easunreyrolle.comeasunreyrolle.com/investors/easun-reyrolle-limited-draft... · 2013-09-30 · i...

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Draft Letter of Offer September 18, 2013

For Eligible Equity Shareholders only

Easun Reyrolle Limited (Our Company was originally incorporated as Easun Reyrolle Relays and Devices Private Limited on August 29, 1974 under the Companies Act, 1956 with the Registrar of Companies Tamil Nadu. Our Company was converted into public limited company on February 13, 1979 and the name of our Company was changed to Easun Reyrolle Relays and Devices Limited. The name of our Company was subsequently changed to Easun Reyrolle Limited pursuant to a fresh

Certificate of Incorporation dated November 11, 1997. The Corporate Identification Number of the Company is L31900TN1974PLC006695)

Registered Office: “Temple Tower”, VI Floor, 672, Anna Salai, Nandanam, Chennai - 600 035 Tel No: +91 44 +91 44 2434 6425; Fax No: +91 44 2434 6435

Corporate Office: 98, SIPCOT Industrial Complex, Hosur - 635 126, Tamil Nadu Tel No: +91 4344 401600; Fax No: +91 4344 276397

Compliance Officer: Mr. K N Nagesha Rao, Secretary and VP (Corporate Finance) E-mail: [email protected]; Website: www.easunreyrolle.com

FOR PRIVATE CIRCULATION TO THE ELIGIBLE EQUITY SHAREHOLDERS OF EASUN REYROLLE LIMITED ONLY DRAFT LETTER OF OFFER

ISSUE OF [●] EQUITY SHARES OF FACE VALUE OF ` 2 EACH (“EQUITY SHARES”) OF EASUN REYROLLE LIMITED (“EASUN” OR THE “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF ` [●] (INCLUDING SHARE PREMIUM OF ` [●]) PER EQUITY SHARE (“ISSUE PRICE”) FOR AN AGGREGATE AMOUNT NOT EXCEEDING ` 5,000 LAKHS TO THE ELIGIBLE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [●] EQUITY SHARES FOR EVERY [●] EQUITY SHARES HELD BY THE ELIGIBLE EQUITY SHAREHOLDERS ON THE RECORD DATE, I.E. [●] (THE “ISSUE”). THE ISSUE PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARES.

GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in relation to this Issue. For taking an investment decision, investors must rely on their own examination of the Company and the Issue including the risks involved. The securities being offered in the issue have not been recommended or approved by the Securities and Exchange Board of India, (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of the Draft Letter of Offer. Investors are advised to refer to the section titled “Risk Factors” given on page 7 before making an investment in this Issue.

ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that the Draft Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in the 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 makes the Draft Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING The existing Equity Shares of the Company are listed on BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). We have received “in-principle” approval from BSE and NSE for listing the Equity Shares to be Allotted in the Issue vide their letters dated [●] and [●], respectively. For the purpose of this Issue, the Designated Stock Exchange is BSE.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

SPA Capital Advisors Limited SEBI Reg. No.: INM 000010825 25, C - Block Community Center, Janak Puri, New Delhi - 110 058 Tel.: +91 11 4567 5500, 2551 7371 Fax: +91 11 2553 2644 E-mail: [email protected] Investor Grievance e-mail id: [email protected] Website: www.spacapital.com Contact Person: Mr. NitiN Somani / Ms. Richa Sharma

Integrated Enterprises (India) Limited SEBI Regn. No.: INR 000000544 IInd Floor, “Kences Towers” No. 1, Ramakrishna Street, North Usman Road, T Nagar, Chennai - 600 017 Tel.: +91 44 2814 0801 - 03 Fax: +91 44 2814 2479 E-mail: [email protected] Investor Grievance e-mail id: [email protected] Website: www.integratedindia.in Contact Person: Anusha N

ISSUE PROGRAMME

ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS

ISSUE CLOSES ON

[●] [●] [●]

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TABLE OF CONTENTS

TITLE PAGE NO.

DEFINITION AND ABBREVIATIONS…………………………………………………………………….. 1 CURRENCY OF FINANCIAL REPRESENTATION AND USE OF MARKET DATA…………………... 5 FORWARD LOOKING STATEMENT……………………………………………………………………… 6 RISK FACTORS……………………………………………………………………………………………… 7 THE ISSUE…………………………………………………………………………………………………… 18 SUMMARY OF FINANCIAL INFORMATION…………………………………………………………….. 19 GENERAL INFORMATION………………………………………………………………………………… 25 CAPITAL STRUCTURE……………………………………………………………………………………... 30 OBJECTS OF THE ISSUE…………………………………………………………………………………… 34 STATEMENT OF TAX BENEFITS…………………………………………………………………………. 38 OUR INDUSTRY……………………………………………………………………………………………. 43 SUMMARY OF OUR BUSINESS…………………………………………………………………………… 50 HISTORY AND CERTAIN CORPORATE MATTERS…………………………………………………….. 53 OUR MANAGEMENT. ……………………………………………………………………………………… 58 OUR PROMOTERS…………………………………………………………………………………………... 63 FINANCIAL STATEMENTS………………………………………………………………………………... 65 CAPITALIZATION STATEMENT………………………………………………………………………….. 113 STATEMENT OF ACCOUNTING RATIOS………………………………………………………………... 114 CERTAIN OTHER FINANCIAL INFORMATION (WORKING RESULTS)……………………………... 115 STOCK MARKET DATA……………………………………………………………………………………. 116 OUTSTANDING LITIGATIONS……………………………………………………………………………. 118 GOVERNMENT AND OTHER APPROVALS……………………………………………………………… 122 OTHER REGULATORY AND STATUTORY INFORMATION…………………………………………... 123 OFFERING INFORMATION…………..……………………………………………………………………. 131 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION…………………………………….. 155 DECLARATION……………………………………………………………………………………………… 156

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DEFINITIONS AND ABBREVIATIONS

In this Draft Letter of Offer, unless the context otherwise requires, the terms defined and abbreviations expanded below shall have the same meaning as stated in this section. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments and modifications notified thereto. Company Related Terms

Term Description “Easun” / “Company” / “Issuer” / we / us / our

Unless the context otherwise requires, refers to, Easun Reyrolle Limited, a public limited company incorporated under the Companies Act, 1956

Articles of Association The Articles of Association of our Company, as amended from time to time Statutory Auditors / Auditors

The Statutory Auditors of our Company, M/s Brahmayya & Co., Chartered Accountants, 48, Masilamani Road, Balaji Nagar, Royapettah, Chennai - 600 014 and M/s R Subramanian & Co., Chartered Accountants, 36, Krishnaswamy Iyer Avenue, Luz, Chennai - 600 004

Board of Directors / Board

The Board of Directors of our Company, unless specified otherwise

Directors / our Directors The Director(s) on the Board of our Company, unless otherwise specified Equity Shares Equity share of the Company of face value ` 2 each Group Companies Companies, firms, ventures, etc. promoted by the Promoters of our Company,

including such entities which are covered under section 370 (1)(B) of the Companies Act.

Memorandum of Association

The Memorandum of Association of our Company, as amended from time to time

Promoter(s) The promoters of our Company namely, Mr. Hariharan Eswaran, Mr. Raj Hari Eswaran, Easun Engineering Company Limited, Easun Products of India Private Limited and Sowraj Investments Private Limited

Promoter Group

Promoter group shall mean the persons and entities forming part of our promoter group in accordance with the SEBI ICDR Regulations and such persons and entities disclosed as Promoter Group in filings made by the Company with the Stock Exchanges pursuant to Clause 35 of the Listing Agreement.

Registered Office Registered Office of our Company situated at “Temple Tower”, VI Floor, 672, Anna Salai, Nandanam, Chennai - 600 035

Subsidiary Company(ies) The Subsidiary Companies of our Company, namely Easun Reyrolle Projects Limited, ERL International Pte. Ltd., ERL Phase Power Technologies Ltd., ERL Marketing International FZE, ERL Switchcraft Pte. Ltd., Switchcraft Limited, Switchcraft Europe GmbH and Electrical Distribution Solutions Pty. Ltd.

Issue Related Terms

Term Description Abridged Letter of Offer

The Abridged Letter of Offer sent to Eligible Equity Shareholders of our Company with respect to this Issue in accordance with the provisions of the SEBI ICDR Regulations and the Companies Act.

Allotment / Allotted Unless the context otherwise requires, the allotment of Equity Shares pursuant to the Issue

Allottee(s) Persons to whom our Equity Shares will be issued pursuant to the Issue Applicant(s) / Investor(s) Eligible Equity Shareholders and / or Renouncees who are entitled to apply or have

applied for Equity Shares under the Issue, as the case may be ASBA / Application Supported by Blocked Amount

The application (whether physical or electronic) used by an ASBA Investor to make an application authorizing the SCSB to block the amount payable on application in the ASBA Account.

ASBA Account Account maintained with an SCSB and specified in the CAF or plain paper application, as the case may be, for blocking the amount mentioned in the CAF, or the plain paper application, as the case may be.

ASBA Investor(s) Eligible Equity Shareholders proposing to subscribe to the Issue through ASBA process and who (i) are holding our Equity Shares in dematerialized form as on the Record Date

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Term Description and have applied for their Rights Entitlements and / or additional Equity Shares in dematerialized form;

(ii) have not renounced their Rights Entitlements in full or in part; (iii) are not Renouncees; and (iv) are applying through blocking of funds in a bank account maintained with

SCSBs. All QIBs, Non-Institutional Investors and other Investors whose application value exceeds ` 2,00,000 complying with the above conditions must participate in this Issue through the ASBA Process only.

Banker(s) to the Issue [●] Composite Application Form / CAF

The form used by an Investor to make an application for the Allotment of Equity Shares in the Issue

Consolidated Certificate The single certificate issued by the Company to each Allottee per folio to whom Equity Shares are allotted in physical form pursuant to the Issue.

Controlling Branches of the SCSBs

Such branches of the SCSBs which coordinate with the Lead Manager, the Registrar to the Issue and the Stock Exchange, a list of which is available on http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries

Designated Branches Such branches of the SCSBs which shall collect application forms used by ASBA Investors and a list of which is available on http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries

Designated Stock Exchange

The Designated Stock Exchange for this Issue shall be BSE Limited

Draft Letter of Offer The Draft Letter of Offer dated September 18, 2013, filed with SEBI for its observations, which does not contain complete particulars of the Issue.

Eligible Equity Shareholder(s)

Equity Shareholders of the Company as on the Record Date

Equity Shares Fully paid up equity shares of our Company having a face value of ` 2 each Issue / Rights Issue Issue of [●] Equity Shares of face value of ` 2 each (“Equity Shares”) of Easun

Reyrolle Limited (“Easun” or the “Company” or the “Issuer”) for cash at a price of ` [●] (including share premium of ` [●]) per Equity Share (“Issue Price”) for an aggregate amount not exceeding ` 5,000 lakhs to the Eligible Equity Shareholders on rights basis in the ratio of [●] Equity Shares for every [●] Equity Shares held by the Eligible Equity Shareholders on the record date, i.e. [●].

Issue Closing Date [●] Issue Opening Date [●] Issue Price ` [●] per Equity Share. Issue Proceeds The monies received by our Company pursuant to the issue of Equity Shares on

Rights basis which are allotted pursuant to the IssueIssue Size The issue of [●] Equity Shares aggregating to ` 5,000 lakhs Lead Manager SPA Capital Advisors Limited Letter of Offer The Letter of Offer dated [●] filed with the Stock Exchanges after incorporating the

observations received from the SEBI on the Draft Letter of Offer, which will contain complete particulars of the Issue.

Listing Agreement The listing agreement entered into between us and the Stock Exchange Non Institutional Investor(s)

Non institutional investor as defined under Regulation 2(1)(w) of the SEBI ICDR Regulations.

“Qualified Foreign Investor(s)” / “QFI(s)”

Non-resident investors, other than SEBI registered FIIs or sub-accounts or SEBI registered FVCIs, who meet ‘know your client’ requirements prescribed by SEBI and are resident in a country which is (i) a member of Financial Action Task Force or a member of a group which is a member of Financial Action Task Force; and (ii) a signatory to the International Organisation of Securities Commission’s Multilateral Memorandum of Understanding or a signatory of a bilateral memorandum of understanding with SEBI. Provided that such non-resident investor shall not be resident in a country which is listed in the public statements issued by Financial Action Task Force from time to time on: (i) jurisdictions having a strategic anti-money laundering/combating the financing of terrorism deficiencies to which counter measures apply; and (ii) jurisdictions that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the Financial Action Task Force to address the deficiencies.

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Term Description Qualified Institutional Buyer(s) / QIB(s)

Public financial institutions as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual fund registered with SEBI, FIIs and sub-account registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual, multilateral and bilateral development financial institution, venture capital fund registered with SEBI, foreign venture capital investor registered with SEBI, state industrial development corporation, insurance company registered with IRDA, provident fund with minimum corpus of ` 2,500 lakhs, pension fund with minimum corpus of ` 2,500 lakhs, National Investment Fund set up by the Government of India and insurance funds set up and managed by the army, navy or air force of the Union of India and insurance funds set up and managed by the Department of Posts, India

Record Date [●] Registrar / Registrar to the Issue

Integrated Enterprises (India) Ltd

Renouncees Any person(s) who has / have acquired Rights Entitlements from the Eligible Equity Shareholders

Rights Entitlement The number of Equity Shares that an Eligible Equity Shareholder is entitled, that is determined as a proportion to the number of Equity Shares held by such Eligible Equity Shareholder on the Record Date, i.e., [●] Equity Shares for [●] Equity Shares held on [●]

Self Certified Syndicate Bank / SCSB

Self Certified Syndicate Bank(s), registered with SEBI, which acts as a Banker to the Issue and which offers the facility of ASBA. A list of all SCSBs is available at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries

Share Certificate The certificate in respect of the Equity Shares allotted to a folio Stock Exchange(s) BSE Limited and National Stock Exchange of India Limited, where our Equity

Shares are presently listed Working Day Any day, other than Saturday or Sunday or public holidays, on which commercial

banks in India are open for business. Conventional and General Terms

Term DescriptionBIFR Board for Industrial and Financial Reconstruction BSE BSE Limited Companies Act The Companies Act, 1956, as amended CDSL Central Depository Services (India) Limited Depositories Act The Depositories Act, 1996, as amended from time to time Depository / Depositories A depository registered with SEBI under the SEBI (Depositories and Participant)

Regulations, 1996, as amended from time to time, in this case being NSDL and CDSL

Depository Participant / DP A depository participant as defined under the Depositories Act ECS Electronic Clearing System EGM Extra Ordinary General MeetingEPS Earnings per Equity ShareFCCB Foreign Currency Convertible Bonds Foreign Institutional Investor / FII

Foreign institutional investor (as defined under SEBI (Foreign Institutional Investors) Regulations, 1995) registered with SEBI under applicable laws in India

Financial Year / Fiscal Year / FY

Twelve months ending on March 31 of a particular year

FIs Financial Institutions FVCI Foreign venture capital investor, registered with SEBI under the SEBI (Foreign

Venture Capital Investor) Regulations, 2000HUF Hindu Undivided FamilyIndian GAAP The generally accepted accounting principles in India Listing Agreement The equity listing agreement signed between our Company and the Stock

Exchange MSE Madras Stock Exchange Limited Non Residents All Bidders who are not NRIs or FIIs and are not persons resident in India NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited

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Term Description RBI Reserve Bank of India RONW Return on Net Worth RTGS Real Time Gross Settlement SEBI The Securities and Exchange Board of India constituted under the SEBI Act,

1992, as amended SEBI ICDR Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2009, as amended SEBI Takeover Regulations The Securities and Exchange Board of India (Substantial Acquisition of Shares

and Takeovers) Regulations, 2011, as amended VSE Vadodara Stock Exchange Limited

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CURRENCY OF FINANCIAL PRESENTATION

In the Draft Letter of Offer, unless the context otherwise requires, all references to one gender also refers to another gender and the word “Lac / Lakh” means “one hundred thousand”, the word “million (mn)” means “ten lac / lakh”, the word “Crore” means “ten million” and the word “billion (bn)” means “one hundred crore”. In the Draft Letter of Offer, any discrepancies in any table between total and the sum of the amounts listed are due to rounding-off. Throughout the Draft Letter of Offer, unless otherwise stated, all figures have been expressed in thousands (’000) and / or lakhs. Unless indicated otherwise, the financial data in the Draft Letter of Offer is derived from our Company’s audited financial statements as on March 31, 2013 prepared in accordance with Indian GAAP, applicable accounting standards and guidance notes issued by the ICAI, the applicable provisions of the Companies Act and other statutory and / or regulatory requirements and are included in the Draft Letter of Offer as required under the SEBI ICDR Regulations. Unless indicated otherwise, the operational data in the Draft Letter of Offer is presented on a basis and refers to the operations of our Company. In the Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. There are significant differences between Indian GAAP and U.S. GAAP; accordingly, the degree to which the Indian GAAP financial statements included in the Draft Letter of Offer will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practice and Indian GAAP. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in the Draft Letter of Offer should accordingly be limited. We have not attempted to explain those differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data. For additional definitions used in the Draft Letter of Offer, see the section ‘Definitions and Abbreviations’ on page 1 of the Draft Letter of Offer.

USE OF MARKET DATA Unless stated otherwise, market data used throughout the Draft Letter of Offer was obtained from internal Company reports, data, websites and industry publications. Industry publication data and website data generally state that the information contained therein has been obtained from sources believed to be reliable, but that their accuracy and completeness and underlying assumptions are not guaranteed and their reliability cannot be assured.

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FORWARD LOOKING STATEMENTS

Certain statements in the Draft Letter of Offer are not historical facts but are “forward-looking” in nature. Forward looking statements appear throughout the Draft Letter of Offer, including, without limitation, under the chapters “Risk Factors”. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or financial performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, our business strategy and the trends we anticipate in the industry and the political and legal environment, and geographical locations, in which we operate, and other information that is not historical information. Words such as “aims”, “anticipate”, “believe”, “could”, “continue”, “estimate”, “expect”, “future”, “goal”, “intend”, “is likely to”, “may”, “plan”, “predict”, “project”, “seek”, “should”, “targets”, “would” and similar expressions, or variations of such expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. These risks, uncertainties and other factors include, among other things, those listed under “Risk Factors”, as well as those included elsewhere in the Draft Letter of Offer. Prospective investors should be aware that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited, to: • General economic and business conditions in the markets in which we operate and in the local, regional

and national economies; • Increasing competition in or other factors affecting the industry segments in which our Company

operates; • Changes in laws and regulations relating to the industries in which we operate; • Our ability to meet our capital expenditure requirements and/or increase in capital expenditure; • Fluctuations in operating costs and impact on the financial results; • Our ability to attract and retain qualified personnel; • Changes in technology in future; • Changes in political and social conditions in India or in countries that we may enter, the monetary

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, please refer to “Risk Factors” on page 7 of the Draft Letter of Offer. 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 we nor the Lead Manager make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. Neither we 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, we and Lead Manager will ensure that the Eligible Equity Shareholders are informed of material developments until the time of the grant of listing and trading permissions by the Stock Exchanges.

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RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all the information in the Draft Letter of Offer, including the risks and uncertainties described below, before making an investment in our Equity Shares. The risks and uncertainties described in this section are not the only risk we may face. If any of the following risks actually occur, our business, financial condition and results of operations could suffer, the trading price of our Equity Shares could decline, and you may lose all or part of your investment. Unless otherwise stated in the relevant risk factors set below, we are not in a position to specify or quantify the financial or other implications of any risk mentioned herein. In making an investment in this Issue, prospective investors must rely on their own examination of our Company and terms of the Issue. The numbering of the Risk Factors has been done to facilitate ease of reading and reference and does not in any manner indicate the importance of one risk factor over another. INTERNAL RISK FACTORS 1. There are certain material legal proceedings involving us that, if determined against us, could have a

material adverse impact on our financial condition and results of operations. There are material outstanding legal proceedings involving our Company that, if determined against us, could have a material adverse impact on our financial condition and results of operations. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. Should any new developments arise, such as a change in law or rulings against us by courts or tribunals, we may need to make provisions in our financial statements, which could adversely impact our reported financial condition and results of operations. Furthermore, if significant claims are determined against us and we are required to pay all or a portion of the disputed amounts, there could be a material adverse effect on our business and profitability. A summary of the litigations against our Company is as under:

Nature of litigation No. of cases Amount (` in lakhs) Criminal Proceedings 1 -* Civil Proceedings 1 50.00** Sales Tax and VAT matters 3 60.99 Customs duty 1 - Income Tax 6 - Total 110.99

* Not ascertainable ** Excludes interest

We cannot provide any assurance that these matters will be decided in our favor. Further, there is no assurance that similar proceedings will not be initiated against us in the future. For further details of the cases mentioned above, please see “Outstanding Litigations” on page 118 of the Draft Letter of Offer.

2. The entire proceeds of the Issue are proposed to be utilized for repayment of the interest free unsecured loans availed from two of the Promoters of our Company.

To repay secured loans availed from banks, infusion of additional funds for working capital and for investment in overseas subsidiary for Research & Development, the Promoters of our Company have infused funds in the form of unsecured loans. We propose to repay the unsecured loans availed from the promoters upto an amount of ` 5,000 lakhs out of the proceeds of the Issue. Out of the total rights entitlement of [●] equity shares aggregating to ` [●], our Promoter Company, namely Easun Products of India Private Limited and Sowraj Investments Private Limited have extended unsecured loans and as on July 31, 2013, the outstanding amount is ` 5,019.76 lakhs. This amount will be fully adjusted against their rights entitlement / additional subscription in the proposed Right issue in terms of the disclosure made to the shareholders of the Company while obtaining their approval for this issue. The approval to the rights issue was accorded by the shareholders through postal ballot the results for which were declared on January 30, 2013. For details, refer to the chapter titled “Objects of the Issue” on page 34 of the Draft Letter of Offer

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3. The funding requirements and the deployment of the proceeds of the Issue are based on management estimates and have not been independently appraised. Further, the deployment of the Issue proceeds is entirely at our discretion and is not subject to any monitoring by an independent agency.

Our funding requirements and the deployment of the proceeds of the Issue are based on management estimates and have not been appraised by any bank or financial institution. Such estimates are based on market conditions and management expectations as of the date they were made.

Further we have not appointed any independent monitoring agency to monitor the utilization of the proceeds raised from this Issue. The Issue proceeds will be utilized at the sole discretion of the Board of Directors of our Company. For further details please refer to section titled “Objects of the Issue” on page 34 of the Draft Letter of Offer.

4. Our Company requires a number of approvals, licenses, registrations and permits in the ordinary

course of our business(es) and the failure to obtain or renew them in a timely manner may adversely affect its operations.

We require a number of approvals, licenses, registrations and permits for our business(s). Additionally, we may need to apply for renewal of approvals which expire, from time to time, as and when required in the ordinary course. In absence of grant of such renewal, we may not be able to carry on our manufacturing operations. Following are the registrations / permits / licenses that have been applied for / not been obtained by our Company for the existing units / branches: • We have applied for renewal of consent with Tamil nadu Pollution Control Board on April 15, 2013

to operate our Hosur unit under Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981.

• Professional tax registration as required under respective State Professional Tax enactment has not been obtained for branch offices of the Company situated in (a) Bhopal, (b) Kolkata, (c) Chennai, (d) Secunderabad and (e) Bangalore.

• Shops and establishment registration as required under respective Shops and Establishment Act in force in various States has not been obtained for branch offices of the Company situated at (a) Noida, (b) Mumbai, (c) Kolkata, (d) Chennai, (e) Secunderabad and (f) Bhopal.

For more information, please refer section titled “Government and Other Approvals” on page 122 of the Draft Letter of Offer. Furthermore, the government approvals and licenses are subject to various conditions. If we fail to comply, or a regulator claims that our Company has not complied with these conditions, our business, financial position and operations would be materially adversely affected.

5. We may be subject to restrictive covenants, including restriction on raising of further capital, under

term loans and working capital facilities provided to us by our Banker.

We have availed of several loans and financial facilities from our Lenders. In respect of various agreements entered into by our Company with our Lender and sanction letters issued by them to us, we are bound by certain restrictive covenants regarding capital structure and other general restrictive covenants. The major restrictive covenants as imposed by the lenders on our Company are as under: Our Company shall not, during the continuance of this loan, without written consent of the Bank: • Effect any scheme of amalgamation or re-constitution • Implement any new scheme of expansion or take up an allied line of business or manufacture • Declare a dividend or distribute profits, except where the installments of principle and interest

payable to the bank in respect of the aforesaid credit facilities are being paid regularly and there are no irregularities whatsoever in respect of any of the aforesaid credit facilities

• Change or in any way alter the capital structure of the company • Withdraw or allow to be withdrawn any moneys brought in by the promoters and directors or

relatives and friends of promoters or directors of the company • Invest any funds by way of deposit, or loan or in share capital of any other concern

Further, our immovable properties and plant and machinery are charged to lenders / Bank as per the terms and conditions of the term loan agreement. For details of the loans availed and assets charged, please refer to section titled "General information" on page 25 of the Draft Letter of Offer. In

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compliance with such restrictive covenants, we have obtained the consent from our lead Banker, State Bank of India vide their letter dated April 29, 2013 for the proposed issue.

6. Inability to obtain adequate financing to meet our Company’s liquidity and capital resource

requirements may have an adverse effect on the proposed expansion activities of the Company and business operations. Our Company may require funds for the financing of routine business activity which comprises our net working capital and bank financing. Our inability to obtain such financing could impair our business, results of operations, financial condition or prospects. Such inability could result from, among other things, the Company’s current or prospective financial condition or results of operations or from its inability for any reason (including reasons applicable to Indian companies generally) to issue securities in the capital markets. There can be no assurance that finance from external sources such as bank finance will be available at the times required or in the amounts necessary, to meet our requirements.

7. Any downgrade of our Company’s credit ratings would increase borrowing costs and constrain its access to capital and, as a result, would negatively affect its business operations and profitability.

The cost and availability of capital is inter alia dependent on our Company’s short-term and long-term credit ratings. Ratings reflect a rating agency's opinion of our Company’s financial strength, operating performance, strategic position, and ability to meet our Company’s obligations. Our Company holds ratings from ICRA of BB (indicating negative) for its term loan facilities, short term fund based facilities and sub limit of short term fund based facilities. In relation to the non fund based facilities, our Company holds the rating of A3+ (indicating moderate safety) from ICRA. The ratings have been modified from BBB to BB and downgraded from A4 to A3+ in the past as a result of large operational losses during Q1 2012-13, tight liquidity condition and high working capital intensity coupled with the fact that our Company derives substantial share of its revenues from State Electricity Boards. Any further downgrade of our Company’s credit ratings may increase borrowing costs and constrain its access to capital and debt markets, and, as a result, would negatively affect its business operations and profitability. In addition, downgrades of its credit ratings could increase the possibility of additional terms and conditions being added to any additional financing or refinancing arrangements in the future. Any such adverse development could adversely affect our Company’s business, future financial performance and results of operations.

8. We have entered into a number of related party transactions. There can be no assurance that entering

into such transaction with related parties will be the most beneficial option for our Company.

We have entered into a number of related party transactions with our Subsidiaries, Promoter, Promoter Group entities, Directors / Key managerial Personnel. The summary details of the related party transactions on standalone basis entered by us during the financial year ended March 31, 2013 are as under:

(` in lakhs) Sr. No.

Particulars March 31, 2013 Standalone Consolidated

1 Sale of goods 770.59 447.74 2 Purchase of goods 434.73 - 3 Rendering of services

- Reimbursement of expenses (including exchange fluctuation) - Unsecured loan

30.96

141.57

- -

4 Availing of services - Reimbursement of expenses - Loan borrowed - Loan repayment

22.23

7,548.50 4,806.00

-

7,548.50 4,806.00

5 Directors remuneration 48.00 48.00 Total 13,802.58 12,850.24

For further details on related party transactions, see the chapter titled “Financial Statements” on page 65 of the Draft Letter of Offer. Our Company’s policy on transactions with related parties is that such transactions are conducted on normal commercial terms in the ordinary and normal course of business. Our Company may enter into additional transactions with its related parties in the future. Although regulations in India do require

10

disclosure of related party transactions in a listed company’s financial statements, such regulations do not require shareholders’ approval or an independent assessment of connected or related party transactions. As a result, there is no independent verification that the terms of such transactions or that any of our Company’s transactions with its related parties will benefit our Company.

9. We have certain contingent liabilities, and our financial condition may be adversely affected if such

contingent liabilities materialize.

The table below sets forth our contingent liabilities not provided for as at March 31, 2013, as per our standalone and consolidated financial statements:

(` in lakhs) Particulars March 31, 2013

Standalone Consolidated A. Contingent liabilities Letters of credit opened by Bank for purchase of raw materials and components

2,728.26 2,728.26

Bills discounted with bank 70.70 70.70 Counter Guarantee given to bankers in respect of Guarantees given by them

17,002.08 17,002.08

Counter Guarantee given to bankers in respect of Standby LC given by them

1,253.66 1,253.66

Bonds executed in favour of President of India for import of material at concessional rate of duty

8.95 8.95

Sales effected under CST - liability towards submission of C Forms

2,735.04 2,735.04

Disputed amount of Income Tax paid 714.21 714.21 Disputed amount of Sales Tax, Karnataka 105.43 105.43 Disputed customs duty paid under protest 66.38 66.38 Disputed VAT Demand of West Bengal 7.99 7.99Disputed amount of Provident Fund 59.37 59.37 B. Commitments Estimated amount of capital commitment on account of Fixed Assets

470.30 470.30

Total 25,222.37 25,222.37

To the extent that any such contingent liabilities materialize, our financial condition may be adversely affected. For further information, see the chapter titled “Financial Statements” on page 65 of the Draft Letter of Offer.

10. Our Company has availed unsecured loans from our Promoters aggregating to ` 5,019.76 lakhs, as

on July 31, 2013 which is repayable on demand after September 30, 2014. Re-payment of such loan, if called at short notice, may affect our cash flows adversely to such extent.

As on July 31, 2013, we have availed unsecured loans from Easun Products of India Private Limited and Sowraj Investments Private Limited, two of our Promoters, aggregating to ` 1,166.26 lakhs and ` 3,853.50 lakhs which is repayable on demand after September 30, 2014. If such loan which is repayable on demand is called at short notice, it may adversely affect our cash flows to such extent. For further details, refer to the section titled “General Information” on page 25 of the Draft Letter of Offer.

11. We have 7 subsidiaries abroad with which we also enter into normal business transactions or share

Research & Development activities and vice versa. These transactions between the subsidiaries are subject to transfer pricing regulations. Changes in these regulations can result in higher taxes and adversely impact our earnings.

We undertake various transactions with our subsidiaries including sale and purchase of goods and our Research & Development activities. The transactions between these entities are governed, at arm’s length that treats each entity at par with an external entity. While we make best efforts to ensure compliance in these laws / regulations, any challenges to these agreements by tax authorities could have a materially adverse impact on our past as well as future financial performance. Any changes to these regulations, in each such jurisdiction, could have a materially adverse impact on our taxes and hence our profitability.

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12. We operate in a competitive business environment, both globally and domestically. Competition from

existing overseas players and new entrants and consequent pricing pressures may adversely affect our business, financial condition and results of operations.

The current business environment is highly competitive with a number of strong players operating out of India and overseas. If we fail to effectively compete against these global players, our financial performance will be adversely impacted. We expect the competition at the marketplace to intensify going forward. Several large players have the ability to arrange for greater resources and generate higher revenues than us. We might find it difficult to succeed against these large players as it will depend upon a number of factors that are beyond our control. If we lose clients as a result of competition, our growth prospects will be affected.

13. Slowdown in Indian power sector or reduced spending by the Government in the Power Sector can adversely affect the Company’s performance Indian power sector, after a long gap, has been building up capacities in the recent past. The 12th Plan proposes an addition of approximately 88,537 MW of power. This would mean accelerating the need for massive investment in power sector in India in the near future. Any slow down in power sector investments would severely effect the industry performance and profitability.

14. We rely on government entities for a substantial portion of our revenues. Policy changes may result in projects being restructured, political or financial pressures could cause government entities to force us to renegotiate our agreements or delay their payment to us on time.

Our business is dependent on Power Transmission & Distribution and its related projects undertaken by government entities and funded by governments or international or multi-lateral development finance institutions. Contracts awarded by the Central and State Government entities have historically accounted, and we expect in the short- to medium-term will continue to account, for a substantial part of the Company’s revenues. There can be no assurance that the Central or State Governments will continue to place emphasis on the Power Transmission & Distribution Sectors. If there is any change in the Government, budgetary allocations by Governments for this sector, or downturn in available work in a particular sector as a result of shifts in Government policies or priorities, our financial results and business prospects may be adversely affected.

15. We are susceptible to product liability claims that may not be covered by warranties and assurances

from our suppliers or by insurance, and which, if successful, could require us to pay substantial sums.

Any defects in our products, including as a result of defective materials supplied to us, can adversely affect our business and could result in customer claims for damages or require us to undertake product recalls. Defects in our products that arise from defective materials or other inputs supplied by external suppliers may or may not be covered by warranties. An unusual number or amount of warranty claims against a supplier could adversely affect us as we depend on a limited number of suppliers for our materials.

We have not obtained any product liability coverage with respect to our products. If any product liability claim is decided against us, it could adversely affect our business and financial condition. We also face the risk of loss resulting from, and the adverse publicity associated with, product liability lawsuits. Even unsuccessful product liability claims would likely require us to spend money on litigation, divert management’s time, adversely affect our goodwill and impair the marketability of our products.

16. Changes in technology may render our current technologies obsolete or require us to make substantial capital investments. The cost of implementing new technologies or expanding capacity or change in our customer technologies could be significant and could adversely affect our revenues and results of operations.

Our businesses are subject to rapid and significant changes in technology. Although we strive to keep our technology in accordance with the latest standards, the technologies currently employed may become obsolete or may be subject to competition from new technologies in the future. The cost of

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implementing new technologies or expanding capacity could be significant and could adversely affect our results of operations.

17. We may not always possess and maintain our bid capacity and pre-qualification capability.

Our business and growth is dependent on our ability to bid for and secure projects. Bidding for projects / contracts is dependent on various criteria, including, bid capacity and pre-qualification capability. Bid capacity relates to the highest possible value of a single project that can be awarded to us. In addition to meeting bid capacity requirements, we may also be required to pre-qualify for the projects. This includes various factors such as the technical capability and experience of having executed similar projects. It is imperative to enhance our bid capacity and pre-qualification capability. However, we cannot assure that we shall always maintain our bid capacity and our pre-qualification capabilities, or at all, and that we shall be able to continually secure projects so as to enhance our financial performance and results of operations.

18. Our revenues depend upon the award of new contracts. Consequently, our failure to win new contracts will adversely affect our results of operations and our cash flows may fluctuate materially from period to period.

Our revenues are derived primarily from contracts awarded to us on a contract-by-contract basis. Generally, it is very difficult to predict whether and when we will be awarded a new contract since many potential contracts involve a lengthy and complex bidding and selection process that may be affected by a number of factors, including changes in existing or assumed market conditions, financing arrangements, technical and financial qualifications, governmental approvals and environmental matters. Because our revenues are derived primarily from these contracts, our results of operations and cash flows may be adversely affected or fluctuate materially from period to period depending on our ability to win new contracts. The uncertainty associated with the award of new contracts may increase our cost of doing business. For example, we may decide to maintain and bear the cost of a workforce in excess of our current contract needs in anticipation of future contract awards. If an expected contract award is delayed or not received, we could incur costs in maintaining an idle workforce that may have a material adverse effect on our results of operations. Alternatively, we may decide that our long term interests are best served by reducing our workforce and we may incur increased costs associated with severance and termination benefits which also could have a material adverse effect on our results of operations for the period when such cost is incurred. Reducing our workforce could also impact our results of operations if we are unable to adequately staff projects that are awarded subsequent to a workforce reduction.

19. We have undertaken and may continue to undertake strategic acquisitions or investments, which may prove to be difficult to integrate and manage or may not be successful. Further, if the Company become subject to increased or unforeseen expenses associated with its international expansion, its revenue and cash flows and the growth of its business could be affected.

We have undertaken various acquisitions and incorporated overseas subsidiaries in the past and may continue to do so in the future. We acquired the businesses of ERL Phase Power Technologies Limited in the year 2007, Switchcraft (Europe) GmbH in the year 2009 and Electrical Distribution Solutions Pty. Ltd. in the year 2013 and commenced international marketing operations through ERL Marketing International FZE in 2008. For details about our acquisitions, please refer to the section titled “History and Certain Corporate Matters” on page 53 of the Draft Letter of Offer. There is a risk that the information relied upon or assumed by us while acquiring a business may be inaccurate or incomplete and we may be subject to unforeseen liabilities and obligations relating to our past acquisitions. In addition, there are inherent risks in the integration of such business and we may not realize the intended benefit of any acquisition. In the future, we may consider making strategic acquisitions of other companies / firms whose resources, capabilities and strategies are likely to enhance our business operations in the different geographical regions that we operate in. It is possible that we may not be able to identify suitable acquisition or investment opportunities, or that if we do identify suitable opportunities, we may not complete those transactions on terms commercially acceptable to us or at all. The inability to identify suitable acquisition targets or investments or the inability to complete such transactions may adversely affect our competitiveness and our growth prospects. In addition, the key personnel of the acquired company may decide not to work for us. If we acquire another company or business we could face difficulty in integrating the acquired operations. There can be no assurance

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that we will be able to achieve the strategic purpose of such acquisitions or operational integration or a return on our investment. Further, any change in the political conditions, economical conditions or the laws/rules and regulations in the country where the Company proposes to expand its operations will have a material impact on revenue. International litigation is often expensive and time consuming and could distract management's attention away from the operation of the business. International operations are subject to other inherent risks, including, but not limited to, difficulties and costs of staffing and managing foreign operations. The Company may need to develop expertise in its operations in foreign markets. Its failure to address these risks adequately could materially and adversely affect its business, results of operations and financial condition.

20. We may experience difficulties in expanding our business into new regions and markets in India and abroad and introducing our complete range of products.

As part of our growth strategy, we continue to evaluate attractive growth opportunities to expand our business into new regions and markets in India and beyond. Factors such as competition, culture, regulatory regimes, business practices and customs and customer requirements in these new markets may differ from those in our current markets and our experience in our current markets may not be applicable to these new markets. In addition, as we enter new markets and geographical regions, we are likely to compete with other manufacturers who already have a presence in those geographies and markets and are therefore more familiar with local regulations, business practices and customs and have stronger relationships with customers.

Our business may be exposed to various additional challenges including obtaining necessary governmental approvals, identifying and collaborating with local business and partners with whom we may have no previous working relationship; successfully gauging market conditions in local markets with which we have no previous familiarity; attracting potential customers in a market in which we do not have significant experience or visibility; being susceptible to local taxation in additional geographical areas and adapting our marketing strategy and operations to different regions. Our inability to expand the acceptability of our products and markets may adversely affect our business prospects, financial conditions and results of operations.

21. The risk of non-payment or default by our customers may adversely affect our Company’s financial

condition and results of operations.

Our Company cannot be certain, and cannot assure you, that it will be able to maintain its recoveries in relation to its debtors in the future. Moreover, as our Company’s business expands, it may experience increase in delay or defaults in payments by its debtors. Thus, if our Company is not able to managing its bad debts, the overall revenue realization will fall and its results of operations may be adversely affected.

22. We have sold the properties admeasuring approximately 21 acres, situated at (a) Pazhavoor Village

Rathapuram Taluk, District Tirunelveli, (b) Aralvoimozhi Village, Thovalai Taluk, Kanyakumari District and (c) Perungudi Village, Rathapuram Taluk, District Tirunelveli for a total consideration of Rupees 490 lakhs vide various sale deeds dated March 29, 2012. Prior to the sale, the aforesaid properties were mortgaged with the State Bank of India, Axis Bank, Standard Chartered Bank, DBS Bank Limited. Though the lenders have release the title deed of the properties, we have not filed the form for satisfaction of charge with the Registrar of Companies. Therefore, we may be liable to indemnify the buyer for all losses in case the lenders seek to invoke the charge.

We have sold the properties admeasuring approximately 21 acres, situated at (a) Pazhavoor Village Rathapuram Taluk, District Tirunelveli, (b) Aralvoimozhi Village, Thovalai Taluk, Kanyakumari District and (c) Perungudi Village, Rathapuram Taluk, District Tirunelveli. State Bank of India, Axis Bank, Standard Chartered Bank, DBS Bank Ltd. continue to have the rights of mortgage over the aforesaid three properties in respect of the loans granted by them to the Company. On July 17, 2013, State Bank of India had returned back the title deeds of the windmill properties to the Company. However we have not filed the form for satisfaction of charge with the Registrar of Companies. We may be liable to indemnify the buyer for all losses in case the lenders seek to invoke the charge.

23. Our success depends in large part upon our management team and key personnel and our ability to

attract, train and retain such persons.

14

Our ability to sustain our rate of growth depends significantly upon our ability to manage key issues such as selecting and retaining key operations personnel, developing managerial experience to address emerging challenges and ensuring a high standard of client service. In order to be successful, we must attract, train, motivate and retain highly skilled employees. If we cannot hire additional qualified personnel or retain them, our ability to expand our business will be impaired and our revenue could decline. We will need to recruit new employees, who will have to be trained and integrated into our operations. We will also have to train existing employees to adhere properly to internal controls and risk management procedures. Failure to train and motivate our employees properly may result in an increase in employee attrition rates, divert management resources and subject us to incurring additional human resource related expenditure. Our inability to attract and retain talented professionals, or the resignation or loss of key operations personnel, may have an adverse impact on our business and future financial performance.

24. We have availed External Commercial Borrowings from Banks and also import raw material &

export goods outside India. Fluctuation in currency rates may adversely impact our results of operations. The exchange rate of foreign currency vis-à-vis Indian Rupee has changed substantially in recent years and may continue to fluctuate significantly in the future. We have availed External Commercial Borrowings from Banks and also import raw material & export goods. Accordingly, our operating results have been and will continue to be impacted by fluctuations in the exchange rate between the Indian Rupee and foreign currency. To hedge the exposure to movement in Foreign Exchange Rates, we enter into Foreign Exchange Forward Contracts selectively based on the risk involved. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the company does not use those for trading or speculation purposes. For details of the export and imports made by our Company and the outstanding liabilities in foreign currency, refer the the chapter titled “Financial Statements” on page 65 of the Draft Letter of Offer

25. The insurance coverage taken by the Company may not be adequate to protect against certain business risks and this may have an adverse affect on the business operations.

The Company’s insurance coverage is likely to cover all normal risks associated with the operation of the business but there can be no assurance that any claim under the insurance policies maintained by it will be honored fully, in part or on time. To the extent that the Company suffers loss or damage that is not covered by insurance or exceeds its insurance coverage, the Company’s financial performance and cash flow may be adversely affected.

26. Our revenues and expenses vary significantly from period to period, which could cause our share

price to decline. Our revenues may vary significantly in the future. Therefore, we believe that period-to-period comparisons of our results of operations may not be necessarily meaningful and may not be relied upon as an indication of our future performance. It is possible that in the future some of our results of operations may be below the expectations of market analysts and our investors, which could cause the share price of our Equity Shares to decline significantly. Some of the factors which may affect the fluctuation of our operating results include: • the size, timing and profitability of our significant projects; • business mix • the ability to modify and enhance our suite of offerings based on customer needs and evolving

technologies; • changes in our pricing policies or those of our competitors; • the effect of wage pressures, seasonal hiring patterns and the time required to train and productively

utilize new employees; • unanticipated cancellations, contract terminations or deferrals of projects; and • unanticipated variations in the duration, size and scope of our projects. In addition, a significant portion of our revenues is dependent upon the timely completion of various project milestones; any delay may cause cost overruns and adversely affect our working capital.

15

27. Any future equity offerings or issue of options under employee stock option scheme may lead to

dilution of investor’s shareholding in our company.

Purchasers of Equity Shares in this Issue may experience dilution of their shareholding to the extent we make future equity offerings and to the extent we decide to grant options to be issued under an employee stock option scheme. As on July 31, 2013, 1,97,245 options have been granted of which 35,409 options have been exercised and 1,61,836 options have lapsed under the Employees Stock Option Scheme 2009. You will experience dilution upon issue and allotment of additional Equity Shares upon the conversion of these instruments.

28. Our ability to pay dividends in the future will depend upon future earnings, financial condition, cash

flows, working capital requirements and capital expenditures.

The amount of our future dividend payments, if any, will depend upon our future earnings, financial condition, cash flows, working capital requirements and capital expenditures. There can be no assurance that we will be able to pay dividends.

EXTERNAL RISK FACTORS 29. Any changes in the regulatory framework could adversely affect our operations and growth prospects.

We are subject to various regulations and policies including Excise, Customs, Service Tax, Income Tax, Labour acts, etc. Our business and prospects could be materially adversely affected by changes in any of these regulations and policies, including the introduction of new laws, policies or regulations or changes in the interpretation or application of existing laws, policies and regulations. There can be no assurance that we will succeed in obtaining all requisite regulatory approvals in the future for our operations or that compliance issues will not be raised in respect of our operations, either of which could have a material adverse affect on our business, financial condition and results of operations.

30. A slowdown in economic growth in the markets in which we operate could cause our business to

suffer.

Our performance and growth are dependent on the health of the economy of the markets in which we operate. The economy could be adversely affected by various factors such as political or regulatory action, including adverse changes in liberalization policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in the economy of the markets in which we operate may adversely affect our business and financial performance and the price of our Equity Shares.

31. Civil disturbances, extremities of weather, regional conflicts and other political instability may have

adverse affects on our operations and financial performance.

Certain events that are beyond our control such as earthquake, fire, floods and similar natural calamities may cause interruption in the business undertaken by us. Our operations and financial results and the market price and liquidity of our equity shares may be affected by changes in Indian Government policy or taxation or social, ethnic, political, economic or other adverse developments in or affecting India.

32. Any downgrading of India’s debt rating by a domestic or international rating agency could adversely

affect our business.

Any adverse revisions to India’s credit ratings for domestic and international debt by domestic or international rating agencies may adversely affect our ability to raise additional financing, and the interest rates and other commercial terms. This could impact our profitability and ability to obtain financing for capital expenditures and the price of our Equity Shares.

33. Regional or International hostilities, terrorist attack or other acts of violence of war could have a

significant adverse impact on international or Indian financial markets or economic conditions or on Government Policy. 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 on the market price of our company’s equity shares.

16

34. Investors will not receive the Equity shares subscribed and allotted in this issue until several days after they have paid for them, which will subject them to market risk.

The Equity Shares subscribed and allotted in this issue will not be credited to investor’s demat account with depository participants until approximately 15 days from the Issue closing date. Investors can start trading only after receipt of listing and trading approvals in respect of these Equity Shares which will require additional time after the allotment. Further, there can be no assurance that the equity Shares allocated will be credited to investor’s demat account, or that the trading in the equity shares will commence, within the time periods specified above.

35. The market value of the Equity Shares may fluctuate due to the volatility of the securities markets.

The securities markets are volatile and stock exchanges have in the past, experienced substantial fluctuations in the prices of listed securities. The stock exchanges have experienced problems, which, if these were to continue or recur, could affect the market price and liquidity of the securities of Indian Companies, including the Equity Shares. The governing bodies of the various Indian stock exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Furthermore, time to time disputes have occurred between listed companies and stock exchanges and other regulatory bodies, which in some cases may have had a negative effect on the market sentiment.

36. Future issues of Equity Shares / convertible instruments of our company may significantly affect the

trading price of the Equity Shares.

Future issue of Equity Shares / convertible instruments by our company or the disposal of Equity Shares by any of the major shareholders or the perception that such issues or sales may occur may significantly affect trading price of the Equity Shares. None of the shareholders are subject to any lock-in restricting their ability to dispose off their Equity Shares, and there can be no assurance that any shareholder will not dispose of, encumber, or pledge, his Equity Shares.

PROMINENT NOTES: 1. Issue of [●] equity shares of face value of ` 2 each (“equity shares”) of Easun Reyrolle Limited

(“Easun” or the “Company” or the “Issuer”) for cash at a price of ` [●] (including share premium of ` [●]) per equity share (“issue price”) for an aggregate amount not exceeding ` 5,000 lakhs to the Eligible Equity Shareholders on rights basis in the ratio of [●] Equity Shares for every [●] Equity Shares held by the Eligible Equity Shareholders on the Record Date, i.e. [●] (the “Issue”). The Issue Price is [●] times the face value of the equity shares. For further details, refer to “Offering Information” on page [●] of the Draft Letter of Offer.

2. The Net Worth of our Company and Book Value per Equity Share as per standalone and consolidated financial statements as on March 31, 2013 is as under:

Particulars Consolidated Standalone

New worth (in ` lakhs) 20,077.76 22,600.84 Book Value per equity share (in `) 96.50 108.62

3. The proceeds from the Issue are proposed to be paid to the Promoters of our Company against the loan

given by them to our Company. For details refer to the chapter titled “Objects of the Issue” on page 34 of the Draft Letter of Offer.

4. There have been no acquisition of Equity Shares by the Promoters and the members of the Promoter Group within the last one year preceding the date of the Draft Letter of Offer except as under:

Date of transaction

Name of Purchaser

Nature of transaction

No. of shares

Consideration per share (in `)

Remarks

December 11, 2012

Meenakshi Subramaniam

Buy 850 66.50 Purchased from stock exchange

June 20, 2013

Anushka Raj Eswaran

Buy 4,000 49.70 Purchased from stock exchange

June 20, 2013

Prithvi Raj Eswaran


17

5. Our Promoter Group, Directors and their relatives have not financed the purchase by any other person of

the equity shares of our Company during the period of six months immediately preceding the date of filing of Draft Letter of Offer with the SEBI.

6. Trading in the Equity Shares of our Company for all investors shall be in dematerialized form only. For further details, see the chapter titled “Offering Information” on page 131 of the Draft Letter of Offer.

7. There has been no change in the name of our Company in the last twelve months.

8. Our Company and the Lead Manager will update the offer document in accordance with the Companies Act and the SEBI ICDR Regulations and our Company and the Lead Manager will keep the public informed of any material changes relating to our company till the listing of our shares on the Stock Exchanges. No selective or additional information would be made available to a section of investors in any manner whatsoever.

9. Investors may contact the Lead Manager, the Registrar to the Issue or the Compliance Officer for any complaints, clarifications, etc. pertaining to the Issue.

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THE ISSUE

The details of this Issue are set out below: Equity Shares proposed to be issued by the Company

[●] Equity Shares

Rights Entitlement [●] Equity Shares for every [●] Equity Shares held on the Record Date

Record Date [●] Issue Price per Equity Share ` [●]. The Issue Price has been arrived at in

consultation between the Issuer and the Lead Manager Issue Size ` 5,000 lakhsEquity Shares outstanding prior to the issue 2,08,07,014 Equity Shares of ` 2/- each Equity Shares outstanding after the Issue, assuming full subscription

[●] Equity Shares of ` 2/- each

Objects of the Issue Please refer to section “Objects of the Issue” on page 34 of the Draft Letter of Offer

For more information on the payment terms, refer to the Chapter titled “Offering Information” on page 131 of the Draft Letter of Offer.

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SUMMARY OF FINANCIAL INFORMATION

The following tables set forth the summary financial information derived from our audited financial statements as on and for financial year ended March 31, 2013 prepared in accordance with Indian GAAP and the Companies Act and should be read in conjunction with the financial statements and the notes (including the significant accounting principles) thereto included in the chapter “Financial Statements” on page 65 of the Draft Letter of Offer. For the financial year ended March 31, 2013, based on the consolidated audited financial statements Consolidated Balance Sheet as at 31st March, 2013

Rs. Lakhs Particulars

Note No.

April 2012- March 2013


I. EQUITY AND LIABILITIES (1) Shareholders’ funds (a) Share capital 2 416.14 416.14 (b) Reserves and surplus 3 19,661.62 19,565.86 (c) Money received against share warrants 2.4(b) - 668.80 20,077.76 20,650.80 (2) Non-current liabilities (a) Long-term borrowings 4 9,190.03 8,527.83 (b) Deferred tax liabilities (Net) 5 429.77 282.42 (c) Other Long term liabilities 6 1,175.14 640.40 (d) Long-term provisions 7 122.92 66.12 10,917.86 9,516.77 (3) Current liabilities (a) Short-term borrowings 8 10,552.31 7,981.59 (b) Trade payables 9 19,599.39 11,985.18 (c) Other current liabilities 10 3,599.59 6,512.67 (d) Short-term provisions 11 512.82 596.83 34,264.11 27,076.27 TOTAL 65,259.73 57,243.84

II. ASSETS (1) Non-current assets (a) Fixed assets (i)Tangible assets 12 10,688.33 5,264.41 (ii)Intangible assets 15,271.55 11,552.41 (iii) Capital Works in Progress - 2,783.90 25,959.88 19,600.73 (b) Non-current investments 13 - 6.28 (c) Foreign Currency Monetary Item Translation

Difference Account 721.00 -

(c) Long-term loans and advances 14 746.16 3,573.10 (d) Other Non current assets 15 3,322.54 2,042.01 30,749.58 25,222.11 (2) Current assets (a) Current investments 16 34.25 19.19 (b) Inventories 17 6,927.08 6,268.91 (c) Trade receivables 18 20,702.49 20,698.26 (d) Cash and Bank Balances 19 2,222.85 3,424.92 (e) Short-term loans and advances 20 4,317.58 1,384.64 (f) Other current assets 21 305.90 225.81 34,510.15 32,021.73 TOTAL 65,259.73 57,243.84

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Consolidated Statement of Profit and Loss for the year ended 31st March, 2013


Not

e No.



1 Revenue from operations 22 28,816.77 32,214.43 2 Other income 23 2,580.17 2,307.22 3 Total Revenue (1+2) 31,396.94 34,521.65 4 Expenses (1) Cost of Materials Consumed 24 17,108.21 22,017.26 (2) Change in Inventory 25 714.82 (233.67) (3) Employee benefits expense 26 4,790.87 4,671.70 (4) Finance costs 27 2,342.49 2,207.50 (5) Depreciation and amortization expense 2,302.07 1,464.06 (6) Other expenses 28 4,306.81 4,821.90 Total expenses 31,565.27 34,948.75 5 Profit before exceptional and extraordinary items and

tax (3-4) (168.34) (427.10)

6 Exceptional items - - 7 Profit before extraordinary items and tax (5-6) (168.34) (427.10) 8 Extraordinary Items - - 9 Profit before tax (7- 8) (168.34) (427.10) 10 Tax expense: (1) Current tax 41.65 250.00 (2) Deferred tax 147.35 135.87 (3) MAT Credit Availment - (87.72)

11 Profit after tax for the year (9-10) (357.34) (725.25) (-) Minority Interest 27.62 809.14 (+) Minority Interest Reserve (27.62) (809.14) (-) Share of Loss of Associates 24.34

12 Profit after tax for the year (357.34) (700.91) 13 Earnings per equity share (in Rs) (1) Basic (Face Value Rs.2 each) (1.72) (3.37) (2) Diluted (Face Value Rs.2 each) (1.72) (3.37)

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Consolidated Cash Flow Statement for the year ended 31st March, 2013 Pursuant to Clause 32 of the Listing Agreement

Rs. Lakhs Particulars As at

31.03.2013 As at 31.03.2012

A Cash flow from operating activities: Net profit before tax and extraordinary items (168.34) (427.10) Adjusted for: Depreciation 2,302.07 1,464.06 (Profit)/Loss on Sale of Assets (1,749.35) (829.37) Interest Expense 2,342.49 2,384.32 Income from Mutual Funds - (364.00) Interest Income (219.51) (246.87) Unreliased Loss/ (Gain) on FCCB - 255.60 Transfer to ESOP Amortization Expenses - 17.81 Unrealised Forex fluctuations in Drs and Crs (90.90) (77.21) Operating profit before Working Capital changes 2,416.46 2,177.24 Loans, Advances, Trade and other receivables (1,380.76) 353.83 Inventories (658.17) 2,615.79 Trade Payables and other Current Liabilities 5,208.66 (3,141.33) Unrealised foreign exchange fluctuation 825.06 922.85 Cash generated from operations 6,411.26 2,928.38 Direct Taxes (85.69) (107.74) Net cash from operating activities 6,325.57 2,820.64

B Cash flow from Investing activities: Purchase of Fixed Assets (11,429.82) (7,382.23) Sale of Investment In Mutual Fund - 5,264.43 Dividend income from mutual funds - 364.00 (Increase) / Decrease in capital work in progress 2,783.90 (1,148.91) Interest received 219.51 246.87 Margin Money Accounts and Deposits 1,031.77 (2,282.59) Sale of Fixed Assets 1,840.48 970.00 Decrease / (Increase) in Investment - 301.61 Net cash from Investing activities (5,554.17) (3,666.82)

C Cash flow from financing activities: Issue of Share Capital - 0.71

FCCB Redemption (1,040.75) - Increase in Term Loans 662.20 3,127.14 Increase / (Decrease ) in Short Term Borrowings 1,849.72 (1,558.46) Dividend paid (41.61) (290.66) Interest paid (2,342.49) (2,384.32) Net Cash from financing activities (912.93) (1,105.59) Increase / (Decrease) in cash and cash equivalent (141.53) (1,951.77) Cash and cash equivalent at the beginning of the year 390.63 2,342.40 Cash and cash equivalent at the close of the year 249.10 390.63

1. The above Cash Flow Statement has been prepared under the "Indirect method" as set out in Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

2. Previous year's figures have been regrouped/rearranged wherever necessary to conform to the current year's presentations.

22

For the financial year ended March 31, 2013, based on the standalone audited financial statements Balance Sheet as at 31st March 2013

Rs Lacs Particulars

Note No.

As at 31st March 2013


I. EQUITY AND LIABILITIES (1) Shareholders’ funds (a) Share capital 2 416.14 416.14 (b) Reserves and surplus 3 22,184.70 22,544.40 (c) Money received against share

warrants 2.4(b) 0.00 668.80

22,600.84 23,629.34 (2) Non-current liabilities (a) Long-term borrowings 4 9,190.03 8,525.52 (b) Deferred tax liabilities (Net) 5 429.77 282.42 (c) Long-term provisions 6 122.92 66.12 9,742.72 8,874.06 (3) Current liabilities (a) Short-term borrowings 7 9,125.08 7,766.60 (b) Trade payables 8 17,795.71 12,892.23 (c) Other current liabilities 9 3,322.39 5,008.45 (d) Short-term provisions 10 197.29 247.85 30,440.47 25,915.13 TOTAL 62,784.03 58,418.50

II. ASSETS (1) Non-current assets (a) Fixed assets (i)Tangible assets 11 9,451.20 3,763.57 (ii)Intangible assets 557.36 434.71 (iii) Capital Works in Progress 0.00 2,783.90 10,008.56 6,982.18 (b) Non-current investments 12 15,502.10 15,502.10 (c) Foreign Currency Monetary Item

Translation Difference Account 721.00 0.00

(d) Long-term loans and advances 13 1,654.93 4,229.11 (e) Other Non current assets 14 3,322.54 2,042.01 31,209.13 28,755.40 (2) Current assets (a) Inventories 15 5,707.70 4,975.89 (b) Trade receivables 16 21,235.41 20,036.27 (c) Cash and Bank Balances 17 2,053.62 3,203.68 (d) Short-term loans and advances 18 2,272.27 1,221.45 (e) Other current assets 19 305.90 225.81 31,574.90 29,663.10 TOTAL 62,784.03 58,418.50

23

Statement of Profit and loss for the year ended 31st March 2013

Rs Lacs Particulars Note

No. April 2012- March 2013


1 Revenue from operations 20 22,044.55 27,670.85 2 Other income 21 2,422.22 1,931.28 3 Total Revenue (1+2) 24,466.77 29,602.13 4 Expenses (1) Cost of Materials Consumed 22 16,755.36 21,284.54 (2) Change in Inventory 23

(131.81)

(58.15) (3) Employee benefits expense 24 2,283.92 2,171.46 (4) Finance costs 25 2,159.20 1,628.47 (5) Depreciation and amortization expense

717.32

520.62 (6) Other expenses 26 2,483.21 3,040.81 Total expenses 24,267.20 28,587.75

5 Profit before exceptional and extraordinary items and tax (3-4)

199.57

1,014.38

6 Exceptional items - - 7 Profit before extraordinary items and tax (5-6) 199.57 1,014.38 8 Extraordinary Items - - 9 Profit before tax (7- 8) 199.57 1,014.38 10 Tax expense:

(1) Current tax 39.93 250.00 (2) Deferred tax 147.35 (77.93) (3) MAT Credit Availment - (87.72)

11 Profit after tax for the year (9-10) 12.29 930.03 12 Profit/(loss) from discontinuing operations 13 Tax expense of discontinuing operations 14 Profit/(loss) from Discontinuing operations (after

tax) (12-13)

-

- 12 Profit after tax for the year (11+14) 12.29 930.03 12 Earnings per equity share (in Rs)

(1) Basic (Face Value Rs.2 each) 0.06 4.47 (2) Diluted (Face Value Rs.2 each) 0.06 4.01

24

Cash flow statement for the year ended 31st March, 2013 Pursuant to Clause 32 of the Listing Agreement

Rs Lakhs Particulars As at 31.03.2013 As at 31.03.2012

A Cash flow from operating activities: Net profit before tax and extraordinary items 199.57 1,014.34 Adjusted for: Depreciation 717.32 520.62 (Profit)/Loss on Sale of Assets (1,749.35) (829.38) Interest Expense 2,159.20 1,628.47 Income from Mutual Funds - (364.00) Interest Income (219.35) (246.19) Unrealised Loss/ (Gain) on FCCB - 255.60 Transfer to ESOP Amortization Expenses - 17.81 Unrealised Forex fluctuations in Drs and Crs 85.75 (77.21) Operating profit before Working Capital changes 1,193.14 1,920.06 Trade and other receivables (2,565.42) (4,008.17) Inventories (731.81) (413.11) Loans and Advances 1,528.96 2,685.30 Trade Payables and other Current Liabilities 3,150.82 1,379.42 Cash generated from operations 2,575.69 1,563.51 Direct Taxes (85.69) (107.72) Net cash from operating activities 2,490.01 1,455.79

B Cash flow from Investing activities: Purchase of Fixed Assets (6,580.50) (303.74) Investment In Mutual Fund - 5,264.43 Dividend income from mutual funds - 364.00 (Increase) / Decrease in capital work in progress 2,783.90 (1,148.91) Interest received 219.35 246.19 Margin Money Accounts and Deposits 1,060.54 (2,359.49) Sale of Fixed Assets 1,802.23 970.00 Investment in ERL International Pte Ltd * - (5,146.82) Net cash from Investing activities (714.48) (2,114.35)

C Cash flow from financing activities: Issue of Share Capital - 0.71 FCCB redemption (1,040.75) -

Increase / (Decrease) in Term Loans 664.51 4,055.41 Increase / (Decrease) in Short term borrowings 712.01 (1,773.23) Dividend paid (41.61) (290.87) Interest paid (2,159.20) (1,628.47) Net Cash from financing activities (1,865.04) 363.55 Increase / (Decrease) in cash and cash equivalent (89.52) (295.01)Cash and cash equivalent at the beginning of the year 169.39 464.40 Cash and cash equivalent at the close of the year 79.87 169.39



* Non cash item

25

GENERAL INFORMATION

Pursuant to a resolution passed under Section 81(1) of the Companies Act by our Board in its meeting held on November 17, 2012 and the member of the Company through postal ballot on January 30, 2013, it has been decided to make the following Offer to the Eligible Equity Shareholders, with a right to renounce: ISSUE OF [●] EQUITY SHARES OF FACE VALUE OF ` 2 EACH (“EQUITY SHARES”) OF EASUN REYROLLE LIMITED (“EASUN” OR THE “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF ` [●] (INCLUDING SHARE PREMIUM OF ` [●]) PER EQUITY SHARE (“ISSUE PRICE”) FOR AN AGGREGATE AMOUNT NOT EXCEEDING ` 5,000 LAKHS TO THE ELIGIBLE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [●] EQUITY SHARES FOR EVERY [●] EQUITY SHARES HELD BY THE ELIGIBLE EQUITY SHAREHOLDERS ON THE RECORD DATE, I.E. [●] (THE “ISSUE”). THE ISSUE PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARES. FOR FURTHER DETAILS, PLEASE REFER TO “OFFERING INFORMATION” ON PAGE 131 OF THE DRAFT LETTER OF OFFER.

Registered Office Corporate Office & Technology Development Centre “Temple Tower”, 6th Floor, 672, Anna Salai, Nandanam, Chennai - 600 035 Tel.: +91 44 2434 6425 Fax: +91 44 24346435

98, SIPCOT Industrial Complex Hosur - 635 126, Tamil Nadu Tel No: +91 4344 401600 Fax No: +91 4344 276397

Factories 98, SIPCOT Industrial Complex, Hosur - 635 126, Tamil Nadu

Plot No(s) 147-Part & 148-Part, Harohalli Industrial Area, 2nd Phase, Madamaranahalli, Harohalli Hobli, Kanakapura Taluk, Ramanagara District, Karnataka

Corporate Identity Number: L31900TN1974PLC006695 Address of the Registrar of Companies Registrar of Companies, Tamil Nadu, Chennai, Andaman and Nicobar Islands Block No. 6, B Wing, 2nd Floor Shastri Bhawan, 26, Haddows Road Chennai - 600 034 Tel.: +91 2827 0071 Fax: +91 2823 4298 E-mail: [email protected] Company Secretary and Compliance Officer Mr. K N Nagesha Rao Secretary and VP (Corporate Finance) 98, SIPCOT Industrial Complex Hosur - 635 126, Tamil Nadu Tel No: +91 4344 401600 Fax No: +91 4344 276397 E-mail: [email protected] Note: All grievances relating to the Issue may be addressed to the Registrar to the Issue or the SCSB in case of ASBA Applicants giving full details such as folio no. / demat account no. / name and address, contact telephone / cell numbers, email id of the first applicant, number of Equity Shares applied for, CAF serial number, amount paid on application and the name of the bank / SCSB and the branch where the CAF, or the plain paper Application, as the case may be, was deposited, alongwith a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished.

26

Lead Manager to the Issue SPA Capital Advisors Limited SEBI Regn. No.: INM 000010825 25, C - Block, Community Center Janak Puri, New Delhi - 110 058 Tel.: +91 11 2551 7371, 4567 5500 Fax: +91 11 2553 2644 E-mail: [email protected] Investor Grievance e-mail id: [email protected] Website: www.spacapital.com Contact Person: Mr. NitiN Somani / Ms. Richa Sharma Registrar to the Issue Integrated Enterprises (India) Limited SEBI Regn. No.: INR 000000544 IInd Floor, “Kences Towers” No. 1, Ramakrishna Street, North Usman Road, T Nagar, Chennai - 600 017 Tel.: +91 44 2814 0801 - 03 Fax: +91 44 2814 2479 E-mail: [email protected] Investor Grievance e-mail id: [email protected] Website: www.integratedindia.in Contact Person: Anusha N Legal Advisor to the Issue Vaish Associates Advocates Unit No. 305, 3rd Floor Prestige Meridian - II Building No. 30, M G Road Bangaluru - 560 001 Tel.: +91 80 4090 3581 / 88 / 89 Fax: +91 80 4090 3584 Email: [email protected] Contact Person: Mr. Vikas Keyal Bankers to the Issue [●] Self Certified Syndicate Banks The list of banks that have been notified by SEBI to act as SCSB for the ASBA process is provided on SEBI website at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries. Banker to the Company State Bank of India Overseas Branch L H O Campus 65, St. Mark’s Road Bangalore - 560 001

Standard Chartered Bank (ECB Loan) 6th Floor, 1 Basinghall Avenue, London - EC2V 5DD, United Kingdom

DBS Bank Limited (ECB Loan) No.6, Shenton Way DBS Building Tower one 31st Floor, Singapore

Axis Bank Limited Corporate Banking Branch Express Building, Second Floor No.1, Queen's Road Bangalore - 560 001

Standard Chartered bank Fourth Floor 19, Rajaji Salai Chennai - 600 001

DBS Bank Limited 806, Anna Salai Chennai - 600 002

Canara Bank Hosur Branch M M Reddy Complex Old Bangalore Road Hosur - 635 109

27

Auditors of the Company M/s R. Subramanian & Co., Chartered Accountants, No. 6, Krishnaswamy Avenue, Luz Mylapore, Chennai - 600 004 Tel.: +91 44 2499 1347 / 2261 Fax: +91 44 2499 1408 E-mail: [email protected] Contact Person: Mr. R Subramanian, Partner Firm Registration No.: 004137S M/s Brahmayya & Co., Chartered Accountants, No. 48, Masilamani Road, Balaji Nagar, Royapettah, Chennai - 600 014 Tel.: +91 44 2813 1128 / 38 / 48 Fax: +91 44 2813 1158 E-mail: [email protected] Contact Person: Mr. Srikrishna, Partner Firm Registration No.: 000511S Credit Rating This being a right issue of equity shares, no credit rating is required. IPO Grading This being a right issue of equity shares, no IPO Grading is required. Trustees This being a Rights Issue of Equity Shares, appointment of Trustees is not required. Appraising Agency The issue has not been appraised. Monitoring Agency There is no requirement for a monitoring agency in terms of Regulation 16(1) of the SEBI ICDR Regulations. The Audit Committee of our Board would monitor the utilization of the proceeds of the Issue. For details please refer to section titled ‘Objects of the Issue’ on page 34 of Draft Letter of Offer. Underwriting / Standby agreement Our Company has not currently entered into any underwriting / stand by agreements. However, it may enter into such an agreement for the purpose of the Issue at an appropriate time and on such terms and conditions as it may deem fit. In the event our Company enters into such an arrangement, it shall be done prior to the filing of the Letter of Offer with the Designated Stock Exchange and the Letter of Offer will be updated to reflect the same. Issue Schedule

Issue Opens on [●]Last date for requests for Split Application Forms [●]Issue Closes on [●]

Minimum Subscription If we do not receive the minimum subscription of 90% in this Issue or if the Promoters and Promoter Group fails to subscribe for unsubscribed portion in the Issue after the Issue Closing Date or the subscription level falls below 90% after the Issue Closing Date on the account of cheques being returned unpaid or withdrawal of applications, we shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after we become liable to pay the subscription amount (i.e., 15 days after the Issue Closing Date), we and every officer in default shall be jointly and severally liable to pay interest for the delayed period, as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.

28

Principal terms of loan and assets charged as security Set forth below is a brief summary of the Company’s aggregate borrowing outstanding as on July 31, 2013 Secured Loans

(` in lakhs, unless otherwise specified) Name of the

Bank and Nature of

limit

Amount Sanctioned

Outstanding as on July 31, 2013

Rate of Interest (%) Securities

Working Capital

State Bank of India

CC: 4,800 LC: 2,300

BG: 14,700

CC: 4,865.61 LC: 2,072.44

BG: 14,524.04

CC - Base Rate + 4.3% p.a. EPC (both

preshipment & post shipment) - Base

Rate BG - 1.05% p.a.

Inland LC - 2.00% p.a.

Foreign LC - 1.488% p.a.

Hypothecation over entire current assets including stocks, receivables and other current assets of the Company on pari passu basis with other working capital lenders. First charge by way of equitable mortgage over Factory Land, Building, plant and machinery and other fixed assets of the Company at No. 98, Sipcot Industrial Complex, Hosur. Second pari passu charge on land and factory building & on plant and machinery at Plot nos. 147-part & no.148-part, Harohalli, Kanakapura Taluk, Ramanagaram District.

Axis Bank Limited

CC: 1,000 BG: 2,900

LC / Buyers Credit: 2,500*

* sub limit of BG

limit

CC: 999.26 LC: 298.36

BG: 2,549.77

CC - Base Rate + 3.5% p.a.

BG - 1.00% p.a. LC - 1.00% p.a.

Buyers credit - 1.00% p.a.

Pari passu first charge on the entire current assets of the Company & Second charge on the entire movable and immovable fixed assets of the Company.

Standard Chartered Bank

CC: 1,800 BG/LC/Buyers

Credit: 1,200

CC: 1,498.38 LC: Nil

BG: 571.33

CC - Base Rate + Margin p.a. BG / LC / Buyers Credit - Applicable rate agreed.

Pari passu first charge on the entire current assets of the Company & Second charge on the entire movable and immovable fixed assets of the Company at Sipcot Industrial Complex, Hosur. First charge on movable and immovable fixed assets at Harohalli, Kanakapura Taluk, Ramanagaram District

Canara Bank CC: 3,000 CC: 2,768.13 CC - Base Rate + 4.50% p.a. PC - Export credit - 10.75% p.a.

Pari passu first charge on the entire current assets of the Company & Pari passu second charge on the entire movable and immovable fixed assets of the Company located at Hosur, Jigani and Harohalli.

ECB / Term Loan

Standard Chartered Bank - ECB Loan

USD 10.00 mn - Repayable in 5

years from the first drawdown date

USD 7.50 mn (` 4,500 lakhs

@ ` 60 / USD) 1

Libor + Spread (currently 4.35% p.a.)

First charge on Land & building & Fixed assets at Harohalli, Kanakapura Taluk, Ramanagaram District and Pari passu second charge on Land & building at #98, Sipcot Industrial Complex, Hosur.

DBS Bank - ECB Loan

USD 7.50 mn - Repayable in 6

years with a moratorium of 1

USD 6.00 mn (` 3789 lakhs

@ ` 63.15/ USD) 2

Floating Rate - Libor +Spread p.a. (Currently around 2.60 p.a.) and

29

Name of the Bank and Nature of

limit

Amount Sanctioned

Outstanding as on July 31, 2013

Rate of Interest (%) Securities

year from the date of first drawdown

Fixed portion - 9% p.a.

Axis Bank Ltd - Rupee Term Loan

750 - Repayable in 4

years

431.82 13.25% p.a. First charge on Land & building & Fixed assets at Harohalli, Kanakapura Taluk, Ramanagaram District and Pari passu second charge on Land & building at #98, Sipcot Industrial Complex, Hosur.

Standard Chartered Bank - Short Term Loan

1,200 700.00 15.00% p.a. Secured by charge on immovable and movable property of the Promoters and personal guarantee.

Vehicle Loan Karur Vysya Bank Ltd

13.84 4.26 12.50% p.a. Hypothecation of Vehicle

CC: Cash Credit BG: Bank Guarantee LC: Letter of Credit Unsecured Loans

(` in lakhs) Name of Lender

Nature of Loan

Amount Sanctioned

Outstanding as on July 31,

2013

Rate of Interest (%)

Repayment terms

Easun Products of India Private Limited 3

Unsecured 5,000 1,166.26 NA Repayable after September 30, 2014. The parties have given their intention of subscribing to Equity share capital of the Company if any offered before September 30, 2014

Sowraj Investments Private Limited 3

Unsecured 5,000 3,853.50 NA

1 Hedged foreign currency exposure 2 source: www.rbi.org.in 3 Promoters of our Company

30

CAPITAL STRUCTURE

Our capital structure and related information as on date of the Draft Letter of Offer is set forth below.

(in ` lakhs unless otherwise stated)

Share Capital Aggregate value at face

value

Aggregate Value at Issue

Price A. Authorised Share Capital 7,50,00,000 Equity Shares of ` 2/- each 1,500.00 50,00,000 Preference Shares of ` 10/- each 500.00 B. Issued Share Capital 2,08,07,864 Equity Shares of ` 2/- each 416.16 C. Subscribed and Paid-up Capital * 2,08,07,014 Equity Shares of ` 2/- each 416.14 D. Present Issue in terms of the Draft Letter of Offer ** [●] Equity Shares at an Issue Price of ` [●] per Equity Share [●] 5,000.00 E. Issued, Subscribed and Paid-up capital after the Issue,

assuming full subscription

[●] Equity Shares of ` 2 each fully paid-up [●] F. Share Premium Account: Before the Issue 9,843.72 After the Issue [●]

* Our Company has kept the allotment of 850 Equity Shares of face value ` 2 each in abeyance pursuant to an order of Sub Court of Kottayam dated November 18, 1994. Of the said 850 Equity Shares (adjusted for bonus issue and split of face value), 175 Equity Shares pertains to the rights issue of the Company in October 1995 and 675 Equity Shares pertains to the bonus issue by our Company on December 17, 1997. ** The Issue has been authorized through resolution passed by the Board of Directors in their meeting held on November 17, 2012 and the member of the Company through resolution passed by postal ballot on January 30, 2013. Notes to the Capital Structure 1. Subscription to the Issue by the Promoters and Promoter Group

Mr. Hariharan Eswaran, Mr. Raj Hari Eswaran, Easun Engineering Company Limited, Easun Products of India Private Limited and Sowraj Investments Private Limited, Promoters of our Company, have confirmed, on behalf of the Promoter Group, vide their letter dated September 18, 2013 that they intend to subscribe to the full extent of their Rights Entitlement in the Issue, in compliance with regulation 10(4) of the SEBI Takeover Regulations. Mr. Hariharan Eswaran, Mr. Raj Hari Eswaran, Easun Engineering Company Limited, Easun Products of India Private Limited and Sowraj Investments Private Limited, Promoters of our Company, on their behalf and on behalf of the Promoter Group, have further confirmed vide their letter dated September 18, 2013 that, they intend to (i) subscribe for additional Equity Shares and (ii) subscribe for unsubscribed portion in the Issue, if any. Such subscription to additional Equity Shares and the unsubscribed portion, if any, to be made by the Promoter Group, shall be in accordance with regulation 10(4) of the SEBI Takeover Regulations. Further, such subscription shall not result in breach of the minimum public shareholding of 25%, as stipulated in the Clause 40A of the Listing Agreement.

2. There are no outstanding warrants, options or rights to convert debentures, loans or other instruments into Equity Shares as on the date of the Draft Letter of Offer. We have no partly paid up equity shares or call in arrears as on the date of the Draft Letter of Offer.

31

3. Our Company has approved Easun Reyrolle Employee Stock Option Plan - 2009 (“ESOP 2009”) in

terms of the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme), 1999. As on the date of the Draft Letter of Offer, 1,97,245 options have been granted, 35,409 options have been exercised, 1,61,836 options have been lapsed and Nil options are outstanding under the ESOP 2009. In terms of the ESOP 2009: - In the event of a rights issue of Equity Shares being made by the Company during the Vesting

Period, adjustment to the Exercise Price and / or number of Options of the said holder would be done on a pro rata basis.

- In the event of a rights issue of Equity Shares being made by the Company and as on the Record Date an Option Holder has exercised options but has not been issued Equity Shares by the Company, shall be eligible for allotment of rights Equity Shares in respect of such unissued Shares.

- If as a result of allotment of any rights shares any fraction arises, the Company shall not issue the fractions of the Option Holders in respect of the fractional entitlements, but shall consolidate the fractions and sell the shares arising out of consideration of fractions in the market and distribute the net sale proceeds to the concerned Option Holders in proportion to their fractional entitlement.

Our Company has received in principle listing approval with respect to the options proposed to be granted under ESOP 2009 and the resultant Equity Shares.

4. Our shareholding pattern as on June 30, 2013 is as follows:

Cate-gory Code

Category of Shareholders Number of Share holder

Total Number of

Shares

Number of Shares held

in dematerializ

ed form

Total shareholding as a percentage of total number of shares

Shares Pledged or otherwise

encumbered

As a %age of (A+B)

As a %age

of (A+B+C)

Number of

shares

As a %age

(A) Shareholding of Promoters and Promoter Group(1) Indian Individuals / Hindu

Undivided Family 11 6,14,469 6,14,469 2.95 2.95 - -

Bodies Corporate 5 53,69,167 53,69,167 25.80 25.80 - - Sub Total 16 59,83,636 59,83,636 28.76 28.76 - - (2) Foreign Individuals (Non-Residents

Individuals / Foreign Individuals)

1 75,000 75,000 0.36 0.36 - -

Sub Total 1 75,000 75,000 0.36 0.36 - - Total Shareholding of

Promoters and Promoter Group (A)

17 60,58,636 60,58,636 29.12 29.12 - -

(B) Public Shareholding (1) Institutions Mutual Funds / UTI 2 11,73,050 11,73,050 5.64 5.64 - - Financial Institutional

Investors 1 5,000 5,000 0.02 0.02 - -

Any Others (Specify) 182 3,89,850 3,89,850 1.87 1.87 - - Non Resident Indians 182 3,89,850 3,89,850 1.87 1.87 - - Sub Total 185 15,67,900 15,67,900 7.54 7.54 - - (2) Non-Institutions Bodies Corporate 263 28,00,736 27,89,106 13.46 13.46 - - Individuals Individual shareholders

holding nominal share capital up to ` 1 lakh

13,944 70,34,36 63,49,832 33.81 33.81 - -

Individual shareholders holding nominal share capital in excess of ` 1 lakh

19 33,45,378 32,38,968 16.08 16.08 - -

Sub Total 14,226 1,31,80,478 1,23,86,906 63.35 63.35 - - Total Public Shareholding

(B) 14,411 1,47,48,378 1,39,54,806 70.88 70.88 - -

Total (A) + (B) 14,428 2,08,07,014 2,00,13,442 100.00 100.00 - -

32

Cate-gory Code

Category of Shareholders Number of Share holder

Total Number of

Shares

Number of Shares held

in dematerializ

ed form

Total shareholding as a percentage of total number of shares

Shares Pledged or otherwise

encumbered

As a %age of (A+B)

As a %age

of (A+B+C)

Number of

shares

As a %age

(C) Shares held by Custodian and against which Depository Receipts have been issued

- - - - - - -

(1) Promoters and Promoter Group

- - - - - - -

(2) Public - - - - - - - Sub Total - - - - - - - Total (A) + (B) + (C) 14,428 2,08,07,014 2,00,13,442 100.00 100.00 - -

5. The list of Equity Shareholders belonging to the category “Promoters and Promoter Group” as on

June 30, 2013 is detailed in the table below:

Sr. No.

Name of the Shareholders

Details of Shares held

Encumbered shares Details of Warrants

Details of convertible securities

Total shares (including

shares assuming

full conversion of warrants

and convertible

securities) as a % of

diluted share capital

No. of Shares

held

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

No. As a %

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

clause (I)(a)

Num-ber of

war-ants held

As a % total

number of war-ants of

the same class

Number of

convert-ible

securities held

Asa % total

number of

convert-ible

securities of the same class

1 Easun Products of India Private Limited

22,67,557 10.90 - - - - - - - 10.90

2 Easun Engineering Company Limited

16,32,500 7.85 - - - - - - - 7.85

3 Sowraj Investments Private Limited

10,10,000 4.85 - - - - - - - 4.85

4 Sowraj Investments Private Limited

4,48,060 2.15 - - - - - - - 2.15

5 Eswaran & Sons Engineers Limited

11,050 0.05 - - - - - - - 0.05

6 Raj H Eswaran 2,90,100 1.39 - - - - - - - 1.39 7 Hari Eswaran 79,755 0.38 - - - - - - - 0.38 8 Vinod

Subramaniam 75,000 0.36 - - - - - - - 0.36

9 Visalam Hari Eswaran

1,56,259 0.75 - - - - - - - 0.75

10 Sowmya Hari Eswaran

24,775 0.12 - - - - - - - 0.12

11 Sita Sankaran 20,004 0.10 - - - - - - - 0.1012 Saraswathi

Venkataraman 12,075 0.06 - - - - - - - 0.06

13 E Raman 11,455 0.06 - - - - - - - 0.06 14 Meenakshi

Subramaniam 9,505 0.05 - - - - - - - 0.05

15 E Krishnan 5 0.00 - - - - - - - 0.00 16 Anushka Raj

Eswaran 5,250 0.03 - - - - - - - 0.03

17 Prithvi Raj Eswaran

5,250 0.03 - - - - - - - 0.03

Total 60,58,636 29.12 - - - - - - - 29.12

33

6. The list of Equity Shareholders, other than the Equity Shareholders belonging to the category “Promoters and Promoter Group”, holding more than 1% of our paid-up capital as on June 30, 2013 is detailed in the table below:

Sr. No.

Name of Shareholder Details of shares held Details of warrants Details of convertible securities

Total shares (including shares

assuming full conversion of warrants and

convertible securities) as % of diluted share

capital

No. of shares held

Shares as % of total

no. of shares

No. of war-ants held

As a % of total no. of

warrants

No. of convertible securities

held

% w.r.t. number of convertible securities

1 Power Ventures Holdings (India) Private Limited

16,38,088 7.87 - - - - 7.87

2 Sundaram Mutual Fund 11,27,257 5.42 - - - - 5.42 3 K Balasubramanian 6,98,588 3.36 - - - - 3.364 Sanjiv Dhirubhai Shah 7,93,975 3.82 - - - - 3.82 Total 42,57,908 20.46 - - - - 20.46

7. None of the Equity Shares of our Company are locked-in as on the date of the Draft Letter of Offer.

8. None of the Equity Shares of our Company held by the Promoters and Promoter Group entities are

subject to pledge or encumbrance as on the date of the Draft Letter of Offer. 9. There have been no acquisition of Equity Shares by the Promoters and the members of the Promoter

Group within the last one year preceding the date of the Draft Letter of Offer except as under:

Date of transaction

Name of Purchaser

Nature of transaction

No. of shares

Consideration per share (in `)

Remarks

December 11, 2012

Meenakshi Subramaniam

Buy 850 66.50 Purchased from stock exchange

June 20, 2013

Anushka Raj Eswaran


June 20, 2013

Prithvi Raj Eswaran


10. The present Issue being a rights issue, pursuant to Regulation 34(c) of the SEBI ICDR Regulations, the

requirements of Promoters’ contribution and lock-in are not applicable.

11. Except for the allotment of Equity Shares pursuant to exercise of options under Employees Stock Option Scheme 2009, if any, there will be no further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any other manner during the period commencing from submission of the Draft Letter of Offer with the Stock Exchanges until the Equity Shares to be issued pursuant to the Issue have been listed.

12. If we do not receive the minimum subscription of 90% in this Issue or if the Promoters and Promoter Group fails to subscribe for unsubscribed portion in the Issue after the Issue Closing Date or the subscription level falls below 90% after the Issue Closing Date on the account of cheques being returned unpaid or withdrawal of applications, we shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after we become liable to pay the subscription amount (i.e., 15 days after the Issue Closing Date), we will pay interest for the delayed period, as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.

13. The ex-rights price of the Equity Shares as per Regulation 10(4)(b) of the SEBI Takeover Regulations is ` [●].

34

OBJECTS OF THE ISSUE

The proceeds of the Issue are proposed to be utilized by us for financing the following objects: • Repayment of loan / debt; and • Expenses for the Issue The main object clause and objects incidental or ancillary to the main object clause of the Memorandum of Association of the Company enables us to undertake the existing activities of our Company. Requirement of Funds The total estimated funds requirement is given below:

Sr. No. Particulars Amount (in ` Lakhs) 1 Repayment of loan / debt 5,000.00 2 Expenses for the Issue* [●]

Total [●] * will be incorporated at the time of filing of Letter of Offer with the Stock Exchange. The fund requirement and deployment is based on our Management estimates and has not been appraised by any bank or financial institution or any other independent agencies. The fund requirement above is based on our current business plan. Means of Finance

Sr. No. Particulars Amount (in ` Lakhs) 1 Proceeds from Rights Issue 5,000.00 2 Internal Accruals* [●] Total [●]

* will be incorporated at the time of filing of Letter of Offer with the Stock Exchange. In the event of a shortfall in raising the requisite funds from the proceeds of the Issue, towards meeting the objects of the Issue, the extent of the shortfall will be met by internal accruals. The internal accruals will be sufficient to meet the balance requirement other than proceeds of the Issue. We do not propose to raise any funds for meeting the Objects of the Issue from sources other than proceeds of the Issue and internal accruals. Out of the total rights entitlement of [●] equity shares aggregating to ` [●], our Promoter Company, namely Easun Products of India Private Limited and Sowraj Investments Private Limited has, till July 31, 2013 extended ` 5,019.76 lakhs as interest free unsecured loan which has been utilized for the purposes as mentioned in this chapter “Objects of the Issue”. This amount will be fully adjusted against their rights entitlement / additional subscription in the proposed Right issue in terms of the disclosure made to the shareholders of the Company while obtaining their approval for this issue. The approval to the rights issue was accorded by the shareholders through postal ballot, the results for which were declared on January 30, 2013. Details of use of Issue Proceeds: 1. Repayment of loan / debt To repay secured loans availed from banks, infusion of additional funds for working capital and for investment in overseas subsidiary for Research & Development, the Promoters of our Company have extended financial assistance to us from time to time in the form of interest free unsecured loans. The interest free unsecured loans availed from our Promoters, namely, Easun Products of India Private Limited and Sowraj Investments Private Limited, were utilized for the objects for which the funds were raised. The purpose for which the unsecured loans were raised is as under:

Particulars Amount (` in lakhs) Repayment of secured bank loans 3,471.50 Infusion of funds for working capital 1,217.50Investment in Switchcraft Europe GmbH (through ERL Singapore Pte. Ltd.) for Research & Development

311.00

Total 5,000.00

35

The details of loans received and its utilization by us is as under: A. Repayment of secured loan to banks

(` in lakhs) Name of Lender Date of

receipt of funds

Loan received

Date of utilization

of loan

Amount utilized

Purpose for which utilised

Sowraj Investments Private Limited

19/01/2013 1800.00 19/01/2013 1800.00 Repayment of loan to Standard Chartered Bank


20/03/2013 100.00 20/03/2013 100.00 Repayment of loan to DBS Bank

Easun Products of India Private Limited





01/06/2013 1,000.00 01/06/2013 1,000.00 Repayment of loan to State Bank of India by reduction of working capital limits

Total 3,471.50 3,471.50 B. Infusion of working capital

(` in lacs) Name of Lender Date of

receipt of funds

Loan received

Date of utilization

of loan

Amount utilized



01/04/2012 899.00 01/04/2012 899.00 Infusion of working capital


09/07/2013 35.00 09/07/2013 35.00


11/12/2013 30.00 11/12/2013 30.00


18/12/2013 75.00 18/12/2013 75.00


18/12/2013 100.00 18/12/2013 100.00


19/12/2013 3.50 19/12/2013 3.50


13/06/2013 75.00 13/06/2013 75.00

Total 1,217.50 1,217.50 C. Investment in Subsidiary for Research & Development

(` in lacs) Name of Lender Date of

receipt of funds

Loan received

Date of utilization

of loan

Amount utilized



01/04/2012 311.00 01/04/2012 311.00 Investment in Switchcraft Europe GmbH (through ERL Singapore Pte. Ltd.) for R&D purpose

Total 311.00 311.00 As per the certificate dated September 16, 2013 received from M Jaya, Chartered Accountant (Membership No. 26178), the aforesaid loans have been used for the same purpose for which the same was raised from Promoters. We intend to utilize the proceeds of the Issue aggregating to ` 5,000 lakhs. The terms of the loan availed from Promoters are as under:

(` in lakhs)

36

Lender Nature of Loan Amount Outstanding (as on July 31, 2013)

Amount proposed to be repaid


Unsecured interest free loan repayable on demand after September 30, 2014. The parties have given their intention of subscribing to Equity share capital of the Company if any offered before September 30, 2014

1,166.26 1,146.50


3,853.50 3,853.50

Total 5,019.76 5,000.00 The repayments of the loan will in-turn improve the debt equity ratio and also strengthen the capital base of the Company. For details of our borrowings outstanding as on July 31, 2013, please refer to section titled “General Information” on page 25 of the Draft Letter of Offer. 2. Expenses for the Issue The Issue related expenses consist fees payable to the Lead Manager, Legal counsel and Registrar to the Issue, stationery printing and distribution expenses, legal fees, statutory advertisement expenses, NSDL / CDSL connectivity charges, fees payable to SEBI, listing fees, selling commission, if any, etc. The total expenses of the Issue are estimated to be approximately ` [●] lakhs.

Particulars Estimated Expenses (` in lakhs) *

% of Estimated Issue size

% of Estimated

Issue expenses Fees payable to intermediaries including Lead Manager and Registrar to the Issue

[●] [●] [●]

Advertising, travelling and marketing expenses [●] [●] [●] Printing and stationery expenses [●] [●] [●] Other expenses (including but not limited to legal fees, SEBI fees, listing charges, depository fees, auditor fees, commission, brokerage, out of pocket reimbursements, etc.)

[●] [●] [●]

Total [●] [●] [●] * Will be incorporated at the time of filing of the Letter of Offer. Estimated Schedule of Deployment of Funds As estimated by our management, the entire proceeds received from the issue would be utilized a under:

(` in lakhs) Particulars Funds already deployed

(upto July 31, 2013) 2013-14 Total

Repayment of loan / debt - 5,000.00 5,000.00 Expenses of the Issue 7.53 [●] [●] Total 7.53 [●] [●] Deployment of Funds towards the Objects of the Issue We have incurred ` 7.53 lakhs upto July 31, 2013 towards the Objects of the Issue which has been certified by Mr. S Prabhakaran (Membership No. 223268), Partner, R. Subramanian & Co., Chartered Accountants and Mr. N Sri Krishna (Membership No. 26575), Partner, Brahmayya & Co., Chartered Accountants, vide their certificate dated September 10, 2013. The same has been incurred towards issue related expenses and have been financed through internal accruals. Interim Use of Proceeds Pending utilization of the proceeds out of the Issue for the purposes described above, we intend to temporarily invest the funds in high quality interest bearing liquid instruments including money market mutual funds, deposits with banks and other investment grade interest bearing securities as may be approved by the Board. Such investments would be in accordance with the investment policies approved by the Board from time to time.

37

Bridge Financing Facilities We have not raised any bridge loan against the Proceeds of the Issue. Monitoring of Utilization of Funds There is no requirement for appointment of an independent monitoring agency in terms of Regulation 16(1) of the SEBI ICDR Regulations. Pursuant to Clause 49 of the listing agreement, the Audit Committee of our Board will monitor the utilization of the Net Proceeds. We shall, on a quarterly basis disclose to the Audit Committee the uses and application of the proceeds of the Issue and further disclose the same a part of the quarterly declaration of financial results. We will disclose the utilization of the proceeds of the Issue under a separate head in our balance sheet till such time the proceeds of the Issue have been utilised, clearly specifying the purpose for which such proceeds have been utilized. We will also, in our balance sheet till such time the proceeds of the Issue have been utilised, provide details, if any, in relation to all such proceeds of the Issue that have not been utilized thereby also indicating investments, if any, of such unutilized proceeds of the Issue. The said annual disclosure shall also be certified by the Statutory Auditors of our Company. The proceeds from the Issue are proposed to be paid to the Promoters of our Company against the loan given by them to our Company.

38

STATEMENT OF TAX BENEFITS

The Board of Directors Easun Reyrolle Limited Chennai Dear Sirs, Statement of Possible Tax Benefits available to M/s Easun Reyrolle Limited (‘the Company’) and its Shareholders We hereby enclose in the Annexure a statement of possible tax benefits available to the Company and to the shareholders of the Company under the Income-tax Act, 1961 and the Wealth-tax Act, 1957 (as amended by the Finance Act, 2013), presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfillment of such conditions, which based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill. The benefits discussed in the enclosed statement are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. 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 met with. The contents of the enclosed statement 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. This report is intended solely for your information and for the inclusion in the Offer Document in connection with the proposed Right Offer of the Company and is not to be used in, referred to or distributed for any other purpose. The Direct Tax Code (“DTC”) has been presented in the Parliament for approval and once approved would be enacted as a law. We are unable to express any opinion on the effect of the same on the shareholders as the Code has not yet been approved. For R. SUBRAMANIAN & CO., Chartered Accountants Form Regn. No.: 004137S S. PRABHAKARAN Partner Membership No.: 223268

For BRAHMAYYA & CO., Chartered Accountants Form Regn. No.: 000511S N. SRIKRISHNA Partner Membership No.: 26575

Date: Chennai Place: 10th September 2013

39

The tax benefits listed below are the possible benefits available under the current tax laws in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the future, it may not choose to fulfill. The following tax benefits shall be available to the Company and the prospective shareholders under Direct Tax. 1. To the Company - Under the Income-tax Act, 1961 (the Act) 1.1 There is no additional benefit arising to the Company under The Income Tax Act, 1961, by proposed Right Offer of Equity Shares. 2. To the Members of the Company – Under the Income Tax Act 2.1 Resident Members

a) Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in Section 115-O of the Act is exempt from income-tax in the hands of the shareholders.

b) Under Section 10(38) of the Act, long term capital gain arising to the shareholder from transfer of a long term capital asset being an equity share in the company or unit of an equity oriented mutual fund (i.e. capital asset held for the period of twelve months or more) entered into in a recognized stock exchange in India and being such a transaction, which is chargeable to Securities Transaction Tax, shall be exempt from tax.

c) In terms of Section 88 E of the Act, the securities transaction tax paid by the shareholder in respect of the taxable securities transactions entered into in the course of the business would be eligible for rebate from the amount of income-tax on the income chargeable under the head ‘Profits and Gains under Business or Profession’ arising from taxable securities transactions.

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

e) Under Section 54EC of the Act, capital gain arising from transfer of long term capital assets [other than those exempt u/s 10(38)] shall be exempt from tax, subject to the conditions and to the extent specified therein, if the capital gain are invested within a period of six months from the date of transfer in the bonds issued by –

(i) National Bank for Agriculture and Rural Development established under Section 3 of the National Bank for Agriculture and Rural Development Act, 1981;

(ii) National Highways Authority of India constituted under Section 3 of National Highways Authority of India Act, 1988;

(iii) Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956;

(iv) National Housing Bank established under Section 3(1) of the National Housing Bank Act, 1987; and

(v) Small Industries Development Bank of India established under Section 3(1) of the Small Industries Development Bank of India Act, 1989.

If only part of the capital gain is so reinvested, the exemption shall be proportionately reduced. However, the amount so exempted shall be chargeable to tax subsequently, if the new bonds are transferred or converted into money within three years from the date of their acquisition.

40

f) Under Section 54ED of the Act, capital gain arising from transfer of long term capital assets, being

listed securities or units [other than those exempt u/s 10(38)], shall be exempt from tax, subject to the conditions and to the extent specified therein, if the capital gain is invested in public issue of equity shares issue by of an Indian Public Company within a period of six months from the date of such transfer. If only a part of the capital gain is so reinvested, the exemption shall be proportionately reduced. However, the amount so exempted shall be chargeable to tax subsequently, if the new equity shares are transferred or converted into money within one year from the date of their acquisition.

g) Under Section 54F of the Act, where in the case of an individual or HUF capital gain arise from

transfer of long term assets [other than a residential house and those exempt u/s 10(38)] then such capital gain, subject to the conditions and to the extent specified therein, will be exempt if the net sales consideration from such transfer is utilized for purchase of residential house property within a period of one year before or two year after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer.

h) Under Section 111A of the Act, capital gains arising from transfer of short term capital assets, being an equity share in a company, which is subject to securities transaction tax will be taxable under the Act @ 10% (plus applicable surcharge and educational cess).

i) Under Section 112 of the Act and other relevant provisions of the Act, long term capital gains [not covered under Section 10(38) of the Act] arising on transfer of shares in the Company, if shares are held for a period exceeding 12 months, shall be taxed at a rate of 20% (plus applicable surcharge and educational cess on income-tax) after indexation as provided in the second proviso to Section 48 or at 10% (plus applicable surcharge and educational cess on income-tax) (without indexation), at the option of the Shareholders.

2.2 Return of Income not to be filed in certain cases Under provisions of Section 115-G of the Act, it shall 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 deductible at source has been deducted there from. 2.3 Other Provisions of the Act

a) 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.

b) 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 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.

c) Under Section 54EC of the Act, capital gain arising from transfer of long term capital assets [other than those exempt u/s 10(38)] shall be exempt from tax, subject to the conditions and to the extent specified therein, if the capital gain are invested within a period of six months from the date of transfer in the bonds issued by –



41





d) Under Section 54ED of the Act, capital gain arising from transfer of long term capital assets, being

listed securities or units [other than those exempt u/s 10(38)], shall be exempt from tax, subject to the conditions and to the extent specified therein, if the capital gain is invested in public issue of equity shares issue by of an Indian Public Company within a period of six months from the date of such transfer. If only a part of the capital gain is so reinvested, the exemption shall be proportionately reduced. However, the amount so exempted shall be chargeable to tax subsequently, if the new equity shares are transferred or converted into money within one year from the date of their acquisition.

e) Under Section 54F of the Act, where in the case of an individual or HUF capital gain arise from

transfer of long term assets [other than a residential house and those exempt u/s 10(38)] then such capital gain, subject to the conditions and to the extent specified therein, will be exempt if the net sales consideration from such transfer is utilized for purchase of residential house property within a period of one year before or two year after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer.

f) Under Section 111A of the Act, capital gains arising from transfer of short term capital assets, being an equity share in a company, which is subject to securities transaction tax will be taxable under the Act @ 10% (plus applicable surcharge and educational cess).

g) Under Section 112 of the Act and other relevant provisions of the Act, long term capital gains [not covered under Section 10(38) of the Act] arising on transfer of shares in the Company, if shares are held for a period exceeding 12 months, shall be taxed at a rate of 20% (plus applicable surcharge and educational cess on income-tax) after indexation as provided in the second proviso to Section 48 or at 10% (plus applicable surcharge and educational cess on income-tax) (without indexation), at the option of the Shareholders.

2.4 Foreign Institutional Investors (FIIs)

a) By virtue of Section 10(34) of the Act, income earned by way of dividend income from another domestic company referred to in Section 115-O of the Act, are exempt from tax in the hands of the institutional investor.

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

(i) 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 @ 10% (plus applicable surcharge and educational cess ); and

(ii) Short term capital gains on transfer of shares/debentures other than those mentioned above would be taxable @ 30% (plus applicable surcharge and educational cess).

c) Under section 115AD capital gain arising on transfer of long term capital assets, being shares and

debentures in a company, are taxed @ 10% (plus applicable surcharge and educational cess). Such capital gains would be computed without giving effect to the first and second proviso to section 48. 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.

42

d) Under Section 54EC of the Act, capital gain arising from transfer of long term capital assets [other than those exempt u/s 10(38)] shall be exempt from tax, subject to the conditions and to the extent specified therein, if the capital gain are invested within a period of six months from the date of transfer in the bonds issued by –







e) Under Section 54ED of the Act, capital gain arising from transfer of long term capital assets, being listed securities or units [other than those exempt u/s 10(38)], shall be exempt from tax, subject to the conditions and to the extent specified therein, if the capital gain is invested in public issue of equity shares issue by of an Indian Public Company within a period of six months from the date of such transfer. If only a part of the capital gain is so reinvested, the exemption shall be proportionately reduced. However, the amount so exempted shall be chargeable to tax subsequently, if the new equity shares are transferred or converted into money within one year from the date of their acquisition.

3. 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; hence, wealth tax is not leviable on shares held in a company. For R. SUBRAMANIAN & CO., Chartered Accountants Form Regn. No.: 004137S S. PRABHAKARAN Partner Membership No.: 223268

For BRAHMAYYA & CO., Chartered Accountants Form Regn. No.: 000511S N. SRIKRISHNA Partner Membership No.: 26575

Date: Chennai Place: 10th September 2013

43

INDUSTRY OVERVIEW

The information presented in this section has been obtained from publicly available documents from various sources including officially prepared materials from the Government of India and its various ministries, industry websites/publications and company estimates. Industry websites / publications generally state that the information contained therein has been obtained from sources believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Industry and government publications are also prepared based on information as of specific dates and may no longer be current or reflect current trends. Although we believe industry, market and government data used in the Draft Letter of Offer is reliable, it has not been independently verified. Similarly, our internal estimates, while believed by us to be reliable, have not been verified by any independent agencies The information / data has been sourced from the following:

Website of Central Intelligence Agency (CIA) – www.cia.gov Website of Statistics and Programme Implementation – www.mospi.nic.in Website of Department of Industrial Policy & Promotion – www.dipp.gov.in Website of Indian Electrical & Electronics Manufacturers’ Association – www.ieema.org Website of Ministry of Power – www.powermin.nic.in Website of Central Electricity Authority – www.cea.nic.in OVERVIEW OF THE INDIAN ECONOMY India is the world’s largest democracy by population with an estimated population size of 1.22 billion and a gross domestic product (“GDP”) in purchasing power parity terms of approximately US$4.76 trillion. This has made India the fourth largest economy in the world after the European Union, United States and China. (Source: Central Intelligence Agency (CIA) World Factbook). As per the latest estimates available on the Index of Industrial Production (IIP), the General Index for the month of June 2013 stands at 164.3 , which is 2.2% lower as compared to the level in the month of June 2012. The cumulative growth for the period April-June 2013-14 over the corresponding period of the previous year stands at (-) 1.1%. The indices of Industrial Production for the mining, manufacturing and electricity sectors for the month of June 2013 stand at 117.1, 174.2 and 157.0 respectively, with the corresponding groeth rates of (-) 4.1%, (-) 2.2% and 0.0% as compared to June 2012. The cumulative growth in the three sectors during April-June 2013-14 over the corresponding period of 2012-13 has been (-) 4.5%, (-) 1.2% and 3.5% respectively. In terms of industries, thirteen (13) out of the twenty two (22) industry groups (as per 2-digit NIC-2004) in the manufacturing sector have shown negative growth during the month of June 2013 as compared to the corresponding month of the previous year. The Foreign Direct Investment (FDI) investment was USD 46.55 Billion in 2011-12 and USD 36.86 Billion in 2012-13 and USD 9.14 Billion in 2013-14 (April – June, 2013) as per provisional figures by RBI. The cumulative amount of FDI Equity inflows from April 2000 to June 2013 stood at USD 198.68 Billion and the total FDI Equity inflows in India during April 2013 to June 2013 stood at USD 5.40 Billion. POWER SECTOR Power Sector is at a crucial juncture of its evolution from a controlled environment to a competitive, market driven regime which endeavors to provide affordable, reliable and quality power at reasonable prices to all sectors of the economy. The liberalization and globalization of the economy is leading to an increased tempo in industrial and commercial activities and this, coupled with penetration of technology and I.T. in the day-to-day life of the common man, is expected to result in a high growth in power demand. It is accordingly essential that development of the Power Sector shall be commensurate with the overall economic growth of the nation. The Indian power sector is one of the most diversified in the world. Sources for power generation range from commercial sources like coal, lignite, natural gas, oil, hydro and nuclear power to other viable non-conventional sources like wind, solar and agriculture and domestic waste. The Power Sector in India has made rapid strides during the last six decades in the field of generation, transmission, distribution and utilization of electricity. The installed generating capacity in the country in 1947 was 1,362 MW which catered to power requirements of urban centres and adjoining areas with electrification of around 1500 Villages. The power generating capacity in the country has since grown manifold to 2,23,625.60 MW at the end of April 2013. Village electrification covers 5,60,993 villages in the country and 1,89,13,410 pump sets energized as on June 30, 2013.

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SEGMENTS OF POWER SECTOR The Power Sector comprises three segments, Generation, Transmission and Distribution. Majority of Generation, Transmission and Distribution capacities are with either public sector companies or with State Electricity Boards (SEBs). The power sector in India is dominated by the government. The State and Central Government sectors account for 39.45% and 29.06% of the total installed capacity respectively while the private sector accounts for about 31.48%. The bulk of the transmission and distribution functions are with State utilities. Transmission and Distribution (T&D) system comprises of transmission lines, transformers, substations, switching stations and distribution lines. In India, the T&D system is a three-tier structure comprising distribution networks, state grids, and regional grids. In India, SEBs are vertically integrated as intra-state distribution network and the grids are owned and operated by SEBs or state governments through SEBs. The transmission and sub-transmission systems supply power to the distribution system, which in turn supplies power to end-consumers. Distribution of power to end consumers is largely controlled by SEBs and licensees in the private sector. GENERATION There are three main sources for generating electricity, which are, thermal, hydroelectric and nuclear. The Indian power sector is largely coal based with the total Installed Capacity comprising of 1,32,288.39 MW (58.59%) coal based, 20,359.85 MW (9.02%) gas based, 1,199.75 MW (0.53%) diesel generation, 39,623.40 MW (17.55%) hydro, 4,780 MW (2.12%) nuclear and 27,541.71 MW (12.20%) from renewable energy sources. The overall generation in the country has been increased from 877 Billion units (BUs) during 2011-12 to 911.65 BUs during the year 2012-13. There has been significant improvement in the growth in actual generation over the last few years. Plant Load Factor (PLF) The Plant Load Factor (PLF) of Thermal Power Stations (TPSs) in the country has been steadily increasing over the years, representing higher utilization of the installed capacity. The Plant Load Factor of coal based stations has increased from 52.4% during 1985-86 to 77.50% in 2009-2010, 69.95% in 2012-13 and 66.28% in 2013-14 (upto July 2013). The Demand Supply Situation India’s energy requirement during 2012-13 stood at 9,98,114 MU and energy availability during the same period was 9,11,209 MU resulting in an energy shortage of 86,905 MU (8.7 percent) and the energy requirement during 2013-14 (upto June 2013) stood at 2,59,181 MU and energy availability during the same period was 2,43,683 MU resulting in an energy shortage of 15,498 MU (6.0 percent). Peak demand for energy in 2012-13 was recorded at 1,35,453 MW, whereas, peak demand met during the same period was 1,23,294 MW and hence, the peak shortage stood at 12,159 MW (9.0 percent). Peak demand for energy in 2013-14 (upto June 2013) was recorded at 1,35,561 MW, whereas, peak demand met during the same period was 1,26,964 MW and hence, the peak shortage stood at 8,597 MW (6.3 percent)The power supply position of the country over the years is as follows: Power Supply Position in India

Period Energy Requirement

(MU)

Energy Availability

(MU)

Energy Shortage

(MU)

Energy Shortage (%)

9TH PLAN END 5,22,537 4,83,350 39,187 7.5 10TH PLAN END 6,90,587 6,24,495 66,092 9.6 2007-08 7,37,052 6,64,660 72,392 9.82008-09 7,77,039 6,91,038 86,001 11.12009-10 8,30,594 7,46,644 83,950 10.1 2010-11 8,61,591 7,88,355 73,236 8.5 2011-12 9,37,199 8,57,886 79,313 8.5 2012-13 9,98,114 9,11,209 86,905 8.7 2013-14 (upto June 2013)

2,59,181 2,43,683 15,498 6.0

Source: www.powermin.nic.in Significant capacity addition of 88,537 MW has been proposed for the 12th Plan. This capacity addition is expected to provide a growth of 9.5% to the power sector. They will meet the power needs of a number of states through transmission of power on regional and national grids.

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Planned Capacity Additions (MW) during the 12th Plan Central State Private Total Hydro 6,004 1,608 3,285 1,0897 Thermal 14,878 13,922 43,540 72,340 Nuclear 5,300 - - 5,300 Total 26,182 15,530 46,825 88,537 Source: www.cea.nic.in TRANSMISSION Transmission of electricity is defined as bulk transfer of power over a long distance at a high voltage, generally of 132 kV and above. Indian power system is demarcated into five independent regional grids viz. Northern, Eastern, Western, Southern, and North-eastern Regions. All the regional grids, except Eastern and North-eastern Regions, operate independently with only a limited exchange of power across the regions. In India bulk transmission has increased from 3,708 ckm in 1950 to more than 2,65,000 ckm today. While the predominant technology for electricity transmission and distribution has been Alternating Current (AC) technology, High Voltage Direct Current (HVDC) technology has also been used for inter-connection of all regional grids across the country and for bulk transmission of power over long distances. Creation of National Grid The exploitable energy resources in our country are concentrated in certain pockets. As a result, some regions do not have adequate natural resources for setting power plants to meet future requirements whereas others have abundant natural resources. This has necessitated formation of National Power Grid to transmit power from resource rich areas to deficit areas as well as to facilitate scheduled/ unscheduled exchange of power. Ministry of Power has envisaged the establishment of National Power Grid as an effective model of interconnecting power grid not only at national level but also at international level. As on June 30, 2011, National Grid with inter-regional power transfer capacity of about 23,800 MW has already been established and this capacity is planned to be enhanced to about 28,000 MW by 2012. Presently, four major power regions of the country namely, North-Eastern, Eastern, Western and Northern are operating as one synchronous grid. This is facilitating flow of power from surplus to deficit regions bringing much needed economy. Evolving the Perspective Transmission System for XI Plan Identification of 11th Plan transmission expansion plan was done based on Power System Studies corresponding to the scenario at the end of 11th Plan. This transmission expansion plan is based on the generation addition programme of 78,700 MW during the 11th plan period. The implementation programme was subsequently worked out keeping in view identification of projects, schemes and transmission elements that should be implemented matching with programme of generation capacity addition and load growth on yearly basis upto 2011-12. Growth of Transmission Sector

Central Sector State Sector JV / Pvt. Total Transmission Lines (ckm.)* 765 kV 7,165 411 7,576 400 kV 77,348 33,882 8,370 1,19,600 220 kV 10,474 1,30,356 830 1,41,660 +/- 500 kV HVDC Lines (ckm) 5,948 1,504 1,980 9,432 Sub Stations: (MVA)* 765 kV 54,000 1,000 55,000 400 kV 85,665 82,972 630 1,69,267 220 kV 7,716 2,35,661 1,567 2,44,944 +/- 500 kV HVDC Converter / BTB Station Converter Terminal (MW) Lines (ckm)

9,500 1,500 2,500 13,500

*Figures are as per change in policy during November 2012 as decided in the meeting held in Planning Commission during November 2012 Source: www.cea.nic.in DISTRIBUTION Power distribution is the final and most crucial link in the electricity supply chain and, unfortunately, the weakest one in the country. It assumes great significance as the segment has a direct impact on the sector's commercial viability, and ultimately on the consumers who pay for power services. The sector has been

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plagued by high distribution losses (30% overall) coupled with theft of electricity, low metering levels and poor financial health of utilities with low cost recovery. Due to the above, the distribution companies have not been able to undertake corresponding investments in infrastructure augmentation. The sector has started receiving greater attention and investment with the restructuring of the state electricity boards (SEBs). Several new initiatives have been introduced to reduce aggregate technical and commercial (AT&C) losses along with a definitive regulatory framework. Electricity Act 2003, National Electricity Policy 2005 and National Tariff Policy 2006 are important regulations governing the sector today with an aim to bring competition in the sector and improve the services to the end consumers. The Govt. has also made heavy investments in the distribution sector through the Rajiv Gandhi Grameen Vidyutikaran Yojna (RGGVY) and Accelerated Power Development and Reforms Programme (APDRP) during the Tenth Plan and has continued to extend the same in the Eleventh Plan as well. The aim of these programs is to provide access of electricity to all and bring down the AT&C losses to a level of around 15% across the country. The various policies and regulations introduced by the government are set to increase competition and bring about commercial viability. The distribution segment continues to carry electricity from the point where transmission leaves off, that is, at the 66/33 kV level. The standard voltages on the distribution side are therefore 66kV, 33 kV, 22 kV, 11 kV and 400/230 volts, besides 6.6 kV, 3.3 kV and 2.2 kV. Depending upon the quantum of power and the distance involved, lines of appropriate voltages are laid. The main distribution equipment comprises HT and LT lines, transformers, substations, switchgears, capacitors, conductors and meters. HT lines supply electricity to industrial consumers while LT lines carry it to residential and commercial consumers. Electrical Equipment Industry Global Electricity Market The demand for electricity worldwide is projected to grow at an annual rate of 2.4% for the period 2009–2035, driven by economic and population growth. Over 80% of the growth between 2009 and 2035 is expected to be in non-OECD countries Global Electrical Equipment Industry The global Electrical Equipment industry consists of the following two segments: a) The global heavy electrical equipment market, including boilers, turbines, generators, wind turbines,

solar power systems, etc. b) The global T&D equipment market, including electric power cables, transformers, electrical switchgear,

transmission line towers, conductors, control equipment, meters, etc.

The global Electrical Equipment market is expected to increase from a cumulative size of more than US$ 3 trillion (2008-15) to US$ 6.8 trillion (2016-30). This translates into around 2% CAGR over the long term. Asia-Pacific and Europe together account for more than 70% of the global market, with the Asia-Pacific region’s share being 45%. This region is expected to see the strongest demand in future due to the region’s strong expected economic growth rates.

Global Electrical Equipment Market share by region (2010)

In spite of less-than-impressive growth rates in recent years in the electrical equipment market, there is scope for expansion in certain areas, such as the emerging markets in the Asia-Pacific and Africa region. Robust economic growth in emerging countries such as China and India, combined with rapid urbanization and

Americas24%

Europe27%

Asia Pacific45%

Rest of the World

4%

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strong growth in investment in these countries, is expected to boost the demand for electrical equipment in these countries. In developed countries, and also in several developing countries, rising ecological concerns and investment in alternative sources of power generation should benefit equipment segments such as wind turbines. Global Trade in Electrical Equipment Global trade in Electrical Equipment products accounts for 3% of the overall trade. While global trade has grown at 18% since 2010, trade in Electrical Equipment has grown by 9% over the same period, thus despite an increase in Electrical Equipment trade, its share in the global trade has not increased. Global trade in Electrical Equipment reached US$ 540 billion in 2011, with China being the leading exporter with over 16% share. India accounts for less than 1% of the total share of exports

Global Electrical Equipment Export Share by Region (2011)

Source: ITC

The US and China are the largest import markets in the world for Electrical Equipment. India imports more than 2% of total Electrical Equipment trade of the world. India has a trade deficit in Electrical Equipment trade, with imports higher than exports, consistently for the last many years. Indian Electrical Equipment Industry India’s electrical equipment industry is highly diverse and manufactures a wide range of high and low technology products. The industry directly employs around half million persons and provides indirect employment to another one million people. The industry can be broadly classified into two sectors – generation equipment and T&D equipment. For 2011-12, the industry size is estimated at ` 1.20 lakh crores, of which generation equipment segment consisting of BTG contributed ` 31,000crores while the major T&D equipment segment of transformers, cables, transmission lines, switchgears, capacitors, energy meters, etc., provided the larger share of ` 64,235crores. Other electrical equipment, including instrument transformers, surge arrestors, stamping and lamination, insulators, insulating material, industrial electronics, indicating instruments, winding wires, etc., contributed to ` 25,000crores.

Estimated Segment-wise Electrical Equipment Industry Size (2011-12)

Source: IEEMA

China 16%

Japan7%

USA9%

India 0%

Germany12%South Korea

3%UK3%

France4%

Hong Kong5%

Rest of the World41%

Major T & D

Equipment53%Generation

Equipment26%

Other Electrical

Equipment21%

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Domestic Demand for Electrical Equipment The demand for electrical equipment in India is expected to witness significant expansion on the back of the growth of the power sector. The government is likely to add around 88.5 GW and 100 GW, respectively, under its 12th and 13th Five Year Plans. Based on investment estimates and capacity addition targets, it is expected that the domestic demand for BTG will be in the range of ` 125,000-150,000 crores by 2022, while that of the T&D equipment industry will be ` 350,000–375,000 crores Plan-wise Equipment Demand (Cumulative)

Equipment 12th Plan (2012 – 2017) (` in ‘000 crores)

13th Plan (2017 – 2012) (` in ‘000 crores)

Generation Equipment (BTG) 300-350 500-600 T & D Equipment 700-750 1000-1150 Source: EY Analysis There has been an overall growth in most segments of the electrical equipment industry — in boilers, turbines, generators, transformers, switchgears, and wires and cables due to the high demand from Central and State power utilities. India’s Electrical Equipment industry is expected to grow steadily and witness growth opportunities as a result of the government‘s focus on capacity augmentation across generation, transmission and distribution. Earlier, the government had stipulated “Power to all by 2012” under its National Electricity Policy (NEP), with a target of achieving 1,000 KWh per capita consumption of electricity by 2012. Indian Electrical Equipment Industry - Strengths • Diversified, mature and strong manufacturing base, with robust supply chain, fully equipped to meet

domestic demand / capacity addition. • Rugged performance design of domestic electrical equipment to meet tough network demand. • Good mix of large private and public sector enterprises, multinational companies and small and medium

companies. • Domestic presence of major foreign players, either directly or through technical collaborations with

domestic manufacturers. • State-of-art technology in most sub-sectors at par with global standards. • Domestic availability of low-cost skilled manpower. • Emerging global reputation of Indian electrical equipment for sourcing products and components and

also of Indian transmission and other EPC contractors. Indian Electrical Equipment Industry - Opportunities • Domestic demand: to sustain the envisaged annual GDP growth rate of around 8-9% over the next 20

years, it has been estimated that India will require to increase its electricity generation capacity by around five times by 2032.

• Rapid growth in metros, airports and other infrastructure projects is expected to generate huge demand for matching BTG and T&D equipment.

• External demand: Currently, share of India’s exports in the global market is less than 1 per cent. With the electricity sector being a sunrise sector across the entire developing world, there exists a significant export potential for the domestic industry.

Indian Electrical Equipment Industry Mission Plan 2012-2022 The generation equipment segment is targeted to reach a size of ` 125,000 crores (US$ 25 billion) and the T&D equipment segment is targeted to reach a size of ` 375,000 crores (US$ 75 billion) by 2022. The electrical equipment industry, comprising these two segments, is targeted to reach a size of ` 500,000 crores (US$ 100 billion) by 2022. Indian exports in Electrical Equipment currently account for 0.8% of the global Electrical Equipment trade. Electrical Equipment imports into India are significant, with a total Electrical Equipment import of US$ 15.7 billion in 2011-12. Global trade in Electrical Equipment is expected to increase at around 2 %, similar to the equipment demand, which would make global Electrical Equipment trade reach US$ 575 billion in 2022. Imports of Electrical Equipment into India have been significant in the last few years. With increasing domestic industry competitiveness and levelling of the playing field, the rate of growth of imports is likely to

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reduce to 7-8% in the long term. India needs to target a 4% share in global Electrical Equipment trade by 2022 to balance its exports and imports, which is estimated to reach US$ 23 billion in 2022. The Indian Electrical Equipment industry is projected to provide direct employment to 1.5 million people and indirect employment to 2 million in by 2022. Industry Competitiveness The electrical equipment industry’s performance has a massive bearing on the course of the country’s economic growth. Countries with a strong manufacturing base and effective government policies for equipment industry have traditionally out-performed others in terms of growth and prosperity. Apart from being the backbone of the industrial growth, it is one of the major sources of employment. The total domestic electrical equipment industry size exceeds ` 1.20 lakh crores (comprising24% from BTG equipment and 76% from T&D sector). Exports from electrical equipment were approximately US$ 4.6 billion in 2011-12. The industry provides direct and indirect employment to around 1.5 million persons. The Indian electrical equipment industry has performed strongly over the last decade. However, if the industry wants to become globally competitive and more importantly, if India is to achieve planned power generation and transmission capacity addition targets along with growth of infrastructure and other industrial sectors, it is important that the electrical equipment industry maintains a high rate of growth and responds to change effectively. The industry should be able to enhance its level of competitiveness by focussing on employee productivity, plant productivity, automation and upgrading of manufacturing practices, product innovation, etc. Government participation in these initiatives will accelerate the growth process. To enable domestic equipment manufacturers to compete in domestic and international markets with other multinational players, the policies of the Government of India along with the State Governments have to provide a level playing field in the country. During the last three years, exports have remained virtually stagnant, while imports have grown rapidly, resulting in the widening of the trade deficit for electrical equipment. Main plant equipment are imported across thermal (coal and gas), hydro and nuclear power plants along with power transformers and switchgear for the transmission sector and small transformers, isolators, etc., required for distribution projects. The extent of dependence on imports has increased over the 11th Plan period due to the increased share of the private sector in the development of power projects. A large share of orders from private players for supply of main plant equipment for thermal power plants is from China and South Korea. Other developing countries have made efforts to promote indigenous industry and reduce dependence on foreign goods, by enforcing laws and regulations that encourage the transfer of technology and setting up of joint ventures. This provides a base for local companies to develop advanced technologies and enhance their ability to compete with the multinational companies in both domestic and international markets.

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SUMMARY OF OUR BUSINESS

We are engaged into the business of power management solutions namely protection products and control systems, sub-station automation and network management solutions, metering products and automatic meter reading solutions, medium voltage switchgears and turnkey projects. We have a complete range of products for utility and industrial markets. This covers applications like generator protection, feeder protection, transformer and reactor protection, bus-bar protection, motor protection, capacitor bank protection and others. We also manufacture trip & auxiliary relays and timers. We have manufactures more than a million relays and more than 10,000 systems in operation for different applications and voltage levels up to 400 KV. Leveraging our knowledge in power system, we have entered into the field of metering and energy management products and solutions. We started our commercial production in 1980 at out plant at Hosur, Tamilnadu. Due to unfavourable business conditions, the Company, in 1987, was referred to BIFR and a scheme of rehabilitation was sanctioned in April 1990. The Company turned around and posted a net profit in 1990-91. We came out with the initial public offering of Rs. 45 lakhs in May 1980 and right issue of Rs.47.30 lakhs in May 1992. To finance the modernisation and expansion of production capacity, establish R&D unit and manufacture microprocessor-based relays, we came out with further right issue of Rs.71 lakhs in October 1995 and commenced the production of microprocessor based numeric relays in May 1996 at a new unit set up at Bangalore. We have received ISO 9001:2008 certification from Association Francaise de Normalisation, France (AFNOR) on May 22, 2013 for our units at Hosur, Arekere and Harohalli and the Hulimavu Branch. In the year 1999, we introduced a new protective relay featuring microprocessor technology. The Overcurrent feeder relay was fully designed and developed by the R & D team and our Company commercialised its production in the year 1999-2000. We ventured into the field of transmission level and substation turnkey projects in April 2006. The motive behind entering into turnkey projects is to enable us to make use a lot of components manufactured by us, assist in forward integration and benefit out of huge spending in the sector. In the same year, we also established our international marketing division. In the year 2007, we entered into power distribution management solutions (DA/DMS) and automatic meter reading (AMR) solutions. We acquired the business of protection relays & power system disturbance recorders (Relays & Recorders) division of NxtPhase T&D Corporation Canada in June 2007. The acquisition is part of a two-fold strategy designed to both expand our position as a leader in the field of electrical power management into the global market and enable the relay & recorder business to reach its full potential with greater focus, resources, and investment. This acquisition will help our Company to gain foothold in North American market. For this acquisition, we established a wholly owned subsidiary in Canada, in the name “ERL Phase Power Technologies Limited” (“ERLPhase”), responsible for conducting the new business acquired. ERLPhase will provide high technology protection, power system recording and wide area monitoring solutions to power utilities in American and other global markets. The manufacturing facilities are located as under:

Plant Location Hosur, Technology Development Centre and Corporate Office

Plot No. 98, Sipcot Industrial Complex, Hosur, Dist. Krishnagiri, Tamil Nadu - 635 126

Bangalore Plot No(s) 147-Part & 148-Part, Harohalli Industrial Area, 2nd Phase, Madamaranahalli, Harohalli Hobli, Kanakapura Taluk, Ramanagara District, Karnataka

Products / service offerings of our Company The Company’s consists of the following business lines grouped under five business groups as under: 1. Protection Business Group Protection products: The protection products cover virtually all applications of power systems, offering customers a wide and flexible choice to meet their specific needs. This includes the traditional business of supplying protection products and protection control systems like numerical multi functional relays, numerical single functional relatesgenesis, static relays and electro mechanical relays.

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Protection and control systems: The protection systems cater to system voltages upto 400KV for transmission schemes and upto 500MW for generator schemes. The other schemes offered are for distribution (utility) and industrial sectors, which include those for transformer, busbar, capacitor bank, reactor applications. The relay and control panels are available in both simplex and duplex versions, with modular construction and flush / semi-flush mounting arrangement for relays, meters and others. 2. Automation Business Group Substation Automation solutions and network management solution: Automation Systems includes providing substation automation solutions, distribution management solutions and supply of control and communication products. Some of the products are Substation Integration & Automation System for industries and utilities, Substation Integration & Automation System for EHV systems, Substation Automation System which is a high performance computer based integration and automation system designed to handle the most demanding data concentration tasks for supervision of power distribution/networks for substations industries and utilities, Protection & Fault Management System and Energy Management System. Communication & Control Products: These compact units are ideally suited for interfacing like relays, meters and others to Engineering work stations. The Company’s product such as Station Controller is designed to meet the present day utility and industry demands. The standard hardware platform gives the necessary ruggedness and Real- Time Operating System (RTOS) provides the multi-tasking and Real-Time data handling capability. 3. Metering Business Group Metering Products and automatic meter reading solutions: The Company is into high technology meters, which includes multi functional meters with accuracy class of 0.5 or 1.0, choice of 3-phase, 4 wire or 3-phase, 3 wire connections and used in utility, industrial and commercial business and energy meters which are compact in size and register energy values with class 1.0 accuracy. 4. Switchgear Business Group Primary and Secondary Switchgear MV: The Company manufactures Indoor, porcelain - clad Vacuum Circuit Breakers (VCB) for medium voltage applications, suitable for installation in metal clad switchgear and outdoor porcelain-clad Vacuum Circuit Breakers for medium voltage applications. These breakers are of open terminal type with vacuum interrupters. 5. Projects Business Group: Turnkey Projects: This includes Turnkey projects of automation of the entire substations up to 220 KV level. Insurance Our operations are subject to risk inherent in the manufacturing such as work accidents, fire or explosion, including hazards that may cause injury and loss of life, severe damage to and destruction of property and equipment and environmental damage. We maintain insurance for a variety of risk including standard fire and special perils policy, burglary policy, vehicle insurance and import export transit policy which covers insurance of building including stocks, machinery and equipments used in our factory. Intellectual Property Rights Our trademark “Easun Reyrolle” and the logo are registered under the Trademark Act 1999 and Copyright Act, 1957. We have applied for registration of the new logo (i.e. ) of the Company under Trademark Act, 1999 on September 30, 2010 and the same is pending for approval. Properties The following table sets forth the significant properties owned by us: Address of Property Names of seller Area Date of

Deed Consideration (in ` Lakhs)*

Use of property

Status

98, SIPCOT Industrial Complex, Hosur - 635 126, Tamil Nadu

State Industries Promotion Corporation of

24,725.95 sq. mtrs.

March 15, 2002

0.78 For factory operations

of the

Mortgaged with banks

52

Address of Property Names of seller Area Date of Deed

Consideration (in ` Lakhs)*

Use of property

Status

Tamil Nadu, Hosur

Company against credit facilities availed

Plot No(s) 147-Part & 148-Part, Harohalli Industrial Area, 2nd Phase, Madamaranahalli, Harohalli Hobli, Kanakapura Taluk, Ramanagara District, Karnataka

Karnataka Industrial Areas Development Board **

67,185 sq. mtrs.

August 17, 2010

996.10 For factory operations of the Company

* Excluding stamp duty and other charges. ** The said property is being given on lease for initial period of 10 years with lease rental of ` 16,605 per annum and maintenance charges of ` 41,505 with a right to Karnataka Industrial Areas Development Board to sell the same to our Company during the currency of the lease period or at the end of ten years from date of the agreement or the extended period, if any. The following properties have been taken on lease by us:

Location Area Name of Lessor Term of lease “Temple Tower”, VI Floor, 672, Anna Salai, Nandanam, Chennai - 600 035

131 sq. ft. Easun Engineering Company Limited

999 years i.e. from March 30, 1993 to March 29, 2992

4th Floor, Tower B, ‘The Corenthum’, A-41, Sector 61, Noida

2,307.26 sq. ft. Lessor: New Okhla Industrial Development Authority (NOIDA) Lessee: Shyam Burlap Company Limited Sub Lessee: Easun Reyrolle Limited

90 years, i.e. from March 31, 1999 to March 30, 2089. Any sale or transfer of rights of this property by our Company will require prior approval of NOIDA

389, “Rasu Kumaki”, Hulimavu, Bannerghatta Road, Bangalore - 560 076

39,000 sq. ft. approx.

M/s Rasu Kumaki, represented by Mr. Kuntal R Amin

Form August 10, 2007 to August 09, 2012. As per the terms of the agreement, we have given a notice vide letter dated May 28, 2012 to the lessor to extend the term for another period of five years i.e. August 10, 2017. Further we have given notice to lessor stating that we will vacate the premises by September 30, 2013.

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HISTORY AND CERTAIN CORPORATE MATTERS

Our Company was originally incorporated as Easun Reyrolle Relays and Devices Private Limited on August 29, 1974 under the Companies Act, 1956 with the Registrar of Companies Tamil Nadu. Our Company was converted into public limited company on February 13, 1979 and the name of our Company was changed to Easun Reyrolle Relays and Devices Limited. The name of our Company was subsequently changed to Easun Reyrolle Limited pursuant to a fresh Certificate of Incorporation dated November 11, 1997. The Corporate Identification Number of the Company is L31900TN1974PLC006695 Our Company was promoted by Easun Engineering Company Limited, Late Mr. K Eswaran and Mr. Hari Eswaran. Presently, Mr. Hariharan Eswaran, Mr. Raj Hari Eswaran, Easun Engineering Company Limited, Easun Products of India Private Limited and Sowraj Investments Private Limited are the Promoters of our Company. We came out with its Initial Public Offering in 1980 and the Equity Shares were listed on MSE. We Company later came out with a rights issue of Equity Shares in May 1992 and October 1995 for our expansion program. We declared a bonus issue of Equity Shares in the ratio of 1:1 on December 17, 1997. The Equity Shares of our Company were later listed on VSE, NSE & BSE w.e.f. January 16, 1996, July 23, 1997 and July 28, 2006 respectively. However the Equity Shares were delisted from MSE and VSE w.e.f. June 11, 2008 & March 30, 2007 respectively. The Equity Shares of our Company are presently listed on BSE and NSE. At the time of incorporation, registered office of our Company was situated at V Floor, Bombay Mutual Building, NSC Bose Road, Chennai - 600 001. The present registered office is situated at “Temple Tower”, VI Floor, 672, Anna Salai, Nandanam, Chennai - 600 035 w.e.f. May 25, 1985. Major events in the history of Our Company since inception

Year Key events, milestones and achievements 1980 Initial Public Offer of the Company

Commencement of commercial production 1992 Rights Issue by our Company in the ratio of 1:11995 Rights Issue by our Company in the ratio of 7:101997 Bonus Issue in the ratio of 1:1 2005 Entered into switchgear business by acquisition of an existing business 2007 Acquired the business of protection relays & power system disturbance recorders (Relays

& Recorders) division of NxtPhase T&D Corporation Canada GDR & FCCB Issue by the Company Received award for Outstanding Domestic Technology Pavilion at “Gridtech 2007” organized by Power Grid Corporation of India Limited

2008 Commencement of international marketing operations by establishing an overseas subsidiary, ERL Marketing International, SharjahEstablishment of Centre of Technology Excellence integrating the R&D establishments at India and Canadian subsidiary, ERL Phase Power Technologies Ltd.

2009 Acquired Switchcraft (Europe) GmbH for acquisition of sophisticated and patented technology and manufacture of Medium Voltage Switchgears Received “Samman Patra” from Chief Commissioner of Central Excise, Bangalore Zone, Ministry of Finance for outstanding revenue performance in Bangalore Central Excise Zone for the year 2007-08

2010 Received “Best Product Prize” in ELECRAMA - 2010 in the category of overall best product by an Indian / overseas exhibitor

2012 Establishment of Global Manufacturing Facilities to produce sophisticated Switchgear products to the design developed by German subsidiary Switchcraft (Europe) GmbH.

2013 Acquired Electrical Distribution Solutions Pty. Ltd., Australia Main Objects The Main objects as per the Memorandum of Association of our Company are as under: 1. To carry on the business of manufacturers of, merchants and dealers in, importers and exporters of and

agents for all types and kinds of relays, protective devices, test kits and accessories thereof used in connection with power and control systems and all components and accessories thereof in all their respective branches.

2. To carry on the business of manufacturers of, merchants and dealers in and agents for:

54

(a) Current, Voltage, Power and Frequency measuring relays for protection of generators, transformers, feeders, motors, rectifiers and other electrical equipments and components.

(b) AC and DC current and voltage operated Control, auxiliary relays including time lag, auto-reclose, voltage-regulating, out of step blocking, fuse failure, check synchronizing and semaphore indicator relays.

(c) Distance relays for protection of HV, and EHV Feeders. (d) Relays test sets, relay tool kits, test blocks and plugs, spring return and discrepancy control

switches, alarm schemes and accessories. (e) And all other Engineering Equipments.

3. To carry on the business of electricians, Electrical Engineers, Mechanical Engineers, Manufacturers, Designers, Erectors, Merchants and Dealers of all kinds of electrical machinery Accessories, Components thereof, Electrical apparatus, Appliances and instruments for any purpose whatsoever and to manufacture, sell, supply and deal in accumulators, lamps, meters, engines, dynamos, batteries, telephonic or telegraphic apparatus of any kind and manufacturers of and dealers in scientific instruments of any kind.

4. To carry on the business as Contractors, Works-Contractors, Estimators, Planners, Designers, Research-Workers and Contractors for electrical and mechanical constructions or erection of Plant and Machinery for any purpose, and to undertake and to execute contracts for work involving the supply, erection, testing and use of machinery and electrical plant in all branches of engineering.

5. To carry on the business of manufacture, importing, buying, sale, repair, alteration, treating and dealing in all kinds of plant, machinery, apparatus, tools, utensils, substances, materials, raw materials and ancillary products and things, necessary of useful for carrying on any of the above businesses.

Subsidiary Companies We have 8 Subsidiary Companies, namely Easun Reyrolle Projects Limited, ERL International Pte. Limited, ERL Phase Power Technologies Limited, ERL Marketing International FZE, ERL Switchcraft Pte. Limited, Switchcraft Limited and Switchcraft Europe GmbH and Electricals Distribution Solutions Pty. Ltd., Australia. The brief summary of the said companies are as under:

1. Easun Reyrolle Projects Limited, India Easun Reyrolle Projects Limited was incorporated on July 11, 2012 under the Companies Act, 1956. Corporate Identification Number of the Company is U31103TN2012PLC086695. The Registered Office of the company is situated at Temple Towers, 6th Floor, 676 Anna Salai, Nandanam, Chennai - 600 035. The

Easun ReyrolleLimited

ERL International Pte Ltd

(100%)

ERL Phase Power Technologies

Limited

(100%)

ERL Marketing International FZE

(100%)

Electrical Distribution

Solutions Pty. Ltd

(82%)

ERL Switchcraft PteLtd

(80%)

Switchcraft Ltd.

(100%)

Switchcraft Europe Gmbh

(100%)

Easun ReyrolleProjects Limited

(99.99%)

55

company has been incorporated with the main object to undertake and execution of contracts to build electrical substations, supply erection commissioning of electrical projects and installation of electrical equipments such as relays, protective devices test kits and accessories thereof. Easun Reyrolle Projects Limited is 99.99% subsidiary of Easun Reyrolle Limited. Board of Directors as on July 31, 2013 Mr. Hariharan Eswaran Mr. Raj Hari Eswaran Mr. JDN Sharma Shareholding Pattern as on July 31, 2013

Name No. of equity shares % of shareholding Easun Reyrolle Limited 499,994 99.99 Mr. Hariharan Eswaran 1 NegligibleMr. Raj Hari Eswaran 1 NegligibleMr. JDN Sharma 1 NegligibleMr. K N Nagesha Rao 1 NegligibleMr. Maheshwar M Katre 1 NegligibleMr. T Jagadeesh 1 NegligibleTotal 100.00

The face value of the equity shares of Easun Reyrolle Projects Limited is ` 1 per equity share. 2. ERL International Pte. Ltd., Singapore ERL International Pte. Ltd. is incorporated under the Companies Act (Cap 50), and on and from December 14, 2007 and that the company is a Private Company limited by shares. Registration Number of the Company is 200723077N. The Registered Office of the company is situated at 10 Jalan Besar. #10-12 Sim Lim Tower, Singapore - 208787. ERL International Pte. Ltd. is wholly owned subsidiary of our Company and incorporated with the objective of holding investments of our Company in overseas ventures. Board of Directors as on July 31, 2013 Mr. Hari Eswaran Mr. Raj H Eswaran Mr. J D N Sharma 3. ERL Phase Power Technologies Limited, Canada

ERL Phase Power Technologies Limited was started in June 8, 2007 under the Canada Business Corporations Act. Corporation Number of the Company is 6786731. The Registered Office of the company is situated at 74 Scurfield Blvd, Winnipeg, MB, R3Y 1G4, Canada. The main object of the company is development, manufacture and sale of protective relays and disturbance recorders. ERL Phase Power Technologies Limited is a wholly owned subsidiary of ERL International Pte. Ltd, Singapore. The Company manufactures Protective Relays and Disturbance Recorders. The products of the Company are used in High Power Transmission and Distribution System industry. The major markets for the manufactured products are North and South America, Canada and UAE. Board of Directors as on July 31, 2013 Mr. Hari Eswaran Mr. Raj H Eswaran Mr. J D N Sharma Mr. Brad Pierce 4. ERL Marketing International FZE, Sharjah ERL Marketing International FZE was incorporated as a Free Zone Establishment on September 15, 2008 in the Hamriyah Free Zone Authority, Sharjah. Registration Number of the Company is 3890. The Company operates in the United Arab Emirates under a Commercial License Number 4387 issued by the Hamriyah Free Zone Authority. The Registered Office of the company is situated at No.1K – 08/02, PO Box

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50669,Hamriyah Free Zone, Sharjah, UAE. The main object of the company consists of import / export / trading in power equipments and products. ERL Marketing International FZE is a wholly owned subsidiary of ERL International Pte Ltd. It is a trading company which sells the products manufactured by Easun Reyrolle Limited and its subsidiaries namely ERL Phase Power Technologies Limited, Switchcraft Europe GMBH. Also the Company trades the electrical equipments of other companies too. The Company trades the products in UAE, Africa, SAARC, Australia and Europe. Board of Directors as on July 31, 2013 Mr. Hari Eswaran Mr. Raj H Eswaran Mr. J D N Sharma Dr. William Stanley Jones Shareholding Pattern as on July 31, 2013

Name No. of equity shares % of shareholding Easun Reyrolle Limited 100.00 Total 100.00

5. ERL Switchcraft Pte Ltd., Singapore

ERL Switchcraft Pte Ltd. was incorporated on September 13, 2011 under the Companies Act (Cap 50). Registration Number of the Company is 201128164H with the object of holding investments. The Registered Office of the company is situated at 10 Jalan Besar, # 10-12, Sim Lim Tower, Singapore - 208787. ERL International Pte. Ltd. holds 80% of voting rights of ERL Switchcraft Pte Ltd. Board of Directors as on July 31, 2013 Mr. Raj Hari Eswaran Mr. Hariharan Eswaran 6. Switchcraft Limited, Hong Kong

Switchcraft Limited was incorporated on February 20, 2002 under the Hong Kong Companies Ordinance. Corporate Identification Number of the Company is 786737. The Registered Office of the company is situated at Flat / RM 2-3, 9/F, Wyndham Place, 40-44 Wyndham Street, Central, Hongkong. The Company is engaged in the supply of electric equipment for Power Transmission and Distribution. ERL Switchcraft Pte Limited holds 100% of voting rights of Switchcraft Ltd. Board of Directors as on July 31, 2013 Mr. J D N Sharma Dr. William Stanley Jones Mr. Hari Haran Eswaran Mr. Raj Hari Eswaran Mr. Klaus Bodenstein Mr. Detlef Herbett Lange Mr. Dennis Yong-Duk Cha 7. Switchcraft Europe GmbH, Germany

Switchcraft Europe GmbH was incorporated on December 12, 2008. Registration number of the Company is HRB18630. The Registered Office of the company is situated at Thyssenstr.93, D-46535, Dinslaken. ERL Switchcraft Pte Limited holds 100% of voting rights of Switchcraft Europe GmbH. ERL India took this company in February 2009. Switchcraft Europe GmbH is a development company into medium voltage switchgear products including Ring Main Units, Intelligent Solid Insulated Switchgears, Vacuum Interrupters. Board of Directors as on July 31, 2013 Mr. J D N Sharma

57

Dr. William Stanley Jones Mr. Hari Haran Eswaran Mr. Raj Hari Eswaran Mr. Klaus Bodenstein Mr. Detlef Herbett Lange Mr. Dennis Yong-Duk Cha 8. Electrical Distribution Solutions Pty. Ltd., Australia Electrical Distribution Solutions Pty. Ltd. has commencement of registration (no. 130 262 583 dated March 20, 2008) as a proprietary company limited by shares under the Corporations Act 2001. The Registered Office of the company is situated at Level 8, 410 Queen Street, Brisbane, Queensland, Australia. We have acquired 82% stake in Electrical Distribution Solutions Pty. Ltd. through our subsidiary, ERL International Pte. Ltd. in July 2013. Board of Directors as on July 31, 2013 Mr. Raj Hari Eswaran Mr. Mark Brown Mr. Abhijit Dasgupta Shareholders Agreement We have not entered into any shareholders agreement Other Agreements Except as above and “Material Contracts and Documents for Inspection” mentioned on page 155 of the Draft Letter of Offer, there are no other material agreements or contracts, which have been entered into by us within a period of 2 years prior to the date of the Draft Letter of Offer, and which are subsisting as on date.

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OUR MANAGEMENT

As per the Articles of Association of our Company, we shall not have less than three or more than 12 Directors on our Board of Directors. The following table sets forth certain details regarding the Board of Directors as on the date of the Draft Letter of Offer:

Sr. No

Name, Father’s Name, Designation, Address, Occupation, Date of Appointment, Tenure

and DIN

Age (in

years)

Nation-ality

Directorship / Partnership in other entities (including foreign companies)

1. Mr. Hariharan Eswaran Non Executive Chairman S/o Late Mr. K Eswaran “Pasupatinath”, A Block, 26, Desika Road Mylapore, Chennai - 600 004 Occupation: Industrialist DIN: 00196760 Date of Appointment: August 29, 1974 Term: Liable to retire by rotation

76 Indian Indian Companies • Easun Product of India Private Limited • Easun Engineering Company Limited • Eswaran & Sons Engineers Private Limited • Easun - MR Tapchangers Limited • Easun Holdings Private Limited • Sowraj Investments Private Limited • Easun Reyrolle Projects Limited Foreign Companies • ERL Phase Power Technologies Limited • ERL International Pte. Ltd. • ERL Marketing International FZE • Switchcraft Europe, GmbH • Switchcraft Limited • ERL (Thiland) Company Limited • ERL Switchcraft Pte. Ltd.

2. Mr. Raj Hari Eswaran Managing Director S/o Mr. Hariharan Eswaran “Pasupatinath”, A Block, 26, Desika Road Mylapore, Chennai - 600 004 Occupation: Industrialist DIN: 00195354 Date of appointment: June 26, 2000 Term: Appointed for 5 years from April 01, 2012 to March 31, 2017

44 Indian Indian Companies • Sowraj Investments Private Limited • Eswaran & Sons Engineers Private Limited • Easun - MR Tapchangers Limited • Easun Products of India Private Limited • Indian Electrical and Electronics Manufacturers

Association • Easun Holdings Private Limited • Easun Reyrolle Projects Limited Foreign Companies • ERL Phase Power Technologies Limited • ERL International Pte. Ltd. • ERL Marketing International FZE • Switchcraft Europe, GmbH • Switchcraft Limited • ERL Switchcraft Pte. Ltd. • ERL (Thiland) Company Limited • German Business Group, Indo German

Chamber of Commerce 3. Mr. J D N Sharma

Non Independent Non Executive Director S/o Mr. J V R Sharma B1/1203, South City, Arakere Mico Layout Bannerghatta Road, Bangalore - 560 076 Occupation: Retired DIN: 00167046 Date of appointment: April 02, 2012 Term: Liable to retire by rotation

68 Indian Indian Companies • Squiger Technologies Private Limited • Hosur Sipcot Infrastructure Development

Association • Easun Reyrolle Projects Limited Foreign Companies • ERL Phase Power Technologies Limited • ERL International Pte. Ltd. • ERL Marketing International FZE • Switchcraft Europe, GmbH • Switchcraft Limited • ERL (Thiland) Company Limited

59

Sr. No

Name, Father’s Name, Designation, Address, Occupation, Date of Appointment, Tenure

and DIN

Age (in

years)

Nation-ality

Directorship / Partnership in other entities (including foreign companies)

4. Dr. William Stanley Jones Independent Director S/o Mr. W C Jones Lanes Holding, Pipers Lane, Great Kingshill High Wycombe, HP156LW, United Kingdom Occupation: Retired executive DIN: 00196064 Date of appointment: April 23, 1992 Term: Liable to retire by rotation

71 United Kingdom

• Switchcraft Europe, GmbH • Switchcraft Limited • NI Enterprises Limited • CPRE Buckinghamshire • ERL Marketing International FZE • Member of Audit Committee in Inst Nuclear

Engineers

5. Mr. Rakesh Garg Independent Director S/o Mr. Tara Chand Garg A-501, 5th Floor, Sabita Building, 16th Road Bandra West, Mumbai - 400 050 Occupation: Profession DIN: 00240379 Date of appointment: April 21, 2009 Term: Liable to retire by rotation

50 Indian • Karan Woo-Sin Limited • Nehas Infotech Private Limited • ThreeG ID Technologies Private Limited • Ishwar Goods Private Limited • Kartiken Logistics Limited • Nehas Trading Private Limited • Five Star Container Terminals Private Limited • Peninsula Terminals Private Limited • Sovereign Logistics Private Limited • Five Star Terminal Private Limited • Adveta Services & Trading Private Limited • Leben Multitrade Private Limited • Rakesh Garg & Associates

6. Mr. Mahalingam Raman Independent Director S/o Mr. U K Mahalingam No. 3/686, Sriram Layout, Kaveri Nagar Kuppam Road Kottivakkam Chennai - 600 041 Occupation: Retired IAS Officer DIN: 01226770 Date of appointment: May 09, 2013 Term: Liable to retire at the ensuing Annual General Meeting

62 Indian • National Commodity and Derivatives Exchange Limited (NCDEX)

• Cochin Shipyard Limited • National Fertilizers Limited

Brief Biography of our Directors: Mr. Hariharn Eswaran, aged 76 years, our Promoter and Non Executive Chairman, is a Fellow of the Institute of Electrical Engineering, United Kingdom. Having associated with our Company since inception, Mr. Hariharan Eswaran is the guiding force behind the expansion and growth of the Company. He had also been Chairman of various trade associations in the past, namely Indian Electrical and Electronics Manufacturers Association, Madras Chamber of Commerce and Industry, Confederation of Indian Industry (Southern Region) (earlier known as Association of Indian Engineering Industry) and Employers Federation of Southern India. Presently he is Director on Board of various Easun Group companies and subsidiaries of our Company. Mr. Raj Hari Eswaran, aged 44 years, our Promoter and Managing Director, is Electrical Engineer and holds Post Graduate Degree in Business Administration from London Business School. He is on the Board of our Company since June 26, 2000 and has been appointed as Managing Director w.e.f. April 01, 2012 and is director on the Board of its subsidiaries. He is also Director and Vice President of Indian Electrical and Electronics Manufacturers Association. He has a wide and varied managerial experience, both in India and abroad. Being the Managing Director, he is responsible for overall day to day operations of the Company. Mr. J D N Sharma, aged 68 years, is Non Independent Non Executive Director of the Company. He has done his engineering from IIT Kharagpur. He has an experience of over 45 years in manufacturing, technical functions, techno commercial functions and top management functions and had held key managerial positions in professional and multinational organizations. He is also an active member of IEEMA Southern Region Council and Institute of Electrical Engineers. For 16 years, he was associated with our Company as key managerial personnel and retired on March 31, 2012 as Chief Executive and thereafter continued as a Non Executive Director on the Board of our Company.

60

Dr. William Stanley Jones, aged 71 years is Independent Director of the Company. He is an Electronic Engineering Graduate and holds a Doctorate Degree. He is a Fellow of the Royal Academy of Engineers and the Institute of Engineers and Technicians, United Kingdom. He has been conferred with the title “Order of British Empire” by the Queen of United Kingdom. In the past, he was associated with Reyrolle Limited and Rolls-Royce Transmission and Distribution Limited and retired as Joint Managing Director of VA TECHs Transmission and Distribution operations. He served on the Boards of many corporate, social and community bodies. He is the Chairman of the Audit Committee of our Company. Mr. Rakesh Garg, aged 50 years is Independent Director of the Company. He is a Graduate from Punjab University and is a qualified Chartered Accountant and Company Secretary. He has a wide experience of working with various listed companies and has been into practice since last 20 years. He holds expertise in the field of Audit and Taxation, Mergers and Acquisitions, feasibility and profitability studies, setting up standard costing system for manufacturing companies, secretarial advice, financial planning, etc. Mr. Mahalingam Raman, aged 62 years is Independent Director of the Company. He holds M.Sc. Degree in Chemistry from Delhi University. Mr. Raman has served on Indian Administrative Services (IAS) since 1976 and has retired as Secretary to the Government of India in the Ministry of Chemicals and Petrochemicals in April 2011. He has in-depth experience of more than two decades in policy formulation, monitoring and implementation at the Government in the field of industrial development and infrastructure. Relationship between Directors None of our Directors are related to each other, except Mr. Hariharan Eswaran and Mr. Raj Hari Eswaran. Mr. Hariharan Eswaran is father of Mr. Raj Hari Eswaran. We further confirm that: • we have not entered into any arrangement or understanding with our major shareholders, customers,

suppliers or others, pursuant to which our Director were selected as Director or member of Senior Management.

• There are no service contracts executed between our Company and any of our Directors providing for benefits upon termination of employment.

Further none of our Directors were either director on board of listed companies that have been delisted from any Stock Exchanges or hold any current and past directorship(s) during the preceding five years in listed companies whose shares have been or were suspended from being traded on BSE or NSE. Borrowing Powers of our Board of Directors Our Company has passed the resolution in the Annual General Meeting of the members of the Company held on September 28, 2007, authorizing the Board of Directors of the Company to borrow from time to time all such monies as they may deem necessary for the purpose of business of the company notwithstanding that money borrowed by the company together with the monies already borrowed by our company may exceed the aggregate of the paid up capital and its free reserves provided that the total amount upto which monies be borrowed by the Board of Directors shall not exceed the sum of ` 15,000 lakhs over and above the aggregate of the paid up capital and its free reserves. Remuneration of the Directors The significant terms of Mr. Raj Hari Eswaran’s employment as the Managing Director, as per the Resolution passed by the members in their Annual General Meeting held on September 26, 2012 are as follows: Tenure of Appointment Appointed as Managing Director from April 01, 2012 to March 31, 2017 Salary ` 4,25,000 per month Perquisites and Benefits Commission @ 1% (one percent) of net profit of the Company in addition to

salary, subject to the overall ceiling under Section 198 and Section 309 of the Companies Act Facility of telephone and Car for the business of the Company

Remuneration paid to Directors The Non executive Directors of our Company are eligible for payment of sitting fees of ` 5,000 (Rupees five thousand only) for every meeting of the Board attended by them. The detail of remuneration paid to Non Executive Directors is as under:

Name of Director Sitting Fees (in ` lakhs) Mr. Hari Eswaran 0.21 Dr. William Stanley Jones 0.30 Mr. Rakesh Garg 0.30 Mr. J D N Sharma 0.21

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Interest of Directors All of our directors may be deemed to be interested to the extent of fees, if any, payable to them, for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration paid in their professional capacity and / or reimbursement of expenses, if any, payable to them and the shares held by them in the Company. Further, the Directors, who are also part of the Promoters Group, namely, Mr. Hariharan Eswaran and Mr. Raj Hari Eswaran shall be deemed to be interested to the extent of the related party transactions entered into by the Company with the said Directors or their relatives or entities on which such Directors directly or indirectly exercise control. For details of related party transactions, refer to the para titled “Related Party Transactions” under the chapter “Financial Statements” on page 65 of the Draft Letter of Offer. Except as stated above our Directors do not have any other interest in our business. Corporate Governance The Company has been complying with the requirements of the applicable regulations, including the Listing Agreement with the Stock Exchanges and the SEBI Regulations, in respect of corporate governance including constitution of the Board and Committees thereof. Our corporate governance policies recognize the accountability of the board and the importance of the transparency to all our constituents, including employees, customers, investors and the regulatory authorities and of demonstrating that the shareholders are the ultimate beneficiaries of our economic activities. Our corporate governance philosophy encompasses not only regulatory and legal requirements, including the SEBI guidelines in respect of corporate governance, but also other practices aimed at a high level of business ethics, effective supervision and enhancement of value for all shareholders. Our role, function, responsibility and accountability are clearly defined. In addition to its primary role of monitoring corporate performance, the function of the Board includes approving a business plan, reviewing and approving annual budgets and borrowing limits, fixing exposure limits and ensuring that our shareholders are kept informed about our plans, strategies and performance. To enable the Board of Directors to discharge these responsibilities effectively, the management provides detailed reports on our performance to the board on a quarterly basis. The Board of Directors can also function through various committees such as the audit committee, the share committee and the shareholders’ / investors’ grievance committee. These committees meet on a regular basis. 1. Audit Committee The audit committee consists of the following members: • Dr. William Stanley Jones • Mr. Raj Hari Eswaran • Mr. Rakesh Garg • Mr. J D N Sharma • Mr. Mahalingam Raman

The general objective of the audit committee is to establish a transparent and effective system of internal monitoring and control, to review any special examination by internal audit and implementation of internal audit recommendations, to review quarterly and annual financial statements before submission to the board, together with coverage of the scope of activities prescribed under section 292A of the Companies Act, 1956. The audit committee also considers and review ethical adherence and compliance with internal control system and corporate governance principles.

2. Shareholders’ / Investors’ Grievance Committee The investors’ grievance committee consists of the following members: • Mr. Hari Eswaran • Mr. Raj Hari Eswaran

The committee’s scope and functions are to consider and review shareholders’ and investors’ grievances and complaints, and to ensure that all shareholders’ and investors’ grievances and correspondence are reviewed and dealt with as expeditiously as possible.

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3. Remuneration Committee The Remuneration Committee consists of the following members: • Dr. W S Jones • Mr. Rakesh Garg • Mr. Mahalingam Raman

4. Compensation Committee The Compensation Committee consists of the following members: • Dr. W S Jones • Mr. Rakesh Garg • Mr. Hariharan Eswaran

The committee’s scope and functions are to approve the annual remuneration and performance bonus plan of the Company

OUR PROMOTERS

The Promoters of our company are Mr. Hariharan Eswaran, Mr. Raj Hari Eswaran, Easun Engineering Company Limited, Easun Products of India Private Limited and Sowraj Investments Private Limited. 1. Mr. Hariharan Eswaran

Mr. Hariharn Eswaran, aged 76 years, our Promoter and Non Executive Chairman, is a Fellow of the Institute of Electrical Engineering, United Kingdom. Having associated with our Company since inception, Mr. Hariharan Eswaran is the guiding force behind the expansion and growth of the Company. He had also been Chairman of various trade associations in the past, namely Indian Electrical and Electronics Manufacturers Association, Madras Chamber of Commerce and Industry, Confederation of Indian Industry (Southern Region) (earlier known as Association of Indian Engineering Industry) and Employers Federation of Southern India. Presently he is Director on Board of various Easun Group companies and subsidiaries of our Company. 2. Mr. Raj Hari Eswaran

Mr. Raj Hari Eswaran, aged 44 years, our Promoter and Managing Director, is Electrical Engineer and holds Post Graduate Degree in Business Administration from London Business School. He is on the Board of our Company since June 26, 2000 and has been appointed as Managing Director w.e.f. April 01, 2012 and is director on the Board of its subsidiaries. He is also Director and Vice President of Indian Electrical and Electronics Manufacturers Association. He has a wide and varied managerial experience, both in India and abroad. Being the Managing Director, he is responsible for overall day to day operations of the Company. 3. Easun Engineering Company Limited Easun Engineering Company Limited was incorporated on February 07, 1948 under the Companies Act, 1913 with the Registrar of Companies, Madras, Tamil Nadu. The registered office of the company is situated at “Temple Towers”, 6th Floor, 672, Anna Salai, Nandanam, Chennai - 600 035. The main object of Easun Engineering Company Limited is to carry on the business as structural / mechanical engineers, manufacturer of agricultural implements and other machinery, tools, etc. Mr. Hariharan Eswaran and Mr. Raj Hari Eswaran are the promoters of Easun Engineering Company Limited. The equity shares of Easun Engineering Company Limited are not listed on any stock exchange. CIN : U51102TN1948PLC000654 PAN : AAACE5975H Bank a/c No. : 400381332 with Indian Bank Shareholding Pattern as on July 31, 2013

Name No. of equity shares % of shareholding Promoters & relatives 725,313 89.32Other than promoters 86,687 10.68Total 812,000 100.00

Passport No. : Z2390152 PAN : AAAPE0313L Bank a/c No. : 400004167610019 with Deutsche Bank

Passport No. : Z1744760 PAN : AABPE6893Q Bank a/c No. : 016010100810111 with Axis Bank Limited

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Board of Directors Mr. Raman Eswaran, Mr. Hariharan Eswaran and Mr. Venkataraman Eswaran are the Directors of Easun Engineering Company Limited. 4. Easun Products of India Private Limited Easun Products of India Private Limited was incorporated on October 09, 1964 under the Companies Act, 1956 with the Registrar of Companies, Madras, Tamil Nadu. The registered office of the company is situated at “Temple Towers”, 6th Floor, 672, Anna Salai, Nandanam, Chennai - 600 035. The main object of Easun Products of India Private Limited is to carry on the business as exporters, importers, merchant, financiers, commission agents, etc. Mr. Hariharan Eswaran and Mr. Raj Hari Eswaran are the promoters of Easun Products of India Private Limited. The equity shares of Easun Products of India Private Limited are not listed on any stock exchange. CIN : U51102TN1964PTC005248 PAN : AAACE7384C Bank a/c No. : 400383395 with Indian Bank Shareholding Pattern as on July 31, 2013

Name No. of equity shares % of shareholdingSowraj Investments Private Limited 173,150 99.97Mr. Raj Hari Eswaran 50 0.03Total 173,200 100.00

Board of Directors Mr. Raj Hari Eswaran, Mr. Hariharan Eswaran and Mr. Ramasamy Ravikumar are the Directors of Easun Products of India Private Limited. 5. Sowraj Investments Private Limited Sowraj Investments Private Limited was incorporated on January 22, 1987 under the Companies Act, 1956 with the Registrar of Companies, Tamil Nadu. The registered office of the company is situated at “Temple Towers”, 6th Floor, 672, Anna Salai, Nandanam, Chennai - 600 035. The main object of Sowraj Investments Private Limited is to carry on the business of finance and investment. Mr. Hariharan Eswaran and Mr. Raj Hari Eswaran are the promoters of Sowraj Investments Private Limited. The equity shares of Sowraj Investments Private Limited are not listed on any stock exchange. CIN : U65993TN1987PTC013938 PAN : AAACS3115M Bank a/c No. : 54008542183 with State Bank of Mysore Shareholding Pattern as on July 31, 2013

Name No. of equity shares % of shareholding Mr. Raj Hari Eswaran 39,429 16.34Mrs. Visalam hari Eswaran 39,404 16.33Ms. H Sowmya Eswaran 39,404 16.33 Mr. Hariharan Eswaran 123,063 51.00 Total 241,300 100.00

Board of Directors Mr. Raj Hari Eswaran, Mr. Hariharan Eswaran and Mr. Hari Eswaran Visalam are the Directors of Sowraj Investments Private Limited. There has been no change in the control of our corporate Promoters, namely Easun Engineering Company Limited, Easun Products of India Private Limited and Sowraj Investments Private Limited.

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FINANCIAL STATEMENTS

STANDALONE FINANCIAL STATEMENTS

Auditor’s Report to the Members of M/s. Easun Reyrolle Limited To the Members of EASUN REYROLLE LIMITED Report on Financial Statements We have audited the accompanying financial statements of EASUN REYROLLE LIMITED which comprise of the Balance Sheet as at 31st March 2013, Statement of Profit & Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). The responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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 2013

b) in the case of the Statement of Profit and Loss, of the Profit for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central

Government of India in terms of sub-section (4A) of section 227 of the Act, 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 give in the annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

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2. As required by section 227(3) of the Act, we report that:

(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) 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 ; (c) the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report

are in agreement with the books of account; (d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply

with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

(e) On the basis of written representations received from the directors as on 31st March 2013 and taken

on record by the Board of Directors, none of the directors is disqualified as on 31st March 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For R SUBRAMANIAN & CO For BRAHMAYYA AND CO Chartered Accountants Chartered AccountantsFirm Regd. No. 004137S Firm Regd. No. 000511S R SUBRAMANIAN N. SRI KRISHNAPartner Partner Membership No: 8460 Membership No: 26575

Place : Chennai Date : 27th June 2013

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Annexure to the Auditors’ report referred to in paragraph 3 of our report of even date

[Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ in the Independent Auditors’ Report of even date to the members of Easun Reyrolle Limited on the financial statements for the year ended 31st March 2013] 1. (a) The Company has maintained proper records showing full particulars, including quantitative

details and situation of Fixed Assets.

(b) These Fixed Assets have been physically verified by the Management on a regular programme, which however, in our opinion needs to be strengthened further having regard to the size of the Company and nature of Assets. No significant discrepancies were noticed on such verification.

(c) As per information and explanations given to us, Fixed Assets disposed during the year were not substantial.

2. (a) The stock of Finished Goods, stores and spare parts and raw materials except stock lying

with third parties, for which confirmation have been sought for, have been physically verified at year end as per programme of verification drawn up by the Management.

(b) In our opinion, the procedures of physical verification of inventories followed by the management

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

(c) On the basis of the records examined by us and relying on the information provided to us, in our opinion, the Company is maintaining proper records of inventories and no material discrepancies were noticed on physical verification as compared to the book record of inventories.

3. (a) During the year the company granted interest free advances to wholly owned overseas subsidiary

outstanding at year end amounting to Rs.776.84 lacs other than this the Company has not granted any loans, secured / unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. The terms of advance given are not prima facie prejudicial to the interests of the company. In the absence of any specific terms as regards the term of advance and terms of repayment of the advances given, we are unable to comment on the same.

(b) During the year the company has taken interest free unsecured loan of Rs.2294.76 lacs from companies, firms or other parties listed in the register required to be maintained under section 301 of the Companies Act, 1956. The terms and conditions of the loan borrowed are not, prima facie, prejudicial to the interests of the company. Interest free unsecured loan outstanding at year end is Rs.4129.76 lacs. The loan is repayable after September 2014 or convertible into Equity if any, allotted prior to due date of repayment.

4. In our opinion and according to the information and explanations given to us, the internal control

system are commensurate with the size of the Company and the nature of its business for purchase of inventory, fixed assets, sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. (a) Based on the audit procedures applied by us, to the best of our knowledge and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions

made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. We are informed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal under Sections 58A and 58AA of the Companies Act, 1956.

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7. The Company has an internal audit system commensurate with the size of the Company and the nature

of its business.

8. The Central Government has not prescribed maintenance of Cost Records under Section 209(1)(d) of the Companies Act, 1956 for any of the products of the Company.

9. a. According to the information and explanations given to us, the Company is generally regular in

depositing the undisputed statutory dues in respect of Customs Duty, Professional Tax and Investor Education and Protection Fund. However, there have been instances of delay in deposit of the undisputed statutory dues of Provident Fund, Excise Duty, Employee State Insurance, Dividend Distribution Tax and Income Tax including Tax Deducted at Source, Sales Tax (VAT, CST) and Service Tax with appropriate authorities, during the year.

b. According to the information and explanations given to us, except for the undisputed statutory dues

representing Fringe Benefit Tax of Rs.9.21 lacs, Service Tax of Rs.156.07 lacs, Dividend Distribution Tax of Rs.6.75 lacs, no other Statutory Dues were outstanding at year end for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us and on the basis of examination of records

of the Company, the following dues have been disputed with appropriate authorities.

Name of the Statute Assessment Year to which

the matter pertains Forum where the matter

is pending Amount in Rs.

Income Tax Act 2001-02 CIT( Appeals) # 30,02,382 Income Tax Act 2003-04 CIT( Appeals) * 47,85,258 Income Tax Act 2004-05 CIT( Appeals) * 26,12,561 Income Tax Act 2005-06 CIT(Appeals) # 71,58,509 Income Tax Act 2006-07 CIT(Appeals) # 55,41,946 Income Tax Act 2008-09 CIT(Appeals) * 3,06,33,157 Income Tax Act 2010-11 CIT(Appeals) @ 1,78,18,290

Sales Tax, Karnataka 2007-08 VAT (Appeals) ** 32,00,000 Sales Tax, Karnataka 2008-09 VAT (Appeals) ** 21,00,000

Sales Tax, West Bengal 2009-10 VAT (Appeals) @ 7,98,599 Customs Duty 2011-12 CESTAT # 66,37,675 Provident Fund 2008-12 EPFO, Salem @ 59,37,030

# paid * adjusted against refund ** covered under Bank Guarantee @ unpaid 10. The Company does not have any accumulated losses at the end of the financial year and has not

incurred cash losses in the current financial year and in the immediately preceding financial year. 11. Based on our audit procedures and on the basis of information and explanations given by the

Management, the Company has not defaulted in repayment of dues to bank, financial institutions and debenture holders except for a delay upto 30 days in repayment of term loan installment to Banks during the year.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of clause 4 (xiii) of the Order relating to Chit Funds, Nidhi, Mutual Benefit Fund or a Society are not applicable to the Company.

14. In our opinion, according to the information and explanations given by the management, the Company is not dealing or trading in shares, securities, debentures and other investments. Proper records of the transactions and contracts have been maintained and timely entries have been made. The said investments have been held by the company in its own name.

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15. According to the information and explanations given to us, the Company has not given any guarantee for any loan taken by others from any Bank or Financial Institution.

16. According to the information and explanations given to us and the based on the examination of records, the term loan availed during the year has been used for the purpose for which such loan has been availed.

17. In our opinion and according to the information and explanations given to us and on an overall

examination of the financial statements of the Company and after placing reliance on the reasonable assumptions made by the company for classification of long term and short term usages of funds, prima facie, we report that funds raised on short term basis have been used for long term investment.

18. According to information and explanation given to us 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.

19. According to the information and explanations given to us, the Company has not issued debentures

during the year and therefore the question of creating security or charge in respect thereof does not arise.

20. The Company has not made public issue of securities during the year and therefore the question of disclosing the end-use of money raised by way of public issue does not arise.

21. During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have not come across any instance of material fraud on or by the company, noticed or reported during the year.

For R SUBRAMANIAN & CO For BRAHMAYYA AND COChartered Accountants Chartered Accountants Firm Regd. No. 004137S Firm Regd. No. 000511S

R SUBRAMANIAN N. SRI KRISHNA Partner Partner Membership No: 8460 Membership No: 26575

Place : Chennai Date : 27th June 2013

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Balance Sheet as at 31st March 2013

Rs Lacs Particulars

Note No.



I. EQUITY AND LIABILITIES (1) Shareholders’ funds (a) Share capital 2 416.14 416.14 (b) Reserves and surplus 3 22,184.70 22,544.40 (c) Money received against share

warrants 2.4(b) 0.00 668.80

22,600.84 23,629.34 (2) Non-current liabilities (a) Long-term borrowings 4 9,190.03 8,525.52 (b) Deferred tax liabilities (Net) 5 429.77 282.42 (c) Long-term provisions 6 122.92 66.12 9,742.72 8,874.06 (3) Current liabilities (a) Short-term borrowings 7 9,125.08 7,766.60 (b) Trade payables 8 17,795.71 12,892.23 (c) Other current liabilities 9 3,322.39 5,008.45 (d) Short-term provisions 10 197.29 247.85 30,440.47 25,915.13 TOTAL 62,784.03 58,418.50

II. ASSETS (1) Non-current assets (a) Fixed assets (i)Tangible assets 11 9,451.20 3,763.57 (ii)Intangible assets 557.36 434.71 (iii) Capital Works in Progress 0.00 2,783.90 10,008.56 6,982.18 (b) Non-current investments 12 15,502.10 15,502.10 (c) Foreign Currency Monetary Item

Translation Difference Account 721.00 0.00

(d) Long-term loans and advances 13 1,654.93 4,229.11 (e) Other Non current assets 14 3,322.54 2,042.01 31,209.13 28,755.40 (2) Current assets (a) Inventories 15 5,707.70 4,975.89 (b) Trade receivables 16 21,235.41 20,036.27 (c) Cash and Bank Balances 17 2,053.62 3,203.68 (d) Short-term loans and advances 18 2,272.27 1,221.45 (e) Other current assets 19 305.90 225.81 31,574.90 29,663.10 TOTAL 62,784.03 58,418.50

Significant Accounting Policies 1 The Notes referred to above form an integral part of the Financial Statements Per our Report of even date annexed For and on behalf of Board of Directors For R SUBRAMANIAN & CO.

For BRAHMAYYA & CO. Raj H Eswaran Rakesh Garg

Chartered Accountants Chartered Accountants Managing Director Director Firm Regn No : 004137S Firm Regn No : 000511S R Subramanian N Sri Krishna K N Nagesha Rao Partner Partner Secretary and VP (Corporate Finance) Membership No: 8460 Membership No: 26575 Place: Chennai Date : 27th June 2013

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Statement of Profit and loss for the year ended 31st March 2013 Rs Lacs

Particulars Note No.



1 Revenue from operations 20 22,044.55 27,670.85 2 Other income 21 2,422.22 1,931.28 3 Total Revenue (1+2) 24,466.77 29,602.13 4 Expenses (1) Cost of Materials Consumed 22 16,755.36 21,284.54 (2) Change in Inventory 23

(131.81)

(58.15) (3) Employee benefits expense 24 2,283.92 2,171.46 (4) Finance costs 25 2,159.20 1,628.47 (5) Depreciation and amortization expense

717.32

520.62 (6) Other expenses 26 2,483.21 3,040.81 Total expenses 24,267.20 28,587.75

5 Profit before exceptional and extraordinary items and tax (3-4)

199.57

1,014.38

6 Exceptional items -

-

7 Profit before extraordinary items and tax (5-6) 199.57

1,014.38

8 Extraordinary Items -

-

9 Profit before tax (7- 8) 199.57

1,014.38

10 Tax expense: (1) Current tax 39.93 250.00 (2) Deferred tax 147.35 (77.93) (3) MAT Credit Availment - (87.72)

11 Profit after tax for the year (9-10) 12.29 930.03 12 Profit/(loss) from discontinuing operations 13 Tax expense of discontinuing operations 14 Profit/(loss) from Discontinuing operations (after

tax) (12-13)

-

- 12 Profit after tax for the year (11+14) 12.29 930.03 12 Earnings per equity share (in Rs)

(1) Basic (Face Value Rs.2 each) 0.06 4.47 (2) Diluted (Face Value Rs.2 each) 0.06 4.01




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Cash flow statement for the year ended 31st March, 2013 Pursuant to Clause 32 of the Listing Agreement

Rs Lakhs Particulars As at 31.03.2013 As at 31.03.2012

A Cash flow from operating activities: Net profit before tax and extraordinary items 199.57 1,014.34 Adjusted for: Depreciation 717.32 520.62 (Profit)/Loss on Sale of Assets (1,749.35) (829.38) Interest Expense 2,159.20 1,628.47 Income from Mutual Funds - (364.00) Interest Income (219.35) (246.19) Unrealised Loss/ (Gain) on FCCB - 255.60 Transfer to ESOP Amortization Expenses - 17.81 Unrealised Forex fluctuations in Drs and Crs 85.75 (77.21) Operating profit before Working Capital changes 1,193.14 1,920.06 Trade and other receivables (2,565.42) (4,008.17) Inventories (731.81) (413.11) Loans and Advances 1,528.96 2,685.30 Trade Payables and other Current Liabilities 3,150.82 1,379.42 Cash generated from operations 2,575.69 1,563.51 Direct Taxes (85.69) (107.72) Net cash from operating activities 2,490.01 1,455.79

B Cash flow from Investing activities: Purchase of Fixed Assets (6,580.50) (303.74) Investment In Mutual Fund - 5,264.43 Dividend income from mutual funds - 364.00 (Increase) / Decrease in capital work in progress 2,783.90 (1,148.91) Interest received 219.35 246.19 Margin Money Accounts and Deposits 1,060.54 (2,359.49) Sale of Fixed Assets 1,802.23 970.00 Investment in ERL International Pte Ltd * - (5,146.82) Net cash from Investing activities (714.48) (2,114.35)

C Cash flow from financing activities: Issue of Share Capital - 0.71 FCCB redemption (1,040.75) -

Increase / (Decrease) in Term Loans 664.51 4,055.41 Increase / (Decrease) in Short term borrowings 712.01 (1,773.23) Dividend paid (41.61) (290.87) Interest paid (2,159.20) (1,628.47) Net Cash from financing activities (1,865.04) 363.55 Increase / (Decrease) in cash and cash equivalent (89.52) (295.01)Cash and cash equivalent at the beginning of the year 169.39 464.40 Cash and cash equivalent at the close of the year 79.87 169.39



* Non cash item Per our Report of even date annexed For and on behalf of Board of Directors For R SUBRAMANIAN & CO. For BRAHMAYYA & CO. Raj H Eswaran Rakesh Garg Chartered Accountants Chartered Accountants Managing Director Director Firm Regn No : 004137S Firm Regn No : 000511S R Subramanian N Sri Krishna K N Nagesha Rao Partner Partner Secretary and VP (Corporate Finance) Membership No: 8460 Membership No: 26575Place: Chennai Date : 27th June 2013

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1. SIGNIFICANT ACCOUNTING POLICIES A. Basis of Accounting

The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued under the Companies (Accounting Standards) Rules 2006 and the relevant provisions of the Companies Act, 1956 as adopted consistently by the company. Revenues are recognised and expenses are accounted on their accrual, including provisions / adjustment for committed obligations and amounts determined as payable or receivable during the year. Use of Estimates The preparation of the financial statements in conformity with Indian GAAP requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. The actual results may differ from these estimates.

B. Revenue Recognition Sale of goods and services is recognised on dispatch to customers or when the service has been provided. Income from turnkey projects is recognised on the Gross Billing exclusive of applicable sales/service taxes and based on work certified. Interests on deposits are recognised on time proportion basis taking into account the amount of deposit and interest. Export incentives such as DEPB benefits are recognized on exports of goods.

C. Fixed Assets and Intangibles Fixed assets are stated at cost of acquisition inclusive of freight, duties, taxes and interest on borrowed capital allocated to and utilized for fixed assets upto the date of capitalization and other direct expenditure incurred on ongoing projects. Assets acquired on hire purchase are capitalised at gross value and interest thereon is charged to revenue. Cost incurred on self generated intangibles which are separately identifiable are amortised over the useful life of the asset. Borrowing costs directly attributable to the acquisition, construction and production of qualifying assets are capitalised till the month in which the asset is ready for its intended use. Other borrowing costs are recognised as expenses in the period in which these are incurred.

D. Depreciation Depreciation on fixed assets is provided under the straight line method in accordance with Schedule XIV of the Companies Act, 1956 at the rates specified therein, with the exception to the following: a) Technical Know how is depreciated at the rate applicable under the provisions of Income Tax Act,

1961. b) Non compete fees is depreciated @20% under the Straight Line Method. c) Vehicles Purchased are written off over the period of three years. d) Computer and accessories purchased are written off over a period of three years. e) Electrical Installations installed on or after 1st April 2005 are written off @12.5%. f) Intangible Assets –Product development is depreciated @ 20% under Straight Line Method. g) Fixed Furniture in leasehold Property is depreciated over the lease period. h) SAP implementation cost is depreciated @ 16.21% under the Straight Line Method.

E. Inventories

a) Inventories other than tools are valued at lower of cost or net realisable value. Cost of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present locations and condition. Cost is determined on weighted average basis.

b) Tools are written off at cost less amortization. Amortizations of tools are made based on technical evaluation.

F. Foreign Currency Transactions

Transactions in foreign exchange are initially recognised at the rates prevailing on the date of transaction. Premium or discount arising at the inception of forward contract is amortized as income or expenses over the life of the contract. Exchange difference on such contracts is recognized in the reporting period in which the exchange rate changes.

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All monetary assets and liabilities are restated at the balance sheet date using year end rates. Resultant exchange difference is recognized as income or expenses in that period.

G. Employee Benefits The company’s contributions to provident fund, a defined contribution scheme is charged to profit & loss account on accrual basis. Liability for gratuity is funded with Life Insurance Corporation of India (LIC). Gratuity expense for the year has been accounted based on actuarial valuation determined under the projected credit unit method, carried out at the end of financial year. Actuarial gains/losses are recognised in full in the profit and loss account. The retirement benefit obligation recognised in the balance sheet represents the present value of defined benefit obligations adjusted for unrecognized past service cost and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost plus the present value of available refunds and reduction in future combinations to the scheme. Superannuation Liabilities have been covered by Master Policies of Life Insurance Corporation of India under irrevocable trust. Annual premium on accrual basis are charged to profit & loss account. Liability for encashment of leave considered to be long term liability is accounted for on the basis of an actuarial valuation as per revised AS-15. Provision for outstanding leave credits considered as short term liability is as estimated by the management. Other short term employee benefits like medical, leave travel etc are accrued based on the terms of employment on time proportion basis.

H. Investments Long term investments are stated at cost less diminution in the value of investments that is other than temporary. Current Investments are carried at lower of cost and fair value. Overseas investments are converted on the date of transaction.

I. Expenditure Subject to Note No.35 below, Revenue expenditure is charged as an expense in the year in which it is incurred. Capital Expenditure is included in fixed assets and depreciated at applicable rate. Expenditure incurred towards selling expenses, is accounted as expenditure in proportion to the sale income recognised. Expenditure incurred towards opening of Bank Guarantee in relation to turnkey project activities and others, the same is prorated over the life of the bank guarantee.

J. Warranty Claims and Liquidated Damages Future liability towards warranty claims are estimated and provided for Liquidated damages are recognised in the books of accounts on actual crystallization.

K. Taxes on Income Current taxes including Fringe Benefits Tax is determined as the amount payable in respect of taxable income for the period. Deferred tax is recognised subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal of in one or more subsequent periods. MAT Credit is recognized as an asset only when and to the extent there is a convincing evidence that the Company will pay normal income-tax during the specified period. In the year in which the Minimum Alternate Tax (MAT) credit becomes eligible to be recongnized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as a MAT Credit Entitlement.

L. Customs and Excise duty Excise duty on finished goods stock lying at the factory is accounted at the point of manufacture. Customs Duty on imported material lying in bonded warehouse is accounted for at the time of bonding of materials.

M. Cash Flow Statement Cash flow statement has been prepared in accordance with the indirect method prescribed in accounting standard 3, issued by Companies (Accounting Standards) Rules 2006.

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N. Provisions and Contingencies

A provision is recognised when an enterprise has a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not provided but disclosed in the notes to financial statements.

O. Impairment of Fixed Assets The carrying amount is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any indication exists, the recoverable amount is estimated. An impairment loss is recognised whenever carrying amount exceeds recoverable amount.

P. Earnings per Share The company reports basic and diluted earnings per share (EPS) in accordance with Accounting Standard 20 on “Earnings per Share”. Basic EPS is computed by dividing the net profit or loss attributable to equity share holders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year attributable to equity share holders by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti dilutive.

2. Share Capital

Rs. Lakhs Particulars As at 31st March

2013As at 31st

March 2012Authorised Share Capital: 7,50,00,000 (75,00,000) Equity Shares of Rs.2/- each 1,500.00 1,500.00 50,00,000 (50,00,000) Preference Shares of Rs.10/- each 500.00 500.00 Issued Share Capital: 2,08,07,864 (2,08,07,864) Equity Shares of Rs.2 each 416.16 416.16 Subscribed and Paid up Capital: 2,08,07,014 (2,08,07,014) Equity Shares of Rs.2 each fully paid up 416.14 416.14

Total 416.14 416.14 4.1 Reconciliation of number of shares


As at 31 March 2013 As at 31 March 2012

No. of Shares held

Amount No. of Shares held

Amount

Balance at the beginning of the year 20,807,014 416.14 20,771,605 415.43 Add: ESOP shares issued during the year (Refer Note no 29)

- - 35,409 0.71

Less: Shares bought back during the year - - - - Balance at the end of the year 20,807,014 416.14 20,807,014 416.14 2.2 Rights, preferences and restrictions attached to shares

Equity Shares: The Company has one class of equity shares having a par value of Rs 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the board is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding .

Details of equity shares held by shareholders holding more than 5% shares of the aggregate shares in the Company

Particulars

As at 31 March 2013 As at 31 March 2012 No. of

Shares held % of

Holding No. of

Shares held % of

Holding Easun Products of India Pvt Ltd 2,267,557 10.90% 2,267,557 10.90% Easun Engineering Company Ltd 1,632,500 7.85% 1,632,500 7.85% Power Ventures Holdings (India) Pvt. Ltd., 1,628,088 7.82% 1,628,088 7.82%

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Sowraj Investments Pvt Ltd 1,458,060 7.01% 1,458,060 7.01% Sundaram Mutual Fund A/C Sundaram Smile Fund

1,102,257 5.29% 788,216 3.79%

2.3 Shares Reserved for issue under Options and Contracts/Commitments for sale of Shares a) Employee Stock Option Scheme

During 2009-10, the Company established "Easun Reyrolle Employee Stock Option Plan 2009" under which 10,00,000 options have been allocated for being granted to the employees and non promoter directors . The Company has obtained in-prinicple approval from National Stock Exchange Limited , Mumbai (NSE) and Bombay Stock Exchange Limited, Mumbai (BSE) for listing upto a maximum of 10,00,000 shares pursuant to exercise of options granted under the Scheme. Each option comprises one underlying Equity Shares of Rs.2/- each. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per the Scheme, the Compensation Committee grants options to senior employees and non promoter directors. The options are granted at a price, which shall not be less than the par value of equity shares of the Company and shall not be more than the Market price as defined in the Guidelines.

b) Issue of Share Warrants During 2010-11, the Company had issued 20,00,000 Convertible Equity Warrants at Rs.133.76 per warrant in terms of the extant guidelines of SEBI on preferential issue. The Company has received Rs.6,68,80,000 towards 25% of the warrant as advance money, each warrant was convertible into one equity shares of Rs.2 each within 18 months from the date of allotment, as the same was not executed, amount so received have been forfeited during the year.

3. Reserves and Surplus


2013 As at 31st March

2012 Capital Reserve

Opening Balance 45.54 45.54 Add: Amount transferred on forfeiture of Share warrant 668.80 - Less: Deductions - - Closing Balance 714.34 45.54

Government Subsidy 40.42 40.42 Securities Premium Account

Opening Balance 10,884.47 10,842.25 Add: Amount transferred on allotment of ESOPs - 42.22 Less: Premium on redemption of FCCB 1,040.75 - Closing Balance 9,843.72 10,884.47

General Reserve Opening Balance 9,546.39 9,446.39 Add: Transfer From Statement of Profit and Loss - 100.00 Less: Deductions - - Closing Balance 9,546.39 9,546.39

Employee Stock Options Outstanding Account Opening Balance - 48.82 Add: ESOP Granted - - Less: Transfer to Share Premium A/c on options exercised - 42.22 Less: Transfer to ESOP Amortisation expenses on expired

options - 6.60

Closing Balance - -Surplus in Statement of Profit and Loss

Opening Balance 2,027.56 1,245.91 Add: Profit for the year 12.29 930.03 Less: Proposed dividend - 41.61 Less: Tax on Proposed dividend - 6.75 Less: Transfer to General Reserve - 100.00

2,039.83 2,027.58 Total 22,184.70 22,544.37

77

4. Long Term Borrowings Rs. Lakhs

Particulars As at 31st March 2013


Secured Loans Foreign Currency Term loans From Banks

Standard Chartered - ECB (Refer 4.1(i)) 2,739.13 3,389.96 DBS Bank - ECB (Refer 4.1(i)) 2,033.66 2,704.04 External Commercial Borrowings (Refer 4.1) 4,772.79 6,094.00

Rupee Term Loans From Banks Axis Bank (Refer 4.1(i)) 287.48 515.60

Hire Purchase Loan Long Term Maturities of vehicle loans (Refer 4.1 (ii)) - 6.39

Total (A) 5,060.27 6,615.99 Unsecured Loans

Sales Tax Deferral Scheme (Refer 9.1) - 74.53 Intercorporate Deposits (Refer 4.1(iii)) 4,129.76 1,835.00

Total (B) 4,129.76 1,909.53 Total (A+B) 9,190.03 8,525.52

4.1 Security Clause i) Term Loans

Bank Properties

Hosur Factory: Land, Building and

Plant & Machinery Industrial Land, amd building at Harohalli, Kanakapura Taluk,

Ramanagaram District Axis Bank Second Charge First Charge DBS Bank Second Charge First Charge Standard Chartered Second Charge First Charge ii) Hire Purchase Loans: Loans taken under hire purchase arrangemnts are secured against hypothecation of

specific assets. iii) Unsecured Term Loan from Sowraj Investments P. Limited and Easun Products of India P. Limited do

not carry any interest. The amount is payable on demand after 30th September 2014. The parties have given their intention of subscribing to Equity share capital of the Company if any offered within 30th September 2014.

4.2 The details of Long Term Borrowings are as follows

Particulars Repayment Start Date

O/s Amt as on 31st

March 2013

Current Maturities

Interest Rate

Instalment Amount

Rupee Term Loans Axis Bank Ltd- (Repayable in 16 Quarterly instalments)

Feb-12 475.00 172.73 13.25% 43.18

External Commercial Borrowings (Fully Un-Hedged)

Standard Chartered Bank Ltd (Repayable in 8 Half yearly Instalments) * (USD - 7.5 million) #

Aug-12 4,109.46 1,370.33 11.45% 685.17

External Commercial Borrowings (Fully Hedged) DBS Bank Ltd (Repayable in 10 Half yearly Instalments) (USD - 6 million) #

Aug-12 2,711.02 677.36 11.60% 338.68

Total 7,295.47 2,220.42 1,067.03 * Amount varies as per the exchange rate on the date of repayment # O/s as on 31.03.13 4.3 Unsecured Loans

a) During the year 2007-08 the company raised funds through issue of Zero Coupon Foreign currency

Convertible Bond aggregating to USD 35 million (Rs.13,846 lakhs) with an option to the investor to convert the FCCBs into equity shares of the company at an initial conversion price of Rs.400 per share

78

at a fixed rate of exchange on conversion Rs.39.45=USD 1, at any time after December 5, 2007 and prior to November 28, 2012 and 34,51,875 shares would be issuable on November 28, 2012 unless previously converted, redeemed, repurchased and cancelled, the balance FCCBs redeemed on December 05, 2012 at 142.56% of their principal amount. Out of the aforesaid FCCBs, there were no FCCBs converted to equity shares as at the year end.

b) During the year 2009-10, the company has bought back and cancelled 310 Nos of 5 years FCCB of the face value of USD 100,000 each, as per the notification of Reserve Bank of India, at a discount to the face value. Consequent to this the company is absolved of its liability towards the bond holders whose bonds are cancelled.

c) During the financial year, the Company has redeemed the balance 40 numbers of 5 years Foreign Currency Convertible Bonds of the face value of USD 100,000 each with premium of 42.56%. Conseqent to this, the Company is fully obsolved of its liability towards the bond holders to whom Foreign Currency Convertible Bonds were issued.

5. Deferred Tax Liabilities


2013 As at 31st

March 2012 Deferred Tax Liabilities - On account of Timing differences related to Fixed Assets 517.37 360.27 Deferred Tax Assets - Disallowances under Income Tax Act 1961 87.60 77.85

Total 429.77 282.42 6. Long-term provisions



2012 Provision for employee benefits

- Leave Encashment 67.41 66.12 - Gratuity 55.51 -

Total 122.92 66.12 7. Short-term borrowings



2012 Secured From Banks - Cash Credits facilities availed 8,735.16 7,374.89 - Buyers credit 389.92 391.71

Total 9,125.08 7,766.60 7.1 Working Capital a. Primary Security Hypothecation of entire current assets including stocks, receivables and other current asets of the Company on pari passu basis favouring Axis Bank, DBS Bank, Standard Chartered Bank and State Bank of India. b. Collateral Security

Bank

Properties Hosur Factory: Land, Building

and Plant & Machinery Industrial Land, amd building at Harohalli, Kanakapura Taluk, Ramanagaram District

Axis Bank Second Charge @ First Charge # DBS Bank Second Charge @ First Charge # Standard Chartered Bank Second Charge @ First Charge # State Bank of India First Charge Second Charge @ on paripassu basis among Axis Bank, DBS Bank and Standard Chartered Bank # by way of primary security

79

8. Trade Payables Rs. Lakhs



Micro, Small and Medium Enterprises (Refer Note 8.1) 302.87 409.66 Other Enterprises 17,492.84 12,482.57

Total 17,795.71 12,892.23 8.1 Based on, and to the extent of information received from the suppliers regarding their status under the

Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), and relied upon by the auditors, the relevant particulars as at 31st March 2013 are furnished below

Rs. Lakhs Particulars 2013 2012

Principal Amount Due to Suppliers 302.87 409.66 Interest Accrued and due to the suppliers under MSMED Act, on the above amount

2.98 3.97

Payment made to suppliers (other than interest) beyond the appointed date

805.93 725.01

Interest paid to suppliers under MSMED Act (Section 16) - -Interest due and payable to suppliers under MSMED Act, for payments already made

12.25 12.95

Interest accrued and remaining unpaid at the end of the year to suppliers under MSMED Act

15.23 16.92

9. Other Current Liabilities


2013 As at 31st

March 2012 (a) Foreign Currency Term loans from Banks

Standard Chartered – External Commercial Borrowing (Refer 4.1(i)) 1,370.33 1,130.00 DBS Bank - External Commercial Borrowing (Refer 4.1(i)) 634.35 677.36

(b) Rupee Term Loans from Banks Axis Bank (Refer 4.1(i)) 181.32 234.40

Current Maturities of Long Term Debt (a+b) 2,186.00 2,041.76 Sales Tax Deferral Scheme (Refer 9.1) 74.53 -Current Maturities of Hire Purchase Loans (Refer 4.1(ii)) 6.39 13.84 Current Maturities of FCCB's - 2,061.20 Interest Accrued and not due on borrowings 43.01 82.49 Interest Accrued and due on borrowings 6.20 8.30 Other Payables

Employee Related 186.30 61.05 Expenses, Service & Contract Payables 118.83 222.27 Unpaid Dividend Payable 37.41 41.92 Statutory Dues Payables 663.72 475.62

Total 3,322.39 5,008.45 9.1 The company has been sanctioned to avail interest free sales tax deferral scheme for an aggregate

amount of Rs.74.53 lakhs by the department of Sales tax, Government of Tamilnadu. The underlying deferred sales tax payable by the company from the financial year commencing from 2013-14.

10. Short-term provisions



2012 Provision for Employee Benefits

Leave Encashment 8.17 8.89 Gratuity 9.12

Other Provisions Warranty Claim Reserve (refer 10.1) 170.79 188.16Provision for FBT (Net of advance tax) 9.21 9.19 Dividend Payable - 41.61

Total 197.29 247.85

80

10.1 Warranty Claim Reserve As at 31st March


2012 At the beginning of the year 188.16 205.74 Created during the year - 29.68 Utilised during the year 17.37 47.27 At the end of the year 170.79 188.16

81

11. Fixed Assets

Rs. Lakhs Particulars Gross Block Depreciation Net Block

As at Additions Deductions As at As at For the year Deletion As at As at As at 1-Apr-12 31-Mar-13 1-Apr-12 31-Mar-13 31-Mar-13 31-Mar-12

(a) Tangible Assets Land 55.19 - 52.88 2.31 - - 2.31 55.19 Land - Leasehold 998.98 - 998.98 - - 998.98 998.98 Land - Hosur Residential Plots 4.29 - 4.29 - - 4.29 4.29 Buildings 941.96 3,234.99 4,176.95 212.67 111.77 324.44 3,852.51 729.29 Buildings - Leasehold 5.26 - 5.26 1.81 0.18 1.99 3.27 3.45 Plant and Machinery 713.63 2,585.03 3,298.66 303.43 116.89 420.32 2,878.33 410.19 Electrical installation 267.67 304.20 571.87 160.76 57.77 218.53 353.34 106.91 Office equipments 488.07 22.65 510.72 342.05 21.55 363.60 147.12 146.02 Furniture 507.04 78.81 585.85 202.45 33.81 236.26 349.59 304.59 Vehicles 132.11 26.00 12.43 145.68 104.55 14.99 12.43 107.11 38.57 27.56 Computers 776.67 43.00 819.67 257.89 163.11 421.00 398.67 518.78

Research And Development Buildings 173.23 173.23 38.51 5.79 44.30 128.93 134.72 Plant and Machinery 445.94 445.94 135.30 21.10 156.40 289.54 310.64 Electrical installation/Fittings 27.01 27.01 20.06 3.17 23.23 3.78 6.95 Office equipments 88.64 88.64 83.51 3.84 87.35 1.29 5.13 Computers 1.46 0.42 1.88 0.57 0.62 1.19 0.69 0.89

Total 5,627.13 6,295.10 65.31 11,856.92 1,863.56 554.57 12.43 2,405.72 9,451.20 3,763.57 Previous Year (6,106.51) (128.78) (608.17) (5,627.13) (1,941.34) (389.77) (467.55) (1,863.56) (3,763.57) (4,165.18)

(b) Intangible Technology Know-how 550.44 550.44 547.17 3.27 550.44 0.00 3.27 Non-compete fees 100.00 100.00 100.00 100.00 - - Intangible Asset - Product devel 719.66 285.40 1,005.06 296.20 155.58 451.78 553.28 423.46 Computer Software 11.69 11.69 3.71 3.90 7.61 4.08 7.98

Total 1,381.79 285.40 - 1,667.19 947.08 162.75 - 1,109.83 557.36 434.71 Previous Year (1,206.82) (174.97) - (1,381.79) (816.23) (130.85) - (947.08) (434.71) (390.59)

(c) Capital Work in Progress Capital Work in progress (including project

related expenditure) 2,783.90 -

2,783.90 - - - - - - 2,783.90

Total 2,783.90 - 2,783.90 - - - - - - 2,783.90 Previous Year (1,634.99) (1,148.91) - (2,783.90) - - - - (2,783.90) (1,634.99)

Grand Total 9,792.82 6,580.50 2,849.21 13,524.11 2,810.64 717.32 12.43 3,515.55 10,008.56 6,982.18 Previous Year (8,948.33) (1,452.65) (608.17) (9,792.82) (2,757.57) (520.62) (467.55) (2,810.64) (6,982.18) (6,190.76)

82

12. Non-current investments

Rs. Lakhs Particulars No. of Shares As at 31st

March 2013 As at 31st

March 2012Non Trade Investments - Unquoted (At Cost) In ERL International Pte Ltd- Singapore Equity Shares of USD 1 each fully paid up 300,000 118.68 118.687.5% Non cumulative redeemable convertible Preference Shares of USD 1 each fully paid up

9,700,000 5,146.82 5,146.82

Non cumulative redeemable convertible Preference Shares of USD 1 each fully paid up

22,000,000 10,236.60 10,236.60

Total 15,502.10 15,502.10Aggregate amount of : quoted investments : market value - -Aggregate amount of unquoted investments 15,502.10 15,502.10 13. Long-term loans and advances



2012 Unsecured, Considered Good unless otherwise stated Capital Advances - 2,813.18 Security Deposits and Earnest Money Deposits 181.42 271.08 Loans and advances to related parties 776.84 604.31 Prepaid Expenses 121.43 37.77 Other Deposits 25.18 23.44 Testing Charges to be amortised 18.31 33.27 Income Tax & TDS (Net) 531.75 446.06

Total 1,654.93 4,229.11 14. Other non-current assets



2012 Long Term Trade Receivables Unsecured, Considered Good 3,322.54 2,042.01

Total 3,322.54 2,042.01 15. Inventory


2013As at 31st March

2012(Lower of Cost and estimated Net Realisable Value) Raw Materials and Components 3,140.73 3,053.61 Work In Progress 287.28 184.05 Finished Goods 917.59 889.01 Packing Materials 10.19 6.60 Stock in Transit - Raw Materials & Components 1,336.64 811.70 Stores and Spares 15.27 30.92

Total 5,707.70 4,975.89 16. Trade Receivables



2012 Unsecured, Considered Good unless otherwise stated Outstanding for a period exceeding six months 11,647.01 10,563.19 Other Receivables 9,588.40 9,473.08

Total 21,235.41 20,036.27

83

17. Cash and Bank Balances Rs. Lakhs



Cash and cash equivalents Cash on Hand 24.31 20.76 Balances with banks in Current Accounts 55.56 148.63

Other Bank Balances* Bank Deposits with maturity more than 3 months but less

than 12 months 1,031.77 2,173.38

Balances in Earmarked Accounts Unpaid Dividend Accounts 37.82 42.63 Margin Money Deposits 904.16 818.28

Total 2,053.62 3,203.68 * Under lien with DBS Bank and Standard Chartered Bank 18. Short-term loans and advances



2012 Advances recoverable in cash or in kind or for value to be received (Unsecured, Considered Good unless otherwise stated)

(a) Advance to suppliers 1,112.47 639.24 (b) Advance to Employees 64.66 47.76 (c) Rental Advance 73.37 70.08 (d) Prepaid Expenses 43.97 104.09 (e) Other Receivables 314.39 124.05 (f) VAT and CENVAT Credit (Net) 663.41 236.23

Total 2,272.27 1,221.45 19. Other current assets



2012 (a) Interest Accrued on Short term deposit 18.11 10.69 (b) Interest Accured on Bank Guarantee Margin 287.79 215.12

Total 305.90 225.81 20. Revenue from Operations



2012 Sale of products (Refer 20.1) 22,780.48 28,448.53 Sale of services 562.52 1,438.38 Other operating revenues 23.91 1.71 23,366.91 29,888.62 Less: Excise duty 1,322.36 2,217.77

Total 22,044.55 27,670.85 20.1 Sale of Products (net of Excise Duty) comprises of the following



2012 Relays and Control Panels 10,971.08 14,371.53 Meters 143.08 737.58 Switchgear 2,250.18 1,857.10 Projects 8,093.77 9,240.13 Wind Energy Produced - 62.75

Total 21,458.12 26,269.09

84

21. Other Income Rs. Lakhs



Interest Income 219.35 246.19 Profit on Sale of Fixed Assets 1,749.35 829.38 Dividend Income from Mutual Fund - 364.00 Realisation of Debts written off in earlier years 8.44 2.36 Foreign Exchange Gains 426.00 401.01 Trade Incentives 18.94 7.14 Miscellaneous Income 0.14 81.20

Total 2,422.22 1,931.28 22. Cost of Material Consumed



2012 Opening Stock Raw Materials and Components 3,053.61 3,260.76 Add: Purchases 16,842.48 21,077.39 19,896.09 24,338.15 Less: Closing Stock Raw Materials and Components 3,140.73 3,053.61

Total 16,755.36 21,284.54 23. Change in Work in Progress and Finished Goods



2012 Opening Stock Finished Goods 889.01 963.78 Work in Progress 184.05 51.13 (A) 1,073.06 1,014.91 Less: Closing Stock Finished Goods 917.59 889.01 Work in Progress 287.28 184.05 (B) 1,204.87 1,073.06

Total (A+B) (131.81) (58.15) 24. Employee Benefits Expense



2012 Salaries and Wages 1,877.53 1,740.77 Contribution to provident and ESI funds 95.86 91.73 Gratuity 80.04 20.43 Leave encashment 0.57 26.11 Staff Welfare Expenses 229.92 292.42

Total 2,283.92 2,171.46 Finance Costs



2012 Interest Term Loans 781.70 339.09 Buyers Credit and Others 60.62 222.78 Working Capital Loans 1,148.69 899.43 Inter Corporate Deposits - 85.95 Other borrowing costs 168.19 81.22

Total 2,159.20 1,628.47

85

25. Other Expenses



2012 Consumption of Stores and Spares 145.36 242.70 Power & Fuel 89.70 72.81 Rent 117.86 89.81 Repairs to : Buildings 1.67 0.05

: Machinery 1.40 1.79 : Others 179.74 319.29

Insurance 68.40 51.65 Rates and taxes, excluding, taxes on income 91.56 119.93 Travel and Conveyance Expenses 464.78 536.26 Postage, Telephone and Telegram 81.40 86.37 Selling Expenses 334.78 403.83 Audit Fees : Audit 7.50 7.50

: Tax matters 0.75 0.75 : For other services 1.50 1.50 : Out of Pocket Expenses 3.77 3.73

Professional Charges 73.15 38.45 Electricity Charges 27.48 27.61 Security Charges 54.35 48.01 Bad Debts - 7.03 Advertisement Expenses 23.77 74.59 Printing & Stationery 39.28 50.35 Bank Charges 319.98 276.46 Tools Written off 15.91 21.11 Service Charges 19.78 41.36 Other expenses 319.31 517.87

Total 2,483.21 3,040.81 26. Gratuity and Leave for AS 15 Disclosure A. Defined Benefit Plan:

(i) Gratuity (Funded) In accordance with applicable laws, the company provides for gratuity, a defined benefit retirement plan (Gratuity Plan) covering all permanent employees. The gratuity plan provides for, at retirement or termination of employment, an amount based on the respective employees last drawn salary and the years of employment with the company. The company provides the gratuity benefit through annual contributions to a gratuity trust which in turn mainly contributes to Life Insurance Corporation of India (LIC) for this purpose. Under this plan the settlement obligation remains with the gratuity trust. Life Insurance Corporation of India administers the plan and determines the contribution premium required to be paid by the trust.

(ii) Leave Encashment (Unfunded) In accordance with applicable rules, the liability for leave encashment was actuarially valued and provided in the books of accounts, covering permanent employees.

B. Defined Contribution Plan (Funded) Provident Fund All employees are entitled to provident fund benefits. For all categories of employees the company makes contributions to Regional Provident Fund commissioners as per law.

Defined Benefit Plans - As per Actuarial Valuations Rs. Lakhs

Particulars Leave Encashment Gratuity 2012-13 2011-12 2012-13 2011-12

1 Assumptions Interest rate 8.50% 8.00% 8.00% 8.00% Salary Escalation 8.50% 8.00% 7.00% 7.00%2 Change in benefit obligations Obligations at period beginning – Current 8.89 5.85 - - Obligations at period beginning - Non-current 66.12 43.21 290.74 276.62

86

Service Cost 13.50 23.06 23.26 22.51 Interest on Defined benefit obligation 6.19 3.92 25.63 22.13 Benefits settled - - (54.68) (23.86) Actuarial (gain)/loss (19.13) (1.29) 62.02 (6.65) Obligations at period end 75.57 74.76 346.97 290.74 Current Liability (within 12 months) 8.89 8.89 - - Non Current Liability 66.12 66.12 - -3 Change in plan assets Plans assets at period beginning, at fair value - - 349.14 325.00 Expected return on plan assets - - 29.14 29.25 Actuarial gain/(loss) - - - - Contributions - - 15.59 18.76 Benefits settled - - (54.68) (23.86) Plans assets at period end, at fair value - - 339.19 349.14 4 Table showing fair value of plan assets Fair value of plan assets at beginning of year - - 349.14 325.00 Actual return on plan assets - - 29.14 29.25 Contributions - - 15.59 18.76 Benefits Paid - - (54.68) (23.86) Fair value of plan assets at the end of year - - 339.19 349.14 Funded status - - (7.78) 58.40 5 Actuarial Gain/Loss recognized Actuarial (gain)/ loss on obligations - - 62.02 (3.39) Actuarial (gain)/ loss for the year - plan assets - - Nil Nil Total (gain)/ loss for the year - - 62.02 6.65) Actuarial (gain)/ loss recognized in the year - - 62.02 6.65)6 The amounts to be recognized in the balance sheet and

Statement of Profit and Loss

Present value of obligations as at the end of year - - 346.97 290.74 Fair value of plan assets as at the end of the year - - 339.19 349.14 Funded status 75.57 74.76 (7.78) 58.40 Net asset/(liability) recognized in balance sheet (75.57) (74.76) (7.78) 58.40 7 Expenses recognised in the Statement of Profit & Loss

for the year ended

Service cost 13.50 23.06 23.26 22.51 Interest cost 6.19 3.92 25.63 22.13 Expected return on plan assets - - (29.14) (29.25) Actuarial (gain)/loss (19.13) (1.29) 62.02 (6.65) Expenses recognised in the statement of Profit & Loss 0.56 25.70 81.77 8.73

27. Disclosure of AS 18 for the Year 2012-13

a) Details of transactions during year 2012-13 Rs. Lakhs

Sl No

Particulars Eswaran & Sons

Engineers Ltd

Sowraj Investme

nts

Easun Products of India P

Ltd

Key Mgt Personnel

ERL International Pte

Ltd

ERLPhase Power

Technologies Ltd

Switchcraft GMBH

ERL Marketing Intl. FZE

ERL Thailand P. Ltd

Grand Total

1 Sale of Goods 447.74 0.98 12.04 309.82 - 770.59 (6.87) (123.81) (794.74) (2.57) (927.98)

2 Purchase of Goods 291.79 142.94 - 434.73 (135.94) (71.27) (1,752.51) (1,959.71)

3 Rendering of Services - Reimbursement of

Expenses 19.24 4.89 - 6.83 30.96

(incl. exchange fluctuation)

(837.31) (42.18) (57.43) (936.91)

Un-Secured Loan 141.57 141.57 (2,490.51) (2,490.51) Interest on Loan

advanced - -

4 Availing of Services - Reimbursement of

Expenses -

- 22.23 - 22.23

(50.35) (229.48) - (279.83) Loan borrowed 3,353.50 4,195.00 7,548.50

87

Sl No


Engineers Ltd

Sowraj Investme

nts

Easun Products of India P

Ltd

Key Mgt Personnel

ERL International Pte

Ltd

ERLPhase Power

Technologies Ltd

Switchcraft GMBH

ERL Marketing Intl. FZE

ERL Thailand P. Ltd

Grand Total

(1,935.00) (1,935.00) Loan repayment 1,835.00 2,971.00 - 4,806.00 (100.00) (1,521.33) (1,621.33) Interest on Loan borrowed - - (85.95) (85.95)

5 Directors remuneration 48.00 48.00 (5.72) (5.72)

b) Details of outstandings in respect of Related Parties (in Rupees)

Rs. Lakhs S.No.

Names of Related Parties Outstanding as on

Maximum Amount

Outstanding as on

Maximum Amount

31/03/2013 due during the year


1 Eswaran & Sons Engineers Ltd.

NIL 1,835.00 Cr 1,835.00 Cr 1,935.00 Cr

2 Easun Mr Tap Changers P Ltd NIL NIL NIL NIL 3 Easun Products of India P Ltd 795.45 Cr 1979.36 Cr 50.23 Cr 50.23 Cr 4 Sowraj Investment P Ltd 3365.76 Cr 3365.76 Cr NIL NIL 5 ERL Phase Power

Technologies Ltd 136.63 Cr 195.52 Cr 86.89 Cr 100.76 Dr

6 ERL International Pte Ltd 583.30 Dr 586.85 Dr 422.49 Dr 5,578.69 Dr 7 ERL Marketing International

FZE 410.59 Dr 557.92 Dr 98.78 Dr 390.21 Cr

8 ERL Thailand P. Ltd NIL 72.29 Dr 370.91 Cr 443.20 Cr 9 Switchcraft Ltd NIL NIL NIL NIL 10 Switchcraft Gmbh 98.40 Dr 263.91 Dr 52.54 Dr 92.34 Dr 11 Directors :

Hari Eswaran 19.99 Cr 19.99 Cr 19.99 Cr 19.99 Cr Raj H Eswaran 5.32 Cr 5.32 Cr 5.32 Cr 5.32 Cr Dr W S Jones 3.03 Cr 3.03 Cr 3.03 Cr 3.03 Cr Rakesh Garg 5.64 Cr 5.64 Cr 5.64 Cr 5.64 Cr J D N Sharma NIL NIL NIL NIL

28. Employee Stock Option Scheme

a) During the year 2010-11 the Compensation Committee has granted 1,97,245 options to its senior employees and non-promoter directors. The options granted vest over a period of 1 to 2 years; and can be exercised over a maximum period of 6 months from the date of vesting. The difference between the market price of the share underlying the value of options granted on the date of grant and the exercise price of the option are expensed over the vesting period as per the SEBI guidelines.

b) Method Used for Accounting for Share Based Payment Plan: The Company has used Intrinsic Value Method to account for the compensation cost of stock option to employees of the Company. Intrinsic Value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option.

c) Employees' Stock Options Details as on the Balance sheet Date are :

Particulars 31/03/2013 31/03/2012 No. of Shares

Weighted Average Exercise

Price(Rs.)

No. of Shares

Weighted Average Exercise

Price(Rs.)Outstanding at the beginning of the year 135,172 101 197,245 101Granted during the year - Nil - NilForfeited during the year - Nil - NilExercised during the year - Nil 35,409 101Expired during the year 135,172 101 26,664 101Outstanding at the end of the year - 101 135,172 101Exercisable at the end of the year - 101 67,586 101 The shares expired during the year were exercisable at the market value of Rs.125.75 fixed as on 28th September 2010 and none of the option holders exercised their options. There is no impact on net income and earning per share for the financial year.

88

29. Contingent Liabilities and Commitments

Rs. Lakhs A. Contingent Libilities 2013 2012 (a) Letters of Credit opened by Bank for purchase of raw

materials and components 2,728.26 3,736.97

(b) Bills Discounted with bank 70.70 39.84 (c) Counter Guarantee given to bankers in respect of Guarantees

given by them 17,002.08 14,183.85


1,253.66 -

(d) Bonds executed in favour of President of Inda for import of material at concessional rate of duty

8.95 8.95

(e) Sales effected under CST - liability towards submission of C Forms

2,735.04 2,785.36

(f) Disputed amounts of Income Tax Assessment year 2001-02 - Paid 30.02 30.02 2003-04 - Paid 47.85 47.85 2004-05 - Paid 26.13 26.13 2005-06 - Paid 70.28 70.28 2006-07 - Paid 55.42 55.42 2008-09 - Paid 306.33 306.33 2010-11 - Unpaid 178.18 -

(g) Disputed amounts of Sales Tax, Karnataka for the FY 2007-08 paid

63.65 63.65

(h) Disputed amounts of Sales Tax, Karnataka for the FY 2008-09 paid

41.78 41.78

(i) Disputed Customs Duty paid under protest 66.38 66.38 (j) Disputed VAT Demand of West Bengal for FY 2009-10 -

Unpaid 7.99 7.99

(k) Disputed amount of provident fund 59.37 - B. Capital Commitment (a) Estimated amount of capital commitment on account of

Fixed Assets 470.30 695.21

30. Other Income includes an amount of Rs.426.24 lacs being the gain on surrender of Currency swap

entered into with Standard Chartered Bank.

31. During the financial year the Company has sold land at Jigani for Rs.1800 lacs based on an agreement to sale and handing over of possession to the buyer pending registration of sale deed. The Company has recognised a profit of Rs.1747.12 lacs towards such sale.

32. The Company has incurred expenditure aggregating to Rs.153.39 lakhs during the year (Rs.168.96

lakhs) on development of products. The expenditure has been capitalised and carried in the financial statements under the head Intangible Asset Product Development as on 31st March 2013. Based on the process of establishing the technical and economic feasibility of the product, the management is confident that the products developed would be commercially viable and there is no uncertainty regarding the establishment of feasibility of the product. Management believes that the expenditure capitalized is in the nature of development costs and can be capitalized as per AS 26 " Intangible Assets".

33. In respect of company’s operations which includes execution of the turnkey projects. These turnkey

projects significantly involve supply of equipment dealt with by the company in the ordinary course of operations. The activities that are additionally carried out while executing the turnkey projects are in the nature of civil construction and erection services which are significantly less when compared with the overall project value. No information is furnished in terms of segment reporting in as much the project execution essentially involves supply of Transmission and Distribution equipment manufactured by the company carrying similar risks and rewards which are not different from main products.

89

34. Personnel expenses and other expenses are net off recovery of overheads from direct and indirect overseas subsidiaries amounting to Rs. NIL (Rs.188.17 lakhs) and net off product development expenses Rs.153.39 lakhs (Rs.168.96 lakhs).

35. Reconciliation of Excise and Service Tax Records / VAT Records with the Financial Records are under

Progress. Adjustments if any which may arise are not ascertainable and would be carried out in the Books upon completion of Reconciliation.

36. During the Year the company has completed installation and commenced production from 01.07.2012 in

the new facility at Harohali. Company has capitalised an amount of Rs.6277.06 lacs towards the project including preoperative expenses of Rs.1771.11 lacs comprising of (a) Interest and Bank Charges Rs.1,246.41 lacs (b) Proto type development Rs.214.38 lacs (c) Employee expenses Rs.104.85 lacs and (d) Other expenses Rs.205.47 lacs.

37. Trade Receivables includes an amount of Rs.731.15 lacs being the Liquidated Damages recovered by

some customers. The Company is in the process of recovering the said amount and pending recovery, no provision is considered in the accounts towards Liquidated Damages.

38. Trade Receivables includes an amount of Rs.160.91 lacs being the outstanding from Foreign Debtors for

more than 1 Year. The Company is in the process of getting necessary approval from Reserve Bank of India towards extension of time limit for collection.

39. The Company has made an investment of Rs.15502.10 lacs in its wholly owned subsidiary at Singapore. Considering the long term prospective and future plans by the management, no provision towards impairment of investment has been.

40. Expenditure incurred on account of borrowing costs amounting to Rs.206.76 lakhs (Rs.593.81 lakhs) is capitalized towards new projects.

41. The Ministry of Corporate Affairs (MCA) vide Para 46 of AS11 has relaxed the requirement of the

immediate debit / credit of Foreign exchange translation differences on long term foreign currency monetary items to the Statement of Profit & Loss till 31st March 2020. Further the MCA inserting a new para 46A in AS11 allowed Companies to defer foreign exchange translation differences on long term foreign currency monetary items for entitites which had not opted for such relaxation earlier. The Company during the financial year has opted for the relaxation as given in Para 46A and has deferred an amount of Rs.721 lacs being the foreign exchange difference on long term external commercial borrowing from Standard Chartered Bank. The amount would be written-off over the period of 3 years, being the loan tenure.

42. Operating Lease

The Company has entered into operating lease arrangements for its office facilities. These leases are for a period ranging from 1 to 5 years with an option to the Company for renewing at the end of the initial term. Rental expenses for operating leases included in the income statement for the year is Rs.117.86 lakhs (Rs.89.81 lakhs) The future minimum lease payments for non-cancellable operating leases are

Rs. Lakhs Break-up of dues 2013 2012

Within one year 27.30 33.92 Due in a period between 1 to 5 years NIL NIL Due after 5 years NIL NIL

43. Financial Lease

The company has acquired Vehicles on Hire rental basis; the minimum hire rentals outstanding as of 31st March 2013 in respect of these assets are as follows:

Rs. Lakhs Break-up of dues Total

minimum Hire Rentals Outstanding

Future Interest on

Outstanding

PV of Minimum

Hire rentals

Within one year 6.39 0.67 5.72 Later than one year - - - Total 6.39 0.67 5.72

90

44. Valuation of Imports of CIF Basis


Components and Spare parts including in transit 3,701.58 7344.93

45. Expenditure in Foreign Currencies Rs. Lakhs

On account of: 2013 2012 Travelling expenses and others 43.36 44.73 46. Earnings in Foreign Exchange on account of Export on

Rs. Lakhs FOB Value Basis 528.64 2749.79

47. Value of Raw Materials, Spare Parts and Components Consumed


2013 2012

Value Rs. % to Total Consumption

Value Rs. % to Total Consumption

Indigenous 13,551.46 80.88 14,671.81 68.93 Imported 3,203.90 19.12 6,612.73 31.07 Total 16,755.36 100.00 21,284.54 100.00

48. Earnings Per Share

The earnings considered in ascertaining Earning per share comprise the profit after tax. The number of shares used in computing Basic Earning per share is the weighted average number of shares outstanding during the year as follows:


Profit after tax 12.29 930.03 Number of Weighted average equity shares

Basic 20,807,014 20,789,310 Effect of dilutive equity shares equivalent

Share Warrants Outstanding - 2,000,000 Foreign Currency Convertiable Bond - 394,500

20,807,014 23,183,810 Face Value of Shares 2.00 2.00 Earings per share before exceptional items

Basic 0.06 4.47 Diluted 0.06 4.01

Earings per share after exceptional items Basic 0.06 4.47 Diluted 0.06 4.01

49. Derivative Instruments and Unhedged Foreign Currency Exposure Rs. Lakhs

Particulars Currency 31-Mar-13 31-Mar-12 Purpose Buy USD 60.00 175.00 Hedge of

ECB Loan Payable

Unhedged Foreign Currency Exposure

Rs. Lakhs Particulars Currency 31-Mar-13 31-Mar-12

ECB Loan USD 75.00 -

Particulars Currency 31-Mar-13 31-Mar-12 Payable AUD 0.34 0.20 Payable CHF - -Payable EURO 0.01 -

91

Particulars Currency 31-Mar-13 31-Mar-12 Payable GBP 0.27 0.11 Payable SGD - -Payable USD 27.74 38.04 Receivable AUD 0.19 0.17 Receivable EURO 2.17 0.28 Receivable GBP 0.21 0.55 Receivable THB - 257.63 Receivable USD 14.70 13.52 Advance Receivable USD 2.88 4.73

50. Confirmation of balance has not been obtained from some of the creditors, debtors and to certain parties

to whom the Company has given advances.

51. The company is engaged in power transmission and distribution segment and the same is being reported Per our Report of even date annexed For and on behalf of Board of Directors For R SUBRAMANIAN & CO.


Chartered Accountants Chartered Accountants Managing Director Director Firm Regn No : 004137S Firm Regn No : 000511S R Subramanian N Sri Krishna K N Nagesha Rao Partner Partner Secretary and VP (Corporate Finance)Membership No: 8460 Membership No: 26575 Place: Chennai Date : 27th June 2013

92

CONSOLIDATED FINANCIAL STATEMENTS

Auditor’s Report on the Consolidated Financial Statements To the Board of Directors of Easun Reyrolle Limited We have examined the accompanying consolidated financial statements of Easun Reyrolle Limited (“the Company”) and its subsidiaries, which comprise the consolidated Balance Sheet as at March 31, 2013, and the consolidated Statement of Profit and Loss and the consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Company in accordance with accounting principles generally accepted in India. This includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit subject to our observations mentioned under ‘Other Matters’, in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Other Matter a. We have not audited the financial statements of step down subsidiaries ERL Canada, ERL Mint

(including its Associate) whose financial statements reflect total assets (net) of Rs.1,137.68 lacs as at 31st March 2013 and total Revenues of Rs.4,745.34 lacs and net cash flows amounting to Rs.(32.51) lacs. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us by the Company’s management, and our opinion, so far as it relates to these step-down subsidiaries including its associate is based solely on the report of their auditors.

b. We have not audited the financial statements of subsidiary and step down subsidiaries ERL International

Pte Limited, ERL Switchcraft Pte Limited, Switchcraft Europe Gmbh, ERL Switchcraft Hongkong, whose financial statements for the year ended 31st March 2013, reflect total assets (net) of Rs.19,113.97 lacs, total revenues of Rs.3,708.35 lacs and net cash flow amounting to Rs.(71.29) lacs. These financial statements have been consolidated solely based on management estimates and are not audited by any auditor. Our opinion is qualified in respect of this matter.

Opinion

93

In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors on the financial statements of certain step down subsidiaries including its associates, management accounts for certain subsidiaries and step down subsidiaries as stated in ‘Other Matters’, the consolidated financial statements prepared in accordance with requirements of Accounting Standard AS-21, Consolidated Financial Statements, and AS-23, Accounting for Investments in Associates in Consolidated Financial Statements notified pursuant to the Companies (Accounting Standard) Rules, 2006, give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the consolidated Balance Sheet, of the state of affairs of the Company as at March 31,

2013; b) in the case of the Consolidated Profit and Loss Account, of the loss for the year ended on that date; and c) in the case of the Consolidated Cash Flow Statement, of the cash flows for the year ended on that date. For R SUBRAMANIAN & CO For BRAHMAYYA AND CO Chartered Accountants Chartered Accountants Firm Regd. No. : 004137S Firm Regd. No. : 000511S R SUBRAMANIAN N. SRI KRISHNA Partner Partner Membership No: 8460 Membership No: 26575 Place: Chennai Date: 27th June 2013

94

Consolidated Balance Sheet as at 31st March, 2013


Note No.



I. EQUITY AND LIABILITIES (1) Shareholders’ funds (a) Share capital 2 416.14 416.14 (b) Reserves and surplus 3 19,661.62 19,565.86 (c) Money received against share warrants 2.4(b) - 668.80 20,077.76 20,650.80 (2) Non-current liabilities (a) Long-term borrowings 4 9,190.03 8,527.83 (b) Deferred tax liabilities (Net) 5 429.77 282.42 (c) Other Long term liabilities 6 1,175.14 640.40 (d) Long-term provisions 7 122.92 66.12 10,917.86 9,516.77 (3) Current liabilities (a) Short-term borrowings 8 10,552.31 7,981.59 (b) Trade payables 9 19,599.39 11,985.18 (c) Other current liabilities 10 3,599.59 6,512.67 (d) Short-term provisions 11 512.82 596.83 34,264.11 27,076.27 TOTAL 65,259.73 57,243.84

II. ASSETS (1) Non-current assets (a) Fixed assets (i)Tangible assets 12 10,688.33 5,264.41 (ii)Intangible assets 15,271.55 11,552.41 (iii) Capital Works in Progress - 2,783.90 25,959.88 19,600.73 (b) Non-current investments 13 - 6.28 (c) Foreign Currency Monetary Item Translation

Difference Account 721.00 -

(c) Long-term loans and advances 14 746.16 3,573.10 (d) Other Non current assets 15 3,322.54 2,042.01 30,749.58 25,222.11 (2) Current assets (a) Current investments 16 34.25 19.19 (b) Inventories 17 6,927.08 6,268.91 (c) Trade receivables 18 20,702.49 20,698.26 (d) Cash and Bank Balances 19 2,222.85 3,424.92 (e) Short-term loans and advances 20 4,317.58 1,384.64 (f) Other current assets 21 305.90 225.81 34,510.15 32,021.73 TOTAL 65,259.73 57,243.84

Significant Accounting Policies 1 The Notes referred to above form an integral part of the Financial Statements Per our Report of even date annexed For and on behalf of Board of Directors For R SUBRAMANIAN & CO. For BRAHMAYYA & CO. Raj H Eswaran Rakesh Garg Chartered Accountants Chartered Accountants Managing Director Director Firm Regn No : 004137S Firm Regn No : 000511S R Subramanian N Sri Krishna K N Nagesha Rao Partner Partner Secretary and VP (Corporate Finance) Membership No: 8460 Membership No: 26575Place: Chennai Date : 27th June 2013

95

Consolidated Statement of Profit and Loss for the year ended 31st March, 2013 Rs. Lakhs

Particulars

Note

No.



1 Revenue from operations 22 28,816.77 32,214.43 2 Other income 23 2,580.17 2,307.22 3 Total Revenue (1+2) 31,396.94 34,521.65 4 Expenses (1) Cost of Materials Consumed 24 17,108.21 22,017.26 (2) Change in Inventory 25 714.82 (233.67) (3) Employee benefits expense 26 4,790.87 4,671.70 (4) Finance costs 27 2,342.49 2,207.50 (5) Depreciation and amortization expense 2,302.07 1,464.06 (6) Other expenses 28 4,306.81 4,821.90 Total expenses 31,565.27 34,948.75 5 Profit before exceptional and extraordinary items and

tax (3-4) (168.34) (427.10)

6 Exceptional items - - 7 Profit before extraordinary items and tax (5-6) (168.34) (427.10) 8 Extraordinary Items - - 9 Profit before tax (7- 8) (168.34) (427.10) 10 Tax expense: (1) Current tax 41.65 250.00 (2) Deferred tax 147.35 135.87 (3) MAT Credit Availment - (87.72)

11 Profit after tax for the year (9-10) (357.34) (725.25) (-) Minority Interest 27.62 809.14 (+) Minority Interest Reserve (27.62) (809.14) (-) Share of Loss of Associates 24.34

12 Profit after tax for the year (357.34) (700.91) 13 Earnings per equity share (in Rs) (1) Basic (Face Value Rs.2 each) (1.72) (3.37) (2) Diluted (Face Value Rs.2 each) (1.72) (3.37)




96

Consolidated Cash Flow Statement for the year ended 31st March, 2013

Pursuant to Clause 32 of the Listing Agreement Rs. Lakhs

Particulars As at 31.03.2013

As at 31.03.2012

A Cash flow from operating activities: Net profit before tax and extraordinary items (168.34) (427.10) Adjusted for: Depreciation 2,302.07 1,464.06 (Profit)/Loss on Sale of Assets (1,749.35) (829.37) Interest Expense 2,342.49 2,384.32 Income from Mutual Funds - (364.00) Interest Income (219.51) (246.87) Unreliased Loss/ (Gain) on FCCB - 255.60 Transfer to ESOP Amortization Expenses - 17.81 Unrealised Forex fluctuations in Drs and Crs (90.90) (77.21) Operating profit before Working Capital changes 2,416.46 2,177.24 Loans, Advances, Trade and other receivables (1,380.76) 353.83 Inventories (658.17) 2,615.79 Trade Payables and other Current Liabilities 5,208.66 (3,141.33) Unrealised foreign exchange fluctuation 825.06 922.85 Cash generated from operations 6,411.26 2,928.38 Direct Taxes (85.69) (107.74) Net cash from operating activities 6,325.57 2,820.64

B Cash flow from Investing activities: Purchase of Fixed Assets (11,429.82) (7,382.23) Sale of Investment In Mutual Fund - 5,264.43 Dividend income from mutual funds - 364.00 (Increase) / Decrease in capital work in progress 2,783.90 (1,148.91) Interest received 219.51 246.87 Margin Money Accounts and Deposits 1,031.77 (2,282.59) Sale of Fixed Assets 1,840.48 970.00 Decrease / (Increase) in Investment - 301.61 Net cash from Investing activities (5,554.17) (3,666.82)

C Cash flow from financing activities: Issue of Share Capital - 0.71

FCCB Redemption (1,040.75) - Increase in Term Loans 662.20 3,127.14 Increase / (Decrease ) in Short Term Borrowings 1,849.72 (1,558.46) Dividend paid (41.61) (290.66) Interest paid (2,342.49) (2,384.32) Net Cash from financing activities (912.93) (1,105.59) Increase / (Decrease) in cash and cash equivalent (141.53) (1,951.77) Cash and cash equivalent at the beginning of the year 390.63 2,342.40 Cash and cash equivalent at the close of the year 249.10 390.63



Per our Report of even date annexed For and on behalf of Board of Directors For R SUBRAMANIAN & CO. For BRAHMAYYA & CO. Raj H Eswaran Rakesh Garg Chartered Accountants Chartered Accountants Managing Director Director Firm Regn No : 004137S Firm Regn No : 000511S R Subramanian N Sri Krishna K N Nagesha Rao Partner Partner Secretary and VP (Corporate Finance) Membership No: 8460 Membership No: 26575 Place: Chennai Date : 27th June 2013

97

1. Significant Accounting Policies: a) Basis of Accounting

The financial statements are prepared under the historical cost conventions in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued under the Companies (Accounting standards) Rules 2006 and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company. Revenues are recognized and expenses are accounted on their accrual, including provisions / adjustments for committed obligations and amounts determined as payable or receivable during the year.

b) Revenue recognition Sale of goods and services is recognized on dispatch to customers or when the service has been provided. Income from turnkey projects is recognized on the Gross Billing exclusive of applicable sales/service taxes and based on work certified. Interests on deposits are recognized on time proportion basis taking into account the amount of deposit and interest. Export incentives such as DEPB benefits are recognized on exports of goods. In respect of subsidiary company, Interest income is recognized on effective interest rates.

c) Translation of Foreign Currency Statements The Translation of foreign operations is done in accordance with Accounting Standard 11 (revised) “The Effects of Changes in Foreign Exchange Rates”. Accordingly, the financials of non-integral operations has been translated at the rates prevailing on the date of Balance Sheet. The resulting exchange difference arising on conversion are accumulated under “Foreign Currency Translation Reserve”.

d) Principles of Consolidation (i) Consolidated Financial Statements related to Easun Reyrolle Limited, Chennai and its

Subsidiary companies. (ii) The Consolidated Financial Statements have been prepared on the following basis:

- The Financial Statements of the Company and its subsidiary (Group) have been prepared on a line by line consolidation by adding the Book value of like items of Assets, Liabilities, Income and Expenses as per respective audited financial statements of the respective companies in accordance with Accounting Standard 21 - “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India.

- The Consolidated Financial Statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the Company’s individual financial statement.

- Intragroup balances, intragroup transactions and resulting unrealised profits have been eliminated.

iii) Minority interests are that part of the net results of operations and of net assets of a subsidiary

attributable to interest which are not owned directly or indirectly by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries identifiable assets and liabilities at the date of acquisition by the Group and the minorities’ share of changes in equity since the date of acquisition, except when the losses applicable to the minority interests in a subsidiary exceed the minority interests in the equity of that subsidiary. In such cases, the excess and further losses applicable to the minority interests are attributed to the equity holders of the Company, unless the minority interests have a binding obligation to, and are able to, make good the losses. When that subsidiary subsequently reports profits, the profits applicable to the minority interests are attributed to the equity holders of the Company until the minority interests’ share of losses previously absorbed by the equity holders of the company have been recovered.

iv) The Subsidiary Companies considered in the Consolidated Financial Statement are:

Name of the Company

Country of Incorpora-

tion

Proportion of ownership interest /

voting power

Reporting date

Difference in

reporting date

Remarks

1. ERL International Pte Ltd.

Singapore 100% 31-Mar-13 - Direct subsidiary

2. ERLPhase Power Technologies Ltd

Canada 100% 31-Mar-13 - Subsidiary of ERL International Pte. Ltd

98

Name of the Company

Country of Incorpora-

tion

Proportion of ownership interest /

voting power

Reporting date

Difference in

reporting date

Remarks

3. ERL Marketing International FZE

Sharjah, UAE

100% 31-Mar-13 - Subsidiary of ERL International Pte. Ltd

4. ERL Switchcraft Pte Ltd

Singapore 80% 31-Mar-13 - Subsidiary of ERL International Pte. Ltd

5. Switchcraft Limited

Hongkong, China

80% 31-Mar-13 - Subsidiary of ERL Switchcraft Pte. Ltd

6. Switchcraft Europe GMBH

Germany 80% 31-Mar-13 - Subsidiary of ERL Switchcraft Pte. Ltd

v) The group applies a policy of treating transactions with minority interest as transactions with

parties external to the Group. Disposals to minority interests, which result in gains and losses for the Group, are recorded in the income statement. The difference between any consideration paid to minority interests for purchases of additional equity interest in a subsidiary and the incremental share of the carrying value of the net assets of the subsidiary is recognized as goodwill.

vi) The Financial Statements of the Subsidiaries used in the Consolidation are drawn up to the same

reporting date as that of the Company i.e. 31st March. vii) The loss attributable to the Minority Shareholders is restricted to their Equity and the excess

loss has been provided in the books of accounts.

e) Fixed assets, Intangibles and Depreciation - Goodwill acquired in a business combination is initially measured at cost being the excess of

the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities at date of acquisition.

- Intangible Asset relating to Deferred Development expenditure of Subsidiary will be amortised over the estimated useful life upon completion of the individual projects.

- Depreciation is provided under Straight Line method as per the amended Schedule XIV of the Companies Act, 1956 or based on the management’s estimate of the useful lives of the assets. In the case of subsidiary companies depreciation is calculated on the straight-line method to write off the cost of the assets over their estimated useful lives.

f) Other Significant Accounting Policies

These are set out in the Notes to the Accounts of the Financial Statements of the Company and its Subsidiary.

g) Inventories In the case of subsidiary company, Raw materials and supplies are stated at the lower of cost and replacement cost. Cost is primarily determined on First-in first-out basis. Finished goods are stated at lower of average cost and net realizable value.

h) Taxation Current taxes is determined as the amount payable in respect of taxable income for the period. Deferred tax is recognized subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal of in one or more subsequent periods. In the case of subsidiary companies, tax liability is recognized in accordance with the applicable local laws.

i) Provisions In the case of Subsidiary companies, provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects the current market assessment of the time value of the money and the risks specific to the obligation. The increase in provision due to passage of time is recognized in the income statement as interest expense.

99

2. Share Capital Rs. Lakhs



Authorised Share Capital: 7,50,00,000 (75,00,000) Equity Shares of Rs.2/- each 1,500.00 1,500.00 50,00,000 (50,00,000) Preference Shares of Rs.10/- each 500.00 500.00 Issued Share Capital: 2,08,07,864 (2,08,07,864) Equity Shares of Rs.2 each 416.16 416.16 Subscribed and Paid up Capital: 2,08,07,014 (2,08,07,014) Equity Shares of Rs.2 each fully paid up 416.14 416.14

Total 416.14 416.14

2.1 Reconciliation of number of shares Rs. Lakhs

Particulars As at 31 March 2013 As at 31 March 2012 No. of Shares

held Amount No. of

Shares held Amount

Balance at the beginning of the year 20,807,014 416.14 20,771,605 415.43 Add: ESOP shares issued during the year - - 35,409 0.71 Less: Shares bought back during the year - - - - Balance at the end of the year 20,807,014 416.14 20,807,014 416.14

2.2 Rights, preferences and restrictions attached to shares

Equity Shares: The Company has one class of equity shares having a par value of Rs 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the board is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

2.3 Details of equity shares held by shareholders holding more than 5% shares of the aggregate shares in the Company

Particulars As at 31 March 2013 As at 31 March 2012 No. of

Shares held % of

Holding No. of

Shares held % of

Holding Easun Products of India Pvt Ltd 2,267,557 10.90% 2,267,557 10.90% Easun Engineering Company Ltd 1,632,500 7.85% 1,632,500 7.85% Power Ventures Holdings (India) Pvt. Ltd., 1,628,088 7.82% 1,628,088 7.82% Sowraj Investments Pvt Ltd 1,458,060 7.01% 1,458,060 7.01% Sundaram Mutual Fund A/C Sundaram Smile Fund 1,102,257 5.29% 788,216 3.79%

2.4 Shares Reserved for issue under Options and Contracts/Commitments for sale of Shares

a) Employee Stock Option Scheme During 2009-10, the Company established "Easun Reyrolle Employee Stock Option Plan 2009" under which 10,00,000 options have been allocated for being granted to the employees and non promoter directors. The Company has obtained in-prinicple approval from National Stock Exchange Limited, Mumbai (NSE) and Bombay Stock Exchange Limited, Mumbai (BSE) for listing upto a maximum of 10,00,000 shares pursuant to exercise of options granted under the Scheme. Each option comprises one underlying Equity Shares of Rs.2/- each. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999. As per the Scheme, the Compensation Committee grants options to senior employees and non promoter directors. The options are granted at a price, which shall not be less than the par value of equity shares of the Company and shall not be more than the Market price as defined in the Guidelines.

b) Issue of Share Warrants During 2010-11, the Company had issued 20,00,000 Convertible Equity Warrants at Rs.133.76 per warrant in terms of the extant guidelines of SEBI on preferential issue. The Company has received Rs.6,68,80,000 towards 25% of the warrant as advance money, each warrant was

100

convertible into one equity shares of Rs.2 each within 18 months from the date of allotment, as the same was not executed, amount so received have been forfeited during the year.

3. Reserves and Surplus Rs. Lakhs



Capital Reserve Opening Balance 45.54 45.54 Add: Amount transferred on Share warrant 668.80 - Less: Deductions - - Closing Balance 714.34 45.54

Government Subsidy 40.42 40.42 Securities Premium Account

Opening Balance 10,884.47 10,842.25 Add: Amount transferred on allotment of ESOPs - 42.22 Less: Premium on redemption of FCCB 1,040.75 - Closing Balance 9,843.72 10,884.47

General Reserve Opening Balance 9,546.39 9,446.39 Add: Transfer From Statement of Profit and Loss - 100.00 Less: Deductions - Closing Balance 9,546.39 9,546.39

Employee Stock Options Outstanding Account Opening Balance - 48.82 Add: ESOP Granted - - Less: Transfer to Share Premium A/c on options exercised - 42.22 Less: Transfer to ESOP Amortisation expenses on expired

options - 6.60

Closing Balance - -Foreign Currency Translation Reserve

Opening Balance 836.79 (86.06) Add: Reserve for the year 825.06 922.85 Closing Balance 1,661.85 836.79

Surplus in Statement of Profit and Loss Opening Balance (1,787.75) (938.50) Add: Profit for the year (357.35) (700.89) Less: Proposed dividend - 41.61 Less: Tax on Proposed dividend - 6.75 Less: Transfer to General Reserve - 100.00 Less: Minority Interest 27.62 809.14 (2,172.72) (2,596.89) Less: Minority Interest Reserve (27.62) (809.14)

(2,145.10) (1,787.75) Total 19,661.62 19,565.86

4. Long Tern Borrowings



2012 Secured Loans Foreign Currency Term loans From Banks

Standard Chartered Bank External Commercial Borrowing 2,739.13 3,389.96 DBS Bank External Commericial Borrowing 2,033.66 2,704.04 External Commercial Borrowings 4,772.79 6,094.00

Rupee Term Loans From Banks Axis Bank 287.48 515.60

Hire Purchase Loan Long Term Maturities of vehicle loans - 8.70

Total (A) 5,060.27 6,618.30

101



Unsecured Loans Sales Tax Deferral Scheme (Refer 10.1) - 74.53 Intercorporate Deposits 4,129.76 1,835.00

Total (B) 4,129.76 1,909.53 Total (A+B) 9,190.03 8,527.83

4.1 The details of Long Term Borrowings are as follows

Rs. Lakhs Particulars Repaymen

t Start Date

O/s Amt as on 31st

March 2013

Current Maturitie

s

Interest Rate

Instalment Amount

Rupee Term Loans Axis Bank Ltd- (Repayable in 16 Quarterly instalments)

Feb-12 475.00 172.73 13.25% 43.18

External Commercial Borrowings (Fully Un-Hedged)

Standard Chartered Bank (Repayable in 8 Half yearly Instalments) O/s as on 31.03.13 (USD - 7.5 million)

Aug-12 4,109.46 1,370.33 4.35% 685.17

External Commercial Borrowings (Fully Hedged)

DBS Bank Ltd (Repayable in 10 Half yearly Instalments) O/s as on 31.03.13 (USD - 6 million)

Aug-12 2,711.02 677.36 11.60% 338.68

Total 7,295.47 2,220.42 1,067.03

4.2 Unsecured Loans a) During the year 2007-08 the company raised funds through issue of Zero Coupon Foreign currency

Convertible Bond aggregating to USD 35 million (Rs.13,846 lakhs) with an option to the investor to convert the FCCBs into equity shares of the company at an initial conversion price of Rs.400 per share at a fixed rate of exchange on conversion Rs.39.45=USD 1, at any time after December 5, 2007 and prior to November 28, 2012 and 34,51,875 shares would be issuable on November 28, 2012 unless previously converted, redeemed, repurchased and cancelled, the balance FCCBs redeemed on December 05, 2012 at 142.56% of their principal amount. Out of the aforesaid FCCBs, there were no FCCBs converted to equity shares as at the year end.

b) During the year 2009-10, the company has bought back and cancelled 310 Nos of 5 years FCCB of the face value of USD 100,000 each, as per the notification of Reserve Bank of India, at a discount to the face value. Consequent to this the company is absolved of its liability towards the bond holders whose bonds are cancelled.

c) During the financial year, the Company has redeemed the balance 40 numbers of 5 years Foreign Currency Convertible Bonds of the face value of USD 100,000 each with premium of 42.56%. Consequent to this, the Company is fully obsolved of its liability towards the bond holders to whom Foreign Currency Convertible Bonds were issued.

5. Deferred Tax Liabilities



2012 Deferred Tax Liabilities - On account of Timing differences related to Fixed Assets 517.37 360.27 Deferred Tax Assets - Disallowances under Income Tax Act 1961 87.60 77.85

Total 429.77 282.42

102

6. Other Long Term Liabilities Rs. Lakhs

Particulars April 2012- March 2013


Trade payables - Other Enterprises 1,175.14 640.40

Total 1,175.14 640.40 7. Long Term Provisions



2012 Provision for employee benefits

- Leave Encashment 67.41 66.12 - Gratuity 55.51

Total 122.92 66.12 8. Short – term Borrowings



2012 A. Secured From Banks - Cash Credits facilities availed 10,162.39 7,589.88 - Buyers credit 389.92 391.71

Total 10,552.31 7,981.59 9. Trade Payables



2012 Micro, Small and Medium Enterprises 302.87 409.66 Other Enterprises 19,296.52 11,575.52

Total 19,599.39 11,985.18 10. Other Current Liabilities



2012 Current Maturities of Long Term Borrowings (a) Foreign Currency Term loans from Banks

Standard Chartered External Commericial Borrowing 1,370.33 1,130.00 DBS Bank External Commericial Borrowing 634.35 677.36

(b) Rupee Term Loans from Banks Axis Bank 181.32 234.40

Current Maturities of Long Term Debt (a+b) 2,186.00 2,041.76 Sales Tax Deferral Scheme (Refer Note 10.1) 74.53 - Current Maturities of Hire Purchase Loans 6.39 13.84 Current Maturities of FCCB's - 2,061.20Interest Accrued and not due on borrowings 43.01 82.49 Interest Accrued and due on borrowings 6.20 8.30 Other Payables

Employee Related 186.30 80.32 Expenses, Service & Contract Payables 396.03 1,723.15 Unpaid Dividend Payable 37.41 41.92 Statutory Dues Payables 663.72 459.69

Total 3,599.59 6,512.67 10.1 The company has been sanctioned to avail interest free sales tax deferral scheme for an aggregate

amount of Rs.74.53 lakhs by the department of Sales tax, Government of Tamilnadu. The underlying deferred sales tax payable by the company from the financial year commencing from 2013-14.

103

11. Short Term Provisions



2012 Provision for Employee Benefits

Leave Encashment 8.17 8.89 Gratuity 9.12

Other Provisions Warranty Claim Reserve 170.79 188.15 Provision for FBT (Net of advance tax) 9.21 9.19 Dividend Payable - 41.61 Other provisions 315.53 348.99

Total 512.82 596.83

104

12. Fixed Assets

Rs. Lakhs Particulars Gross Block Depreciation Net Block

As at 1-Apr-12

Additions Deductions As at 31-Mar-13

As at 1-Apr-12

For the year Deletion As at 31-Mar-13

As at 31-Mar-13

As at 31-Mar-12

(a) Tangible Assets Land 55.19 - 52.86 2.33 - - 2.33 55.19 Land – Leasehold 998.98 - 998.98 - - 998.98 998.98 Land - Hosur Residential Plots 4.29 - 4.29 - - 4.29 4.29 Buildings 941.96 3,234.99 4,176.95 212.67 111.77 324.44 3,852.51 729.29 Buildings - Leasehold 5.26 - 5.26 1.81 0.18 1.99 3.27 3.45 Plant and Machinery 713.63 2,585.03 3,298.66 303.43 116.89 420.32 2,878.33 410.19 Electrical installation 267.67 304.20 571.87 160.76 57.77 218.53 353.34 106.91 Office equipments 488.07 22.65 510.72 342.05 21.55 363.60 147.12 146.02 Furniture 507.04 78.81 585.85 202.45 33.81 236.26 349.59 304.59 Vehicles 132.11 26.00 12.43 145.68 104.55 14.99 12.43 107.11 38.57 27.56 Computers 776.67 43.00 819.67 257.89 163.11 421.00 398.67 518.78

Research And Development Buildings 173.23 173.23 38.51 5.79 44.30 128.93 134.72 Plant and Machinery 445.94 445.94 135.30 21.10 156.40 289.54 310.64 Electrical installation/Fittings 27.01 27.01 20.06 3.17 23.23 3.78 6.95 Office equipments 88.64 88.64 83.51 3.84 87.35 1.29 5.13 Computers 1.46 0.42 1.88 0.57 0.62 1.19 0.69 0.89 . Subsidiary Assets Equipments 1,423.21 61.11 1,484.32 314.74 275.69 590.43 893.89 1,108.47 Furniture & Fixtures 120.12 13.44 106.68 22.86 0.46 1.39 21.93 84.75 97.27 Office Equipments 312.45 28.47 283.98 31.59 4.56 36.15 247.83 280.86 Vehicles 39.66 3.49 43.15 25.41 8.58 1.48 32.51 10.64 14.24 Total 7,522.57 6,359.70 107.20 13,775.07 2,258.15 843.88 15.30 3,086.74 10,688.33 5,264.41

. (b) Intangible

Technology Know-how 550.44 550.44 547.17 3.27 550.44 0.00 3.27 Non-compete fees 100.00 100.00 100.00 100.00 - - Intangiable Asset - Product level 719.66 285.40 1,005.06 296.20 155.58 451.78 553.28 423.46 Computer Software 11.69 11.69 3.71 3.90 7.61 4.08 7.98 . Subsidiary Assets Goodwill 3,129.36 91.13 3,038.23 - - - 3,038.23 3,129.36 Computer Software 216.45 77.56 294.01 78.55 50.00 128.55 165.46 137.90 Intellectual property rights 4,787.07 697.04 5,484.11 - - - 5,484.11 4,787.07 Intangible Development costs 4,624.46 4,208.45 8,832.91 1,561.08 1,245.44 2,806.52 6,026.39 3,063.38 Total 14,139.12 5,268.45 91.13 19,316.44 2,586.71 1,458.19 - 4,044.90 15,271.55 11,552.41

105

Particulars Gross Block Depreciation Net Block As at

1-Apr-12 Additions Deductions As at

31-Mar-13 As at

1-Apr-12 For the year Deletion As at

31-Mar-13 As at

31-Mar-13 As at

31-Mar-12 . (c) Capital Work in Progress

Capital Work in progress (including project related expenditure)

2,783.90 2,783.90 - - - - - - 2,783.90

Total 2,783.90 - 2,783.90 - - - - - - 2,783.90 .

Grand Total 24,445.59 11,628.15 2,982.23 33,091.51 4,844.86 2,302.07 15.30 7,131.64 25,959.87 19,600.73 Previous Year (15,656.09) (9,396.66) (608.17) (24,444.58) (3,848.35) (1,464.06) (467.55) (4,844.86) (19,599.72) (11,807.74)

106

13. Non-current Investments



2012 Non Trade Investments - Unquoted (At Cost) Investment in Associates - 30.62 (-) Share of loss of associates - -24.34

Total - 6.28 Aggregate amount of : quoted investments : market value Aggregate amount of unquoted investments - 6.28 14. Long – term loans and advances



2012 Unsecured, Considered Good unless otherwise stated Capital Advances - 2,813.18 Security Deposits and Earnest Money Deposits 181.42 271.08 Prepaid Expenses 121.43 110.14 Other Deposits 25.18 23.44 Testing Charges to be amortised 18.31 33.27 Income Tax & TDS (Net) 399.82 321.99

Total 746.16 3,573.10 15. Other non-current assets



2012 Long Term Trade Receivables Unsecured, Considered Good 3,322.54 2,042.01

Total 3,322.54 2,042.01 16. Current Investments



2012 Traded - Quoted Other investments 34.25 19.19

Total 34.25 19.19 17. Inventory



2012 (Lower of Cost and estimated Net Realisable Value) Raw Materials and Components 3,935.00 3,828.59 Work In Progress 287.28 647.16 Finished Goods 1,342.70 950.54 Packing Materials 10.19 - Stock in Transit - Raw Materials 1,336.64 811.70 Stores and Spares 15.27 30.92

Total 6,927.08 6,268.91

107

18. Trade Receivables Rs. Lakhs



Unsecured, Considered Good unless otherwise stated Outstanding for a period exceeding six months 11,647.01 5,800.60 Other Receivables 9,055.48 14,897.66

Total 20,702.49 20,698.26 19. Cash and Bank Balances



2012 Cash and cash equivalents

Cash on Hand 193.54 20.87 Balances with banks in Current Accounts 55.56 369.76

Other Bank Balances* Bank Deposits with maturity more than 3 months but less

than 12 months 1,031.77 2,173.38

Balances in Earmarked Accounts Unpaid Dividend Accounts 37.82 42.63 Margin Money Deposits 904.16 818.28

Total 2,222.85 3,424.92 * Under lien with DBS Bank and Standard Chartered Bank

20. Short – term Loans and Advances

Rs. Lakhs Particulars As at 31st


March 2012 Advances recoverable in cash or in kind or for value to be received (Unsecured, Considered Good unless otherwise stated)

(a) Advance to suppliers 1,177.59 665.37 (b) Advance to Employees 64.66 47.76 (c) Rental Advance 73.37 70.08 (d) Prepaid Expenses 193.73 111.26 (e) Other Receivables 1,210.76 250.64 (f) VAT and CENVAT Credit (Net) 663.41 239.53 (g) Loans & Advances from related parties 934.06 -

Total 4,317.58 1,384.64 21. Other Current Assets



2012 (a) Interest Accrued on Short term deposit 18.11 10.69 (b) Interest Accured on Bank Guarantee Margin 287.79 215.12

Total 305.90 225.81 22. Revenue from Operations



2012 Sale of products (Refer Note 22.1) 26,962.54 32,992.12 Sale of services 562.52 1,438.38 Other operating revenues 2,614.07 1.71 30,139.13 34,432.21 Less: Excise duty 1,322.36 2,217.78

Total 28,816.77 32,214.43

108

22.1 Sale of Products (net of Excise Duty) comprises of the following Rs. Lakhs



Relays, Recorders and Control Panels 14,928.22 18,520.42 Meters 143.08 737.58 Switchgears and RMU's 2,475.10 2,213.46 Projects 8,093.77 9,240.13 Wind Energy Produced - 62.75

Total 25,640.18 30,774.34

23. Other Income Rs. Lakhs



Interest Income 219.51 246.87 Profit on Sale of Fixed Assets 1,749.35 829.37 Dividend Income from Mutual Fund - 364.00 Realisation of Debts written off in earlier years 8.44 2.36 Foreign Exchange Gains 426.00 401.01 Trade Incentives 18.94 7.14 Miscellaneous Income 157.93 456.47

Total 2,580.17 2,307.22

24. Cost of Material Consumed Rs. Lakhs



Opening Stock Raw Materials and Components 7,194.69 4,373.95 Reinstatement of Opening Inventory - 3,185.57

Add: Purchases 13,848.52 18,598.82 21,043.21 26,158.34 Less: Closing Stock

Raw Materials and Components 3,935.00 4,141.08 Total 17,108.21 22,017.26

25. Change in Work in Progress and Finished Goods



March 2012 Opening Stock

Finished Goods 1,839.55 1,093.64 Work in Progress 505.25 3,130.00 Reinstatement of Opening Inventory - (3,185.57)

(A) 2,344.80 1,038.07 Less: Closing Stock

Finished Goods 1,342.70 950.54 Work in Progress 287.28 321.20

(B) 1,629.98 1,271.74 Total (A+B) 714.82 (233.67)

26. Employee Benefits Expense



March 2012 Salaries and Wages 4,384.48 4,241.01 Contribution to provident and ESI funds 95.86 91.74 Gratuity 80.04 20.44 Leave encashment 0.57 26.11

109



Staff Welfare Expenses 229.92 292.40 Total 4,790.87 4,671.70

27. Finance Costs



March 2012 Interest Term Loans 781.70 339.09 Buyers Credit and Others 243.91 222.78 Working Capital Loans 1,148.69 899.43 Inter Corporate Deposits - 85.95 Other borrowing costs 168.19 660.25

Total 2,342.49 2,207.50

28. Other Expenses Rs. Lakhs



Consumption of Stores and Spares 145.36 242.70 Power & Fuel 89.70 72.81 Rent 365.90 343.04 Repairs to : Buildings 48.14 69.94

: Machinery 1.40 1.79 : Others 331.19 409.59

Insurance 103.83 97.25 Rates and taxes, excluding taxes on income 91.77 123.20 Travel and Conveyance Expenses 710.43 863.75 Postage, Telephone and Telegram 114.00 134.48 Selling Expenses 334.78 690.52 Audit Fees : Audit 15.00 15.00

: Tax matters 1.50 0.75 : For other services 16.26 17.90 : Out of Pocket Expenses 3.77 3.73

Professional Charges 266.85 354.47 Electricity Charges 27.48 27.61 Security Charges 54.35 48.01 Bad Debts 27.79 7.03 Advertisement Expenses 95.31 152.25 Printing & Stationery 87.30 98.43 Bank Charges 319.98 276.46 Tools Written off 15.91 21.11 Service Charges 19.78 41.36 Other expenses 1,019.03 708.72

Total 4,306.81 4,821.90 29. Disclosure of AS 18 for the Year 2012-13

a) Details of transactions during year 2012-13 Rs. Lakhs

Sl No


Engineers Ltd

Sowraj Investments

Easun Products of India P Ltd

Key Mgt Personnel

ERL Phase Power Technologies Ltd

Grand Total

1 Sale of Goods 447.74 - 447.74 (2.57) (2.57) 2 Purchase of Goods - - - 3 Rendering of Services - 4 Availing of Services - Reimbursement of Expenses - - (50.35) (50.35) Loan borrowed 3,353.50 4,195.00 7,548.50

110

Sl No


Engineers Ltd

Sowraj Investments

Easun Products of India P Ltd

Key Mgt Personnel

ERL Phase Power Technologies Ltd

Grand Total

(1,935.00) (1,935.00) Loan repayment 1,835.00 2,971.00 4,806.00 (100.00) (100.00) Interest on Loan borrowed - - (85.95) (85.95) 5 Directors remuneration 48.00 48.00 (5.72) (5.72)

b) Details of outstandings in respect of Related Parties

S.No

. Names of Related Parties Outstanding as

on Maximum Amount

Outstanding as on

Maximum Amount



1 Eswaran & Sons Engineers Ltd.

NIL 1,835.00 Cr 1,835.00 Cr 1,935.00 Cr

2 Easun Products of India P Ltd

795.45 Cr 1979.36 Cr 50.23 Cr 50.23 Cr

3 Sowraj Investment P Ltd 3365.76 Cr 3365.76 Cr NIL NIL 4 ERL Thailand P. Ltd NIL 72.29 Dr 370.91 Cr 443.20 Cr 5 Directors : Hari Eswaran 19.99 Cr 19.99 Cr 19.99 Cr 19.99 Cr Raj H Eswaran 5.32 Cr 5.32 Cr 5.32 Cr 5.32 Cr Dr W S Jones 3.03 Cr 3.03 Cr 3.03 Cr 3.03 Cr Rakesh Garg 5.64 Cr 5.64 Cr 5.64 Cr 5.64 Cr J D N Sharma NIL NIL NIL NIL

30. Contingent Liabilities and Commitments

Rs. Lakhs A. Contingent Libilities 2013 2012 (a) Letters of Credit opened by Bank for purchase of raw materials

and components 2,728.26 3,736.97

(b) Bills Discounted with bank 70.70 39.84 (c) Counter Guarantee given to bankers in respect of Guarantees

given by them 17,002.08 14,183.85


1,253.66 -

(d) Bonds executed in favour of President of Inda for import of material at concessional rate of duty

8.95 8.95

(e) Sales effected under CST - liability towards submission of C Forms

2,735.04 2,785.36

(f) Disputed amounts of Income Tax Assessment year 2001-02 - Paid 30.02 30.02 2003-04 - Paid 47.85 47.85 2004-05 - Paid 26.13 26.13 2005-06 - Paid 70.28 70.28 2006-07 - Paid 55.42 55.42 2008-09 - Paid 306.33 306.33 2010-11 - Unpaid 178.18 -

(g) Disputed amounts of Sales Tax, Karnataka for the FY 2007-08 paid

63.65 63.65

(h) Disputed amounts of Sales Tax, Karnataka for the FY 2008-09 paid

41.78 41.78

(i) Disputed Customs Duty paid under protest 66.38 66.38 (j) Disputed VAT Demand of West Bengal for FY 2009-10 - Unpaid 7.99 7.99 (k) Disputed amount of provident fund 59.37 -

B. Capital Commitment (a) Estimated amount of capital commitment on account of Fixed

Assets 470.30 695.21

111

31. Operating Lease

The Company has entered into operating lease arrangements for its office facilities. These leases are for a period ranging from 1 to 5 years with an option to the Company for renewing at the end of the initial term. Rental expenses for operating leases included in the income statement for the year is Rs.117.86 lakhs (Rs.89.81 lakhs). The future minimum lease payments for non-cancellable operating leases are

Rs. Lakhs Break-up of dues 2013 2012

Within one year 27.30 33.92 Due in a period between 1 to 5 years NIL NIL Due after 5 years NIL NIL 32. Financial Lease

The company has acquired Vehicles on Hire rental basis; the minimum hire rentals outstanding as of 31st March 2013 in respect of these assets are as follows:

Rs. Lakhs Break-up of dues Total

minimum Hire Rentals Outstanding

Future Interest on

Outstanding

PV of Minimum

Hire rentals

Within one year 6.39 0.67 5.72 Later than one year - - - Total 6.39 0.67 5.72 33. Earnings Per Share

The earnings considered in ascertaining Earning per share comprise the profit after tax. The number of shares used in computing Basic Earning per share is the weighted average number of shares outstanding during the year as follows:

Particulars 2013 2012 Profit after tax (357.34) (700.91) Number of Weighted average equity shares Basic 20,807,014 20,789,310 Effect of dilutive equity shares equivalent

Share Warrants Outstanding - 2,000,000 Foreign Currency Convertiable Bond - 394,500

20,807,014 23,183,810 Face Value of Shares 2.00 2.00

Earings per share before exceptional items Basic (1.72) (3.37) Diluted (1.72) (3.02)

Earings per share after exceptional items Basic (1.72) (3.37) Diluted (1.72) (3.02)

Per our Report of even date annexed For and on behalf of Board of DirectorsFor R SUBRAMANIAN & CO. For BRAHMAYYA & CO. Raj H Eswaran Rakesh Garg Chartered Accountants Chartered Accountants Managing Director Director Firm Regn No: 004137S Firm Regn No: 000511S R Subramanian N Sri Krishna Partner Partner Membership No: 8460 Membership No: 26575 K N Nagesha Rao Secretary & VP (Corporate Finance) Place: Chennai Date: 27th June 2013

112

Disclosure of Consolidated Financial Information relating to Subsidiary Companies as on 31.03.2013 Rs. Lakhs

Name of the subsidiary ERL International

Pte Ltd., Singapore. 1

ERLPhase Power

Technologies Ltd.,

Canada. 1

ERL Marketing Intl. FZE., Sharjah. 1

ERL Switchcraft

Pte. Ltd, Singapore. 1

Switchcraft Europe GMBH,

Germany. 2

Switchcraft Limited,

Hong Kong, China. 3

Share Capital 17,536.00 3,836.00 570.52 839.78 3,173.40 14.14 Reserves & Surplus 2,038.82 (2,726.60) (542.24) (511.47) (2,836.54) (1,140.16) Total Assets 22,223.96 6,049.70 658.63 7,558.36 4,963.78 2.80 Other Liabilities 2,649.14 4,940.30 630.35 7,230.05 4,626.92 1,128.81 Investments (excl. investments in Subsidiary Companies)

- - - - - -

Turnover 489.67 4,114.69 611.02 308.78 2,909.90 - Profit Before Tax 334.61 (403.52) (203.66) (173.40) 37.41 (1.46) Provision for Taxation - - - - 1.74 - Profit After Taxation 334.61 (403.52) (203.66) (173.40) 35.68 (1.46) Proposed Dividend - - - - - - Notes:- Information on subsidiaries is provided in compliance with the circular no.2/2011 dated February 8, 2011 from Ministry of Corporate Affairs, Government of India. We undertake to make availbale the audited annual accounts and related information of subsidiaries, where applicable, upon request by any of our shareholders. The annual accounts will also be available for inspection during business hours at our Corporate office in Bangalore, India. The same will also be available on our website, www.easunreyrolle.com 1. Converted into Indian Rupees at the exchange rate, 1 USD = Rs.54.80 as on 31st March 2013. 2. Converted into Indian Rupees at the exchange rate, 1 EUR = Rs.70.23 as on 31st March 2013. 3. Converted into Indian Rupees at the exchange rate, 1 HKD = Rs.7.06 as on 31st March 2013.

113

CAPITALISATION STATEMENT

The capitalisation statement of the Company as at March 31, 2013, as adjusted post issue is as under:

(` in lakhs)

Particulars Pre Issue at March 31, 2013 (Standalone)

Items adjusted for the Issue*

Borrowings Short-term debt 9,125.08 [●] Long-term debt 9,190.03 [●] Total Debt 18,315.11 [●] Shareholders’ funds: Equity Share Capital 416.14 [●] Reserves and Surplus 22,184.70 [●] Total Shareholders’ funds 22,600.84 [●] Long term debt / equity ratio 0.41 [●] Total debt / equity ratio 0.81 [●]

* Will be updated at the time of finalization of Letter of Offer. Notes: 1. The long term debt/equity ratio has been computed as under:

Long term debt/total shareholders' funds 2. The total debt/equity ratio has been computed as under:

Total debt/total shareholders' funds 3. Short term debt is considered as debt due within 12 months from March 31, 2013 – Short term

borrowings is considered. 4. Long term debt is considered as debt other than short term debt, as defined above – Long term

borrowings is considered.

114

STATEMENT OF ACCOUNTING RATIOS

The following tables present certain accounting and other ratios derived from the Company’s audited financial statements as at and for the year ended March 31, 2013 included in the “Financial Statements” on page 65 of the Draft Letter of Offer. Standalone financial statements

Consolidated financial statements

Formula: Earnings per Share (Rs.) = Restated Earnings Attributable to Equity Share Holders / Weighted No. of Equity Shares Net Asset Value (Rs.) = Net Worth / No. of Equity Shares Return on Net Worth (%) = Restated Earnings Attributable to Equity Share Holders / Net Worth

Particulars For the financial year ended March 31, 2013 March 31, 2012

(Audited) (Audited)Net Worth (` In Lakhs) 22,600.84 23,629.31 Earnings Attributable to Equity Share Holders (` in Lakhs) 12.29 930.03 No. of Equity Shares outstanding at the end of Specified Period 2,08,07,014 2,08,07,014 Weighted No. Of Equity Shares outstanding during the Specified Period

2,08,07,014 2,31,83,810

Earnings Per Share (EPS) (Face value of ` 2/- Each) - Basic And Diluted Earnings Per Share (`)

Basic: 0.06 Diluted: 0.06

Basic: 4.47 Diluted: 4.01

Return on Net Worth (%) 0.05 3.94Net Assets Value per share of ` 2/- each (`) 108.62 113.56

Particulars For the financial year ended March 31, 2013 March 31, 2012

(Audited) (Audited) Net Worth (` In Lakhs) 20,077.76 20,650.80 Earnings Attributable to Equity Share Holders (` in Lakhs) (357.34) (700.91) No. of Equity Shares outstanding at the end of Specified Period 2,08,07,014 2,08,07,014Weighted No. Of Equity Shares outstanding during the Specified Period

2,08,07,014 2,31,83,810

Earnings Per Share (EPS) (Face value of ` 2/- Each) - Basic And Diluted Earnings Per Share (`)

Basic: (1.72) Diluted: (1.72)

Basic: (3.37) Diluted: (3.02)

Return on Net Worth (%) (1.78) (3.39) Net Assets Value per share of ` 2/- each (`) 96.50 99.25

115

CERTAIN OTHER FINANCIAL INFORMATION (WORKING RESULTS)

Unaudited standalone working results of our Company for the period from April 01, 2013 to July 31, 2013:

Particulars Amount (` in lakhs) Sales 5,467.53Other income 75.32Estimated Gross Profit (excluding Depreciation) (617.18) Provision for Depreciation 266.73 Provision for taxation - Estimated Net Profit (883.91)

116

STOCK MARKET DATA

The Equity shares of our Company are presently listed and traded on BSE and NSE. The equity shares are frequently traded on NSE and infrequently traded at BSE. The share trading data for the equity shares of our Company is as under: Stock Market Data for BSE The closing market price of the equity shares of the Company on the first business day after the Board approved the Issue on November 17, 2012 was ` 72.95 per equity share on the BSE. The high and low prices and associated volumes of securities traded during last 3 years recorded on BSE is as follows:

Calendar Year High (`)

Date of High

Volume on date of high

(no. of shares)

Low (`) Date of Low Volume on date of low (no.

of shares)

Weighted Average Price (`)

From 01/01/2013 to 31/08/2013

79.00 01/01/2013 2,537 34.00 05/08/2013 1,806 56.40

2012 83.00 24/12/2012 16,106 48.00 17/09/2012 4,380 64.42 2011 124.45 07/01/2011 4,739 47.20 19/12/2011 2,909 77.84 2010 147.00 28/10/2010 22,366 81.05 23/02/2010 12,508 113.73

The high and low price, and associated volume of securities traded during the last 6 months on BSE is as follows:

Period High (`)

Date of High


(no. of shares)

Low (`)

Date of Low

Volume on date of low

(no. of shares)


August 2013 55.50 30/08/2013 1,078 34.00 05/08/2013 1,806 45.99 July 2013 48.95 10/07/2013 972 40.70 31/07/2013 9,526 44.27 June 2013 53.55 05/06/2013 1,000 46.00 28/06/2013 4,724 49.31 May 2013 63.00 20/05/2013 12,307 51.00 31/05/2013 65,856 53.86 April 2013 62.50 25/04/2013 793 54.00 09/04/2013 1,367 57.46 March 2013 66.00 04/03/2013 20,683 51.55 22/03/2013 1,427 56.97 Latest Stock Market Data for the preceding four weeks from the date of filing of Draft Letter of Offer with SEBI:

Week Starting

From

Week ending on

High Low Week’s Closing Price

(in `)

Total Traded quantity during

the period Amount

(in `) Date Amount

(in `) Date

11/09/2013 17/09/2013 67.50 12/09/2013 63.10 12/09/2013 64.80 70,937 04/09/2013 10/09/2013 67.00 10/09/2013 54.50 04/09/2013 55.85 130,622 28/08/2013 03/09/2013 57.50 02/09/2013 48.25 28/08/2013 52.60 20,009 21/08/2013 27/08/2013 55.35 26/08/2013 37.25 22/08/2013 39.75 23,824 Stock Market Data for NSE The closing market price of the equity shares of the Company on the first business day after the Board approved the Issue on November 17, 2012 was ` 72.90 per equity share on the NSE. The high and low prices and associated volumes of securities traded during last 3 years recorded on NSE is as follows:

Calendar Year High (`)

Date of High


(no. of shares)

Low (`)

Date of Low


(no. of shares)


From 01/01/2013 to 31/08/2013

79.85 02/01/2013 36,881 36.75 08/08/2013 3,536 57.86

2012 83.90 24/12/2012 47,620 47.80 27/08/2012 9,415 64.91 2011 122.90 03/01/2011 26,035 44.90 29/08/2011 4,579 77.70 2010 146.75 28/10/2010 68,085 85.15 21/05/2010 12,912 114.71

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The high and low price, and associated volume of securities traded during the last 6 months on NSE is as follows:

Period High (`)

Date of High


(no. of shares)

Low (`)

Date of Low


(no. of shares)


August 2013 55.75 26/08/2013 9,597 36.75 08/08/2013 3,536 46.40 July 2013 49.85 01/07/2013 8,489 40.00 31/07/2013 13,876 44.99 June 2013 54.00 05/05/2013 11,536 45.20 25/06/2013 2,142 48.70May 2013 64.50 20/05/2013 10,854 50.10 31/05/2013 105,151 54.97 April 2013 62.00 25/04/2013 5,302 50.80 02/04/2013 1,629 57.96 March 2013 66.50 04/03/2013 69,024 52.40 25/03/2013 10,411 59.30 Latest Stock Market Data for the preceding four weeks from the date of filing of Draft Letter of Offer with SEBI:

Week Starting

From

Week Ending on

High Low Week’s Closing

Price (in `)

Total Traded quantity

during the period

Amount (in `)

Date Amount (in `)

Date

11/09/2013 17/09/2013 68.50 13/09/2013 61.35 12/09/2013 64.25 116,665 04/09/2013 10/09/2013 67.00 10/09/2013 55.20 04/09/2013 55.30 178,595 28/08/2013 03/09/2013 57.50 02/09/2013 47.60 28/09/2013 52.95 52,725 21/08/2013 27/08/2013 55.75 26/08/2013 37.15 22/08/2013 39.25 42,109 Form the purpose of this chapter: • Year is a calendar year • Average price is the weighted average share price of the Equity Shares traded during the respective

period • High price is the maximum of the daily high prices and Low price is the minimum of the daily low

prices of the Equity Shares of our Company for the year, or the month, as the case may be • In case of two days with the same high / low / closing price, the date with higher volume has been

considered • Source: www.bseindia.com & www.nseindia.com

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OUTSTANDING LITIGATIONS

Except as described below, there are no outstanding litigations including, suits, criminal or civil prosecutions and taxation related proceedings against us that would have a material adverse effect on our business. Further, there are no defaults, non-payment of statutory dues including institutional / bank dues that would have a material adverse affect on our business other than unclaimed liabilities against us as of the date of the Draft Letter of Offer. Further, except as disclosed below, we are not aware of any litigation involving moral turpitude, material violations of statutory regulations and or proceedings relating to economic offences which have arisen in the last ten years. Further, except as disclosed below, we are not subject to: (a) Any outstanding litigation which does not impact our future revenues for an amount more than one

percent of our networth, for the last completed financial year. (b) Any outstanding litigation which impacts the future revenues for an amount more than one percent of

our revenue, for the last completed financial year. Further from time to time, we have been and continue to be involved in legal proceedings filed by and against us, arising in the ordinary course of our business. These legal proceedings are both in the nature of civil and criminal proceedings. A. LITIGATION PERTAINING TO CASES FILED AGAINST THE COMPANY

1. Criminal Proceedings

Section Court /

forum Parties to the

Dispute Brief facts of the case Extent if

Liability / Claim

Present Status

- Criminal Case No. 838/2010

- Criminal Revision Petition No. 87/12

Section 417/420/415 IPC

District & Session Judge, Hailakandi, Assam

Plaintiff: H.P.C.L. Defendants: Easun Reyrolle Limited

Complaint of knowingly supply of faulty materials over commissioning of system deceit & cheating Revision Petition No. 87/12 against order dismissing complaint case no. C.R – 838/2010 by Hon’ble C.J.M., Hailakandi

Not ascertainable

Next date is September 25, 2013

2. Civil Proceedings

Sr. No

Section

Court / forum

Parties to the Dispute

Brief facts of the case Extent of Liability / Claim

Present Status

a T.S. – 17/10

Civil Judge, Hailakand, Assam

Plaintiff: H.P.C.L. Defendants: Easun Reyrolle Limited

Suit for recovery of compensation of Rs. 50,00,000/- (Fifty Lakh) with interest @12% per annum for supply of faulty materials & breach of contract.

Rs. 50 Lacs plus interest

The matter is listed for September 26, 2013 for final argument.

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3. Tax Matters against the Company

a) Sales Tax and VAT

S. No

Assessment Year

Forum where the matter is pending

Brief facts of the case Extent of remaining

liability (Rs. Lakhs)

Present status

1. 2007-08 KVAT (Appeals)- Karnataka

Sales Tax matter regarding non-submission of C forms and E1 forms. The department had raised a total demand of Rs. 63,64,825/- (inc. interest and penalty) towards Sales Tax liability via A.O. and Demand notice dated 28/09/2010. The company filed an appeal with Jt. Commissioner of Commercial Tax (Appeals-2), Bangalore and demand was stayed on 26/10/2010. Paid Rs. 32,00,000/- and Rs. 32,00,000/- (Bank Guarantee from SBI)

Rs. 32 lacs

Last hearing was on November 26, 2012. The next date of hearing is yet to be fixed.

2. 2008-09 KVAT (Appeals)- Karnataka

Non-submission of C forms and E1 forms. The department had raised a total demand of Rs. 41,78,406/- (inc. interest and penalty). The company filed an appeal dated 31/01/2012 with Jt. Commissioner of Commercial Tax (Appeals-4), Bangalore and demand was stayed on 28/02/2012. Paid Rs. 20,89,203/- and Rs. 21,00,000/- (Bank Guarantee from SBI)

Rs. 21 Lacs

Last hearing was on November 26, 2012. The next date of hearing is yet to be fixed.

3. 2009-10 Directorate of Commercial Taxes, West Bengal

The Company has received notice dated 07/06/2012 of demand of Rs. 7.99 lacs under section 46 r/w 66 of the West Bengal Value Added Tax Act, 2003 towards non-submission of C-forms. The Company filed an Appeal against the demand.

Rs. 7.99 lacs Appeal of the Company is admitted. The next date of hearing is yet to be fixed.

b) Custom Duty

S. No

Assessment Year




Present status

1. 2011-12 Customs Excise Service Tax Appellate Tribunal, Bangalore

The Company has received a show cause notice for Rs. 66,37,675/- for the period 2011-12. The dispute is with respect to exemption of Basic Custom Duty on imported relays (department appeal). The Company had filled an appeal to Commissioner of Customs – Appeal, Bangalore against order dated 08.12.2011 and the order was passed in favor of Assessee that the Company was eligible for the refund of the excess paid duty. However, The Commissioner of Customs, Bangalore has filed an appeal against the said order with the Customs Excise Service Tax Appellate Tribunal.

Nil

The date of hearing is yet to be fixed.

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c) Income Tax

S. No

Assessment Year




Present status

1. 2001-02 Income Tax Appellate Tribunal, Chennai

Disallowance of deduction u/s 80 IA (windmill income) and partial disallowance of 80HHC (export benefit). The Company received a demand of Rs. 30,02,282/- from assessing officer vide notice dated 31.12.2008 which was paid by us in 2009 and we also filed an appeal which was not accepted by Commissioner of Income tax. Against the order of CIT, we have filed an appeal in Appellate Tribunal on 29.03.2013

Nil The next date of hearing is September 19, 2013

2. 2003-04 CIT (Appeals)

Disallowance of deduction u/s 80 IA (windmill income) and partial disallowance of 80HHC (export benefit). The demand of Rs. 47,85,258/- was adjusted against refund receivable by the Company. The Company has filed the Appeal on 18.01.2011 against the assessment order

Nil The date of hearing is yet to be fixed.

3. 2004-05 CIT (Appeals), Chennai

Disallowance of deduction u/s 80 IA (windmill income) and partial disallowance of 80HHC (export benefit). The demand of Rs. 26,12,561/- as stated in the assessment order dated 13.12.2010 has been adjusted against the refund to be received by the Company. The Company has filed an appeal.

Nil The date of hearing is yet to be fixed.

4. 2005-06 Income Tax Appellate Tribunal, Chennai

Disallowance of deduction u/s 80 IA (windmill income) and disallowance for expenditure towards non-compete fee disallowed. A demand of Rs. 71,58,509/- was raised vide order dated 31.12.2008 which has been paid by the Company in 2009. The Company received an unfavorable order on its appeal on the CIT and has now filed an appeal on Appellate Tribunal, Chennai on 29.03.2013

Nil The next date of hearing is September 19, 2013

5. 2006-07 CIT (Appeals)-Chennai

Disallowance of deduction u/s 80 IA (windmill income) and bad debts and expense write-off disallowed. A demand of Rs. 55,41,946/- was raised on 31.12.2008 which the Company has paid and also filed an appeal on 12.02.2009

Nil Last hearing was on September 05, 2013. The next date of hearing is yet to be fixed.

6. 2008-09 CIT (Appeals)-Chennai

Disallowance of deduction u/s 80IA (windmill income), expenditure incurred for raising FCCB / GDR and disallowance of exempted dividend income under Rule 8D. A demand of Rs. 3,06,33,157/- was raised on 31.10.2010 which has been adjusted against the refund to be received by the Company. The Company has filed an appeal on 28.01.2011

Nil Last hearing was on September 03, 2013. The next date of hearing is yet to be fixed.

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B. LITIGATION PERTAINING TO CASES FILED BY THE COMPANY

1. Criminal Proceedings –

Sr. No

Section Court / forum

Parties to the Dispute

Brief facts of the case Extent of Liability /

Claim

Present Status

1 138 of Negotiable Instruments Act

Hon’ble Judicial Magistrate Fast Tract Court, Hosur

Compliant / Plaintiff: Easun Reyrolle Limited Accused / Defendant: Balaji Construction Company

Recovery of trade dues of Rs. 1,00,000/- together with interest. Complainant has initiated legal proceedings under Section 138 of Negotiable Instruments Act

Rs. 1.00 lacs Warrant Issued and Execution is Pending through Hyderabad Police Station.

1. Litigations pertaining to cases filed by and against the Subsidiaries of the Company

There are no litigations filed by and against the Subsidiaries of the Company.

OTHER DISCLOSURES Our promoters, their relatives (as per Companies Act, 1956), group companies, associate companies are not declared as wilful defaulters by RBI/ government authorities and there are no violations of securities laws committed by them in the past or pending against them. Our Company, promoters, directors or any of our Company‘s Associates or Group companies or other ventures of the promoters and companies with which the directors of our Company are associated as directors or promoters have not been prohibited from accessing the capital markets under any order or direction passed by SEBI and no penalty has been imposed at any time by any of the regulators in India or abroad.

122

GOVERNMENT AND OTHER APPROVALS

Except as stated below, our Company is in compliance with all applicable regulations governing our business activities and has received the necessary consents, licenses, permissions and approvals from government and various regulatory agencies, required for us to undertake our current business activities and there are no pending approvals and renewals required for carrying on our present business: • We have applied for renewal of consent with Tamil nadu Pollution Control Board on April 15, 2013 to

operate our Hosur unit under Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981.

• Professional tax registration as required under respective State Professional Tax enactment has not been obtained for branch offices of the Company situated in (a) Bhopal, (b) Kolkata, (c) Chennai, (d) Secunderabad and (e) Bangalore.

• Shops and establishment registration as required under respective Shops and Establishment Act in force in various States has not been obtained for branch offices of the Company situated at (a) Noida, (b) Mumbai, (c) Kolkata, (d) Chennai, (e) Secunderabad and (f) Bhopal.

The aforesaid offices are only marketing offices. MATERIAL DEVELOPMENT AFTER THE DATE OF THE AUDITED FINANCIAL STATEMENTS AS ON MARCH 31, 2013 In the opinion of our Board, there have not arisen since the date of the last audited financial statements i.e. March 31, 2013, any circumstances that materially or adversely affect or are likely to affect our profitability taken as a whole or the value of our assets or our ability to pay our material liabilities within the next 12 months.

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OTHER REGULATORY AND STATUTORY INFORMATION

Authority for the Issue Pursuant to a resolution under Sections 81(1) of the Companies Act passed by our Board of Directors on November 17, 2012 and the member through resolution passed by postal ballot on January 30, 2013, it has been decided to make the rights offer to the Eligible Equity Shareholders of our Company. The Board in its meeting held on [●] determined the Issue Price as ` [●] and the rights entitlement of [●] Equity Shares for every [●] Equity Shares held on the Record Date. The Issue Price has been arrived at in consultation with the Lead Manager. Prohibition by SEBI, RBI or governmental authorities Our Company, our Directors, our Promoters, the Promoter Group entities, the persons in control of our Company and the companies with which our Directors, Promoters or persons in control are associated as directors or promoters or persons in control have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. None of our Directors is associated with the capital markets in any manner. None of our Company, our Group Companies, members of our Promoter Group or ventures with which our Promoters was associated with in the past have been declared as wilful defaulters by the RBI or any other governmental authority and there have been no violations of securities laws committed by any of them in the past and no such proceedings are currently pending against them. Association with securities markets None of the Directors of the Company are associated with the securities markets in any manner. Compliance with Part E of Schedule VIII of SEBI Regulations Our Company is in compliance with the provisions specified in Clause (1) of Part E of Schedule VIII to the SEBI ICDR Regulations as explained below: (a) Our Company has been filing periodic reports, statements and information in compliance with the

Listing Agreements for the last three years immediately preceding the date of filing of the Draft Letter of Offer with SEBI;

(b) The reports, statements and information referred to in sub-clause (a) above are available on the website of BSE & NSE, which are recognised stock exchanges with nationwide trading terminals; and

(c) Our Company has an investor grievance-handling mechanism which includes meeting of the Share Transfer Committee and Shareholders / Investors Grievance Committee at frequent intervals, appropriate delegation of power by the Board as regards share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.

DISCLAIMER CLAUSE OF SEBI AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT LETTER OF OFFER TO 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 DRAFT LETTER OF OFFER. THE LEAD MANAGER, SPA CAPITAL ADVISORS LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME 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 DRAFT LETTER OF OFFER, THE LEAD MANAGER IS

124

EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE ISSUER DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER, SPA CAPITAL ADVISORS LIMITED HAS FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED SEPTEMBER 18, 2013 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 MATERIALS 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 ISSUER,

ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, 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 ISSUER,

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 SEBI (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 REGISTRATION IS VALID.

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITER

TO FULFIL THEIR UNDERWRITING COMMITMENTS. - NOT APPLICABLE 5. WE CERTIFY THAT WRITTEN CONSENT FROM THE PROMOTERS HAS BEEN

OBTAINED FOR INCLUSION OF THEIR EQUITY SHARES AS PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE EQUITY SHARES PROPOSED TO FORM PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN WILL NOT BE DISPOSED OR SOLD OR TRANSFERRED BY THE PROMOTER DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT LETTER OF OFFER WITH SEBI UNTIL THE DATE OF COMMENCEMENT OF THE LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF OFFER. - NOT APPLICABLE

6. WE CERTIFY THAT REGULATION 33 OF THE SEBI (ISSUE OF CAPITAL AND

DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO 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 / 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 SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO

125

ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITOR’S 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 WILL BE MADE TO ENSURE

THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SECTION 73(3) 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 LETTER OF OFFER. WE FURTHER CONFIRM THAT THE AGREEMENT TO BE ENTERED INTO BETWEEN THE 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 EQUITY SHARES IN DEMAT OR PHYSICAL MODE.

11. WE CERTIFY THAT ALL APPLICABLE DISCLOSURES MANDATED IN THE SEBI (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 ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE COMPANY; AND

(B) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY SEBI FROM TIME TO TIME.

13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO

ADVERTISEMENT IN TERMS OF THE SEBI (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 OF THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, RISK FACTORS, PROMOTERS EXPERIENCE, ETC.

15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH

THE APPLICABLE PROVISIONS OF THE SEBI (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.

126

16. WE ENCLOSE STATEMENT ON ‘PRICE INFORMATION OF PAST ISSUES HANDLED BY MERCHANT BANKERS (WHO ARE RESPONSIBLE FOR PRICING THIS ISSUE)’, AS PER THE FORMAT SPECIFIED BY THE BOARD THROUGH CIRCULAR. - NOT APPLICABLE

17. WE CERTIFY THAT THE PROFITS FROM RELATED PARTY TRANSACTIONS HAVE

ARISEN FROM LEGITIMATE BUSINESS TRANSACTIONS. - COMPLIED WITH TO THE EXTENT OF RELATED PARTY TRANSACTIONS REPORTED IN ACCORDANCE WITH ACCOUNTING STANDARD 18 IN THE AUDITED FINANCIAL STATEMENTS OF THE COMPANY FOR THE FINANCIAL YEAR ENDED MARCH 31, 2013.

THE FILING OF THE DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ISSUER FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES 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. Disclaimer Statement from our Company and the Lead Manager OUR COMPANY AND THE LEAD MANAGER ACCEPT NO RESPONSIBILITY FOR STATEMENTS MADE OTHERWISE THAN IN THIS DRAFT LETTER OF OFFER OR IN THE ADVERTISEMENT 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 OWN RISK. INVESTORS WHO INVEST IN THE ISSUE WILL BE DEEMED TO HAVE BEEN REPRESENTED BY OUR COMPANY AND THE 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. Caution The Lead Manager accepts no responsibility, save to the limited extent as provided in the Issue Agreement. All information shall be made available by our Company and the Lead Manager to the Eligible Equity Shareholders at large and no selective or additional information would be made available for a section of Eligible Equity Shareholders in any manner whatsoever. Applicants will be required to confirm and will be deemed to have represented to our Company and the 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 the Rights Shares and that they shall not issue, sell, pledge or transfer their Rights Entitlement or Rights Shares to any person who is not eligible under applicable laws, rules, regulations, guidelines and approvals to acquire the Rights Shares. Our Company, the Lead Manager and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising any Applicant on whether such Applicant is eligible to acquire any Rights Shares. The Lead Manager and its affiliates may engage in transactions with, and perform services for, our Company and our Group Entities or affiliates in the ordinary course of business and have engaged, or may in the future engage, in transactions with our Company and our Group Entities or affiliates, for which they have received, and may in the future receive, compensation. Disclaimer with respect to jurisdiction The Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and regulations thereunder. Any disputes arising out of the Issue will be subject to the jurisdiction of the appropriate court(s) in Himachal Pradesh, India only. Selling restrictions

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The distribution of the 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 the legal requirements prevailing in those jurisdictions. Persons into whose possession the Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. We are making this Issue of Equity Shares on a rights basis to our eligible Equity Shareholders and will dispatch the Letter of Offer / Abridged Letter of Offer and CAFs to the eligible Equity Shareholders who have provided 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 the Draft Letter of Offer was filed with SEBI for observations. Accordingly, the rights of 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 legal requirements applicable in such jurisdiction. Receipt of the Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, under those circumstances, the 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 the Draft Letter of Offer should not, in connection with the issue of the Equity Shares, 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 the 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 referred to in the Draft Letter of Offer. Neither the delivery of the Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date. Designated Stock Exchange The Designated Stock Exchange for the purposes of the Issue will be BSE. Disclaimer Clause of the BSE As required, a copy of the Draft Letter of Offer will be submitted to BSE. The disclaimer clause as intimated by BSE to us, upon grant of in-principle listing approval, shall be included in the Letter of Offer prior to filing the Letter of Offer with the Stock Exchange. Disclaimer Clause of the NSE As required, a copy of the Draft Letter of Offer will be submitted to NSE. The disclaimer clause as intimated by NSE to us, upon grant of in-principle listing approval, shall be included in the Letter of Offer prior to filing the Letter of Offer with the Stock Exchange. Filing The Draft Letter of Offer will be filed with SEBI at Overseas Tower, 7th Floor, 756-L, Anna Salai, Chennai - 600 002, for its observations. SEBI has vide its letter [●] dated [●] issued its final observations and the Letter of Offer has been filed with the Designated Stock Exchange. Listing The existing Equity Shares are listed on the BSE & NSE. We will file in-principle approval application to obtain in-principle approval from the BSE & NSE in respect of the Equity Shares being offered in terms of the Issue. If the permission to deal in and for an official quotation of the securities is not granted by the Stock Exchanges mentioned above, we shall forthwith repay, without interest, all monies received from applicants in pursuance of the Draft Letter of Offer. We will issue and dispatch Allotment advice / share certificates / demat credit and / or letters of regret along with refund order or credit the allotted Equity Shares to the respective beneficiary accounts, if any, within a period of 15 days from the Issue Closing Date.

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If in either of the above cases money is not repaid within eight days from the day we become liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier), we and every Director who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to pay the money with interest as prescribed under Section 73 of the Companies Act. Consents Consents in writing of the Promoters, Directors, Compliance Officer, Lead Manager to the Issue, Legal Counsel, Registrar to the Issue, Bankers to the Company, Statutory Auditors and Bankers to the Issue and experts to act in their respective capacities have been obtained and such consents have not been withdrawn up to the date of the Draft Letter of Offer. M/s Brahmayya & Co. and M/s R Subramanian & Co., Chartered Accountants, the Statutory Auditors, have given their written consent for the inclusion of their report in the form and content appearing in this Draft Letter of Offer and such consent and report have not been withdrawn up to the date of this Draft Letter of Offer. Expenses of the Issue The total expenses of the Issue are estimated to be approximately ` [●] million ([●]% of the total Issue Size). The expenses of the Issue include, among others, fees of the Lead Manager, fees of the Registrar to the Issue, fees of the other advisors, printing and stationery expenses, advertising, travelling and marketing expenses and other expenses. The estimated Issue expenses are as follows:

(` in lakhs) Particulars Estimated

Expenses (` in lakhs) *

% of Estimated Issue size

% of Estimated

Issue expenses Fees payable to intermediaries including Lead Manager and Registrar to the Issue

[●] [●] [●]

Advertising, travelling and marketing expenses [●] [●] [●] Printing and stationery expenses [●] [●] [●] Other expenses (including but not limited to legal fees, SEBI fees, listing charges, depository fees, auditor fees, commission, brokerage, out of pocket reimbursements, etc.)

[●] [●] [●]

Total [●] [●] [●] Investor Grievances and Redressal System Our Company has adequate arrangements for redressal of Investor complaints. We have been registered with the SEBI Complaints Redress System (SCORES) as required by the SEBI Circular no. CIR/ OIAE/2/2011 dated June 03, 2011. Our Company has a Shareholders’ / Investors’ Grievance Committee which meets as and when required, to deal and monitor redressal of complaints from shareholders. Generally, the investor grievances are dealt within two or three days of the receipt of the complaint. Integrated Enterprises (india) Limited is our Registrar and Share Transfer Agent. All investor grievances received by us have been handled by the Registrar and Share Transfer Agent in consultation with the Compliance Officer. We have adequate arrangements for the redressal of investor complaints in compliance with the corporate governance requirements under the Listing Agreements. Additionally, we have been registered with the SEBI Complaints Redress System (SCORES) as required by the SEBI Circular no. CIR/OIAE/2/2011 dated June 3, 2011. Consequently, investor grievances are tracked online by us. The share transfer and dematerialization for us is being handled by Integrated Enterprises (India) Limited, Registrar and Share Transfer Agent, which is also the Registrar to the Issue. Letters are filed category wise after being attended to. All investor grievances received by us have been handled by the Registrar and Share Transfer agent in consultation with the compliance officer. Our Board has constituted the Shareholders’ / Investors’ Grievance Committee. This committee currently comprises of 2 members, namely Mr. Hariharan Eswaran and Mr. Raj Hari Eswaran. Our Shareholders’ /

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Investors’ Grievance Committee oversees the reports received from the registrar and transfer agent and facilitates the prompt and effective resolution of complaints from our shareholders and investors. Its broad terms of reference include: • Redressal of Equity Shareholder and Investor complaints including, but not limited to non-receipt of

share certificates, transfer of Equity Shares and issue of duplicate share certificates, non-receipt of balance sheet, non-receipt of declared dividends, etc. and

• Monitoring transfers, transmissions, dematerialization, rematerialization, splitting and consolidation of shares issued by the Company.

Status of Shareholders Complaints (a) No. of shareholders complaints outstanding as on August 31, 2013: Nil (b) Status of the pending complaints: Not applicable Investor Grievances arising out of the Issue Any investor grievances arising out of the Issue will be handled by the Registrar to the Issue. The Registrar to the Issue will have a separate team of personnel handling only our post-Issue correspondence. Our agreement with the Registrar to the Issue provides for retention of records with the Registrar for a period of at least one year from the last date of dispatch of letters of Allotment and refund orders to enable the Registrar to the Issue to redress grievances of Investors. All grievances relating to the Issue may be addressed to the Registrar to the Issue or the SCSB in case of ASBA Applicants giving full details such as folio no. / demat account no. / name and address, contact telephone / cell numbers, email id of the first applicant, number of Equity Shares applied for, CAF serial number, amount paid on application and the name of the bank / SCSB and the branch where the CAF, or the plain paper Application, as the case may be, was deposited, alongwith 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 Registrar to the Issue for attending to routine grievances will be 15 working 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 Registrar to the Issue to attend to them as expeditiously as possible. We undertake to resolve the investor grievances in a time bound manner. Investors may contact the Registrar to the Issue at: Integrated Enterprises (India) Limited SEBI Regn. No.: INR 000000544 IInd Floor, “Kences Towers” No. 1, Ramakrishna Street, North Usman Road, T Nagar, Chennai - 600 017 Tel.: +91 44 2814 0801 - 03 Fax: +91 44 2814 2479 E-mail: [email protected] Investor Grievance e-mail id: [email protected] Website: www.integratedindia.in Contact Person: Anusha N Investors may contact the Compliance Officer at the below mentioned address and/ or Registrar to the Issue at the above mentioned address in case of any pre-Issue/ post -Issue related problems such as non receipt of allotment advice / share certificates / demat credit / refund orders etc. Address of our Compliance Officer: Mr. K N Nagesha Rao Secretary and VP (Corporate Finance) 98, SIPCOT Industrial Complex Hosur - 635 126, Tamil Nadu Tel No: +91 4344 401600 Fax No: +91 4344 276397 E-mail: [email protected]

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Minimum Subscription If we do not receive the minimum subscription of 90% in this Issue or if the Promoters and Promoter Group fails to subscribe for unsubscribed portion in the Issue after the Issue Closing Date or the subscription level falls below 90% after the Issue Closing Date on the account of cheques being returned unpaid or withdrawal of applications, we shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after we become liable to pay the subscription amount (i.e., 15 days after the Issue Closing Date), we and every officer in default shall be jointly and severally liable to pay interest for the delayed period, as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.

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OFFERING INFORMATION

The Equity Shares proposed to be issued are subject to the terms and conditions contained in the Draft Letter of Offer, the Letter of Offer, the Abridged Letter of Offer, the CAF enclosed with the Letter of Offer, the Memorandum and Articles of Association, the provisions of the Companies Act, FEMA, the SEBI Regulations, any other regulations, guidelines, notifications and regulations for issue of capital and for listing of securities issued by SEBI, RBI and/ or other statutory authorities and bodies from time to time, and the terms and conditions as stipulated in the Allotment advice or letters of Allotment or share certificate and rules as may be applicable and introduced from time to time. All rights/ obligations of Equity Shareholders in relation to Applications and refunds pertaining to the Issue shall apply to Renouncee(s) as well. Please note that, in terms of SEBI circular CIR/CFD/DIL/1/ 2011 dated April 29, 2011, QIB applicants, Non Institutional Investors and other applicants whose application amount exceeds ` 2,00,000 can participate in the Issue only through the ASBA process. The Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose application amount is more than ` 200,000, can participate in the Issue either through the ASBA process or the non ASBA process. ASBA Investors should note that the ASBA process involves application procedures that may be different from the procedure applicable to non ASBA process. ASBA Investors should carefully read the provisions applicable to such applications before making their application through the ASBA process. For details, see “Procedure for Application through the Applications Supported by Blocked Amount (“ASBA”) Process” on page 134 of the Draft Letter of Offer. Authority for the Issue Pursuant to a resolution under Sections 81(1) of the Companies Act passed by our Board of Directors on November 17, 2012 and the member through resolution passed by postal ballot on January 30, 2013, it has been decided to make the rights offer to the Eligible Equity Shareholders of our Company. Basis for the Issue The Equity Shares are being offered for subscription for cash to those existing equity shareholders of our Company whose names appear, as beneficial owners as per the list to be furnished by the Depositories in respect of the Equity Shares held in the electronic form, and on the register of members of our Company in respect of Equity 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. Ranking of Equity Shares The Equity Shares shall be subject to the Memorandum and Articles of Association. The Equity Shares allotted in the Issue shall rank pari passu with the existing Equity Shares in all respects, including payment of dividends, provided that voting rights and dividend payable shall be in proportion to the paid-up value of the Equity Shares held. Mode of Payment of Dividend We shall pay dividends (in the event of declaration of such dividends) to our equity shareholders as per the provisions of the Companies Act and our Articles of Association. The distribution of the Draft Letter of Offer and the issue of the Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. We are making the issue of the Equity Shares on a rights basis to the Equity Shareholders and the Draft Letter of Offer, Abridged Letter of Offer and the CAFs will be dispatched only to those Equity Shareholders who have a registered address in India or who have provided an Indian address. Any person who acquires Rights Entitlements or the Equity Shares will be deemed to have declared, warranted and agreed, by accepting the delivery of the Draft Letter of Offer, 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 and in other restricted jurisdictions. PRINCIPAL TERMS OF THE EQUITY SHARES ISSUED UNDER THE ISSUE Face Value Each Equity Share shall have the face value of ` 2 each.

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Issue Price Each Equity Share is being offered at a price of ` [●] (including a premium of ` [●] per Equity Share). The Issue Price has been arrived at by us in consultation with the Lead Manager. Rights Entitlement Ratio The Equity Shares are being offered on a rights basis to the existing equity shareholders of our Company in the ratio of [●] Equity Shares for every [●] Equity Shares held as on the Record Date. As your name appears as a beneficial owner in respect of Equity 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, you are entitled to the number of Equity Shares as set out in Part A of the CAF enclosed with the Draft Letter of Offer. An Eligible Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an Application to subscribe to the Issue on plain paper. For further details, see the section titled “Offering Information - Application on Plain Paper” on page 136 and 143 respectively. Terms of payment The entire amount of ` [●] per Equity Share is payable on application. Where an applicant has applied for additional Equity Shares and is allotted lesser number of Equity Shares than applied for, the excess Application Money paid shall be refunded. The monies would be refunded within 15 days from the Issue Closing Date. In the event that there is a delay of making refunds beyond eight days after our Company becomes liable to make such refunds, i.e. on the expiry of 15 days from the Issue Closing Date, our Company shall pay interest for the delayed period at rates prescribed under sub-sections (2) and (2A) of section 73 of the Companies Act. Fractional Entitlements For Equity Shares being offered on a rights basis under the Issue, if the shareholding of any of the Eligible Equity Shareholders is equal to or less than [●] Equity Shares or is not in multiples of [●], the fractional entitlement of such Eligible Equity Shareholders shall be ignored for computation of the Rights Entitlement. However, Eligible Equity Shareholders whose fractional entitlements are being ignored earlier will be given preference in the Allotment of one additional Equity Share each, if such Eligible Equity Shareholders have applied for additional Equity Shares. An illustration stating the rights entitlement for number of Equity Shares is set out below: Those Eligible Equity Shareholders holding less than [●] Equity Shares and therefore entitled to zero Equity Shares under the Issue shall be dispatched a CAF with zero entitlement. Such Eligible Equity Shareholders are entitled to apply for additional Equity Shares. However, they cannot renounce the same in favors of any third parties. CAF with zero entitlement will be non-negotiable/ non-renounceable. Forfeiture If there is a failure to pay the call money on or before the day appointed for the payment of the same in accordance with the provisions of the articles of association of the Company, the Board may, at any time during which any part of the call or installment remains unpaid, serve a notice on such member of the Company requiring him to pay the same together with any interest that may have accrued. The notice shall fix a date and a place or places on and at which such call or installment and such interest as aforesaid are to be paid. The notice shall also state that in the event of non-payment at or before the time and at the place or places appointed, the shares in respect of which such call was made or installment is payable and to which the notice relates will be liable to be forfeited. If the requisites of such notice are not complied with, any shares in respect of which such notice has been given may, at any time thereafter before payment of all calls or installments, interest and expenses due in respect thereof, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture. Any share so forfeited shall be deemed to be the property of the Company, and the Board may sell, re-issue or otherwise dispose of the same in such manner as they think fit. Arrangement for Odd Lot Equity Shares The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of the Issue. The Company will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity Shareholder.

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Rights of the Equity Shareholder Subject to applicable laws, Equity Shareholders shall have the following rights: • Right to receive dividend, if declared; • Right to attend general meetings and exercise voting powers, unless prohibited by law; • Right to vote on a poll either in person or by proxy; • Right to receive offers for rights shares and be allotted bonus shares, if announced; • Right to receive surplus on liquidation; • Right of free transferability of shares; and • Such other rights, as may be available to a shareholder of a listed public company under the Companies

Act and the Memorandum and Articles of Association. GENERAL TERMS AND CONDITIONS OF THE ISSUE FOR ASBA APPLICANTS AND NON - ASBA APPLICANTS Market lot The Equity Shares of the Company is tradable only in dematerialized form. The market lot for Equity Shares in dematerialised mode is one. In case of holding in physical form, the Company would issue to the allottees one certificate for the Equity Shares allotted to one folio ("Consolidated Certificate"). In respect of the Consolidated Certificate, the Company will, upon receipt of a request from the Equity Shareholder, split such Consolidated Certificate into smaller denomination within one month’s time from the request of the Equity Shareholder in accordance with the provisions of the Articles of Association. Restrictions on transfer and transmission of shares and on their consolidation / splitting There are no restrictions on transfer and transmission and on their consolidation / splitting of shares issued pursuant to the Issue. 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. Nomination facility In terms of Section 109A of the Companies Act, nomination facility is available in case of Equity Shares. An applicant can nominate, by filling the relevant details in the CAF in the space provided for this purpose. A sole Eligible Equity Shareholder or first Eligible Equity Shareholder, along with other joint Eligible 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 Eligible 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 Eligible 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 our Registered and Corporate Office 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 Eligible Equity Shareholder(s) has already registered the nomination with our Company, no further nomination needs to be made for Equity Shares to be allotted in the Issue under the same folio. However, new nominations, if any, by the Eligible Equity Shareholder(s) shall operate in supersession of the previous nomination, if any. In case the Allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the Equity Shares to be allotted in the Issue. Nominations registered with respective Depository Participant of the applicant would prevail. If the applicant wants to change the nomination, they are requested to inform their respective Depository Participant.

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Notices All notices to the Eligible Equity Shareholders required to be given by our Company shall be published in one English National Daily and one Hindi National Daily with wide circulation (including the place where our Registered Office is situated) and/ or will be sent by ordinary post or registered post or speed post to the registered address of the Equity Shareholders in India as updated with the Depositories/ registered with the Registrar and Transfer Agent from time to time. Procedure for Application The CAF for Equity Shares would be printed for all Equity Shareholders. In case the original CAF is not received by the Equity Shareholder or is misplaced by the Equity Shareholder, the Equity Shareholder 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. In case the signature of the Equity Shareholder(s) does not match with the specimen registered with us, the application is liable to be rejected. Please note that neither the Company nor the Registrar shall be responsible for delay in the receipt of the CAF / duplicate CAF attributable to postal delays or if the CAF / duplicate CAF are misplaced in the transit. Please note that, in terms of SEBI circular CIR/CFD/DIL/1/ 2011 dated April 29, 2011, QIB applicants, Non Institutional Investors and other applicants whose application amount exceeds ` 2,00,000 can participate in the Issue only through the ASBA process. The Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose application amount is more than ` 200,000, can participate in the Issue either through the ASBA process or the non ASBA process. Please also note that by virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Any Equity Shareholder being an OCB is required to obtain prior approval from RBI for applying to the Issue. The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated 8 December 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated non resident entities in terms of Regulation 5(1) of RBI Notification No.20/ 2000-RB dated May 3, 2000 under FDI Scheme with the prior approval of Government if the investment is through Government Route and with the prior approval of RBI if the investment is through Automatic Route on case by case basis. Shareholders renouncing their rights in favour of OCBs may do so provided such Renouncee obtains a prior approval from the RBI. On submission of such approval to us at our Registered Office, the OCB shall receive the Abridged Letter of Offer and the CAF. PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (“ASBA”) PROCESS This section is for the information of the ASBA Investors proposing to subscribe to the Issue through the ASBA Process. We 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 the 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 Lead Manager, we, its directors, affiliates, associates and their respective directors and officers and the Registrar to the Issue shall not take any responsibility for acts, mistakes, errors, omissions and commissions etc. in relation to applications accepted by SCSBs, Applications uploaded by SCSBs, applications accepted but not uploaded by SCSBs or applications accepted and uploaded without blocking funds in the ASBA Accounts. It shall be presumed that for applications uploaded by SCSBs, the amount payable on application has been blocked in the relevant ASBA Account. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or other applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the ASBA process. The Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose application amount is more than ` 200,000, can participate in the Issue either through the ASBA process or the non ASBA process.

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The list of banks which have been notified by SEBI to act as SCSBs for the ASBA Process is provided on http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries. For details on Designated Branches of SCSBs 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 through the ASBA Process is available only to the Equity Shareholders on the Record Date. To qualify as ASBA applicants, eligible Equity Shareholders: • are required to hold Equity Shares in dematerialized form as on the Record Date and apply for (i) their

Rights Entitlement or (ii) their Rights Entitlement and Equity Shares in addition to their Rights Entitlement in dematerialized form;

• should not have renounced their Right Entitlement in full or in part; • should not have split the CAF; • should not be Renouncees; • should apply through blocking of funds in bank accounts maintained with SCSBs; and • are eligible under applicable securities laws to subscribe for the Rights Entitlement and the Equity

Shares in the Issue. All applicants who are QIBs and Non - Institutional Investors can participate in the Issue only through the ASBA Process. Any Application by such categories of Investors including plain paper applications by them have to be made through the ASBA process. CAF The Registrar will dispatch the CAF to all Eligible Equity Shareholders as per their Rights Entitlement on the Record Date. Those Eligible Equity Shareholders who must apply or who wish to apply through the ASBA process and have complied with the parameters mentioned above will have to select this mechanism in Part A of the CAF and provide necessary details. Eligible Equity Shareholders applying through the ASBA process are required to submit their Applications by selecting the ASBA option in Part A of the CAF. Application in electronic mode will only be available with such SCSBs who provide such facility. The Eligible 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. Please note that no more than five Applications (including CAF and plain paper) can be submitted per bank account in the Issue. ASBA Investors are also advised to ensure that the CAF is correctly filled up, stating therein the bank account number maintained with the SCSB in which an amount equivalent to the amount payable on Application as stated in the CAF will be blocked by the SCSB. Acceptance of the Issue ASBA Investors 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 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 in this regard. Mode of payment An ASBA Investor agrees to block the entire amount payable on Application with the submission of the CAF, by authorising 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 details of which are 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 to the Issue. Upon receipt of intimation from the Registrar to the Issue, the SCSBs shall transfer such amount as per the Registrar to the Issue’s instruction from the bank account maintained with the SCSB, as mentioned by the Eligible Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI Regulations, into a separate bank account maintained by our Company as per the provisions of Section 73(3) of the Companies Act. The balance amount remaining after the finalisation of the Basis of Allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Manager to the respective SCSB.

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The ASBA Investor 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 Eligible 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 ASBA Investors A summary of options available to Eligible Equity Shareholders is presented below. ASBA Investors may exercise any of the following options with regard to the Equity Shares, using the respective CAFs received from Registrar:

Option Available Action Required Accept whole or part of your Rights Entitlement without renouncing the balance.

Fill in and sign Part A of the CAF (All joint holders must sign)

Accept your Rights 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 Shareholders applying under the ASBA Process will need to select the ASBA process option in the CAF and provide required details. However, in cases where this option is not selected, but the CAF is tendered to the SCSBs with the relevant details required under the ASBA process option and the SCSBs block the requisite amount, then that CAF would be treated as if the Eligible Equity Shareholder has selected to apply through the ASBA process option. Additional Equity Shares An ASBA Applicant is eligible to apply for additional Equity Shares over and above the number of Equity Shares that it is entitled to, provided that it is eligible to apply for Equity Shares under applicable law and has 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 consultation with the Designated Stock Exchange and in the manner prescribed under “Offering Information - Basis of Allotment” on page 150 of the Draft Letter of Offer. If you desire to apply for additional Equity Shares please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. Renunciation under the ASBA process Renouncees are not eligible to participate in the Issue through the ASBA process. 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 applying under the ASBA Process may make an application to subscribe to the Issue on plain paper. The Equity Shareholder shall submit the plain paper application 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. The envelope should be superscribed “Easun Reyrolle Limited - Rights Issue”. The application on plain paper, duly signed by the Investors including joint holders, in the same order as per the specimen recorded with us / Depositories, must reach the Designated Branch of the SCSBs before the Issue Closing Date and should contain the following particulars: • Name of Issuer, being Easun Reyrolle Limited; • 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;

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• Total number of Equity Shares applied for; • Total amount to be blocked at the rate of ` [●] per Equity Share; • Details of the ASBA Account such as the account number, name, address and branch of the relevant

SCSB; • In case of non-resident investors, details of the NRE/FCNR/NRO account such as the account number, • name, address and branch of the SCSB with which the account is maintained; • Except for applications on behalf of the Central or State Government, residents of Sikkim and the

officials appointed by the courts, PAN number 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 the Equity Shareholders to appear in the same sequence and order as they appear in our records.

• Additionally, all such applicants are deemed to have accepted the following: “If we understand the offering to which this application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said Equity Shares or Rights Entitlement in the United States. Accordingly, I/we understand this application should not be forwarded to or transmitted in or to the United States at any time. I/we understand that neither us, nor the Registrar, the Lead Manager or any other person acting on behalf of us will accept subscriptions from any person, or the agent of any person, who appears to be, or who we, the Registrar, the Lead Manager or any other person acting on behalf of us have reason to believe is, a resident of the United States or “U.S. Person” (as defined in Regulation S) or is ineligible to participate in the Issue under the securities laws of their jurisdiction. I/We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our residence. I/We (i) am/are, and the person, if any, for whose account I/we am/are acquiring such Rights Entitlement and/or the Equity Shares is/are, outside the United States, (ii) am/are not a “U.S. Person” (as defined in Regulation S), and (iii) is/are acquiring the Rights Entitlement and/or the Equity Shares in an offshore transaction meeting the requirements of Regulation S. I/We acknowledge that we, the Lead Manager, their affiliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.” OPTION TO RECEIVE EQUITY SHARES IN DEMATERIALISED FORM ELIGIBLE EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF OUR COMPANY UNDER THE ASBA PROCESS CAN BE ALLOTTED ONLY IN DEMATERIALISED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE HELD BY SUCH ASBA APPLICANT ON THE RECORD DATE. General instructions for ASBA Investors • Please read the instructions printed on the CAF carefully. • Pursuant to the applicability of the directions issued by SEBI vide its circular bearing number

CIR/CFD/DIL/1/2011 dated 29 April 2011, all Applicants who are QIBs or Non Institutional Investors shall, on a mandatory basis, make use of the ASBA process in the Issue. In addition all investors applying through the ASBA process including QIBs and Non Institutional Investors will have to comply with the eligibility conditions as specified in SEBI circular no. SEBI/CFD/DIL/ASBA/1/2009/30/12 dated December 30, 2009. Applicants that are QIBs and Non Institutional Investors can participate in the Issue only through the ASBA process. Eligible Equity Shareholders who are not QIBs or Non Institutional Investors can participate in the Issue through either the ASBA process or the non ASBA process.

• Applications should be made on the printed CAFs 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 the Draft Letter of Offer, Abridged Letter of Offer are liable to be rejected. The CAF must be filled in English.

• The CAF / plain paper application 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

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(assuming that such Banker to the Issue is not a SCSB), to our Company or Registrar or a Lead Manager to the Issue.

• 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 IT Act, irrespective of the amount of the Application. Except for Applications on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, CAFs without PAN will be considered incomplete and are liable to be rejected. With effect from 16 August 2010, the demat accounts for Investors for which PAN details have not been verified shall be “suspended for credit” and no Allotment and credit of Equity Shares shall be made into the accounts of such Investors.

• All payments will be made by blocking the amount in the bank account maintained with the SCSB. Cash payment or payment by cheque/ demand draft/ pay order 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.

• 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 Eligible Equity Shareholders must sign the CAF as per the specimen signature recorded with our Company and/ or Depositories.

• 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 the Depository/ 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.

• All communication in connection with Application for the Equity Shares, including any change in address of the Eligible Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of Allotment in the Issue quoting the name of the first/ sole applicant Eligible Equity Shareholder, folio numbers and CAF number.

• Only the person or persons to whom the Equity Shares have been offered shall be eligible to participate under the ASBA process.

• Only persons outside restricted jurisdictions and who are eligible to subscribe for Rights Entitlement and Equity Shares under applicable securities laws are eligible to participate.

• Only the Eligible Equity Shareholders holding shares in demat form, and who comply with all the parameters for being an ASBA Investor, are eligible to participate through ASBA process.

• Eligible Equity shareholders who have renounced their entitlement in part/ full are not entitled to apply using ASBA process.

Do’s for ASBA Investors: • Ensure that the ASBA process option is selected in part A of the CAF and necessary details are filled in.

In case of non-receipt of the CAF, the Application can be made on plain paper with all necessary details as required under the paragraph “Application on plain paper” appearing in the section titled “Offering Information - Procedure for application through the Applications Supported by Blocked Amount (“ASBA”) process” on page 134 of the Draft Letter of Offer.

• Ensure that the details about your Depository Participant and beneficiary account are correct and the beneficiary account is activated.

• Ensure that the CAFs are submitted with the Designated Branch of the SCSBs and details of the correct bank account have been provided in the CAF.

• Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied for} multiplied by {the Issue Price, 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.

• 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.

• Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form.

• Except for CAFs submitted on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, each applicant should mention their PAN allotted under the IT Act.

• 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.

• Ensure that the Demographic Details are updated, true and correct, in all respects.

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• Ensure that the account holder in whose bank account the funds are to be blocked has signed authorizing such funds to be blocked.

• Ensure that you apply through the ASBA process if you are a QIB or a Non - Institutional Investor. Don’ts for ASBA Investors: • Do not apply if you are not eligible to participate in the Issue under the securities laws applicable to your

jurisdiction. • Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB. • Do not pay the amount payable on Application in cash, by money order or by postal order. • Do not send your physical CAFs to the Lead Manager / Registrar to the Issue / Bankers to the Issue

(assuming that such Bankers to the Issue is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Bank; instead submit the same to a Designated Branch of the SCSB only.

• Do not submit the GIR number instead of the PAN as the Application is liable to be rejected on this ground.

• Do not apply if the ASBA Account has been used for five applicants. • Do not instruct respective banks to release the funds blocked under the ASBA process. • In the event that you are a QIB or a Non - Institutional Investor, do not apply in the Issue through the

non – ASBA process. Grounds for Technical Rejection under ASBA process Applications under the ASBA process are liable to be rejected on the following grounds: • Application on a Split Application Form. • Application for Allotment of Rights Entitlements or additional shares which are in physical form. • DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available

with the Registrar. • Renouncee applying under the ASBA process. • Sending CAF to a Lead Manager / the Registrar to the Issue/ the Registrar and Transfer Agent/ a Banker

to the Issue (assuming that such Banker to the Issue is not a SCSB)/ to a branch of a SCSB which is not a Designated Branch of the SCSB/ Bank.

• Insufficient funds are available with the SCSB for blocking the amount. • Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen

pursuant to regulatory orders. • Account holder not signing the CAF or declaration mentioned therein. • CAFs that do not include the certification set out in the CAF to the effect that the subscriber does not

have a registered address (and is not otherwise located) in restricted jurisdictions and is authorized to acquire the rights and the securities in compliance with all applicable laws and regulations.

• CAFs which have evidence of being executed in/ dispatched from restricted jurisdiction or executed by or for the benefit of a “U.S. Person” (as defined in Regulation S).

• An Eligible Equity Shareholder, who is not complying with any or all of the conditions for being an ASBA Investor, applies under the ASBA process.

• Submitting the GIR instead of the PAN. Depository account and bank details for ASBA Investors IT IS MANDATORY FOR ALL THE ELIGIBLE EQUITY SHAREHOLDERS WHO COMPLY WITH THE PARAMETERS FOR BEING AN ASBA INVESTOR TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL SUCH ELIGIBLE EQUITY SHAREHOLDERS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. SUCH ELIGIBLE EQUITY SHAREHOLDERS 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. Such Eligible Equity Shareholders should note that on the basis of name of these Eligible 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, the Demographic Details. Hence, Eligible Equity Shareholders should carefully fill in their Depository Account details in the CAF.

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These Demographic Details would be used for all correspondence with such Eligible Equity Shareholders including mailing of the letters intimating unblocking of bank account of the respective Eligible Equity Shareholder. The Demographic Details given by the Eligible Equity Shareholders in the CAF would not be used for any other purposes by the Registrar to the Issue. Hence, Eligible Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs/ plain paper ASBA Applications, ASBA Investors 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 of funds would be mailed to the address of the ASBA Investors as per the Demographic Details received from the Depositories. The Registrar to the Issue will give instructions to the SCSBs for unblocking funds in the ASBA Account to the extent Equity Shares are not allotted to such shareholders. ASBA Investors may note that delivery of letters intimating unblocking of the funds 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 Eligible Equity Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of the funds. Note that any such delay shall be at the sole risk of the ASBA Investors and none of the Company, the SCSBs or the Lead Manager shall be liable to compensate the ASBA Investors for any losses caused 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, (a) names of the Eligible Equity Shareholders (including the order of names of joint holders), (b) the DP ID and (c) the beneficiary account number, then such Applications are liable to be rejected. PROCEDURE FOR APPLICATION BY NON ASBA PROCESS 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 by Renouncee(s); and Part D: Form for request for Split Application Forms. The summary of options available to the Eligible Equity Shareholder who applies through the Non - ASBA process is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the enclosed CAF:

Option Available Action Required Accept whole or part of your Rights Entitlement without renouncing the balance.

Fill in and sign Part A (all joint holders must sign)

Accept your Rights Entitlement in full and apply for additional Equity Shares

Fill in and sign Part A including ‘Block III’ relating to the acceptance of Rights Entitlement and ‘Block IV’ relating to additional Equity Shares (all joint holders must sign)

Renounce your Rights Entitlement in full to one person, (Joint Renouncees are considered as one).

Fill in and sign Part B (all joint holders must sign) indicating the number of Equity Shares renounced and hand it over to the Renouncee. The Renouncees must fill in and sign Part C (all joint Renouncees must sign)

Accept a part of your Rights Entitlement and renounce the balance to one or more Renouncee(s)

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 the receipt of requests for Split Application Forms. Splitting will be permitted only once. On receipt of the Split Application Form take action as indicated below. For the Equity Shares you wish to accept, if any, fill in and sign Part A.

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For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand it over to the Renouncees. Each of the Renouncees should fill in and sign Part C for the Equity Shares accepted by them.

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.

Please note that: • Part A of the CAF must not be used by any person(s) other than the Eligible Equity Shareholders. If

used, this will render the Application invalid. • Request for Split Application Form should be made for a minimum of one Equity Share or in multiples

thereof and one Split Application Form for the balance Equity Shares, if any. • Request by the Eligible Equity Shareholder(s) for the Split Application Form should reach the Registrar

to the Issue on or before [●]. • Only the person, to whom the Draft Letter of Offer and / or Abridged Letter of Offer has been addressed

to and not the Renouncee(s) shall be entitled to renounce and to apply for Split Application Forms. CAF once split cannot be split again.

• Eligible Equity Shareholders may not renounce in favour of persons or entities in restricted jurisdictions including the United States or to or for the account or benefit of U.S. Person (as defined in Regulation S) who would otherwise be prohibited from being offered or subscribing for Equity Shares or Rights Entitlement under applicable securities law.

• While applying for or renouncing their Rights Entitlement, joint Eligible Equity Shareholders must sign the CAF in the same order and as per specimen signatures recorded with our Company / the Depositories.

• Split Application Forms(s) will be sent to the applicant(s) by post at the applicant’s risk. Acceptance of the Issue You may accept the offer to participate and apply for the Equity Shares offered, either in full or in part, by filling Part A of the CAFs and submit the same along with the application money payable to the collection branches of the Bankers to the Issue 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 or any committee thereof in this regard. Investors at centres not covered by the branches of Bankers to the Issue can send their CAFs together with the cheque drawn at par on a local bank at Chennai / demand draft payable at Chennai 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. For further details on the mode of payment, see “Offering Information - Payment options for Non ASBA Applicants” on page 145 of the Draft Letter of Offer. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above your Rights Entitlement, provided that you are eligible to apply under applicable law and have applied for all the Equity Shares 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, subject to sectoral caps and in consultation if necessary with the Designated Stock Exchange and in the manner prescribed under “Offering Information - Basis of Allotment” on page 150 of the Draft Letter of Offer. If you desire to apply for additional Equity Shares, please indicate your requirements in the place provided for additional Equity Shares in Part A of CAF. The Renouncees applying for all the Equity Shares renounced in their favor may also apply for additional Equity Shares by indicating the details of additional Equity Shares applied for in the place provided for additional Equity Shares in Part C of CAF. Renouncees applying for all the Equity Shares renounced in their favor may also apply for additional Equity Shares by indicating the details of additional Equity Shares applied for in the place provided for additional Equity Shares in Part C of CAF. Applications for additional Equity Shares by Non Resident Eligible Equity Shareholders will be subject to the permission of the RBI/ FIPB. 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.

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Renunciation the 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. Your attention is drawn to the fact that we shall not Allot and/ or register and Equity Shares in favour of more than three persons (including joint holders), partnership firm(s) or their nominee(s), minors, HUF, any trust or society (unless the same is registered under the Societies Registration Act, 1860 or the Indian Trust Act, 1882 or any other applicable law relating to societies or trusts and is authorized under its constitution or bye-laws to hold equity shares, as the case may be). Additionally, existing Equity Shareholders may not renounce in favour of persons or entities in the United States, or to, or for the account or benefit of a “U.S. Person” (as defined in Regulation S), or who would otherwise be prohibited from being offered or subscribing for Equity Shares or Rights Entitlement under applicable securities laws. Pursuant to letters dated May 25, 2012 and August 24, 2012, the RBI has allowed the renunciation of Rights Entitlements by a (i) non resident Equity Shareholder to a resident investor, (ii) a non resident Equity Shareholder to a non resident investor and (iii) a resident Equity Shareholder to a non resident investor, on the floor of the Stock Exchanges. However, renunciation of Rights Entitlements by way of private arrangement by (i) non resident Equity Shareholder to a resident investor, (ii) a non resident Equity Shareholder to a non resident investor and (iii) a resident Equity Shareholder to a non resident investor, would require prior approval of the RBI. Applications not accompanied by the aforesaid approvals are liable to be rejected. Renunciations by OCBs By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies OCBs have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, the existing Equity Shareholders who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of Renouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated non-resident entities in terms of Regulation 5(1) of RBI Notification No.20/ 2000-RB dated May 3, 2000 under FDI Scheme with the prior approval of Government if the investment is through Government Route and with the prior approval of RBI if the investment is through Automatic Route on case by case basis. Shareholders renouncing their rights in favour of OCBs may do so provided such Renouncee obtains a prior approval from the RBI. On submission of such approval to us at our Registered Office, the OCB shall receive the Abridged Letter of Offer and the CAF. 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 CAF to the Banker 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 us of the person(s) applying for Equity Shares in Part ‘C’ of the CAF to receive Allotment of such Equity Shares. Part ‘A’ of the CAF must not be used by the Renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any Equity Shares in favour of any other person. The right of renunciation is subject to the express condition that our Board shall be entitled in its absolute discretion to reject the Application from the Renouncee(s) without assigning any reason thereof. Renouncee(s) shall not be entitled to further renounce the entitlement in favour of any other person. Procedure for renunciation To renounce the entire Rights Entitlement in favour of one Renouncee If you wish to renounce the Rights Entitlement indicated in Part A of the CAF, 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 Renouncees, all joint Renouncees must sign this part of the CAF. To renounce in part/ or renounce the whole to more than one person(s) If you wish to either accept the Rights Entitlement in part and renounce the balance or renounce the entire Rights Entitlement in favour of two or more Renouncees, the CAF must be first split into requisite number of forms.

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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 Application Forms from the Registrar to the Issue, the procedure as mentioned in paragraph above shall have to be followed. In case the signature of the Eligible 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 Equity Shares are renounced should fill in and sign Part C of the CAF and submit the entire CAF to the Bankers to the Issue on or to any of the collection branches of the Bankers to the Issue as mentioned in the reverse of the CAF on or before the Issue Closing Date along with the application money in full. Further, Eligible Equity Shareholders renouncing their Rights Entitlement in whole or in part will not be eligible to participate through the ASBA process. Change and/ or introduction of additional holders If you wish to apply for Equity Shares jointly with any other person(s), not exceeding three persons, 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 our Board of Directors shall be entitled in its absolute discretion to reject the Application from the Renouncee(s) without assigning any reason thereof. Offer to Non Resident Eligible Equity Shareholders / Applicants Applications received from NRs for Allotment shall be inter alia, subject to the conditions imposed from time to time by the RBI under FEMA in the matter of receipt and refund of Application Money, Allotment, issue of letters of Allotment/ Allotment advice/ share certificates, payment of interest, dividends, etc. General permission has been granted to any person resident outside India to purchase shares offered on a rights basis by an Indian company in terms of FEMA and Regulation 6 of notification No. FEMA 20/2000-RB dated 3 May 2000. Our Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the Allotment of Equity Shares, payment of dividend etc. to the Non Resident Eligible Equity Shareholders. The Equity Shares purchased on a rights basis by non-residents shall be subject to the same conditions including restrictions in regard to the repatriability as are applicable to the original equity shares against which equity shares are issued on a right basis. The Draft Letter of Offer and CAF shall only be dispatched to Non Resident Eligible Equity Shareholders with registered addresses in India. Availability of Duplicate CAF In case the original CAF is not received, or is misplaced by an 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 the request for duplicate CAF should reach the Registrar to the Issue at least seven days prior to the Issue Closing Date. 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. If the applicant violates any of these requirements, he/ she shall face the risk of rejection of both the Applications. Neither the Registrar to the Issue nor the Lead Manager or our Company, shall be responsible for postal delays or loss of duplicate CAFs in transit, if any. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Issue on plain paper, along with cheque / demand draft (after deducting banking and postal charges) payable at Chennai which should be drawn in favour of “Easun Reyrolle Limited - Rights Issue - R” in case of resident shareholders and non-resident shareholders applying on non-repatriable basis and in favour of “Easun Reyrolle Limited - Rights Issue - NR” in case of non-

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resident shareholders applying on repatriable basis and send the same by registered post directly to the Registrar to the Issue so as to reach Registrar to the Issue on or before the Issue Closing Date. The envelope should be superscribed “Easun Reyrolle Limited - Rights Issue - R” in case of resident shareholders and Non-resident shareholders applying on non-repatriable basis, and “Easun Reyrolle Limited - Rights Issue - NR” in case of non-resident shareholders applying on repatriable basis. Applications on plain paper, duly signed by the applicants 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 Company, being “Easun Reyrolle Limited”; • Name and address of the Eligible Equity Shareholder including joint holders; • Registered Folio Number/ DP and Client ID No.; • Share certificate numbers and distinctive numbers of Equity Shares (if Equity Shares are held in

physical form); • Number of Equity Shares held as on Record Date; • Number of Equity Shares entitled as per Rights Entitlement; • Number of Equity Shares applied for as per Rights Entitlement; • Number of additional Equity Shares applied for, if any; • Total number of Equity Shares applied for; • Total amount paid at the rate of ` [●] per Equity Share; • Particulars of cheque/ demand draft/ pay order; • Savings/ current account number and name and address of the bank where the Eligible Equity

Shareholder will be depositing the refund order. In case of Equity Shares allotted in dematerialised form, the bank account details will be obtained from the information available with the Depositories;

• Details of PAN, except in case of Applications on behalf of the Central or State Government and the officials appointed by the courts and by Investors residing in Sikkim, irrespective of the total value of the Equity Shares being applied for pursuant to the Issue;

• Signature of Eligible Equity Shareholders to appear in the same sequence and order as they appear in the records of our Company;

• If the payment is made by a draft purchased from NRE/FCNR/NRO account, 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.

• Additionally, by subscribing to any Equity Shares offered in the Issue, you are deemed to have represented, warranted, acknowledged and agreed to us, the Lead Manager, as follows:

“If we understand the offering to which this application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said Equity Shares or Rights Entitlement in the United States. Accordingly, I/we understand this application should not be forwarded to or transmitted in or to the United States at any time. I/we understand that neither us, nor the Registrar, the Lead Manager or any other person acting on behalf of us will accept subscriptions from any person, or the agent of any person, who appears to be, or who we, the Registrar, the Lead Manager or any other person acting on behalf of us have reason to believe is, a resident of the United States or “U.S. Person” (as defined in Regulation S) or is ineligible to participate in the Issue under the securities laws of their jurisdiction. I/We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our residence. I/We (i) am/are, and the person, if any, for whose account I/we am/are acquiring such Rights Entitlement and/or the Equity Shares is/are, outside the United States, (ii) am/are not a “U.S. Person” (as defined in Regulation S), and (iii) is/are acquiring the Rights Entitlement and/or the Equity Shares in an offshore transaction meeting the requirements of Regulation S. I/We acknowledge that we, the Lead Manager, their affiliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.”

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Please note that those who are making the Application otherwise than on original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If an applicant violates any of these requirements, he/ she shall face the risk of rejection of both the Applications. Our Company will refund such Application Money to such applicant without any interest thereon. Last date of application The last date for submission of the duly filled in CAF or the plain paper Application is [●]. Our Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 (thirty) days from the Issue Opening Date. If the CAF, or the plain paper Application together with the amount payable is not received by the Bankers to the Issue / Registrar to the Issue, on or before the close of banking hours on the aforesaid last date or such date as may be extended by our Board or any committee of our Board, the offer contained in the Draft Letter of Offer shall be deemed to have been declined and our Board or any committee of our Board shall be at liberty to dispose of the Equity Shares hereby offered, as provided under the section titled “Offering Information - Basis of Allotment’ on page 150 of the Draft Letter of Offer. Payment options for Non - ASBA Applicants Mode of payment for Resident Eligible Equity Shareholders / Applicants • Non - ASBA Applicants who are resident in centers with the bank collection centres shall draw cheques/

drafts accompanying the CAF, crossed account payee only and marked “Easun Reyrolle Limited - Rights Issue - R”.

• Resident Non - ASBA Applicants 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 Applications together with Demand Draft / Pay Order payable at Chennai, crossed account payee only and marked “Easun Reyrolle Limited - Rights Issue - R” 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 or the Lead Manager will not be responsible for postal delays or loss of Applications in transit, if any.

Mode of payment for Non - Resident Eligible Equity Shareholders/ Applicants Non Resident Non - ASBA Applicants applying on a non-repatriation basis should send their completed CAF by registered post / speed post to the Registrar to the Issue, along with demand drafts net of bank and postal charges, payable at Chennai in favour of the Bankers to the Issue, crossed account payee only and marked “Easun Reyrolle Limited - Rights Issue - R” or “Easun Reyrolle Limited - Rights Issue - NR”, as the case may be, so that the same are received on or before Issue Closing Date in any of the following manner: Application with repatriation benefits • By Indian Rupee drafts purchased from abroad and payable at Chennai 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 India; or • By Rupee draft purchased by debit to NRE / FCNR Account maintained elsewhere in India and payable

at Chennai; or FIIs registered with SEBI must remit funds from special non resident rupee deposit account.

• Non Resident investors applying with repatriation benefits should draw crossed account payee cheques/ drafts in favour of the Bankers to the Issue and marked “Easun Reyrolle Limited - Rights Issue - NR” payable at Chennai for the full Application Money.

• In the case of NRIs who remit their application money from funds held in FCNR / NRE Accounts, refunds and other disbursements, if any shall be credited to such account, details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their application money through Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in U.S. Dollars at the rate of exchange prevailing at such time subject to the permission of RBI. Our Company will not be liable for any loss on account of exchange rate fluctuation for converting the Rupee amount into U.S. Dollar or for collection charges charged by the applicant’s bankers.

Application without repatriation benefits • As far as Non Residents holding shares on non-repatriation basis is 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 India or Rupee Draft purchased out of NRO Account maintained elsewhere in

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India but payable at Chennai. In such cases, the Allotment of Equity Shares will be on non repatriation basis.

• All cheques/ demand drafts submitted by non-residents applying on a non-repatriation basis should be drawn in favour of the Bankers to the Issue and marked “Easun Reyrolle Limited - Rights Issue - R” payable at Chennai and must be crossed ‘account payee only’ for the full Application Money. The CAF duly completed together with the amount payable on Application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

• Applicants 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.

Note: • In case where repatriation benefit is available, interest, dividend, sales proceeds derived from then

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 CAF 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. General instructions for Non - ASBA Applicants (a) Please read the instructions printed on the enclosed CAF carefully. (b) Application should be made on the printed CAF, provided by our Company or a plain paper Application

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 the 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 applicants, details of occupation, address, father’s/ husband’s name must be filled in block letters.

(c) The CAF together with cheque/ demand draft should be sent to the Bankers to the Issue / Collecting Bank or to the Registrar to the Issue, and not to our Company, the Lead Manager. Resident applicants residing at places other than cities where the branches of the Bankers to the Issue have been authorized by our Company for collecting Applications, will have to make payment by crossed account payee cheques or demand drafts / pay orders payable at Chennai and marked “Easun Reyrolle Limited - Rights Issue” and send their CAFs to the Registrar to the Issue by registered post/ speed post. If any portion of the CAF is/ are detached or separated, such Application is liable to be rejected.

(d) Each of the applicants should mention his/ her PAN allotted under the IT Act along with the Application for the purpose of verification of the number. Except in case of Applications on behalf of the Central or State Government and the officials appointed by the courts and by Investors residing in Sikkim, CAFs without the PAN details will be considered incomplete and are liable to be rejected.

(e) Investors holding Equity Shares in physical form, are advised to provide information as to their savings/ current account number, the nine digit MICR number and the name of the Company, branch 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. Applications not containing such details are liable to be rejected.

(f) All payment should be made by cheques/ demand draft only. Application through the ASBA process as mentioned above is acceptable. Cash payment is not acceptable. 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.

(g) 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 Eligible

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Equity Shareholders must sign the CAF or the plain paper Application as per the specimen signature recorded with our Company.

(h) In case of an Application under a 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 the relevant investment under the Issue and to sign the Application and a certified true 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 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.

(i) 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 applicants who are Renouncees, the number of applicants should not exceed three. 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.

(j) Application(s) received from Non Residents/ NRIs, or persons of Indian origin residing abroad for Allotment of Equity Shares shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of Application Money, Allotment of Equity Shares, subsequent issue and Allotment of Equity Shares, interest, dispatch of share certificates, etc. In case a Non Resident Eligible Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF.

(k) All communication in connection with Application for the Equity Shares, including any change in address of the Eligible Equity Shareholders should be addressed to the Registrar to the Issue prior to the Allotment Date quoting the name of the first/ sole applicant Eligible Equity Shareholder, folio numbers and CAF number. Please note that any intimation for change of address of Eligible Equity Shareholders, after the Allotment Date, should be sent to the Registrar and Share Transfer Agent, in the case of Equity Shares held in physical form and to the respective Depository Participant, in case of Equity Shares held in dematerialised form.

(l) Split Application Forms cannot be re-split. (m) Only the person or persons to whom Equity Shares have been offered and not Renouncee(s) shall be

entitled to obtain Split Application Forms. (n) Applicants must write their CAF number at the back of the cheque/ demand draft. (o) A separate cheque/ demand 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 (f) above).

(p) No receipt will be issued for Application Money received. The Bankers to the Issue/ Collecting Bank/ Registrar to the Issue will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.

(q) Our Company shall not allot and/ or register any Equity Shares in favour of any person situated or subject to any jurisdiction where the offering in terms of the Draft Letter of Offer could be illegal or requires compliance with applicable securities laws.

(r) The distribution of the Draft Letter of Offer and issue of Equity Shares under the Issue and Rights Entitlements to persons in certain jurisdictions outside India may be restricted by legal requirements in those jurisdictions. Persons in the United States and such other jurisdictions are instructed to disregard the Draft Letter of Offer and not to attempt to subscribe for Rights Issue Equity Shares.

Do’s for non-ASBA Investors: (a) Check if you are eligible to apply i.e. you are an Eligible Equity Shareholder on the Record Date; (b) Read all the instructions carefully and ensure that the cheque/ draft option is selected in part A of the

CAF and necessary details are filled in; (c) In the event you hold Equity Shares in dematerialised form, ensure that the details about your

Depository Participant and beneficiary account are correct and the beneficiary account is activated as the Equity Shares will be allotted in the dematerialised form only;

(d) Ensure that your Indian address is available to our Company and the Registrar and Transfer Agent, in case you hold Equity Shares in physical form or the depository participant, in case you hold Equity Shares in dematerialised form;

(e) Ensure that the value of the cheque/ draft submitted by you is equal to the (number of Equity Shares applied for) X (Issue Price of Equity Shares, as the case may be) before submission of the CAF;

(f) Ensure that you receive an acknowledgement from the collection centres of the collection bank for your submission of the CAF in physical form;

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(g) Ensure that you mention your PAN allotted under the IT Act with the CAF, except for Applications on behalf of the Central and State Governments, residents of Sikkim and officials appointed by the courts;

(h) 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; and

(i) Ensure that the Demographic Details are updated, true and correct, in all respects. Dont’s for non-ASBA Investors: (a) Do not apply through the non-ASBA process if you are a QIB or a Non – Institutional Investor; (b) Do not apply on duplicate CAF after you have submitted a CAF to a collection centre of the Bankers to

the Issue; (c) Do not pay the amount payable on Application in cash, by money order or by postal order; (d) Do not submit the GIR number instead of the PAN as the Application is liable to be rejected on this

ground; (e) Do not submit an Application accompanied with stockinvest; or (f) Do not apply if you are not eligible to participate in the Issue under the securities laws applicable to your

jurisdiction. Grounds for Technical Rejections for non-ASBA Investors 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 Application Money payable; • Bank account details (for refunds) are not given and the same are not available with the Depository

Participant (in the case of Equity Shares held in dematerialised form) or the Registrar and Transfer Agent (in the case of Equity Shares held in physical form);

• Age of the first applicant not given (in case of Renouncees); • Except in case of Applications on behalf of the Central or State Government and the officials appointed

by the courts and by Investors residing in Sikkim, PAN details not given; • PAN in CAF not matching the PAN in the DP ID; • 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 existing shareholder does not match with the one given on the CAF and for

Renouncees if the signature does not match with the records available with their depositories; • If the applicant desires to have Equity Shares in electronic form, but the CAF does not have the

applicant’s depository account details; • CAF is not submitted by the applicants within the time prescribed as per the CAF and the Draft Letter of

Offer; • CAF not duly signed by the sole/ joint applicants; • CAF by OCBs unless accompanied by specific/general approval from the RBI permitting such OCBs to

invest in the Issue; • CAF accompanied by stockinvest/ outstation cheques/ post – dated cheques/ outstation money orders/

postal orders/ outstation demand drafts; • CAFs that do not include the certifications set out in the CAF to the effect that, among other thing, the

subscriber is not located in restricted jurisdictions and is authorized to acquire the Rights Entitlements and Equity Shares under the Issue in compliance with all applicable laws and regulations;

• CAFs which have evidence of being executed in/dispatched from restricted jurisdictions; • In case no corresponding record is available with the Depositories that matches three parameters,

namely, names of the applicants (including the order of names of joint holders), the 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 last available address in India has not been provided;

• Multiple Applications, including where an applicant submits a CAF and a plain paper Application; and • Duplicate Applications; • In case the GIR number is submitted instead of the PAN; and • Applications by Renouncee(s) who are persons not competent to contract under the Indian Contract Act,

1872, including minors. 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 an integral part of the Draft Letter of Offer and

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must be carefully followed. The CAF is liable to be rejected for any non-compliance of the provisions contained in the Draft Letter of Offer or the CAF. Option to receive Equity Shares in Dematerialised Form Except for ASBA Applicants, Investors shall be Allotted Equity Shares in dematerialised (electronic) form at the option of the Investor. Our Company, along with the Registrar and Transfer Agent, has signed tripartite agreements dated June 20, 2001 and June 07, 2002 entered into with NSDL and CDSL, respectively, which enables the Investors to hold and trade in securities in dematerialised form, instead of holding the securities in the form of physical certificates. Our Company has appointed Integrated Enterprises (India) Limited as the Registrar to the Issue, which has connectivity with both Depositories, and can therefore, credit the Equity Shares Allotted in dematerialised form. In the Issue, Allottees who have opted for Equity Shares in dematerialised form will receive their Equity Shares in the form of an electronic credit to their beneficiary account with a Depository Participant. Investors will have to give the relevant particulars for this purpose in the appropriate place in the CAF or the plain paper application, as the case may be. Applications, which do not accurately contain this information, will receive securities in physical form. No separate Applications for securities in physical and/ or dematerialised form should be made. If such Applications are made, the Application for physical securities will be treated as multiple Applications and is liable to be rejected. In case of partial Allotment, Allotment will be done in demat option for the shares sought in demat and balance, if any, may be allotted in physical shares. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM. The procedure for availing the facility for Allotment of Equity Shares in the 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 registered in our records. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as registered in our records). In case of Investors having various folios 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 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 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 the Issue may be made in dematerialized form even if the original Equity Shares 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 our records.

The 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 participant will provide to the applicant 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 the Issue. In case these details are incomplete or incorrect, the application is liable to be rejected. Payment of refunds to Non - ASBA Applicants

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Our Company will issue and dispatch refund orders within a period of 15 days from the Issue Closing Date. If such money is not repaid within the stipulated time period, our Company shall pay that money with interest at the rate of 15% per annum for the delayed period at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act. The payment of refund to Non - ASBA Applicants, if any, would be done through any of the following modes: 1. NECS - Payment of refund would be done through NECS for Investors having an account at any of the

centres 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 records of the Registrar and Transfer Agent. The payment of refunds is mandatory for Investors having a bank account at any centre where NECS facility has been made available by the RBI (subject to availability of all information for crediting the refund through NECS), except where the Investor, being eligible, opts to receive refund through NEFT, direct credit or RTGS.

2. National Electronic Fund Transfer (“NEFT”) - Payment of refund shall be undertaken through NEFT wherever the Investor’s bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code 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 Code 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 Refund Banker(s), in this case being, [●] shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Refund Bank(s) for the same would be borne by our Company.

4. RTGS - If the refund amount exceeds ` 2 lakhs, the Investors 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 NECS or any other eligible mode. Charges, if any, levied by the refund bank(s) for the same would be borne by the 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 dispatched through Speed Post/ Registered Post. Such refunds will be made by cheques, pay orders or demand drafts drawn and will be payable at par.

6. In case of any category of Investors specified by SEBI, crediting of refunds to the Investors in any other electronic manner permissible under the banking laws of India for the time being in force which is permitted by 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 are mandatorily required to be given for printing on the refund orders. Bank account particulars, where available, will be printed on the refund orders / refund warrants which can then be deposited only in the account specified. We will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Basis of Allotment Subject to the provisions contained in the Draft Letter of Offer, the Articles of Association and the approval of the Designated Stock Exchange, the Board will proceed to allot the Equity Shares 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 pertaining to fractional entitlements in case of any shareholding other than in multiples of [●]. Investors whose fractional entitlements are being ignored would be given preference in allotment of one additional Equity Share. The Allotment of such Equity Shares will be at the sole discretion of the Board of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential Allotment.

(c) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as part of the Issue 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

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making full Allotment in (a) and (b) above. The Allotment of such Equity Shares will be at the sole discretion of the Board of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and will not be a preferential Allotment.

(d) Allotment to Renouncees who having applied for all the Equity Shares renounced in their favour, have applied for additional Equity Shares provided there is surplus available after making full Allotment under (a), (b) and (c) above. The Allotment of such Equity Shares will be at the sole discretion of the Board of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential Allotment.

(e) Allotment to any other person as our Board may, in its absolute discretion deem fit provided there is surplus available after making Allotment under (a), (b), (c) and (d) above, and the decision of the Board in this regard shall be final and binding.

In the event of oversubscription, Allotment will be made within the overall size of the Issue. Intention and extent of participation by the Promoters and the members of the Promoter Group in the Issue Mr. Hariharan Eswaran, Mr. Raj Hari Eswaran, Easun Engineering Company Limited, Easun Products of India Private Limited and Sowraj Investments Private Limited, Promoters of our Company, have confirmed, on behalf of the Promoter Group, vide their letter dated September 18, 2013 that they intend to subscribe to the full extent of their Rights Entitlement in the Issue, in compliance with regulation 10(4) of the SEBI Takeover Regulations. Mr. Hariharan Eswaran, Mr. Raj Hari Eswaran, Easun Engineering Company Limited, Easun Products of India Private Limited and Sowraj Investments Private Limited, Promoters of our Company, on their behalf and on behalf of the Promoter Group, have further confirmed vide their letter dated September 18, 2013 that, they intend to (i) subscribe for additional Equity Shares and (ii) subscribe for unsubscribed portion in the Issue, if any. Such subscription to additional Equity Shares and the unsubscribed portion, if any, to be made by the Promoter Group, shall be in accordance with regulation 10(4) of the SEBI Takeover Regulations. Further, such subscription shall not result in breach of the minimum public shareholding of 25%, as stipulated in the Clause 40A of the Listing Agreement. Letter of Allotment / Allotment Advice / Share Certificate / Demat Credit / Refund Order We will issue and dispatch Allotment advice / share certificates / demat credit and / or letters of regret along with refund order or credit the allotted Equity Shares 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 we become liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier) we and every Director who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to pay the money with interest as prescribed under Section 73 of the Companies Act. Investors residing at centers where clearing houses are managed by the RBI will get refunds through National Electronic Clearing Service (“NECS”) except where Investors have not provided the details required to send electronic refunds. In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, advice regarding their 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 of refund within 15 days of the Issue Closing Date. In case of those Investors who have opted to receive their Rights Entitlement in physical form and we issue letter of allotment, the corresponding share certificates will be kept ready within three months from the date of Allotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Companies Act or other applicable provisions, if any. Investors are requested to preserve such letters of allotment, which would be exchanged later for the share certificates. The letter of allotment / refund order would be sent by registered post / speed post to the sole / first Investor’s registered address in India or the Indian address provided by the Equity Shareholders from time to time. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole / first Investor. Adequate funds would be made available to the Registrar to the Issue for this purpose.

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Disposal of Application and Application Money 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. Please note that no such acknowledgment will be issued by our Company. 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 applicant within 15 days from the Issue Closing Date. In the event that there is a delay of making refunds beyond eight days after our Company becomes liable to make such refunds, i.e. on the expiry of 15 days from the Issue Closing Date, our Company shall pay interest for the delayed period at rates prescribed under sub-sections (2) and (2A) of section 73 of the Companies Act. For further instruction, please read the CAF carefully. Underwriting Our Company has not currently entered into any underwriting agreements. However, it may enter into such an agreement for the purpose of the Issue at an appropriate time and on such terms and conditions as it may deem fit. In the event our Company enters into such an arrangement, it shall be done prior to the filing of the Letter of Offer with the Designated Stock Exchange and the Letter of Offer will be updated to reflect the same. Impersonation As a matter of abundant caution, attention of the investors is specifically drawn to the provisions of Sub-section (1) of Section 68A of the Companies Act which is reproduced below: “Any person who (a) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares

therein, or (b) otherwise induces a Company to allot, or register any transfer of shares therein to him, or any other

person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years”. Payment by Stockinvest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated 5 November 2003, the stockinvest scheme has been withdrawn with immediate effect. Hence, payment through stockinvest would not be accepted in the Issue. Investment by FIIs In accordance with the current regulations, the following restrictions are applicable for investment by FIIs: No single FII can hold more that 10% of our post-Issue paid-up share capital. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 5% of our total paid-up share capital, in case such sub-account is a foreign corporate or an individual. Applications will not be accepted from FIIs in restricted jurisdictions. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or are applying in the Issue for Equity Shares for an amount exceeding ` 2 lakhs shall mandatorily make use of ASBA facility. 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. Applications will not be accepted from NRIs in restricted jurisdictions. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or are applying in the Issue for Equity Shares for an amount exceeding ` 2 lakhs shall mandatorily make use of ASBA facility. Procedure for Applications by Mutual Funds

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A separate application can be made in respect of each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications. The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made. Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number CIR/CFD/DIL/1/2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or are applying in the Issue for Equity Shares for an amount exceeding ` 2 lakhs shall mandatorily make use of ASBA facility. Investment by QFIs In terms of circulars dated January 13, 2012, SEBI and RBI have permitted investment by QFIs in Indian equity issues, including in rights issues. A QFI can invest in the Issue through its depository participant with whom it has opened a demat account. No single QFI can hold more than five percent of paid up equity capital of the company at any point of time (includes investment made as a QFI and FDI). Further, aggregate shareholding of all QFIs shall not exceed ten percent of the paid up equity capital of the Company at any point of time. Applications will not be accepted from QFIs in restricted jurisdictions. QFI applicants which are QIBs, Non-Institutional Investors or whose application amount exceeds ` 2 lakhs can participate in the Issue only through the ASBA process. The Board of Directors declares that: (a) All monies received out of the Issue shall be transferred to a separate bank account referred to

subsection (3) of Section 73 of the Companies Act; (b) Details of all monies utilized out of the Issue shall be disclosed under an appropriate separate head in

our balance sheet indicating the purpose for which such monies have been utilised till the time any of the Issue Proceeds remained unutilised;

(c) Details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate separate head in our balance sheet indicating the form in which such unutilized monies have been invested; and

(d) We may utilize the funds collected in the Issue only after finalisation of the Basis of Allotment. Our undertakings We undertake the following: 1. The complaints received in respect of the Issue shall be attended to by us expeditiously and

satisfactorily. 2. All steps for completion of the necessary formalities for listing and commencement of trading at all

Stock Exchanges where the Equity Shares are to be listed will be taken within 7 working days of finalisation of Basis of Allotment.

3. The funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by us.

4. Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the Investor within 15 days of the Issue Closing Date, giving details of the banks where refunds shall be credited along with amount and expected date of electronic credit of refund.

5. The allotment of Equity Shares and dispatch of refund orders / share certificate and demat credit is completed within 15 days from the Issue Closing Date

6. The certificates of the securities / demat credit / refund orders to the non-resident Indians shall be dispatched within the specified time.

7. The Company agrees that it shall pay interest @ 15% p.a. if the allotment is not made and / or the refund orders are not dispatched to the investors within 15 days from the Issue Closure Date for the period of delay beyond 15 days.

8. No further issue of securities affecting equity capital of our Company shall be made till the securities issued/offered through the Draft Letter of Offer Issue are listed or till the application money are refunded on account of non-listing, under-subscription etc.

9. 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.

10. At any given time there shall be only one denomination of Equity Shares. 11. We accept full responsibility for the accuracy of information given in the Draft Letter of Offer and

confirm that to the best of its knowledge and belief, there are no other facts the omission of which makes any statement made in the Draft Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts.

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12. All information shall be made available by the Lead Manager and the Issuer to the Investors at large and no selective or additional information would be available for a section of the Investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc.

13. We shall comply with such disclosure and accounting norms specified by SEBI from time to time. Minimum Subscription If we do not receive the minimum subscription of 90% in the Issue or if the Promoters and Promoter Group fails to subscribe for unsubscribed portion in the Issue after the Issue Closing Date or the subscription level falls below 90% after the Issue Closing Date on the account of cheques being returned unpaid or withdrawal of applications, we shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after we become liable to pay the subscription amount (i.e., 15 days after the Issue Closing Date), we and every officer in default shall be jointly and severally liable to pay interest for the delayed period, as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act. Important • Please read the Draft Letter of Offer carefully before taking any action. The instructions contained in the

accompanying CAF are an integral part of the conditions of the Draft Letter of Offer and must be carefully followed; otherwise the Application is liable to be rejected.

• It is to be specifically noted that the Issue of Equity Shares is subject to the risk factors mentioned in the

section titled “Risk Factors” on page 7 of the Draft Letter of Offer. • All enquiries in connection with the Draft Letter of Offer, 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 Eligible Equity Shareholder as mentioned on the CAF and super-scribed “Easun Reyrolle Limited - Rights Issue” on the envelope) to the Registrar to the Issue at the following address:

Integrated Enterprises (India) Limited SEBI Regn. No.: INR 000000544 IInd Floor, “Kences Towers” No. 1, Ramakrishna Street, North Usman Road, T Nagar, Chennai - 600 017 Tel.: +91 44 2814 0801 - 03 Fax: +91 44 2814 2479 E-mail: [email protected] Investor Grievance e-mail id: [email protected] Website: www.integratedindia.in Contact Person: Anusha N The Issue will be kept open for a minimum of 15 days unless extended, in which case it will be kept open for a maximum of 30 days.

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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 the Draft Letter of Offer, which are or may be deemed material have been entered or are to be entered into by our Company. These contracts and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of the Company situated at “Temple Tower”, VI Floor, 672, Anna Salai, Nandanam, Chennai - 600 035 from 10.00 AM to 02.00 p.m. from the date of the Draft Letter of Offer until the date of closure of the Rights Issue. A. Material Contracts 1. Issue Agreement dated September 04, 2013 entered between our Company and the Lead Manager 2. Agreement dated September 16, 2013 entered between our Company and the Registrar to the Issue 3. Escrow Agreement dated [●] between our Company, the Lead Manager, the Registrar to the Issue, and

Banker to the Issue. B. Documents available for inspection 1. Fresh Certificate of Incorporation of the Company dated November 11, 1997. 2. Memorandum and Articles of the Company. 3. Tripartite agreements dated October 20, 2000 and October 21, 2000 entered into with NSDL and CDSL

respectively. 4. Copy of the Resolution passed by the Directors in their meeting dated November 17, 2012 approving the

Issue. 5. Copy of the Resolution passed by the members through postal ballot on January 30, 2013 approving the

Issue. 6. Consents of the Promoters, Directors, Compliance Officer, Lead Manager to the Issue, Legal Counsel,

Registrar to the Issue, Bankers to the Company, Statutory Auditors and Bankers to the Issue to include their names in the Draft Letter of Offer to act in their respective capacities.

7. Letter of Offer dated September 29, 1995 for the previous rights issue made by the Company. 8. Copy of resolution appointing the Managing Director. 9. Shareholders Resolution passed at the Annual General Meeting held on September 26, 2012 appointing

M/s Brahmayya & Co. and M/s R Subramanian & Co., Chartered Accountants, as statutory auditors. 10. Annual Report of the Company for the financial year ended March 31, 2013. 11. Statement of Tax Benefits dated September 10, 2013 received from the Statutory Auditors of our

Company. 12. Certificate dated September 16, 2013 given by M Jaya, Chartered Accountant with respect to availment

and utilization of unsecured loans from Easun Products of India Private Limited and Sowraj Investments Private Limited and proposed to be re-paid out of the proceeds of the Issue.

13. Due Diligence certificate dated September 18, 2013. 14. In-principle listing approval for this Issue dated [●] and [●] from BSE and NSE respectively. 15. SEBI Observation letter no. [●] dated [●]. Any of the contracts or documents mentioned in the Draft Letter of Offer may be amended or modified at any time if so required in the interest of the Company or if required by the other parties, without reference to the Shareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.

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DECLARATION

No statement made in the Draft Letter of Offer contravenes any of the provisions of the Companies Act, 1956 and the rules made thereunder. All the legal requirements connected with the said issue as also the regulations, instructions etc. issued by SEBI, Government of India, Reserve Bank of India and any other competent authority in this behalf, have been duly complied with. We further certify that all statements made in the Draft Letter of Offer are true and correct. On behalf of the Board of Directors of Easun Reyrolle Limited

Hariharan Eswaran * Chairman

Raj Hari Eswaran Managing Director

J D N Sharma * Director

William Stanley Jones * Director

Rakesh Garg * Director

Mr. Mahalingam Raman * Director

K N Nagesha Rao Secretary and VP (Corporate Finance)

* Signed through power of attorney holder. Place: Chennai Date: September 18, 2013