SOMA TEXTILES & INDUSTRIES LIMITED - sebi.gov.in · soma textiles & industries limited (Our Company...

DRAFT LETTER OF OFFER Dated: November 23, 2010

For Equity Shareholders of our Company only

SOMA TEXTILES & INDUSTRIES LIMITED(Our Company was originally incorporated on March 29, 1940 under the name of R.B. Rodda & Company Limited under the Indian Companies Act, VII of 1913 vide Certificate of Incorporation issued by the Office of Registrar of Joint Stock Companies, Bengal, Calcutta. Subsequently the name of our company was changed to Soma Textiles & Industries Limited vide fresh Certificate of Incorporation consequent on change of name dated 21st January, 1992 issued by the office of Registrar of Companies, West Bengal – Kolkata)

Registered Office: 2, Red Cross Place, Kolkata – 700001, Tel. No. + 91-033-2248-7406/07; Fax No. + 91-033-2248-7045, Website: www.somatextiles.com; E-mail: [email protected];

(For details of change in registered office of our company, refer to the section titled ‘History and Corporate Structure’ beginning on Page No. 77 of this Draft Letter of Offer.)

Contact Person: Mr. Radhey Shyam Sharma, Company Secretary & Compliance Officer

LETTER OF OFFER

ISSUE OF 99,09,900 EQUITY SHARES OF FACE VALUE OF RS.10/- EACH FOR CASH AT PAR AGGREGATING TO RS. 990.99 LAKHS TO THE EXISTING EQUITY SHAREHOLDERS OF OUR COMPANY ON RIGHTS BASIS IN THE RATIO OF 3 EQUITY SHARES FOR EVERY 10 FULLY PAID EQUITY SHARES HELD BY THE EXISTING SHAREHOLDERS ON THE RECORD DATE, I.E. ON [●], 2010. THE ISSUE PRICE IS EQUAL TO THE FACE VALUE OF THE EQUITY SHARE.

GENERAL RISKS

Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of the issuer and the offer including the risks involved. The securities being offered in the issue have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this Draft Letter of Offer. Specific attention of investors is invited to the chapter titled ’Risk Factors’ given on Page No. 11 of this Draft Letter of Offer.

ISSUER'S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Draft Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Letter of Offer as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING

The existing Equity Shares of our Company are listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). Our Company has received in-principle approval from Bombay Stock Exchange Limited for listing the securities arising from this Issue by its letter dated [●], 2010 (will be updated) and National Stock Exchange Limited by its letter dated [●], 2010 (will be updated) in terms of Regulation 7 (b) (i) of SEBI (ICDR) Regulations, 2009 as amended from time to time. For the purpose of this Issue, the Designated Stock Exchange is Bombay Stock Exchange Limited.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

ARIHANT capital markets ltdSEBI Registration No.: INM 0000110703rd Floor, Krishna Bhavan, 67, Nehru Road, Vile Parle (East), Mumbai- 400 057Tel.: +91- 22- 4225 4800/847; Fax. : +91- 22- 4225 4880:Email: [email protected]: www.arihantcapital.comContact Person: Mr. Amol Kshirsagar

SHAREPRO SERVICES (I) PVT. LTD.,SEBI Registration No.: INR000001476 13AB Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange, Off Andheri Kurla Road, Sakinaka, Andheri (E), Mumbai – 400 072Tel.: +91- 22- 67720306/308/420/422;Fax. : +91- 22- 28508927 / 28591568;Email: [email protected] Website: www.shareproservices.comContact Person: Mr. V. Kumaresan / Mr. Ganesh Rane

ISUSE PROGRAMME

ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS

ISSUE CLOSES ON

[●], 2010 [●], 2010 [●], 2010

TABLE OF CONTENTSSECTION PAGE NO.Section I - GeneralDefinitions And Abbreviations 1Notice to Overseas Shareholders 7No Offer in the United States 7Presentation Of Financial Information And Use Of Market Data 9Forward Looking Statements 10Section II – Risk Factors 11Section III - IntroductionBusiness Overview 19Summary of Financial Information 20Summary of the Issue 26General Information 27Capital Structure 55Objects Of The Issue 61Statement Of Tax Benefits 69Key Industrial Regulations And Policies 76Section IV – About The CompanyHistory and Corporate Structure 77Management 86Management Organisation Structure 90Key Managerial Personnel 91Section V – Financial InformationAuditors’ Report on Financial Statements 93Stock Market Data For Equity Shares Of The Company 168Section VI – Legal And Other InformationOutstanding Litigations And Material Developments 169Government And Other Approvals 175Other Regulatory And Statutory Disclosures 177Section VII – Offering InformationTerms of the Present Issue 186Issue Procedure 191Restrictions On Foreign Ownership Of Indian Securities 211Section VIII – Statutory And Other InformationMaterial Contracts And Documents For Inspection 212Declaration 214

SOMA TEXTILES & INDUSTRIES LIMITED

1

SECTION I – GENERAL

DEFINITIONS AND ABBREVIATIONS

In this Draft Letter of Offer, the terms "we", "us", "our", "our Company", "the Company" or "SOMA", unless the context otherwise implies, refer to SOMA TEXTILES & INDUSTRIES LIMITED. All references to "Rs." or "INR" refer to Rupees, the lawful currency of India; "USD" or "US$" refer to the United States Dollar, the lawful currency of the United States of America, references to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words "Lakh" or "Lac" means "100 thousand" and the word "million" or "mn" means "10 lakh" and the word "crore" means "10 million" or "100 lakhs" and the word "billion" means "1,000 million" or "100 crores". Any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off.

Conventional / General Terms

Term Description Act or Companies Act

The Companies Act, 1956 and the rules made thereunder, as amended from time to time

Depository

A depository registered with SEBI under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 as amended from time to time.

Depositories National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), the Depositories registered with SEBI under the SEBI (Depositories & Participant) Regulations, 1996 as amended from time to time.

Depositories Act The Depositories Act, 1996 and subsequent amendments thereto. Depository Participant / DP

A depository participant as defined under the Depositories Act, 1996 and registered with SEBI under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 as amended from time to time.

DP ID Depository Participant’s identity. FII(s) Foreign Institutional Investors registered with SEBI under applicable laws. FCNR Account Foreign Currency Non-Resident (Banks) Accounts as defined under Foreign

Exchange Management (Deposit) Regulations, 2000, as amended from time to time.

GoI Government of India. Indian GAAP Generally Accepted Accounting Principles in India. I.T. Act The Income Tax Act, 1961 and subsequent amendments thereto. Person or Persons

Any individual, sole proprietorship, unincorporated association, unincorporated organization, body corporate, corporation, company, partnership, limited liability company, limited liability partnership, joint venture, or trust or any other entity or organization validly constituted and/or incorporated in the jurisdiction in which it exists and operates, as the context requires.

Non Residents A person resident outside India, as defined under FEMA. NRE Account Non Resident External Account as defined under Foreign Exchange

Management (Deposit) Regulations, 2000, as amended from time to time. NRO Account Non Resident Ordinary Account as defined under Foreign Exchange

Management (Deposit) Regulations, 2000, as amended from time to time. RBI Reserve Bank of India SEBI Securities and Exchange Board of India Act Securities Act United States Securities Act, 1933, and subsequent amendments thereto. SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 and amendments thereto.


2

SEBI (Issue Of Capital And Disclosure Requirements) Regulations, 2009 / SEBI (ICDR) Regulations

Securities And Exchange Board Of India (Issue Of Capital And Disclosure Requirements) Regulations, 2009, notified by SEBI on 26th August, 2009.

Takeover Code/ SEBI (SAST) Regulations, 1997

The Securities and Exchange Board Of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 as amended to date.

Wealth tax Act The Wealth Tax Act, 1957 and subsequent amendments thereto. Company / Issue Related Terms

Term Description Abridged Letter of Offer The abridged letter of offer to be sent to Eligible Equity Shareholder of our

Company with respect to this Issue in accordance with SEBI (ICDR) Regulations

Allotment Unless the context otherwise requires, the issue and the allotment of Equity Shares, pursuant to the Issue.

Allottee The applicants to whom the Equity Shares are being / have been allotted. Application Unless the context otherwise requires, the allotment of Rights Equity Shares

pursuant to the Issue. Articles / Articles of Association / AOA

Articles of Association of our Company.

ASBA Application Supported by Blocked Amount process provided by SEBI as one of the modes for applying in a Public Issue / Rights Issue

Associate Companies Soma Textile FZC, Hamriya Free Zone, Auditors Refers to Statutory Auditors of our Company, Pipara & Company, unless

otherwise specified Bankers to the Issue [●] (Will be updated). Board or Board of Directors Board of Directors of our company , which term shall include a

committee of the Board Business Day Any day, other than a Saturday or a Sunday, on which commercial banks in

Mumbai are open for business Composite Application Form/CAF

The form Used by an Investor to make an application for allotment of the rights Equity Shares in the Issue.

Capital or Share Capital Share Capital of our Company comprising of subscribed and paid up Equity Share Capital.

Designated Stock Exchange National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) where the Equity Shares of our Company are presently listed.

Draft Letter of Offer This Draft Letter of Offer dated November 23, 2010 filed with SEBI. Eligible Equity Shareholders The Equity Shareholders of our Company as on the Record Date Equity Share(s) or Share(s) Equity Share of our Company having a face value of Rs. 10/- each listed on

NSE and BSE unless otherwise specified in the context thereof. Equity Shareholders Unless otherwise stated, means a holder of Equity Shares of our Company

as on the Record Date. Fiscal/FY Period of twelve months ended March 31 of that particular year, unless

otherwise stated. Investor(s) The holder(s) of Equity Shares of our Company as on the Record Date, i.e.,

[●], 2010 and Renouncees. Issue Closing Date [●], 2010. Issue Opening Date [●], 2010.


3

Issue Price Rs. 10/- Letter of Offer The Letter of Offer to be filed with the Stock Exchange in relation to the

Issue after incorporating SEBI comments on the Draft Letter of Offer. Lead Manager or Lead Manager to the Issue

Lead Manager to this Issue, in this case being Arihant Capital Markets Limited.

Listing Agreement Listing Agreement entered into with NSE & BSE. Memorandum / Memorandum of Association/ MoA

Memorandum of Association of our Company.

Promoter Arvind Somany, Surendra Kumar Somany, Sarvopari Investment Private Limited, Krishnaa Glass Private Limited, Nandita Patodia, Anupama Agarwal, Nalini Somany

Promoter Group

Unless the context otherwise requires, refers to those companies, Individuals and entities mentioned in the section titled “Promoter Group” on Page No. 56 of this Draft Letter of Offer.

Record Date [●], 2010. Registrar to the Issue or Registrar

Sharepro Services (I) Pvt. Ltd.

Registrar and Transfer Agent Sharepro Services (I) Pvt. Ltd. Registered Office

The Registered office of the Company situated at 2, Red Cross Place, Kolkata – 700001

Renouncees

Shall mean the persons who have acquired Right Entitlements from the existing Equity Shareholders of our Company.

Right Entitlement

The number of Equity Shares (Three) that a shareholder is entitled to in proportion to his/her shareholding (Ten) in our Company i.e. “Three shares for every Ten Shares held “as on the Record Date.

Rights Issue The issue of Equity shares being offered on rights basis as per terms of this Draft Letter of Offer.

The Offer or The Issue Issue of 99,09,900 fully paid equity shares with a face value of Rs.10/- each at par for an amount aggregating to Rs.990.99 lacs on rights basis to the existing shareholders of our company in the ratio of 3 fully paid equity shares for every 10 equity shares held by the existing shareholders on the record date, i.e. on [●], 2010.

Industry Related Terms

Term Term Description CAGR Compounded Annual Growth Rate CFM Cubic Feet Per Minute FDY Fully Drawn Yarn ISI Indian Standards Institute Kgs. Kilograms MT Metric Tonnes MTPA Metric Tonnes per Annum PT Per Tonne TPA Tonnes Per Annum TPD Tonnes Per Day


4

General and Conventional Terms/Abbreviations

Term Description ASBA Application Supported by Blocked Amount AGM Annual General Meeting. Arihant Arihant Capital Markets Limited AS

Accounting Standards, as issued by the Institute of Chartered Accountants of India.

Asst. Assessment ACA Associate Chartered Accountant AY Assessment Year. Bn Billion B.A Bachelor of Arts B.Com Bachelor of Commerce B.Sc Bachelor of Science B. Tech Bachelor of Technology BSE Bombay Stock Exchange Limited BV Book Value CAF Composite Application Form CAGR Compounded Annual Growth Rate CAIIB Certified Associate of the Indian Institute of Bankers CDR Corporate Debt Restructuring CDR EG Corporate Debt Restructuring Empowered Group CDR LOA Corporate Debt Restructuring ( Letter of Approval) CDSL Central Depositories Services (India) Limited CEGAT Customs, Excise & Gold (Control) Appellate Tribunal CESTAT Customs, Excise and Service Tax Appellate Tribunal Contract Labour Act Contract Labour (Regulation& Abolition Act),1970 DEE Diploma Electric Engineer DRT Debt Recovery Tribunal DSCR Debt Service Coverage Ratio EBIDTA Earnings before Interest Depreciation, Tax and Amortization. EGM Extra-ordinary General Meeting. EOU Export Oriented Unit EPCG Scheme Export Promotion Capital Goods Scheme EPF Act Employees Provident funds and Miscellaneous Provisions

Act,1952 EPS Earnings Per Share EU European Union FCCB’S Foreign Currency Convertible Bonds FCNR Foreign Currency ( Non- Resident) Account Scheme FCRA Forward Contracts (Regulation) Act, 1952 FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 and subsequent

amendments thereto FERA Foreign Exchange Regulation Act, 1973 now repealed by FEMA FI Financial Institution


5

FII(s) Foreign Institutional Investor(s) as defined Under SEBI ( Foreign Institutional Investors) Regulation,1995 registered with SEBI and as defined under FEMA(Transfer or Issue of Security by a Person Resident Outside India) regulations,2000 and under other applicable laws in India

FICCI Federation of Indian Chambers of Commerce and Industry FIPB Foreign Investment Promotion Board FITL Funded Interest Term Loan FY/ FYs Financial Year/ Financial Years GDP Gross Domestic Product GOI Government of India HUF Hindu Undivided Family Indian Boiler Act Indian Boiler Act No. V,1923 LL.B Bachelor of Law MBA Masters in Business Administration Mn Million MLW Master in Labour Welfare M. Tech Master in Technology MoU Memorandum of Understanding. M.T. p. a. Metric Tonne Per Annum NAV Net Assets Value NAVPS Net Assets Value Per Share NBFC Non Banking Financial Company NR Non Residents NRI(s) Non Resident Indian, as defined under the Foreign Exchange

Management (Deposit) Regulations, 2000 as amended from time to time

NSDL National Securities Depository Limited OP Operating Profit OPM Operating Profit Margin NSE National Stock Exchange of India Limited P.A. Per Annum P/E Ratio Price / Earnings Ratio PAN Permanent Account Number PAT Profit After Tax PBIDT Profit Before Interest, Depreciation and Tax PBDT Profit Before Depreciation and Tax PBT Profit Before Tax PGDM Post Graduate Diploma in Management PLR Prime Lending Rate ROC Registrar of Companies RONW Return on Networth SCRA Securities Contracts (Regulation) Act, 1956 SCSB Self Certified Syndicate Banks SOMA Soma Textiles & Industries Limited


6

Takeover Code Securities and Exchange Board of India ( Substantial Acquisition of Shares and Takeovers) Regulations, 1997 read with amendments issued subsequent to that date

TRA Trust & Retention Account TUFS Technology Upgradation Fund Scheme US$ or USD or Dollars Refers to the lawful currency of the United States of America. UIN Unique Identification Number Water Act Water (Prevention and Control of pollution) Act, 1974 w.e.f With effect from WTO World Trade Organisation


7

NOTICE

TO

OVERSEAS SHAREHOLDERS The distribution of this Draft Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. Our company is making this issue of Equity Shares on a rights basis to the shareholders of our company and will dispatch the Letter of Offer/Abridged Letter of Offer and Composite Application Form (“CAF”) to such shareholders who have an Indian address. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the Equity Shares or the rights entitlements, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the rights entitlements referred to in this Draft Letter of Offer. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in our company’s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date.

NO OFFER IN THE UNITED STATES

The rights and the Equity Shares of our company have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions thereof (the ‘‘United States’’ or ‘‘U.S.’’) or to, or for the account or benefit of, “U.S. Persons” as defined in Regulation S under the Securities Act (‘‘Regulation S’’), except in a transaction exempt from the registration requirements of the Securities Act. The rights referred to in this Draft Letter of Offer are being offered in India, but not in the United States. The offering to which this Draft Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any shares or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said shares or rights. Accordingly, this Draft Letter of Offer/Letter of Offer/Abridged Letter of Offer and the enclosed CAF should not be forwarded to or transmitted in or into the United States at any time. Neither our company nor any person acting on behalf of our company will accept subscriptions or renunciation from any person, or the agent of any person, who appears to be, or who our company or any person acting on behalf of our company has reason to believe is, either a “U.S. person” (as defined in Regulation S) or otherwise in the United States when the buy order is made. Envelopes containing CAF should not be postmarked in the United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal to make an offer under the Draft Letter of Offer, and all persons subscribing for the Equity Shares and wishing to hold such Equity Shares in registered form must provide an address for registration of the Equity Shares in India. Our company is making this issue of Equity Shares on


8

a rights basis to shareholders of our company and the Letter of Offer/Abridged Letter of Offer and CAF will be dispatched to shareholders who have an Indian address. Any person who acquires rights and the Equity Shares will be deemed to have declared, represented, warranted and agreed, (i) that it is not and that at the time of subscribing for the Equity Shares or the rights entitlements, it will not be, in the United States when the buy order is made, (ii) it is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States, and (iii) is authorized to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations. Our company reserves the right to treat as invalid any CAF which: (i) does not include the certification set out in the CAF to the effect that the subscriber is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations; (ii) appears to our company or its agents to have been executed in or dispatched from the United States; (iii) where a registered Indian address is not provided; or (iv) where our company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; and our company shall not be bound to allot or issue any Equity Shares or rights entitlement in respect of any such CAF. Our company is informed that there is no objection to a United States shareholder selling its rights in India. Rights entitlement may not be transferred or sold to any U.S. Person.


9

PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA

Unless stated otherwise, the financial information and data in this Draft Letter of Offer is derived from our Company’s consolidated financial statements which are included in this Draft Letter of Offer and set out in the section “Auditors’ Report on Financial Statements” on Page No. 93. Unless stated otherwise, throughout this Draft Letter of Offer, all figures have been expressed in Lacs, except in the section titled “Capital Structure”, Auditors’ Report on Financial Statements and Stock Market Data for Equity Shares of the Company in the Section titled “Financial Information” beginning on Page Nos. 93 and 168 respectively of this Draft Letter of Offer where certain figures have been expressed in absolute numbers or in Lacs. All numbers presented in this Draft Letter of Offer have been rounded off to two decimal places. Our fiscal year commences on April 1 and ends on March 31 of the next year. Unless stated otherwise, reference herein to a fiscal year is to the fiscal year ended March 31 of a particular year. All references to "Rupees" or "Rs." are to Indian Rupees, the official currency of the Republic of India. In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off, and unless otherwise specified, all financial numbers in parenthesis represent negative figures.


10

FORWARD LOOKING STATEMENTS

We have included statements in this Draft Letter of Offer which contain words or phrases such as "will", "aim", "is likely to result", "believe", "expect", "will continue", "anticipate", "estimate", "intend", "plan", "contemplate", "seek to", "future", "objective", "goal", "project", "should", "will pursue" and similar expressions or variations of such expressions, that are "forward looking statements". All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include but are not limited to:

General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies;

Changes in laws and regulations relating to the sectors/areas in which we operate;

Increased competition in the sectors/areas in which we operate;

Our ability to successfully implement our growth strategy and expansion plans

Our ability to meet our capital expenditure requirements;

Fluctuations in operating costs;

Our ability to attract and retain qualified personnel;

Changes in technology;

Changes in political and social conditions in India or in countries that we may enter, the monetary

and interest rate policies of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices.

The performance of the financial markets in India and globally; and any adverse outcome in the legal proceedings in which we are involved.

For a further discussion of factors that could cause our actual results to differ, see the chapters titled "Risk Factors" beginning on Page No. 11 of this Draft Letter of Offer respectively. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither our Company nor the Lead Manager nor any of their respective affiliates or advisors have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI/Stock Exchanges requirements, our Company and Lead Manager will ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges


11

SECTION II – RISK FACTORS

RISK FACTORS An investment in Equity Shares involves a high degree of risk. You should carefully consider all the information in this Draft Letter of Offer, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, results of operations and financial condition could suffer, the price of our Equity Shares could decline, and you may lose all or part of your investment. The financial and other implications of material impact of risks concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. However there are a few risk factors where the impact is not quantifiable and hence the same has not been disclosed in such risk factors. Internal Risk Factors 1. We are involved in legal proceedings which, if finally determined against us, could affect our

business and financial conditions. We are party to certain legal proceedings. No assurances can be given as to whether these matters will

be settled in our favor or against us. If a claim is finally determined against us and we are required to pay all or a portion of the disputed amount, it could have an adverse effect on our results of operations and cash flows. A classification of the legal proceedings, which if they result in adverse outcome would in terms of Part E of Schedule VIII to SEBI (ICDR) Regulations, may materially and adversely affect the operations or the financial position of our Company. The amounts involved in these cases are mentioned in brief below

Litigation In Respect Of Our Company as on date

Category Number of Cases Amount (Rs. in lacs)

By Against By Against Labour Cases 2 11 0.40 22.38 Excise - 8 - 28.18 Others - - - -

For further details on the outstanding litigation of our Company please refer to section titled

“Outstanding Litigations and Material Developments” beginning on Page No. 169 of this Draft Letter of Offer.

Except as disclosed in the section titled “Outstanding Litigations and Material Developments”

beginning on Page No. 169 of this Draft Letter of Offer, there are no other such litigations pending as on the date of this Draft Letter of Offer.

2 Our Company defaulted in payment of dues to banks and financial institutions and has undergone

a scheme for debt restructuring under CDR mechanism. During 2007-08 our company suffered operational losses resulting in liquidity stress and consequent default in payment of dues to banks/institutions. We approached our lenders for restructuring package under the CDR Mechanism, which was approved in February 2009. The Scheme has imposed several obligations and conditions on our company, details whereof are provided in Page No. 61 of this Draft


12

Letter of Offer. Any failure on our part to comply with these conditions will cause us to forfeit the reliefs and concessions granted to us in the package, besides making us liable to any other action that our lenders may take.

3 We have incurred significant losses in the past.

On standalone basis, we incurred a loss of Rs. 1760 lakhs in FY 2008; Rs. 2837 lakhs in FY 2009 and Rs. 1868 lakhs in FY 2010 and Rs. 820 lacs for half year ended September 30, 2010. There is no guarantee that we will not continue to make losses in future too.

4 We had entered into certain derivative transactions with ICICI Bank which resulted in significant losses to our company amounting to Rs 791 lacs. We incurred losses amounting to Rs. 791 lacs in respect of derivative transactions with ICICI Bank. These losses arose on account of unusual movements in foreign currency rates with dollar becoming very weak in March 2008. These losses have now been converted in Derivative Rupee Term Loan under the Corporate Debt Restructuring scheme

5 The Contingent Liabilities of our Company as on March 31, 2010, as per the audited accounts for which no provisions are made are as follows:

Particulars

FY 2010 (Rs in Lacs)

FY 2009 (Rs in Lacs)

a) Bills discounted by the company 248.05 413.61

b) Sales Tax Payment disputed by the Company 6.17 -

c) Excise Duty demand disputed by the Company 35.13 35.13

d) Claims against the Company not Acknowledged as debts

24.54 38.90

e) Tandulwadi Grampanchaat Tax 5.42 -

f) Electrical Inspection Division, Pune - 176.46

6 We have downsized our capital expenditure programme which resulted in our garment project

capacity being halved from proposed 10000 pieces per day to present 5000 pieces per day. During FY 2007-08, we implemented capital expenditure programme for setting up garment facility having capacity of 10,000 pieces per day. However, mid-way we had to downsize our project capacity to 5000 pieces per day since we started making operational losses and the textile industry was gravely affected by global downturn. While there is no overrun in the project cost in real sense, the revised cost estimates for the scaled down project would appear somewhat higher as compared to the original estimates. We had already incurred certain expenditure (such as civil work, washing capacity, etc.) to match the capacity of the 10,000 pieces per day. However, on down-scaling the capacity, such extra


13

expenditure incurred has become surplus which can be put to use only on enhancement of the capacity to 10000 pieces.

7 Failure to comply with the conditions of TUFS shall make us ineligible for interest subsidy

We have availed loans amounting to Rs. 12562.80 Lakhs under Technology Upgradation Fund Scheme (TUFS/the Scheme). These loans are eligible for 5% Interest subsidy subject to conditions provided therein. We are also entitled to a 10% capital subsidy for investment in specified processing machineries. Such interest and capital subsidy are allowed subject to fulfillment of conditions such as investments only in eligible machineries as notified under the scheme, 20% equity contribution under the project cost, maximum loan period of 8-10 years including an initial moratorium of 1 to 2 years, security by way of first charge on all present and future assets etc. If we fail to comply with such conditions stipulated under TUFS, the interest or capital subsidy may be denied to us making our operations less cost effective.

8 Our company has given loan to its erstwhile subsidiary, M/s. Soma Textile FZE, U.A.E., which was outstanding to the extent of Rs. 7079 lacs as on March 31, 2010

We have extended loan to our erstwhile subsidiary M/s. Soma Textile FZE, which was outstanding to the extent of Rs. 7079 lacs as on March 31, 2010. The erstwhile subsidiary has total Shareholders’ Funds of Rs. 556 lacs and carried forward loss of Rs. 531 lacs. As on 31st March 2010, its fund deployment was in Current Assets and Loans & Advances, largely in the form of Sundry Debtors, considered good by the Management of the said erstwhile subsidiary company.

9 Increase in cotton prices or decrease in supply of cotton may have a material adverse effect on our business

Raw material cost constitutes significant percentage of our total expenses. Our primary raw material is cotton, which we source from the domestic market. The cost of cotton forms around 40% of the total cost of production. We have not entered into any firm arrangements with any party for supply of key raw materials like cotton and polyester staple fibre. Cotton is an agricultural product and its supply and quality are subject to forces of nature. Any material shortage or interruption in the domestic supply or deterioration in the quality of cotton due to natural causes or other factors could result in increased production costs, which we may not successfully be able to pass on to customers, which in turn would have an material adverse effect on our business. Although domestic cotton prices have been lower than imported, there can be no assurance that the price levels of cotton will remain favourable. Any increase in cotton prices would have a material adverse effect on our business

10 We have incurred capital expenditures, which may not yield the benefits intended

We had embarked upon major expansions, modernisation programme to meet the growing demand of domestic and international buyers in the textiles sector. Our inability to correspondingly increase our business may adversely affect our operations. We cannot assure that we will be able to get the benefits of the generally growing demand in the textile sector and accordingly the benefits accruing to us from the capacity expansion, modernisation and garmenting may be less than what is anticipated.

11 We operate in a highly competitive and fragmented industry and our failure to successfully compete could result in a loss of one or more significant customers

The textile industry is highly competitive and fragmented. In the recent past many companies in the textile industry have ramped up their capacities to encash opportunities arising from abolition of the quota system with effect from January 1, 2005. Further, additional capacities that may come up are


14

expected to increase competition amongst players in the textile industry and we may face pressures on pricing, product quality, turnaround time, order size etc., which may result in loss of one or more significant customers which may reduce our profit margins.

12 Any decrease in demand of fabrics / decrease in the price of garments or fabrics will impact our business. Our profits are dependent on the prices and demand for the fabric and garments in the domestic and international market. If there is a decrease in demand, there would be a corresponding decrease in prices and our profit margins might decline as a result. This may result in certain operational and financial difficulties including cash flow restrictions.

13 Our business is dependent on our manufacturing facilities to a large extent. The loss of or shutdown of operations at any of the manufacturing facilities may have a material adverse effect on our business, financial condition and results of operations

The existing and proposed manufacturing facilities of our Company are subject to operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, labour disputes, natural calamities, industrial accidents and the need to comply with the directives of relevant government authorities. The occurrence of any of these risks could significantly affect our operating results.

14 Cheap substitutes and imports may affect the business

The textile industry is highly fragmented with the unorganized sector forming a significant portion, which leads to cheaper products entering the market. Also with the reduction in trade barriers there is an increase in imports of cheaper products that pose a competition to the existing domestic organized players. This may directly impact our operations.

15 Restrictive Covenants in loan documents

Our Company has entered into several loan agreements with various lenders, such as State Bank of India, ICICI,IDBI, EXIM Bank, Dena Bank and Axis Bank Limited which requires us to obtain the prior approval of the aforementioned banks to take certain actions, including entering into any fresh lending arrangements with other lenders. In addition, we are subject to a number of risks associated with debt financing, including the risk that cash flow from operations may be insufficient to meet required payments of principal and interest. In particular, we have a number of working capital financings and other short-term debt facilities which have been extended to us by various banks on a yearly basis. We cannot assure you that we will be able to continue to obtain working capital and other financing in the future, which may result in liquidity problems for us and we will need to find alternate sources of funding. Although we anticipate that we will be able to repay or refinance existing debt, and any other indebtedness when it matures, there can be no assurance that we will be able to do so. In addition, we have granted security in favour of our lenders over, among others, immovable assets by way of mortgage and hypothecation of our assets both present and future pursuant to our loan and security agreements. For further details of our secured indebtedness, please refer to the table titled “Principal terms of Loan and Assets charged as Security” beginning on Page No. 32 of this Draft Letter of Offer. If we are unable to fulfil our payment obligations under the loan agreements, our property and


15

assets could be forfeited or transferred, which may adversely impact our business operations. These security arrangements also restrict our ability to grant further security over our assets.

16 Our insurance policies do not cover all risks, specifically risks like product defect / liability risk,

loss of profits and workmen’s compensation, In the event of the occurrence of such events, our insurance coverage may not adequately protect us against possible risk of loss. In addition to risks arising from natural disasters and risks to properties and personnel (like personal injury/loss of life), in the course of our business, our operations are also subject to the risks arising from or as a result of use of pesticides and other hazardous substances. These risks include, but are not limited to accidental release or discharge of hazardous substances, explosions, poisoning, spills/leaks, insect/snake bites, environmental pollution etc. One or more of the aforesaid factors may result in closure or suspension of operations and imposition of civil and/or criminal penalties. While we believe that we maintain insurance coverage in amounts consistent with industry norms in each of our regions, our insurance policies may not cover all risks. There can be no assurance that our insurance policies will be adequate to cover the losses in respect of which the insurance had been availed. If we suffer a significant uninsured loss or if insurance claim in respect of the subject-matter of insurance is not accepted or any insured loss suffered by us significantly exceeds our insurance coverage, our business, financial condition and results of operations may be materially and adversely affected.

17 Our inability to upgrade to the latest technology may adversely affect our growth, market position and profitability. Advancement in technology may require us to make additional capital expenditure for upgrading our manufacturing facilities so as to compete with our various competitors. In the event that we are not able to respond to such technological advancement in a timely manner, we may lose our competitive edge thereby adversely affecting our profits.

18 Our operations are dependent on cordial industrial relations with employees. Presently our labour relations are satisfactory. However, there can be no assurance that we will not experience future disruptions to our operations due to disputes including strikes, work stoppages, or increase wage demands by our employees or other problems with work force which may adversely affect our business or operations.

19 Our inability to keep pace with the ever-changing fashion trends can hamper the demand for our products / our business. In respect of some of our products, we operate in a highly creative and dynamic fashion industry. The ever-changing nature of the fashion industry subjects us to uncertainties associated with the ever-changing market trends. Any inability on our part to understand the prevailing world-wide trend or to forecast changes from time to time may affect our growth prospects. Denim is mainly used for the manufacture of jeans. Jeans has been popular for more than three decades and its popularity is growing every year. We have to keep ourselves updated with the recent market trends. We need to have a dedicated product development department. All products developed by us may not necessarily be accepted by the market.


16

20 Our future funds requirements, in the form of fresh issue of capital or securities and or loans

taken by us, may be prejudicial to the interest of the shareholders depending upon the terms on which they are eventually raised. We may require additional capital from time to time depending on our business needs. Any fresh issue of shares or convertible securities would dilute the shareholding of the existing shareholders and such issuance may be done on terms and conditions, which may not be favourable to the then existing shareholders. If such funds are raised in the form of loans or debt, then it may substantially increase our interest burden and decrease our cash flows, thus prejudicially affecting our profitability and ability to pay dividends to our shareholders

21 Antidumping duty by importing countries may adversely affect our exports Due to levy of Antidumping Duty in the importing countries, our supply to importing countries will not remain as attractive, as their local manufacture. This may adversely affect our exports to certain countries, thereby impacting our business operations.

22 Our success largely depends on our key managerial personnel and our ability to attract and retain them. Any loss of our key managerial personnel could adversely affect our business, operations and financial condition. We depend significantly on the expertise, experience and continued efforts of our key managerial personnel. If one or more members of our key managerial personnel are unable or unwilling to continue in his/her present position, it could be difficult to find a replacement. Our business could thereby be adversely affected. It is possible that we may not be able to retain our existing key managerial personnel or may fail to attract/ retain new employees at equivalent positions in the future. As such, any loss of key managerial personnel could adversely affect our business, operations and financial condition. For further details on the key managerial personnel of our Company please refer to the chapter titled ‘Key Managerial Personnel’ beginning on Page No. 91 of this Draft Letter of Offer.

23 The provisions of World Trade organisation may adversely impact the Sales of our Company The elimination of quota restriction will open the way for the competitive developing countries to develop stronger clusters of textile expertise, enabling them to handle all stages of the production chain from growing natural fibres to producing finished clothing. Due to quota removal, we have to compete with suppliers from countries such as China, who have the advantage of bulk manufacturing and low overheads such as power and wages.

24 High production costs may put is to competitive disadvantages We are required to compete with manufacturers from India and other countries who may have advantage of lower manufacturing cost than us due to lower input costs and larger scale operations. We may not be in position to reduce our existing manufacturing cost. Our competitors with lower production costs would be in a position to utilize their capacities to the optimal level. This may adversely affect our growth.


17

EXTERNAL RISK FACTORS

1. A slowdown in economic growth in India could cause our business to suffer

Our performance and the quality and growth of our assets are necessarily dependent on the health of the overall Indian Economy. A slowdown in the Indian Economy could adversely affect our business, including our ability to grow our asset portfolio, the quality of our assets and our ability to implement our strategy. Indian Economy can be adversely affected by a general rise in interest rates, weather conditions adversely affecting agriculture, deterioration of infrastructure or various other factors affecting the growth of industrial, manufacturing and services sector. In addition, the Indian Economy is in a state of transition. The Share of the services sector of the Economy is increasing while that of the industrial, manufacturing and agricultural sectors is declining. It is difficult to gauge the impact of these fundamental economic changes on our business.

2. Stability of policies and political situation in India can determine the fortunes of the industry.

A significant change in India’s economic liberalisation and deregulation policies could affect business and economic conditions in India generally and our business in particular. A significant change in the Indian government’s or the state governments’ economic liberalisation and deregulation policies could adversely affect business and economic conditions in India generally and our business and financial condition and prospects in particular.

3. Emergence of competition from other manufacturing countries having Free Trade Agreements,

(“FTAs”), and Preferential Trade Agreements, (“PTAs”), with major importing countries

While quantitative restrictions stand eliminated with the removal of quotas, certain countries which enjoy FTAs / PTAs with major importing countries may have an advantage (by way of lower or zero import tariffs) over exporters from countries that do not have such agreements. Whereas India currently is not a party to such agreements it may adversely affect our competitiveness and consequently our operations and profitability as well.

4. If financial instability occurs in certain countries, particularly emerging market countries in Asia

and other countries, our business and the price of our Equity Shares may be adversely affected.

Indian markets and the Indian economy are influenced by economic and market conditions in other countries, particularly emerging market countries in Asia and certain other countries. Although economic conditions are different in each country, investors’ reactions to developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss of investor confidence in the financial systems of other emerging markets may cause exchange rate instability and increased volatility in Indian financial markets, and, indirectly, in the Indian economy in general. Any worldwide financial instability could also have a negative impact on the Indian economy. Financial disruptions may occur again and may harm our business, our future financial performance and the price of our Equity Shares.

5. Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries

could adversely affect the financial markets and our business

Terrorist attacks and other acts of violence or war may negatively affect the Indian markets on which our Equity Shares will be traded and may also adversely affect the worldwide financial markets. These acts may also result in a loss of business confidence. In addition, any deterioration in relations among countries


18

in our neighbourhood might result in investor concern about stability in the region, which could adversely affect the market price of our Equity Shares. India has also witnessed civil disturbances in recent years and it is possible that future civil unrest as well as other adverse social, economic and political events in India could have a negative impact on us. Such incidents could also create a greater perception that investment in Indian Companies involves a higher degree of risk and could have an adverse impact on our business and the market price of our Equity Shares.

6. Any downgrading of India’s debt rating by an International Rating Agency could have a negative

impact on our business. Any adverse revisions to India’s credit ratings for domestic and international debt by International Rating Agencies may adversely impact our ability to raise additional financing, the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on our business, our financial performance, our ability to raise financing for onward lending and the price of our Equity Shares.

7. Regional conflicts in South Asia could adversely affect the Indian economy, disrupt our Company’s

operations and cause its business to suffer.

South Asia has, from time to time, experienced instances of civil unrest and hostilities among neighbouring countries. Military activity or terrorist attacks could adversely affect the Indian economy. This could have a material adverse effect on the market for securities of Indian companies including the Equity Shares of our Company.

Prominent Notes:

Net worth on March 31, 2010 as per latest audited financial statements is Rs. 8841.91 Lacs.

The size of the issue is Rs. 990.99 Lacs. There are no transactions by the issuer with group companies and subsidiary companies or

associates during one year preceding the date of filing Our promoter group, the directors of our company who are promoters, our other directors and

their relatives have not financed the purchase by any other person of securities of our company other than in the normal course of the business of any financing entity during the period of six months immediately preceding the date of filing this Draft Letter of Offer with the Board.

The issue price has been arrived at in consultation between the issuer and the merchant banker. Financials of Issuer Company has been disclosed as per Part E of Schedule VIII of SEBI (ICDR)

Regulations, 2009 Investors are advised to refer to ‘Auditors’ Report on Financial Statements’ beginning on Page No.

93 of this Draft Letter of Offer before investing in this issue


19

SECTION III – INTRODUCTION

SUMMARY

1. BUSINESS OVERVIEW: Our company was originally incorporated with the Registrar of Joint Stock Companies, Bengal, Calcutta vide Certificate of Incorporation dated March 29, 1940 under the name of R. B. Rodda & Co. Ltd under the Indian Companies Act, VII of 1913 vide Registration no.9231 of 1939-40. Later on, our Company’s name was changed to SOMA TEXTILES & INDUSTRIES LIMITED vide fresh Certificate of Incorporation consequent on change of name dated 21st January, 1992 issued by the office of Registrar of Companies, West Bengal – Kolkata Mr. Surendra Kumar Somany, Mr. Arvind Somany, their relatives & associate concerns including Krishnaa Glass Private Limited and Sarvopari Investment Private Limited are our current promoters. Our principal business is manufacture and sale of Spinned Cotton Yarn, Polyester Yarn, Denim (Indigo Dyed), Cotton Shirtings and Ready-for-Dyeing Shirt Materials, Bottom Weights and garments etc. Presently, we have production facilities at the following two locations: 1. Unit No. 1 is set up at Rakhial Road, Rakhial, Ahmedabad, Gujarat. This is Composite Textile Mill

having facility of manufacturing Denim, cotton shirting, bottom weights, yarn and garments.

2. Unit No. 2 is set up at Baramati, Maharashtra, for the manufacture of 100% cotton single/double medium and super fine yarn of international quality.

Our product range comprises 100% cotton yarn from our Baramati unit, 100% cotton and blended shirting fabrics, cotton and poly-cotton bottom wear fabrics, denim fabrics and garments from Ahmedabad unit. Our manufacturing facilities are modern as we have been consistently upgrading our equipments to adapt to technological changes. Textile being a well established and traditional industry of the country, no outside technical know-how or expertise is required. We have, in the recent past, updated our ring frames to auto-doffing mechanism and are technically equipped to produce good quality products, which can compete with the best in industry both domestic as well as international.


20

2. SUMMARY OF FINANCIAL INFORMATION The following tables set forth summary financial information derived from our unaudited financial results for half year ended 30th September 2010, audited financial results for the fiscal year ended 31st March 2010 and audited financial statements for the fiscal years ended March 31, 2009. Our Audited financial statements have been prepared in accordance with Indian GAAP and are presented in the section titled “Financial Information” on Page No. 93 of this Draft Letter of Offer. The summary financial information presented below should be read in conjunction with the Audited financial statements and the notes thereto appearing on Page No. 93 of this Draft Letter of Offer. Summary Statement of Assets and Liabilities of our Company on standalone basis:-

(Rs in Lacs)

PARTICULARS

Six Month Ended

30.09.2010*

2010

2009

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDS Share capital 3322.75 3322.75 3322.75

Share Application Money 975.00

975.00

700.00

Reserves and surplus 3825.71

4645.75

6513.61 8123.46 8943.50 10536.36

LOAN FUNDS Secured loans 18688.32 18379.10 18463.18

Unsecured loans 43.56

43.56

43.56 18731.88 18422.66 18506.74

DEFERRED TAX LIABILITY ---

---

749.92

26855.34 27366.16 29793.02 APPLICATION OF FUNDS

FIXED ASSETS Gross Block 27091.03 27034.84 26482.27

Accumulated Depreciation (14145.24)

(13442.14)

(11848.08)Net Block 12945.79 13592.70 14634.19

Capital work-in-progress 23.50

7.86

190.03 12969.29 13600.56 14824.22

INVESTMENTS 34.43

34.43

34.43

DEFERRED TAX ASSETS 214.08

214.08

---


21

CURRENT ASSETS, LOANS AND ADVANCES

Inventories 5944.88

6197.83

5113.03

Sundry Debtors 2320.02

2250.92

1606.43

Cash and Bank Balances 229.16

423.65

858.44

Other Current Assets 876.52

834.16

734.04

Loans and Advances 7439.86

7527.83

8415.11 16810.44 17234.39

16727.05 LESS: CURRENT LIABILITIES AND

PROVISIONS

Liabilities 2893.58

3478.43

1619.97

Provisions 368.74

340.46

343.72 (3262.32) (3818.89) (1963.69)

Net Current Assets 13548.12

13415.50

14763.36 MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted) 89.43

101.59

171.01 TOTAL 26855.35 27366.16 29793.02

Summary Statement of Profit and Loss of Our Company (on standalone basis):

(Rs in lacs)

PARTICULARS

Six Month Ended

30.09.2010*

2010

2009

INCOME

Sales 13056.60 20755.59 15707.38

Other income 353.12

801.86

952.94

TOTAL 13409.72 21557.45 16660.32 EXPENDITURE

1240.22

20277.42

16937.52 Manufacturing & Other Expenses

Financial Cost 982.87

1576.11

1573.06


22

Depreciation

825.81

1655.02

1650.59

TOTAL 14218.90 23508.55 20161.17

LOSS BEFORE PRIOR PERIOD ITEM / EXCEPTIONAL ITEMS AND TAX 809.18

1951.10

3500.85

PRIOR PERIOD ITEMS-INCOME (7.14)

(11.81)

---

EXCEPTIONAL ITEMS (3.72)

892.36

(441.50)

LOSS BEFORE TAXATION 820.04

2831.66

3059.35

Provision for Income Tax --- --- ---

Provision for Fringe Benefit Tax ---

---

4.67

Income Tax Paid For Earlier Years ---

0.19

11.13

Provision for Deferred Tax ---

(964.00)

(238.00)

NET LOSS AFTER TAXATION 820.04

1867.85

2837.15

Balance brought forward from previous year (4164.05)

2296.19

(540.96)BALANCE BEING LOSS CARRIED TO BALANCE SHEET (4984.09)

4164.04

2296.19

Basic and Diluted Earnings per Share of Rs. 10 each (in Rupees)

- Basic Earning Per Share (2.48)

(5.65)

(8.59)

- Diluted Earning Per Share (2.48)

(5.65)

(8.59)

∗ Note:

The unaudited figures for half year ended September 30, 2010 have been subject to limited review by the Auditors of the Company.


23

Summary Statement of Assets and Liabilities of our Company on consolidated basis:-

(Rs in lacs) PARTICULARS 2010 2009 SOURCES OF FUNDS

SHAREHOLDERS’ FUNDS

Share capital

3322.75

3322.75

Share Application Money

1030.01

700.00

Reserves and surplus

4581.08

6508.57

8933.84

10531.32 LOAN FUNDS

Secured loans 18379.10 18463.18

Unsecured loans

43.56

43.56

18422.66

18506.74

DEFERRED TAX LIABILITY --

749.93

TOTAL 27356.50 29787.99

APPLICATION OF FUNDS FIXED ASSETS

Gross Block

27034.85

26482.27

Accumulated Depreciation

(13442.14)

(11848.08)

Net Block

13592.71

14634.19

Capital work-in-progress

7.86

190.04

13600.57

14824.23

INVESTMENTS

0.21

0.21

DEFERRED TAX ASSETS

214.08

---

CURRENT ASSETS, LOANS AND ADVANCES Inventories

6197.83

5113.03

Sundry Debtors 10573.02 11422.29

Cash and Bank Balances

516.19

862.99


24

Other Current Assets

834.16

734.04

Loans and Advances

453.06

423.07

18574.25 18555.42

LESS: CURRENT LIABILITIES AND PROVISIONS

Liabilities

4793.74

3419.16

Provisions

340.46

343.72

(5134.20)

(3762.88)

Net Current Assets

13440.05

14792.54

MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted)

101.59

171.01 TOTAL 27356.50 29787.99

Summary Statement of Profit and Loss of Our Company (On Consolidated Basis): (Rs in lacs)

PARTICULARS 2010 2009

INCOME

Sales 23290.51 31296.89

Other income

801.86

952.94

TOTAL 24092.37 32249.83 EXPENDITURE

Manufacturing & Other Expenses 22872.10 34470.94

Financial Cost

1576.91

1573.35

Depreciation

1655.02

1650.59

TOTAL 26104.03 37694.88 LOSS BEFORE PRIOR PERIOD ITEM / EXCEPTIONAL/ EXTRAORDINARY ITEMS AND TAX

2011.66

5445.05

PRIOR PERIOD ITEMS-INCOME

(11.81)

---


25

EXCEPTIONAL ITEMS 892.36 (441.51) EXTRAORDINARY ITEMS --- 1850.84 LOSS BEFORE TAXATION 2892.21 6854.38

Provision for income Tax --- --- Provision for Fringe Benefit Tax --- 4.68 Income Tax Paid For Earlier Years 0.19 11.13 Provision for Deferred Tax (964.00) (238.00)

NET LOSS AFTER TAXATION 1928.40 6632.19

Balance brought forward from previous year 2767.03 (3865.17)BALANCE BEING LOSS CARRIED TO BALANCE SHEET 4695.43 2767.02


- Basic Earning Per Share (5.84) (20.08)- Diluted Earning Per Share (5.84) (20.08)

Note: Soma Textile FZE has ceased to be our subsidiary with effect from 31st March, 2010, after close of office hours. Therefore, the consolidated financial statements are till 31st March, 2010.


26

3. SUMMARY OF THE ISSUE

Equity Shares to be issued by our Company

99,09,900 Equity Shares

Rights Entitlement Three Equity Shares for every Ten Equity Shares held on the Record Date

Record Date [●]

Issue Price per Equity Share Rs. 10/- per equity share.

Equity Shares outstanding prior to the Issue

3,30,33,000

Equity Shares outstanding after the Issue. 4,29,42,900

Terms of the Payment Rs. 10 per share on application.

Terms of Issue For more information, refer to Section titled “Terms of the Present Issue" beginning on Page No. 186 of this Draft Letter of Offer.

Utilisation of Issue Proceeds For further information, please refer to the section titled ‘Objects of the Issue’ beginning on Page No. 61 of this Draft Letter of Offer.


27

GENERAL INFORMATION

Dear Shareholder(s), Pursuant to the resolution passed by the Board of Directors of our Company at its meeting held on 31.10.2009, and the resolution passed by the members of our Company at the EGM held on 07.12.2009 it has been decided to make the following offer to the Equity Shareholders of our Company with a right to renounce: ISSUE OF 99,09,900 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT PAR AGGREGATING TO RS. 990.99 LACS ON RIGHTS BASIS TO THE EXISTING SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF 3 EQUITY SHARES FOR EVERY 10 FULLY PAID EQUITY SHARES HELD BY THE EXISTING SHAREHOLDERS ON THE RECORD DATE, THAT IS ON [●].

GENERAL INFORMATION Name of the Company Soma Textiles & Industries Limited Registered Office 2, Red Cross Place, Kolkata – 700001, West Bengal Website address www.somatextiles.com Contact Details Tel. No. :+ 91-033-2248-7406/07

Fax No. :+91-033-2248-7045 E-mail address : [email protected]

Registration Number (Corporate Identity No.)

L51909WB1940PLC010070

Company Secretary & Compliance Officer

Mr. Radhey Shyam Sharma Soma Textiles & Industries Limited 2, Red Cross Place, Kolkata – 700001, West Bengal Tel. No. :+ 91-033-2248-7406/07 Fax No. :+91-033-2248-7045 Website: www.somatextiles.com E-mail address : [email protected]

Investors may contact the Compliance Officer for any pre-issue /post-issue related matter. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the SCSB, giving full details such as name, address of the applicant, number of Equity Shares applied for, Amount blocked, ASBA Account number and the Designated Branch of the SCSB where the CAF was submitted by the ASBA Investors. Auditors M/s. Pipara & Company

Chartered Accountants Pipara Corporate House, Near Grah Finance, Netaji Marg, Law Garden Ahmedabad – 380006 Tel. No. :+ 91-79-40 370 370-374 Fax No. :+91-79-40 370 376 Website: www.pipara.com E-mail address : [email protected]; [email protected]


28

Bankers to our Company: (i) Dena Bank

Address: Dena Bank, Ashram Road, Ahmedabad Tel. No.: 079-26585315; Fax No.: 079-26588559 Website: www.denabank.com (ii) State Bank of India Address: SBI, Commercial Branch, Ellisbridge, Ahmedabad Tel. No.: 079-26585623; Fax No.: 079-26575692 Website: www.statebankofindia.com (iii) ICICI Bank Address: ICICI Bank Towers, North Tower, 4th Floor, Bandra Kurla Complex, Bandra (East), Mumbai - 400051 Tel. No.: 022-26531414; Fax No.: 022-26531122 Website: www.icicibank.com (iv) IDBI Bank Address: IDBI Tower, Mumbai Main Office, Cuffe Parade, Mumbai - 400005 Tel. No.: 022-66553355; Fax No.: 022-22180411 Website: www.idbi.com (v)EXIM Bank Address: Centre One Building, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai – 400 005 Tel. No.: 022-22172600; Fax No.: 022-22182357 Website: www.eximbankindia.com (vi) Axis Bank Address: Maker Tower F, 11th Floor, Cuffe Parade, Colaba, Mumbai - 400005 Tel. No.: 022-67074407; Fax No.: 022-22181429 Website: www.axisbank.com

Bankers to the Issue [●] [●]

Lead Managers to the Issue

Arihant Capital Markets Limited SEBI Regn. No. INM 000011070 Address: 3rd Floor, Krishna Bhavan, 67, Nehru Road, Vile Parle (East), Mumbai- 400057. Tel. No. +91-22-4225 4800/847 Fax No. + 91-22-4225 4880 Website: www.arihantcapital.com E-Mail : [email protected] Contact Person: Mr. Amol Kshirsagar


29

Registrar to the Issue

M/s. Sharepro Services (I) Pvt. Ltd. SEBI Regn. No.:INR000001476 Address: 13AB Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange, Off Andheri Kurla Road, Sakinaka, Andheri (E), Mumbai – 400 072 Tel.: +91- 22- 67720306/308/420/422; Fax. : +91- 22- 28508927 / 28591568; Email: [email protected] Website: www.shareproservices.com Contact Person: Mr. V. Kumaresan / Mr. Ganesh Rane

Note: Investors are advised to contact the Registrar to the Issue / Compliance Officer in case of any pre-issue/ post-issue related problems such as non-receipt of Letter of Offer / letter of allotment / demat credit / share certificate(s)/refund orders. Self Certified Syndicate Banks: The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on www.sebi.gov.in/pmd/scsb.pdf. Credit Rating Details & IPO grading This being an issue of Equity Shares on a rights basis, no credit rating & IPO grading is required. Debenture Trustee This being a Rights Issue of Equity Shares, appointment of Debenture trustee is not required. Monitoring Agency In terms of SEBI ICDR, Chapter II, Regulation 16, the appointment of a monitoring agency is mandatory only if the issue size exceeds Rs.500.00 Crores. Since the present issue size would not exceed Rs.500.00 Crores no monitoring agency has been appointed. Declaration by Board on creation of separate account The Board of Directors declares that funds received against this Issue will be transferred to a separate bank account other than the bank account referred to sub-section (3) of Section 73 of the Companies Act. Inter-se Allocation of Responsibilities Arihant Capital Markets Limited is the sole Lead Manager to the Rights Issue and all the issue related activities are co-ordinated by them.


30

No Activities

Responsible Coordinator

1. Capital structuring with the relative components and formalities such as composition of debt and equity, type of instruments.

Arihant Capital Markets Ltd


2. Drafting and Design of the offer document and of advertisement / publicity material including newspaper advertisements and brochure / memorandum containing salient features of the offer document. To ensure compliance with the SEBI Regulations and other stipulated requirements and completion of prescribed formalities with Stock Exchange and SEBI.



3. Retail/Non-institutional marketing strategy which will cover, inter alia, preparation of publicity budget, arrangements for selection of (i) ad-media, (ii) bankers to the issue, (iii) collection centres (iv) distribution of publicity and issue material including composite application form and the abridged letter of offer and the draft letter of offer to the extent applicable.



4. Institutional marketing strategy to the extent applicable. Arihant Capital Markets Ltd


5. Selection of various agencies connected with the issue, namely Registrars to the Issue, Printers, and Advertisement agencies.



6. Follow-up with bankers to the issue to get quick estimates of collection and advising the issuer about closure of the issue, based on the correct figures.



7. The post-issue activities will involve essential follow-up steps, which must include finalisation of basis of allotment / weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as registrars to the issue, bankers to the issue, and bank handling refund business. Even if many of these post-issue activities would be handled by other intermediaries, the Lead Manager shall be responsible for ensuring that these agencies fulfil their functions and enable him to discharge this responsibility through suitable agreements with the Issuer Company.



Underwriting Details Our Company has not entered into any standby arrangements with underwriters for underwriting the present issue. Expert Opinion Our Company has not obtained any expert opinions in relation to this Draft Letter of Offer.


31

Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Issue, our Company shall forthwith refund the entire subscription amount received within 15 days from Issue Closing Date. If there is a delay in the refund of subscription by more than eight days after the date from which our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date or the date of refusal by the Stock Exchanges, whichever is earlier) our Company shall pay interest for the delayed period at the rates prescribed under Section 73 (2) and (2A) of the Companies Act. Underwriting/ stand by Support This issue of equity shares is not being underwritten and/or no standby support is being sought for the said issue. Subscription to the Issue by the Promoters and the Promoter Group The Promoters and the members of the Promoter Group holding Equity Shares in our Company have vide their letter dated 11th October, 2010 undertaken to fully subscribe for their Rights Entitlement. The promoters have already brought in a sum of Rs. 975 lacs as share application money in our company. The promoters reserve the right to subscribe for their Rights Entitlement either by themselves and/or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Promoter Group to another member of the Promoter Group. They have also undertaken to apply for the Equity Shares in addition to their rights entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining approvals required under applicable law, if any. Such subscription for Equity Shares over and above their rights entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Further, such acquisition by them of additional Equity Shares shall (i) not result in a change of control of the management of our Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. The promoters have vide their aforesaid letter have also authorized our company to utilize application money received from the Promoters Group towards the issue of Equity Shares to the Promoters Group against their rights entitlement, renunciations to be acquired by them (if any) and additional shares that they may apply and /or any shortfall in the Rights Issue subscription. Appraising Entity The objects of the rights issue or the amount being raised hereunder have not been appraised by any bank or financial institution. However, the requirement of Rs. 975 lacs has been stipulated by the CDR Empowered Group to be brought in by the promoters as promoters contribution by way of Right Issue of Equity Shares towards funding the cost of Restructuring Scheme in terms of Restructuring package approved by them. Issue Schedule Issue Opening Date: [●] Last date for receiving requests for SAFs: [●] Issue Closing Date: [●]


32

Principal terms of Loan and Assets charged as Security:

Sr. No.

Name of the Bank

Nature of Facility

Amount (in lakhs)

Security

1 ICICI Bank Ltd. (ICICI Bank)

Rupee Term Loan (under TUF)

567.00 (Original

Loan Rs.2000Lacs)

I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 15/10/2004 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of other existing lenders ranking on first pari passu basis with the charges created/to be created in favour of other lenders. IV. Subsisting mortgages/charges/securities created by the Company from time to time over the immoveable and moveable assets of the Company shall continue to be in full force and effect.


33

ICICI Bank Ltd. (ICICI Bank)

Rupee Term Loan (New) (Under TUF)

110.00 I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking on first pari passu basis with the charges created in favour of the existing lenders.

ICICI Bank Ltd. (ICICI)

Derivative Loss Rupee Term Loan (New)

791.00 I. Pari passu Third Charge by way of hypothecation on the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged), pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra. II. Additionally by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in


34

the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati, by constructive delivery, with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking third and subservient in point of priority to the charges created or to be created in favour of existing lenders and CDR lenders. III. Personal Guarantee of Shri Arvind Kumar Somany (one of the Promoters of the Company). IV. Repayment shall be on Subservient basis.

ICICI Bank Ltd. (ICICI)

Funded Interest Term Loan (FITL) (On Derivative Loss Loan)

81.50 I. Third Charge by way of hypothecation on the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged). II. Additionally by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking third and subservient in point of priority to the charges created or to be created in favour of existing lenders and CDR lenders. III. Personal Guarantee of Shri Arvind Kumar Somany (one of the Promoters of the Company).

Funded Interest Term Loan (FITL) on Term Loan & NCDS

56.75 138.25

I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009.


35

II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking on first pari passu basis with the charges created in favour of existing lenders.


36

2 Axis Bank

Rupee Term Loan (Under TUF)

2904.24 (Original

Loan Rs.6500

Lacs)

I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 04/09/2007 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of other existing lenders ranking on first pari passu basis with the charges created/to be created in favour of other lenders. IV. Subsisting mortgages/charges/securities created by the Company from time to time over the immoveable and moveable assets of the Company shall continue to be in full force and effect.

Axis Bank

Rupee Term Loan (New) (under TUF)

226.00 I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road,


37

Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking on first pari passu basis with the charges created in favour of existing lenders.

Axis Bank

Funded Interest Term Loan (FITL)

203.28 I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the


38

State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking on first pari passu basis with the charges created in favour of existing lenders.

3 IDBI Bank Ltd.

Rupee Term Loan (Under TUF)

3391.00 (Original

Loan Sanctioned

Rs.3500 Lacs)

I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 06/07/1998 by deposit of title deeds of Company’s


39

immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of other existing lenders ranking on first pari passu basis with the charges created/to be created in favour of other lenders. IV. Subsisting mortgages/charges/securities created by the Company from time to time over the immoveable and moveable assets of the Company shall continue to be in full force and effect.

IDBI Bank Ltd.

Rupee Term Loan (New)

301.00 I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking on first pari passu basis with the charges created in favour of existing lenders.


40

IDBI Bank Ltd.

Funded Interest Term Loan (FITL) on Term Loan & NCDS


IDBI Bank Ltd.

Rupee Tied Foreign Currency Loan

377.20 (Original Loan USD 3.29

Million equivalent to

Rs.12.00 Crores)



41

II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 06/07/1998 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of other existing lenders ranking on first pari passu basis with the charges created/to be created in favour of other lenders. IV. Subsisting mortgages/charges/securities created by the Company from time to time over the immoveable and moveable assets of the Company shall continue to be in full force and effect.

IDBI Trustee- ship Services Ltd.

Non Convertible Debentures (NCDs) (Rs.117.30 Lacs of IDBI & Rs.66 Lacs of ICICI)

183.30 (Original

NCDS IDBI–176

Lacs ICICI-132 Lacs, aggregating to Rs.308 Lacs)

I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the


42

State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 12/01/2006 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of other existing lenders ranking on first pari passu basis with the charges created/to be created in favour of other lenders. IV. Subsisting mortgages/charges/securities created by the Company from time to time over the immoveable and moveable assets of the Company shall continue to be in full force and effect.

4 EXIM Bank

Rupee Term Loan

1363.64 (Original Loan Rs.1500 Lacs

I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to


43

its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 12/01/2006 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of other existing lenders ranking on first pari passu basis with the charges created/to be created in favour of other lenders. IV. Subsisting mortgages/charges/securities created by the Company from time to time over the immoveable and moveable assets of the Company shall continue to be in full force and effect.

EXIM Bank


95.48 I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank


44

and SBI ranking on first pari passu basis with the charges created in favour of existing lenders.

Exim Bank Ltd.



5 Dena Bank (DB)

Rupee Term Loan (RTL)

1749.80 (Original

Loan Rs.2000 Lacs)

I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or


45

wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 12/01/2006 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of other existing lenders ranking on first pari passu basis with the charges created/to be created in favour of other lenders. IV. Subsisting mortgages/charges/securities created by the Company from time to time over the immoveable and moveable assets of the Company shall continue to be in full force and effect.

Dena Bank

Rupee Term Loan (New) (Under TUF)

136.00 I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods,


46

consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking on first pari passu basis with the charges created in favour of existing lenders.

Dena Bank (DB)

Funded Interest Term Loan (FITL) (As per CDR Scheme)

698.00 I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of


47

Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking on first pari passu basis with the charges created in favour of existing lenders.

Dena Bank (DB)

Working Capital Facilities (Fund based)

4125.00 By a first pari passu charge, by way of hypothecation of the whole of Moveable Properties and Current Assets namely Stock of Raw-materials, Stock in Process, Semi-finished and Finished Goods, Stores and Spares, not relating to Plant and Machinery (Consumable Stores and Spares) Bills Receivables, Book Debts and all other moveables of the Company (excluding such moveables as are permitted by the said Banks i.e. Dena Bank and SBI from time to time) but including documents of title to goods and other assets such as outstanding moneys receivables including receivables under cash assistance, cash incentives and any other schemes etc. pertaining to Ahmedabad unit at Rakhial Road, Ahmedabad in the State of Gujarat, and Baramati Unit at Baramati, Pune, in the State of Maharashtra and lying in the Company’s premises or godown or elsewhere or in transit and other moveable property of Baramati Unit of the Company both present and future. Additionally secured by way of second charge by way of mortgage and charge on pari passu basis over immoveable properties of the Company i.e. freehold and leasehold land together with all buildings and structures thereon, all plant and machinery attached to the earth or permanently fastened to anything to the earth pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra including easement rights and goodwill save and except the Plant and Machinery purchased under Equipment Financial Scheme of banks whether fixed or moveable, whether attached to the land and premises situated at unit at Baramati, District- Pune, in the State of Maharashtra for Baramati unit (other than current assets) both present and future, whether installed or not and whether lying loose or stored in or about the Company’s premises and godown or otherwise or in transit ranking on first pari passu basis with the charges created or to be created in favour of existing lenders by a mortgage created on 12/01/2006.


48

Additional Fund-based Working Capital of Rs.1125 Lacs sanctioned under CDR Scheme subsequently further secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking second and subservient in point of priority to the charges created/to be created in favour of CDR lenders.

Dena Bank Ltd.

Working Capital Facilities (Non-Fund based)

1875.00 I. By a first pari passu charge, by way of hypothecation of the whole of Moveable Properties and Current Assets namely Stock of Raw-materials, Stock in Process, Semi-finished and Finished Goods, Stores and Spares, not relating to Plant and Machinery (Consumable Stores and Spares) Bills Receivables, Book Debts and all other moveables of the Company (excluding such moveables as are permitted by the said Banks i.e. Dena Bank and SBI from time to time) but including documents of title to goods and other assets such as outstanding moneys receivables including receivables under cash assistance, cash incentives and any other schemes etc. pertaining to Ahmedabad unit at Rakhial Road, Ahmedabad in the State of Gujarat, and Baramati Unit at Baramati, Pune, in the State of Maharashtra and lying in the Company’s premises or godown or elsewhere or in transit and other moveable property of Baramati Unit of the Company both present and future. II. Additionally secured by way of second charge by way of mortgage and charge on pari passu basis over immoveable properties of the Company i.e. freehold and leasehold land together with all buildings and structures thereon, all plant and machinery attached to the earth or permanently fastened to anything to the earth pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra including easement rights and goodwill save and except the Plant and Machinery purchased under Equipment Financial Scheme of banks whether fixed or moveable, whether attached to the land and premises situated at unit at Baramati, District- Pune, in the State of Maharashtra for Baramati unit (other than current assets) both present and future, whether


49

installed or not and whether lying loose or stored in or about the Company’s premises and godown or otherwise or in transit ranking on first pari passu basis with the charges created or to be created in favour of existing lenders by a mortgage created on 12/01/2006. III. (i)Documentary Bills upto usance of 270 days accompanied by Bill of Lading. Airway Bills, Railway Receipts, Motor Transport Receipt of the approved transport operators IV. A. Inland/Foreign Bills with a maximum tenor of 120 day accompanied by shipping documents and other documents evidencing the shipment of goods manufactured by the Company drawn under L/C. B. Extension of Hypothecation Charge over Company’s stocks, book debts and other current assets in favour of the consortium bank financing the working capital requirements of the Company.

Dena Bank Ltd.

Short term loan by earmarking LC limits

750.00 (Within the

over all limit of DB under consortium)

(i) Hypothecation of stock and receivables. (ii) Extension of second charge over fixed assets of Ahmedabad and Baramati Unit.

Dena Bank Ltd.

Negotiation of Export Bills under L/C (Inland/Foreign- DP/DA upto 120 days)/ REBA

1000 (Outside

consortium) – For

Negotiation of Bills

under LC

A. Inland/Foreign Bills with a maximum tenor of 120 day accompanied by shipment of goods manufactured by the company drawn under L/C B. Extension of Hypothecation Charge over company’s stocks, book debts and other current assets in favour of the consortium bank financing the working capital requirements of the company.

6 State Bank of India

Rupee Term Loan

274.57 (Original

Loan Rs.700 Lacs)



50

II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Subsisting mortgages/charges/securities created by the Company from time to time over the immoveable and moveable assets of the Company shall continue to be in full force and effect.

State Bank of India


21.00 I. First Charge by way of hypothecation on pari passu basis over the whole of Company’s moveable properties viz. moveable Fixed Assets including moveable Plant and Machinery, Machinery Spares, Tools, Accessories and other moveables (save and except Current Assets/Book Debts and Assets specifically charged) both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. II. Second Charge by way of hypothecation on pari passu basis on the Company’s current assets viz. stock of raw-materials, semi finished and finished goods, consumable stores, book debts, receivables and such other moveables both present and future pertaining to Company’s unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra or wherever else the same may be or be held by any party or in transit or in high seas. More fully described in Schedule “A” of the Deed of Hypothecation dated 25th August, 2009. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery


51

with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking on first pari passu basis with the charges created in favour of existing lenders.

State Bank of India



State Bank of India

Working Capital Facilities (Fund based)

1375.00 I. By a first pari passu charge, by way of hypothecation of the whole of Moveable Properties and Current Assets namely Stock of Raw-materials, Stock in Process, Semi-finished and Finished Goods, Stores and Spares, not relating to Plant and Machinery (Consumable Stores and Spares) Bills Receivables, Book Debts and all other moveables of the Company (excluding such moveables as are


52

permitted by the said Banks i.e. Dena Bank and SBI from time to time) but including documents of title to goods and other assets such as outstanding moneys receivables including receivables under cash assistance, cash incentives and any other schemes etc. pertaining to Ahmedabad unit at Rakhial Road, Ahmedabad in the State of Gujarat, and Baramati Unit at Baramati, Pune, in the State of Maharashtra and lying in the Company’s premises or godown or elsewhere or in transit and other moveable property of Baramati Unit of the Company both present and future. II. Additionally secured by way of second charge by way of mortgage and charge on pari passu basis over immoveable properties of the Company i.e. freehold and leasehold land together with all buildings and structures thereon, all plant and machinery attached to the earth or permanently fastened to anything to the earth pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra including easement rights and goodwill save and except the Plant and Machinery purchased under Equipment Financial Scheme of banks whether fixed or moveable, whether attached to the land and premises situated at unit at Baramati, District- Pune, in the State of Maharashtra for Baramati unit (other than current assets) both present and future, whether installed or not and whether lying loose or stored in or about the Company’s premises and godown or otherwise or in transit ranking on first pari passu basis with the charges created or to be created in favour of existing lenders by a mortgage created on 12/01/2006. III. Additional Fund-based Working Capital of Rs. 375 Lacs sanctioned under CDR Scheme subsequently further secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking second and subservient in point of priority to the charges created/to be created in favour of CDR lenders.


53

State Bank of India

Working Capital Facilities (Non-Fund based)

600.00 I. By a first pari passu charge, by way of hypothecation of the whole of Moveable Properties and Current Assets namely Stock of Raw-materials, Stock in Process, Semi-finished and Finished Goods, Stores and Spares, not relating to Plant and Machinery (Consumable Stores and Spares) Bills Receivables, Book Debts and all other moveables of the Company (excluding such moveables as are permitted by the said Banks i.e. Dena Bank and SBI from time to time) but including documents of title to goods and other assets such as outstanding moneys receivables including receivables under cash assistance, cash incentives and any other schemes etc. pertaining to Ahmedabad unit at Rakhial Road, Ahmedabad in the State of Gujarat, and Baramati Unit at Baramati, Pune, in the State of Maharashtra and lying in the Company’s premises or godown or elsewhere or in transit and other moveable property of Baramati Unit of the Company both present and future. II. Additionally secured by way of second charge by way of mortgage and charge on pari passu basis over immoveable properties of the Company i.e. freehold and leasehold land together with all buildings and structures thereon, all plant and machinery attached to the earth or permanently fastened to anything to the earth pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra including easement rights and goodwill save and except the Plant and Machinery purchased under Equipment Financial Scheme of banks whether fixed or moveable, whether attached to the land and premises situated at unit at Baramati, District- Pune, in the State of Maharashtra for Baramathi unit (other than current assets) both present and future, whether installed or not and whether lying loose or stored in or about the Company’s premises and godown or otherwise or in transit ranking on first pari passu basis with the charges created or to be created in favour of existing lenders by a mortgage created on 12/01/2006. III. Additionally secured by way of first charge by mortgage and charge on pari passu basis over immoveable properties of the Company pertaining to its unit at Rakhial Road, Ahmedabad in the State of Gujarat and unit in Baramati at Pune in the State of Maharashtra by way of joint mortgage created on 25th August, 2009 by deposit of title deeds of Company’s immoveable properties of Company’s unit at Ahmedabad and Baramati by constructive delivery with ICICI acting for itself and as agent of CDR


54

lenders i.e. IDBI, Axis Bank, Exim Bank, Dena Bank and SBI ranking on first pari passu basis with the charges created in favour of existing lenders. III. (i)Documentary Bills upto usance of 270 days accompanied by Bill of Lading. Airway Bills, Railway Receipts, Motor Transport Receipt of the approved transport operators. IV. A. Inland/Foreign Bills with a maximum tenor of 120 day accompanied by shipping documents and other documents evidencing the shipment of goods manufactured by the Company drawn under L/C. B. Extension of Hypothecation Charge over Company’s stocks, book debts and other current assets in favour of the consortium bank financing the working capital requirements of the Company.


55

CAPITAL STRUCTURE

The Share capital of our company as on the date of filing this Draft Letter of Offer with SEBI is as set forth below:

Sr. No.

Particulars Nominal Value (in Rs. Lacs)

Value at Issue Price (in Rs. Lacs)

A Authorised Share Capital 500,00,000 Equity Shares of Rs. 10/- each

5,000.00

B Issued, Subscribed & Paid-up Share Capital 330,33,000 Equity Shares of Rs 10/- each fully paid- up Add: Share forfeiture Account (3,85,300 Shares)

3,303.30 19.45

----------- 3,322.75

C Present issue being offered to the existing Shareholders through the Letter of Offer 99,09,900 Equity Shares of Rs. 10/- each for cash at par

990.99

990.99

D Issued, Subscribed and Paid-up Capital after the issue 4,29,42,900 Equity Shares of Rs. 10/- each Add: Share forfeiture Account (3,85,300 Equity Shares)

4,294.29 19.45

---------- 4313.74

E Securities Premium Account Before the Issue After the Issue

8713.65

8713.65

Notes to the Capital Structure: i. Share forfeiture account represents amount forfeited on Rs. 19.45 lacs in respect of 3,85,300 shares for

non-payment of calls during the year 1996-1997.

ii. Promoters have brought in Share Application money of Rs. 975 lacs which represents contribution received from the promoters for funding the cost of the Restructuring Scheme as stipulated under the CDR Scheme sanctioned to our company.

iii. Pursuant to the open offer made during November 2007, the Acquirer i.e Krishnaa Glass Private Limited alongwith Persons Acting in Concert i.e. Mr. Arvind Somany, Mr. Surendra Kumar Somany, Mrs. Prasann Somany, Mrs. Nandita Patodia, Mrs. Anupama Agarwal, Mrs. Nalini Somany, Ms, Nitya Somany, M/s Simplex Trading & Agencies Limited and M/s Sarvopari Investment Pvt Ltd (“PAC’s”)


56

acquired 31,59,236 equity shares of Soma Textiles & Industries at a price of Rs.32 per share. This Open Offer was made pursuant to and in compliance with provisions of Regulation 11(1) as required under the Takeover Code.

iv. Pursuant to the open offer made during December 2008, the Acquirer i.e. Mavi Invetsment Fund

Limited acquired 66,06,600 Equity Shares of Soma Textiles & Industries Limited at a price of Rs. 40.14 per share. This Open Offer was made pursuant to and in compliance with provisions of Regulation 10 & 11(1) as required under the Takeover Code.

v. Our company has not issued any warrant, option, convertible loan, debenture or any other securities convertible at a later date into equity, which would entitle the holders to acquire further Equity Shares of our company.

vi. At any given point of time there shall be only one denomination for the Shares of our Company and we shall comply with such disclosure and accounting norms as may be prescribed by SEBI.

i. Details of Promoters’ contribution and Lock - in for Promoter and Promoter Group

The present issue being a rights issue, provisions of promoters’ contribution and lock-in, as per the extant SEBI (ICDR) Regulations, are not applicable in this issue. None of the existing shares of the promoters and promoter group are under lock-in, pledged or encumbered except the shares held by Shri S. K. Somany, Shri A. K. Somany and Sarvopari Investment Private Limited totalling to 40,00,012 shares, which stand duly pledged with IDBI.

ii. Details of Equity Shares acquired by the Promoter and Promoter Group, in the last one year is as

follows: Date of Transaction

Name of the Acquirer

No. of equity shares acquired

Name of the person from whom shares acquired

Price per Share (Rs.)

Consideration (Rs.)

11.03.2010 Arvind Kumar Somany

1879 Nitya Somany 10.18 (approx)

19,127

11.03.2010 Arvind Kumar Somany

2330 Prasann Somany 10.18 (approx)

23,717

iii. The shareholding pattern of Company belonging to the category “Promoter and Promoter

Group” as 30.09.2010:

Total Shares held Shares pledged or otherwise

encumbered Sr. No.

Name of the shareholder Number As a % of grand

total (A)+(B)+

(C)

Number As a percent

age

As a % of grand total (A)+(B)+(C)

of sub-clause (I)(a)

1 Krishnaa Glass Private Limited 8437716 25.54 0 0 0 2 Sarvopari Investment Private Limited 4007244 12.13 2671156 66.66 8.09 3 Arvind Somany 854848 2.59 823639 96.35 2.49 4 Surendra Kumar Somany 1008274 3.05 505217 50.11 1.53


57

5 Nalini Somany 300000 0.91 0 0.00 0.00 6 Anupama Agarwal 24239 0.07 0 0.00 0.00 7 Nandita Patodia 24920 0.08 0 0.00 0.00

TOTAL 14657241 44.37 4000012 27.29 12.11

iv. Intention and extent of participation by promoters and promoters group with respect to rights issue:

a. The Promoters and the members of the Promoter Group holding Equity Shares in our Company have vide their letter dated 11th October, 2010 undertaken to fully subscribe for their Rights Entitlement. The promoters reserve the right to subscribe for their Rights Entitlement either by themselves and/or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Promoter Group to another member of the Promoter Group.

b. The promoters vide the aforesaid letter have also undertaken to apply for Equity Shares in addition to

their Rights Entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining approvals required under applicable law, if any. Such subscription for Equity Shares over and above their Rights Entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Further, such acquisition by them of additional Equity Shares shall (i) not result in a change of control of the management of our Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. Presuming no subscription is received from other shareholders and the Promoters/Promoter Group entities subscribing to the entire unsubscribed portion, their shareholding shall increase to 57.21% of the post rights issue equity capital of our Company.

c. The Promoters and Promoter Group shall subscribe to such unsubscribed portion as per the relevant

provisions of the law. Allotment to the Promoter and Promoter Group of any unsubscribed portion, over and above their Rights Entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements.

d. The promoters vide their aforesaid letter have also authorized our company to utilize application

money of Rs. 975 lacs received from the Promoters Group, towards the issue of Equity Shares to the Promoters Group against their rights entitlement, renunciations to be acquired by them (if any) and additional shares that they may apply and /or any shortfall in the Rights Issue subscription.

v. Shareholding pattern as per latest filing with recognised stock exchanges (Quarter ended : 30.09.2010):

Category code

Category of Shareholder

Number of

Share-holders

Total number

of shares

Number of shares held

in demateriali

zed form

Total shareholding as a percentage of total number of

shares

Shares pledged or otherwise

encumbered

As a percent

age of(A+B)

1

As a percenta

ge of (A+B+C)

Number of

Shares

As a percent

age

(A) Shareholding of Promoter and Promoter Group


58

1 Indian

(a) Individuals/ Hindu Undivided Family 5 2212281 1797769 6.70 6.70 1328856 60.07

(b) Central Government/ State Government(s) 0 0 0 0.00 0.00 0 0.00

(c) Bodies Corporate 2 12444960 12444960 37.67 37.67 2671156 21.46 (d) Financial Institutions/

Banks 0 0 0 0.00 0.00 0 0.00 (e) Any Others(Specify) 0 0 0 0.00 0.00 0 0.00

Sub Total(A)(1) 7 14657241 14242729 44.37 44.37 4000012 27.29

2 Foreign a Individuals (Non-

Residents Individuals/ Foreign Individuals) 0 0 0 0.00 0.00 0 0.00

b Bodies Corporate 0 0 0 0.00 0.00 0 0.00 c Institutions 0 0 0 0.00 0.00 0 0.00 d Any Others(Specify) 0 0 0 0.00 0.00 0 0.00 Sub Total(A)(2) 0 0 0 0.00 0.00 0 0.00 Total Shareholding of

Promoter and Promoter Group (A)= (A)(1)+(A)(2) 7 14657241 14242729 44.37 44.37 4000012 27.29

(B) Public shareholding 1 Institutions

(a) Mutual Funds/ UTI 2 2388 0 0.01 0.01 0 0.00 (b) Financial Institutions /

Banks 0 0 0 0.00 0.00 0 0.00 (c) Central Government/

State Government(s) 0 0 0 0.00 0.00 0 0.00 (d) Venture Capital Funds 0 0 0 0.00 0.00 0 0.00 (e) Insurance Companies 1 10000 10000 0.03 0.03 0 0.00 (f) Foreign Institutional

Investors 2 6607000 6606600 20.00 20.00 0 0.00 (g) Foreign Venture Capital

Investors 0 0 0 0.00 0.00 0 0.00 (h) Any Other (specify) 0 0 0 0.00 0.00 0 0.00 Sub-Total (B)(1) 5 6619388 6616600 20.04 20.04 0 0.00

B 2 Non-institutions (a) Bodies Corporate 439 3719590 3707190 11.26 11.26 0 0.00


59

(b) Individuals

I

i. Individual shareholders holding nominal share capital up to Rs 1 lakh 11010 5570780 5021090 16.86 16.86 0 0.00

II ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh. 82 2395452 2395452 7.25 7.25 0 0.00

(c) Any Other (specify) Trust 0 0 0 0.00 0.00 0 0.00

(c-i) NRI Rept 31 63635 63635 0.19 0.19 0 0.00 (c-ii) NRI Non Rept 13 6914 6914 0.02 0.02 0 0.00

Sub-Total (B)(2) 11575 11756371 11194281 35.59 35.59 0 0.00

(B) Total Public Shareholding (B) = (B)(1) + (B)(2) 11580 18375759 17810881 55.63 55.63 0 0.00

TOTAL (A)+(B) 11587 33033000 32053610 100.00 100.00 4000012 12.11

(C) Shares held by Custodians and against which Depository Receipts have been issued 0 0 0 0.00 0 0.00

GRAND TOTAL (A)+(B)+(C) 11587 33033000 32053610 100.00 4000012 12.11

vi. Details of statement showing shareholding of persons belonging to the category showing Shareholding

belonging to the category “Public” and holding more than 1% of the total number of Shares as on 30.09.2010 Sr. No.

Name of the shareholder Number of shares Shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}

1 Mavi Investment Fund Limited 6606600

20.00

2 Oudh Finance & Investment Pvt Ltd 626103

1.90

TOTAL 7232703 21.90


60

vii. Note on Open offers to shareholders made by promoters and by strategic investors

i. Pursuant to the open offer made during November 2007, the Acquirer i.e Krishnaa Glass Private Limited

alongwith Persons Acting in Concert i.e. Mr. Arvind Somany, Mr. Surendra Kumar Somany, Mrs. Prasann Somany, Mrs. Nandita Patodia, Mrs. Anupama Agarwal, Mrs. Nalini Somany, Ms, Nitya Somany, M/s Simplex Trading & Agencies Limited and M/s Sarvopari Investment Pvt Ltd (“PAC’s”), the promoter group acquired 31,59,236 equity shares of Soma Textiles & Industries at a price of Rs.32 per share. This Open Offer was made pursuant to and in compliance with provisions of Regulation 11(1) as required under the Takeover Code.

ii. Pursuant to the open offer made during December 2008, the Acquirer i.e. Mavi Invetsment Fund

Limited acquired 66,06,600 Equity Shares of Soma Textiles & Industries Limited at a price of Rs. 40.14 per share. This Open Offer was made pursuant to and in compliance with provisions of Regulation 10 & 11(1) as required under the Takeover Code.

viii. Our Company, promoters, directors and lead manager have not entered into any buyback or standby

arrangements for any of the securities being issued through this Draft Letter of Offer.


61

OBJECTS OF THE ISSUE

The objects of the present rights issue are:

1. To meet the requirement under the CDR scheme.

2. To meet the issue expenses

Requirement of funds :

Sr. No. Objects of the Issue Requirement ( Rs. Lacs)

1. CDR requirements 975.002. Rights Issue expenses 20.00

TOTAL 995.00

Means of Finance : Rs. (Lacs)

Present Rights Issue 990.99 Internal resources 4.01 Total 995.00

1) To meet the CDR scheme requirements Background for reference to CDR: During the Financial year 2007-08, we took-up modernization and upgradation of our spinning unit at Baramati and weaving and processing facilities at Ahmedabad besides setting-up a garment manufacturing unit at Ahmedabad with an installed capacity of 10,000 pieces per day. The project was appraised by Axis Bank at a total cost of Rs.8200 lacs. which was proposed to be funded by term loan of Rs.6500 lacs. sanctioned under TUFS by Axis Bank and internal generation of Rs.1700 lacs. However, while implementing the scheme, the entire domestic textile industry witnessed recession on account of economic turmoil and global recession leading to sudden glut in the market conditions, unprecedented rise in input costs especially of cotton and adverse exchange fluctuation. Due to steep increase in cotton prices as well as increase of energy and other input costs, the textile industry faced acute financial and liquidity problems. Our operations suffered during 2007-08 on account of following factors.

(a) Unprecedented increase in cotton prices: The prices of cotton, the main raw material of our company witnessed around 35% increase from about Rs.21,000 per candy to Rs.28,500 per candy during 2007-08. As against increase in cotton prices, the average selling prices of yarn reduced by about 9-10% from Rs.132 per kg to Rs.120 per kg and those of processed fabric from Rs.65 per meter to Rs.60 per meter.

(b) Adverse market conditions for denim fabric: The domestic denim fabric industry was suffering mainly on account of overcapacity. The selling prices of denim fabrics witnessed downward pressure due to supply exceeding the demand. Our profitability was adversely affected on account of erosion in margins on denim fabrics.

(c) Increase in cost of dyes & chemicals: On account of increase in oil prices globally, the prices of petrochemical products such as dyes & chemicals increased sharply resulting in substantial increase in manufacturing costs of fabric.


62

(d) Increase in cost of Utilities: The fuel and natural gas prices increased substantially during the period on account of all round increase in oil prices. Further, the transportation cost also went up due to increase in oil prices. Besides, the cost of power drawn from AEC has also increased by about 20%.

(e) Adverse exchange fluctuation: On account of adverse exchange fluctuation resulting in strengthening of rupee vis-à-vis US $, our export realizations especially in cotton yarn and denim fabric segments suffered heavily.

The above factors resulted in our company incurring cash losses which eroded our working capital margins. Further, added to this, the unfinished garment project put further strain on our liquidity by way of interest on borrowings without corresponding return on investments. These adverse events had multiple effects on our profitability resulting in our company incurring loss at operating cash level during the FY 2007-08 and as a result of that we were not able to pay the dues to the institutions/banks. Further, on account of losses incurred and sluggish demand for textile products, our margin on working capital got partially eroded causing severe liquidity problems and impediments in smooth operations. The unsatisfactory operating results and thinning down of cash profits forced us to halt the implementation of the scheme and defer the balance capital expenditure. While we decided to defer the balance capex on modernization & upgradation of existing facilities barring certain inevitable capital expenditure required in processing unit at Ahmedabad, we downscaled the garment project to 5000 pieces per day (as against 10,000 pieces per day planned originally). Consequently, we, through referring Institution IDBI Bank, approached our lenders i.e State Bank of India, Exim Bank, Dena Bank, Axis Bank and ICICI Bank, on July 21, 2008 for a comprehensive financial restructuring package to improve the working capital position and to reschedule its term debts in line with our projected potential earnings. The CDR Empowered Group comprising of Executive Director (ED) level representatives of Industrial Development Bank of India Ltd., ICICI Bank Ltd., State Bank of India as standing members, in addition to ED level representatives of the lenders appointed IDBI Bank as Monitoring Institution. Restructuring Package under the CDR Scheme: After detailed review of several proposals by CDR EG, finally a Restructuring Package was granted to our company vide Letter of Approval (LOA) No. BY.CDR/AG No. 1110/2008-09 dated 26th February 2009 for restructuring our then existing financial assistance availed from the Institutions/Banks and sanctioning additional financial assistance to our company in the manner and to the extent set out in the LOA. The salient features of the Scheme was injection of fresh working capital with concession in bank charges, reduction in margins, fresh term loan for completion of pending capital projects, funding of interest, reduction in interest rate, moratorium and deferment of principal repayments. The cost of Scheme and means of finance envisaged:

(Rs. Lacs) COST OF SCHEME Total

Cash Loss (Net of op. cash balance) 857

Capital Expenditure - Garment Division - Balance ongoing scheme - Normal Capex

787 448 200

Increase in net working capital 1482

Total 3774


63

(Rs. In lacs)

MEANS OF FINANCE Total

Unsecured Loans / Equity from Promoters 975 Fresh term loan under TUFS from lenders 900

Sanction of fund based working capital limit for Garment Division

500

Proposed new facility against cotton warehousing Receipts

1000

Funded Interest (Net of repayment) 399 Total 3774

Restructuring package approved by the CDR Empowered Group I. RESTRUCTURING SCHEME

i) Cut-off date: September 30, 2008

ii) TUFS Rupee Term Loan • Reschedulement of Rupee Term Loan (TUFS) including overdue principal for September 2008 as under:

Year 08-09 09-10 10-11 11-12 12-13

Repayment % 03.50 00.20 07.70 11.60 15.70

Year 13-14 14-15 15-16 16-17 17-18

Repayment % 15.70 16.70 16.70 08.20 04.00

iii) The (NCDs) and Rupee tied Foreign Currency Loan.

The repayment schedule in respect of NCDs / Rupee tied Foreign Currency Loan would be as under:

Year 08-09 09-10 10-11 11-12 12-13 Repayment % --- 0.25 8.00 12.00 17.50

Year 13-14 14-15 15-16 16-17 17-18 Repayment % 17.50 17.50 17.50 09.75 -

iv) Prepayment of Term Loan (Non TUFS) without penalty out of internal accruals and when available

even prior to the extended dates.

FUNDING OF INTEREST

The interest on TUFS loan shall be funded for four quarters and interest on Non TUFS loan- shall be funded for seven quarters. The FITL shall carry interest @ 6% p.a. on TUFS loan and 8% p.a. on Non TUFS loan. The repayment of FITL (TUFS) along with interest is repayable in 5th and 6thquarter from the date of first


64

funding. The repayment of FITL (Non TUFS) shall be as follows. The interest on this FITL will be repaid in two equal annual installments in FY 2017 and 2018.

Year 11-12 12-13 13-14 14-15 15-16 16-17 Repayment % 5.00 5.00 10.00 10.00 30.00 40.00

The funding of interest (FITL) for Dena Bank shall be extended by a period for which the interest had already been serviced to it.

Rate Of Interest:

The Interest on outstanding TUFS rupee term loan shall be as follows:

Year 08-09 09-10 10-11 11-12 12-13 13-14 Rate of interest (%)

6% 8% 10% Doc. Rate Doc. Rate+0.50%

Doc. Rate+0.50%

Year 14-15 15-16 16-17 17-18 Rate of interest (%)

Doc. Rate+1%

Doc. Rate+1%

Doc. Rate+1%

Doc. Rate+1%

The interest on debentures of ICICI Bank and IDBI Bank shall continue to be at the existing rate being charged as at present.

The rate of interest on outstanding rupee tied foreign currency loan shall be 12.50% p.a. for all the years.

Fresh Term Loan:

All the CDR lenders to sanction and disburse on pre-rata basis fresh term loan of Rs.900 lacs under TUFS for completing the garment project and other capex requirements of urgent nature. It will carry interest at 12.50% p.a payable monthly.

The term loan shall be repayable in 9 years commencing from April 2010 on stepped-up basis as given below:

Year 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18Repayment % 9.00 12.00 12.00 13.00 13.00 13.00 13.00 15.00

Waiver of FILD if any on the term loans, on the cut-off date. Working Capital Requirement: • Relaxation in margins on WC, LC, BG limits shall be at 10% for a period of one year and the same will

be reviewed by WC consortium at the end of each year and re-fixed appropriately based on DP availability.

• Stepped up interest rate for CC for FY 2009 at 10% and thereafter at 11 %. • Funding of Interest for seven quarters on Working Capital facility. FITL will carry interest at 8%. FITL

as well as interest on FITL in respect of working capital to be repaid as per FITL non TUFS loan. The funding of interest (FITL) for Dena Bank shall be extended by a period for which the interest had already been serviced to it.


65

• Other Banking charges shall be decided by individual banks. Additional Working Capital: Sanction of additional fund based working capital facility of Rs.1500 lacs comprising Rs. 1000 lacs for existing operations of the company for purchase of cotton to be released in the current financial year and Rs.500 lacs for the garment division. The facility for garment division would be required during FY 2009-10. Assessment shall be made by Dena Bank and any irregularity in working capital shall be carved out as WCTL. ICICI Bank's Derivative Loss: ICICI Bank's derivative losses amounting to Rs.791 lacs shall carry interest @6% p.a. and its interest funding and repayment shall be in line with the Non TUFS loan on subservient basis. However, the above amount shall be secured by 3rd charge on the fixed assets. Short Term Loan (STL) of Rs.1000 lacs of Dena Bank: Dena Bank shall establish usance LCs and the Short Term Loan (STL) would be liquidated to the extent of equivalent amount over a period of six months. In this process, the L/C limit shall be replenished against STL without causing any impact on the company's cash flow. Contribution from Company/Promoters/Co-promoter(s): The promoters of the Company will bring Rs.975 lacs by way of equity. Rs.700 lacs to be brought by March 2009 and the remaining Rs.275 lacs to be brought by September 2009. Main conditions stipulated under the CDR package. There are certain conditions laid down by CDR Empowered Group which needs to be fulfilled by the Company. Following are the some of the main conditions which are stipulated under the CDR package : i. CDR lenders with the approval of CDR EG, shall appoint at the sole cost and expense of the company a

Concurrent Auditor during the currency of the package, to review the operations of the Company on a periodic basis, monitoring the operations of TRA and any other work that may be assigned by the lenders.

ii. The Company shall broad base the board by induction of suitable professionals in the field of marketing, finance etc. with prior approval of lenders / CDR EG. No additional representations from the promoter’s side will be permitted.

iii. The provisions made for derivative loss in the proposed restructuring package shall be subject to ICICI Bank filing consent terms in DRT

iv. The company shall agree and undertake that it shall not incur any capital expenditure or make any investment or acquire any equipment on lease without prior approval of secured lenders, except to the extent envisaged in the CDR package.

v. The company shall not dispose off any of its fixed assets, whether charged to lenders or otherwise without prior approval of lenders, CDR EG.

vi. The company shall not declare any dividend on equity capital so long as it is in arrears of payment of dues to lenders and without prior consent of CDR EG.

vii. The company shall agree not to escrow its future cash flows (except discounting of bills in the normal course of business) or create any charge or lien or interest of whatsoever nature without the prior approval of CDR EG except as provided in the CDR package, if any.


66

viii. The company shall raise unsecured loans, as and when advised, by the institutions for meeting the term obligations or to meet the cash losses.

ix. CDR Lenders with approval of CDR EG shall have the absolute discretion of resetting the interest rate on their term loans/FITL/WC after 2 years from the date of final approval of the restructuring package.

x. The promoters to bring in additional funds as may be required to meet DSCR of 1.0 on yearly basis and average DSCR of 1.25.

xi. In the event of default, CDR lenders shall have the right to convert entire / part of the defaulted loan amount including interest into equity as per SEBI pricing formula. The conversion option can be exercised by institutions at anytime during the currency of the assistance.

xii. Profits from subsidiary to be repatriated and used for acceleration of repayment of term loans / WCTL / FITL.

xiii. The company to ensure that the losses of the subsidiary company will not be funded out of the operations of Soma Textiles and Industries Limited.

xiv. The company shall not effect change in management set up without prior permission from CDR EG. xv. (a) In case of debt outstanding beyond seven years from the date of CDR LOA, The CDR lenders shall

have a right to convert into equity up to 20% of such, outstanding (as on the date of conversion) as per SEBI Guidelines/ loan covenants, whichever is applicable.

(b) As regards zero coupon FITL remaining outstanding beyond 7 years, if any, such conversion right of lenders would be applicable to the entire amount and the conversion shall be as per SEBI guidelines.

xvi. CDR Lenders shall establish a Trust & Retention Account (TRA) and enter into a Trust & Retention Account Agreement. The Company would ensure submission of quarterly / annual cash flows to all CDR lenders.

xvii. In the case of any future induction of private equity / ECB / Venture Capital funds / any other source, the charging of prepayment premium will be governed by the CDR guidelines and decision of CDR EG. Normally, prepayment will be on pro-rata basis amongst different debt instruments. However, any change thereof as may be requested by the borrower could be considered and recommended by the Monitoring Committee and approved by CDR EG.

xviii. Individual CDR Lenders shall have a right to assign / hypothecate / transfer their outstanding debt to any Asset Reconstruction company / Bank / or any other entity, in terms of CDR guidelines.

The CDR EG in its review note meeting held on 31st August 2009 and confirmed by meeting held on 30th September 2009 and communicated through Letter dated 1st October 2009 permitted us to raise the contributory amount of Rs. 975 lacs through Rights Issue instead of preferential issue as originally envisaged in the restructuring package. Accordingly, the equity Shareholders of our company at the Extra-Ordinary Meeting held on 7th December 2009 the approved the Rights Issue of for an amount not exceeding Rs. 1000 lacs. Our promoters have already brought in Rs. 975 lacs as share application money into our company in compliance of terms prescribed by the CDR EG and the same is already deployed towards the purposes as stipulated in the CDR package. The same is reflected in the Audited Balance Sheet of the Company for the year ended March 31, 2010. The main objects clause and the objects incidental or ancillary to the main objects clause of our Memorandum of Association enable us to undertake our existing activities and the activities for which the funds are being raised by us in the Issue. Meet Issue expenses The expenses for this Issue include issue management fees, fees to Registrars, printing and distribution expenses, advertisement expenses, depository charges, regulatory fees and listing fees to the Stock Exchanges, among others. The total expenses for this Issue are estimated at Rs. 20 Lacs.


67

A broad break-up of the same is as under: Nature of Expenses Rs. Lacs

Fees to the intermediaries 10.00Printing & Stationery and Postage expenses 5.00Advertisement 2.00Miscellaneous Expenses incl. Fees to SEs, SEBI etc. 3.00

Total 20.00

Appraisal As mentioned earlier, the requirement of funds for CDR scheme is as per the package approved by the CDR Empowered Group. Schedule of Implementation The CDR package is already under implementation. In order to ensure compliance with the package terms, the funds envisaged to be brought in by the promoters have already been brought in as share application money. The details of deployment of funds as at 30.06.2010 and source of financing in respect of the cost of scheme mentioned above, is as under:

Rs. In Lacs

Particulars Total estimated amount

Amount utilized out of net proceeds of this issue

Amount already utilized

Amount to be utilized during FY 2010-11

Proceeds of Rights Issue

Borrowings from banks

Cash Loss (Net of op. cash balance)

857 640 640 217**

Capital Expenditure - Garment

Division - Balance

ongoing scheme

- Normal

Capex

787 448

200

335

335

102**

900

098

Increase in net working capital

1482 1405 77

975 1724 1075 Total 3774 975* 2699 1075


68

* Promoters have brought in Rs. 975 lacs as share application money towards issue of Equity Shares on Rights basis, and which have been utilised for the purpose outlined under the CDR Scheme. Promoters have undertaken to subscribe to their rights entitlement in full and also to apply for shares in addition to their rights entitlements, to the extent of any under-subscription in the issue and have authorised the company to utilise the said share application money for the purpose. As such, if any portion of the said share application money is not required to be utilised for such additional subscription beyond rights entitlement of the promoters in the rights issue on account of subscription to rights issue by shareholders in the public category, then such share application money brought in by the promoters over and above their rights entitlement, will be refunded to them, without interest. ** Funded by FITL

Issue Expenses: Our company has incurred Rs. 2.00 lacs as expenses towards rights issue as on the date of filing this Draft Letter of Offer. The same has been met out of our internal resources. Strategic Partner / Financial Partner Our company does not have any strategic partner or financial partner in relation to the objects of the issue. Deployment of Funds Promoters have brought in Rs. 975 lacs as share application money towards issue of Equity Shares on Rights basis. The said amount being net proceeds of the rights issue have already been deployed as outlined in the CDR Scheme. This disclosure has been made in accordance with Clause VII (G)(2) of Schedule VIII – Part E as per regulation 57(2)(b) of SEBI (ICDR) Regulations, 2009. Interim Use of Proceeds It may be observed from the above, that we will not have any surplus funds for interim use and the funds raised will be used towards the objects mentioned above. SPECIAL TAX BENEFITS No special tax benefits are available for our company and our shareholders except the ‘General Tax Benefits’ available to all companies or to shareholders of any company, after fulfilling certain conditions as required under the respective Acts.


69

STATEMENT OF TAX BENEFITS

Auditor's Report on Possible Tax Benefits Available to the Company and its Shareholders To The Board of Directors, Soma Textiles and Industries Limited Dear Sirs, We hereby report that the enclosed Annexure states the possible tax benefits that may be available to Soma Textiles & Industries Ltd. and to the shareholders of the Company under the provisions of the Income Tax Act, 1961, the Wealth Tax Act, 1957, and other allied tax laws presently prevailing and in force in India. The contents of this Annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and the interpretation of the current tax laws in force in India. Several of these benefits are subject to the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws and their interpretations. Hence, the ability of the Company or its Shareholders to derive tax benefits is subject to the fulfillment of such conditions. The benefits discussed in the Annexure are not exhaustive. The information being furnished by us is general in nature and it is neither designed nor intended to be a substitute for professional tax advice. Investors are advised to consult their own tax consultants with respect to the specific tax implication arising out of their participation in the proposed Rights Issue of equity shares of the Company. The tax rates and various provisions of the Income Tax Act, 1961 referred to in the Annexure to this report are as prescribed in the Finance Act, 2010 applicable for financial year ended March 31, 2011. We do not express any opinion or provide any assurance as to whether:

i). The Company or its shareholders will continue to obtain these benefits in future; or ii). The conditions prescribed for availing the benefits have been / would be fulfilled by them.

This report is intended solely for the information and for inclusion in the Draft Letter of Offer to the proposed Rights Issue of equity shares of the Company and is not to be used, referred to or distributed for any other purpose without obtaining our prior written consent.

For Pipara & Co Chartered Accountants

(Registration No. 107929W)

Place: Ahmedabad Date: 17th September, 2010 Gyan Pipara

Partner Membership No. 034829


70

Annexure to the Auditor's Report on Statement of Tax Benefits Available to the Company and Its Shareholders

STATEMENT OF SPECIAL TAX BENEFITS Though the company is not currently engaged in the business of generation and/or distribution or transmission of power, the company, if it engages in the business of generation and/or distribution or transmission of power in future, will be entitled for a deduction in accordance with and subject to the conditions mentioned in Section 80-IA of the Act of an amount equal to hundred per cent of profits or gains derived from industrial undertaking engaged in generation and/or distribution or transmission of power for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking has started its operation, which should be before 31st day of March, 2011. STATEMENT OF GENERAL TAX BENEFITS A). BENEFITS TO THE COMPANY UNDER THE INCOME TAX ACT, 1961(the "Act"):

1. As per Section 10(34) of the Act, any income by way of dividends referred to in Section115-0 (i.e.

dividends declared, distributed or paid on or after 1st April, 2003 by Domestic Companies) received on the shares of any company is exempt from tax.

2. As per Section 115-0(1A) the domestic company will be allowed to set-off the dividend received from its subsidiary company during the financial year against the dividend distributed by it while computing the DDT if:

• The dividend is received from its subsidiary. • The subsidiary has paid the Dividend Distribution Tax on the dividend distributed. • The domestic company is not a subsidiary of any other company.

Provided that, the same amount of dividend shall not be taken into account for reduction more than once. For the purpose of the sub-section a company shall be a subsidiary of another company if such other company holds more than half in nominal value of the equity share capital of the company.

3. As per section 10(35) of the Act, the following income will be exempt from tax in the hands of the

Company:

(i). Income received in respect of the units of a Mutual Fund specified under section10(23D); or

(ii). Income from units received by a unit holder of UTI. (iii). Income received in respect of units from the Specified Company.

However, this exemption does not apply to any income arising from transfer of units.

4. As per section 2(29A) read with section 2(42A), shares held in a company or a Unit of a Mutual Fund

specified under clause (23D) of section 10 are treated as a long-term capital asset if the same are held by the assessee for more than twelve months period immediately preceding the date of its transfer. Accordingly, the benefits enumerated below in respect of long term capital gain / asset will be available only if the shares in a company or a Unit of a Mutual Fund specified under clause (23D) of section 10 are held for more than twelve months.


71

5. As per section 10(38) of the Act, long term capital gains arising to the company from the transfer of long-term capital asset, being an equity share in a company or a unit of an equity oriented fund where such transaction is chargeable to securities transaction tax, will be exempt in the hands of the Company.

6. The company will be entitled to claim deduction of preliminary expenditure, being expenditure incurred in connection with the extension of undertaking or in connection with setting-up a new unit under section 35D of the Act, subject to the limit specified in section 35D(3).

7. Under section 111A of the Act, short term capital gain on sale of equity shares or units of an equity oriented fund where the transaction of such sale is chargeable to Securities Transaction Tax, will be chargeable to tax at the rate of 15% (plus applicable surcharge and education cess).

8. As per Section 112 of the Act, long-term capital gains on sale of listed securities or units or zero coupon bonds on which securities transaction tax is not paid, will be chargeable to tax at the concessional rate of 20% (plus applicable surcharge and education cess) after considering indexation benefits in accordance with and subject to the provisions of Section48 of the Act or at 10% (plus applicable surcharge and education cess) without indexation benefits, at the option of the Company. Under Section 48 of the Act, the long term capital gains arising out of sale of capital assets [excluding bonds and debentures (except Capital Indexed Bonds issued by the Government)] will be computed after indexing the cost of acquisition/ improvement.

9. In accordance with and subject to the condition specified in Section 54EC of the Act, long-term capital gain [other than those exempt U/S 10(38)] will not be chargeable to tax to the extent such capital gain is invested in certain notified bonds within six months from the date of transfer. If only part of the capital gain is so reinvested, the exemption will be allowed proportionately. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisitions, the amount of capital gain exempted earlier would become chargeable to tax as long term capital gain in the year in which the bonds are transferred or converted into money. Investment made on or after April 1, 2007 in the long term specified asset by an assessee during any financial year should not exceed Rs. 50 lakhs

B). OTHER BENEFITS, IN ADDITION TO THOSE MENTIONED ABOVE ARE AS

FOLLOWS:

1. To the Company:

1.1 Under section 32 of the Act, the Company is entitled to claim depreciation subject to the conditions specified therein, at the prescribed rates on its specified assets used for its business. As per Section 32(2) the depreciation allowance which could not be set-off during the previous year is allowed to be carried forward for an indefinite period.

1.2 Under Section 35 of the Act, the Company is eligible for a deduction of the entire amount of expenditure laid out or expended on scientific research related to the business of the Company, in the year in which such expenditure is incurred.

1.3 Under Section 35 (2AB) of the Act, Company is eligible for a weighted deduction of a sum equal to

one and one-half times of the expenditure incurred on in-house research and development, if it satisfies the following conditions:

a) it is engaged in the business of manufacture or production of an article or thing except those

specified in the Eleventh Schedule of the Act;


72

b) it incurs any expenditure on scientific research ( not being expenditure in the nature of cost of any land or building);

c) the above expenditure is incurred up to March 31,2012 research and development facility;

d) the research and development facility is approved by the prescribed authority (prescribed

authority is Secretary, Department Industrial Research); e) the Company has entered into an agreement with the prescribed authority for cooperation in

such research and development facility and for audit of the accounts maintained for that facility.

1.4 Under Section 115JAA (1A) of the Act, credit is allowed in respect of Minimum Alternate Tax paid (MAT) under Section 115JB of the Act for any assessment year commencing on or after April 1, 2006. Credit eligible for carry forward is the difference between MAT paid and the tax computed as per the normal provisions of the Act. Such MAT credit will be available for set-off upto 10 years succeeding the year in which the MAT credit becomes allowable.

1.5 As per Section 72, business losses (other than speculation loss) suffered during the previous year, if

not wholly set-off against income under any other head of income, so much of the loss as has not been set-off can be carried forward and set-off against profit from any business carried on by the assessee upto eight subsequent assessment years.

1.6 As per Section 74, short-term capital loss suffered during the year can be set off against short-term as well as long-term capital gains. The balance short-term capital loss, if any, can be carried forward and set-off against capital gains of future years upto eight subsequent assessment years.

1.7 The long-term capital loss suffered during the year is allowed to be set-off only against long-term capital gains. The balance loss, if any, can be carried forward for eight years for claiming set-off against subsequent year's long-term capital gains.

2. To the Shareholders of the Company

2.1 Resident Shareholders

i) Dividend received from the company is exempt from tax under section 10(34) of the Act.

ii) Long-term capital gains on transfer of shares on which securities transaction tax is paid will

be exempt from tax under section 10(38) of the Act.

iii) Short-term capital gains on transfer of shares on which securities transaction tax is paid will be chargeable to tax @ 15% (plus applicable surcharge & education cess) as per the provision of section 111A of the Act.

iv) According to the provision of Section 54F of the Act and subject to the conditions specified

therein, in the case of an individual or a Hindu Undivided Family (HUF), capital gain arising on transfer of long-term capital assets [other than a residential house and those exempt U/S 10(38)] are not chargeable to tax if the entire net consideration is invested within the prescribed period in a residential house. If only a part of such net consideration is invested, the exemption shall be allowed proportionately. For this purpose, net consideration means full value of the consideration received or accruing as a result of the transfer of capital asset as reduced by any expenditure incurred, wholly and exclusively in connection with such transfer.


73

Such benefit will not be available: a) if the individual or Hindu Undivided Family –

• owns more than one residential house, other than the new asset on the date of transfer of the original asset; or

• purchase any residential house, other than the new asset, within a period of Two year after the date of transfer of the original asset; or

• constructs any residential house, other than the new asset, with in a period of three years after the date of transfer of the original asset; and

b) the income from such residential house, other than the one residential house owned on the

date of transfer of the original asset, is chargeable under the head "Income from house property".

If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be income chargeable under the head "Capital Gains" of the year in which the new residential house is transferred.

v) The resident shareholder has the option to invest the capital gain in specified assets as per the

provisions of Section 54EC of the Act.

2.2 Non-Resident Shareholders

i) Dividend received from the company is exempt from tax under section 10(34) of the Act.

ii) Long-term capital gains on transfer of shares on which securities transaction tax is paid will be exempt from tax under section 10(38) of the Act.

iii) In accordance with section 115F, subject to the conditions and to the extent specified

therein, long-term capital gain arising from transfer of shares of the company acquired out of convertible foreign exchange, and on which securities transaction tax is not payable, will be exempt from capital gains tax, if the net consideration is invested within six months of the date of transfer in any specified asset.

iv) As per the provisions of Section 115G of the Act, it will not be necessary for a non-resident

Indian to furnish his return of income if his only source of income is investment income or long term capital gains or both, arising out of assets acquired, purchased or subscribed in convertible foreign exchange and tax has been deducted at source from such income.

v) Under Section 115-I of the Act, a non resident Indian may elect not to be governed by the

provisions of Chapter XII-A of the Act for any assessment year by furnishing his return of income under Section 139 of the Act declaring therein that the provisions of the Chapter shall not apply to him for that assessment year and if he does so the provisions of this Chapter shall not apply to him. In such a case the tax on investment income and long term capital gains would be computed as per normal provisions of the Act.

vi) Under the first proviso to Section 48 of the Act, in case of a non resident, in computing the

capital gains arising from transfer of shares of the company acquired in convertible foreign exchange (as per exchange control regulations), protection is provided from fluctuations in


74

the value of rupee in terms of foreign currency in which the original investment was made. Cost indexation benefits will not be available in such a case.

vii) As per section 115H of the Act, where a non-resident Indian becomes assessable as a

resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under section 139 of the Act to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.

2.3 Mutual Funds

In terms of Section 10(23D) of the Act, mutual funds registered under the Securities and Exchange Board of India Act, 1992 and a notified mutual funds set up by public sector banks or public financial institutions or authorized by the Reserve Bank of India and subject to the conditions specified therein, are eligible for exemption from income tax on their entire income, including income from investment in the shares of the company.

2.4 Foreign Institutional Investors (FIIs)

i). Under Section 115AD, capital gain arising on transfer of short term capital assets, being shares and debentures in a company, are taxed as follows:

a) Short term capital gain on transfer of shares/debentures entered in a recognized stock

exchange which is subject to securities transaction tax shall be taxed @15% (plus applicable surcharge and education cess); and

b) Short term capital gains on transfer of shares/debentures other than those mentioned

above would be taxable @30% (plus applicable surcharge and education cess).

ii). Under Section 115AD capital gain arising on transfer of long term capital assets[other than those exempt U/S 10 (38)], being shares and debentures in a company, are taxed @ 10% (plus applicable surcharge and education cess). Such capital gains would be computed without giving effect to the first and second proviso to Section48. In other words, the benefit of indexation, direct or indirect, as mentioned under the two provisos would not be allowed while computing the capital gains.

2.5 Venture Capital Companies/ Funds

As per the provisions of Section 10(23FB) of the Act, income of a venture capital company or venture capital fund from investment in a venture capital undertaking is exempt from tax

a) "Venture Capital Company" means such company which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992 (SEBI) and notified as such in the Official Gazette; and

b) "Venture Capital Fund" means such fund operating under a registered trust deed or

operating as a venture capital scheme made by the Unit Trust of India, which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992 and notified as such in the Official Gazette.


75

C). UNDER THE WEALTH TAX ACT, 1957

Shares in a company held by a shareholder will not be treated as an asset within the meaning of Section 2(ea) of Wealth tax Act, 1957 and hence, wealth tax is not leviable on shares held in the company.

D). UNDER THE GIFT TAX ACT, 1958

Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares will not attract gift tax. However, as per the provisions of Section 56 of the Act, the receipt of shares, without adequate consideration or inadequate consideration, by an individual or Hindu Undivided Family (HUF) shall be chargeable to tax in the hands of such individual or HUF, subject to conditions specified in Section 56(2)(vii) of the Act.

NOTES:

a) At present, the Company does not enjoy any special direct tax benefits. b) All the above benefits are as per the current tax law and will be available only to the sole/ first

named holder in case the shares are held by joint holders.

c) In respect of non-residents, taxability of capital gains mentioned above shall be further subject to any benefits available under the Double Taxation Avoidance Agreement, if any between India and the country in which the non-resident has fiscal domicile. As per the provisions of section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the non-resident.

d) In view of the individual nature of tax consequence, each investor is advised to consult his/ her own tax advisor with respect to specific tax consequences of his/ her participation in the scheme.

e) The above statement of possible direct tax benefits sets out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares.


76

KEY INDUSTRY REGULATIONS AND POLICIES

KEY INDUSTRY REGULATIONS AND POLICIES The proposed objects of the issue of our company are towards the existing line of business of our company. Hence, there are no new Key Industry Regulations applicable for the proposed objects of the issue. INTEREST OF PROMOTERS AND DIRECTORS TO THE PROJECT OR OBJECT OF THE ISSUE There is no material existing or anticipated transactions in relation to Object of the Issue or utilisation of issue proceeds with promoters, directors, key managerial personnel, associates and group companies, except allotment of shares on rights basis to promoters against the share application money already brought in by them into our company and already put to use towards the objects of the issue.


77

SECTION IV – ABOUT THE COMPANY

HISTORY & CORPORATE STRUCTURE

Our Company was originally started as a partnership firm in 1930 under the name and style of M/s. R B Rodda & Co. It was later incorporated as a limited company on 29th March, 1940 at Kolkata under the name R B Rodda & Co. Ltd. Five years later, the management of our company was taken over by Somany brothers. Initially we were engaged in trading activities. In 1969, we purchased New Commercial Mills Co. Limited at Ahmedabad, which was under liquidation and named this unit as "Soma textiles". Subsequently, our name was changed to “Soma Textiles & Industries Limited" and a fresh certificate of incorporation consequent to change of name was issued on 21st January, 1992 by Registrar of Companies, West Bengal at Kolkata. The registered office of our Company is situated at 2, Red Cross Place, Kolkata – 700 001. Tel: 033-22487406, Fax : 033-22487045. The regional office is located at 6, Vaswani Mansion, Dinshaw Wacha Road, Backbay Reclamation, Mumbai-400020. Our current promoters are Nandita Patodia, Anupama Agarwal, Nalini Somany, Arvind Somany, Surendra Kumar Somany, Sarvopari Investment Private Limited, Krishnaa Glass Private Limited. We are registered with the Registrar of Companies – West Bengal, Nizam Palace, 2nd MSO Building, 2nd Floor, 234/4, A.J.C.B. Road, Kolkata – 700020, West Bengal. The Registration number of our Company is 010070 and CIN (Corporate Identity Number) is L51909WB1940PLC010070 In 1987 we started producing Denim fabric and we were amongst the first to introduce Denim fabric in India. In 1993-94, we set-up a 100% EOU cotton spinning unit at Baramati, Dist, Pune, Maharashtra. However, during 2006 this unit was de-bonded with requisite approval from Development Commissioner SEEPZ, Mumbai thereby also facilitating local sales from this unit. We have continuously focused on application of state of the art technology and accordingly we replaced almost all traditional looms to high speed looms. During FY 2004-05, we implemented modernization cum expansion scheme to increase our denim manufacturing capacity from 6 million meters to 16 million meters per annum, replace our process machineries at Ahmedabad and spinning machineries at Baramati at a total cost of Rs.8700 lacs. The Project was completed and commercial production started from Dec. 2006. During the Financial year 2007-08, we took-up modernization and upgradation of our spinning unit at Baramati and weaving and processing facilities at Ahmedabad besides setting-up a garment manufacturing unit with an installed capacity of 10,000 pieces per day. The project was appraised by Axis Bank at a total cost of Rs.8200 lacs which was proposed to be funded by term loan of Rs.6500 lacs sanctioned under TUFS by Axis Bank and internal generation of Rs.1700 lacs. However, while implementing the scheme, the entire domestic textile industry witnessed recession on account of economic turmoil and global recession leading to sudden glut in the market conditions, unprecedented rise in input costs especially of cotton and adverse exchange fluctuation. These adverse events had multiple effects on our profitability resulting in our company incurring loss at operating cash level during the FY 2007-08 and as a result of that we were not able to pay the dues to the institutions/banks. We then approached our lenders for a comprehensive restructuring package under the CDR Scheme, which was sanctioned in February 2009, details of which are given in Page No. 61 of this Draft Letter of Offer. Pursuant to the open offer made during November 2007, the Acquirer i.e Krishnaa Glass Private Limited alongwith Persons Acting in Concert i.e. Mr. Arvind Somany, Mr. Surendra Kumar Somany, Mrs. Prasann Somany, Mrs. Nandita Patodia, Mrs. Anupama Agarwal, Mrs. Nalini Somany, Ms, Nitya Somany, M/s Simplex Trading & Agencies Limited and M/s Sarvopari Investment Pvt Ltd (“PAC’s”) acquired 31,59,236


78

equity shares of Soma Textiles & Industries at a price of Rs.32 per share. This Open Offer was made pursuant to and in compliance with provisions of Regulation 11(1) as required under the Takeover Code.

Pursuant to the open offer made during December 2008, the Acquirer i.e. Mavi Invetsment Fund Limited acquired 66,06,600 Equity Shares of Soma Textiles & Industries Limited at a price of Rs. 40.14 per share. This Open Offer was made pursuant to and in compliance with provisions of Regulation 10 & 11(1) as required under the Takeover Code. We have production facilities at the following two locations: 1 Unit No. 1 is set up at Rakhial Road, Rakhial, Ahmedabad, Gujarat. This is Composite Textile Mill

having facility of manufacturing Denim, cotton shirting, bottom weights and Yarn and Garments.

2 Unit No. 2 is set up at Baramati, Maharashtra, for the manufacture of 100% cotton single/double medium and super fine yarn of international quality.

Location of units and installed capacities, date of commencement of commercial production LOCATION PRODUCT INSTALLED

CAPACITIES

DATE OF COMMENCEMENT OF COMMERCIAL PRODUCTION

Rakhial Road, Ahmedabad - 380 023 Gujarat State

Cotton / Blended Yarn Denim & Blended Fabric Fabric Processing Garments

Spindles Rotors Looms Mtrs. / day No of pieces / day

23,568 384

149

75,000

2500

} } } } } } all the facilities } are in } operation since l long } Commercial production started from 1st October ,2008.

Plot No. D-49, MIDC, Baramati - 413 133, Dist. Pune Maharashtra

Cotton Yarn Spindles 30,240 The capacity is in operation since long

Products

1. Yarn

• 100% Cotton Combed yarns from 24s Ne to 2/80s Ne. • Polyester-Cotton & Polyester-Viscose yarns from 30s Ne to 60s Ne.


79

2. Shirtings and Bottom Wear Fabrics

• We produce wide range of Shirting and Bottom-wear categories in 100% Cotton, Polyester

Cotton blends and Poly-Cottons. • We provide these finished fabrics in Piece Dyed, Bleach and Ready to Dye (RFD) varieties.

These fabrics are manufactured in Plain, Twill, Satin weaves and various Dobby designs.

3. Denims

• Our Denim collection has a product line that includes.

• Silky Denims (made of fine 2 ply yarns)

• Slub & Streaky Denims

• Poly Denim

• Stretch Denim and

• Exotic Denims – (made of dobby designs and weave patterns)

4. Garments

Our infrastructure: Spinning:

• 55,000 Spindles & 550 Rotors – German, Swiss & Japanese machinery.

Weaving:

• High Speed Airjet & Rapier (72 Nos.- Belgian & Japanese) Looms for High Value Shirting &

Bottom Wear.

• High Speed Airjet, Projectile & Rapier (120 Nos.- Swiss, Italian & Japanese) Looms for DENIM.

Processing:

• German Continuous Bleaching and Dyeing Ranges for Shirting &Bottom-wear fabrics.

• German and Swiss Slasher Dyeing and Processing machines for Denim Fabric. All the above are supported by state-of-the-art laboratories and run by technically qualified textile engineers. Our business is organized into different business units, as described below:

1) Yarn Business Unit:

2) Piece Dyed Division:


80

3) Denim Fabric Division:

4) Garment Business Division:

The day-to-day affairs of our Company are being looked after by Shri Arvind Somany, Managing Director, who is stationed at Ahmedabad. He also looks after the overall operations of Ahmedabad unit. He is assisted by Shri Ajit Gohil, President and a core team of professionals heading each of the critical functions v.i.z. Production (Shri M. Pandit), Marketing (Shri Rohit Agarwal), Finance (Shri Amit Periwal), Purchases (Shri Vinod Gupta), Engineering (Shri M A. Patel), Human Resources (Shri Ramanlal Suthar) The operations at Baramati spinning unit are looked after by Shri S. K. Somany directly who is assisted by Shri B S Lande (Production) and Shri Abhay Purohit,(Commercial). However the overall management of the Company is controlled and supervised by the Board of Directors of the Company.


81

MAJOR EVENTS IN COMPANY’S BUSINESS OPERATIONS

YEAR EVENT 1940 Incorporation of company under the name R. B. Rodda & Co. Ltd. With Registrar of

Companies, West Bengal 1945 Management take-over by Somany brothers 1969 Purchase of New Commercial Mills Co. Ltd, a textile unit then under liquidation. This unit

was named as “Soma Textiles” 1987 Manufacture of Denim Fabric 1992 Name of the Company changed to Soma Textiles & Industries Limited 1993 Listing on Bombay Stock Exchange 1993/1994 100% Export Oriented spinning Unit at Baramati for manufacture of cotton yarn

Rights-cum-public issue of Fully convertible Debentures. 1996 Listed on National Stock Exchange of India Limited 2002 Restructuring of term loan with lenders 2006 Setting up of then- subsidiary, Soma Textile FZE. 2006 Setting up of 12 millions per annum capacity of denim at Ahmedabad manufacturing unit. 2006 Issue of GDR aggregating to Rs. 78.37 crores, proceeds of which were deployed in its

then-subsidiary, Soma Textile FZE. 2008 Modernisation programme including setting up of garment manufacturing unit;

2009 Restructuring package under CDR Mechanism


82

Main Objects of our Company: The objects for which our Company is established, as set out in its Memorandum of Association are as follows: A. MAIN OBJECTS OF THE COMPANY TO BE PURSUED ON ITS INCORPORATION ARE:- 1. To purchase all or any of the assets of and the goodwill of the business of Gunsmiths Boat-builders contractors and merchants carried on by Messrs. R.B. Rodda & Co. Ltd., at Calcutta in India, and with a view thereto to enter into and carry into effect (either with or without modification) an agreement, which has already been prepared, and is expressed to be made between Frederick Barton Prike of the one part and the Company of the other part, a copy whereof has for the purpose of identification be endorsed with the signature of Harry Arthur Fowler, Solicitor. 2. To carry on the trade or business of arms and ammunition manufactures and dealers and for that purpose to manufacture purchase load and sell and generally deal in arms of all kinds, cartridges, cartridge cases, detonators, fuses and other substances and things required for or incidental to the carrying out of the above objects or any of them. 3. To carry on the trade or business of manufacturers of explosives of every description, gunpowder, nitroglycerine, dynamite, gun cotton, blasting powder or other substances or things and to purchase, manufacture, sell and generally deal in explosives and all materials, substances and things required for or incidental to the manufacture, preparation, adaptation. Use or working of explosives or the packing, storing, firing, carrying or disposition thereof. 4. To carry on the trade or business of marine engineers, owners, buyers, sellers, converters, letters for hire, builders and repairers of ships, steam and motor launches and barges, iron and steel bridge boats and any sea-going or other vessels. 5. To carry on the trade or business of manufacturers, importers and exporters of any dealers in and repairers of engines, machinery, rolling stock, implements tools, utensils, appliances and apparatus of all kinds. 6. To construct and maintain for the use of the Company or for letting out on hire, graving and other docks and other conveniences for the building, repairing or docking of ships, launches, boats, barges, and other vessels and to aid in or contribute to the construction of any such works. 7. To buy, sell, take or let on hire, import, export, manufacture, manipulate, treat, prepare for market and deal in merchandise, commodities and articles of all kinds and generally to carry on business as merchants importers and exporters. (7A) To carry on the business of growing, cultivating processing, combing, preparing, ginning spinning weaving, dying, bleaching, printing manufacturing, bailing, pressing, selling, buying and otherwise dealing in Cotton Kapas, yarn, cotton waste, yarn waste, cotton cuttings, cotton rejections, artificial fibres silk, jute, hemp, flax, linen, cloth and other fabrics, whether textile felted netted or looped made from raw cotton silk, flax, hemp, jute, wool any artificial fibre and other material and to erect maintain or otherwise acquire and work mills and factories for the purpose. (7B) To carry on the business of manufacturing buying selling, importing, exporting distributing processing, exchanging, converting, altering, twisting or otherwise handling or dealing in cellulose viscose rayon yarns and fibres, synthetic fibres and yarn staple fibre yarns and such other fibres or fibrous materials, transparent paper and auxilliary chemical products allied products byproducts or substances or substitutes for all or any


83

of them or yarn or yarns for textile or other use as the company may deem necessary expedient or practicable. (7C) To manufacture, prepare, import, export, buy, sell and otherwise deal in all kinds of glass, glass-ware, glass goods, mirrors, looking-glass, scientific glasswares, sheet and plate glass, bangles, false pearls, bottles, phials and all kind of articles prepared of glass and to carry on the business of glass leveller, glass embosser, glass tablet. (7D) To produce, manufacture, refine, prepare, import, export, purchase, sell, treat and generally to deal in all kinds of sanitaryware (including sanitaryware made of plastic, fibre-glass or any other synthetic product), earthenware, stoneware, glass china, terra cotta, porcelain, products, bricks, tiles, pottery, pipes, insulators refractories of all description and or by products thereof. (7E) To product, manufacture, purchase, refine, prepare, import, export, sell and generally to deal in alumina cement, lime and limestone and connection therewith to acquire erect, construct, establish, operate and maintain lime-stone quarries. (7F) To amalgamate, to merge or to enter into partnership or into any arrangements for sharing profits into any union of interest, joint venture, reciprocal concession or co-operation with any person or persons or company or companies carrying on, or engaged in, or about to carryon or engage in, or being authorised to carry on or engage in, any business or transaction which this company is authorised to carryon or engage in. (7G) To carry on the business as manufacturers, producers, printers, dyers, weavers, processors, fabricators, assemblers, ginners, bleachers, balers, knitters, pressers, carders, sizers, spinners, woolcombers, worsted packers, reelers, refiners, distributors, traders, dealers, agents, brokers, financiers, buyers, sellers, importers and exporters of natural and man-made fibre including cotton staple fibre, synthetic viscose, artificial silk, jute silk, hemp, wool, liner, nylon, terelene, cotton and synthetic waste or any other fibrous materials and yarn whether blended, spun, filament or otherwise including floor cloth, American cloth, tarpaulins, table cloth, upholstery, curtains, water proofing goods and articles, dress linings and synthetic materials, knitted products, garments, readymade or otherwise including shirts, bush shirts, pyjama suits, pants, uniform for the Army, Navy, Airforce and other personal safaries, suits, coats, hosiery vests under garments for men, women and children made-ups shawls, sweaters, laces, stockings, mats, rugs, blankets, packing materials, tapes, sacks, fabrics whether textile, felted, netted or looped. (Resolution passed through Postal Ballot Paper on September 17, 2007) 8. To take on lease, hire purchase or otherwise acquire and maintain any lands, rights over or connected with lands, buildings, works, plant, machinery;' apparatus, stock-In-trade and immoveable or moveable property of any description and any patents, inventions, rights or privilege, which may. be deemed necessary or convenient for any business which the Company is authorised to carry on, or otherwise turn to account and to use, exercise, develop or grant licenses in respect of the property, rights, or information so acquired. 9. To erect, construct, maintain or alter, or assist in the erection, construction, maintenance or alteration of any building, erections, works, and to pull down, alter and rebuild any buildings, erections or works acquired by the Company. 10.To lease, let out on hire, mortgage, pledge, sell or otherwise dispose of the whole or any part of the undertaking of the Company, or any land, business, property, rights or assets of any kind of the Company, or any share or interest therein respectively, in such manner and for such consideration as the Company may think fit, and in particular for shares, debentures or securities of any other corporation' having objects altogether or in part similar to those of the Company.


84

11.To pay any premiums or salamis and to pay for any property, rights or privileges acquired by' or services· rendered to the Company either wholly or partially in cash, or in shares, bonds, debentures or other securities of the Company, and to issue any such shares either as fully paid up or with such amount credited as paid up thereon as may be agreed upon, and to charge any such bonds debentures or other securities upon all or any part of the property, of the Company. 12. To adopt such means of making known the products of the Company as may seem expedient and in particular by advertising in the press, by circulars, by purchase and exhibition of works of art or interest, by publication of books and periodicals and by granting prizes, rewards and donations. 13. To establish and support, or aid In the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of the Company, or its predecessors in business or the dependants or connections of such persons, and to grant pensions and allowances, and to make payments toward insurance of such persons, and to subscribe or guarantee money for charitable or benevolent objects, or for any exhibition or for any public, general of useful object. 14. To enter into any arrangement with any Government, or authority, supreme, municipal, local, otherwise, that may seem conductive to the Company's objects or any of them, and obtain from any such Government or authority, all rights, concessions, and privileges, which the Company may think it desirable to obtain, and to carry out, exercise and comply with any such arrangements, rights, privileges and concessions. 15. To pay all or any cost, charge an9 expenses preliminary and incidental to the promotion, formation, establishment and registration of the Company. 16. To purchase or otherwise acquire and undertake all or any part of the business, property and liabilities of any person or corporation carrying on any business, which the Company is authorised to carry on, or possessed or property suitable for the purpose of the Company. 17. To promote any other company for the purpose of acquiring all or any of the property of this Company or advancing directly or indirectly the objects or interest thereof, and to take or otherwise acquire and hold shares in any such company, and to guarantee the payment of any debentures of other securities issued by any such company. 18.To take or otherwise require and hold shares in any other company having objects altogether or in part similar to those of this Company, or carrying on any business capable of being conducted so' as directly or indirectly to benefit this Company. 19.To enter into partnership or into any arrangement for sharing profits, union of interests, co-operation, joint-adventure, reciprocal concession or otherwise, with any person or company carrying on or engaged in or about to carryon or be engaged in any business or transaction which this Company is authorised to carry on or engage in, or any business or transactions capable of being conducted so as directly or indirectly to benefit this Company, and to take or otherwise acquire and hold shares or stock in any such company. 20. To draw, make, accept, endorse, Discount, execute and issue cheques, promissory notes, bills of exchange and other negotiable or transferable instruments. 21. To invest moneys of the Company not immediately required upon such securities as may time to time be determined. 22. To lend money to such persons and on such terms as may seem expedient and in particular, to customers of and other person having dealings with the Company, and to guarantee the performance of contracts by members of or persons having dealings with the Company.


85

23.To appoint Agents and Managers and constitute Agencies of the Company in India or any other country whatsoever. 24.To borrow or raise or secure the payment of money in such manner as the Company shall think fit, and, in particular, by the issue of debentures charged upon all or any of the Company's property (both present and future) including its uncalled capital and to purchase, redeem or payoff any such securities. 25. To pay brokerage or commission to any person or Persons in consideration of his or their subscribing, or agreeing to subscribe, whether absolutely or conditionally, for any shares or debentures of the Company, or procuring or agreeing to procure subscriptions whether absolute or conditional for the same, which brokerage or commission may be paid either in cash or in debentures or shares of the Company credited as fully or partly paid up. 26.To distribute any of the Company's property among the members in specie. 27. To do all or any of the above things in any part of the world, and either as principals, agents, contractors, trustees or otherwise, and either alone or in conjunction with others, and by or through agents, sub-contractors, trustees or otherwise. 28. To do all such other things as are incidental or as the Company may think conducive to the attainment of the above objects or any of them. Subsidiary We had a wholly owned subsidiary by name Soma Textile FZE registered in Himriya Free Zone, Sharjah, UAE. Our holdings stand diluted to 40% from 100% in the paid-up capital of the Soma Textile FZE consequent upon increase in paid up capital of the subsidiary from AED 300,000 to AED 750,000 by further issue of shares, to which we did not subscribe to. As a result, Soma Textile FZE has ceased to be our subsidiary with effect from 31st March, 2010,after close of office hours and has become an associate of our Company. The Status of Soma Textile FZE has changed to Soma Textile FZC, i.e. from free zone establishment with limited liability to free zone Company with limited liability under the Certificate of Incorporation no.6339 issued by the Registrar, Free Zone Companies, Hamariah Free Zone Authority, Sharjah, UAE on 31st March, 2010. Business Transfer / Shareholders Agreement There are no Business Transfer or Shareholders’ Agreement in the knowledge of our company, as on the date of filing this Draft Letter of Offer.


86

MANAGEMENT Board of Directors As per our Company's Articles of Association, the number of Directors of our Company shall not be less than three or more than eleven. At present there are 6 Directors. The Board of Directors of our company is currently comprised of the following persons:

Sr. No. Name, Father's name, Designation, Age, Address, Qualification & Occupation

Date of appointment and term

Other Directorships

1. Mr. Arvindkumar Somany S/o Surendra Kumar Somany Managing Director Age: 53 Years Add: Survey No. 36, Village

Nabhoi, P. O. Sughad –Via Chandkheda, Dist. Gandhinagar-382424

Qualification: B. Sc., MIMA Occupation: Industrialist DIN: 00024903 PAN:ACBPS8983M Experience: 30 years of experience in Textile industry

22/01/2008 to 21/01/2011

Pudumjee Ind. Ltd KGPL Indus. & Finvest Pvt. Ltd. NND Investments Pvt. Ltd.

2. Mr. Surendra Kumar Somany S/o Late Murlidhar Somany Chairman, Promoter Director Age: 78 years Add:81, Las Palms, 20, Little

Gibbs Road, Mumbai- 400006 Qualification: B. Com Occupation: Industrialist DIN: 00001131 PAN: AAGPS6467H Experience: Over Six decades of experience in management & administration in textile and other industries

01/04/1949 ROTATIONAL

Jamshri Ranjitsinghji Spg. & Wvg. Mills Co. Ltd. Nav Bharat Refrigation and Industries Ltd. Simplex Realty Co. Ltd. Somany Evergreen Knits Ltd. Shreelekha Global Finance Ltd.


87

3. Mr. Brijkishore Hurkat S/o. Ramniwas Hurkat Independent Director Age: 67 years Add: R. No. 15, Kalash Apartment,

3, Dilkhush Society, St. Xavier’s School Road, Ahemadabad - 380014

Qualification: B. Com Occupation: Business DIN: 02005896 PAN:AAAPH6170N Experience:41 Years of experience

30/01/2009 ROTATIONAL

Savak Investment & Finance Pvt. Ltd.

4

Mr. Bajranglal Dhoot S/o. Gulabchand Dhoot Independent Director Age: 78 years Add.: 201/204, Madhu Kunj,

Sayani Road, Prabhadevi, Mumbai- -400025

Qualification: Intermediate Arts Occupation: Business DIN: 02690250 PAN: AABPD5592M Experience: 50 Years of experience

30.05.2009 ROTATIONAL

NONE

5

Mr. Anoop Sharma S/o. Hari Mohan Sharma Independent Nominee Director -

(IDBI Bank) Age: 37 Years Add.: A4 Vayam IDBI Bank Complex Off C.G. Road Opp. Lal Bunglow Ahmedabad – 380 006 Qualification: M.Com, MBA Occupation: Service DIN: 03064488 PAN: APGPS7048M Experience: 12 Years of experience

19/04/2010 NON ROTATIONAL

NONE


88

6 Mr. Shrikant Bhat S/o Bhairaveshwar Ramchandra Bhatt Executive Director Age: 44 Years Add.: A4/10, Satya Darshan C.H.S. Ltd., LIC Colony, MAlpa, Dongri, Pump House Andheri (East), Mumbai- 400093 Qualification: B. Com, C.A. Occupation: Service DIN: 00650380 PAN:ACGPB2132C Experience: 18 years of experience in Corporate Finance and Taxation

18/01/2008 to 17/01/2013

Somany Evergreen Knits Ltd.

Note: None of the above mentioned Directors are on the RBI List of wilful defaulters. Current and Past Directorships None of the Directors of our Company currently hold any Directorship in any listed company whose shares have been / were suspended from being traded on the Bombay Stock Exchange Limited / National Stock Exchange of India Limited during the past 5 years. None of the Directors of our Company have held any Directorship in the past in any listed company whose shares were suspended from being traded on the Bombay Stock Exchange Limited / National Stock Exchange of India Limited during the past 5 years. None of the Directors of our Company currently hold any Directorship in any listed company which has been delisted from any stock exchange. None of the Directors of our Company have held any Directorship in the past in any listed company which has been delisted from any stock exchange. Nature of Family Relationship between any of Directors: Mr. Arvind Somany, Managing Director, is son of Mr. Surendra Kumar Somany, the Chairman and Director. Besides this, there is no other family relationship between any of the directors. Arrangement or Understanding with major shareholders, customers, suppliers or other, pursuant to which any of the director was selected as a director or member of senior management: Mr. Anoop Sharma has been appointed as a Nominee Director of IDBI Bank with effect from 19th April, 2010. As per clause 83 our Company's Articles of Association, the number of Directors of our Company cannot be less than 3 or more than 11. At present there are 6 Directors.


89

Details of Service Contracts The company has entered into agreement with the Whole Time Directors i.e Managing Director and Executive Director on 23rd February, 2008 upon their appointment containing the terms and conditions of the appointment and the remuneration payable to them. The appointment of Shri A. K. Somany, Managing Director is contractual for a period of 3 years commencing from 22nd January, 2008. The service of Shri A. K. Somany may be terminated by giving 6 months notice or alternatively 6 months in lieu of such notice period as per the agreement. The appointment of Shri Shrikant Bhat, Executive Director, is also contractual for a period of 5 years commencing from 18th January, 2008. Two months notice or alternatively 2 months salary in lieu of such notice period is payable on termination as per the Agreement. There is no separate provision for payment of severance fee to the Managing and Executive Directors of the Company in their service agreement entered into by the company with them. Except gratuity, earned leave at the end of tenure and notice period as stated above no other severance fee is paid/or payable to such Directors.


90

MANAGEMENT ORGANISATION STRUCTURE


91

KEY MANAGERIAL PERSONNEL

BARAMATI UNIT Sl. No.

Name

Designation

Qualifications

Experience

Responsibility

1 Mr. B.S.Lande

Vice President Technical

M.Tech.

34 Yrs.

Production /Technical head

2 Mr. Abhay Purohit

Vice President Commercial

B.Com

32 Yrs.

Commercial /Accounts

3 Mr. M.V.Govande Dy. G. Manager Production

B.Tech.

14 Yrs.

Production

4 Mr.A.K.Bhattacharya Sr. Manager Maintenace

B.sc/Tech 20Yrs. Maint/Utility

AHMEDABAD UNIT Sl. No.

Name

Designation

Qualification

Years of Experience

Functional Responsibility

1. Mr. Abhijit Gohil

President MBA 22 Head of Operation, Sales strategy & business developments

2. Mr. Amit Periwal

Head of Finance & Accounts.

B. Com., ACA,

8 Finance Planning & Mobilization of Funds

3. Mr. R S Sharma

Company Secretary

B.Com., LLB 41 Secretarial functions and compliances with statutory requirements

4 Mr. Rohit Agarwal

D.G.M. Mktg. Mktg. / Finance P.G.

12 Mktg.

5 Mr. Vinod Gupta

Gen. Manager (Purchase)

B Tech Mech 30 Overall operations.


92

6 Mr. M. A. Patel

Manager (Eng)

DEE 23 In charge of Engineering department handling all the operation & maintenance of the engineering,

7 Mr. Ramanlal R.Suthar

Manager (IR) B.A., LLB, MLW

31 Head of HR Department

8 Mr. M.Y.G. Malik

Vice President B.Com LLB

26 Overall operations. Garment Div.

9 Mr. Suresh Khar

Deputy GM B. Sc. 13 Garment Mktg.

10 Mr. Iliash G. BiramiWala

Deputy GM BA 18 Production & Planing Garment Div.


93

SECTION V – FINANCIAL INFORMATION

AUDITORS' REPORT ON FINANCIAL STATEMENTS

The Members of SOMA TEXTILES & INDUSTRIES LIMITED We have audited the attached Balance Sheet of SOMA TEXTILES & INDUSTRIES LIMITED, as at 31st March, 2010 and also the Profit and Loss Account and cashflow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors' Report) Order, 2003 as amended by the Companies (Auditors' Report) (Amendment) Order, 2004 (together the 'Order') issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 of India and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: (i) We have obtained all the information and explanations, which to the best of our knowledge and belief

were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper report adequate for the purposes of our audit have been received from the branches not audited by us. The financial records of Baramati branch of company have been audited by Shankarlal Jain & Associates, Chartered Accountants, Mumbai, a copy of whose report has been forwarded to us. We have relied on that report and have appropriately dealt with the same in our report;

(iii) The Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account and with the audited reports from the branches;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section(3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March, 2010, and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31st March, 2010 from being appointed as a director in terms of clause(g) of sub-section(1) of section 274 of the Companies Act, 1956;


94

(vi) In our opinion and to the best of our information and according to the explanations given to us, and

subject to our observations as aforesaid, and particularly Note No. 23 of Schedule 22(B) of Notes on Accounts, the said accounts read together with notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; (b) In the case of the Profit and Loss Account, of the LOSS for the year ended on that date; and (c) In the case of Cashflow Statement, of the Cashflows for the year ended on that date.

For PIPARA & COMPANY, CHARTERED ACCOUNTANTS

Firm Registration No.107929W

GYAN PIPARA Partner

Membership. No. 034289 Date: 29th May, 2010. Place: Ahmedabad


95

Annexure referred to in paragraph 3 of our report of even date to the members of SOMA TEXTILES & INDUSTRIES LIMITED on the accounts for the year ended on 31st March 2010.

(i) (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a phased programme of physical verification of fixed assets which, in our opinion, is reasonable having regard to the size of the company and nature of its assets. In accordance with this programme, the management has verified fixed assets during the year and no material discrepancies have been noticed on such verification.

(c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concerns status of the company is not affected.

(ii) (a) The management conducts regular physical verification of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verification of inventory followed by the

management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory. Some immaterial discrepancies were

noticed on physical verification which have been properly dealt with in the books of account. (iii) (a) The company has granted interest free loan to its 100% subsidiary, Soma Textiles FZE. Total

amount outstanding on 31st March 2010 was Rs.707,878,454/-. (b) The terms and conditions of loans given by the company are prima facie not prejudicial to the

interest of the company. (c) As there is no stipulation made for repayment of loan by subsidiary, we are unable to report on

regularity of receipt of principal amount. (d) As there is no stipulation of repayment of loan by subsidiary, we are unable to report on

overdue amount. (e) The company has not taken any loans, secured or unsecured from companies, firms or other

parties covered in the register maintained under section 301 of the Act. Accordingly sub-clauses (f) and (g) are not applicable.

(iv) There is an adequate internal control system commensurate with the size of the company and the

nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and service.

(v) (a) According to the information and explanations given to us, we are of the opinion that the

transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and as explained to us, the transactions made in pursuance of contracts or

arrangements entered into the register maintained under section 301 of the Companies Act


96

1956 and exceeding value of Rupees Five Lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public. Therefore the provisions of sections 58A, 58AA or any other relevant provisions of the Act and the rules framed thereunder or any order passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal do not apply to company.

(vii) In our opinion and according to information and explanations given to us, the company has a internal audit system communsurate with its size and nature of its business, which may be further strengthened.

(viii) In our opinion, the company has maintained proper cost records prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act. However, we are not required to carry out and have not carried out any detailed examination of such accounts and records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination

of books of account, we are of the opinion that the company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and any other statutory dues with the appropriate authorities. At the end of the year, there were no undisputed dues payable for a period of more than six months from the date they became payable.

(b) As on 31st March 2010, according to records of the company, some statutory dues were disputed and not deposited as given below:

Name of Statute

Nature of Dues

Amount (Rs.)

Period to which its relate

Forum where dispute is pending

Central Excise Act, 1944

Penalty for filing wrong declaration

25,428 1996-97 1997-98

CEGAT, Mumbai and the Hon’ble High Court of Gujarat, A'bad.


Recovery of CENVAT

158,973 2004-05 The Dy.Commissioner of C. Excise, Div-I, Ahmedabad.


Recovery of additional TTA duty of Yarn captively consumed

2,485,486 2002-03 The Dy. Commissioner of C. Excise, Div-III, Ahmedabad.


97


Refund claim for amount short received against refund claim of yarn duty after adjusting the old recovery.

97,711 2005-06 Commissioner of Central Excise, (Appeals), Ahmedabad


Demand for Service Tax on Goods Transport

444,139 2005-06 Dy. Commissioner Service Tax Devi – II


Demand for excise on scrap sale

251,047 2006-07 Asst. Commissioner of Central Excise.


Demand for old duty.

50,179 2008-09 CESAT, West Zone, Ahmedabad

Gujarat Sales Tax Act-1969

Additional Sales Tax

617,257 1997-98, 1998-99 &2000-01

Gujarat Value Added Tax Tribunal

(x) The company has accumulated losses at the end of the financial year but the same are less than 50%

of its net worth. It has incurred cash losses in the financial year as well as in the immediately preceding financial year.

(xi) Company is under Corporate Debt Restructuring (CDR) package under scheme of RBI which was duly approved and implemented. Company has not defaulted in repayment of dues to any financial institution or bank as per reschedule under CDR package.

(xii) In our opinion and according to explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly this clause does not apply.

(xiii) The company is not a chit fund / nidhi company / mutual benefit entity or society which would be governed by any special statute. Accordingly this clause along with sub clauses does not apply.

(xiv) In our opinion and according to explanations given to us, the company is not dealing or trading in

shares, securities, debentures and other investments. Accordingly this clause does not apply. (xv) In our opinion and according to explanations given to us, the company has not given any guarantee

for loans taken by others from bank or financial institutions. Accordingly this clause does not apply. (xvi) In our opinion and according to explanations given to us, the term loans were applied only for the

purpose for which they were obtained.


98

(xvii) In our opinion and according to explanations given to us, the funds raised on short-term basis have not been used for long-term investment.

(xviii The company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act during the year and accordingly this clause does not apply.

(xix) The company has not issued debentures during the year. Accordingly this clause does not apply. (xx) The company has not raised any money from public during the financial year. Accordingly this clause

does not apply. (xxi) In our opinion and according to explanations given to us, no fraud on or by the company has been

noticed or reported during the year.

For PIPARA & COMPANY,CHARTERED ACCOUNTANTS

Firm Registration No.107929W

GYAN PIPARAPartner

Membership. No. 034289 Date: 29th May, 2010. Place: Ahmedabad


99

BALANCE SHEET AS AT 31ST MARCH, 2010 Schedule 2010 2009 (Rs in lacs) (Rs in lacs) SOURCES OF FUNDS

SHAREHOLDERS' FUNDS

Share capital 1

3322.75

3322.75

Share Application Money 1

975.00

700.00

Reserves and surplus 2

4645.75

6513.61

8943.50

10536.36 LOAN FUNDS

Secured loans 3 18379.10 18463.18

Unsecured loans 4

43.56

43.56

18422.66

18506.74

DEFERRED TAX LIABILITY

-

749.92 [Refer note 17 of Schedule 22 (B)]

27366.16 29793.02 APPLICATION OF FUNDS

FIXED ASSETS 5 Gross Block 27034.84 26482.27

Accumulated Depreciation

(13442.14)

(11848.08)Net Block 13592.70 14634.19

Capital work-in-progress

7.86

190.03 13600.56 14824.22

INVESTMENTS 6

34.43

34.43

DEFERRED TAX ASSETS

214.08

- [Refer note 17 of Schedule 22 (B)]

CURRENT ASSETS, LOANS AND ADVANCES

Inventories 7

6197.83

5113.03

Sundry Debtors 8

2250.92

1606.43

Cash and Bank Balances 9

423.65

858.44

Other Current Assets 10

834.16

734.04

Loans and Advances 11

7527.83

8415.11


100

LESS: CURRENT LIABILITIES AND PROVISIONS 17234.39 16727.05

Liabilities 12

3478.43

1619.97

Provisions 13

340.46

343.72 (3818.89) (1963.69)

Net Current Assets

13415.50

14763.36 MISCELLANEOUS EXPENDITURE 14

101.59 171.01

(to the extent not written off or adjusted) TOTAL 27366.16 29793.02

NOTES ON ACCOUNTS 22

As per our report of even date FOR PIPARA & COMPANY CHARTERED ACCOUNTANTS Firm Registration No. 107929W

GYAN PIPARA PARTNER S. K. SOMANY Chairman Membership No. 34289 Place : Ahmedabad Date : 29th May, 2010 A. K. SOMANY Managing Director

R.S.SHARMA Place : Ahmedabad Company Secretary Date : 29th May, 2010


101

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010

Schedule 2010 2009

(Rs in lacs) (Rs in lacs) INCOME

Sales

20755.59

15707.38

Other income 16

801.86

952.94

TOTAL

21557.45

16660.32 EXPENDITURE

Manufacturing & Other Expenses 17

20277.42

16937.52

Financial Cost 15

1576.11

1573.06

Depreciation 5

1655.02

1650.59

TOTAL

23508.55

20161.17 LOSS BEFORE PRIOR PERIOD ITEM / EXCEPTIONAL ITEMS AND TAX

1951.10

3500.85


(11.81)

--- [Refer note 21 of Schedule 22 (B)]

EXCEPTIONAL ITEMS

892.36

(441.50)

[Refer note 22 of Schedule 22 (B)]

LOSS BEFORE TAXATION

2831.66

3059.35

Provision for Income Tax

---

---

Provision for Fringe Benefit Tax

---

4.67

Income Tax Paid For Earlier Years

0.19

11.13

Provision for Deferred Tax

(964.00)

(238.00)NET LOSS AFTER TAXATION 1867.85 2837.15


102

Balance brought forward from previous year

2296.19

(540.96)BALANCE BEING LOSS CARRIED TO BALANCE SHEET

4164.04

2296.19


[Refer note 25 of schedule 22(B)]

- Basic Earning Per Share

(5.65)

(8.59)

- Diluted Earning Per Share

(5.65)

(8.59) NOTES TO ACCOUNTS 22

As per our report of even date FOR PIPARA & COMPANY

CHARTERED ACCOUNTANTS

Firm Registration No. 107929W

GYAN PIPARA S. K. SOMANY Chairman PARTNER Membership No. 34289 A. K. SOMANY Managing Director

Place : Ahmedabad

R.S.SHARMA Place : Ahmedabad

Company Secretary Date : 29th May, 2010


103

SCHEDULES TO THE ACCOUNTS (Rs in lacs) 2010 2009 SCHEDULE 1 : SHARE CAPITAL

AUTHORISED

50,000,000 (50,000,000) Equity Shares of Rs. 10/-each

5000.00

5000.00

5000.00

5000.00ISSUED, SUBSCRIBED & PAID-UP 33,033,000 (Previous Year 33,033,000) Equity Shares of Rs.10/- each fully paid-up including 3,185,000 Equity Shares allotted as fully paid up Bonus Shares by capitalisation of General Reserve.

3303.30

3303.30

Add : Share forfeiture account (385,300 Equity Shares)

19.45

19.45

3322.75 3322.75

SHARE APPLICATION MONEY

975.00

700.00 NOTE : Share Application Money represents, contribution received from the promoters of the Company for funding the cost of the Restructuring Scheme as stipulated under Corporate Debt Restructuring (CDR) Scheme sanctioned to the Company by way of Right Issue of Shares.

4297.75

4022.75 SCHEDULE 2 : RESERVES & SURPLUS

GENERAL RESERVE

As per last Balance Sheet

18.58

18.58

CAPITAL RESERVE


0.57

0.57 SHARE PREMIUM ACCOUNT


8713.65

8713.65

DEBENTURE REDEMPTION RESERVE


77.00

77.00

PROFIT & LOSS ACCOUNT As per Annexed Account (Being Loss) (4164.05) (2296.20)

4645.75 6513.61


104

2010 2009 SCHEDULE 3 : SECURED LOANS

DEBENTURES 308,000 (Previous Year 308,000 ) 15% Secured

Redeemable Non Convertible Debentures of Rs. 100/- each 211.11 191.25

TERM LOANS

Rupee Loans

11298.48

10977.80

Derivative Rupee Term Loan

847.13

802.05 WORKING CAPITAL LOANS

Rupee Loans

6018.54 5915.15

Foreign Currency Loans

---

573.14

LEASEHOLD LIABILITY

3.84

3.81

18379.10 18463.18 NOTES :

a) Term Loans of Rs.10549 Lacs and Debentures of Rs. 183 Lacs of the company were restructured under Corporate Debt Restructuring (CDR) scheme during the previous year 2008-09.

b) All the Term Loans and Debentures duly restructured and are secured by way of first mortgage / charge over the immovable properties and first charge by way of hypothecation over the movable (save and except certain items of Plant & Machinery purchased and/or to be purchased under the equipment finance/credit scheme and book debts) both present and future, subject to prior charges created and/or to be created in favour of company's bankers on stocks of raw materials, finished and semi-finished goods, consumable stores and book debts for securing working capital requirement.

c) Security in respect of Funded Interest on Term Loans and Debentures are secured by way of first charge ranking pari passu over the immovable properties and first charge by way of hypothecation over the movable (save and except certain items of Plant & Machinery purchased and/or to be purchased under the equipment finance/credit scheme and book debts) both present and future, subject to prior charges created and/or to be created in favour of company's bankers on stocks of raw materials, finished and semi-finished goods, consumable stores and book debts for securing working capital requirement.

d) Funded Interest on Term Loans, Debentures, Derivative Rupee Term Loan and working capital is included in the secured loans.

e) Rupee Term Loans are inclusive of Foreign Currency Term Loan of IDBI Bank Ltd. (erstwhile IDBI), duly converted into Rupee Tied Foreign Currency Loan.

f) All Term Loans are additionally secured by personal guarantees of Shri S. K. Somany-Chairman and Shri A. K. Somany-Managing Director of the Company.


105

g) Derivative Loss converted into Derivative Rupee Term Loan under CDR Scheme are secured by way of pari passu third charge on the fixed assets and immovable properties of the company ranking third and subservient in point of priority to the charges created or to be created in favour of the existing lenders. The said loan is additionally secured by personal guarantee of Shri A K Somany - Managing Director of the Company. Repayment of this Term Loan is subjected to availability of cash flow on subservient basis as per stipulation given under Corporate Debt Restructuring (CDR) scheme. The ICICI bank has filed its consent terms to Debt Recovery Tribunal (DRT) as per Corporate Debt Restructuring (CDR) scheme with regard to provision of Derivative loss in restructuring scheme as a secured debt by way of Derivate Rupee Term Loan.

h) Term Loans shall rank pari-passu interse without any preference or priority of one or the other. i) Working Capital Loans are secured by first charge by way of hypothecation of finished and semi finished

stock, stock of raw materials, stores, stock in transit and book debts and by second charge over movable and immovable properties both present and future. These limits are additionally secured by personal guarantees of Shri S. K. Somany -Chairman and Shri A. K. Somany - Managing Director.

j) Installments of Term Loans due within one year are Rs.990.54 lacs/- (Previous Year Rs. 326.17 lacs) k) Term Loans include vehicle loans amounting to Rs. Nil (Previous Year Rs. 4.34 lacs)-secured by

hypothecation of Vehicles financed in favour of respective lenders. l) Leasehold Liability is secured by Leasehold Building.

SCHEDULE 4 : UNSECURED LOANS 2010

2009

Trade Deposits

0.17

0.17

Sales Tax Deferment Loan

43.40

43.40

43.56

43.56

2010

2009

SCHEDULE 6 : INVESTMENTS [Other than Trade] LONG TERM INVESTMENTS UNQUOTED OTHERS 10 Equity Shares of Rs. 50/- each in Las Palmas Co-op. Hsg. So. Ltd. 0.01 0.01 5 Shares of Rs. 100/- each in Poonam Apt. Association 0.01 0.01 2000 Equity shares of Rs. 10/- each of Kechak Credit & Finvest Pvt. Ltd. 0.20 0.20 IN PRECIOUS METALS

Ginnies

0.00

0.00 IN 100% SUBSIDIARY Two Equity Share of AED 150,000 each of Soma Textile FZE.

34.21 34.21

(Ceased to be a wholly owned subsidiary of the company and its Legal status stood changed from Free Zone Establishment to Free Zone Company, with effect from closure of business hours as on 31st March, 2010.)

34.43 34.43


106

SCHEDULE 5 : FIXED ASSETS

GROSS BLOCK DEPRECIATION NET BLOCK

Balance As on 01.04.2009 Additions

Deletions / Adjustmen

ts Balance As

on 31.03.2010 Balance As

on 01.04.2009 Charge for

the Year


ts

Balance As on

31.03.2010

As at 31st March

2010

As at 31st

March2009

Land - Freehold 29.82 --- --- 29.82 --- --- --- --- 29.82 29.82 -Leasehold 1.08 --- --- 1.08 --- --- --- --- 1.08 1.08

Buildings - Freehold 2926.20 230.97 --- 3157.17 665.35 91.48 --- 756.83 2400.34 2260.85

Leasehold 9.31 --- --- 9.31 0.34 0.15 --- 0.49 8.82 8.97

Plant & machinery 23189.25 357.96 66.91 23480.29 11000.08 1544.87 54.78 12490.17 10990.12 12189.17

Furniture, Fixtures & other equipments 204.47 37.97 --- 242.44 140.67 7.88 --- 148.55 93.90 63.81

Vehicles 122.14 0.53 7.95 114.72 41.65 10.64 6.19 46.10 68.62 80.49

Total 26482.27 627.43 74.86 27034.84 11848.08 1655.02 60.97 13442.14 13592.70 14634.19

Capital work in progress 190.03 7.86 190.03 7.86 --- --- --- --- 7.87 190.03

Total 26672.30 635.30 264.90 27042.70 11848.08 1655.02 60.97 13442.14 13600.57 14824.22

Previous year 26530.18 2655.49 2513.36 26672.30 10905.48 1650.59 708.00 11848.08 14824.22


107

2010

2009

SCHEDULE 7 : INVENTORIES (As taken, valued and certified by the Management)

Stores and Spares including in transit

844.04

697.67

Raw Materials including in transit 1

1547.78

689.86

Finished Goods

1525.38

1670.59

Goods in Process

2208.60

2036.29

Waste

72.04

18.61

6197.83

5113.03 SCHEDULE 8 : SUNDRY DEBTORS (Considered good unless stated otherwise)

Outstanding for a period exceeding six months:

Unsecured

38.62

28.09 Other Debts:

Secured

389.82

443.52

Unsecured

1822.48

1134.82

2250.92

1606.43 2010 2009

SCHEDULE 9 : CASH AND BANK BALANCES

Cash on hand

2.70

6.17 With Scheduled Banks :

- In Current Accounts

92.01

791.17

- In Margin Accounts

242.36

53.54

- In Fixed Deposit Accounts

85.09

6.05

- In Debenture Account (Refund)

1.50

1.50

423.65

858.44


108

2010

2009

SCHEDULE 10 : OTHER CURRENT ASSETS

Export Incentive Receivable

75.70

124.44

Duties, Claims & Other Receivables

171.13

177.02

Interest Receivable under TUF Scheme

576.63

425.14

Interest Accrued

10.69

7.45

834.16

734.04

2010

2009

SCHEDULE 11 : LOANS AND ADVANCES (Unsecured, considered good)

Advances recoverable in cash or in kind or for value to be received

143.29

102.35

Balance with Central Excise in Current Account

37.89

41.14 Income Tax Advance

105.49

93.67

Fringe Benefit Tax

0.85

5.75

Security & other Deposits

161.52

175.63

SOMA Textile FZE Loan Account

7078.78

7996.57 [Refer note 23 of schedule 22(B)]

7527.83

8415.11 SCHEDULE 12 : LIABILITIES

Sundry Creditors

3249.14

1330.22

Other Liabilities

194.87

289.75

Interest accrued but not due

34.41

---

3478.43

1619.97 SCHEDULE 13 : PROVISIONS Gratuity 322.70 317.02

Bonus 17.76 22.02

Fringe Benefit Tax - 4.68 340.46 343.72


109

2010

2009

SCHEDULE 14 : MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted)

Deferred Revenue Expenditure

107.92

127.74

Preliminary Expenses

630.94

72.51

171.01

200.25

Less: Expenses written off

69.42

29.23

101.59

171.01 SCHEDULE 15 : FINANCIAL COST INTEREST RECEIVED (GROSS)

From Banks & Others

55.20

51.77

55.20

51.77 INTEREST PAID

To Banks & Others

633.11

610.33 On Term Loans 948.09 892.14

1581.20 1502.47

OTHER FINANCE COST

50.10

122.36

1631.30

1624.83 1576.11 1573.06 2010 2009 SCHEDULE 16 : OTHER INCOME

Rent

0.69

0.85

Interest Incentive under TUF Scheme

507.22

451.79

Miscellaneous Receipts

261.17

337.42

Insurance & Other claims

20.58

33.22

Liabilities no longer required written back

---

0.04

Profit on Sale of Fixed Assets (Net)

12.21

129.62 801.86 952.94


110

2010

2009

SCHEDULE 17 : MANUFACTURING & OTHER EXPENSES

Raw Materials consumed

11736.71

9541.71

Cloth Purchases

592.89

92.99

Garment material & Job work charges

157.11

40.01

Stores & Spares

2331.50

2071.16

Power & Fuel

3162.06

2513.50

Processing & Printing Charges

3.79

7.21

Cost of Employment

1528.51

1394.26 Rent

4.24

2.91

Rates & Taxes

23.22

25.81

Insurance 38.69 37.48

Miscellaneous Expenses

261.17

198.00Repairs

-Plant & Machinery

155.64

115.65

-Buildings

10.20

10.43

-Other Assets

3.48

2.02

Commission & Brokerage to Selling Agents

149.56

116.82

Forwarding & Delivery Expenses

62.98

121.27

Service Tax

7.18

7.27

Payment to Auditors

9.95

10.82

Directors' Meeting Fee

0.45

0.35

Wealth Tax

0.62

0.62

Travelling Expenses

486.19

17.44


111

Miscellaneous Expenditure Written Off

69.42

29.23 20357.94 16356.96Less : Increase/(Decrease) in Stocks 80.52 (580.56) 20277.42 16937.52

2010

2009

SCHEDULE 18 : RAW MATERIALS CONSUMED

Opening Stock

689.86

1288.50

Add: Purchases

12594.63

8973.77 13284.49 10262.29

Less : Sales

---

30.72

Closing Stock

1547.78

689.86

11736.71

9541.71

SCHEDULE 19 : COST OF EMPLOYMENT

Salaries, Wages & Gratuity

1344.47

1249.39

Contribution to Employees' Provident Fund

93.31

90.43

Contribution to Employees' Insurance Scheme

2.77

1.52

Workers and Staff Welfare Expenses Incl. cont.to E.S.I.

87.96

52.92

1528.51

1394.26

2010

2009

SCHEDULE 20 : PAYMENT TO AUDITORS

Audit Fees

5.94

4.80

Taxation Matters

1.39

4.59

Other matters

2.27

0.91

Reimbursement of expenses

0.34

0.51

9.95

10.82


112

2010

2009

SCHEDULE 21 : INCREASE / (DECREASE) IN STOCKS

Opening Stock

3725.50

4306.05

Less: Closing stock

3806.01

3725.50

80.52

(580.56)

SCHEDULE 22: SIGNIFICANT ACCOUNTING POLICIES & NOTES FORMING PART OF FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010. (A) SIGNIFICANT ACCOUNTING POLICIES 1) BASIS OF ACCOUNTING :

The financial statements are prepared under the historical cost convention, on the accrual basis of accounting and comply with the provisions of Companies Act, 1956, generally accepted accounting principles in India and Companies (Accounting Standards) Rules 2006 as amended from time to time to the extent applicable.

2) REVENUE RECOGNITION : (a) Sales including export sales and trading sales are recognised when goods are dispatched from the

factory and are recorded at net of shortages, claims settled, discounts, rate differences, rebate allowed to customers.

(b) Export Sales are booked on the rate prevailing on the date of transaction and the resultant gain or loss on realisation is accounted as “Foreign Exchange Rate Fluctuation” and is dealt in the Profit and Loss Account.

3) A) FIXED ASSETS : (a) Fixed Assets are stated at cost, net of accumulated depreciation. However, in the case of

Baramati Unit, fixed assets are further reduced by the amount of Sales Tax refund due. All costs including financing costs till the commencement of commercial production related to the acquisition and installation of the respective assets have been capitalised.

(b) Cost of leasehold land is not amortised over the period of lease, as the same is exempted as per Accounting Standards 19 (1) (c).

(c) Amount incurred towards capital work-in-progress will be suitably apportioned to the respective Fixed Assets on commissioning of assets.

(d) Assets, identified and evaluated technically as obsolete and held for disposal have been written off in relevant year and adjusted from profit on sale of Fixed Assets.

(e) Foreign exchange rate variations relating to acquisition of Fixed Assets are transferred to Profit & Loss Account as per the revised Accounting Standard 11 "The Effects Of Changes In Foreign Exchange Rates".

(f) The 10% Capital Subsidy under TUFS from Ministry of Textiles on specified processing machinery has been deducted from the respective Fixed Assets.


113

B) DEPRECIATION:

(a) Ahmedabad Unit : Depreciation on fixed assets is charged on Straight-Line method on prorata basis, except on the fixed assets purchased during the period 1st April, 1988 to 31st March, 2005 on which depreciation has been charged on Written Down Value Method on prorata basis.

(b) Baramati Unit : Depreciation on fixed assets is charged on Straight-Line Method on pro-rata basis, by applying the rates as specified in Schedule XIV to the Companies Act, 1956. However, the Plant & Machineries have been considered as Continuous Process Plant based on technical assessment and are depreciated accordingly.

4) INVENTORIES : Inventories of Raw Materials, Goods in Process, Stores and Spares and Finished Goods are stated at cost or net realisable value whichever is lower except saleable waste which is valued at contracted selling price. Goods in Transit are stated at cost. Cost comprises of cost of purchases, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formulae used is 'First-in-First-out' (FIFO) basis.

5) INVESTMENTS : Investments are classified as Long Term Investments and Current Investments as per AS -13 "Accounting for Investments". Long term investments are stated at Cost. Provision is made for diminution in the value of Long term Investments to recognise a decline, if any other than temporary in nature.

6) FOREIGN EXCHANGE TRANSACTIONS : (a) Foreign currency transactions are recorded at the exchange rates at the date of transaction. (b) Gains and losses resulting from the settlement of such transactions and from the translation of

monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account.

(c) Premium in respect of forward contracts is accounted over the period of the contract. (d) Forward Exchange contracts entered for trading purposes are valued and marked to its current

market value and the resultant gain or loss is dealt with in Profit and Loss Account. (e) All foreign currency loans outstanding at the close of the balance period are expressed in Indian

currency at the exchange rate prevailing on the date of Balance Sheet. (f) Foreign exchange rate variations relating to acquisition of Fixed Assets are transferred to Profit &

Loss Account as per the revised Accounting Standard 11 "The Effects of Changes in Foreign Exchange Rates". Current assets & current liabilities in foreign currency, other than those covered by forward exchange contracts, outstanding at the close of the balance sheet date are converted in Indian currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted as “Foreign Exchange Rate Fluctuation", during the year.


114

7) USE OF ESTIMATES :

The preparation of financial statement requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses and disclosure of contingent liabilities on the date of financial statement. The recognition, measurement, classification or disclosure of the information in the financial statement has been made relying on these estimates.

8) IMPAIRMENT OF ASSETS : Consideration is given at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amounts of the Company's Assets. If any indication exists, an Asset's recoverable amount is estimated. An impairment loss is recognized wherever the carrying amount of an assets exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use.

9) EXCISE DUTY : The Company has obtained exemption for excise duty with effect from 10.11.2004 with respect to Ahmedabad Unit and with effect from 24.02.2006 with respect to Baramati Unit.

10) EMPLOYEE BENEFITS : (a) Short term employee benefits are recognized as an expense at undiscounted amount in the Profit &

Loss Account of the year in which the related service is rendered. (b) Post employment and other long term employee benefits are recognized as an expense in the Profit

& Loss Account for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain / loss in respect of post employment and other long term benefits are charged to Profit & Loss Account.

11) RESEARCH AND DEVELOPMENT EXPENSES : Research and development expenditure of revenue nature is recognised as an expense in the year in which it is incurred and the expenditure of capital nature are depreciated over the useful lives of the assets.

12) TREATMENT OF CONTINGENT LIABILITIES : Contingent Liabilities not provided for are disclosed by way of Notes on Accounts.

13) AMORTISATION OF DEFERRED REVENUE EXPENDITURE : - Upfront processing charges and expenses related to loans from IDBI, Dena Bank and Exim Bank are

being amortised over a period of loan i.e. ten years. - Preliminary expenses including cost of increasing authorised capital & GDR issue expenses are

amortised over a period of ten years. - Upfront fee and loan processing charges paid to ICICI Bank Ltd. are amortised over a period of five

years. - Overhauling charges of DG Set are to amortised over expected running hours of the DG Set. However,

the management has decided to write off 100% expenditure during the year, as the Company will not use the DG set because the MSEB rate is cheaper than generating electricity from DG set.


115

14) EXPORT INCENTIVES:

Following the Accrual Concept of Accountancy, the Company has taken credits as income for Rs.12, 312,267/- (Previous Year Rs. 22,239,294/-) being Duty Drawback available and DEPB License at the close of the year.

15) TAXATION: Tax expense comprises current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Deferred tax reflects the tax effect of the timing differences between accounting income and taxable income originating and reversing during the year. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(B) NOTES ON ACCOUNTS 1) As per Accounting Standard 15 "Employee Benefits" the disclosure of employee benefits as defined in

the Accounting Standard are given below:

Ahmedabad Unit a) Defined Contribution Plans

The Company has recognised following amounts in Profit & Loss Account for the year: (Rs. in lacs) 2010 2009 1 Contribution to Employees' Provident Fund. 42.27

38.32

2 Contribution to Pension Fund 32.36

32.05

3 Contribution to Labour Welfare Fund 2.79

0.56

4 EDLI Charges 0.03

0.03

5 Administration Charges of Provident Fund 5.61

5.24

Total 83.07 76.20

b) Defined Benefit Plans: The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

1) Reconciliation of opening and closing balance of Defined Benefit obligation:

Gratuity 2010 2009

a) Present value of Defined Benefit Obligation as at 31st March, 2009 297.58 285.18

b) Interest Cost 24.55 19.96c) Current Service Cost 19.10 19.59 d) Benefit paid (31.31) (51.18)


116

e) Net Actuarial (Gain) / Loss (5.06) 24.02

f) Present value of Defined Value Obligation as on 31st March, 2010 304.85 297.58

2) Reconciliation of fair value of Plan Assets.

a) Fair value of Plan Assets as at 31st March, 2009 NIL NILb) Expected return on Plan Asset NIL NILc) Net Actuarial (Gain) / Loss NIL NILd) Employer Contribution NIL NILe) Benefit paid NIL NILf) Fair value of Plan Assets as at 31st March, 2010 NIL NIL

3) Actuarial Assumptions

Discount rate as on 31st March, 2010 8.25% 7.00%

Annual Increase in salary cost. 5.00% 5.00%

The estimates of future salary increase, considered in actuarial valuation take into account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

4) Leave encashment (Rs in lacs)

2010 2009 a) Defined Benefit Obligation as on 31st March, 2010

19.49

20.36The above information is certified by the Actuary.

Baramati Unit a) Defined Contribution Plans

The Company has recognized following amounts in the Profit & Loss Account for the year:- (Rs in lacs)

2010 2009 1 Contribution to Employees' Provident Fund. 5.39 6.38 2 Contribution to Pension Fund 6.23 6.82 3 Contribution to Labour Welfare Fund 0.10 0.13 4 EDLI Charges 0.37 0.41 5 Administration Charges of P.F. 1.07 1.21 Total 13.17 14.94


117

b) Defined Benefit Plans 1) Reconciliation of opening and closing balances of the present value of the Defined Benefit

Obligation (DBO) (Rs in Lacs)

Gratuity 2010

Leave Encashment 2010

Gratuity 2009

Encashment 2009

Opening DBO as on April 1, 2009

19.45 6.16 20.35 5.57

Benefits paid during the year

4.14 1.57 3.83 2.46

Closing DBO as on March 31, 2010

17.84 5.81 19.45 6.16

Expenses recognized in the Profit & Loss Account

2.53 1.23 2.92 3.05

Assets./(Liabilities) recognized in the Balance Sheet as on March 31, 2010

17.84 5.81 (19.45) (6.16)

2) Actuarial Assumptions :

2010 2009 Discount Rate 8.25% p.a. 8% p.a. Salary Escalation Rate 6% p.a. 6% p.a. Mortality Table LIC (1994-96) Ultimate LIC (1994-96) UltimateAttrition Rate 2% p.a. 2% p.a.

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

2) Estimated amount of contracts remaining to be executed on capital account and not provided

for Rs. 161.73 lacs (Previous year Rs. 407.18 lacs/- ), advance paid Rs. 2.82 lacs (Previous year Rs. 328.68 lacs)

3) The Company had been sanctioned a Restructuring Package by Corporate Debt Restructuring (CDR) Cell under the CDR Mechanism of RBI vide Letter of Approval (LOA) No. BY.CDR/AG No. 1110/2008-2009 dated 26th February, 2009 for restructuring the Company’s existing financial assistance outstanding as on 30th September, 2008, availed of from the Institutional Lenders and Working Capital from Banks, and sanctioning additional financial assistance extended/to be extended to the Company in the manner and to the extent set out in the LOA. The salient features of the scheme were injection of fresh working capital and concession in the bank charges, reduction in margins, fresh term loan for completion of pending capital projects, funding of interest, reduction in interest rate, moratorium and deferment of principal amount repayments.


118

4) Contingent Liabilities not Provided for in respect of –

(Rs in lacs) PARTICULARS

2010 2009

a) Bills discounted by the company

248.06 413.62

b) Sales Tax Payment disputed by the Company

6.17 -

c) Excise Duty demand disputed by the Company

35.13 35.13


24.54 38.90

e) Tandulwadi Grampanchaat Tax

5.42

f) Electrical Inspection Division, Pune

- 176.46

5) Unredeemed Bank Guarantees (Rs in lacs) 44.91 63.77

(margin in form of FDR Rs.6.04 lacs provided against Bank Guarantees)

6) (a) The Company has been advised that the computation of net profits for the purpose of Directors remuneration under Section 349 of the Companies Act, 1956 need not be enumerated in view of loss in the company. Therefore, the question of payment of commission doesn’t arise. However, fixed monthly remuneration has been paid to the whole-time Directors as per Schedule XIII to the Companies Act, 1956.

(Rs in lacs) (b) Directors Remuneration: 2010 2009 i) Salary 23.79 19.19 ii) Contribution to Provident Fund 2.26 2.09 iii) Perquisites 2.07 1.62 28.11 22.90

7) In the opinion of the Board and to the best of their knowledge and belief, the valuation on realisation of

current assets, loans and advances in the Ordinary Course of business would not be less than the amount at which they are stated in the Balance Sheet.


119

8) A) Auditors’ Remuneration :

2010 2009 i) As Auditor 5.45 4.30 ii) As Advisor, in respect of

- Taxation Matters 1.39 4.59 - Management Services - - - Company Law Matters - -

iii) In any other manner 2.61 1.42 B) Fees paid to Cost Auditors 0.50 0.50

9) Other Liabilities include FCD Application Money Refundable of Rs. 1.27 lacs (Previous Year Rs.1.27

lacs) 10) Stores consumption includes partly for repairs and replacements.

11) Profit/loss on the sale of Raw Material has been adjusted from the consumption.

12) Sundry debit / credit balances and the accounts squared up during the balance sheet period are subject to

confirmation and reconciliation from the parties to the transactions.

13) The company has been making efforts for obtaining informations from its vendors regarding their status under "Micro, Small and Medium Enterprises Development Act, 2006". However, the required information has not been received from the vendors and therefore bifurcation between Total Outstanding Dues of Micro Enterprises and Small Enterprises and Other Dues are not disclosed under the heading "Current Liabilities & Provisions".

14) The receivables includes bill discounted with bankers amounting to Rs. 248.06 lacs (Previous Year Rs.

413.62 lacs/-). The Bills are backed & secured against confirmed L/Cs and hypothecation of present and future receivables. The sundry creditors includes creditors against Letters of Credit outstanding amounting to Rs. 1631.63 lacs (Previous Year Rs. 637.43 lacs).

15) In absence of any indication of there being potential impairment of any assets, as prescribed in AS-28

"Impairment of Fixed Assets", as at Balance Sheet date, no recoverable amount has been estimated.

16) No amounts are due for deposits as at the Balance Sheet date to the Investors Protection and Education Fund.

17) In accordance with Accounting Standard 22 "Accounting for taxes on income" under the Companies

(Accounting Standards) Rules 2006, for the year under consideration there is Deferred Tax Asset of Rs.964 lacs (Previous Year 238 lacs) has been recognised in the profit and loss account. The net Deferred Tax Asset Rs. 214.08 lacs (Previous year net Deferred Tax Liability Rs. 749.92 lacs) comprises of deferred tax liability related to fixed assets Rs. 1696.89 lacs less deferred tax assets as per carried forward unabsorbed depreciation and business losses available as per Income Tax Act 1961 Rs. 1910.97 lacs.

18) Import purchases are booked on the basis of the amount actually paid.


120

19) Related Party Transaction

1.1 Holding Company

Not Applicable

1.2 Subsidiary Company

SOMA TEXTILE F.Z.E., Sharjah, UAE

(Ceased to be a wholly owned subsidiary of the company and its Legal status stood changed from Free Zone Establishment to Free Zone Company, with effect from closure of business hours as on 31st March,2010.)

1.3 Fellow Subsidiary

Not Applicable

1.4 Other related parties where control exists.

Somany Evergreen Knits Ltd. Kechak Credit & Finvest Ltd.

1.5 Key Management Personnel and their relatives

Shri S. K. Somany, Chairman (Shri A. K. Somany, Managing Director is son of Shri S. K. Somany) Shri A. K. Somany, Managing Director (Shri S. K. Somany, Chairman is father of Shri A. K. Somany) Shri Shrikant Bhat, Executive Director Shri Shrikant Bhat, Manager, Soma Textile FZE.

1.6 The following transactions were carried out with related parties in the ordinary course of business :

Particulars

Subsidiaries

Key Management personnel and their

relatives

Other parties which significantly influence / are influenced by the

Company (either individually or

otherwise) 2010 2009 2010 2009 2010 2009

Rent Paid - - - - 1.76 1.56 Water & Electricity Charges

- - - - 0.92 1.17

Sales - - - - - 15.28 Testing Changes - - - - 0.08 0.16 Packing Materials - - - - - -

Repair & Maintance 0.43 -

Rates & Taxes 0.00 -

Loan Given - - - - - -

Investment made - - - - - -

Remuneration - - 28.11 22.90 - -

Sitting Fee - - 0.13 0.08 - -


121

Balance outstanding at date of Balance sheet

- payable - - - - - - - receivable

7078.78

7996.57 - -

0.06

0.64

20) Amount of exchange rate net fluctuation debited to Profit & Loss Account for the year is Rs. 860.25 lacs (Previous year credited Rs.480.53 lacs)

21) Prior Period Income Represent :

Particulars 2010 2009 (Rs in lacs) (Rs in lacs)

Credit Relating to Earlier Years

25.03 -

Debit Relating to Earlier Years

(13.22)-

11.81 -

22) Exceptional items : Exceptional items for the current Year includes foreign exchange fluctuations and Retrenchment compensation. The Previous Year figures also includes derivative loss .

23) Use of GDR Proceeds and Investment in Soma Textile FZE : (a) The company came out with the GDR Issue on 20th October,2006 for Rs.7837.50 lacs. Out of

the said GDR's an amount of Rs.7078.78 lacs upto 31st March,2010 (Previous year Rs. 7996.57 lacs) has been invested in Soma Textile FZE, Sharjah, U.A.E. a wholly owned subsidiary of the company, an establishment with limited liabilities registered in Hamriya Free Zone, Sharjah, U.A.E. to augment its long term resources. However, as per the report on Financial Statement as on 31st March, 2010 as certified by AL SAIF AUDITING & ACCOUNTANTS, independent Auditors pertaining to Soma Textile FZE, its legal status stood changed from FZE (Free Zone Establishment) to FZC (Free Zone Company) with effect from closure of business hours as on 31st March, 2010, as Soma Textile FZE ceased to be a wholly owned Subsidiary of the company with effect from closure of business hours as on 31st March, 2010.

(b) As on 31st March 2010, the company has total investment of Rs.7113 lacs (Previous Year Rs.

8030.78 lacs ) in its 100% subsidiary, Soma Textile FZE, Sharjah, UAE, out of which Rs.34.21 lacs(Previous Year Rs.34.21 lacs) is in the form of equity share capital (shown under Schedule 6 - Investments) and balance Rs.7078.78 lacs (Previous Year Rs. 7996.57 lacs) is in the form of loans (shown under Schedule 11 - Loans and Advances).


122

24) As the Company's business activity falls within a single primary and geographical segment viz. 'textile', the disclosure requirements of Accounting Standard (AS-17) "Segment Reporting", issued under Companies (Accounting Standards) Rules 2006 is not applicable.

25) Earning per Share (EPS) :

Earning per Share (EPS) :

2010 (Rs in lacs) 2009 (Rs in lacs)

a) Basic : (5.65) (8.59)

Numerator : Net profit/(Loss) after taxation as disclosed in

Profit & Loss Account (After Extra Ordinary Items) (1867.85) (2837.16)

Denominator :Weighted Average No. of Equity

Shares outstanding during the year 330.33 330.33 b) Diluted : (5.65) (8.59)

Numerator : Net Profit/(Loss) for Diluted EPS (1867.85) (2837.16)

(After Extra Ordinary Items)

Denominator :Weighted Average No. of Equity 330.33 330.33

c) The nominal value per Equity Shares is Rs.10/-

26) Additional Information pursuant to the provisions of paragraphs 3 and 4 of Part II of Schedule

VI to the Companies Act, 1956.

I. CAPACITY

2010 2009 Unit Registered Installed Registered Installed Ahmedabad Unit

Ring Spindles Nos. 25,200 23,568 25,200 23,568

Rotors Nos. 552 384 552 384

Looms Nos. 476 149 476 149

Garment stitching Machines Nos. NA 269 NA 190

Baramati Unit

Ring Spindles Nos. 60,480 30,240 60,480 30,240 The registered and installed capacities are as per Certificates given by the Management on which the Auditors have relied.


123

II. PRODUCTION & SALES

Production Sales Quantity Quantity Value (Rs. in lacs) 2010 2009 2010 2009 2010 2009

Class of Goods

Unit

Packed Cloth

Metres

17,149,133

15,261,902

17,238,748

15,289,849 13184.59

10307.89

Garments Pieces 260,683 114,829 260,683 114,829 849.61 303.47

Yarn * Kgs. 4,684,912 3,835,099 4,676,932 3,845,452 5962.14 4393.74 Own Waste Kgs.

2,415,303

2,072,671

2,309,509

2,290,032 759.24

702.27 *Excludes yarn spun for own consumption Kg.2236620 (Previous year kgs. 1830664)

III. STOCKS

Opening Stock Closing Stock

Quantity Value (Rs. in lacs) Quantity Value (Rs. in lacs) Class of Goods

Unit 2010 2009 2010 2009 2010 2009 2010 2009

Cloth*

Metres

1,111,703

1,139,650

893.16 934.36

1,022,088

1,111,703 870.16

893.16 Garments Pieces

-

-

-

-

-

-

-

- Yarn** Kgs.

40,383

50,736

43.47 55.05

48,363

40,383 76.06

43.47 Own Waste

Kgs. 69,941

287,302

18.61 119.96

175,735

69,941 72.04

18.61

* Exclusive of loose stock Rs. 579.15 lacs (Previous year Rs. 733.96 lacs) ** Exclusive of yarn in process

IV. RAW MATERIAL CONSUMED

2010

2009

Class of Goods

Unit Quantity Value (Rs. in lacs)

Quantity Value (Rs. in lacs)

Cotton Kgs. 8,359,105 5611.39 6,643,728 4530.79 Cotton Yarn Kgs. 4,332,735 4385.18 4,413,876 3940.86 Man Made Fibre

Kgs. 1,422,852 1259.73 631,386 435.01

Polyester Yarn

Kgs. 691,857 480.41 697,769 635.05


124

V. VALUE OF IMPORTED & INDIGENOUS RAW MATERIALS, SPARE PARTS AND

COMPONENTS CONSUMED

2010 2009 Raw Materials Spare Parts &

Components Raw Materials Spare Parts &

Components Rupees (lacs) % Rupees (lacs) % Rupees(lacs) % Rupees (lacs) %

Indigenous 11736.71 100.00 1994.34 85.54 9379.14 98.30 1814.88 87.63 Imported - 337.16 14.46 162.56 1.70 256.28 12.37

VI. MERCHANDISE :

Purchases Sales Quantity Value Quantity Value

Class of Goods Unit 2010 2009 2010 2009 2010 2009 2010 2009 Cloth Metres

-

-

-

-

-

-

-

-

VII. VALUE OF IMPORTS (C.I.F.) ACCOUNTED FOR DURING THE YEAR

2010 (Rs in lacs) 2009 (Rs in lacs) Capital Goods 12.37 68.16 Components & Spare Parts 322.57 256.28 Raw Material - 162.56

VIII. EXPENDITURE IN FOREIGN CURRENCY

2010 (Rs in lacs) 2009 (Rs in lacs) Interest on Foreign Currency Loans - 125.33 Traveling Expenses 20.25 2.40

IX. EARNING IN FOREIGN CURRENCY DURING THE YEAR

2010 (Rs in lacs) 2009 (Rs in lacs) F.O.B.Value of Exports 1684.85 3583.79


125

X. ADDITIONAL INFORMATION PURSUANT TO PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956.

1 Registration Details Registration No. L51909WB1940PLC010070 State Code 21 Balance Sheet Date 31.03.2010

2 Capital raised during the year (amount in Rs. thousands)

Public Issue Nil Right Issue Nil Bonus Issue

NilPrivate

Placement Nil3 Position of Mobilisation and

Development of Funds (Rs. in thousands)

Total Liabilities

2,736,616

Total Assets

2,736,616

Source of Funds Paid up Capital

332,275 Reserve &

Surplus

464,575 Share Application money 97,500,000 Secured Loans 1,837,910

Unsecured Loans 4,356 Deferred Tax Liability

- Application of Funds Net Fixed Assets 1,360,057 Investments

3,442 Net Current Assets 1,341,550 Misc.

Expenditure

10,159 Deferred Tax Assets

21,408

4 Performance of Company (Rs. in thousands)

Turnover & Other Income 2,155,745 Total Expenditure

2,438,911

Loss before tax 283,166 Loss after tax 186,785

Basic Earning per Share in Rs.

(5.65) Dividend Rate Nil

5 Name of Three Principal Products/Services of Company

Item Code No.(ITC Code) 5205 to 5209 Product Description Cotton Yarn and Cotton

Fabrics


126

27) Previous year's figures have been re-arranged, re-classified and/or re-grouped wherever considered necessary.

28) Schedule 1 to 22 form an integral part of the Balance Sheet and Profit & Loss Account.

Item Code No. (ITC Code) 5509 to 5514 Product Description Blended Yarn & Man-made

fabrics.

Item Code No.(ITC Code) 6202 to 6205 Product Description Jeans, Trousers & Shirts


127

CONSOLIDATED AUDITORS’ REPORT TO

THE BOARD OF DIRECTORS OF SOMA TEXTILES & INDUSTRIES LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF SOMA TEXTILE & INDUSTRIES LIMITED AND ITS SUBSIDIARY SOMA TEXTILE FZE, SHARJAH.

1. We have audited the attached Consolidated Balance Sheet of Soma Textiles & Industries Limited and

its Subsidiary Soma Textile FZE, Sharjah (hereinafter referred as the 'Soma Textiles & Industries Group') as at March 31, 2010, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Soma Textiles & Industries Limited's management and have been prepared by the management on the basis of separate financial statements and other financial information regarding its subsidiary. Our responsibility is to express an opinion on the consolidated financial statements based on our audit.

2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those

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

3. We did not audit the financial statements of subsidiary Soma Textile FZE, Sharjah , whose

financial statements reflect total assets of Rs. 8,419 lacs as at March 31, 2010 (Rs.9,825 lacs as at March 31, 2009) and total revenues of Rs. 2,535 lacs for the year ended March 31, 2010 (Rs.15,590 lacs for the year ended March 31, 2009) and cash flows amounting to Rs. 87 lacs for the year ended March 31, 2010 (Rs. 2 lacs for the year ended March 31, 2009) have been considered for the purpose of preparation of these consolidated financial statements.

4. The financial statements and other financial information of the above subsidiary Soma Textile FZE,

Sharjah have been audited by other auditor, Al Saif Auditing and Accountants, Chartered Accountants, Sharjah. whose report have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of the subsidiary is based solely on the report of the Al Saif Auditing and Accountants, Chartered Accountants, Sharjah.

5. We report that the consolidated financial statements have been prepared by Soma Textiles &

Industries Limited's management in accordance with the requirements of Accounting Standard (AS) 21, 'Consolidated Financial Statements' issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of Soma Textiles & Industries Limited, its subsidiary Soma Textile FZE, Sharjah included in the consolidated financial statements.

6. In our opinion, and on the basis of the information and explanations given to us and based on the

consolidation of separate audit reports on individual financial statements of Soma Textiles & Industries Limited and its subsidiary Soma Textile FZE, Sharjah, the consolidated financial statements of Soma Textiles & Industries Limited and its subsidiary Soma Textile FZE, Sharjah subject to our observation and particularly Note No. 24 of Schedule 22(B) of Notes on Accounts,


128

the said accounts read together with notes thereon give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Consolidated Balance Sheet of the consolidated state of affairs of Soma Textiles & Industries Group as at March 31, 2010; (ii) in the case of the Consolidated Profit and Loss Account, of the Loss of the Soma Textiles & Industries Group for the year ended on that date; and (iii) in the case of the Consolidated Cash Flow Statement, of the Cash Flows of the Soma Textiles & Industries Group for the year ended on that date.

For PIPARA & COMPANY CHARTERED ACCOUNTANTS

Firm Registration No. 107929W

GYAN PIPARA PARTNER

Membership No. 034289 Place:Ahmedabad Date:29thMay,2010


129

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010 (Rs in lacs)

Schedule 2010 2009 SOURCES OF FUNDS

SHAREHOLDERS' FUNDS Share capital 1 3322.75 3322.75 Share Application Money 1 1030.01 700.00 Reserves and surplus 2 4581.08 6508.57

8933.84 10531.32 LOAN FUNDS

Secured loans 3 18379.10 18463.18 Unsecured loans 4 43.56 43.56

18422.66 18506.74

DEFERRED TAX LIABILITY --- 749.93 [Refer note 17 of Schedule 22 (B)]

27356.50 29787.99 APPLICATION OF FUNDS

FIXED ASSETS 5 Gross Block 27034.85 26482.27 Accumulated Depreciation (13442.14) (11848.08)Net Block 13592.71 14634.19 Capital work-in-progress 7.86 190.04

13600.57 14824.23

INVESTMENTS 6 0.21 0.21 DEFERRED TAX ASSETS 214.08 ---

[Refer note 17 of Schedule 22 (B)] CURRENT ASSETS, LOANS AND ADVANCES

Inventories 7 6197.83 5113.03 Sundry Debtors 8 10573.02 11422.29 Cash and Bank Balances 9 516.19 862.99 Other Current Assets 10 834.16 734.04 Loans and Advances 11 453.06 423.07

18574.25 18555.42LESS: CURRENT LIABILITIES AND PROVISIONS

Liabilities 12 4793.74 3419.16 Provisions 13 340.46 343.72

(5134.20) (3762.88)Net Current Assets 13440.05 14792.54

MISCELLANEOUS EXPENDITURE 14 (to the extent not written off or adjusted) 101.59 171.01

TOTAL 27356.50 29787.99


130

NOTES ON ACCOUNTS 22

As per our report of even date FOR PIPARA & COMPANY

CHARTERED ACCOUNTANTS Firm Regstration No. 107929W

GYAN PIPARA PARTNER S. K. SOMANY Chairman Membership No. 34289 Place : Ahmedabad A. K. SOMANY Managing Director Date : 29th May, 2010 R.S.SHARMA Place : Ahmedabad Company Secretary Date : 29th May, 2010


131

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010

(Rs in lacs) Schedule 2010 2009

INCOME

Sales

23290.51

31296.89

Other income 16

801.86

952.94

TOTAL

24092.37

32249.83 EXPENDITURE

Manufacturing & Other Expenses 17

22872.10

34470.94

Financial Cost 15

1576.91

1573.35

Depreciation 5

1655.02

1650.59

TOTAL

26104.03

37694.88 LOSS BEFORE PRIOR PERIOD ITEM / EXCEPTIONAL/ EXTRAORDINARY ITEMS AND TAX (1)

2011.66

5445.05


(11.81) ---

[Refer note 21 of Schedule 22 (B)]

EXCEPTIONAL ITEMS

892.36

(441.51)[Refer note 22 of Schedule 22 (B)]

EXTRAORDINARY ITEMS

---

1850.84 [Refer note 23 of Schedule 22 (B)]

LOSS BEFORE TAXATION

2892.21

6854.38 Provision for income Tax --- ---

Provision for Fringe Benefit Tax

---

4.68

Income Tax Paid For Earlier Years

0.19

11.13

Provision for Deferred Tax

(964.00)

(238.00)


132

NET LOSS AFTER TAXATION

1928.40

6632.19

Balance brought forward from previous year

2767.03

(3865.17)BALANCE BEING LOSS CARRIED TO BALANCE SHEET

4695.43 2767.02


[Refer note 26 of schedule 22(B)]

- Basic Earning Per Share

(5.84)

(20.08)

- Diluted Earning Per Share

(5.84)

(20.08) NOTES TO ACCOUNTS 22 As per our report of even date FOR PIPARA & COMPANY

CHARTERED ACCOUNTANTS Firm Regstration No. 107929W

GYAN PIPARA S. K. SOMANY Chairman PARTNER Membership No. 34289 A. K. SOMANY Managing Director Place : Ahmedabad Date : 29th May, 2010 R.S.SHARMA Place : Ahmedabad Company Secretary Date : 29th May, 2010


133

CONSOLIDATED SCHEDULES TO THE ACCOUNTS (Rs in lacs)

2010 2009 SCHEDULE 1 : SHARE CAPITAL

AUTHORISED

50,000,000 (50,000,000) Equity Shares of Rs. 10/- each

5000.00

5000.00

5000.00 5000.00ISSUED, SUBSCRIBED & PAID-UP 33,033,000 (Previous Year 33,033,000) Equity Shares of Rs.10/- each fully paid-up including 3,185,000 Equity Shares allotted as fully paid up Bonus Shares by capitalisation of General Reserve.

3303.30 3303.30

Add : Share forfeiture account (385,300 Equity Shares)

19.45

19.45

3322.75

3322.75

SHARE APPLICATION MONEY

1030.01

700.00 NOTE : Share Application Money represents, contribution received from the promoters of the Company for funding the cost of the Restructuring Scheme as stipulated under Corporate Debt Restructuring (CDR) Scheme sanctioned to the Company by way of Right Issue of Shares.

4352.76

4022.75

2010

2009

SCHEDULE 2 : RESERVES & SURPLUS

GENERAL RESERVE


18.58

18.58

18.58

18.58 CAPITAL RESERVE


0.57

0.57 SHARE PREMIUM ACCOUNT


8713.65

8713.65

DEBENTURE REDEMPTION RESERVE


77.00

77.00


134

STATUTORY RESERVE


17.65

17.65

PROFIT & LOSS ACCOUNT

17.65

17.65

As per Annexed Account (Being Loss) (4695.43) (2767.01)

FOREIGN CURRENCY TRANSLATION RESERVE

449.05

448.14

4581.08

6508.58 2010 2009 SCHEDULE 3 : SECURED LOANS

DEBENTURES 308,000 (Previous Year 308,000 ) 15% Secured Redeemable

Non Convertible Debentures of Rs. 100/- each

211.11

191.25 TERM LOANS

Rupee Loans

11298.48

10977.80

Derivative Rupee Term Loan

847.13

802.05 WORKING CAPITAL LOANS

Rupee Loans

6018.54

5915.15

Foreign Currency Loans

---

573.14

LEASEHOLD LIABILITY

3.84

3.81

18379.10

18463.18 NOTES :

a) Term Loans Rs. 10549 Lacs and Debentures Rs. 183 Lacs of the company were restructured under Corporate Debt Restructuring (CDR) scheme during the previous year 2008-09.

b) All the Term Loans and Debentures duly restructured and are secured by way of first mortgage / charge over the immovable properties and first charge by way of hypothecation over the movable (save and except certain items of Plant & Machinery purchased and/or to be purchased under the equipment finance/credit scheme and book debts) both present and future, subject to prior charges created and/or to be created in favour of company's bankers on stocks of raw materials, finished and semi-finished goods, consumable stores and book debts for securing working capital requirement.


135

c) Security in respect of Funded Interest on Term Loans and Debentures are secured by way of first charge ranking pari passu over the immovable properties and first charge by way of hypothecation over the movable (save and except certain items of Plant & Machinery purchased and/or to be purchased under the equipment finance/credit scheme and book debts) both present and future, subject to prior charges created and/or to be created in favour of company's bankers on stocks of raw materials, finished and semi-finished goods, consumable stores and book debts for securing working capital requirement.

d) Funded Interest on Term Loans, Debentures, Derivative Rupee Term Loan and working capital is included in the secured loans.

e) Rupee Term Loans are inclusive of Foreign Currency Term Loan of IDBI Bank Ltd. (erstwhile IDBI), duly converted into Rupee Tied Foreign Currency Loan.

f) All Term Loans are additionally secured by personal guarantees of Shri S. K. Somany-Chairman and Shri A. K. Somany-Managing Director of the Company.

g) Derivative Loss converted into Derivative Rupee Term Loan under CDR Scheme are secured by way of pari passu third charge on the fixed assets and immovable properties of the company ranking third and subservient in point of priority to the charges created or to be created in favour of the existing lenders. The said loan is additionally secured by personal guarantee of Shri A K Somany - Managing Director of the Company. Repayment of this Term Loan is subjected to availability of cash flow on subservient basis as per stipulation given under Corporate Debt Restructuring (CDR) scheme. The ICICI bank has filed its consent terms to Debt Recovery Tribunal (DRT) as per Corporate Debt Restructuring (CDR) scheme with regard to provision of Derivative loss in restructuring scheme as a secured debt by way of Derivate Rupee Term Loan.

h) Term Loans shall rank pari-passu interse without any preference or priority of one or the other.

i) Working Capital Loans are secured by first charge by way of hypothecation of finished and semi finished stock, stock of raw materials, stores, stock in transit and book debts and by second charge over movable and immovable properties both present and future. These limits are additionally secured by personal guarantees of Shri S. K. Somany -Chairman and Shri A. K. Somany - Managing Director.

j) Installments of Term Loans due within one year are Rs.99,054,250/- (Previous Year Rs. 32,617,041/-) k) Term Loans include vehicle loans amounting to Rs. Nil (Previous Year Rs. 434,387/)-secured by

hypothecation of Vehicles financed in favour of respective lenders. l) Leasehold Liability is secured by Leasehold Building.


136

2010

2009

SCHEDULE 4 : UNSECURED LOANS

Trade Deposits

0.17

0.17

Sales Tax Deferment Loan

43.40

43.40

43.57

43.57

2010

2009

SCHEDULE 6 : INVESTMENTS [Other than Trade]

LONG TERM INVESTMENTS UNQUOTED OTHERS 10 Equity Shares of Rs. 50/- each in Las Palmas Co-op. Hsg. So. Ltd.

0.01

0.01

5 Shares of Rs. 100/- each in Poonam Apt. Association

0.00

0.00

2000 Equity shares of Rs. 10/- each of Kechak Credit & Finvest Pvt. Ltd.

0.20

0.20

IN PRECIOUS METALS

Ginnies

0.00

0.00

0.21

0.21


137

SCHEDULE 5 : FIXED ASSETS

GROSS BLOCK DEPRECIATION

NET BLOCK

Balance As on 01.04.2009 Additions

Deletions /

Adjustments

Balance As on 31.03.2010

Balance As on 01.04.2009

Charge for the Year


ts Balance As

on 31.03.2010

As at 31st March

2010

As at 31st March

2009

Land - Freehold 29.82 --- --- 29.82 --- --- --- --- 29.82 29.82 - Leasehold 1.08 --- --- 1.08 --- --- --- --- 1.08 1.08

Buildings - Freehold 2926.20 230.97 --- 3157.17 665.35 91.48 --- 756.83 2400.34 2260.85 - Leasehold 9.31 --- --- 9.31 0.34 0.15 --- 0.49 8.82 8.97

Plant & machinery 23189.25 357.96 66.91 23480.29 11000.08 1544.87 54.78 12490.17 10990.12 12189.17

Furniture, Fixtures & other equipments 204.47 37.97 --- 242.44 140.67 7.88 --- 148.54 93.90 63.81

Vehicles 122.14 0.53 7.95 114.72 41.69 10.64 6.19 46.10 68.62 80.49

Total 26482.27 627.43 74.86 27034.84 11848.08 1655.02 60.97 13442.14 1359.27 14634.19


138

2010

2009

SCHEDULE 7 : INVENTORIES (As taken, valued and certified by the Management) Stores and Spares including in transit

844.04

697.67

Raw Materials including in transit

1547.78

689.86

Finished Goods

1525.38

1670.59

Goods in Process

2208.60

2036.29

Waste

72.04

18.62

6197.83

5113.03SCHEDULE 8 : SUNDRY DEBTORS (Considered good unless stated otherwise)

Outstanding for a period exceeding six months:

Unsecured

38.62

28.09 Other Debts:

Secured

389.82

443.52

Unsecured

10144.58

10950.68

10573.02

11422.29


139

2010 2009

SCHEDULE 9 : CASH AND BANK BALANCES

Cash on hand

3.12

9.47 With Scheduled Banks :

- In Current Accounts

184.12

792.44

- In Margin Accounts

242.36

53.54

- In Fixed Deposit Accounts

85.09

6.05

- In Debenture Account (Refund)

1.50

1.50

516.18

862.99 SCHEDULE 10 : OTHER CURRENT ASSETS Export Incentive Receivable

75.70

124.44

Duties, Claims & Other Receivables

171.13

177.02

Interest Receivable under TUF Scheme

576.63

425.14

Interest Accrued

10.69

7.45

834.16

734.04


140

2010

2009

SCHEDULE 11 : LOANS AND ADVANCES (Unsecured, considered good)

Advances recoverable in cash or in kind or for value to be received

147.30

106.88

Balance with Central Excise in Current Account

37.89

41.14

Income Tax Advance

105.49

93.67

Fringe Benefit Tax

0.85

5.75

Security & other Deposits

161.52

175.63

453.06

423.07 SCHEDULE 12 : LIABILITIES

Sundry Creditors

4561.45

3126.20

Other Liabilities

197.88

292.97

Interest accrued but not due

34.41 ---

4793.74

3419.16SCHEDULE 13 : PROVISIONS

Gratuity

322.70

317.02

Bonus

17.76

22.02

Fringe Benefit Tax

---

4.68

340.46

343.72


141

2010

2009

SCHEDULE 14 : MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted)

Deferred Revenue Expenditure

107.92

127.74

Preliminary Expenses

63.09

72.51

171.01

200.25

Less: Expenses written off

69.42

29.23

101.59

171.01 SCHEDULE 15 : FINANCIAL COST INTEREST RECEIVED (GROSS)

From Banks & Others 55.20 51.77

55.20

51.77 INTEREST PAID

To Banks & Others

633.11

610.33

On Term Loans

948.09

892.14

1581.20

1502.47

OTHER FINANCE COST

50.91

122.65 1632.11 1625.11 1576.91 1573.35

2010 2009 SCHEDULE 16 : OTHER INCOME

Rent

0.69

0.85

Interest Incentive under TUF Scheme

507.22

451.79

Miscellaneous Receipts

261.17

337.42

Insurance & Other claims

20.58

33.22

Liabilities no longer required written back

---

0.03

Profit on Sale of Fixed Assets (Net)

12.21

129.62 801.86 952.94


142

2010

2009

SCHEDULE 17 : MANUFACTURING & OTHER EXPENSES

Trading Purchases

2552.06

17475.23

Raw Materials consumed

11736.71

9541.71

Cloth Purchases

592.89

92.99

Garment material & Job work charges

157.11

40.01

Stores & Spares

2331.50

2071.16

Power & Fuel

3162.06

2513.50 Processing & Printing Charges

3.79

7.21

Cost of Employment

1549.97

1429.85

Rent

4.24

2.91

Rates & Taxes

23.22

25.81

Insurance

38.69

37.48

Miscellaneous Expenses

282.28

220.59 Repairs

-Plant & Machinery

155.64

115.65

-Buildings

10.20

10.43

-Other Assets

3.48

2.02

Commission & Brokerage to Selling Agents

149.56

116.82

Forwarding & Delivery Expenses

62.98

121.27

Service Tax

7.18

7.27

Payment to Auditors

9.95

10.82

Directors' Meeting Fee

0.45

0.35

Wealth Tax

0.62

0.62

Travelling Expenses

48.62

17.44


143

Miscellaneous Expenditure Written Off

69.42

29.23 22952.62 33890.37

Less : Increase/(Decrease) in Stocks

80.52

(580.56)

22872.10

34470.93

2010

2009

SCHEDULE 18 : RAW MATERIALS CONSUMED

Opening Stock

689.86

1288.50

Add: Purchases

12594.63

8973.79

13284.49

10262.29

Less : Sales

---

30.72

Closing Stock

1547.78

689.86

11736.71

9541.71 SCHEDULE 19 : COST OF EMPLOYMENT

Salaries, Wages & Gratuity

1365.93

1284.98

Contribution to Employees' Provident Fund

93.31

90.43

Contribution to Employees' Insurance Scheme

2.77

1.52

Workers and Staff Welfare Expenses Incl. cont.to E.S.I.

87.96

52.92

1549.97

1429.85


144

2010

2009

SCHEDULE 20 : PAYMENT TO AUDITORS

Audit Fees

5.95

4.80

Taxation Matters

1.39

4.59

Other matters

2.27

0.91

Reimbursement of expenses

0.34

0.51

9.95

10.82 SCHEDULE 21 : INCREASE / (DECREASE) IN STOCKS

Opening Stock

3725.50

4306.05

Less: Closing stock

3806.01

3725.50

80.52

(580.56) SCHEDULE 22 : SIGNIFICANT ACCOUNTING POLICIES & NOTES FORMING PART OF

CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010

1. Background

Consolidated financial statements includes financial statements of the parent company, Soma Textiles & Industries Ltd. and its following Subsidiary Company.

Name of Subsidiary Extent of Ownership Interest (%)

Year Ended

Soma Textile F.Z.E. 100%

31st March

Legal Status and Business Activities

a) SOMA TEXTILE FZE is an establishment with limited liability registered in the Hamriya Free Zone in UAE under license # 3146 issued by Government of Sharjah, UAE on 07 November 2007 and valid up to 6th November 2010. Mr.Shrikant B Bhat and Mr. Hiren Trivedi Indian nationals are the designated Managers of the Company.

Soma Textile FZE had received share application money from two new shareholders viz Bader Ali Easa Mehboob Alali , Abdalla Ahmed Hassan Ahmad Amberman Barman for AED 2,25,000 each aggregating to AED 4,50,000 and it was disclosed as share application money in the books of accounts and subsequently 225 shares of AED 1000 each were allotted to each applicant at and after the closure of business hours as on 31st March, 2010. The status of the establishment stood changed from Free Zone


145

Establishment (F.Z.E.) with limited liability to Free Zone Company (F.Z.C.) with limited liability as per certificate of incorporation bearing Registration No. 6339 dtd. 31st March, 2010 issued by Registrar, Free Zone Companies, Hamriyah Free Zone Authority, Sharjah, UAE. The shares of the company are held as follows :

Shareholders Shares Amount(AED)

Soma Textiles & Industries Ltd. India 300 300000

Bader Ali Easa Mehboob Alali 225 225000

Abdalla Ahmed Hassan Ahmad Amberman Barman 225 225000

b) The Company is engaged in the Business of general trading and merchandise.

2. Significant Accounting Policies and notes to these Consolidated Financial Statement are intended to serve as means of informative disclosures and a guide to better understanding of the consolidated position of the Company. Recognizing this purpose, the company has disclosed only such policies and notes from the individual financial statement, which fairly present the needed disclosures. Lack of homogeneity and other similar consideration made it desirable to exclude some of them, which, in the opinion of the Management, could be better viewed, when referred from the individual financial statements.

3. Principles of Consolidation

i) Consolidation of Financial Statements are prepared using the Financial Statement of the parent company and its subsidiary company drawn upto the reporting date.

ii) The Consolidation of the financial statements of the parent company and its subsidiary is done on a line by line basis by adding together like items of assets, liabilities, income and expenses. All intra group transactions and the resulting unrealized inter company profit/losses and balances have been eliminated in the course of consolidation.

iii) The financial statement of parent company and its subsidiary have been consolidated using uniform accounting policies for like transaction and other events in similar circumstances.

iv) For the purpose of conversion of AED into Rupees, income and expenditure converted at an average rate and Assets and liabilities are converted at year ended closing rate and foreign exchange fluctuation is transferred to foreign currency translation reserve account.

(A) SIGNIFICANT ACCOUNTING POLICIES 1. BASIS OF ACCOUNTING : Parent Company The financial statements are prepared under the historical cost convention, on the accrual basis of accounting and comply with the provisions of Companies Act, 1956, generally accepted accounting principles in India and Companies (Accounting Standards) Rules 2006 as amended from time to time to the extent applicable.

Subsidiary Company These Financial Statements are prepared under the historical cost convention and in accordance with International Accounting Standards and Interpretations issued or adopted by the International Accounting Standard Board. They confirm to the International Financial Reporting Standards and are in compliance with the U.A.E. commercial Companies Law No. 8 of 1984. Accounting policies and practices applied are consistent from one period to another. It is presumed that the Company will continue to operate normally in the foreseeable future. All policies and practices have been applied consistently in preparing these statements.


146

2. REVENUE RECOGNITION : Parent Company (a) Sales including export sales and trading sales are recognised when goods are dispatched from the factory

and are recorded at net of shortages, claims settled, discounts, rate differences, rebate allowed to customers.

(b) Export Sales are booked on the rate prevailing on the date of transaction and the resultant gain or loss on realisation is accounted as “Foreign Exchange Rate Fluctuation” and is dealt in the Profit and Loss Account.

Subsidiary Company (As separately certified by Auditor of the subsidiary) (a) Revenue represents the total invoiced value for goods delivered and / or services rendered during the year

less returns and discounts. (b) Income is recognised when earned and not when received. Expenses are charged when incurred and not

when paid except for leave salary and travel benefits which are charged as and when they are paid. 3. A) FIXED ASSETS : Parent Company (a) Fixed Assets are stated at cost, net of accumulated depreciation. However, in the case of Baramati Unit,

fixed assets are further reduced by the amount of Sales Tax refund due. All costs including financing costs till the commencement of commercial production related to the acquisition and installation of the respective assets have been capitalised.

(b) Cost of leasehold land is not amortised over the period of lease, as the same is exempted as per Accounting Standards 19 (1)(c).

(c) Amount incurred towards capital work-in-progress will be suitably apportioned to the respective Fixed Assets on commissioning of assets.

(d) Assets, identified and evaluated technically as obsolete and held for disposal have been written off in relevant period and adjusted from profit on sale of Fixed Assets.

(e) Foreign exchange rate variations relating to acquisition of Fixed Assets are transferred to Profit & Loss Account as per the revised Accounting Standard 11 "The Effects Of Changes In Foreign Exchange Rates".

(f) The 10% Capital Subsidy under TUFS from Ministry of Textiles on specified processing machinery has been deducted from the respective Fixed Assets.

B) DEPRECIATION : (a) Ahmedabad Unit : Depreciation on fixed assets is charged on Straight-Line method on prorata basis,

except on the fixed assets purchased during the period 1st April, 1988 to 31st March, 2005 on which depreciation has been charged on Written Down Value Method on prorata basis.

(b) Baramati Unit: Depreciation on fixed assets is charged on Straight-Line Method on pro-rata basis, by

applying the rates as specified in Schedule XIV to the Companies Act, 1956. However, the Plant & Machineries have been considered as Continuous Process Plant based on technical assessment and are depreciated accordingly.


147

4. INVENTORIES :

Inventories of Raw Materials, Goods in Process, Stores and Spares and Finished Goods are stated at cost or net realisable value whichever is lower except saleable waste which is valued at contracted selling price. Goods in Transit are stated at cost. Cost comprises of cost of purchases, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formulae used is 'First-in-First-out' (FIFO) basis.

5. INVESTMENTS:

Investments are classified as Long Term Investments and Current Investments as per AS -13 "Accounting for Investments". Long term investments are stated at Cost. Provision is made for diminution in the value of Long term Investments to recognise a decline, if any other than temporary in nature.

6. FOREIGN EXCHANGE TRANSACTIONS : Parent Company (a) Foreign currency transactions are recorded at the exchange rates at the date of transaction. (b) Gains and losses resulting from the settlement of such transactions and from the translation of monetary

assets and liabilities denominated in foreign currencies, are recognised in the Profit and Loss Account. (c) Premium in respect of forward contracts is accounted over the period of the contract. (d) Forward Exchange contracts entered for trading purposes are valued and marked to its current market

value and the resultant gain or loss is dealt with in Profit and Loss Account. (e) All foreign currency loans outstanding at the close of the balance period are expressed in Indian

currency at the exchange rate prevailing on the date of Balance Sheet. (f) Foreign exchange rate variations relating to acquisition of Fixed Assets are transferred to Profit & Loss

Account as per the revised Accounting Standard 11 "The Effects Of Changes In Foreign Exchange Rates".

(g) Current assets & current liabilities in foreign currency, other than those covered by forward exchange contracts, outstanding at the close of the year are converted in Indian currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted as "Foreign Exchange Rate Fluctuation", during the year. Subsidiary Company Transactions in foreign currencies are translated into UAE Dirhams at the rates of exchange prevailing on the date of such transactions. Assets and liabilities in foreign currencies are translated into UAE Dirhams at the rates of exchange prevailing on the date of Balance sheet. The resultant gain or loss is taken into the profit and loss account.

7. USE OF ESTIMATES : Parent Company

The preparation of financial statement requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses and disclosure of contingent liabilities on the date of financial statement. The recognition, measurement, classification or disclosure of the information in the financial statement has been made relying on these estimates.


148

Subsidiary Company

A provision is recognized in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligator.

8. IMPAIRMENT OF ASSETS :

Consideration is given at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amounts of the Company's Assets. If any indication exists, an Asset's recoverable amount is estimated. An impairment loss is recognized wherever the carrying amount of an assets exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use.

9. EXCISE DUTY :

The Company has obtained exemption for excise duty with effect from 10.11.2004 with respect to Ahmedabad Unit and with effect from 24.02.2006 with respect to Baramati Unit.

10. EMPLOYEE BENEFITS: Parent Company

(a) Short term employee benefits are recognized as an expense at undiscounted amount in the Profit & Loss Account of the year in which the related service is rendered.

(b) Post employment and other long term employee benefits are recognized as an expense in the Profit & Loss Account for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain / loss in respect of post employment and other long term benefits are charged to Profit & Loss Account.

Subsidiary Company No provision has been made for end of service benefits payable to the staff with respect to their period of service till date of Balance sheet in accordance with UAE Labour laws. These expenses are accounted as they are incurred.

11. RESEARCH AND DEVELOPMENT EXPENSES :

Research and development expenditure of revenue nature is recognised as an expense in the year in which it is incurred and the expenditure of capital nature are depreciated over the useful lives of the assets.

12. TREATMENT OF CONTINGENT LIABILITIES : Contingent Liabilities not provided for are disclosed by way of Notes on Accounts. 13. AMORTISATION OF DEFERRED REVENUE EXPENDITURE : Parent Company

- Upfront processing charges and expenses related to loans from IDBI, Dena Bank and Exim Bank are being amortised over a period of loan i.e. ten years.


149

- Preliminary expenses including cost of increasing authorised capital & GDR issue expenses are amortised over a period of ten years.

- Upfront fee and loan processing charges paid to ICICI Bank Ltd. are amortised over a period of five years.

- Overhauling charges of DG Set are to amortised over expected running hours of the DG Set. However, the management has decided to write off 100% expenditure during the year, as the Company will not use the DG set because the MSEB rate is cheaper than generating electricity from DG set.

Subsidiary Company

- Expenses incurred in formation of the FZE will be amortized over the period of 5 years, but the Company has not provided the same.

14. EXPORT INCENTIVES :

Following the Accrual Concept of Accountancy, the Company has taken credits as income for Rs.123.12 lacs (Previous Year Rs. 222.39 lacs) being Duty Drawback available and DEPB License at the close of the year.

15. TAXATION :

Tax expense comprises current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Deferred tax reflects the tax effect of the timing differences between accounting income and taxable income originating and reversing during the year. Deferred tax is measured based on the tax rate and tax laws enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

B) NOTES ON ACCOUNTS

1. As per Accounting Standard 15 "Employee Benefits" the disclosure of employee benefits as defined in the Accounts Standard are given below :

Ahmedabad Unit

a) Defined Contribution Plans

The Company has recognised following amounts in Profit & Loss Account for the year :

2010(Rs in lacs)

2009(Rs in lacs)

1. Contribution to Employees' Provident Fund. 42.27 38.32

2. Contribution to Pension Fund 32.36 32.05

3. Contribution to Labour Welfare Fund 2.79 0.56

4. EDLI Charges 0.03 0.02


150

5. Administration Charges of Provident Fund 5.61 5.24

Total 83.07 76.20

b) Defined Benefit Plans:

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

1) Reconciliation of opening and closing balance of Defined Benefit obligation : Gratuity

2010(Rs in lacs)

2009((Rs in lacs)

a) Present value of Defined Benefit Obligation as at 31st March, 2009

297.58

285.18

b) Interest Cost 24.55

19.96

c) Current Service Cost 19.10 19.59

d) Benefit paid (31.31) (51.18)

e) Net Actuarial (Gain) / Loss (5.06) 24.01

f) Present value of Defined Value Obligation as on 31st March, 2010

304.85 297.58

2) Reconciliation of fair value of Plan Assets : 2010 2009

a) Fair value of Plan Assets as at 31st March, 2009

NIL NIL

b) Expected return on Plan Asset NIL NIL

c) Net Actuarial (Gain) / Loss NIL NIL

d) Employer Contribution NIL NIL

e) Benefit paid NIL NIL

f) Fair value of Plan Assets as at 31st March, 2010

NIL NIL


Discount rate as on 31st March, 2010 8.25% 7.00% Annual Increase in salary cost. 5.00% 5.00%


151

The estimates of future salary increase, considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

4) Leave encashment :

2010 (in lacs) 2009 (in lacs) Defined Benefit Obligation as on 31st March, 2010 19.49 20.36 The above information is certified by the Actuary.

Baramati Unit a) Defined Contribution Plans

The Company has recognized following amounts in the Profit & Loss Account for the year:- 2010 (Rs in lacs) 2009 (Rs in lacs)1 Contribution to Employees' Provident Fund.

5.39 6.38

2 Contribution to Pension Fund 6.23 6.823 Contribution to Labour Welfare Fund 0.10 0.134 EDLI Charges 0.37 0.415 Administration Charges of P.F. 1.07 1.22Total 13.17 14.94

b) Defined Benefit Plans 1) Reconciliation of opening and closing balances of the present value of the Defined Benefit

Obligation (DBO) (Rs in lacs)

Gratuity 2010 Leave Encashment

2010

Gratuity 2009

Leave Encashment

2009Opening DBO as on April 1, 2009

19.45 6.16 20.35 5.57

Benefits paid during the year 4.14 1.57 3.83 2.46Closing DBO as on March 31, 2010

17.84 5.81 19.45 6.16

Expenses recognized in the Profit & Loss Account

2.53 1.23 2.92 3.05

Assets./(Liabilities) recognized in the Balance Sheet as on March 31, 2010

17.84 5.81 (19.45) (6.16)


152


2010 2009 Discount Rate 8.25% p.a. 8% p.a. Salary Escalation Rate 6% p.a. 6% p.a. Mortality Table LIC (1994-96) Ultimate LIC (1994-96) UltimateAttrition Rate 2% p.a. 2% p.a.

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Parent Company Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 161.73 lacs (Previous year Rs. 407.18 lacs ), advance paid Rs. 2.82 lacs (Previous year Rs. 328.68 lacs)

Subsidiary Company There were no significant commitments, of capital nature of otherwise as on the date of this Balance Sheet 3) The Company had been sanctioned a Restructuring Package by Corporate Debt Restructuring

(CDR) Cell under the CDR Mechanism of RBI vide Letter of Approval (LOA) No. BY.CDR/AG No. 1110/2008-2009 dated 26th February, 2009 for restructuring the Company’s existing financial assistance outstanding as on 30th September, 2008, availed of from the Institutional Lenders and Working Capital from Banks, and sanctioning additional financial assistance extended/to be extended to the Company in the manner and to the extent set out in the LOA. The salient features of the scheme were injection of fresh working capital and concession in the bank charges, reduction in margins, fresh term loan for completion of pending capital projects, funding of interest, reduction in interest rate, moratorium and deferment of principal amount repayments.

4) Contingent Liabilities not Provided for in respect of – (Rs. in lacs)

2010 Rupees 2009 Rupees a) Bills discounted by the

company 248.06 413.62


6.17 -


35.13 35.13


24.54 38.90


153

e) Tandulwadi Grampanchaat Tax

5.42

f) Electrical Inspection Division, Pune

- 176.46

5) Unredeemed Bank Guarantees (Rs. in lacs) 44.91 63.77 (margin in form of FDR Rs.6.04 lacs provided against Bank Guarantees) 6) (a) The Company has been advised that the computation of net profits for the purpose of Directors

remuneration under Section 349 of the Companies Act, 1956 need not be enumerated in view of loss in the company. Therefore, the question of payment of commission doesn't arise. However, fixed monthly remuneration has been paid to the whole-time Directors as per Schedule XIII to the Companies Act, 1956.

(b) Directors Remuneration: 2010 (Rs in lacs) 2009 (Rs in lacs) i) Salary 23.79 17.84 ii) Contribution to Provident Fund 2.26 2.09 iii) Perquisites 2.07 2.97 28.11 22.90

7) In the opinion of the Board and to the best of their knowledge and belief, the valuation on realisation of current assets, loans and advances in the Ordinary Course of business would not be less than the amount at which they are stated in the Balance Sheet.

Subsidiary Company

No provision has been made on account of bad debts. All debts are current and are deemed good. Bad debts, if any, are written off as they arise. The Company does most of its business with regular customers.

8) A) Auditors’ Remuneration : 2010 (Rs in lacs) 2009 (Rs in lacs)

i) As Auditor 5.45 4.30 ii) As Advisor, in respect of

- Taxation Matters 1.39 4.59 - Management Services - - - Company Law Matters - -

iii) In any other manner 2.61 1.42 B) Fees paid to Cost Auditors 0.50 0.50

9) Other Liabilities include FCD Application Money Refundable of Rs. 1.27 lacs (Previous Year Rs.1.27 lacs)


154

10) Stores consumption includes partly for repairs and replacements. 11) Profit/loss on the sale of Raw Material has been adjusted from the consumption. 12) Sundry debit / credit balances and the accounts squared up during the balance sheet period are

subject to confirmation and reconciliation from the parties to the transactions.

13) The company has been making efforts for obtaining informations from its vendors regarding their status under "Micro, Small and Medium Enterprises Development Act, 2006". However, the required information has not been received from the vendors and therefore bifurcation between Total Outstanding Dues of Micro Enterprises and Small Enterprises and Other Dues are not disclosed under the heading "Current Liabilities & Provisions".

14) The receivables includes bill discounted with bankers amounting to Rs. 248.06 lacs (Previous

Year Rs. 413.62 lacs). The Bills are backed & secured against confirmed L/Cs and hypothecation of present and future receivables. The sundry creditors includes creditors against Letters of Credit outstanding amounting to Rs. 1631.63 lacs (Previous Year Rs. 637.43 lacs).

15) In absence of any indication of there being potential impairment of any assets, as prescribed in

AS-28 "Impairment of Fixed Assets", as at Balance Sheet date, no recoverable amount has been estimated.

16) No amounts are due for deposits as at the Balance Sheet date to the Investors Protection and

Education Fund. 17) In accordance with Accounting Standard 22 "Accounting for taxes on income" under the

Companies (Accounting Standards) Rules 2006, for the year under consideration there is Deferred Tax Asset of Rs.964 lacs (Previous Year 238 lacs) has been recognised in the profit and loss account. The net Deferred Tax Asset Rs. 214.08 lacs (Previous year net Deferred Tax Liability Rs. 749.92 lacs) comprises of deferred tax liability related to fixed assets Rs. 1696.89 lacs less deferred tax assets as per carried forward unabsorbed depreciation and business losses available as per Income Tax Act 1961 Rs. 1910.97 lacs.

18) Import purchases are booked on the basis of the amount actually paid.

19) Related Party Transaction

1.1 Other related parties where control exists. Somany Evergreen Knits Ltd. Kechak Credit & Finvest Ltd.

1. Key Management Personnel and their relatives

Shri S. K. Somany, Chairman

(Shri A. K. Somany, Managing Director is son of Shri S. K. Somany)

Shri A. K. Somany, Managing Director

(Shri S. K. Somany, Chairman is father of Shri A. K. Somany)

Shri Shrikant Bhat, Executive Director


155

2.

The following transactions were carried out with related parties in the ordinary course of business :

(Rs in lacs) Particulars Key Management personnel and

their relatives Other parties which

significantly influence / are

influenced by the Company (either individually or

otherwise)

2010 2009 2010 2009

Rent Paid

-

-

1.76

1.56

Water & Electricity Charges

-

-

0.92

1.17

Sales

-

-

-

15.28

Testing Changes

-

-

0.07

0.16

Packing Materials

-

-

-

-

Repair & Maintance

0.43

Rates & Taxes

0.01

Loan Given

-

-

-

-

Investment made

-

-

-

-

Remuneration

28.11

22.90

- -

Sitting Fee

0.13

0.08

- -

Balance outstanding at the year end - payable - - - -

- receivable

-

-

0.06

0.64

20) Amount of exchange rate net fluctuation debited to Profit & Loss Account for the year is Rs.

860.25 lacs (Previous year credited Rs.480.54 lacs)


156

21) Prior Period Income Represent : (Rs in lacs)

Particulars 2010 2009 sCredit Relating to Earlier Years 25.03 -Debit Relating to Earlier Years (13.22) -

11.81 - 22) Exceptional Items:

a) Exceptional items for the current Year include foreign exchange fluctuations and Retrenchment compensation. The Previous Year figure also includes derivative loss.

23) Extraordinary Items:

b) Subsidiary Company : The company has reported extraordinary item (loss) of AED Nil (Previous year AED 14,606,600/- equivalent to Rs. 1850.84 lacs) under the “Extra-ordinary Items” (loss) during the financial year as certified by the auditor of subsidiary company.

24) Use of GDR Proceeds and Investment in Soma Textile FZE :

The company came out with the GDR Issue on 20th October, 2006 for Rs.7837.50 lacs. Out of the said GDR's an amount of Rs.7078.78 lacs upto 31st March,2010 (Previous year Rs. 7996.57 lacs) has been invested in Soma Textile FZE, Sharjah, U.A.E. a wholly owned subsidiary of the company, an establishment with limited liabilities registered in Hamriya Free Zone, Sharjah, U.A.E. to augment its long term resources. However, as per the report on Financial Statement as on 31st March, 2010 as certified by AL SAIF AUDITING & ACCOUNTANTS, independent Auditors pertaining to Soma Textile FZE, its legal status stood changed from FZE (Free Zone Establishment) to FZC (Free Zone Company) with effect from closure of business hours as on 31st March, 2010, as Soma Textile FZE ceased to be a wholly owned Subsidiary of the company with effect from closure of business hours as on 31st March, 2010. During the financial year, the said subsidiary has incurred loss of AED 460,498 equivalent to Rs. 6,056,177/- (Previous Year AED 29,949,903 equivalent to Rs. 3795.03 lacs). The total loss incurred by the said subsidiary upto 31st March, 2010 is AED 699,156 as per audited accounts, as certified by AL SAIF AUDITING & ACCOUNTANTS, independent Auditors. The said AED 699,156 in INR terms is Rs 531.39 lacs on the basis of report under Section 212 of Companies Act,1956, as certified by Shankarlal Jain & Associates, Chartered Accountants, Mumbai. As on 31st March 2010, the company has total investment of Rs.7113 lacs (Previous Year Rs. 8030.78 lacs) in its 100% subsidiary, Soma Textile FZE, Sharjah, UAE, out of which Rs.34.21 lacs (Previous Year Rs.34.21 lacs) is in the form of equity share capital Rs.7078.78 lacs (Previous Year Rs. 7996.57 lacs) is in the form of loans.


157

25) Segment Reporting:

(A) Primary Segment (Business segment) (Rs. In Lacs)

Particulars 2010 2009 1 Segment Revenue a) Textiles Manufacturing 20,756 15,707 b) Trading 2,535 15,590 Total Sales 23,291 31,297 Less: Inter Segment Revenue - - Net Sales 23,291 31,297 2 Segment Loss Segment Result before Interest & Finance Cost a) Textiles Manufacturing 364 1,928 b) Trading 59 1,944

Total Segment Loss

423

3,872

Add: 1) Interest & Finance Cost

1,577

1,573

2) Other un-allocable expenditure net off un-

allocable income

-

-

Loss before Exceptional Items, Tax & Extraordinary Items 2,000 5,445

Add: Exceptional Item 892 (442) Add: Extra Ordinary Item - 1851 Loss before Tax 2,892 6,854

Other Information 3 Segment Assets

a) Textiles Manufacturing 23,970 23,555 b) Trading 8,419 9,825 Total Assets 32,389 33,380

4 Segment Liabilities a) Textiles Manufacturing 3,819 2,714 b) Trading 1,315 1,799 Total Liabilities 5,134 4,513

5 Segment Depreciation a) Textiles Manufacturing 1,655 1,651 b) Trading - - Total Depreciation 1,655 1,651

6 Capital Expenditure a) Textiles Manufacturing 635 2,655 b) Trading


158

Total Capital Expenditure 635 2,655

7 Non cash expenses other than Depreciation a) Textiles Manufacturing 69 29 b) Trading Total Non cash expenses other than Depreciation 69 29

(B) Secondary Segment (Geographical by Customers)

1 Segment Revenue a) In India 19,067 12,101 b) Outside India 4,224 19,196 Total Sales 23,291 31,297 2 Carrying Cost of Segment Assets

a) In India 23,581

23,141

b) Outside India

8,808

10,239

Total Assets

32,389

33,380

3 Addition to Fixed Assets

a) In India

635

2,655

b) Outside India

-

-

Total Addition to Fixed Assets

635

2,655

Notes:

1) Segments have been idetified in line with the Accounting Standard on Segment reporting (AS- 17) taking into account the Organisation Structure as well as the differetial risks and returns of the Segments.

2) The company has disclosed Business Segment as the Primary Segment.

3) Type of Products and Services in each Business Segment:

Business Segment Type of Products & Services a) Textiles Manufacturing Fabric, Yarn and Garments b) Trading General Trading and Merchandise


159

26) Earning per Share (EPS) :

Earning per Share (EPS) :2010

Rs in lacs 2009

Rs in lacs

a) Basic :

(5.84)

(20.08)

Numerator : Net profit after taxation as disclosed in

Profit & Loss Account (After Extra Ordinary Items)

(1928.41)

(6632.19)


330.33

330.33 Shares outstanding during the year

b) Diluted :

(5.84)

(20.08)

Numerator : Net Profit for Diluted EPS

(1928.41)

(6632.19) (After Extra Ordinary Items)


330.33

330.33 c) The nominal value per Equity Shares is Rs.10/-

27) Previous year's figures have been re-arranged, re-classified and/or re-grouped wherever considered necessary

28) Schedule 1 to 22 form an integral part of the Consolidated Balance Sheet and Consolidated

Profit & Loss Account.

As per our report of even date S. K. SOMANY Chairman FOR PIPARA & COMPANY CHARTERED ACCOUNTANTS (Firm Reg. No. 107929W)

GYAN PIPARA R.S. SHARMA A. K. SOMANY Managing Director PARTNER Company Secretary MEMBERSHIP NO.: 34289 Place : Ahmedabad Date : 29th May,2010


160

Review Report to: The Board of Directors Soma Textiles & Industries Limited LIMITED REVIEW REPORT FOR THE SIX MONTHS ENDED 30TH SEPTEMBER, 2010 We have reviewed the accompanying unaudited standalone Statement of Assets & Liabilities of Soma Textiles & Industries Limited as at 30th September, 2010, and unaudited standalone Profit and Loss Account for the period ended on that date except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter and Promoter Group Shareholding’ which have been traced from disclosures made by the management and have not been audited by us. These statements are the responsibility of the Company’s Management and have been certified by the management. Our responsibility is to issue a report on these financial statements based on our review. We conducted our review of Soma Textiles & Industries Limited, Ahmedabad Unit and relied upon the review conducted by M/s Shankarlal Jain and Associates, Chartered Accountants, Mumbai for Baramati Unit in accordance with the Standard on Review Engagements (SRE) 2400 “Engagements to Review Financial Statements”, issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatements. A review is limited primarily to inquiries of Company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the accompanying Statement of Assets & Liabilities and Profit and Loss Account prepared in accordance with applicable Accounting Standard and other recognised accounting practices and policies has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is required to be disclosed, or that this contains any material misstatement.

For PIPARA & COMPANY CHARTERED ACCOUNTANTS

(Registration No.107929W) Date : 11th November,2010 Place: Ahmedabad

GYAN PIPARA Partner

Membership No. 034289


161

STATEMENT OF ASSETS & LIABILITIES AS ON 30.09.2010

(Rs. In Lakhs)

For, Soma Textiles & Industries Ltd.

Place: Ahmedabad S. K. Somany Date: 11th November, 2010 Chairman

Particulars

6 months ended 30.09.2010

Corresponding 6 months ended in the previous Year

30.09.2009 Unaudited Unaudited Stand-alone Stand-alone SHAREHOLDERS' FUNDS: (a) Capital 4298 4153 (b) Reserves and Surplus 3826 5235 LOAN FUNDS 18732 18947 DEFERRED TAX LIABILITY - 750 TOTAL 26856 29085 FIXED ASSETS 12969 14061 INVESTMENTS 34 34

DEFERRED TAX ASSETS 214

- CURRENT ASSETS,LOANS AND ADVANCES (a) Inventories 5945 6004 (b) Sundry Debtors 2320 1474 (c) Cash and Bank balances 229 870 (d) Other current assets 877 769 (e) Loans and Advances 7440 8145 Less: Current Liabilities and provision (a) Liabilities 2893 2068 (b) Provisions 369 361 MISCELLANEOUS EXPENDITURE (NOT WRITTEN OFF OR ADJUSTED)

90

157

TOTAL 26856 29085


162

SOMA TEXTILES & INDUSTRIES LTD.

Regd. Office: 2,Red Cross Place, Kolkata-700 001 UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED 30TH

SEPTEMBER, 2010 (Rs in Lacs)

Particulars

Three Months Ended

(30.09.2010)

Three Months Ended

(30.09.2009)

Six Months Ended

(30.09.2010)

Six Months Ended

(30.09.2009)

Year Ended 31.03.2010

Unaudited Unaudited Unaudited Unaudited Audited Stand-alone Stand-alone Stand-alone Stand-alone Stand-alone

1 a) Net Sales / Income from Operations 7,472 4,912 13,057 8,902 20,756

b) Other Operating Income 59 62 103 113 261 Total 7,531 4,974 13,160 9,015 21,017 2 Expenditure

a) (Increase)/Decrease in Stock in Trade & Work in Progress 705 (89) 194 (270) (81)

b) Consumption of Raw materials 4,023 3,018 7,789 5,364 12,487 c) Purchase of traded goods - - - - - d) Employees cost 471 380 878 730 1,529

e) Stores and Spares Consumption 720 537 1,352 1,014 2,332

f) Power and fuel 931 748 1,736 1,450 3,162 g) Depreciation 417 417 826 826 1,655 h) Other Expenditure 273 165 461 346 849 Total 7,540 5,176 13,236 9,460 21,933

3 Profit from Operations before Other Income, Interest & Exceptional Items

(9) (202) (76) (445) (916)

4 Other Income 113 157 243 276 552

5 Profit before Interest & Exceptional Items 104 (45) 167 (169) (364)

6 Interest 509 408 983 789 1,576

7 Profit after Interest but before Exceptional Items (405) (453) (816) (958) (1,940)

8 Exceptional Items (244) (20) (4) (321) (892)

9 Profit / (Loss) from Ordinary activities before tax (649) (473) (820) (1,279) (2,832)

10 Tax Expense - - - - 964

11 Net Profit / (Loss) from Ordinary activities after tax (649) (473) (820) (1,279) (1,868)

12 Extraordinary Item - - - - - 13 Net Profit / (Loss) for the period (649) (473) (820) (1,279) (1,868)14 Paid up equity share capital 3,323 3,323 3,323 3,323 3,323 Face value of the share 10 10 10 10 10


163

15 Reserve excluding Revaluation

Reserves - 4,646

16 Earning Per Share (EPS) -

(a) Basic and Diluted EPS before Extraordinary items for the period, for the year to date and for the previous year (not to be annualized)

(1.96) (1.43) (2.48) (3.87) (5.65)

(b) Basic and diluted EPS after Extraordinary items for the period, for the year to date and for the previous year (not to be annualized)

(1.96) (1.43) (2.48) (3.87) (5.65)

17 Public shareholding

- Number of shares 18,375,759

18,376,759

18,375,759

18,376,759

18,375,759

- Percentage of shareholding 55.63 55.63 55.63 55.63 55.63

18 Promoters and Promoter Group Shareholding

a) Pledged / Encumbered


4,000,012

4,000,012

4,000,012

4,000,012

- Percentage of shares (as a % of the total shareholding of promoter and promoter group)

27.29 27.29 27.29 27.29 27.29

- Percentage of shares (as a % of the total share capital of the company)

12.11

12.11

12.11

12.11

12.11

b) Non - encumbered


10,656,229

10,657,229

10,656,229

10,657,229

- Percentage of shares (as a % of the total shareholding of the Promoter and Promoter group)

72.71 72.71 72.71 72.71 72.71

- Percentage of shares (as a % of the total share capital of the company)

32.26

32.26

32.26

32.26

32.26

Notes: 1. The above results have been reviewed by the Audit Committee and approved by the Board of Directors at

their respective meetings held on Thursday ,11th November, 2010. 2. The Auditors of the Company have carried out a 'Limited Review' of the above financial Results. 3. There was no investor complaint pending at the beginning of the quarter and no complaint was received

and was remained pending at the end of the quarter. 4. Income Tax including deferred tax will be determined and provided for at the end of the financial year. 5. Earning Per Share (EPS) has been calculated as per Accounting Standard (AS-20) issued by the Institute

of Chartered Accountants of India. 6. The Company has opted to submit financial results on stand-alone basis with effect from the quarter ended

30th June, 2010 upon Cessation of Soma Textile FZE (now Soma Textile FZC), Sharjah, UAE, as


164

Company's sole wholly owned subsidiary, accordingly consolidated figures of the corresponding quarter, six-month and the previous year ended 31st March 2010,are not provided in the above financial results.

7. The business activity of the Company falls within a single primary business segment viz 'Textile' and hence there are no other reportable segment as per Accounting Standard 17 'Segment Reporting' notified under Companies (Accounting Standards) Rules, 2006.

8. Exceptional items represent foreign exchange fluctuations and retrenchment compensation. 9. Previous period figures have been regrouped and rearranged wherever necessary to facilitate comparison.

For, Soma Textiles & Industries Ltd.

Place: Ahmedabad S. K. Somany Date: 11th November, 2010 Chairman


165

Summary of Accounting Ratios Particulars As at 31st

March, 2010 As at 31stMarch, 2009

Earnings per Share Basic – Rs. Negative Negative Diluted – Rs. Negative Negative Net Asset Value per Share – (Rs.) 26.74 31.36 Return on Net Worth (%) Negative Negative Weighted Average number of Equity shares outstanding during the year considered for Basic EPS and Net Asset Value per Share

33,033,000 33,033,000

Weighted Average number of Equity shares outstanding during the year considered for Diluted EPS

33,033,000 33,033,000

Notes: Basic Earnings Per Share (Rs.) = Net Profit after Tax before Extraordinary Items Weighted Average Number of Equity Shares outstanding during the year Diluted Earnings Per Share (Rs.) = Net Profit after Tax before Extraordinary Items Weighted Average Number of Diluted Equity Shares outstanding during the year. Net Asset Value Per Share (Rs.) = Net worth excluding Revaluation Reserve Number of Equity Shares outstanding during the year Return on Net Worth (%) = Net Profit after Tax and before Extraordinary Items Net worth excluding Revaluation Reserve Net Worth = Equity Share Capital + Reserves & Surplus (Excluding revaluation reserve, if any) – Miscellaneous Expenditure. Notes: 1. Net Profit as per the audited financial statement of the Company for the year ended 31/03/2010 has

been considered for the purpose of computing the above ratios.


166

Capitalisation Statement (Rs in lacs)

Particulars Pre Issue as at 31.03.2010

Post Issue

Debt as at 31st March

Short Term Debt

11846.39 11846.39

Long Term Debt

11370.02 11370.02

Total Debt

23216.40 23216.40

Shareholders’ Fund

Share Capital

- Equity

3322.75 4313.74

- Preference

- -

Reserves

4581.08 4581.08

Total Shareholders’ Fund

7903.83 8894.82

Long term Debt/Shareholders’ Funds (Ratio)

1.44 1.28

Notes: 1. The figures disclosed above are based on the audited Balance Sheet as at March 31, 2010. 2. Debts for post issue is taken as per the pre issue figures. 3. Above capitalization statement is prepared on the assumption that proposed rights issue of Equity

Shares will be subscribed fully. Management representation about working result from April 1, 2010 to September 30, 2010 (based on results for the quarter and half year ended September 30, 2010 submitted to stock exchanges) Information as required by the Government of India, Ministry of Finance circular No. F2/5/SE/76 dated February 5, 1977, as amended further on March 8, 1977 and in accordance with sub-item (B) of item X of Regulation (5) of Part E of the SEBI (ICDR) Regulations.


167

As per management representation received by us about the working result of for the period from 1st April 2010 to 30th September, 2010; Working results for the period from April 1, 2010 to September 30, 2010: (Rs in lacs) Particulars Amount Income from Operation 13057 Other Income 103 Total Income 13160 Gross Profit Before Depreciation and Tax (Before Exceptional Items) 10 Provision for Depreciation 826 Provision for Taxes - Net Profit / (Loss) (After Exceptional Items) (820) Material changes and commitments: There are no material changes and commitments, which are likely to affect the financial position of the Company since March 31, 2010 (i.e. last date up to which updated financial information is incorporated in the Draft Letter of Offer).


168

STOCK MARKET DATA FOR EQUITY SHARES OF THE COMPANY (a) The week end prices of the Equity Shares of our company for last four weeks on the BSE

Week High Price (Rs.) Low Price (Rs.) 18/10/2010 to 22/10/2010 12.10 10.2025/10/2010 to 29/10/2010 15.99 11.7001/11/2010 to 05/11/2010 14.20 13.0008/11/2010 to 12/11/2010 14.75 12.4015/11/2010 to 19/11/2010 12.90 10.45

(b) Current Market Price of our Company on BSE is Rs. 10.67 (November 19, 2010)

(c) The high and low closing prices recorded on the BSE for the preceding three Fiscals and the number of Equity Shares traded on the days the high and low prices were recorded are stated below.

(d) The high and low prices and volume of Equity Shares traded on the respective dates during the last six

months is as follows:

BSE Details of High Price

Details of Low Price

Volume

Month Rs. Rs. No of SharesMay 2010 10.99 8.88 5,23,528June 2010 10.85 8.61 6,97,299July 2010 11.80 9.45 4,72,861August 2010 11.80 9.60 7,97,542September 2010 10.69 9.71 2,94,792October 2010 15.99 9.65 54,91,640

The issue price for the proposed rights issue of equity shares has been arrived at in consultation between the issuer and the Lead Manager.

Year High Low Date Rs. Volume Date Rs. Volume 2008 06/12/07 47.00 7,53,582 24/03/08 17.40 13,797 2009 17/04/08 35.85 2,21,340 20/03/09 8.58 21,735 2010 05/06/09 16.10 48,135 29/04/09 8.63 11,408


169

SECTION VI – LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS

Except as described below and in the notes to the financial statements, there are no contingent liabilities not provided for, outstanding litigation, disputes, non payment of statutory dues, overdue to banks/ financial institutions, defaults against banks/financial institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits and arrears on cumulative preference shares issued by our Company, defaults in creation of full security as per terms of issue/other liabilities, proceedings initiated for economic/civil/any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of part I of Schedule XIII of the Companies Act, 1956) against our Company save and except the following: Contingent Liabilities (not provided for as of 31.03. 2010) (Rs in lacs)

2010

2009

a) Bills discounted by the company 248.06 413.62


6.17 -


35.13 35.13


24.54 38.90

e) Tandulwadi Grampanchaat Tax 5.42 -

f) Electrical Inspection Division, Pune - 176.46

Except as described below, there are no outstanding litigations, suits or civil proceedings, or criminal proceedings, or prosecutions or tax liabilities, irrespective of whether specified in Schedule XIII of the Act, against our Company and there are no defaults, non-payment or over dues of statutory dues, over dues to banks/ financial institutions, defaults against banks/ financial institutions, defaults in dues payable to holders of any debentures, bonds, or fixed deposits defaults in creation of full security as per terms of issue/ other liabilities, proceedings initiated for economic/ civil/ and other offences (including past cases where penalty may or may not have been awarded) that would result in a material adverse effect on the business in terms of the disclosure required under Part- E of Schedule VIII of SEBI ICDR. Neither our company nor its directors or promoters are on RBI’s list of wilful defaulters. No disciplinary action has been taken by the SEBI/ Stock Exchanges against our Company, Directors of our Company and Promoters. The Promoters of our company have not defaulted on any loan payments as on the date of this Draft Letter of Offer. Our company defaulted in loan repayments to Banks/Institutions and has undergone a scheme of debt restructuring under the CDR Mechanism. For details pl. refer Page No. 61 of this Draft Letter of Offer.


170

1. Pending matters which, if they result in adverse outcome, would materially and adversely affect the

operations or the financial position of our company:

Taxation cases and Others List of Disputed Excise/Custom Cases pending with CEGAT, Commissioner Appeal, AC & Commissioner of C. Excise, etc. as on date

Sr. No

Matters pending with

Matter SCN No. & Date / File No. & Date

Amount (Rs)

Our ReplyNo. Date

Remarks Present Status

1 CEGAT, Mumbai and the Hon'ble High Court of Gujarat, Ahmedabad

MODVAT taken on HM HDPP Roll. Dispute regarding filing of declaration as description not tally with the declaration.

F.No. V 52(3-88)DA/97/138 Dt. 13.3.97 from AC F.No.ARII/Soma/STA/SCN '97-98/475 dt. 26.5.97 (AC confirmed demand on above two SCN vide OIA No.68-69 dt.22.1.98) Penalty imposed Rs.2000/- CEGAT, Mumbai confirmed Demand vide OIA No. C-II/3597 dt.7.12.2000

17437 7991 25428

i) Reply filed vide letter dtd. 10.04.97 ii) Reply filed vide letter dtd. 10.4.97

Public Hearing (P.H.) held. Demand Confirmed vide AC Order No. 6869 dtd. 22.1.98. Appeal No. 170 AHD-1/98 paid Rs.13000/- on 6.1.99 under protest as per stay order No. 966/88 dt.23.12.98 of the Comm. Appeal, Ahd. P.H.fixed on 28.4.98 at 5.00 p.m. Mr. Kailash Arrawatia atten. Appeal 105

Next hearing date awaited

2 The Dy. Commissioner of C. Excise, Div-I, Ahmedabad.

Recovery of Deemed Modvat Credit taken on inputs i.e. outside purchased of Grey Fabrics Period March '03

F No. V52(3-34)DA/11/04 dt.24.03.2004

158973 Reply filed vide letter dtd.

01.08.2004



171

3A The Dy.

Commissioner of C. Ex. Div.III, Ahmedabad.

Recovery of Additional TTA Duty on Yarn Captively Consumed Period July '01 to Sept. '01.

SCN No.-V52 (3-25) /DA /II/ 2002 dt. 31.7.2002

963720 Reply filed vide letter dt.9.9.2002 to the Commissioner of C.Ex. Ahmedabad.


3B The Dy. Commissioner of C. Ex. Div.III, Ahmedabad.

Recovery of Additional TTA Duty on Yarn Captively Consumed Period Oct.'01 to Dec.. '01.

SCN No.V52(3-27)/DA/II/2002 dt. 27.9.2002



3C The Dy. Commissioner of C. Ex. Div.III, Ahmedabad.

Recovery of Additional TTA Duty on Yarn Captively Consumed Period Jan.'02 to Mar '02.

SCN No.V52(3-79)/DA/II/2002 dt. 22.01.2003



3D The Dy. Commissioner of C. Ex. Div.III, Ahmedabad.

Recovery of Additional TTA Duty on Yarn Captively Consumed Period April '02 to June '02

SCN No.V52(3-5)/DA/2003 dt. 6.3.2003

591088 Next hearing date awaited

4 Commissioner of Central Excise, (Appeal), Ahmedabad

Refund claim for amount short received against refund claim of yarn duty after adjusting the old recovery.

OIA No. 188/2004/AC/ Ref Dt.13.08.2005

97711 Appeal filed on 13.10.2004

Appeal No. V2(52)123/A-7104 dt. 14.10.2004. Public Hearing (P.H.) fixed on 8.8.2005 and attended by Mr. Paresh Dave, Advocate. OIA No. 220/2005 dt. 29.08.2005 received rejecting appeal for Refund. Next



172

appeal filed with CEGAT , Mumbai on 30.11.2005. Appeal No.E/3980/05/Mum. .

5 Custom,Excise & Service-tax Appellate Tribunal Waste Zone Banch-Ahmedabad.

Demand for old duty . Insurance not reversal and Capital goods.

S/1520/WZB/AHD/2008 DT. 15-12-08(of O-N-A-No;464/2008(Ahd-1)dated 22/07/2008)

50179 We have deposited Rs. 50000 , as per the order of Cegat Order No: S/5120 & Date 15-12-2008

Awaiting for final Desistion from CEGAT -AHD.

Awaitng for final decision

TOTAL 2817777

BARAMATI UNIT LITIGATION STATUS AS ON DATE

Amount in Rs.

PARTICULARS AS ON DATE

Present Status

Employee compensation Mr. B. N. Jarad, ex-employee of the company is aggrieved by grant of 40% back wages by Labour court, Pune and he has filed revision application for full back wages w.e.f. 12-7-1997 whereas the company has filed a revision application challenging the relief of reinstatement and grant of 40% back wages. Both these revisions are pending disposal before the Industrial court, Pune and the matter is subjudice.

9,39,330

Next hearing fixed on 28.01.2011


173

Labour Cases – Ahmedabad Unit

Sr. No.

Case No. Plaintiff Defendants

Name of Court

Amount Involved (in Rs.)

Subject Matter and Relief sought

Present Status

1 S.C.A. No. 10695/10

Indrapal Laxminarayan

Gujarat High Court

3,00,000/- Filed by worker against Ind. Court order to 40% wages High Court passed an order to pay 75% as back wages.

We are going to file L.P.A.

Before High Court against

this order

2 S.C.A. No. 11798/08

S.C.Tyagi Gujarat High Court

25000/- Filed by company against Industrial Court order

Pending before High Court

3 Summary Suit No. 2532/03

Mrugank A. Dave

Civil Court

29,000/- File by employee (A/C Officer) demanding-- amount as salary

Matter pending beforecourt Next hearing date 28.12.2010

4

Review App.5/06

STIL v/s S. C. Tygi

Industrial Court Ahmedabad

2,65,000 (Estimated)

Case filed by an employee against the order of labour court for re - reinstatement & full back wages Relief sought: To give full back wages & reinstatement (T 381/)

Matter pending before Court

Next hearing date 03.01.2011

5 Appeal No. 05/2010

STIL v/s Rashamikant R.

Ind.Court

1,90,000

Appeal filed against LC Order to reinstatement with back wages in T.App.278/1992



6 Review App.04/2010 & T. App. No. 266/95

STIL v/s B. D. Gajjar

Ind.Court & Labour Cour

1,80,000

Review Application filed against LC &Ind. court 's Order in Revision App. 17/07



7 T App.No. 26/08

Akshay Shah Labour court Ahmedabad

45,000 Case filed by an employee against the termination of his service. Relief sought To reinstate with back wages from the date of termination

Matter pending before Court for Order

8

T.App.No. 41/09

Sureshchandra D

Labour court 1,20,000 Case filed by an employee for reinstatement with back wages


Next hearing date on 26.12.2010


174

9

T. Application No. 42/09

Dinesh Rambhajan

Labour court 1,20,000 Case filed by an employee for reinstatement with back wages



10

Rec.App.No. 63/10

Shantaben Laxmanbhai

Labour Court 5,088/-plus Cost

File by nominee (Late Laxmanbhai Amthabhai



11 Review 5/10 Joginder Darusingh

Labour Court

15000/-

Filed by Co. against Industrial court order in App.38/07



12 Rec.App.No. 102/10

Lala Danabhai Labour Court

45000/- Filed by worker for amount of Retrenchment Compensation



Any pending matters, would materially and adversely affect the operations of financial position matters which are pending or which have arisen in the immediately preceding 10 years involving:

a) Issue of moral turpitude or criminal liability on the part of the issuer.

Nil

b) Material violation of statutory regulations by issuer

Nil

c) Economic offences where proceedings have been initiated against the issuer

Nil

Note: No penalties have been imposed on our Company, Directors of our Company, Promoters or Promoter Group Companies for any economic offences at any time in the past.


175

GOVERNMENT AND OTHER APPROVALS

We have received all the necessary licenses, permissions and approvals from the Central and State Governments and other government agencies/certification bodies required for its business and no further approvals are required by us for carrying on the present business activities of the Company. No further approvals from any Government authority/Reserve Bank of India (RBI) are required by us to undertake the existing activities, save and except those approvals, which may be required to be taken in the normal course of business from time to time. It must, however, be distinctly understood that in granting the above approvals, the Government, RBI and other authorities do not take any responsibility for the financial soundness of the Company or for the correctness of any of the statements or any commitments made or opinions expressed in the Draft Letter of Offer. In view of the approvals listed below, we can undertake this Issue and our current business activities and that no further approvals from any governmental or regulatory authority or any other entities are required to undertake the Issue or continue our business activities. Unless otherwise stated, these approvals are all valid as of the date of this Draft Letter of Offer. I. INCORPORATION:

1. Certificate of Incorporation bearing No. 9231 of 1939-1940 dated 29th March, 1940 issued by Registrar of Joint Stock Companies, Bengal.

2. The Company Identification Number (CIN) is L51909WB1940PLC010070

3. Fresh Certificate of Incorporation consequent on change of name from R. B. Rodda Co. Limited to

Soma Textiles & Industries Limited issued by Asst. Registrar of Companies, W.B. dated 21st January, 1992.

II. APPROVALS FOR THE ISSUE:

1. The Board of Directors has, pursuant to the resolutions passed at its meetings held on 31.10.2009 authorised the Issue of Equity Shares on Rights Issue basis.

2. The Shareholders have, pursuant to the resolutions passed at its meetings held on 07.12.2009 authorised the Rights Issue of Equity Shares

3. Certificate of Incorporation bearing No.9231 of 1939-1940 dated 29th March, 1940 issued by the Registrar of Joint Stock Companies, West Bengal.

4. The Company Identification Number (CIN) is L51909WB1940PLC010070 III. APPROVALS FOR BUSINESS: General Approvals:

1. Importer-Exporter Code (IEC):0888000804 2. Permanent Account Number:AADCS0405R 3. Certificate of Star Export House-B-1345


176

For Ahmedabad Plant:

1. Electricity Permission 2. Factory License No. 23/239/14-25/140/155/E-2/23 3. Boilers Certificates No. GT-5149 and GT-2860 4. Environment- Pollution control Consent Order-31517-Applied for renewal 5. Tax Deduction Account Number AHMS00722B 6. Value Added Tax at various locations 7. Central Sales Tax Number at various locations 24572201976 8. Central Excise Registration No.AADCS0405RXM002 9. Service Tax Number is AADCS0405RST001 10. Importer –Exporter Code ( IEC) -0888000804 11. Texprocil registration-cum- membership- MP/MY/15026(93)-S 12. Employee’s Provident Fund (EPF) Establishment Code No. GJ/288

For Baramati Plant:

1. Electricity Permission 2. Environment- Maharashtra Pollution control Consent No.MPCB/PCI-III/EIC-PN-4200-09/92 3. Tax Deduction Account Number PNES10896E 4. Value Added Tax at various locations 5. Central Sales Tax Number at various locations: 400020-C-330 6. State Sales Tax Registration Certificate number : 413102/S/0759 7. Factory Licence – PNA/23.230/A-94/01405 8. Central Excise Registration No.AADCS0405RXM001 9. Service Tax Number AADC0405RSD002 10. Consumer License No: Solvent/Pune-32/2007 11. Final Debonding Order No. SEEPZ/EOU/28/(88)/92/VolV/1397 12. Employee’s Provident Fund (EPF) Establishment Code No. MH/PN/31913

MATERIAL DEVELOPMENTS Save as stated elsewhere in the Draft Letter of Offer, there are no material developments after the date of last financial statements.


177

OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the issue: The Rights issue has been authorized by the Board of Directors at its meeting held on 31-10-2009. Further, the Equity Shareholders have approved the present rights issue in terms of Section 81 of the Companies Act, 1956 vide special resolution passed at the Extra- Ordinary General Meeting of the Company held on 07.12.2009. The Board of Directors at its meeting held on November 11, 2010 has approved the present rights issue. PROHIBITION BY SEBI: There is no prohibition on Our Company, our Promoters, our promoter group, our Directors or our group companies from accessing or operating in the capital markets or restrained from buying, selling, or dealing in the securities under any order or direction passed by SEBI. None of the promoters, directors or person in control of our company was or also is a promoter, director or person in control of any other company which is debarred from accessing the capital market under any order or directions made by SEBI. None of our directors are associated with securities market in any manner, except as general investors and SEBI has not initiated any action against our directors in this regard. Further, our company, our Promoter, their relatives (as per the Companies Act, 1956), group companies, are not declared as wilful defaulters by RBI/ Government authorities and there are no violations of securities law committed by them in the past or pending against them. Compliance with Part E of Schedule VIII of the SEBI Regulations Our company is in compliance with the provisions specified in Part E of Schedule VIII of the SEBI Regulations. Approvals for the Issue & Business Activity Our Company is not proposing to enter into any new line of business and has all the necessary approvals for undertaking its present activities and no further approvals from any Government authority are required by our Company to undertake its present activities. Our Company can undertake the activities proposed in view of the present approvals and will take necessary steps, if any, at the appropriate time to obtain any Government /statutory clearances for activities to be undertaken from the proceeds of the issue. Disclaimer Clause of SEBI AS REQUIRED, A COPY OF THIS DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SECURITIES AND EXCHANGE BOARD OF INDIA. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF OFFER DOCUMENT TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE OFFER DOCUMENT. THE LEAD MERCHANT BANKER, ARIHANT CAPITAL MARKETS LIMITED, HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME


178

BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE OFFER DOCUMENT, THE LEAD MERCHANT BANKER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE ISSUER DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MERCHANT BANKER, ARIHANT CAPITAL MARKETS LIMITED, HAS FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED NOVEMBER 23, 2010 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992, WHICH READS AS FOLLOWS:

1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS, ETC. AND OTHER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, IT’S DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS AND OTHER PAPERS FURNISHED BY THE COMPANY,

WE CONFIRM THAT:

A. THE DRAFT LETTER OF OFFER FILED WITH SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

B. ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE AS ALSO THE REGULATIONS, GUIDELINES, INSTRUCTIONS, ETC. FRAMED / ISSUED BY SEBI, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

C. THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT 1956, THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.

3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED

IN THE DRAFT LETTER OF OFFER ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATIONS ARE VALID;

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS - NOT APPLICABLE;


179

5. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIS AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIS PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED / SOLD / TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT LETTER OF OFFER WITH SEBI TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF OFFER - NOT APPLICABLE

6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER - NOT APPLICABLE.

7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE COMPANY ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE - NOT APPLICABLE.

8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE DRAFT LETTER OF OFFER. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE


180

BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION. NOTED FOR COMPLIANCE

10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.

11. WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE SECURITIES AND EXCHNAGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.

12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER:

A. AN UNDERTAKING FROM THE COMPANY THAT AT ANY GIVEN TIME, THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE COMPANY AND;

B. AN UNDERTAKING FROM THE COMPANY THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.

13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHNAGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHILE MAKING THE ISSUE.

14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OR THE COMPANY, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE, ETC.

15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHNAGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.

The filing of Draft Letter of Offer does not, however, absolve our Company from any liabilities under Section 63 or Section 68 of the Act or from the requirement of obtaining such statutory and other clearances as may be required for the purpose of the proposed Issue. SEBI further reserves the right to take up, at any point of time, with the Lead Manager any irregularities or lapses in the Draft Letter of Offer. In addition to the Lead manager, the issuer is also obligated to update the offer document and keep the public informed of any material changes till the date of listing and commencement of trading of the securities offered under this Draft Letter of Offer.


181

Caution: Our Company and the Lead Manager accept no responsibility for statements made otherwise than in the Draft Letter of Offer or in the advertisements or any other material issued by or at the instance of our Company and that anyone placing reliance on any other source of information would be doing so at his/her/their own risk. Investors who invest in the issue will be deemed to have represented to the issuer and lead manager and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire equity shares of our company, and are relying on independent advice / evaluation as to their ability and quantum of investment in this issue. All information shall be made available by the Lead Manager and our company to the shareholders and no selective or additional information would be made available for a section of the shareholders or investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc Disclaimer in Respect of Jurisdiction: This Draft Letter of Offer has been prepared under the provisions of Indian Law and the applicable rules and regulations hereunder. This Draft Letter of Offer does not constitute an offer to sell or an invitation to subscribe to securities hereby issued, in any jurisdiction other than India. The distribution of the Draft Letter of Offer and the offering of the securities on a rights basis to persons in certain jurisdictions outside India may be restricted by the legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate Court(s) in Kolkata, India only. No action, has been, or will be taken, to permit offering of these securities in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for its observations and the Draft Letter of offer would be filed with the relevant Stock Exchanges in India. Accordingly, the Equity Shares may not be offered or sold directly or indirectly, and the Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of the Draft Letter of Offer, nor any sale hereunder, shall under any circumstances create any implication that the affairs of our company have remained unchanged since the date hereof or that the information herein is correct as of any time subsequent to this date. Disclaimer clauses of Stock Exchanges Bombay Stock Exchange Limited and National Stock Exchange of India Limited (hereinafter referred to as the "Stock Exchanges") have given their permission to our Company to use their respective names in the Draft Letter of Offer as the Stock Exchanges on which our Company's shares issued in terms of this Issue are proposed to be listed. Disclaimer Clause of the BSE As required, a copy of this Draft Letter of Offer has been submitted to BSE. BSE has given vide its letter Ref. No. [● ]dated [ ● ] , 2010, permission to our Company to use its name in this Draft Letter of Offer as the Stock Exchange on which our Company’s securities are proposed to be listed. The Exchange has scrutinized this Draft Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to our Company. BSE does not in any manner: (i) warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Letter of Offer; or (ii) warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or (iii) take any responsibility for the financial or other soundness of


182

this Company, its Promoters, its management or any scheme or project of this Company; and it should not for any reason be deemed or construed that this Draft Letter of Offer has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever. Disclaimer clause of the NSE As required, a copy of this Draft Letter of Offer has been submitted to National Stock Exchange of India Limited. NSE has pursuant to its letter dated [●] granted permission to the Company to use the NSE’s name in this Draft Letter of Offer as one of the stock exchanges on which the Company’s securities are proposed to be listed. The NSE has scrutinized this Draft Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Company. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed that the Draft Letter of Offer has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Letter of Offer, nor does it warrant that the Company’s securities will be listed or will continue to be listed on the NSE; nor does it take any responsibility for the financial or other soundness of the Company, its Promoters, its management or any scheme or project of the Company. Every person who desires to apply for or otherwise acquire any securities of the Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the NSE whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. Filing: The Draft Letter of Offer has been filed with Securities Exchange Board of India’s Eastern Regional Office at L&T Chambers, 3rd Floor, 16 Camac Street, Kolkata 700 0017 for its observations and also with the NSE & BSE where the securities to be issued in terms of this Draft Letter of Offer are proposed to be listed. Listing: Our Company has made applications to the BSE and NSE for permission to deal in and for an official quotation in respect of the Equity Shares being offered in terms of this Draft Letter of Offer. Our Company has applied for in-principle approvals to BSE for the securities proposed to be issued through this Draft Letter of Offer. Our Company has received in-principle approvals from BSE by its letter dated [●]and NSE by its letter dated [●] granting in principle approval for listing the securities arising from the Issue in terms of Regulation 7(b)(i) of SEBI (ICDR) Regulations, 2009 as amended from time to time.BSE shall be the designated Stock Exchange. If the permission to deal in and for an official quotation of the securities is not granted by any of the Stock Exchanges mentioned above, within 15 days from the Issue Closing Date, our Company shall forthwith repay, without interest, all monies received from applicants in pursuance of this Draft Letter of Offer. If such money is not paid within eight days after our Company becomes liable to repay it, then our Company and every Director of our Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under subsections (2) and (2A) of section 73 of the Companies Act.


183

Consent Consent in writing of the Auditors, Lead Manager and the Registrar to the Issue, to act in their respective capacities; and of the bankers to our Company and Directors for their names to appear as such in this Draft Letter of Offer have been obtained and such consents have not been withdrawn up to the time of delivery of this Draft Letter of Offer for registration with the Stock Exchange. M/s Pipara & Co., the Auditors of our Company have given their written consent for the inclusion of their Report in the form and content as appearing this Draft Letter of Offer and such consents and Reports have not been withdrawn upto the time of delivery of this Draft Letter of Offer for registration to the Stock Exchange. M/s Pipara & Co., the Auditors of our Company have given their written consent for inclusion of statement of tax benefits in the form and content as appearing in this Draft Letter of Offer accruing to our Company and its members. To the best of our knowledge there are no other consents required for making this issue, however, should the need arise, necessary consents shall be obtained by us. Expert Opinion Save and except as stated in the chapter titled “Auditors’ Report on Financial Statements” and Section titled “Statement of Tax Benefits” beginning on Page Nos. 93 and 69 respectively of this Draft Letter of Offer, our Company has not obtained any expert opinions in relation to this Draft Letter of Offer. Issue expenses The Issue related expenses inter-alia includes issue management fees, registrar fees, printing and distribution expenses, auditor fees, advertisement expenses, stamp duty, depository charges and listing fees to the stock exchanges. The following table provides a break up of estimated Issue expenses:

Nature of Expenses Rs. Lacs

Fees to the intermediaries 10.00Printing & Stationery and Postage expenses 5.00Advertisement 2.00Miscellaneous Expenses incl. Fees to SEs, SEBI etc. 3.00

Total 20.00 Allotment and Refund Our Company will issue and dispatch the Letter of Allotment /Share Certificate, Demat Credit and/or Letter of Regret along with the Refund Order, if any, within a period of six weeks from the date of closure of the Issue. If such monies are not repaid within eight days from the day our Company becomes liable to pay it, our Company shall, as stipulated under Section 73(2A) of the Act, pay such monies with interest @ 15% p.a. The Letter of Allotment / Share Certificates Refund Order exceeding Rs.1,500/- would be sent by registered post / speed post to the sole/first applicant's registered address. Refund Orders up to the value of Rs.1,500/- would be sent under Certificate of Posting. Such Refund Orders would be payable at par at all places where the applications were originally accepted. The same would be marked 'Account Payee only' and would be drawn in favour of the sole/first applicant. Adequate funds would be made available to the Registrar to the Issue for this purpose Our Company will comply with all the legal requirements applicable till the date of filing of the Draft Letter of Offer with the Stock Exchanges.


184

Compulsory Dematerialised Dealing: The equity shares of our Company are to be traded compulsorily under dematerialized trading for all investors. Our Company has an agreement with Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL) and its equity shares bear the ISIN No INE314C01013 Underwriting Commission, Brokerage and Selling Commission. No Underwriting Commission, Brokerage and Selling Commission will be paid for the Issue. Mechanism evolved by Our Company for redressal of Investor grievances The transfer of shares and other related work is handled by Sharepro Services (I) Pvt. Ltd., our Registrar and Share Transfer agents. The Secretarial Department of our company actively interacts with Registrar & Transfer Agent for expeditious redressal of investor grievances and takes care of complaints received from statutory bodies such as SEBI, Stock Exchanges, Department of Company Affairs, etc. Our Company's investor grievances related to allotment, refund etc. arising out of the issue will be handled by Sharepro Services (I) Pvt. Ltd., Registrars to the issue. The Registrars will have a separate team of personnel handling only the post issue correspondence of our Company. Investor grievances would be settled expeditiously and satisfactorily by our Company. The approximate time taken by us to dispose off the investor grievance is 30 days from the date of receiving the complaint. The agreement between our Company and the Registrars to the issue will provide for retention of records with the Registrars for a period of at least one year from the last date of dispatch of letter of allotment/ share/ certificate/ refund order to enable the Registrars to redress grievances of investors. All grievances relating to the Issue may be addressed to the Registrars to the Issue giving full details such as folio No., name and address of the first applicant, Equity Shares, Application Form serial number, amount paid on application and the Bank Branch where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the renouncee should be furnished. The average time taken by the Registrars for attending to routine grievances will be 15 days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrars to attend to them as expeditiously as possible. Our Company undertakes to resolve its investor grievances in a time bound manner. Number of investor complaints received during three years preceding the filing draft offer document with Board & complaints disposed. Sr. No.

Year No. of Complaints pending at the beginning of the period

No. of complaints Received

No. of complaints resolved

No. of Complaints pending at the end of the period

1 2007-08 0 1 1 0 2 2008-09 0 1 1 0 3 2009-10 0 1 1 0


185

Number of investor complaints pending on the date filing draft offer document with Board. There are no investors’ complaints are pending to be resolved, as on the date of filing this Draft Letter of Offer. All investors are hereby informed that our Company has appointed a Compliance Officer who may be contacted in case of any pre-issue/post-issue related problems. Compliance Officer Mr. Radhey Shyam Sharma 2, Red Cross Place, Kolkata – 700001 Tel. No. + 91-033-2248-7406/07 Fax No. + 91-033-2248-7045 E-mail: [email protected]


186

SECTION VII – OFFERING INFORMATION

TERMS OF THE PRESENT ISSUE

The Equity Shares are now being issued pursuant to the Rights Issue and the Equity Shares to be allotted are subject to the terms and conditions contained in this Draft Letter of Offer, the enclosed CAF, the Memorandum and Articles of Association of our Company, the provisions of the Act, FEMA, regulations issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time, terms and conditions as stipulated in the allotment advice or letter of allotment or security certificate and rules as may be applicable and introduced from time to time. Ranking of equity shares The Equity Shares being issued shall be subject to the provisions of our Memorandum of Association and Articles of Association. The dividend payable on the partly paid-up Equity Shares, until fully paid-up, shall rank for dividend in proportion to the amount paid-up. The Equity Shares shall rank pari passu, in all respects including dividend, with our existing Equity Shares once fully paid-up. As per the Articles of Association of our company, no member is entitled to vote either personally or by proxy at any General Meeting or Meeting of a class of shareholders either upon a show of hands or upon a poll in respect of any shares registered, in his name on which any calls or other sums presently payable by him have not been paid or in regard to which our company has, and has exercised, any right of lien.

Mode of Payment of Dividend Dividend, if any declared by the Board and approved by our shareholders and CDR EG, will be paid in any of the modes permitted by the Companies Act, 1956. Face value and issue price Face value Each Equity Share shall have the face value of Rs. 10 (Ten Rupees). Issue Price Rs. 10 (Ten Rupees) per Equity share. Payment Method The full amount of Rs. 10/- per Equity Shares shall be payable by the applicant on application (“Application Money”).

Rights of Equity Shareholders Subject to applicable laws, Equity Shareholders shall inter-alia have the following rights: 1. Right to receive dividend, if declared; 2. Right to attend general meetings and exercise voting power, unless prohibited by law; 3. Right to vote on poll, either in person or proxy; 4. Right to receive offer for rights shares and be allotted bonus shares if announced; 5. Right to receive surplus on liquidation; 6. Right of free transferability of share; and


187

7. Such other rights as may be available to a shareholder of a listed public company under the Companies Act and our Memorandum and Articles of Association of our Company and the terms of the listing agreement with the Stock Exchange.

Market lot The securities of our Company are tradable only in dematerialized form. The market lot for the Equity Shares in dematerialized mode is one. In case of holding in physical form, our Company would issue to the allottees separate certificate for the Equity Shares allotted on rights basis with a split performance. Our Company would issue one certificate for the entire allotment. However, our Company would issue split certificates on written requests from the shareholders. Investors may please note that the Equity Shares of Our Company can be traded on the Stock Exchange in dematerialized form only. Nomination facility In terms of section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. A sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders being individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity Shares. A person, being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity Share by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the Equity Share is held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at the Registered Office of our Company or such other person at such addresses as may be notified by our Company. The applicant can make the nomination by filling in the relevant portion of the CAF. Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has / have already registered the nomination with our Company, no further nomination needs to be made for Equity Shares to be allotted in this Issue under the same folio. In case the allotment of Equity Shares is in dematerialized form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective DP of the applicant would prevail. If the applicant requires change in the nomination, they are requested to inform their respective DP.

Minimum Subscription If our Company does not receive the minimum subscription of ninety per cent of the Issue through this draft letter of offer on the date of the closure of the Issue, the entire subscription shall be refunded to the applicants within 15 days from the date of closure of the Issue. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e. 15 days after closure of the Issue), our Company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of section 73 of the Companies Act.


188

In case the permission to deal in and for an official quotation of the Equity Shares is not granted by BSE and NSE; the Issuer shall forthwith repay without interest, all monies received from the applicants in pursuance of this Draft Letter of Offer and if such money is not repaid within eight days after the day from which the Issuer is liable to repay it, the Issuer shall pay interest as prescribed under sub-section (2) and (2A) of section 73 of the Companies Act, 1956.

Additional subscription by promoter Our Promoters have confirmed that they intend to subscribe to the full extent of their entitlement in the Issue. Our Promoter, either by himself or through one or more Promoter Group Entities, has agreed to subscribe to the entire unsubscribed portion, if any, in this rights issue. As a result of this subscription and consequent allotment, our Promoter and Promoter Group Entities may acquire shares over and above their entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding. This subscription and acquisition of additional Equity Shares, if any, will not result in change of control of the management of our Company and shall be exempt in terms of proviso to Regulation 3(1) (b) (ii) of the Takeover Code. Our Promoters and Promoter Group intend to subscribe to unsubscribed portion as per the relevant provisions of the law. The Promoter / Promoter Group have undertaken to subscribe to the equity shares over and above their entitlement. Assuming that the entire rights issue of 99,09,900 Equity Shares is subscribed to by and allotted to our promoters, their shareholding in our company will increase to 57.21% whereby our company will continue to be in compliance with Clause 40A of the Listing Agreement, and public shareholding will continue to be well above the minimum permissible level. Arrangement for odd lot Equity Shares Our Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this Issue. Our Company will issue a consolidated certificate for the number of shares allotted to the Equity Shareholder. Restrictions, if any, on transfer and transmission of shares and on their consolidation or splitting. Except as stated in the Articles of Association of our Company there are no restrictions on transfer and transmission of shares.

Option to receive Equity Shares in Dematerialized Form Applicants to the Equity Shares of our Company issued through this Issue shall be allotted the securities in dematerialized (electronic) form at the option of the applicant. Our Company has signed tripartite agreements dated 31st October, 2000 and 2nd November, 2000 with CDSL and NSDL respectively, which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. However upon change of RTA, our Company has signed a fresh tripartite agreement dated 11th June, 2010 and dated 16th July, 2010 with CDSL and NSDL respectively. In this Issue, the allottees who have opted for Equity Shares in dematerialized form will receive their Equity Shares in the form of an electronic credit to their beneficiary account with a depository participant. The CAF shall contain space for indicating number of shares applied for in demat and physical form or both. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Applications, which do not accurately contain this information, will be given the securities in physical form. No separate applications for securities in physical and / or dematerialized form should be made. If separate applications are made, the application for physical securities will be treated as multiple applications and is liable to be rejected.


189

In case of partial allotment, allotment will be done in demat option for the shares sought in demat and balance, if any, will be allotted in physical shares.

Basis for the Issue The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the shares held in the electronic form and on the Register of Members of our Company in respect of shares held in the physical form at the close of business hours on the Record Date, i.e. [●] fixed in consultation with the Designated Stock Exchange, BSE.

Rights Entitlement Ratio: As your name appears as beneficial owner in respect of the shares held in the electronic form or appears in the register of members as an equity shareholder of our Company as on the Record Date i.e. [●], you are entitled to the number of shares in Block I of Part A of the enclosed in the CAF.

The eligible shareholders shall be entitled to the following: 1. Three [3] Equity shares for every 10 [Ten] Equity Share held as on the Record Date. 2. Rights Entitlement on Equity Shares held in the pool account of the clearing members on the Record

Date shall be considered, and such claimants are requested to: a. Approach the concerned depository through the clearing member of the Stock Exchange with

requisite details; and b. Depository in turn should furnish details of the transaction to the Registrar.

Joint Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint holders with benefits of survivorship subject to provisions contained in the Articles of Association of our Company. Notices All notices to the Equity Shareholder(s) required to be given by our Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and one regional language daily newspaper with wide circulation and/or, will be sent by ordinary post /registered post to the registered holders of the Equity Share at the address registered with the registrar from time to time.

Terms of payment Issue price of Rs.10.00/- is to be paid as follows:

Amount Payable per Equity Share (Rs.) Face Value (Rs.) Premium (Rs.) Total (Rs.) On Application 10.00 00.00 10.00 Total 10.00 0.00 10.00

For details please refer ‘Payment Method’ on Page No. 186 of this Draft Letter of Offer. Payment should be made in cash (not more than Rs. 20,000) or by cheque / bank demand draft / drawn in favour of “Soma Textile & Industries Limited - Rights Issue” and marked “A/c Payee” on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the bankers


190

clearing house located at the centre where the CAF is accepted. Outstation cheques /money orders / postal orders will not be accepted and CAFs accompanied by such cheque / money orders / postal orders are liable to be rejected. Where an applicant has applied for additional shares and is allotted lesser number of shares than applied for, the excess application money shall be refunded. The monies would be refunded within 15 days from the closure of the Issue, and if there is a delay beyond 8 days from the stipulated period, our Company will pay interest on the monies in terms of sub-sections (2) and (2A) of section 73 of the Companies Act, 1956.


191

ISSUE PROCEDURE Procedure for Application The enclosed CAF for Equity Shares should be completed in all respects in its entirety before submission to the Bankers to the Issue or their designated branches as they appear in the CAF. The forms of the CAF should not be detached under any circumstances; otherwise the application is liable to be rejected. The CAF would be sent to all shareholders at their registered Indian address. In case the original CAF is not received by the applicant or is misplaced by the applicant, the applicant may request the Registrar to the Issue for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. Non-resident shareholders can obtain a copy of the CAF from the Registrar to the Issue, by furnishing the registered folio number, DP ID number, Client ID number and their full name and address. Acceptance of the Issue You may accept the offer to participate in this Issue and apply for the Equity Shares offered, either in full or in part, by filling Part A of the enclosed CAFs and submit the same along with the application money payable to the Bankers to the Issue or any of the collection branches as mentioned on the reverse of the CAFs before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of our company in this regard. Investors at centres not covered by the branches of collecting banks can send their CAFs together with the cheque drawn at par on a local bank at Kolkata/demand draft payable at Kolkata to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. This Issue includes a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favour of any other person or persons subject to the approval of the Board. Such renouncees can only be Indian Nationals (including minor through their natural / legal guardian) / limited companies incorporated under and governed by the Act, statutory corporations / institutions, trusts (registered under the Indian Trust Act), societies (registered under the Societies Registration Act, 1860 or any other applicable laws) provided that such trust / society is authorized under its constitution / bye laws to hold Equity Shares in a company and cannot be a partnership firm, foreign nationals or nominees of any of them (unless approved by RBI or other relevant authorities) or to any person situated or having jurisdiction where the offering in terms of this Letter of Offer could be illegal or require compliance with securities laws of such jurisdiction or any other persons not approved by the Board. The CAF consists of four parts: Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares. Part B: Form for renunciation. Part C: Form for application for renouncees. Part D: Form for request for split application forms. Option available to the Equity Shareholders The summary of options available to the Equity Shareholder is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the enclosed CAF:


192

Option Option Available Action Required A. Accept whole or part of your

entitlement without renouncing the balance.

Fill in and sign Part A (All joint holders must sign)

B. Accept your entitlement in full and apply for additional Equity Shares

Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

C. Renounce your entitlement in full to one person (Joint renouncees not exceeding three are considered as one renouncee).

Fill in and sign Part B (all joint holders must sign) indicating the number of Equity Shares renounced and hand over the entire CAF to the renouncee. The renouncees must fill in and sign Part C of the CAF (All joint renouncees must sign)

D. 1. Accept a part of your entitlement and renounce the balance to one or more renouncee(s) OR 2. Renounce your entitlement to all the Equity Shares offered to you to more than one renouncee

Fill in and sign Part D (all joint holders must sign) requesting for Split Application Forms. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for Split Forms. Splitting will be permitted only once. On receipt of the Split Form take action as indicated below. (i) For the Equity Shares you wish to accept, if any, fill in and sign Part A of one split CAF (only for option 1). (ii) For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand over the split CAFs to the renouncees. (iii) Each of the renouncees should fill in and sign Part C for the Equity Shares accepted by them.

E. Introduce a joint holder or change the sequence of joint holders

This will be treated as a renunciation. Fill in and sign Part B and the renouncees must fill in and sign Part C.

Option A: Acceptance of the Issue in full or in part You may accept the Issue and apply for the Equity Shares offered, either in full or in part by filling part A of the enclosed CAF. For details of submission of CAF and mode of payment please refer to the paragraph titled “Acceptance of the Issue” and “Payment Method” beginning on Page Nos. 191 and186 respectively of this Draft Letter of Offer. Option B: Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to, provided that you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). The application for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board and in consultation if necessary with the Designated Stock Exchange. This allotment of additional Equity Shares will be made on an equitable basis with reference to number of Equity Shares held by you on the Record Date. If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for additional shares in Part A of the CAF. Applications for additional Equity Shares shall be considered and allotment shall be in the manner prescribed under the paragraph titled “Basis of Allotment” beginning on Page No. 208 of this Draft Letter of Offer. The renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares.


193

Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange. In case of change of status of holders i.e. from Resident to Non-Resident, a new demat account shall be opened for the purpose. Option C & D: Renunciation This Issue includes a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favour of any other person or persons subject to the approval of the Board. Such renouncees can only be Indian Nationals (including minor through their natural / legal guardian) / limited companies incorporated under and governed by the Act, statutory corporations / institutions, trusts (registered under the Indian Trust Act), societies (registered under the Societies Registration Act, 1860 or any other applicable laws) provided that such trust / society is authorized under its constitution / bye laws to hold Equity Shares in a company and cannot be a partnership firm, foreign nationals or nominees of any of them (unless approved by RBI or other relevant authorities) or to any person situated or having jurisdiction where the offering in terms of this Draft Letter of Offer could be illegal or require compliance with securities laws of such jurisdiction or any other persons not approved by the Board. Renunciation in favour of non residents / FIIs Any renunciation from Resident Indian Shareholder(s) to Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to other Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to Resident Indian(s) is subject to the renouncer(s) / renouncee(s) obtaining the approval of the FIPB and / or necessary permission of the RBI, if and to the extent required, under the FEMA and other applicable laws and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid approval(s), wherever the same are liable to be rejected. By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, OCBs have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to OCBs Regulations), 2003. Accordingly, the existing Equity shareholders of our Company who wish to renounce the same in favour of renouncees shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s) except with the prior permission of RBI. Your attention is drawn to the fact that our Company shall not allot and / or register any Equity Shares in favour of:

1. More than three persons including joint holders; 2. Partnership firm(s) or their nominee(s); 3. Minors (unless application is made through a guardian) ;and 4. Any Trust or Society (unless the same is registered under the Societies Registration Act, 1860 or

any other applicable Trust laws and is authorized under its Constitutions to hold Equity Shares of a Company).

The right of renunciation is subject to the express condition that the Board / Committee of Directors shall be entitled in its absolute discretion to reject the request for allotment to renouncee(s) without assigning any reason thereof. Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. Submission of the enclosed CAF to the Bankers to the Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (Part B of the CAF) duly filled in shall be conclusive evidence for our Company of the person(s) applying for Equity Shares in Part C to receive allotment of such Equity Shares. The renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Part ‘A’ must not be used by


194

the renouncee(s) as this will render the application invalid. Renouncee(s) will also have no further right to renounce any shares in favour of any other person. Procedure for renunciation To renounce all the Equity Shares offered to a shareholder in favour of one renouncee If you wish to renounce the offer indicated in Part A, in whole, please complete Part B of the CAF. In case of joint holding, all joint holders must sign Part B of the CAF. The person in whose favour renunciation has been made should complete and sign Part C of the CAF. In case of joint renouncees, all joint renouncees must sign this part of the CAF. Renouncee(s) shall not be entitled to further renounce their entitlement in favour of any other person. To renounce in part/or renounce the whole to more than one person(s) If you wish to either accept this offer in part and renounce the balance or renounce the entire offer in favour of two or more renouncees, the CAF must be first split into requisite number of forms. For this purpose you shall have to apply to the Registrar to the Issue. Please indicate your requirement of Split Application Forms in the space provided for this purpose in Part D of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of receiving requests for Split Application Forms. On receipt of the required number of split forms from the Registrar, the procedure as mentioned in paragraph above shall have to be followed. In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the specimen registered with our Company, the application is liable to be rejected. Renouncee(s) The person(s) in whose favour the offer is renounced should fill in and sign Part C of the Application Form and submit the entire Application Form to the Bankers to the Issue on or before the Issue Closing Date along with the application money. Option E: Change and / or introduction of additional holders If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is /are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed. However, this right of renunciation is subject to the express condition that the Board shall be entitled in its absolute discretion to reject the request for allotment from the renouncee(s) without assigning any reason thereof. Please note that: 1. Part A of the CAF must not be used by any person(s) other than those in whose favour this Issue has

been made. If used, this will render the application invalid.

2. Request for split application form should be made for a minimum of one (1) Equity Share or in multiples of one (1) Equity Share;

3. Request by the applicant for the Split Application Form should reach our Company on or before [●].

4. Only the person to whom this Draft Letter of Offer has been addressed to and not the renouncee(s) shall be entitled to renounce and to apply for Split Application Forms. Forms once split cannot be split again.


195

5. Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.

Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the applicant who should furnish the registered folio number / DP and Client ID number and his / her full name and address to the Registrar to the Issue. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received / found subsequently. Thus in case the original and duplicate CAFs are lodged for subscription, allotment will be made on the basis of the duplicate CAF and the original CAF will be ignored. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of duplicate CAF in transit, if any. Procedure for Application through the Applications Supported by Blocked Amount (“ASBA”) Process This section is for the information of the Equity Shareholders proposing to subscribe to the Issue through the ASBA Process. Our company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Draft Letter of Offer. Equity Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and to ensure that the CAF is correctly filled up. The list of banks who have been notified by SEBI to act as SCSB for the ASBA Process are provided on http://www.sebi.gov.in/pmd/scsb.pdf For details on designated branches of SCSB collecting the CAF, please refer the above mentioned SEBI link. Equity Shareholders who are eligible to apply under the ASBA Process The option of applying for Equity Shares in the Issue through the ASBA Process is only available to Equity Shareholder(s) of our company on the Record Date and who:

Is holding the Equity Shares in dematerialised form and has applied towards his/her rights entitlements or additional Securities in the Issue in dematerialised form;

Has not renounced his entitlements in full or in part; Is not a Renouncee; Is applying through a bank account with one of the SCSBs.

CAF The Registrar will despatch the CAF to all Equity Shareholders as per their entitlement on the Record Date for the Issue. Those Equity Shareholders who wish to apply through the ASBA payment mechanism will have to select for this mechanism in Part A of the CAF and provide necessary details. Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF only. Application in electronic mode will only be available with such SCSB who provides such facility. The Equity Shareholder shall submit the CAF to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. Acceptance of the Issue You may accept the Issue and apply for the Equity Shares either in full or in part, by filling Part A of the respective CAFs sent by the Registrar, selecting the ASBA process option in Part A of the CAF and submit


196

the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of our company in this regard. Mode of payment The Equity Shareholder applying under the ASBA Process agrees to block the entire amount payable on application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB. After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrar. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per Registrar’s instruction allocable to the Equity Shareholders applying under the ASBA Process from bank account with the SCSB mentioned by the Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI Regulations, into the separate bank account maintained by our company as per the provisions of section 73(3) of the Companies Act, 1956. The balance amount remaining after the finalization of the basis of allotment shall be either unblocked by the SCSBs or refunded to the investors by the Registrar on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Manager to the respective SCSB. The Equity Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF. The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Equity Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the application by the SCSB, our company would have a right to reject the application only on technical grounds. Options available to the Equity Shareholders applying under the ASBA Process The summary of options available to the Equity Shareholders is presented below. You may exercise any of the following options with regard to the Equity Shares, using the respective CAFs received from Registrar: Option Available Action Required 1 Accept whole or part of your entitlement

without renouncing the balance. Fill in and sign Part A of the CAF (All joint holders must sign)

2 Accept your entitlement in full and apply for additional Equity Shares

Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

The Equity Shareholder applying under the ASBA Process will need to select the ASBA option process in the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the SCSB with the relevant details required under the ASBA process option and SCSB blocks the requisite amount, then that CAF would be treated as if the Equity Shareholder has selected to apply through the ASBA process option. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares that you are entitled too, provided that (i) you have applied for all the Equity Shares (as the case may be) offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, in


197

consultation with the Designated Stock Exchange and in the manner prescribed under “Basis of Allotment” on Page No. 208 of this Draft Letter of Offer. If you desire to apply for additional Equity Shares please indicate your requirement in the place provided for additional Securities in Part A of the CAF. Renunciation under the ASBA Process Renouncees cannot participate in the ASBA Process. Option to receive Securities in Dematerialized Form EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF OUR COMPANY UNDER THE ASBA PROCESS CAN ONLY BE ALLOTTED IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE BEING HELD ON RECORD DATE. General instructions for Equity Shareholders applying under the ASBA Process

i. Please read the instructions printed on the respective CAF carefully.

ii. Application should be made on the printed CAF only and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of this Draft Letter of Offer are liable to be rejected. The CAF must be filled in English.

iii. The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose

bank account details are provided in the CAF and not to the Bankers to the Issue/Collecting Banks (assuming that such Collecting Bank is not a SCSB), to our company or Registrar or Lead Manager to the Issue.

iv. All applicants, and in the case of application in joint names, each of the joint applicants, should

mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.

v. All payments will be made by blocking the amount in the bank account maintained with the SCSB.

Cash payment is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

vi. Signatures should be either in English or Hindi or in any other language specified in the Eighth

Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with our company/or Depositories.

vii. In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order

and as per the specimen signature(s) recorded with our company. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.


198

viii. All communication in connection with application for the Securities, including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole applicant Equity Shareholder, folio numbers and CAF number.

(i) Only the person or persons to whom Securities have been offered and not renouncee(s) shall be eligible to participate under the ASBA process.

Do’s:

a. Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled in.

b. Ensure that you submit your application in physical mode only. Electronic mode is only available with certain SCSBs and not all SCSBs and you should ensure that your SCSB offers such facility to you.

c. Ensure that the details about your Depository Participant and beneficiary account are correct and the

beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only. d. Ensure that the CAFs are submitted at the SCSBs whose details of bank account have been provided

in the CAF. e. Ensure that you have mentioned the correct bank account number in the CAF. f. Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied

for} X {Application Money payable, as the case may be}) available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.

g. Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable

on application mentioned in the CAF, in the bank account maintained with the respective SCSB, of which details are provided in the CAF and have signed the same.

h. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in

physical form. i. Each applicant should mention their PAN allotted under the I. T. Act. j. Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the

beneficiary account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF.

k. Ensure that the Demographic Details are updated, true and correct, in all respects.

Don’ts:

1) Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB.


199

2) Do not pay the amount payable on application in cash, by money order or by postal order. 3) Do not send your physical CAFs to the Lead Manager to Issue / Registrar / Collecting Banks

(assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only.

4) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this

ground. 5) Do not instruct your respective banks to release the funds blocked under the ASBA Process.

Grounds for Technical Rejection under the ASBA Process In addition to the grounds listed under “Grounds for Technical Rejection” on Page No. 205 of this Draft Letter of Offer, applications under the ABSA Process are liable to be rejected on the following grounds: a) Application for entitlements or additional shares in physical form. b) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available with

the Registrar. c) Sending CAF to a Lead Manager / Registrar / Collecting Bank (assuming that such Collecting Bank is not

a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company. d) Renouncee applying under the ASBA Process. e) Insufficient funds are available with the SCSB for blocking the amount. f) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen

pursuant to regulatory orders.

g) Account holder not signing the CAF or declaration mentioned therein. Depository account and bank details for Equity Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. ORDINARY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Equity Shareholders applying under the ASBA Process should note that on the basis of name of these Equity Shareholders, Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of these Equity Shareholders such as address, bank account details


200

for printing on refund orders and occupation (“Demographic Details”). Hence, Equity Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF. These Demographic Details would be used for all correspondence with such Equity Shareholders including mailing of the letters intimating unblock of bank account of the respective Equity Shareholder. The Demographic Details given by Equity Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Equity Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Letters intimating allotment and unblocking (if any) would be mailed at the address of the Equity Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. Equity Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of bank account may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Equity Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of bank account. Note that any such delay shall be at the sole risk of the Equity Shareholders applying under the ASBA Process and none of our company, the SCSBs or the Lead Managers shall be liable to compensate the Equity Shareholder applying under the ASBA Process for any losses caused to such Ordinary Shareholder due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Equity Shareholders (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF and who is not applying under the ASBA Process may make an application to subscribe to the Issue on plain paper, along with Demand Draft, net of bank and postal charges payable at Kolkata which should be drawn in favour of the “Soma Textile & Industries Limited - Rights Issue” and the Equity Shareholders should send the same by registered post directly to SCSB. The envelope should be superscripted “Soma Textile & Industries Limited - Rights Issue” and should be postmarked in India. The application on plain paper, duly signed by the Investors including joint holders, in the same order as per specimen recorded with our company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:

Name of Issuer, being SOMA TEXTILES AND INDUSTRIES LTD; Name and address of the Equity Shareholder including joint holders; Registered Folio Number/ DP and Client ID no.; Number of Equity Shares held as on Record Date; Number of Equity Shares entitled to; Number of Equity Shares applied for; Number of additional Equity Shares applied for, if any; Total number of Equity Shares applied for; Total amount paid on application at the rate of Rs. 10.00 per Equity Share; Particulars of cheque/draft;


201

Except for applications on behalf of the Central or State Government and the officials appointed by the courts, PAN of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue; and

Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of our company.

The shareholders making application otherwise than on the application form shall not renounce their rights and shall not utilise the application form for any purpose including renunciation even if it is received subsequently. Where any shareholder makes an application on application form as well as on plain paper, the application is liable to be rejected. Underwriting The Issue is not underwritten. Allotment / Refund Our company will issue and dispatch allotment advice/ share certificates /demat credit and/ or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any, within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day our company becomes liable to repay it, our company and every Director of our company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the Companies Act. Investors residing at centres where clearing houses are managed by the RBI or are available otherwise, will get refund through ECS only except where the Investors are otherwise disclosed as applicable/eligible to get refunds through direct credit and RTGS. In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form by using electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately. Investors to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit refund with a period of 15 days from the Issue Closing Date. In case of those Investors who have opted to receive their Rights Entitlement in physical form, our company will issue the corresponding share certificates under section 113 of the Companies Act or other applicable provisions if any. Any refund order exceeding Rs. 1,500 will be dispatched by registered post/ speed post to the sole/ first Investor’s registered address. Refund orders up to the value of Rs. 1,500 would be sent under the certificate of posting. Such cheques or pay orders will be payable at par at all places where the applications were originally accepted and will be marked ‘Account Payee only’ and would be drawn in the name of the sole/ first Investor. Adequate funds would be made available to the Registrar to the Issue for this purpose. Payment of Refund Mode of making refunds The payment of refund, if any, would be done through any of the following modes:

1. ECS – Payment of refund would be done through ECS for Investors having an account at any centre where such facility has been made available. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. The payment of refunds is mandatory for Investors having a bank account at any centre where ECS facility has been made available by the RBI or are available otherwise (subject to availability of all information for crediting the refund through ECS), except


202

where the Investor, being eligible, opts to receive refund through National Electronic Fund Transfer (“NEFT”), direct credit or RTGS.

2. NEFT – Payment of refund shall be undertaken through NEFT wherever the Investors’ bank has

been assigned the Indian Financial System Code, which can be linked to a MICR, if any, available to that particular bank branch. IFSC will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Investors have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC of that particular bank branch and the payment of refund will be made to the Investors through this method.

3. Direct Credit – Investors having bank accounts with the Bankers to the Issue shall be eligible to

receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by our company.

4. RTGS – Investors having a bank account at any centre where such facility has been made available

and whose refund amount exceeds Rs. 10 lacs, have the option to receive refund through RTGS. Such eligible Investors who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the refund bank(s) for the same would be borne by our company. Charges, if any, levied by the Investor’s bank receiving the credit would be borne by the Investor.

5. For all other Investors, including those who have not updated their bank particulars with the MICR

code, the refund orders will be despatched under certificate of posting for value up to Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/first Investor and payable at par.

6. Credit of refunds to Investors in any other electronic manner, permissible under the banking laws,

which are in force, and are permitted by the SEBI from time to time. Printing of Bank Particulars on Refund Orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the Investor’s bank account, where available, are mandatorily required to be given for printing on the refund orders. Bank account particulars will be printed on the refund orders/refund warrants which can then be deposited only in the account specified. Our Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Allotment advice / Share Certificates/ Demat Credit Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered address of the first named Investor or respective beneficiary accounts will be credited within 15 days from the Issue Closing Date. In case our company issues allotment advice, the relevant share certificates will be dispatched within one month from the date of allotment. Allottees are requested to preserve such allotment advice (if any) to be exchanged later for share certificates. Option to receive Equity Shares in Dematerialized Form Investors to the Equity Shares of our Company issued through this Issue shall be allotted the securities in dematerialized (electronic) form at the option of the Investor. Our Company signed a tripartite agreement


203

with CDSL on 11th June, 2010 which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. Our Company has also signed a tri-partite agreement with NSDL on 16th July, 2010, which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. In this Issue, the allottees who have opted for Equity Shares in dematerialized form will receive their Equity Shares in the form of an electronic credit to their beneficiary account as given in the CAF, after verification with a depository concerned. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Allotment advice, refund order (if any) would be sent directly to the Investor by the Registrar to the Issue but the Investor’s depository participant will provide to him the confirmation of the credit of such Equity Shares to the Investor’s depository account. CAFs, which do not accurately contain this information, will be given the Equity Shares in physical form. No separate CAFs for Equity Shares in physical and/or dematerialized form should be made. If such CAFs are made, the CAFs for physical Equity Shares will be treated as multiple CAFs and is liable to be rejected. In case of partial allotment, allotment will be done in demat option for the Equity Shares sought in demat and balance, if any, will be allotted in physical Equity Shares. Investors may please note that the Equity Shares of our Company can be traded on the Stock Exchanges only in dematerialized form. Procedure for availing the facility for allotment of Equity Shares in this Issue in the electronic form is as under: • Open a beneficiary account with any depository participant (care should be taken that the beneficiary

account should carry the name of the holder in the same manner as is exhibited in the records of our company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as with our company). In case of Investors having various folios in our Company with different joint holders, the Investors will have to open separate accounts for such holdings. Those Equity Shareholders who have already opened such beneficiary account(s) need not adhere to this step.

• For Equity Shareholders already holding Equity Shares of our Company in dematerialized form as on the

Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Equity Shares pursuant to this Issue by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of Equity Shares arising out of this Issue may be made in dematerialized form even if the original Equity Shares of our Company are not dematerialized. Nonetheless, it should be ensured that the depository account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of our company.

Responsibility for correctness of information (including Investor’s age and other details) filled in the CAF vis-à-vis such information with the Investor’s depository participant, would rest with the Investor. Investors should ensure that the names of the Investors and the order in which they appear in CAF should be the same as registered with the Investor’s depository participant. If incomplete / incorrect beneficiary account details are given in the CAF, the Investor will get Equity Shares in physical form. The Equity Shares allotted to applicants opting for issue in dematerialized form, would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s depository


204

participant will provide to him the confirmation of the credit of such Equity Shares to the applicant’s depository account. Renouncees will also have to provide the necessary details about their beneficiary account for allotment of Equity Shares in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected.

General instructions for Investors a) Please read the instructions printed on the enclosed CAF carefully.

b) Application should be made on the printed CAF provided by our Company and should be completed

in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of this Draft Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the Investors, details of occupation, address, father’s / husband’s name must be filled in block letters. The CAF together with cheque/demand draft should be sent to the Bankers to the Issue/Collecting Bank or, in case of applications made on plain paper, to the Registrar to the Issue and not to our Company or Lead Manager to the Issue. Investors residing at places other than cities where the branches of the Bankers to the Issue have been authorised by our Company for collecting applications, will have to make payment by demand draft payable at Kolkata of an amount net of bank and postal charges and send their CAFs to the Registrar to the Issue by registered post. If any portion of the CAF is/are detached or separated, such application is liable to be rejected. Applications where separate cheques/demand drafts are not attached for amounts to be paid for Equity Shares are liable to be rejected.

c) Except for applications on behalf of the Central or State Government and the officials appointed by the courts, PAN of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue. CAFs without PAN will be considered incomplete and are liable to be rejected.

d) Investors are advised that it is mandatory to provide information as to their savings/current account number and the name of our Bank with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Application not containing such details is liable to be rejected.

e) The payment against the application should not be effected in cash if the amount to be paid is Rs.

20,000 or more. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon. Payment against the application if made in cash, subject to conditions as mentioned above, should be made only to the Bankers to the Issue.

f) Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with our company.

g) In case of an application under power of attorney or by a body corporate or by a society, a certified true copy of the relevant power of attorney or relevant resolution or authority to the signatory to make


205

the relevant investment under this Issue and to sign the application and a copy of the Memorandum and Articles of Association and / or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with our company, the same need not be a furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue.

h) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and

as per the specimen signature(s) recorded with our company. Further, in case of joint Investors who are Renouncees, the number of Investors should not exceed three. In case of joint Investors, reference, if any, will be made in the first Investor’s name and all communication will be addressed to the first Investor.

i) All communication in connection with application for the Equity Shares, including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole Investor, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to the Registrar and Transfer Agents of our company, in the case of Equity Shares held in physical form and to the respective depository participant, in case of Equity Shares held in dematerialized form.

j) SAFs cannot be re-split.

k) Only the person or persons to whom Equity Shares have been offered and not Renouncee(s) shall be entitled to obtain SAFs.

l) Investors must write their CAF number at the back of the cheque /demand draft.

m) Only one mode of payment per application should be used. The payment must be either in cash or by cheque / demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted.

n) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-dated cheques and postal / money orders will not be accepted and applications accompanied by such cheques / demand drafts / money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in cash. (For payment against application in cash please refer point (e) above).

o) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank/ Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.

Grounds for Technical Rejections Investors are advised to note that applications are liable to be rejected on technical grounds, including the following:

• Amount paid does not tally with the amount payable for; • Bank account details (for refund) are not given; • Age of Renouncee(s) not given;


206

• Except for CAFs on behalf of the Central or State Government and the officials appointed by the courts, PAN not given for application of any value;

• In case of CAF under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted;

• If the signature of the Equity Shareholder does not match with the one given on the CAF; • If the Investors desires to have Equity Shares in electronic form, but the CAF does not have the

Investor’s depository account details; • CAFs are not submitted by the Investors within the time prescribed as per the CAF and this Draft

Letter of Offer; • CAFs not duly signed by the sole/joint Investors; • CAFs by OCBs; • CAFs accompanied by Stockinvest; • In case no corresponding record is available with the depositories that matches three parameters,

namely, names of the Investors (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the beneficiary’s identity;

• CAFs by ineligible non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided;

• CAFs where our Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements;

• Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground;

• Applications by renouncees who are persons not competent to contract under the Indian Contract Act, 1872, including minors;

• Multiple CAFs; and • Please read the Draft Letter of Offer and the instructions contained therein and in the CAF carefully

before filling in the CAF. The instructions contained in the CAF are each an integral part of the Draft Letter of Offer and must be carefully followed. CAF is liable to be rejected for any non-compliance of the provisions contained in the Draft Letter of Offer or the CAF.

Mode of payment for Resident Equity Shareholders/ Investors

• All cheques / drafts accompanying the CAF should be drawn in favour of the Collecting Bank (specified on the reverse of the CAF), crossed ‘A/c Payee only’ and marked ‘SOMA TEXTILES - Rights Issue’;

• Investors residing at places other than places where the bank collection centres have been opened by our Company for collecting applications, are requested to send their CAFs together with demand draft for the full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed ‘A/c Payee only’ and marked ‘Soma Textile & Industries Limited - Rights Issue’ payable at Kolkata directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

Investment by NRIs Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3) (i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. NRI Investors should note that applications by ineligible non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided are liable to be rejected.


207

Mode of payment for Non-Resident Equity Shareholders/ Investors As regards the application by non-resident Equity Shareholders, the following conditions shall apply: Any renunciation from Resident Indian Shareholder(s) to Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to other Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to Resident Indian(s) is subject to the renouncer(s) / renouncee(s) obtaining the approval of the FIPB and / or necessary permission of the RBI, if and to the extent required, under the FEMA and other applicable laws and such permissions should be attached to the CAF. Individual non-resident Indian applicants can obtain application form at the following address: [●] Tel: [●] Fax: [●] Email: [●] Website: [●] Contact Person: [●] Applications not accompanied by the aforesaid approval(s), wherever the same are liable to be rejected. Payment by non-residents must be made by demand draft payable at Kolkata /cheque payable drawn on a bank account maintained at Kolkata or funds remitted from abroad in any of the following ways: As regards the application by non-resident Equity Shareholders, the following conditions shall apply: • Any renunciation from Resident Indian Shareholder(s) to Non-Resident Indian(s) or from Non-

Resident Indian Shareholder(s) to other Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to Resident Indian(s) is subject to the renouncer(s) / renouncee(s) obtaining the approval of the FIPB and / or necessary permission of the RBI, if and to the extent required, under the FEMA and other applicable laws and such permissions should be attached to the CAF.

• Applications not accompanied by the aforesaid approval(s), wherever the same are liable to be rejected. • Payment by non-residents must be made by demand draft payable at Mumbai /cheque payable drawn on

a bank account maintained at Mumbai or funds remitted from abroad in any of the following ways: Application with repatriation benefits • By Indian Rupee drafts purchased from abroad and payable at Kolkata or funds remitted from abroad

(submitted along with Foreign Inward Remittance Certificate); or • By cheque/draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Kolkata;

or • By Rupee draft purchased by debit to NRE/FCNR Account maintained elsewhere in India and payable in

Kolkata; or FIIs registered with SEBI must remit funds from special non-resident rupee deposit account. • Non-resident investors applying with repatriation benefits should draw cheques/drafts in favour of

‘SOMA TEXTILES – Rights Issue – NR’ and must be crossed ‘account payee only’ for the full application amount, net of bank and postal charges.

Application without repatriation benefits • As far as non-residents holding Equity Shares on non-repatriation basis are concerned, in addition to the

modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Kolkata or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Kolkata. In such cases, the allotment of Equity Shares will be on non-repatriation basis.

• All cheques/drafts submitted by non-residents applying on a non-repatriation basis should be drawn in favour of ‘SOMA TEXTILES – Rights Issue – NR’ and must be crossed ‘account payee only’ for the


208

full application amount, net of bank and postal charges. The CAFs duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

• Investors may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR/ NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected.

• New demat account shall be opened for holders who have had a change in status from resident Indian to NRI.

Notes: • In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the

investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to IT Act.

• In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares cannot be remitted outside India.

• The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

• In case of an application received from non-residents, allotment, refunds and other distribution, if any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.

Basis of Allotment The basis of allotment shall be finalized by the Board of our Company or Committee of Directors of our Company authorized in this behalf by the Board of our company. The Board of our Company or the Committee of Directors as the case may be, will proceed to allot the equity Share in consultation with BSE in the following order of priority.

a) Full allotment to those Equity Shareholders who have applied for their rights entitlement either in full or in part and also to the renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part.

b) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them and have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full allotment in (a) above. The allotment of such Equity Shares will be made on a fair and equitable basis in consultation with the Designated Stock Exchange.

c) Allotment to the renounces, who having applied for the Equity Shares renounced in their favour have also applied for additional Equity Shares, provided there is an under-subscribed portion after making full allotment in (a) and (b) above. The allotment of such additional Equity Shares will be made on a proportionate basis at the sole discretion of the Board/ Committee of Directors but in consultation with the Designated Stock Exchange, as a part of the Issue and not as a preferential allotment.

d) Allotment to any other person as the Board may in its absolute discretion deem fit provided there is surplus available after making full allotment under (a), (b) and (c) above.

e) Our Company shall not retain any over-subscription.


209

Payment by Stockinvest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003- 04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue. Disposal of application and application money No acknowledgment will be issued for the application moneys received by our company. However, the Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the Investor within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day our Company becomes liable to repay it, our Company and every Director of our Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the Companies Act. For further instruction, please read the CAF carefully. Undertakings by our company

1. The complaints received in respect of the Issue shall be attended to by our Company expeditiously and satisfactorily.

2. All steps for completion of the necessary formalities for listing and commencement of trading at all Stock exchanges where the specific securities are to be listed will be taken within seven working days of finalization of basis of allotment.

3. That funds required for making refunds to unsuccessful applicants as per the modes disclosed shall be made available to the Registrar to the Issue by our company.

4. That where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 15 days of closure of the Issue, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund.

5. That no further issue of securities shall be made till the securities offered through this offer document are listed or till the application moneys are refunded on account of non-listing, under subscription, etc.;

6. Adequate arrangements shall be made to collect all ASBA applications and to consider them similar to non-ASBA applications while finalising the Basis of Allotment.

Utilisation of Issue Proceeds The Board of Directors declares that: i. Our Company shall utilize funds collected in rights issue after the finalisation of the basis of allotment.

ii. All monies received out of this Issue shall be transferred to a separate bank account other than the bank

account referred to sub-section (3) of Section 73 of the Companies Act;


210

iii. details of all monies utilised out of the issue referred above shall be disclosed under an appropriate separate head in the balance sheet of the issuer indicating the purpose for which such monies had been utilised; and

iv. Details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate separate

head in the balance sheet of our Company indicating the form in which such unutilized monies have been invested.

Minimum Subscription

If our Company does not receive the minimum subscription of ninety per cent of the Issue through this Draft Letter Of Offer on the date of the closure of the Issue, the entire subscription shall be refunded to the applicants within 15 days from the date of closure of the Issue. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e. 15 days after closure of the Issue), our Company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of section 73 of the Companies Act. In case the permission to deal in and for an official quotation of the Equity Shares is not granted by BSE, the Issuer shall forthwith repay without interest, all monies received from the applicants in pursuance of this Draft Letter of Offer and if such money is not repaid within eight days after the day from which the Issuer is liable to repay it, the Issuer shall pay interest as prescribed under sub-section (2) and (2A) of section 73 of the Companies Act, 1956.

Important

• Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the accompanying Composite Application Form (CAF) are an integral part of the conditions of this Draft Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected.

• All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for Split

Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and superscribed ‘Soma Textile & Industries Limited - Rights Issue’ on the envelope) to the Registrar to the Issue at the following address:

Sharepro Services (I) Pvt. Ltd.

SEBI Registration No.: INR000001476 Address.: 13AB Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange, Off Andheri Kurla Road, Sakinaka, Andheri (E), Mumbai – 400 072 Tel.: +91- 22- 67720306/308/420/422; Fax. : +91- 22- 28508927 / 28591568; Email: [email protected] Website: www.shareproservices.com

Contact Person: Mr. V. Kumaresan / Mr. Ganesh Rane

1. It is to be specifically noted that this Issue of Equity Shares is subject to Risk Factors appearing on Page No. 11 of this Draft Letter of Offer. 2. The Rights Issue will be kept open for minimum 15 days unless extended, in which case it will be kept open for a maximum 30 days. To avoid any misuse of instruments, the applicants are advised to write the application no. on the back of the cheques / payment instruments.


211

RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of GoI and FEMA. While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. By way of Circular No. 53 dated December 17, 2003, the RBI has permitted FIIs to subscribe to shares of an Indian company in a public offer without the prior approval of the RBI, so long as the price of the equity shares to be issued is not less than the price at which the equity shares are issued to residents. Transfers of equity shares previously required the prior approval of the FIPB. However, vide a RBI circular dated October 4, 2004 issued by the RBI, the transfer of shares between an Indian resident and a non-resident does not require the prior approval of the FIPB or the RBI, provided that

i. the activities of the investee company are under the automatic route under the foreign direct investment (FDI) Policy and transfer does not attract the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

ii. the non-resident shareholding is within the sectoral limits under the FDI policy, and iii. the pricing is in accordance with the guidelines prescribed by the SEBI/RBI. As per the existing

policy of the Government of India, OCBs cannot participate in this Issue.


212

SECTION VIII – STATUTORY & OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The following Contracts (not being contracts entered into in the ordinary course of business carried on by our Company or entered into more than two years before the date of this Draft Letter of Offer) which are or may be deemed material have been entered or are to be entered in to by our Company. These Contracts and also the documents for inspection referred to hereunder, may be inspected at the Office of our Company situated at 2, Red Cross Place, Kolkatta - 700001 from 11.00 a.m. to 2.00 p.m., from the date of this Draft Letter of Offer until the date of closure of the issue. A) MATERIAL CONTRACTS 1. Agreement entered into between the Company and the Lead Merchant Banker, Arihant Capital Markets

Ltd. dated 11.10.2010

2. Memorandum of Understanding entered into between the Company and the Registrar to the issue, Sharepro Services (I) Pvt. Ltd dated 29.09.2010.

3. Tri- partite agreement between the Company, Sharepro Services (I) Pvt. Ltd. and NSDL dated 16th July,

2010 for dematerialization of shares.

4. Tri- partite agreement between the Company, Sharepro Services (I) Pvt Ltd. and CDSL dated 11th June, 2010 for dematerialization of shares

B) DOCUMENTS 1. Memorandum and Articles of Association of the Company as amended till date. 2. Certificate of Incorporation of the Company dated 29th March, 1940 issued by the Registrar of Joint

Stock Companies, Bengal.

3. Fresh Certificate of Incorporation dated 21st January, 1992 consequent on change of name of the company issued by the Registrar of Companies, West Bengal, Kolkata.

4. Copy of Board Resolution dated 31.10.2009 authorizing the Rights issue of Equity Shares.

5. Copy of the Special Resolution u/s 81(1) of the Companies Act, 1956 passed by the members of the

company in the Extra Ordinary General Meeting held on 07.12.2009

6. Copy of Resolution passed in the Board Meeting dated 29.07.1999 for appointment of Mr. Radhey Shyam Sharma, as the Compliance Officer

7. Letter dated 17.09.2010_from M/s Pipara & Company; the Statutory Auditors of the Company,

regarding the tax benefits available to the Company and its members.

8. The Limited Review Report of the Auditors, M/s Pipara & Company dated 11.11.2010 in relation to Unaudited Financial Results for the quarter and half year ended 30th September, 2010 alongwith Statement of Assets & Liabilities as at the end of the half year ended 30th September, 2010.


213

9. Annual reports & Financial Statements of the Company for the year ended March 31, 2010, 2009, 2008,

2007 and 2006.

10. Consents from the Directors, Auditors, Lead Merchant Bankers, Registrar to the Issue, & Bankers to the Company to include their name in the Draft Letter of Offer and to act in their respective capacities.

11. Undertaking given by the promoters to subscribe more than their entitlement, in case required to ensure

full subscription in the Right Issue.

12. Due Diligence Certificate dated 23.11.2010 to SEBI from the Lead Merchant Banker i.e. by Arihant Capital Markets Ltd.

13. Copy of Board resolution dated 11.11.2010 approving the present rights issue.

14. In principle approval dated [●] from NSE and BSE for listing of the securities offered in this issue.

15. Letter dated 26-02-2008 approving Restructuring Proposal Under CDR System by the CDR Empowered

Group

SOMA TEXTILES & INDUSTRIES LIMITED - sebi.gov.in · soma textiles & industries limited (Our Company...

Documents

Transcript of SOMA TEXTILES & INDUSTRIES LIMITED - sebi.gov.in · soma textiles & industries limited (Our Company...