gic housing finance limited · gic housing finance limited (incorporated on 12 th december 1989...

LETTER OF OFFER(For private circulation to equity

shareholders of the Company only)

GIC HOUSING FINANCE LIMITED(Incorporated on 12th December 1989 under the Companies Act, 1956 as GIC Grih Vitta Limited

and renamed to GIC Housing Finance Limited on 16th November 1993)Registered and Corporate Office: Universal Insurance Building,

3rd Floor, Sir P.M. Road, Fort, Mumbai - 400 001. Tel: (022) - 2285 3866/68. (022) - 2285 1766/67 Fax: (022) – 2288 4985.

E-mail: [email protected]; Website: www.gichfindia.com

ISSUE OF 89,75,561 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PREMIUM OF RS. 6/- PER EQUITY SHAREAGGREGATING RS. 14,36,08,976 ON RIGHTS BASIS TO THE EQUITY SHAREHOLDERS OF THE COMPANY IN THERATIO OF 1 EQUITY SHARE FOR EVERY 2 EQUITY SHARES HELD ON BOOK CLOSURE DATE (i.e. 17th SEPTEMBER2004).

GENERAL RISKS: Investment in equity and equity related securities involve a degree of risk and investors should not investany funds in this offer, unless they can afford to take the risk of losing their investment. Investors are advised to read the riskfactors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely ontheir own examination of the Issuer and the offer including the risks involved. The securities have not been recommended orapproved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this docu-ment. Specific attention of investors is invited to the statement of Risk Factors on pages i to iv of the Letter of Offer.

ISSUER’S ABSOLUTE RESPONSIBILITY: The Issuer, having made all reasonable inquiries, accepts responsibility for andconfirms that this Letter of Offer contains all information with regard to GIC Housing Finance Limited and the Issue, which ismaterial in the context of the Issue, that the information contained in this Letter of Offer is true and correct in all material aspectsand is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that thereare no other facts, the omission of which makes this document as a whole or any of such information or the expression of anysuch opinions or intentions misleading in any material respect.

LISTING: The Company’s existing Equity Shares are listed on BSE,the designated stock exchange, NSE, CSE and MSE. TheEquity Shares to be issued through this Issue would also be listed on the Stock Exchanges mentioned above. The Companyhas received the in-principle approvals for listing from BSE, NSE, CSE and MSE vide their letters dated 23-08-2004,12-08-2004, 03-09-2004, and 03-08-2004 respectively.

LEAD MANAGER TO THE ISSUE REGISTRARS TO THE ISSUE

Sharepro ServicesSatam Estate, 3rd Floor,Above Bank of Baroda,Chakala, Andheri (East),Mumbai – 400 099.Tel: (022) 2821 5168/5169Fax: (022) 2837 5646E-mail: [email protected]

UTI Securities Limited4th Floor, Merchant Chamber,41, Sir Vithaldas Thackersey Marg,New Marine Lines,Mumbai - 400 020.Tel:(022) 5667 0672/0684Fax: (022) 2203 0165E-mail: [email protected]

ISSUE OPENS ON Wednesday, September 29, 2004

LAST DATE FOR RECEIPT OF REQUESTS FOR SPLIT FORMS Wednesday, October 13, 2004

ISSUE CLOSES ON Thursday, October 28, 2004

GIC HOUSING FINANCE LIMITED

TABLE OF CONTENTS

RISK FACTORS i

GENERAL INFORMATION 1

CAPITAL STRUCTURE 8

TERMS OF THE PRESENT OFFER 12

TAX BENEFITS TO THE COMPANY AND ITS SHAREHOLDERS 22

PARTICULARS OF THE ISSUE 25

COMPANY AND MANAGEMENT 25

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 55

FINANCIAL PERFORMANCE OF THE COMPANY 58

OUTSTANDING LITIGATIONS 72

PROMISE VS PERFORMANCE IN RESPECT OF PREVIOUS ISSUES 83

STOCK MARKET DATA FOR EQUITY SHARES OF THE COMPANY 84

BASIS OF ISSUE PRICE 85

MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS 88


ABBREVIATIONS AND GLOSSARY OF THE TERMS USED:ACT THE COMPANIES ACT, 1956

AGM ANNUAL GENERAL MEETING

ARTICLES OR ARTICLESOF ASSOCIATION OR AOA ARTICLES OF ASSOCIATION OF THE COMPANY

AS ACCOUNTING STANDARD

AY ASSESSMENT YEAR

BANKERS TO THE ISSUE HDFC BANK AND THEIR COLLECTING CENTRES

THE BOARD OF DIRECTORS OF THE COMPANY OR THE COMMITTEE AUTHORISED TO ACT ONBOARD ITS BEHALF

BSE/DESIGNATEDSTOCK EXCHANGE THE STOCK EXCHANGE, MUMBAI

CAF COMPOSITE APPLICATION FORM

CAR CAPITAL ADEQUACY RATIO

CDSL CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED

CSE THE CALCUTTA STOCK EXCHANGE ASSOCIATION LIMITED

DEMAT DEMATERIALISED (ELECTRONIC/DEPOSITORY AS THE CONTEXT MAY BE)

DP DEPOSITORY PARTICIPANT

EMI EQUATED MONTHLY INSTALLMENT

EPS EARNINGS PER SHARE

THE ISSUED, SUBSCRIBED AND PAID UP EQUITY SHARE CAPITAL OF THE COMPANY AND THEEQUITY SHARES ADDITIONAL EQUITY SHARES OF THE COMPANY OFFERED PURSUANT TO THE RIGHTS ISSUE

FCNR FOREIGN CURRENCY NON RESIDENT

FEMA FOREIGN EXCHANGE MANAGEMENT ACT 1999, AND THE SUBSEQUENT AMENDMENTS THERETO

FII FOREIGN INSTITUTIONAL INVESTOR AS DEFINED UNDER SEBI (FOREIGN INSTITUTIONALINVESTORS) REGULATIONS, 1995 REGISTERED WITH SEBI AND AS DEFINED UNDER FEMA(TRANSFER OR ISSUE OF SECURITY BY A PERSON RESIDENT OUTSIDE INDIA)REGULATIONS, 2000 AND UNDER OTHER APPLICABLE LAWS IN INDIA

FIPB FOREIGN INVESTMENT PROMOTION BOARD

FY FINANCIAL YEAR

GIC GENERAL INSURANCE CORPORATION OF INDIA

GICHFL OR THE COMPANY GIC HOUSING FINANCE LIMITED

GOI / GOVERNMENT GOVERNMENT OF INDIA

GUIDELINES / SEBI SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES 2000 AND SUBSEQUENTGUIDELINES AMENDMENTS THERETO

HFCs HOUSING FINANCE COMPANIES

HUF HINDU UNDIVIDED FAMILY

ISIN INTERNATIONAL SECURITIES IDENTIFICATION NUMBER ALLOTTED BY THE DEPOSITORY

ISSUER GIC HOUSING FINANCE LIMITED

ISSUE PRICE RS. 16 PER EQUITY SHARE OF RS. 10 EACH

LEAD MANAGER UTI SECURITIES LIMITED

LOF / LETTER OF OFFER LETTER OF OFFER OF THE COMPANY FOR THE RIGHTS ISSUE OF 89,75,561 EQUITY SHARES OFRS. 10 EACH

MEMORANDUM OR MEMORANDUM OF ASSOCIATION OF THE COMPANYMEMORANDUM OFASSOCIATION OR MOA


MSE MADRAS STOCK EXCHANGE

NICL NATIONAL INSURANCE COMPANY LIMITED

IFCI IFCI LIMITED

NEW INDIA THE NEW INDIA ASSURANCE COMPANY LIMITED

NHB NATIONAL HOUSING BANK

NPA NON PERFORMING ASSETS

NR NON RESIDENT

NRE NON RESIDENT EXTERNAL

NRI NON RESIDENT INDIAN

NRO NON RESIDENT ORDINARY

NSDL NATIONAL SECURITIES DEPOSITORY LIMITED

NSE NATIONAL STOCK EXCHANGE OF INDIA LIMITED

OCB OVERSEAS CORPORATE BODIES

OICL THE ORIENTAL INSURANCE COMPANY LIMITED

PAN/GIR NO INCOME TAX PERMANENT ACCOUNT NUMBER / GENERAL INDEX REFRENCE NUMBER

PLR PRIME LENDING RATE

RBI RESERVE BANK OF INDIA

BOOK CLOSURE DATE 17TH SEPTEMBER 2004

REGISTRARS / REGISTRARS SHAREPRO SERVICESTO THE ISSUE

RIGHTS ISSUE PRESENT ISSUE OF 89,75,561 EQUITY SHARES OF RS. 10 EACH

SEBI SECURITIES AND EXCHANGE BOARD OF INDIA

SEBI GUIDELINES SEBI (DISCLOSURE & INVESTOR PROTECTION) GUIDELINES, 2000

SEBI (SAST) REGULATIONS SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTIANTIAL ACQUISITION OF SHARES ANDTAKEOVERS), REGULATIONS, 1997

STOCK EXCHANGES NSE, BSE, CSE AND MSE REFERRED TO COLLECTIVELY

SUUTI SPECIFIED UNDERTAKING OF THE UNIT TRUST OF INDIA

UNITED INDIA UNITED INDIA INSURANCE COMPANY LIMITED

In this Letter of Offer, all references to “Rupees” and “Rs.” are to the lawful currency of India.

In this Letter of Offer, any discrepancies in any table between total and the sums of the amount listed are due to rounding off. Anypercentage amounts, as set forth in “Risk Factors”, “Management’s discussion and analysis of financial condition and results ofoperations” and elsewhere in this Letter of Offer, unless otherwise indicated, have been calculated on the basis of the amountsdisclosed in the financial statements prepared in accordance with the Indian Accounting Standards.


RISK FACTORS

An investment in Equity Shares involves a high degree of risk. The investor should carefully consider all of the information providedin this Letter of Offer, including the risks and uncertainties described below, before making an investment in the Company’s EquityShares. If any of the following risks actually occur, Company’s business, results of operations and financial condition could suffer,the trading price of the Company’s Equity Shares could decline, and the investors may lose all or part of their investment.

Note: Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial or otherimplication of any risks mentioned herein under:

Internal Risk Factors

1. The housing finance companies, including GICHFL face market risk because of lack of hard data and historical performancemeasures to assess the real risk. This is typical of developing markets like India.

Management Perception: The setting up of Credit Information Bureau of India Ltd. (CIBIL) is a step in the direction ofmitigating this risk.

2. Housing companies, including GICHFL face credit risk on account of the inherent nature of the business.

Management Perception: GICHFL has a strong credit control mechanism in place with clear policies and guidelines inrespect of scrutiny of any loan proposal. The effective appraisal systems are in place and followed uniformly. These measuresminimize the credit risk to a great extent.

3. GICHFL faces Asset Liability Mismatch caused due to difference in maturity profile of assets and liabilities. Assets generatedby HFCs have an average tenor of 10-15 years as against this; liabilities contracted are of a lesser tenor.

Management Perception: The average tenor of the Assets generated by GICHFL is 13 years, whereas funds from banksare available for a maximum tenor of 7-8 years. This is a peculiar risk faced by Housing Finance companies.

4. The borrowings of GICHFL are largely linked to benchmarks like the PLR of banks and institutions and hence our debt ismainly floating in nature, exposing us to interest rate risk.

Management Perception: The interest rate risk of the Company is minimized due to the fact that in the past 2 years around80% of the loans disbursed has floating rate of interest.

5. NPAs (Net) of the Company account 7.45% of the total advances as on 31-03-2004. Any further increase in the NPA levelsmay affect the liquidity position of the Company adversely.

Management Perception: The Company has identified loans given to builders as one of the major reasons for NPAs.Accordingly, from the financial year 2000-01, the Company has stopped sanctioning loans under this category. Currently93% of the loan portfolio of the Company is to retail category in which the Net NPAs have reduced to 4.89% in FY 04 ascompared to 5.53% in FY 03.

6. In case of recovery of bad loans, weak and lengthy legal procedures affect us adversely.

Management Perception: The NHB Act has been amended and recovery procedures and foreclosure norms have beenincorporated. NHB is also in the process of introducing mortgage credit guarantee scheme for providing cover to HFCsagainst possible defaults. The enforcement of the Securitization Act will help the Company in speedy recovery of bad loans.

7. The Company has a contingent liability not provided for on account of three tax disputes in appeal amounting to Rs. 457.18lacs as on 31st March 2004. To the extent of this contingent liability becomes actual liability, it will adversely affect our resultsof operations and financial condition.

Management Perception: The Company has already paid the said dues to the Income Tax Department and there will not beany cash outflow from the Company on account of this contingent liability.

8. The investments made by the Company during the period 1995-1997 in equity shares (unquoted), redeemable preferenceshares (unquoted) and non convertible bonds worth Rs. 1384.50 lacs have been reduced to Rs. 166.50 lacs as on 31st

March 2004.

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Management Perception: The Company has been writing off the investments in the books over a period of time to reflectthe diminution in the value of investments and as on 31st March 2004 the total amount written off is Rs. 1218 lacs. Further,as a policy the company has not been making fresh investments since 2001, except in short term money market mutualfunds.

9. Risk arising out of outstanding litigations against our Company, our promoters and Companies promoted by our promoters.

� The Company is made an additional party to the suit filed before the Kerala High Court for winding up of JyomanBuilders Private Limited for non-completion of the project by Mr. Sarat Chandra Das, one of the creditors of JyomanBuilders Private Limited. The amount of liability involved is Rs. 3.50 crores.

� Smt. P. Parvathi, an ex employee of the Company has filed a case before the Presiding Officer, Labour Court – I,Andhra Pradesh, Hyderabad for reinstatement with back wages. The Presiding Officer has issued an order in favor ofthe employee and the Company has appealed against the interim order in the Andhra Pradesh High Court, Hyderabad.However, the Company has already deposited the amount of back-wages in the court.

� The Company’s promoters are defendants in number of legal proceedings incidental to their business and operations.The aggregate of pending litigations with the amount involved are given below:

Name Nature and no. of Litigations Amount(Rs. crore)

National Insurance 213989 claims pending before motor accident tribunals 1784.12Company Limited

United India Insurance 264001 claims pending before motor accident tribunals 2655.81Company Limited

The Oriental Insurance 244055 claims 2492Company Limited

The New India Assurance 236705 motor third party claims 3065.65Company Limited

Specified undertaking of the 244 cases relating to property disputes, miscellaneous 11.11Unit Trust of India consumer court cases and US-64.

IFCI Limited 2 pending claims 46

For more information regarding litigation of our promoters, companies promoted by them and group companies, please referto the section “Outstanding Litigation” on page no. 72 of the Letter of Offer.

As on 30th June 2004, there are five cases filed by the Company, where the Company has appealed against the orderpassed by the income tax department. Out of which, four cases involve appeal to the order passed for levying income tax onnotional interest on non-performing assets of the Company for the assessment years 1997-1998, 1998-1999, 1999-2000and 2001-2002 amounting to Rs. 45,718,198/- and one case involves appeal to the order passed by the Commissioner ofIncome Tax (Appeals) for disallowing expenses from taxable income for having been incurred in relation to earning of exemptincome for the assessment year 2001-2002. For further details please refer to the section “Outstanding Litigations” on pageno. 72 of this letter of offer.

10. Agreements relating to certain leasehold properties of the Company situated in different parts of India have not been registered.The Company has not renewed the agreements in respect of certain leasehold/leave and licence properties.

Management Perception: The Company does not perceive any adverse effect on the business of the Company on accountof non-registration of the said properties. For further details please refer to page no. 52 under the heading ‘Property’ in theLetter of Offer.

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11. The following promoter companies/ventures promoted by the promoters of GICHFL are loss-making entities.

Name Loss as on 31-03-2004(In Rs. crores)

IFCI Limited 3229.78

Agriculture Insurance Company of India Limited 0.83

Rajasthan Consultancy Organisation Limited 0.12

The New India Assurance Company (Sierra Leone) Limited *10.52

* Amount in Leone for the year ended 31st December 2003

12. The Company’s name reflects that General Insurance Corporation of India (GIC) is one of the major shareholder in theCompany whereas the holding of GIC in the Company is only 5.97%.

Management Perception: GIC Housing Finance Limited was promoted by GIC and the erstwhile subsidiaries of GIC namely,NICL, OICL, New India and United India. GIC alongwith its erstwhile subsidiaries, was holding 33% of the equity capital inGICHFL. Subsequently the Government of India delinked NICL, OILC, New India and United India from GIC thereby dilutingGICs stake in GICHFL. As a result the equity stake held by GIC was split between these entities. Hence as on date GIC onlyholds 5.97% equity stake while its four erstwhile subsidiaries each hold 6.67% equity stake.

External Risk Factors

1. Terrorist attacks and other acts of violence or war involving India and other countries where the Company sells its productscould adversely affect the Company’s business.

Management Perception: Terrorist attacks, such as the ones that occurred in New York and Washington, D.C. on September11, 2001 and New Delhi on December 13, 2001 and other acts or violence or war may negatively affect the Indian marketswhere the Equity Shares of the Company will trade. These acts may also result in a loss of business confidence, make traveland other services more difficult and ultimately affect the Company’s business, financial conditions and results of operations.Also as a result of such events, India, or certain other countries may enter into armed conflict with other countries. Theconsequences of any potential armed conflicts are unpredictable, and the Company may not be able to foresee events thatcould have a material adverse effect on its business, financial condition or results of operations.

2. The housing finance industry has witnessed the entry of banks in the past few years. These banks have access to cheapfunds and are therefore able to lend to customers at lower interest rates resulting in intense competition in the housingfinance industry, and finer spreads.

Management Perception: The Company specializes in providing housing finance with focus and core competence in housingfinance. Banks on the other hand have banking as their main business activity and housing finance is an ancillary businessfor them.

3. The housing finance industry depends oni) Prices in the real estate market,ii) Interest rate prevalent in the market andiii) Fiscal benefits provided by the Government from time-to-time.

Any changes in the above may affect the disbursements and consequently the margins of the Company.

Management Perception: In view of the large population, the Company expects demand for housing to outstrip supply andhence any change in the above factors will not have a major effect on the Company’s business. The Company has presencein semi-urban areas of the country, which present an opportunity for the Company to garner more business. Further, theUnion Budget has emphasized on Housing in the Rural Sector, which provides an added avenue for generating business.

Notes to the Risk Factors

� Investors are advised to refer to “basis of issue price” on page no. 85 before investing in this Issue.

� The Net Worth of the Company before the Issue as on 31st March 2004 was Rs. 9,582 lacs.

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� The Book Value of the Equity Shares of the Company as on 31st March 2004 was Rs. 53.23.

� The size of the Issue will be Rs. 14,36,08,976.

� There will be Equity Shares in transit account, as on the Book Closure Date i.e. 17th September 2004. The Companyproposes to keep the rights entitlement on these Equity Shares in abeyance and offer them to the rightful owner as and whenthey are known. In case, the rights entitlement are not subscribed by these owners, the Company reserves the right to allotthe rights to any other person as may be decided by the Board of the Company.

� None of the Promoter and director has undertaken any transactions in the Equity Shares of the Company during the last sixmonths.

� The transactions between GICHFL and its subsidiaries / associate companies and companies under common control for thelast three years are as under:

Financial Year Name of the party Nature of transaction Amount(Rs in Lacs).

Repayment of 13,147Secured Loans

2001-2002 GIC and Subsidiaries. Interest Paid 1,264

Insurance Premium 15Paid

Repayment of 0Secured Loans

2002-2003 GIC and Subsidiaries. Interest Paid 0.2

Insurance Premium 14.02Paid

Repayment of 0Secured Loans

2003-2004 GIC and Subsidiaries. Interest Paid 0

Insurance Premium 40Paid

� There are no material events occurring after the balance sheet date of March 31, 2004, which have an impact on financialstatements.

� The notes to accounts and significant accounting policies have been furnished in the auditors’ report.

� For details on the basis of allotment, investors may refer to the paragraph titled “Basis of Allotment” on page no. 20 of thisLetter of Offer.

� Investors are free to contact the Lead Manager for any clarification or information, who will be obliged to attend to the same.

� The investors may contact the Lead Manager and the Issuer for any complaint pertaining to the Issue.

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(Incorporated on 12th December 1989 under the Companies Act, 1956 as GIC Grih Vitta Limitedand renamed GIC Housing Finance Limited on 16th November 1993)

Registered and Corporate Office: Universal Insurance Building,3rd Floor, Sir P.M. Road, Fort, Mumbai - 400 001.

Tel: (022) - 2285 3866/68. (022) - 2285 1766/67 Fax: (022) - 2288 4985.E-mail: [email protected]; Website: www.gichfindia.com

Dear Equity Shareholders,

Pursuant to the resolution passed by the Board of Directors at the meeting held on 21st June 2004 and 14th July 2004 it has beendecided to make the following offer to the equity shareholders of the Company:

ISSUE OF 89,75,561 EQUITY SHARES OF RS.10 EACH FOR CASH AT A PREMIUM OF RS. 6 PER EQUITY SHAREAGGREGATING RS 14,36,08,976 ON RIGHTS BASIS TO THE EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIOOF 1 EQUITY SHARE FOR EVERY 2 EQUITY SHARES HELD ON BOOK CLOSURE DATE (i.e.17th SEPTEMBER 2004).

GENERAL INFORMATION

Statutory Declaration

In the opinion of the Board, there are no circumstances that have arisen since the date of the last financial statement disclosed inthe Letter of Offer, that materially or adversely affect or are likely to affect the performance or profitability of the Company or valueof its assets or its ability to pay its liabilities within the next twelve months.

Important

1. This Issue is applicable only to those shareholders whose names appear as beneficial owners in respect of the EquityShares held in the electronic form and on the register of members of the Company in respect of the Equity Shares held inphysical form as on 17th September 2004, i.e. the Book Closure Date.

2. Shareholders’ attention is drawn to RISK FACTORS appearing on Pages (i) to (iv) of this Letter of Offer.

3. Please ensure that CAF is received with this Letter of Offer.

4. Please read this Letter of Offer and the instructions contained therein and in the CAF carefully, before filling in the CAF. Theinstructions contained in the CAF are an integral part of this Letter of Offer and must be carefully followed. Application is liableto be rejected if it is not in conformity with the terms of the Letter of Offer and/or the CAF.

5. All enquiries in connection with this Letter of Offer or CAF should be addressed to the Registrars, Sharepro Services, SatamEstate, 3rd Floor, Chakala, Andheri (East), Mumbai–400099 quoting the registered folio number / DP ID/client ID number andthe serial number of the CAF and his/her full name and address.

6. In case the original CAF is not received, lost or misplaced by the shareholder, the Registrars/Company will issue a duplicateCAF on the request of the shareholder who should furnish the registered folio number/DP ID/client ID number and his/her fullname and address to the Registrars/Company. Please note that those applicants who are making the application in theduplicate CAF should not utilize the original CAF for any purpose including renunciation, even if it is received/found subsequently.In case the original and the duplicate CAFs are lodged for subscription, allotment will be made on the basis of the duplicateCAF and the original CAF will be ignored.

7. The Rights Issue will be kept open for a minimum period of 30 days. If extended, it will be kept open for a maximum period of60 days.

8. The funds received against the Issue will be kept in separate bank account(s) and the Company will not have any access tosuch funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the Company hasreceived the minimum subscription of 90 per cent of the Issue. If the Company does not receive the minimum subscription of90 per cent of the issue the entire subscription shall be refunded to the applicants within forty-two days from the date ofclosure of the Issue.

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ELIGIBILITY FOR THE ISSUE

GIC Housing Finance Limited is an existing listed Company. It is eligible to offer this Issue in terms of clause 2.4.1 (iv) of the SEBIGuidelines. The Company, its promoters, its directors or any of the Company’s associate or group companies and companies inwhich the directors of the Company are associated as director(s) or promoter(s) have not been prohibited from accessing thecapital market under any order or direction passed by SEBI or any other regulatory authority. Further the promoters, their relatives(as per Act), the Company, group companies, associate companies are not detained as willful defaulters by RBI/Governmentauthorities.

BUSINESS APPROVALS

The Company is not proposing to enter into any new line of business and has all the requisite approvals for carrying on the existingactivities of the Company.

No further approval from any government authority is required by the Company to undertake its current activities, save and exceptsuch approvals, which may be required to be taken in the normal course of business from time to time.

CONSENT OF LENDERS

The Company has received NOCs from all its lenders to increase the capital of the Company by way of this proposed Rights Issue.

DISCLAIMER CLAUSE

AS REQUIRED, A COPY OF THIS LETTER OFFER HAS BEEN FILED WITH SEBI. IT IS TO BE DISTINCTLY UNDERSTOODTHAT SUBMISSION OF THE LETTER OF OFFER TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THATTHE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FORTHE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADEOR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER.LEAD MERCHANT BANKER, UTI SECURITIES LIMITED, HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE LETTEROF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURE AND INVESTORPROTECTION) GUIDELINES, 2000 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORSTO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FORTHE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE LETTER OF OFFER,THE LEAD MERCHANT BANKER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANYDISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEADMERCHANT BANKER, UTI SECURITIES LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 02ND

AUGUST 2004 IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS 1992, WHICH READS AS FOLLOWS:

1) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIALDISPUTES, DISPUTE WITH COLLABORATORS, ETC., AND OTHER MATERIALS IN CONNECTION WITH THEFINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;

2) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS ANDOTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THEOBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THEANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY.

WE CONFIRM THAT:

(A) THE DRAFT LETTER OF OFFER FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS,MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

(B) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS ALSO THE GUIDELINES,INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY INTHIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

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(C) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO ENABLETHE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSEDISSUE.

3) WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE LETTER OF OFFER AREREGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATION IS VALID;

THE FILING OF THE LETTER OF OFFER WITH SEBI DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANYLIABILITIES UNDER SECTION 63 OR 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAININGSUCH STATUTORY OR 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 MANAGERS (MERCHANTBANKERS), ANY IRREGULARITIES OR LAPSES IN THE LETTER OF OFFER.

CAUTION

The Company accepts no responsibility for any statements made otherwise than in this Letter of Offer or in the advertisement orany other material issued by or at the instance of the Company and that anyone placing reliance on any other source of informationwould be doing so at his/her/their own risk.

The Lead Managers and the Issuer shall make all information available to the shareholders and no selective or additional informationwould be available to any section of the shareholders in any manner whatsoever.

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES

Copies of the letter of offer will be forwarded to the Stock Exchanges where the Equity Shares of the Company are listed after thesame has been filed with SEBI.

Disclaimer Clause of The Stock Exchange, Mumbai (BSE)

As required, a copy of this Letter of Offer has been submitted to the BSE (the Designated Stock Exchange). The Stock Exchange,Mumbai (“the Exchange”) has given vide its letter dated 23rd August 2004 permission to this Company to use the Exchange’s namein this Letter of Offer as one of the Stock Exchanges on which this Company’s securities are proposed to be listed. The Exchangehas scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission tothis Company. BSE does not in any manner-

i. Warrant, certify or endorse the correctness or completeness of any of the contents of this, Letter of Offer; orii. Warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; oriii. Take any responsibility for the financial or other soundness of this Company, its promoters, its management or any

scheme or project of this Company;

And it should not for any reason be deemed or construed that this Letter of Offer has been cleared or approved by the Exchange.Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independentinquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which maybe suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything statedor omitted to be stated herein or any other reason whatsoever.

Disclaimer Clause of National Stock Exchange of India Limited (NSE)

As required, a copy of this Letter of Offer has been submitted to the National Stock Exchange of India Limited (hereinafter referredto as NSE). NSE has, given vide its letter dated 12th August 2004 its permission to the issuer to use the Exchange’s name in thisLetter of Offer as one of the Stock Exchanges on which this issuer’s securities are proposed to be listed. The Exchange hasscrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to thisissuer. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construedthat the Letter of Offer has been cleared or approved by NSE; nor does it: warrant, certify or endorse the correctness or completenessof any of the contents of this Letter of Offer; nor does it warrant that this issuer’s securities will be listed or will continue to be listedon the Exchange; nor does it take any responsibility for the financial or other soundness of this issuer, its promoter, its managementor any scheme or project of this issuer.

Every person who desires to apply for or otherwise acquire any securities of the Company may do so pursuant to an independentinquiry, investigation and analysis and shall not have any claim against the NSE whatsoever by reason of any loss which may be

3


suffered by such person consequent to or in connection with such subscription or acquisition whether by reason of anything statedor omitted to be stated herein or any other reason whatsoever.

Disclaimer Clause of The Calcutta Stock Exchange Association Limited

The Calcutta Stock Exchange has given vide its letter dated 03rd September 2004 permission to this Company to use the Exchange’sname in this Letter of Offer as one of the Stock Exchange on which this Company’s securities are proposed to be listed. TheExchange has scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaidpermission to this Company. The Calcutta Stock Exchange does not in any manner




Disclaimer Clause of The Madras Stock Exchange Limited

The Madras Stock Exchange has given vide its letter dated 03rd August 2004 permission to this Company to use the Exchange’sname in this Letter of Offer as one of the Stock Exchange on which this Company’s securities are proposed to be listed. TheExchange has scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaidpermission to this Company. The Chennai Stock Exchange does not in any manner-




DISCLAIMER IN RESPECT OF JURISDICTION

This Issue of Equity Shares is made in India to persons resident in India and NRIs/FIIs subject to requisite approvals. This Letter ofOffer does not, however, constitute an offer to sell or an invitation to subscribe to Equity Shares offered hereby in any otherjurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possessionthis Letter of Offer comes is required to inform himself/herself about and to observe any such restrictions. Any dispute arising out ofthis Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, India only.

FILING

The Letter of Offer has been filed with the Securities and Exchange Board of India, Mumbai. A copy of this Letter of Offer also beenfiled with the Stock Exchanges where the equity shares to be issued in terms of this LOF are proposed to be listed..

LISTING

The Company’s Equity Shares are listed on the BSE, NSE, MSE and CSE. The Company has paid the current annual listing feesto each stock exchange. The company has received in-principle approval from BSE, NSE, CSE & NSE pursuant to letter dated23-08-2004, 12-08-2004, 03-09-2004 & 03-08-2004 respectively, for permission to deal in and for an official quotation in respect ofthe Equity Shares arising from the issue. BSE shall be the Designated Stock Exchange.

If the permission to deal in and for an official quotation of the Equity Shares is not granted by the Stock Exchanges, the Companyshall forthwith repay, without interest, all monies received from the applicants in pursuance of this Letter of Offer. If such monies arenot repaid within eight days after the Company becomes liable to repay it (i.e. 42 days after closure of the Issue), then the Company

4


and every director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liableto repay the money, with interest as prescribed under Section 73 of the Act.

The Company shall ensure that all steps for the completion of the necessary formalities for listing and commencement of trading atthe Stock Exchanges mentioned above are taken within seven working days of finalisation and adoption of the basis of allotment frthe issue.

As only one equity share is being offered for every two Equity Shares held by the equity shareholders of the Company on the BookClosure Date i.e. 17th September 2004, the Company envisages that the minimum level of the public shareholding, which is atpresent 52.17%, after the completion of Rights Issue will not fall below the minimum permissible level.

IMPERSONATION

Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Act, which isreproduced 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.”

MINIMUM SUBSCRIPTION

If the Company does not receive the minimum subscription of 90 per cent of the Issue the entire subscription shall be refunded tothe applicants within 42 days from the date of closure of the Issue. If there is any delay in the refund of subscription amount by morethan 8 days after the Company becomes liable to pay the subscription amount (i.e. forty two days after the closure of the Issue), theCompany will pay interest for the delayed period, at rates prescribed under Section 73 of the Act.

The issue will become under subscribed if the subscription money received is less than the aggregate amount of this issue afterconsidering the number of shares applied as per entitlement plus additional shares. The under subscribed portion can be appliedfor only after the closure of the issue. The promoters or any other persons subscribing to such under subscribed portion will begoverned by the provisions of SEBI (SAST) Regulations 1997.

The promoters as mentioned below have agreed to subscribe to the following number of shares over and above their entitlement:

Promoter No. of shares

National Insurance Company Limited 150000

The Oriental Insurance Company Limited 300000

United India Insurance Company Limited 300000

New India Assurance Company Limited 300000

ALLOTMENT / REFUND

The Company will complete allotment of Equity Shares and issue and credit the allotted Equity Shares to the respective beneficiaryaccount and/or despatch the letter of allotment/ Equity Share certificate and/or letter of regret, along with the refund order, if any,within a period of six weeks from the date of closure of the issue. The Company agrees that it shall pay interest for the delayedperiod at rates prescribed under Section 73 of the Act, if the allotment is not made and/or the refund orders are not despatched tothe investors within a further period of 8 days after the end of 42 days from the date of closure of the Issue for the period of delaybeyond 42 days.

Further, the Company shall despatch allotment advice, Share Certificate and/or refund order and give credit to the BeneficiaryAccount with Depository Participants and submit the listing documents to the Stock Exchanges within two working days of thefinalistion and adoption of the basis of allotment.

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In accordance with the extant postal rules the Company will ensure despatch of refund orders of value up to Rs.1500/- undercertificate of posting and refund orders of value above Rs.1500/- by registered post only.

Refund, if any, shall be made by cheques or pay orders drawn on the bank(s) appointed by the Company as refund banker(s). Thebank charges, if any, for encashing such cheques/pay orders will be borne by the applicants. Such cheques/pay orders will bepayable at par at the places where the application money was originally accepted.

The Company will provide adequate funds to the Registrars, for the purpose of despatch of letter(s) of allotment/share certificate(s)/letter(s) of regret/refund order(s).

COMPULSORY DEMATERIALISED DEALING

The Equity Shares of the Company are under compulsory dematerialized trading for all class of investors with effect from 05th July2000. The Company has depository arrangements with NSDL and CDSL for issue and holding of the Equity Shares in dematerializedform. The existing equity shares bear ISIN No: INE289B01019.

DENOMINATION OF SHARES

The Company undertakes that at any given time, there shall be only one denomination for the Equity Shares of the Company andthat the Company shall comply with such disclosures as may be specified by SEBI from time to time.

ISSUE PROGRAMME

The Issue will open at the commencement of banking hours and will close at the close of banking hours on the dates mentionedbelow.

ISSUE OPENS ON Wednesday, 29th September, 2004

LAST DATE FOR RECEIPT OF REQUESTS FOR SPLIT FORMS Wednesday, 13th October, 2004

ISSUE CLOSES ON Thursday, 28th October, 2004

CREDIT RATING

Since the present issue is of Equity Shares, credit rating is not required.

TRUSTEES

This being an issue of Equity Shares, appointment of Trustees is not required.

ISSUE MANAGEMENT TEAM

LEAD MANAGERS TO THE ISSUE

UTI Securities Limited4th Floor, Merchant Chamber,41, Sir Vithaldas Thackersey Marg,New Marine Lines,Mumbai – 400 020.Tel No: (022) 5667 0672 / 5667 0684Fax No: (022) 2203 0165Email: [email protected]

REGISTRARS TO THE ISSUE

Sharepro ServicesSatam Estate, 3rd Floor,Cardinal Gracious Rd, Above Bank of BarodaChakala, Andheri (East),Mumbai – 400 099.Tel: (022) 2821 5168 / 2821 5169Fax: (022) 2837 5646 / 2839 2259Email: [email protected]

LEGAL ADVISOR TO THE ISSUE

M/s Crawford Bayley & Co4th Floor, State Bank Buildings,N.G.N. Vaidya Marg, Fort,Mumbai – 400 023.Tel: (022) 2266 3713Fax: (022) 2266 3978

AUDITORS TO THE COMPANY

M/s M.P. Chitale & CompanyChartered AccountantsHamam House, 1st Floor,Ambalal Doshi Marg,Fort, Mumbai – 400 001.Tel No: (022) 2265 1186Fax No: (022) 2265 5334

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BANKERS TO THE COMPANY

Bank of IndiaD.N. Road Branch,Sadhana Reyon House,Fort, Mumbai – 400 001.Tel No: (022) 2261 4878Fax No: (022) 2261 0168

HDFC Bank Limited2nd Floor, Trade WorldNew Building, Kamala MillsSenapati Bapat MargLower Parel, Mumbai – 400 013.Tel No: (022) 2498 8484Fax No: (022) 2496 3871

Note : The investors are advised to contact the Registrar to the Issue / Compliance Officer in case of any pre-issue / post-issuerelated problems such as non-receipt of LOF / Letter of allotment / share certificate(s) / refund order / demat credit, etc.

STANDBY UNDERWRITING ARRANGEMENTS

The present issue is not underwritten.

BANKERS TO THE ISSUE

HDFC Bank LimitedManeckji Wadia Building, Ground Floor,Nanik Motwani Marg,Fort, Mumbai – 400 023.Tel No: (022) 2270 1616Fax No: (022) 2270 3346

COMPANY SECRETARY AND COMPLIANCE OFFICERMr. S. SridharanGIC Housing Finance Limited,3rd Floor, Universal Insurance Building,Sir P.M. Road, Fort, Mumbai – 400 001.Tel: (022) 2288 1783Fax: (022) 2288 4985Email: [email protected]

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CAPITAL STRUCTURE

Share Capital Nominal Value Aggregate AmountAmount Rs.

A. Authorised

5,00,00,000 Equity Shares of Rs.10/- each 50,00,00,000

1,00,00,000 Redeemable Preference Shares of Rs. 100/- each. 1,00,00,00,000

B. Issued, Subscribed and Paid up

1,79,51,122 Equity Shares of Rs.10/- each 17,95,11,220 49,75,55,220

C. Now offered in terms of this Letter of Offer

89,75,561 Equity Shares of Rs. 10/- each

for cash at a premium of

Rs. 6/- each 8,97,55,610 14,36,08,976

D. Paid up Capital after the present offer

2,69,26,683 Equity Shares of Rs 10/- each 26,92,66,830

E. Share Premium

Before the Issue 31,80,44,000

After the Issue 5,38,53,366 37,18,97,366

NOTES TO CAPITAL STRUCTURE

1. Share Capital History

Date of No. of Shares Nominal Issue Issue RemarksAllotment issued Value Amount Price

(Rs.) (Rs.)

12-12-1989 11 10 110 10 Subscription to MoA

30-03-1991 5000000 10 50000000 10 First Allotment

02-12-1993 5000011 10 50000110 10 Rights issue

10-01-1995 8004900 10 400245000 50 IPO and Allotment topromoters

2. On 30th June 2004, the Company forfeited 53,800 Equity Shares and cancelled the same.

3. All Equity Shares of the Company have been issued for cash and are fully paid up.

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Sr.No. Particulars

Pre Issue(as on 30-06-2004) Post IssueEligible

RightsSharesNo. of

shares

Percent tothe

Capital

No. ofShares afterRights Issue

1 Promoter GroupGeneral Insurance Corporation of India 1071422 5.97 535711 1607133 5.97

National Insurance Company Limited 1197000 6.67 598500 1795500 6.67

United India Insurance Company Limited 1197000 6.67 598500 1795500 6.67

Oriental Insurance Company Limited 1197000 6.67 598500 1795500 6.67

New India Assurance Company Limited 1197000 6.67 598500 1795500 6.67

Unit Trust of India 1150509 6.41 575254 1725764 6.41

IFCI Limited 1575000 8.77 787500 2362500 8.77

Percent to theCapital

4. Shareholding Pattern as on 30th June 2004:

Sr. ParticularsNo. No. of shares Percent to the

Capital

1 Promoter Group 8584931 47.83

2 Banks / Financial Institutions / Insurance Companies 409800 2.28

3 Mutual Funds 21248 0.12

4 Private Corporate Bodies 2865853 15.96

5 Non Residents 19700 0.11

6 Indian Public 6049590 33.70

Total 17951122 100.00

5. The Promoter shareholding in Company as on 30th June 2004:

Sr. Name No. of shares Percent to theNo. Capital

1. General Insurance Corporation of India 1071422 5.97

2. National Insurance Company Limited 1197000 6.67

3. United India Insurance Company Limited 1197000 6.67

4. Oriental Insurance Company Limited 1197000 6.67

5. New India Assurance Company Limited 1197000 6.67

6. Unit Trust of India 1150509 6.41

7. IFCI Limited 1575000 8.77

Total 8584931 47.83

6. The Promoter Group and directors have not purchased or sold or financed, directly or indirectly, any Equity Shares during aperiod of six months preceding the date on which the letter of offer is filed with SEBI.

7. In accordance with clause 4.10.1 (c) of the SEBI Guidelines, the requirements of Promoter’s contribution and lock-in do notapply to a Rights Issue.

8. Shareholding Pattern before and after the Issue is and will be as under:

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Sr.No. Particulars

Pre Issue(as on 30-06-2004)

Post IssueEligibleRightsSharesNo. of

shares

Percent tothe

Capital

No. ofShares afterRights Issue

Percent to theCapital

2 Banks / Financial Institutions 409800 2.28 204900 614700 2.28/ Insurance Companies

3 Mutual Funds 21248 0.12 10624 31872 0.12

4 Private Corporate Bodies 2865853 15.96 1432926 4298779 15.96

5 Non Residents 19700 0.11 9850 29550 0.11

6 Indian Public 6049590 33.70 3024795 9074385 33.70

TOTAL 17951122 100.00 8975561 26926683 100.00

Note : The post issue shareholding pattern indicated above is on the assumption that all the shareholders in respectivecategories will subscribe to their entitlement.

9. Top 10 shareholders of the Company and the number of Equity Shares held by them:A) As on the date of filing with Stock Exchange

Sr. Name of the shareholder No. of shares Percent to theNo. Capital

1 IFCI Limited 1575000 8.77

2 National Insurance Company Limited 1197000 6.67

3 United India Insurance Company Limited 1197000 6.67

4 Oriental Insurance Company Limited 1197000 6.67

5 New India Assurance Company Limited 1197000 6.67

6 Specified Undertaking of Unit Trust of India 1150509 6.41

7 General Insurance Corporation of India 1071422 5.97

8 CD Equisearch Private Limited 561033 3.13

9 Tata Investment Corporation Limited 300000 1.67

10 EXIM Scripts Dealers Private Limited 289901 1.62

Total 9735865 54.25

B) As on 10 days prior to date of filing with Stock Exchange


1 IFCI Limited 1575000 8.77

2 National Insurance Company Limited 1197000 6.67

3 United India Insurance Company Limited 1197000 6.67

4 Oriental Insurance Company Limited 1197000 6.67

5 New India Assurance Company Limited 1197000 6.67

6 Specified Undertaking of Unit Trust of India 1150509 6.41

7 General Insurance Corporation of India 1071422 5.97

8 CD Equisearch Private Limited 561033 3.13

9 Tata Investment Corporation Limited 300000 1.67

10 EXIM Scripts Dealers Private Limited 289901 1.62

Total 9735865 54.25

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10. The Company has not availed of any bridge loan or entered into any other similar financial arrangement for incurringexpenditure towards the objects of the Issue, the amount of which will be repaid out of the proceeds of this Issue.

11. There are no buyback, standby or similar arrangement for purchase of Equity Shares offered through this Letter of Offer bythe Promoter Group, directors and the Lead Managers.

12. The Equity Shares offered through this Rights Issue shall be made fully paid up as the entire money of Rs. 16/- per share(Face value of Rs. 10/- + Premium of Rs. 6/-) is being called on application.

13. The Promoter Group holds 47.83 per cent of the paid up Equity Capital of the Company as on 30th June 2004. The PromoterGroup will be entitled to 42,92,466 Equity Shares and have confirmed their in-principle intention to subscribe to the rightsentitlement except SUUTI (Specified Undertaking of Unit Trust of India), which has given its in principal approval to subscribefor 3,00,000 equity shares out of their entitlement of 5,75,254 equity shares at a price of Rs. 15/- per share.

The Promoter Group may subscribe to additional shares beyond their entitlement in the offer. However, as only one equityshare is being offered for every two Equity Shares held by the equity shareholders of the Company on the Book ClosureDate, the Company envisages that the minimum level of the public shareholding, which is at present 52.17%, after thecompletion of Rights Issue, will not fall below the minimum permissible level.

14. There would be no further issue of equity capital whether by way of issue of bonus shares, preferential allotment, rights issueor in any other manner during the period commencing from submission of the Letter of Offer to SEBI until Equity Sharesoffered through this Letter of Offer have been listed or application monies refunded on account of non-listing or undersubscription, etc.

15. The Company presently does not have any intention or proposal to alter its capital structure for a period of six months fromthe date of opening of the issue, by way of split/consolidation of the equity shares (including issue of securities convertibleinto exchangeable, directly or indirectly for equity shares) whether preferential or otherwise, or if the Company goes in foracquisitions and joint ventures the Company might consider raising additional capital to fund such activity or use shares ascurrency for acquisition and/or participation in such joint venture.

16. The Company has not issued any Equity Shares out of revaluation reserves in the past. The Company does not have anyrevaluation reserves.

17. The Company shall comply with such disclosures and accounting norms as may be specified by SEBI, from time to time.

18. The Company had 23,491 shareholders as on 30th June 2004.

C) As on 2 years prior to the date of filing with Stock Exchange


1. Unit Trust of India 1583700 8.80

2. IFCI Limited 1575000 8.75

3. HDFC Limited 1260000 6.99

4. National Insurance Company Limited 1197000 6.65

5. United India Insurance Company Limited 1197000 6.65

6. The Oriental Insurance Company Limited 1197000 6.65

7. The New India Assurance Company Limited 1197000 6.65

8. GIC of India 1071417 5.95

9. ICICI Limited 1027800 5.71

10. State Bank of India 378000 2.10

Total 11683917 64.90

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TERMS OF THE PRESENT OFFER

The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of this Letter of Offer, theCAF, the MoA and AoA of the Company, the approvals from the Government of India, FIPB and RBI, if applicable, the provisions ofthe Act, FEMA, guidelines issued by SEBI, laws, guidelines, notifications and regulations for issue of capital and for listing of equityshares issued by SEBI, Government of India, RBI and/or other statutory authorities and bodies from time to time, listing agreementsentered into by the Company with Stock Exchanges, terms and conditions as stipulated in the allotment advise or letters of allotment,rules as may be applicable and introduced from time to time.

AUTHORITY FOR THE ISSUE

The Rights Issue has been authorized by the Board at its meeting held on 21st June 2004 and 14th July 2004 under section 81 of theCompanies Act, 1956.

BASIS OF OFFER

The Company has in consultation with the Designated Stock Exchange fixed the Book Closure Date for determining the shareholderswho are entitled to receive this offer for Equity Shares on a rights basis. The shareholders whose names appear as beneficialowners as per the list furnished by the depositories in respect of the Equity Shares held in electronic form and on the register ofmembers of the Company in respect of the Equity Shares held in physical form on 17th September 2004 at the close of businesshours shall be entitled to the Equity Shares on rights basis in the ratio of one Equity Share for every two Equity Shares held by them.

RIGHTS ENTITLEMENT

As your name appears as beneficial owner in respect of the Equity Shares held in the electronic form or appears in the register ofmembers as an equity shareholder of the Company on the Book Closure Date, you are entitled to this Rights Issue. The number ofEquity Shares to which you are entitled is shown in Block I of Part A of the enclosed CAF.

FRACTIONAL ENTITLEMENT

If the shareholding of any of the equity shareholders is less than two or is not in multiples of two, then in respect of the holding notin an exact multiple of two Equity Shares, the fractional entitlement of such holder shall be rounded off to the next integer. Thenumber of Equity Shares offered is shown in Block II of Part A of the enclosed CAF(s). The additional Equity Shares required toaccommodate such rounding off will be adjusted out of the Promoters’ entitlement.

ISSUE PRICE

Each Equity Share is of face value of Rs 10/- and is being offered at a premium of Rs. 6/- per Equity Share.

TERMS OF PAYMENT

(a) Residents: Entire amount of Rs 16/- per Equity Share will be payable on application.

(b) Non-Residents: Entire amount of Rs 16/- per Equity Share will be payable on application.

MARKET LOT

The Equity Shares of the Company are tradable only in dematerialized form. The market lot for Equity Shares in demat form is one.In case of applications made by shareholders for receiving Equity Shares in physical form, the Company will issue to the allotteesone certificate for the Equity Shares allotted (“consolidated certificate”). In respect of the consolidated certificate, the Company will,upon receipt of a request from the shareholder along with the consolidated certificate, split such certificates into market lot andreturn the duly split shares within 7 days time from the date of request. No fees would be charged by the Company for splitting suchconsolidated certificate.

RANKING OF EQUITY SHARES

The Equity Shares allotted pursuant to this offer shall rank pari-passu in all respects with the existing Equity Shares of the Companyincluding in respect of dividends.

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

12


the applicant’s bank account are mandatorily required to be provided for printing on the refund orders. Bank account particulars willbe printed on the refund orders, which can then be deposited only in the account specified. The Company will in no way beresponsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud.

OFFER TO NON-RESIDENT EQUITY SHAREHOLDERS/APPLICANTS

Vide notification dated 18th June, 2003, bearing number FEMA 94/2003, RBI has granted general permission to Indian companiesto issue rights/bonus equity shares to existing non-resident shareholders. The existing non-resident shareholders may apply forissue of additional Equity Shares and the Company may allot the same subject to the condition that the overall issue of EquityShares to non-residents in the total paid up capital does not exceed the sectoral cap. In other words, non-residents may subscribefor additional Equity Shares over and above Equity Shares offered on rights basis by the Company and renounce the Equity Sharesoffered in full or part thereof in favour of a person named by them. However, this facility would not be available to investors who havebeen allotted such Equity Shares as OCBs.

JOINT-HOLDERS

Where two or more persons are registered as the holders of Equity Shares, they shall be deemed (so far as the Company isconcerned) to hold the same as joint-tenants with benefits of survivorship subject to provisions contained in the AoA.

NOMINATION

The sole equity shareholder or first equity shareholder, along with other joint equity shareholders being individual(s) may nominateany 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 toall the rights in the Equity Shares. Person(s), being nominee(s), becoming entitled to the Equity Shares by reason of the death of theoriginal equity shareholder(s), shall be entitled to the same rights to which he/she would be entitled if he/she were the registeredholder of the Equity Shares. Where the nominee is a minor, the equity shareholder(s) may also make a nomination to appoint, in theprescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during theminority of the nominee. A nomination shall stand rescinded upon the sale/disposal of the Equity Share(s) by the person nominating.A buyer will be entitled to make a fresh nomination in the manner prescribed. When two or more persons hold Equity Share(s), thenominee shall become entitled to receive the Equity Shares only on the demise of all the holders. Fresh nominations can be madeonly in the prescribed form available on request at the Registered Office of the Company located at Universal Insurance Building,3rd Floor, Sir P.M. Road, Fort, Mumbai - 400 001, India or at such other place at such address as may be notified by the Company.The applicant can make the nomination by filling in the relevant portion in the CAF.

Only one nomination would be applicable for one folio. Hence, in case the shareholder(s) has (have) already registered the nominationwith the Company, no further nomination needs to be made for Equity Shares to be allotted in the Issue under the same folio.

In case the allotment of Equity Shares is in dematerialized form, there is no need to make a separate nomination for the EquityShares to be allotted in the Issue. Nominations registered with respective DP of the applicant would prevail. If such applicantsrequire changing the nomination, they are requested to inform their respective DP.

NOTICES

All notices to the equity shareholder(s) required to be given by the Company in connection with the Issue shall be published in oneEnglish national daily with wide circulation, one regional national daily with wide circulation and/or will be sent by ordinary post to theregistered holders of the Equity Share(s) from time to time.

ISSUE OF DUPLICATE EQUITY SHARE CERTIFICATE

If any Equity Share certificate(s) is/are mutilated or defaced or the cages for recording transfers of Equity Shares are fully utilized,the Company against the surrender of such certificate(s) may replace the same, provided that the same will be replaced asaforesaid only if the certificate numbers and the distinctive numbers are legible.

If any Equity Share certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the satisfactionof the Company and upon furnishing such indemnity/surety and/or such other documents as the Company may deem adequate,duplicate Equity Share certificate(s) shall be issued.

ACCEPTANCE OF OFFER

The equity shareholder may accept and apply for the Equity Share(s) offered in whole or in part, by filling in Part “A” of the enclosedCAF and submitting the same along with payment of the application money to the Bankers to the Issue and its collection centresspecified on the reverse of the CAF on or before the close of banking hours on 28th October 2004.

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OPTIONS AVAILABLE TO THE EQUITY SHAREHOLDER

The CAF clearly indicates the number of Equity Shares, which the equity shareholder is entitled to. If the equity shareholder appliesfor an investment in Equity Shares, then he/she can:

� Apply for his/her entitlement in full� Apply for his/her entitlement in full and apply for additional Equity Shares� Apply for his/her entitlement in part� Apply for his/her entitlement in part and renounce the other part� Renounce the entire entitlement (or part of entitlement).

ADDITIONAL EQUITY SHARES

The equity shareholder is eligible to apply for additional Equity Shares over and above the number of Equity Shares entitled to,provided he/she applies for all the Equity Shares, to which he/she is entitled to, without renouncing them, in whole or in part, infavour of any other person(s). The Board reserves the sole and absolute right to reject any such application for additional EquityShares without assigning any reasons therefor. If a shareholder desires to apply for additional Equity Shares, he/she needs toindicate his/her requirement in Box [IV] of Part ‘A’ of the CAF. Applications for additional Equity Shares shall be considered andallotment shall be made in the manner prescribed elsewhere in the Letter of Offer under the heading “basis of allotment”. Therenouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares.

Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment would be madeon a fair and equitable basis with reference to the number of equity shares held by you on the book closure date in consultation withthe Designated Stock Exchange.

RENUNCIATION

As an equity shareholder on the Book Closure Date, he/she has the right to renounce his/her entitlement of the Equity Shares in fullor in part in favour of any other person(s) including individuals non resident Indians, limited companies, statutory corporations/institutions, trusts (registered under the Indian Trust Act, 1882), societies (registered under the Societies Registration Act, 1860 orother applicable laws), minors (through their legal guardians) provided that such trusts, societies or legal entities are authorizedunder their constitution/rules/bye-laws to hold Equity Shares in the Company. Renouncee(s) need not be existing members of theCompany. However, renunciation in favour of partnership firms, HUFs, foreign nationals (unless approved by RBI or other relevantauthorities) or any person located or having jurisdiction where the offering in terms of this Letter of Offer could be illegal or requirescompliance with securities laws of such jurisdiction or any other persons not approved by the Board will not be accepted. Jointrenunciation in favour of more than three individuals will not be accepted. Renunciation in favour of OCBs is not permissible.

The Board reserves the right to reject the request for allotment to renouncees in its sole and absolute discretion withoutassigning any reasons therefor.

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 willrender the application invalid. Submission of the enclosed CAF to the Banker to the Issue at its collecting centres specified on thereverse of the CAF with the Form of Renunciation (Part B of the CAF) duly filled in shall be conclusive evidence in favour of theCompany of the person(s) applying for Equity Shares in Part C to receive allotment of such Equity Shares. The renounceesapplying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Part ‘A’ must not be usedby the renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any EquityShares in favour of any other person.

PROCEDURE FOR RENUNCIATION� To renounce the offer in whole in favour of one renouncee:

If the equity shareholder wishes to renounce this offer in whole, then he/she has to complete Part B of the CAF. In case ofjoint holders, all joint holders must sign this part of the CAF in the same order as per the specimen signatures recorded withthe Company. The person in whose favour renunciation has been made should complete and sign Part C of the CAF. In caseof joint renouncees, all joint renouncees must sign this part of the CAF.

� To renounce the offer in part:If the equity shareholder wishes to accept this offer in part and renounce the balance or renounce the entire offer in favour oftwo or more renouncees, the CAF must be first split by applying to the Registrars to the Issue. The equity shareholder shouldindicate his/her requirement for split forms in the space provided for this purpose in Part D of the CAF and return the entireCAF to the Registrars to the Issue so as to reach them latest by the close of business hours on 28th October, 2004. Onreceipt of the required number of split forms from the Registrars, the procedure as mentioned in the above para shall have tobe followed.

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� Change and/or introduction of additional holders:If the equity shareholder wishes to apply for Equity Shares jointly with any other person, or persons, not more than three, whois/are not already joint holders, it shall amount to renunciation and the procedure as stated above shall have to be followed.Even a change in the sequence of the joint holders shall amount to renunciation and the procedure for renunciation, as statedabove shall have to be followed.

� Renouncee(s):The person in whose favour the Equity Shares are renounced should fill in and sign Part C and submit the entire CAF to theBankers to the Issue or to the collection centres on or before the closing date of the Issue along with the application money.

In case the signature of the equity shareholder(s), who has/have renounced the Equity Shares, does not match with the specimensignature(s) as per the records of the Company, the application is liable to be rejected.

However, any right of renunciation is subject to the express condition that the Board of the Company shall be entitled in its absolutediscretion to reject the request for allotment from the renouncees without assigning any reasons therefor.

SPLITTING OF COMPOSITE APPLICATION FORMS

� Split CAF cannot be re-split.� Only the person to whom the offer is made and not the renouncee(s) shall be entitled to obtain split CAF.� Requests for split CAF should be sent to the Registrars to the Issue, not later than 13th October, 2004 by filling in

Part D of the CAF.� Requests for split CAF will be entertained only once.� Split forms shall be sent by post to the applicant at the applicant’s risk.

HOW TO APPLY FOR EQUITY SHARES

The equity shareholder may exercise any of the following options with regard to the Equity Shares offered to him/her, using theenclosed CAF:

OPTIONS AVAILABLE ACTION REQUIRED

1 Accept entitlement in full. Fill in and sign ‘Part A’ of the CAF. (all joint holdersmust sign at place marked ‘P’)

2. Accept entitlement in full and apply for additional Shares. Fill in and sign ‘Part A’ at place marked ‘P’ afterindicating in Block III the number of additional EquityShares accepted and No. of additional Shares appliedin Block IV (all joint holders must sign)

3. Accept entitlement in part without renouncing the balance. Fill in and sign ‘Part A’ of the CAF, after indicating inBlock III the number of Equity Shares accepted.

4. Renounce the entitlement in full to one person without Fill in and sign ‘Part B’ (all joint holders must sign) atplace marked ‘Q’ after indicating in Block VII the No. ofEquity Shares renounced. The renouncee(s) must fill inand sign Part C (joint renouncees shall be consideredtogether and all joint renouncees must sign).

5. Accept a part of your entitlement and renounce the balance Fill in and sign Part ‘D’ (all joint holders must sign) atto one or more renouncee(s) place marked ‘S’ requesting for Split Application Forms.OR Send the CAF to the Registrars to the issue so as toRenounce your entitlement of all the Equity Shares offered reach them on or before the last date for receivingto you to more than one renouncee(s). requests for Split Forms.

Splitting will be permitted only once.On receipt of the Split Forms, take action as indicatedbelow :For the Equity Shares you wish to accept, if any, fill in

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and sign Part A of one of the Split Forms an sign atplace marked ‘P’. In the other Split Form(s) for the EquityShares you wish to renounce fill in and sign Part ‘B’ aplace marked ‘Q’ indicating the number of Equity Sharesrenounced and hand it over to the renouncees. Eachof the renouncees should fill in and sign Part ‘C’ at aplace mark ‘R’ (of the respective Split Form) for theEquity Shares accepted by them.

6. Introduce a joint holder or change the sequence of This will be treated as a renunciation. Fill in and signjoint holders. Part ‘B’ at the place marked ‘Q’ and the renouncees

must fill in and sign Part ‘C’ at a Place marked ‘R’.

Application for Equity Shares should be made only on the CAFs, which are provided by the Company. The CAF should be completedin all respects as explained under the head “INSTRUCTIONS” indicated on the reverse of the CAF before submission to theBankers to the Issue at its collecting centres on or before the last day of the closure of the Issue. Non-resident shareholders/renouncee(s) should forward their applications to the Bankers to the Issue at the specified collection centre indicated on the reverseof the CAF for non-resident applicants. No part of the CAF should be detached under any circumstances.

Applicants residing at places other than designated collection centers.

Applicants residing at places other than the cities where the bank collection centers have been opened should send their completedCAF by registered post to the Registrars along with bank drafts payable at Mumbai in favour of “GICHFL - Rights Issue” crossed“A/c Payee only” so that the same are received on or before closure of the Issue (i.e. 28th October, 2004). In such cases theapplicants can make payment net of Demand Draft and postal charges.

The Company shall not be liable for any postal delays and applications received through mail after the closure of the Issue are liableto be rejected and returned to the applicants. Applications by mail should not be sent in any other manner except as mentionedabove.

All CAFs duly completed together with cash/cheque/demand draft must be submitted before the closure of the Issue tothe Bankers to the Issue named herein or to any of its collection centers mentioned on the reverse of the CAF. The CAFalongwith application money must not be sent to the Company or the Lead Managers to the Issue or the Registrars to theIssue except as mentioned above.

The applicants are requested to strictly adhere to these instructions. Failure to do so could result in the applicationsbeing liable to be rejected, with the Company, the Lead Managers and the Registrar not having any liability to suchapplicants.

In case the original CAF is not received by the shareholder or is lost, misplaced, he/she may request the Registrars for issue of aduplicate CAF by furnishing the registered folio number/DP ID/Client ID number and their full name and address. In case theoriginal and duplicate CAFs are lodged for subscription, allotment will be made on the basis of the duplicate CAF and the originalCAF will be ignored.

APPLICATIONS UNDER POWER OF ATTORNEY

In case of applications made under a power of attorney or by limited companies or bodies corporate or registered societies ormutual funds or trusts, certified true copy of the relevant power of attorney or relevant resolution or authority to make the investmentand sign the application, as the case may be, along with a copy of the memorandum and articles of association and/or bye-lawsmust be lodged with the Registrar giving reference of the serial number of the CAF after submission of the CAF to the Bankers tothe Issue or any of their collection centres, failing which the applications are liable to be rejected.

In case the above-referred documents are already registered with the Company, the same need not be furnished again. However,the serial number of registration or reference of the letter, vide which these papers were lodged with the Company/R&T Agentsmust be mentioned just below the signature(s) on the CAF. In no case should these papers be attached to the application andsubmitted to the Bankers to the Issue or at its collection centers.

APPLICATION ON PLAIN PAPER

Shareholders who have neither received the original CAF(s) nor are in a position to obtain the duplicate CAF(s) may make an

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application to subscribe to the Rights Issue on plain paper, along with an account payee cheque /demand draft payable at Mumbaito be drawn in favour of “GICHFL - Rights Issue” and marked “A/c Payee only” and sent by registered post directly to theRegistrars, so as to reach them on or before the closure of the Issue. The envelope should be superscribed “GICHFL – RightsIssue”.

The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recordedwith the Company should contain the following particulars:

� Name of Issuer� Name of the shareholder including joint-holders� Address of sole / first holder� Folio number/DP ID / client ID number� Number of Equity Shares held as on 17th September, 2004 (Book Closure Date)� Certificate numbers and distinctive numbers, if held in physical form� Number of Equity Shares to which entitled� Number of Equity Shares accepted out of entitlement� Number of additional Equity Shares applied for, if any� Total number of Equity Shares applied for� Amount paid on application� Particulars of cheque / draft enclosed� Savings/current account number and name and address of the bank where the shareholder will be depositing the refund

order.� PAN/GIR number and income tax circle/ward/district of the sole/all the joint applicants where the application is for Equity

Shares of a value of Rs.50,000/- or more� In case of non-resident shareholders, NRE/FCNR/NRO account number, name and address of the bank and branch� If the payment is made by a draft purchased from an NRO account, an account debit certificate from the bank issuing the

draft, confirming that the draft has been issued by debiting the NRO account.� If the payment is made by drafts purchased from NRE/FCNR 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 account.� Signature of shareholders in the same order as appearing in Company’s records.

Please note that shareholders who are making the application on plain paper shall not be entitled to renounce their rights andshould not utilize the CAF for any purpose including renunciation even if it is received subsequently. If the applicant violates any ofthese requirements, he/she shall face the risk of rejection of both the applications. The Company shall refund such applicationamount to the applicant without any interest thereon.

MODE OF PAYMENT

For resident shareholders

Payment should be made in cash (not more than Rs.20,000/-) or by cheque/bank draft drawn on any bank (including a co-operativebank) which is situated at and is a member or a sub-member of the bankers clearing house located at the centre where the CAF issubmitted and which is participating in the clearing at the time of submission of the application. Cheques/Demand Drafts must bemade payable to “GICHFL – Rights Issue”. Outstation cheques/money orders/postal orders/ post dated cheques will not beaccepted and CAFs accompanied by such cheques/money orders/postal orders/post dated cheques are liable to be rejected.

For non-resident shareholders on non-repatriation basis

For NRIs holding Equity Shares on non-repatriation basis, payment may be made by way of cheque drawn on NRO accountmaintained in Mumbai or rupee draft purchased out of NRO account maintained elsewhere in India but payable at Mumbai. In suchcases, the allotment of Equity Shares will be on non-repatriation basis. If the payment is made by a draft purchased from an NROaccount, an account debit certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NROaccount, should be enclosed with the CAF. In the absence of the above, the application shall be considered incomplete and is liableto be rejected.

All cheques/bank drafts accompanying the CAFs should be crossed “A/c Payee only” and made payable to “GICHFL – RightsIssue NR”. The CAF duly completed together with the cheques/drafts for the total amount payable should be deposited with theBankers to the Issue at the specified collection centre indicated on the reverse of the CAF, on or before the close of banking hours

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on the date of closure of the Issue. A separate cheque or bank draft must accompany each CAF. Reference number of CAF shouldbe mentioned on the reverse of the cheque/draft.

New demat account shall be opened for holders who have had a change of status from resident Indian to NRI.

For Non-Resident shareholders on repatriation basis

Payment by NRIs/FIIs/Foreign Investors must be made by demand draft/cheque payable at Mumbai or funds remitted from abroadin any of the following manner:

� By Indian rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad; OR� By cheque/draft on a NRE account or FCNR account maintained in Mumbai; OR� Rupee draft purchased by debit to NRE/FCNR Account maintained elsewhere in India and payable in Mumbai; OR� FIIs registered with SEBI must remit funds from special non-resident rupee deposit accounts.

All cheques/drafts submitted by NRIs / FIIs / foreign shareholders should be drawn in favour of “GICHFL – Rights Issue NR”. TheCAF for non-residents applying on repatriation basis duly completed together with the amount payable on application must bedelivered to the Bankers to the Issue on or before the close of banking hours on the date of closure of the Issue.

A separate cheque or bank draft must accompany each CAF. Applicants may note that where payment is made by drafts purchasedfrom NRE/FCNR accounts as the case may be, an account debit certificate from the bank issuing the draft confirming that the drafthas been issued by debiting the NRE/FCNR account should be enclosed with the CAF. In the absence of the above the applicationshall be considered incomplete and is liable to be rejected.

In the case of Non-Residents who remit their application monies from funds held in FCNR/NRE Accounts, refunds and otherdisbursements, if any shall be credited to such account, details for 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 US dollars at the rate of exchange prevailing at such time. The Company will not be liable for any loss onaccount of exchange rate fluctuation for converting the rupee amount into US dollars or for collection charges charged by theapplicant’s bankers.

Applications received from NRs, NRIs, persons of Indian origin resident abroad, for allotment of Equity Shares shall be inter-alia,subject to the conditions imposed from time to time by the RBI under FEMA in the matter of refund of application monies, allotmentof Equity Shares, issue of letters of allotment / export of share certificates, dividends, interest, etc.

Investors will not have the facility of applying through stockinvest instrument in the issue as Reserve Bank of Indiahas withdrawn the stockinvest scheme vide notification No. DBOD.NO.FSC.BC.42/24.47.001/2033-04 dated05th November 2003.

GENERAL

Please read the instructions printed on the enclosed CAF carefully.

1. Application should be made on the printed CAF, provided by the Company except as mentioned under the head‚ applicationon plain paper in the Letter of Offer and should be complete in all respects.

2. A CAF found incomplete with regard to any of the particulars required to be given therein, and/or which is not completed inconformity with the terms of this Letter of Offer is liable to be rejected and the amount paid, if any, in respect thereof will berefunded without interest and after deduction of bank commission and other charges, if any.

3. The CAF must be filled in English and the names of all the applicants, details of occupation, address, father’s/husband’sname, etc. must be filled in block letters.

4. Signatures should be either in English or Hindi or the languages specified in the Eighth Schedule to the Constitution of India.Signatures other than in the aforesaid languages or thumb impression must be attested by a notary public or a specialexecutive magistrate under his/her official seal.

5. The CAF together with cheque/demand draft should be sent to the Bankers to the Issue or their collection centres and not tothe Company or Lead Managers or the Registrars to the Issue, except in the cases mentioned below. Applicants makingapplications on plain paper and those residing at places other than cities where the collection centres of the Bankers to theIssue have been authorized by the Company for collecting applications, will have to make payment by Demand Draft, (net ofdemand draft and postal charges) payable at Mumbai and send their application forms to the Registrars to the Issue byREGISTERED POST. If any portion of the CAF is/are detached or separated, such application is liable to be rejected.

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6. The shareholders must sign the CAF as per the specimen signature recorded with the Company. In case of joint holders, alljoint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with theCompany. Further, in case of joint applicants who are renouncees, the number of applicants should not exceed three.

7. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressedto the first applicant at the address given in the CAF.

8. Bank Account Details: It is mandatory for the applicant to mention the applicant’s savings bank/current accountnumber and the name of the bank with whom such account is held in the space provided in the CAF, to enable theRegistrars to the Issue, to print the said details in the refund orders after the name of the payees. Applications notcontaining above details are liable to be rejected.

9. PAN/GIR Number: Where an application for allotment of Equity Shares individually is for a total value of Rs. 50,000/- or morei.e. the total number of Equity Shares applied for multiplied by the issue price per share is Rs. 50,000/- or more, the applicantor in case of applications in joint names, each of the applicants, should mention their PAN allotted under the Income-Tax Act,1961 or where the same has not been allotted, the GIR number under the Income-Tax Act, 1961 along with the circle/ward/district. In case where neither the PAN nor the GIR number has been allotted, the fact of non-allotment should be mentionedin the CAF. CAF without this information will be considered incomplete and shall be liable to be rejected.

10. Payment by cash: The payment against the share application should not be effected in cash if the amount to be paid is morethan Rs. 20,000/-. In case payment is effected in contravention of this, the application will be deemed invalid and the applicationmoney will be refunded and no interest will be paid thereon.

11. All communication in connection with application for the Equity Shares, including any change in address of the shareholdersshould be addressed to the Registrars to the Issue quoting the name of the first/sole applicant shareholder, folio number andCAF number.

12. Split CAF cannot be re-split.

13. Only the person or persons to whom Equity Shares have been offered and not renouncee(s) shall be entitled to obtain splitCAF.

14. As per section 109A of the Act, the sole applicant / joint applicants being individuals may nominate, in the prescribed manner,a person to whom his/her/their share in the Company shall vest in the event of his/her death. Only one nomination would beapplicable per folio. Hence, in case the shareholder(s) has/have already registered the nomination with the Company, nofurther nomination need to be made for their holdings. In case the allotment of Equity Shares is in dematerialized form, thereis no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered withrespective DP of the applicant would prevail. If the applicant requires changing the nomination, he/she is requested to informtheir respective DP.

15. Applicants must write CAF number on the reverse of the cheque/demand draft.

16. Only one mode of payment per application should be used.

17. A separate cheque/draft must accompany each CAF.

OPTION TO RECEIVE THE RIGHT EQUITY SHARES IN DEMATERIALISED FORM

The Equity Shares of the Company have been under compulsory dematerialized trading for all class of investors, with effect from05th January 2000. Hence, the equity shareholders who wish to trade on the Stock Exchanges are advised to opt for receiving theseEquity Shares in dematerialized form.

The Company has depository arrangements with NSDL and CDSL for issue and holding of the Equity Shares in dematerializedform. In this context:

(i) Tripartite agreements have been entered into on 01st March 2004 between the Company, Registrars and NSDL and on 26th

February 2004 between the Company, Registrars and CDSL for offering depository facility to the investors. The Companywill apply to NSDL and CDSL, for approval to admit the Equity Shares offered in terms of this Letter of Offer into theirdepository system for trading and for completion of other formalities.

(ii) Applicants opting to receive allotment in Demat form must have a beneficiary account with any of the DPs of NSDL or CDSLprior to making the application and in the same order of names in case of a joint application.

(iii) Shareholders, who do not hold beneficiary account, may open a beneficiary account with any DP (care should be taken that

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the beneficiary account should carry the name of the holder in the same manner as is exhibited in the records of theCompany. In case of joint holding, the beneficiary account should be opened carrying the names of the holders in the sameorder as with the Company). In case of investors having various folios in the Company with different joint holders, theinvestors will have to open separate accounts for such holdings.

(iv) For shareholders already holding Equity Shares of the Company in dematerialized form as on Book Closure Date, thebeneficiary account number will be printed on the CAF. For those shareholders/applicants who open accounts later or thosewho change their accounts and wish to receive their rights entitlement by way of credit to such account, the necessary detailsof their beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of EquityShares arising out of the Issue may be made in dematerialized form even if the original Equity Shares of the Company arenot dematerialized.

(v) Equity Shares allotted to an applicant in the electronic form will be credited directly to the applicant’s respective beneficiaryaccount with DP.

(vi) The allotment advice / refund orders will be directly sent to the applicant by the Registrars to the Issue.

(vii) If incomplete/incorrect details are given under the heading ‘Request for Shares in Electronic Form’ in the CAF, resulting inrejection by the depositories, such applicant will be issued physical share certificates.

(viii) The applicant is responsible for the correctness of their beneficiary account details given in the CAF vis-à-vis those with theirDP. In case the information is incorrect or insufficient, the Issuer would not be liable for losses, if any.

(ix) Renouncees can also exercise the option to receive Equity Shares in demat form by indicating the same in the relevant blockand providing the necessary details about their beneficiary account.

(x) It may be noted that Equity Shares in electronic form can be traded only on the Stock Exchanges having electronic connectivitywith NSDL or CDSL.

(xi) Dividend or other benefits with respect to the Equity Shares held in dematerialized form would be paid to those shareholderswhose names appear in the list of beneficial owners given by the depositories to the Company as on book closuredate.

INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE TRADED ON THE STOCKEXCHANGES IN DEMATERIALIZED FORM ONLY.

LAST DATE FOR SUBMISSION OF COMPOSITE APPLICATION FORM

The last date for receipt of the CAF, by the Bankers to the Issue and its collection centres, together with the amount payable, is onor before the close of banking hours, on 28th October, 2004. If the CAF together with the amount payable is not received by theBankers to the Issue at its collection centres on or before the close of banking hours on 28th October, 2004, the offer contained inthis Letter of Offer shall be deemed to have been declined, and the Board shall utilize this entitlement for allotting the Equity Sharesas mentioned below under the heading “Basis of Allotment”.

BASIS OF ALLOTMENT

The basis of allotment shall be finalised by the Board in consultation with the Designated Stock Exchange. The Board will proceedto allot the Equity Shares in the following order of priority:

1. Full allotment to the equity shareholders who have applied for their rights entitlement either in full or in part and also to therenouncees who have applied in full or in part for the Equity Shares renounced in their favour (subject to other provisionscontained under the paragraph titled “renunciation”)

2. Allotment to the equity shareholders who having applied for their full rights entitlement of Equity Shares, have applied foradditional Equity Shares, provided there is surplus available after making full allotment under 1 above. The allotment of suchadditional Equity Shares shall be made as far as possible on equitable basis with reference to number of Equity Shares heldon 17th September 2004, i.e. Book Closure Date, within the overall size of Rights Issue at the sole and absolute discretion ofthe Board in consultation with the Designated Stock Exchange.

3. Allotment to renouncees who having applied for all the Equity Shares renounced in their favour have applied for additionalEquity Shares, provided there is a surplus remaining after 1 and 2 above.

4. Equity Shares remaining unsubscribed after making full allotments under 1, 2 and 3 above, shall be disposed off by theBoard in any manner as it in its sole discretion deems fit and the decision of the Board in this regard shall be final and binding.

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The Company expects to complete the allotment of Equity Shares within a period of 42 days from the date of closure of the Issuein accordance with the listing agreements with the Stock Exchanges.

The Company shall retain no oversubscription.

FORFEITURE

Since the entire money of Rs. 16/- per equity share (Face value of Rs. 10/- + Premium of Rs. 6/-) is payable on application itself,there will not be any forfeiture of shares in the proposed Rights Issue.

DISPOSAL OF APPLICATIONS AND APPLICATION MONIES

The Board, reserves its full, unqualified and absolute right to accept or reject any application in whole or in part in consultation withthe Designated Stock Exchange without assigning any reason therefor, in case the application is not made in terms of this Letter ofOffer. In case an application is rejected in full, the application money received will be refunded to the first named applicant within sixweeks from the date of closure of the Issue in accordance with Section 73 of the Act. If there is delay of refund of application moneyby more than 8 days after the Company becomes liable to pay (i.e. forty two days after the closure of Issue), the Company will payinterest for the delayed period at the rate prescribed under sub-section (2) and (2A) of Section 73 of the Act.

No acknowledgment will be issued for the application monies received by the Company. However, the Bankers to the Issue /Registrars to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at thebottom of each CAF.

ALLOTMENT / REFUND

Where an applicant has applied for additional Equity Shares and is allotted lesser number of Equity Shares than applied for, theexcess application money paid shall be adjusted first towards allotment money and balance, if any will be refunded to the applicant.

Share certificate / letter of allotment or letter of regret together with refund order exceeding Rs. 1,500/- if any, will be despatched byregistered post at the sole/first named applicant’s address within 42 days from the date of the closing of the Issue. Refund ordersupto Rs. 1,500/- will be despatched under certificate of posting. Adequate funds will be made available to the Registrars for thispurpose.

In case of those shareholders who have opted to receive their Equity Shares in dematerialized form through electronic credit underthe depository system, an advice regarding the credit will be sent separately.

If such money is not repaid within 8 days from the day the Company becomes liable to pay it, the Company shall pay that moneywith interest as stipulated under Section 73 of the Act.

Refunds will be made by cheques or pay orders drawn on the bank(s) appointed by the Company as refund bankers. Suchinstruments will be payable at par at the places where applications were accepted. Bank charges, if any, for encashing suchcheques or pay orders will be borne by the applicants.

For non-resident applicants, refunds, if any, will be made as under:

Where applications are accompanied by Indian rupee drafts purchased abroad and payable at Mumbai, India, refunds will be madein convertible foreign exchange equivalent to Indian rupees to be refunded. Indian rupees will be converted into foreign exchangeat the rate of exchange, which is prevailing on the date of refund. The exchange rate risk on such refunds shall be borne by theconcerned applicant and the Company shall not bear any part of the risk.

Where the applications made are accompanied by NRE / FCNR / NRO cheques, refunds will be credited to NRE / FCNR / NROaccounts respectively, on which such cheques were drawn and details of which were provided in the CAF.

LETTERS OF ALLOTMENT / SHARE CERTIFICATES

Share certificate, letter of allotment or letter of regret as the case may be will be despatched to the registered address of the firstnamed applicant and/or the respective beneficiary accounts will be credited within six weeks, from the date of closure of the Issue.In case the allotment is made in physical form, and if letter of allotment is issued, the relevant share certificate will be despatchedwithin three months from the date of allotment in exchange for the letter of allotment. Allottees are requested to preserve such letterof allotment (if any) to be exchanged later for share certificates.

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UTILISATION OF ISSUE PROCEEDS

The application monies received will be kept in a separate bank account and the Company will not have access to such fundsunless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90 percent of the issue has been received. The Company will be permitted to have access to the funds upto the extent of the size of theissue on obtaining clearance from the Designated Stock Exchange with suitable documentary evidence that the minimum subscriptionamount of 90 per cent of the issue size has been received. No interest will be paid on application monies received.

The Board declares that all moneys received out of this Issue shall be transferred to separate bank account other than the bankaccount referred to in sub-section (3) of section 73.

UNDERTAKINGS BY THE COMPANY

The Company undertakes that:

a) The complaints received in respect of the Issue shall be attended to by the Company expeditiously and satisfactorily;

b) All steps for completion of the necessary formalities for listing and commencement of trading at all Stock Exchanges wherethe Equity Shares are to be listed are taken within seven working days of finalization of basis of allotment;

c) Funds required for dispatch of refund orders/allotment letters/certificates by registered post shall be made available to theRegistrars by the Company;

d) Share certificates / refund orders to the non-resident Indians shall be dispatched within the specified time;

e) No further issue of shares shall be made till the shares offered through this Letter of Offer are listed or till the applicationmoneys are refunded on account of non-listing, under subscription, etc.

All the legal requirements as applicable till the filing of the Letter of Offer with the Designated Stock Exchange have been compliedwith.

UTI Securities Limited and GIC Housing Finance Limited hereby undertake to update the letter of offer and keep the publicinformed of any material changes till the shares issued through this offer are listed on the stock exchanges andcommencement of trading.

TAX BENEFITS TO THE COMPANY AND ITS SHAREHOLDERS

The Board of Directors of the Company has been advised by M/s M.P. Chitale & Co., Chartered Accountants vide their letter dated24th July 2004 that under the Income Tax Act, 1961and other applicable tax laws for the time being in force, the following taxbenefits and concessions will inter-alia, be available to the Company and the members.

A. TO THE COMPANY

Under Income Tax Act 1961

1. In accordance with and subject to the provisions of Section 112 of the Income Tax Act, 1961, long term capital gain accruingto the Company will be subject to tax as stated below instead of normal rate of 35% (plus applicable surcharge) applicable tothe Company.

� If long term capital gain is computed with indexation @ 20%(plus applicable surcharge)

� If long term capital gain is computed without indexation @ 10%(plus applicable surcharge)

2. Dividend Income received from Domestic Companies is exempt under section 10(34) of the Income-tax Act, 1961.

3. The Company is entitled to a deduction of 40% of its profits from the business of providing long-term finance u/s 36(1)(viii) ofthe Income-tax Act, 1961. The said deduction is subject to the condition that the Company is required to create and maintaina special reserve to the extent of the deduction. If the aggregate amount carried to such reserve exceeds twice the amountof the paid up share capital and general reserves of the Company, the deduction is restricted to such amount only.

4. The Company is eligible to claim exemption in respect of tax on long term capital gains u/s. 54EC and 54ED if the amount ofcapital gains is invested in certain specified bonds / securities subject to the fulfillment of the conditions specified in thosesections.

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Under Wealth Tax Act, 1957

The Company is liable to pay wealth tax as per the provisions of Wealth Tax Act, 1957 at the rate of 1% in respect of certain assetsowned by the Company, subject to the basic exemption of Rs.15 lacs.

B. TO THE RESIDENT MEMBERS OF THE COMPANY

Under Income Tax Act, 1961

1. Dividend income received by the members will be exempt under section 10(34) of the Income Tax Act, 1961.

2. If the Company’s shares are sold by the member after being held for more than twelve months the gain, if any, would be taxedas long term capital gain which will be computed after indexing the cost of acquisition at 20% (plus applicable surcharge) andwithout indexation at 10% (plus applicable surcharge).

Such long-term capital gain will be taxed at the following rates.

i. In case of members being Individuals, HUF, association of persons or body of individuals

Where the total income does not exceed Rs.8,50,000 - 20% and 10% as the case may be.

Total income exceeds Rs.8,50,000 – 20% and 10% (plus applicable surcharge) as the case may be.

ii. In case of members being Domestic Company - 20% and 10% (plus applicable surcharge) as the case may be.

iii. In case of members being artificial judicial person – 20 % and 10% (plus applicable surcharge) as the case may be.

This exemption is available to all assesses.

3. Long Term Capital Gains on sale of shares of the Company by the members shall be exempt from income tax if such gainsare invested in bonds / equity shares specified in Section 54EC or Section 54ED respectively subject to the fulfillment of theconditions specified in those sections. In the case of individual or HUF members, Long Term Capital Gains on sale of sharesof the Company shall be exempt from income tax u/s. 54F subject to the fulfillment of the conditions specified therein.


Share held in Domestic Company are not “asset” under the Wealth-Tax Act 1957, hence not liable to wealth tax in the hands of theholder of the said shares.

C. TO THE NON-RESIDENT MEMBERS OF THE COMPANY

Under Income Tax Act, 1961

1. As per the provision of section 115-E of the Income Tax Act, 1961 investment in shares being specified asset, the long termcapital gain arising on the transfer of such shares in the company acquired in convertible foreign exchange by a Non-Resident Indians, will be liable to Income Tax @10% (plus applicable surcharge)

i. In case of members being Individuals, HUF, association of persons or body of individuals

Where the total income does not exceed Rs.8,50,000 - 20% and 10% as the case may be.

Total income exceeds Rs.8,50,000 – 20% and 10% (plus applicable surcharge) as the case may be.

ii. In case of members being Domestic Company - 20% and 10% (plus applicable surcharge) as the case may be.

iii. In case of members being artificial judicial person – 20 % and 10% (plus applicable surcharge) as the case may be.

2. Under section 115F of the Income Tax Act, 1961 the Long Term Capital gain as referred to in 1 above shall be exempted fromincome tax entirely / proportionately if he/she invest all or a portion of the net consideration in specified assets as defined insection 115C (f) of the Income Tax Act, 1961 within 6 months of the date of transfer. The amount so exempted shall, however,be chargeable to tax under the provisions of section 115F(2) if the specified assets are transferred or converted in to moneywithin three years from the date of acquisition thereof as specified in the said section.

3. As per the provision of section 115-I of the Act, when a Non Resident Indian, elects not to be governed by the provision ofChapter XII-A of the Income Tax Act, 1961, than his/her total income shall be computed and charged in accordance with otherprovisions of the Act.

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4. Non resident shareholders will be entitled to exemption, under section 10(34) of the Income Tax Act, 1961, in respect of theincome by way of dividend received from the Company.”

5. Where any Double Taxation Avoidance Agreement [DTA] entered into by India with any other country provides for a concessionaltax rate or exemption in respect of income from the investment in the company’s shares, those beneficial provisions shallprevail over the provisions of the Income Tax Act, 1961 in that regard.


Share held in Domestic Company are not “asset” under the Wealth-Tax Act 1957, hence not liable to wealth tax in the hands of theholder of the said shares.

TO FOREIGN INSTITUTIONAL INVESTORS

1. Under Section 115AD (1)(b)(ii) of the Act, Income by way of Short Term Capital Gain arising from the transfer of shares held inthe Company for a period of less than twelve months will be taxable @ 30% (plus applicable surcharge).

2. Under Section 115AD (1)(b)(iii) of the Act, Income by way of Long Term Capital Gain arising from the transfer of shares held inthe Company will be taxable @ 10% (plus applicable surcharge)

3. Income by way of dividend received on shares of the Company is exempt u/s. 10(34) of the Income Tax Act, 1961.”

4. Where any Double Taxation Avoidance Agreement [DTA] entered into by India with any other country provides for a concessionaltax rate or exemption in respect of income from the investment in the company’s shares, those beneficial provisions shallprevail over the provisions of the Income Tax Act, 1961 in that regard.

TO FOREIGN COMPANY

Dividend declared by the Company is exempt from tax by virtue of provision of section 10(34) and under section 115-O. Income byway of long term capital gain will be taxed at concessional rate of 20% (plus applicable surcharge) as provided in Section 112(1)(C)of the Income Tax Act, 1961.

Where any Double Taxation Avoidance Agreement (DTA) entered into by India with any other country provides for a concessionaltax rate or exemption in respect of income from the investment in the company’s shares, those beneficial provision shall prevailover the provisions of the Income Tax Act, 1961 in that regard.

All the above tax provisions are subject to change pursuant to enactment of the Finance (No.2) Bill 2004 introduced in the LokSabha on July 8, 2004.

TO MUTUAL FUNDS

As per the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and ExchangeBoard of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutionsand Mutual Funds authorized by the Reserve Bank of India would be exempt from income tax.

We hereby give our consent to include our above-referred opinion regarding the tax benefits available to the Company and to itsshareholders in the offer document, which the Company intends to submit to the Securities and Exchange Board of India, Mumbai.

However, all shareholders are advised to consult their own tax advisors as to the tax implications on investments in their individualcases.

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PARTICULARS OF THE ISSUE

OBJECTS OF THE ISSUE

1. To strengthen Capital Adequacy norms as specified by NHB and augment resources for lending.

2. Meet issue expenses

To strengthen Capital Adequacy norms as specified by National Housing Bank and augment resources for lending

As per the NHB ‘Housing Finance Companies Directions, 2001’ dated 27th September 2001, every Housing Finance Company shallmaintain a minimum Capital Adequacy Ratio (CAR) of 12%. The Capital Adequacy Ratio (CAR) of GICHFL as on 31st March 2004is 12.64%. With an increase in the budgeted housing loan sanctions for the year 2004-05, the CAR as on 31st March 2005 wouldbe below the minimum stipulated level of 12% unless fresh capital is infused. In view of the additional business and to maintain theCAR above the minimum stipulated level of 12%, infusion of fresh capital is required.

Meet issue expenses

The expenses of the Issue include lead manager’s fees and other intermediary fees, printing and distribution expenses, legal fees,advertisement expenses and listing fees payable to the stock exchanges amongst others.

The main objects clause of the MOA enables the Company to undertake its existing activities and the activities for which the fundsare being raised through the Issue.

Means of Finance and Deployment of Funds

The funds of Rs. 1436.08 lacs raised by the Company through the proposed Rights Issue will be deployed during the currentfinancial year as follows:

Particulars Rs. lacs

Housing Finance activities 1396.03

Issue Expenses 40.05

Total 1436.08

COMPANY AND MANAGEMENT

History of the Company

GIC Housing Finance Limited was incorporated as ‘GIC Grih Vitta Limited’ on 12th December 1989. The Company was issued thecertificate for commencement of business dated 12th January 1990. The name is changes to its present name vide fresh Certificateof Incorporation issued on 16th November 1993. The Company was formed with the objective of entering in the field of direct lendingto individuals and other corporates to accelerate the housing activities in India. The primary business of GICHFL is granting housingloans to individuals and to persons/entities engaged in construction of houses/flats for residential purposes.

The Company was promoted by General Insurance Corporation of India and its erstwhile subsidiaries namely, National InsuranceCompany Limited, The New India Assurance Company Limited, The Oriental Insurance Company Limited and United India Insur-ance Company Limited together with UTI, ICICI, IFCI, HDFC and SBI, all of them contributing to the initial share capital.

HDFC, SBI and ICICI have since sold off their holding in the Company and have ceased to be the promoters of the Company.

Significant events in the Company’s history are as follows:

Year Event

1989 Company was incorporated with the name “GIC Grih Vitta Limited”.

1989-91 The Company started its operations from 8 locations.

1991-92 The Company launched Employee Housing Scheme and Builder Scheme.

1992-93 Company’s name changed to “GIC Housing Finance Limited”.Apna Ghar Yojana was introduced by the Company.

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1993-94 The Company made a rights issue of 1:1; the capital crossed the Rs. 10 crores mark.

1994-95 The authorised share capital was increased to Rs. 150 crores; maiden Initial Public Offer (IPO) by the Company.

New service centres were started in Navi Mumbai, Vizag and Coimbatore.

1996-97 The Company started the process of branch interlinking and computerization.

2003-04 The Company has crossed Rs. 500 crores business in individual housing loan and the total portfolio has crossedRs. 1000 crores.

Main Objects of the Company

Main objects of the Company as set out in its Memorandum and Articles of Association inter-alia are:

� To carry on the business of providing long-term finance to any person or persons, company or corporation, society or associa-tion enabling borrower to construct or purchase in India a house or flat for residential purposes, upon such security and suchterms and conditions as the Company may deem fit and also provide long-term finance to persons engaged in the business ofconstruction of houses in India or flats in India for residential purposes to be sold by them by way of hire purchase or ondeferred payment or other similar basis upon such terms and conditions as the Company may think fit and proper.

Changes in the MOA of the Company since incorporation

Sr. No. Details of changes in MOA Date of Resolution

1. Name was changed from “GIC Grih Vitta Limited” to “GIC Housing Finance Limited” 25-09-1993

2. Clause 5A was inserted 27-05-1995

3. Clause 29A was added 27-05-1995

4. Clause 30 was amended 27-05-1995

5. Clause 31A was inserted 27-05-1995

6. Clause 61 & 63 were added 27-05-1995

7. Increase in authorised share capital from Rs. 50 crores to Rs. 150 crores 27-05-1995by amendment of Capital clause

8. Alteration in the Capital clause of the Company 26-09-1996

Past Capital issues by the CompanyThe Company has raised capital in the past as follows:

Year Type of Capital Nature of Issue Issue Size Date of Prospectus /Raised (Debt / Equity) (Public / Rights) Rs in Lacs Letter of Offer

1993 Equity Rights Issue(Pre-IPO) 500.00 —

1994 Equity Public Issue 4002.45 14-11-1994

Board of Directors

The Board comprises of eminent professionals in the field of finance and insurance.

Mr. A.K. Guha, Managing Director is in-charge of the overall management of the Company subject to the supervision and control ofthe Board.

He is ably supported by professional and qualified team of executives in the area of commercial operations, finance, secretarial andlegal, information technology, marketing and human resources.

The following table sets forth details regarding Company’s Board.

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Name of Directors, Age in years Designation, List of other Directorships/MembershipsOccupation and Address

Mr. P.C. Ghosh (59 years)ChairmanOccupation: Service18, Hill Park, A.G. Bell Marg,Malabar Hill,Mumbai – 400 006.

General Insurance Corporation of India Limited.GIC Asset Management Company Limited.Loss Prevention Association of India Limited.India International Insurance Pte Limited.Kenindian Assurance Co Limited.Life Insurance Corporation of India.LIC (Mauritius) Offshore Limited.Indian Register of Shipping.Export Credit Guarantee Corporation of India Limited.Southern Petrochemical Industries Corporation Limited.ICICI Bank Limited.Deposit Insurance and Credit Guarantee Corporation.Technical Advisory group of Tariff Advisory committee.National Insurance Academy.Insurance Institute of India.Asian Reinsurance Corporation.

Mr. V. Jagannathan (59 years)Independent & Non Executive DirectorOccupation: Service46, Bishop Gardens, R A Puram,Chennai – 600 028.

United India Insurance Company Limited.India International Insurance Pte Limited.Loss Prevention Association of India Limited.

Mr. Rajendra Beri (58 years)Independent & Non Executive DirectorOccupation: ServiceFlat No. 9, Mayfair House,Little Gibbs Road,Malabar HillMumbai – 400 006.

The New India Assurance Company Limited.The New India Assurance Company (Sierra Leone) Limited.The New India Assurance Company (Trinidad & Tobago)Limited.The Prestige Assurance Plc, Nigeria.Loss Prevention Association of India Limited.

Mr. Sham Lal Mohan (59 years)Independent & Non Executive DirectorOccupation: Service192, Jor Bagh, New Delhi.

The Oriental Insurance Company Limited.Ken India Assurance Company Limited.DCM Shriram Consolidated Limited.Loss Prevention Association of India Limited.

Mr. H.S. Wadhwa (59 years)Independent & Non Executive DirectorOccupation: ServiceFlat No. 25, Alipore Estate,8/6/1, Alipore Road,Kolkata – 700 027.

National Insurance Company Limited.Loss Prevention Association of India Limited.General Insurance Corporation of India Limited.India International Insurance Pte. Limited.

Mr. N.R. Ranganathan (66 years)Nominee DirectorOccupation: Retired IAS Officer4B, Lakshmi Villa, No.7, First Cross Rd,Raja Annamalaipuram,Chennai – 600 028.

Gujarat Narmada Fertilizers Limited.

Mr. M.K. Tandon (62 years)Independent & Non Executive DirectorOccupation: Service205, Challenger Tower IV,Thakur Village, Kandivali (West),Mumbai.

GIC Mutual Fund.Coromondel Fertilisers Limited.Atul Limited.Saw Pipes Limited.Welspun Syntex Limited.

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Mr. R.M. Malla (51 years)Independent & Non Executive DirectorOccupation: ServiceC-4/19, Safdurjung Development Area,New Delhi – 110 019.

Haldia Petrochemicals Limited.Jindal Thermal Power Company Limited.Rajasthan Consultancy Organisation Limited.

Mr. A.R.M. Rao (49 years)Nominee DirectorOccupation: Service1-4/41, Maker Kunden Gardens,Opp. Lido Cinema, Juhu Road,Santacruz (West), Mumbai – 400 049.

UTI Securities Limited.Standard Chartered UTI Securities India Private Limited.

Mr. R.L. Baxi (66 years)Independent & Non Executive DirectorOccupation: RetiredC-23/24, Modi Nagar Adarsh Society,Near Chaturabai Bhuvan,Off Mathurdas Road, Kandivali (West),Mumbai – 400 067.

GIC Asset Management Company Limited.

Mr. Manu Chadha (49 years)Independent & Non Executive DirectorOccupation: Chartered AccountantB-30, Connaught Place,Kuthiala Building,New Delhi – 110 001.

Dena Bank.SBI Funds Management Private Limited.Ispat Industries Limited.Orient Paper & Industries Limited.TRC Financial Services LimitedTRC Corporate Consulting Private Limited.

Mr. A.K. Guha (56 years)Managing DirectorOccupation: Service3, Hill Park, Malabar Hill,Mumbai – 400 006.

Mr. P.C. Ghosh: Mr. Prabhas Chandra Ghosh, Chairman of General Insurance Corporation of India, was appointed as Director andChairman of the Company on 31st July 2002. Mr. P. C. Ghosh has done his B.Sc. (Physics) and B.Tech (Mech) from the IndianInstitute of Technology. He has vast and varied experience and knowledge of all the functional areas of Insurance Industry gainedover the past 30 years. From March 2001 to October 2002 he was holding the charge of Managing Director of General InsuranceCorporation of India. From November 2001 to February 2002 he was holding additional charge of the post of Chairman-cum-Managing Director of National Insurance Company Limited. Under his guidance the Company aspires to expand in the IndianHousing Finance Market.

Mr. V. Jagannathan: Mr. V. Jagannathan, Chairman-Cum-Managing Director of United India Insurance Co. Ltd., was appointed asDirector of the Company on 30th October 2002. He is post-graduate in Economics and his interest lies also in Tamil Literature andPhilosophy. He joined the General Insurance Industry in 1969 and possesses an experience of more than three decades. He tookthe charge of United India Insurance Co. Ltd. as Chairman-Cum-Managing Director on 05th March 2001. During his long career,spanning over three decades, he has held many assignments with distinction and carries with him a rich experience in variousoperational areas of the Insurance Industry.

Mr. Rajendra Beri: He has done his Masters in Business Administration, and joined The New India Assurance Company Limited inFebruary 1971 as a management trainee. He worked both in the technical as well as in the marketing department of the companyin various capacities across the country. He was also incharge of the company’s operations in Japan from August 1997 till May2000. On his return to India, he was on deputation as Secretary, Tariff Advisory Committee, Mumbai till July 2001. Thereafter, hereturned to New India as General Manager. He assumed the post of Current Incharge in March 2002 and has been the Chairman-cum-Managing Director of The New India Assurance Company Limited since 21st May 2002.

Mr. Sham Lal Mohan: Mr. S. L. Mohan, Chairman-Cum-Managing Director of The Oriental Insurance Company Limited, wasappointed as Director of the Company on 30th October 2002. He has done his B.E. (Mech) from Punjab University in 1968. He isalso an Associate of Insurance Institute of India, Mumbai.

—

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Mr. H.S. Wadhwa: Mr. H. S. Wadhwa, Chairman-cum-Managing Director of National Insurance Company Limited was appointedas Director of the company w.e.f. 24th October 2003. He started his career in insurance industry in the year 1964. Marketing ofinsurance products has been his area of expertise. He took the Charge of Chairman-cum-Managing Director of National InsuranceCompany Limited on 29th August 2002.

Mr. N.R. Ranganathan: Mr. N.R. Ranganathan is an alumnus of the Presidency College, Madras, Law College, Madras and theLondon School of Economics. He joined the Indian Administrative Services in 1960 and held important positions. He was Secretary(Personnel) to Government of India and Member Secretary of the Planning Commission, Government of India.

Mr. M.K. Tandon: Mr. M. K. Tandon was appointed as Director of the Company w.e.f. 02nd September 1999. He is M.Com, LLB,Associate Part I (Insurance Institute of India). He started his career in insurance industry in 1964. He has immense knowledge andexperience in insurance industry for the past four decades. He was the Managing Director of General Insurance Corporation ofIndia during from 04th March 1999 to 04th March 2001. Thereafter he was the Chairman-Cum-Managing Director of National InsuranceCo. Ltd. from 05th March 2001 to 30th September 2001.

Mr. R.M. Malla: Mr. R. M. Malla, Executive Director of IFCI Limited, was appointed as Director of the Company on 28th June 2002.He is M.Com from University of Delhi, MBA from Faculty of Management Studies, University of Delhi, PGDBM from ManagementDevelopment Institute, Gurgaon and CAIIB from Indian Institute of Bankers.

Mr. A.R.M. Rao: A qualified Chartered Accountant with 22 years of work experience in Unit Trust of India. He has worked in variousfunctional areas of marketing, accounting and operations at various branches of UTI and also in the Departments of InternationalFinance, Investments and Fund Management at Corporate Office in different capacities. He rose to the position of President in theyear 2003 and is currently the Managing Director of UTI Securities Limited.

Mr. R.L. Baxi: Mr. R. L. Baxi was appointed as Director of the Company on 30th October 2001. Mr. R L Baxi B.Com, LLB, Fellow ofChartered Institute of Insurance, London and Fellow of the Insurance Institute of India. He retired as Director and General Managerfrom New India Assurance Company Limited on 31st March 1998. During his term with New India Assurance Company Limited, healso discharged duties as ‘Current Incharge’ of the company for 9 months.

Mr. Manu Chadha: Mr. Manu Chadha was appointed as Director of the Company on 29th April 2002. He has done his B. Com(Hons), FCA, LLB and is a practicing Chartered Accountant since 1979 and is a Senior Partner with M/s. T R Chadha & Co. He isalso on the Board of Dena Bank, SBI Mutual Fund and other body corporates. The Government of India has nominated him on theInvestor Education and Protection Fund.

Mr. A.K. Guha: Mr. A.K. Guha, M.Com, A.C.A., joined United India Insurance Company Limited in the year 1975. He has vastexperience and knowledge in financial areas of Insurance Industry. During his deputation in New India Assurance Company Limitedas Assistant General Manager he had undergone training on Investment Management at Business School, Manchester, U.K., inthe year 2000. Before deputation to GICHFL from 01st January 2003 as Chief Executive, he was heading the Mumbai regional officeI and II of United India Insurance. GICHFL’s business and profitability have increased manifold since Mr. Guha has taken charge ofthe Company. To recognize his contribution, Mr. Guha has been inducted on the Board as Managing Director w.e.f. 21st June 2004.

COMPENSATION OF MANAGING DIRECTOR

Mr. A.K. Guha was appointed as the Managing Director of GICHFL w.e.f. 21st June 2004 till 31st August 2007 vide Board resolutiondated 21st June 2004.

The monthly emoluments of Mr. A.K. Guha are as under:

Basic Rs. 22,300/-

Dearness Allowance Rs. 9,540/-

City Compensatory Allowance Rs. 375/-

Fixed Personal Allowance Rs. 500/-

Special Allowance Rs. 2000/-

Deputation Allowance Rs. 1000/-

Total Rs. 35,715/-

In addition he is eligible for leave travel concession for self, wife and dependent children by air once in a year for 2000 km. Otheryearly allowances are as under:

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Domiciliary Mediclaim Rs. 10,500/-

Dress Code Allowance Rs. 6,000/-

Brief Case Allowance Rs. 2,000/-

Total Rs. 18,500/-

CORPORATE GOVERNANCEThe Company is committed to the principles of good corporate governance. According to the Company corporate governance is thecombination of voluntary practices and compliance with laws and regulations leading to effective control and management of theCompany. The Company believes that good corporate governance contemplates that corporate actions balance the interest of allstakeholders and satisfy the tests of accountability, transparency and fair play. The Company believes that all its operations andactions must be directed towards enhancing overall shareholder value.

The Company has complied with SEBI guidelines in respect of corporate governance, especially with respect to the appointment ofindependent directors on the Board and constitution of its Board committees, the shareholder/investor grievance committee andthe audit committee. The Company has complied with all the requirements of the listing agreements with the Stock Exchanges andregulations and SEBI guidelines. Further, there is no penalty/stricture levied by any statutory authority against the Company inrelation to corporate governance.

AUDIT COMMITTEE

The Audit Committee comprises of 3 independent non-executive directors namely Mr. M.K. Tandon, Mr. A.R.M. Rao and Mr. R.L.Baxi. Mr. M.K. Tandon is the Chairperson of the Audit Committee.

The terms of reference of the Audit Committee are given below:

i. To have discussions with the auditors periodically about internal control systems, the scope of audit including the observationsof the auditors and to review the half-yearly and annual financial statements before submission to the Board and ensurecompliance of internal control systems.

ii. To oversee the Company’s financial reporting process and the disclosure of its financial information to ensure that thefinancial statement is correct, sufficient and credible.

iii. Recommending the appointment and removal of external auditor, fixation of audit fee and also approval for payment for anyother services.

iv. Reviewing with management the annual financial statements before submission to the Board.

v. Reviewing with the management, external and internal auditors, the adequacy of internal control systems.

vi. Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing andseniority of the official heading the department, reporting structure coverage and frequency of internal audit.

vii. Discussions with internal auditors on any significant findings and follow up thereon.

viii. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud orirregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

ix. Discussions with external auditors before the audit commences, nature and scope of audit as well as to have post-auditdiscussion to ascertain any area of concern.

x. Reviewing the Company’s financial and risk management policies.

xi. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in caseof non-payment of declared dividends) and creditors, if any.

SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE

The SEBI Guidelines provide for and make it necessary for companies to assign high priority to investor grievances and ensure thatall preventive steps have been taken to minimize the number of complaints. Keeping these guidelines in mind, the Company takesextra care and interest for its investor community. The Company has designated personnel to solve investors’ problems along withthe Share Transfer Agents of the Company, Sharepro Services.

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The Shareholders/Investor grievance Committee comprises of 3 independent non-executive directors namely Mr. M.K. Tandon,Mr. A.R.M. Rao and Mr. R.L. Baxi and is headed by Mr. M.K. Tandon.

REMUNERATION COMMITTEE

The Company has not constituted a Remuneration Committee. The Board may as and when it considers expedient, constitute aRemuneration Committee.

POLICY ON DISCLOSURES AND INTERNAL PROCEDURE FOR PREVENTION OF INSIDER TRADING

The Company is in compliance with and will continue to comply with the provisions of the SEBI (Prohibition of Insider Trading)Regulations, 1992. In compliance with regulation 12(1) of the SEBI (Prohibition of Insider Trading) Regulations, 1992, Companyhas framed a code of internal procedures and conduct for prevention of insider trading.

Mr. S. Sridharan, the Company Secretary is responsible for setting forth policies, procedures, monitoring and adherence to therules for the preservation of price sensitive information and the implementation of the code of conduct under the overall supervisionof the board.

SHAREHOLDING OF THE DIRECTORS

The Articles of Association of the Company do not require the Chairman and the Directors to hold any qualification shares. Thedirectors (including their relatives) do not hold any shares of the Company as on 30th June 2004.

BORROWING POWERS OF THE BOARD

The shareholders vide a resolution pursuant to section 293(1) (d) of the Act passed at the AGM of the Company held on 26th

September 2002, had approved and delegated powers to the Board for borrowing up to a sum of Rs. 2,000 crores.

INTEREST OF THE DIRECTORS

All directors of the Company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetingsof the Board or any Committee thereof, commission payable to them as well as to the extent of other remuneration, reimbursementof expenses payable to them under Articles of Association by the Company. The Managing Director is also interested to the extentof remuneration paid to him for services rendered by him. All Directors may also be deemed to be interested to the extent of equityshares, if any, already held by them or their relatives, companies, firms and trusts in which they are interested as directors,members, partners or trustees in the Company, or that may be subscribed for and allotted to them and also to the extent of anydividend payable thereon and other distributions in respect of the said Equity Shares of the Company.

Payment to Directors for the year ended 31st March, 2004(Amount in Rs.)

Name of Director Sitting Salaries / Commission TotalFees Perquisites

Mr. M.K. Tandon 44,000 - - 44,000

Mr. D.S. Phaterphekar 29,000 - - 29,000

Mr. T.S. Laschar 4,500 - - 4,500

Mr. R.L. Baxi 59,000 - - 59,000

Mr. Manu Chadha 4,000 - - 4,000

Mr. N.R. Ranganathan 4,000 - - 4,000

Note:1) No other director had drawn sitting fees during the year under consideration.2) No salary/perquisite/commission was allowed/paid to any of the directors during this period.

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Changes in Directors in the last three years

Sr. Name Date of ReasonNo. Appointment /

Cessation1. Mr. A.R.M. Rao 28-07-2001 Appointed as Nominee Director

2. Mr. Udipi Vasudeva Rao 28-09-2001 Retirement from directorship

3. Mr. P.M. Venkatasubramanian 28-09-2001 Reappointed at the AGM

4. Mr. M.K. Tandon 28-09-2001 Reappointed at the AGM

5. Mr. T.S. Laschar 28-09-2001 Appointed as Additional Director, confirmed at the AGM

6. Mr. Dilip S Phatarphekar 28-09-2001 Appointed as Additional Director, confirmed at the AGM

7. Mr. Dilip M Nachane 30-10-2001 Resigned as Director

8. Mr. R.L. Baxi 30-10-2001 Appointed as Additional Director

9. Mr. Manu Chadha 29-04-2002 Appointed as Additional Director

10. Mr. R.M. Malla 28-06-2002 Appointed as Additional Director

11. Mr. Debadatta Sengupta 30-06-2002 Resigned as Director

12. Mr. O.P. Aggarwal 28-06-2002 Resigned as Director

13. Mr. Prabhas Chandra Ghosh 31-07-2002 Appointed as Nominee Director

14. Mr. D. Swaminathan 27-09-2002 Resigned as Director

15. Mr. P.M. Venkatasubramanian 27-09-2002 Resigned as Director

16. Mr. M.K. Tandon 27-09-2002 Reappointed as Director

17. Mr. R.L. Baxi 27-09-2002 Appointed as Additional Director, confirmed at the AGM

18. Mr. Manu Chadha 27-09-2002 Appointed as Additional Director, confirmed at the AGM

19. Mr. R.M. Malla 27-09-2002 Appointed as Additional Director, confirmed at the AGM

20. Mr. V. Jagannathan 30-10-2002 Appointed as Additional Director

21. Mr. Rajendra Beri 30-10-2002 Appointed as Additional Director

22. Mr. Sham Lal Mohan 30-10-2002 Appointed as Additional Director

23. Mr. V. Jagannathan 26-09-2003 Appointed as Additional Director, confirmed at the AGM

24. Mr. Rajendra Beri 26-09-2003 Appointed as Additional Director, confirmed at the AGM

25. Mr. Sham Lal Mohan 26-09-2003 Appointed as Additional Director, confirmed at the AGM

26. Mr. T.S. Laschar 26-09-2003 Retired by rotation from Directorship

27. Mr. R.L. Baxi 26-09-2003 Reappointed at the AGM

28. Mr. Dilip S Phatarphekar 26-09-2003 Retired by rotation from Directorship

29. Mr. H.S. Wadhwa 24-10-2003 Appointed as Additional Director

30. Mr. A.K. Guha 21-06-2004 Appointed as Additional/Managing Director

Date of Expiration of the term of current Directors

Sr. Name of the Director Nature of Directorship Date of expiration of term ofNo office/due for re-appointment1 Mr. P.C. Ghosh Chairman 31-01-2005

2 Mr. V. Jagannathan Independent & Non Executive Director AGM – 2005

3 Mr. Rajendra Beri Independent & Non Executive Director AGM – 2006

4 Mr. Sham Lal Mohan Independent & Non Executive Director AGM – 2005

5 Mr. H.S. Wadhwa Independent & Non Executive Director AGM – 2006

6 Mr. N.R. Ranganathan Nominee Director —

7 Mr. M.K. Tandon Independent & Non Executive Director AGM – 2004

8 Mr. R.M. Malla Independent & Non Executive Director AGM – 2004

9 Mr. A.R.M. Rao Nominee Director —

32


10 Mr. R.L. Baxi Independent & Non Executive Director AGM – 2005

11 Mr. Manu Chadha Independent & Non Executive Director AGM – 2004

12 Mr. A.K. Guha Managing Director 31-08-2007

KEY MANAGERIAL PERSONNEL

1 Mr. A.K. Guha Managing Director 57 CA 21-10-2002 35 Supervising and United India 6.77 lacsyears Managing the Insurance

overall day to day Companyaffairs of the LimitedCompany

2 Mr. S. Sridharan Assistant Vice 43 B.Com, CA, 01-03-1994 10 Company United India 5.74 lacsPresident CS, ICWA, years Secretary, Legal, Insurance

BGL Recovery and CompanySanctions. Limited

3 Mr. Rajib De Assistant Vice 38 B.Com, ACA 08-01-1992 03 Marketing, HPCL 4.40 lacsPresident years Systems and

Internal Audit.

4 Mr. K. Divakar Group Head 49 B.Sc 06-02-1992 13 Area Manager, New India 4.80 lacsyears Bangalore Area Assurance

Office. Companylimited

5 Mr. Shrinivas M Group Head 43 BE, PGD in 17-05-1993 09 Recovery Canfin 5.37 lacsConstruction years Homes Ltd.

6 Mr. H.D. Thakkar Group Head 54 B.Com 01-01-1996 25 Administration GIC of India 4.58 lacsyears and Compliance of

NHB guidelines.

7 Mr. Potu Srinivas Group Head 42 B.Sc, B.L., 29-02-1992 04 Area Manager, Sundaram 4.27 lacsPGD IRPM years Hyderabad Area Finance

Office.

8 Mr. S. Group Head 39 B.Sc 18-07-1991 05 Area Manager, CMC Ltd. 4.87 lacsVijayramesh years Navi Mumbai

Area Office.

9 Mr. R. Group Head 52 B.Sc 02-11-1993 08 Area Manager, United India 3.94 lacsJayachandran years Trivandrum Area Insurance

Office CompanyLimited

10 Mr. Mahesh Group Head 43 B.Com, ACA 14-10-1995 12 Accounts and GIC of India 3.74 lacsGhagre years Resource

Mobilisation.

11 Mrs. Meena V Group Head 45 B.A. 12-06-2002 12 Area Manager, — 4.19 lacsyears New Delhi

Area office.

Sr.No Name Designation Age Qualification

Date ofJoining

ExpYrs.

FunctionalResponsibility

PreviouslyEmployed

PresentAnnual

Compensation(Rs. in lacs)

33


CHANGES IN THE KEY MANAGERIAL PERSONNEL IN THE LAST THREE YEARS

Sr. No Name Appointed/ Resigned Date of Change Reason1. Mr. A.K. Guha Appointed 21-10-2002 Appointed as Chief Executive

2. Mrs . Meena V Appointed 12-06-2002 Appointed as Group Head

3. Mr. N. Sowmyan Retired 31-12-2002 Retired

� The transactions with key managerial personnel and their relatives during financial years 2003-04, 2002-03 and 2001-02 areas under:

Name of the Key Nature of transaction 2003 – 04 2002 - 03 2001 – 02Managerial Personnel

Mr. A.K. Guha Housing loan 107388 — —

SHARE HOLDING OF KEY MANAGERIAL PERSONNEL

Name Number of SharesMr. A.K. Guha —Mr. S. Sridharan 100Mr. Rajib De 200Mr. K. Divakar 100Mr. Shrinivas M 100Mr. H.D. Thakkar —Mr. Potu Srinivas 200Mr. S. Vijayramesh —Mr. R. Jayachandran 200Mr. Mahesh Ghagre 200Mrs. Meena V 200

34


Promoter Details

1. General Insurance Corporation of India (GIC)

The entire general insurance business in India was nationalized by General Insurance Business (Nationalization) Act, 1972 (GIBNA).The Government of India (GOI), through Nationalization took over the shares of 55 Indian insurance companies and the undertakingsof 52 insurers carrying on general insurance business.

GIC was formed in pursuance of Section 9(1) of GIBNA. It was incorporated on 22nd November 1972 under the Companies Act,1956 as a private company limited by shares. GIC was formed for the purpose of superintending, controlling and carrying on thebusiness of general insurance.

As soon as GIC was formed, GOI transferred all the shares it held of the general insurance companies to GIC. Simultaneously, thenationalized undertakings were transferred to Indian insurance companies. After a process of mergers among Indian insurancecompanies, four companies were left as fully owned subsidiary companies of GIC (1) National Insurance Company Limited, (2) TheNew India Assurance Company Limited, (3) The Oriental Insurance Company Limited, and (4) United India Insurance CompanyLimited.

The next landmark happened on 19th April 2000, when the Insurance Regulatory and Development Authority Act, 1999 (IRDAA)came into force. This act also introduced amendment to GIBNA and the Insurance Act, 1938. An amendment to GIBNA removedthe exclusive privilege of GIC and its subsidiaries carrying on general insurance in India.

In November 2000, GIC was renotified as the ‘Indian Reinsurer’ and through administrative instruction; its supervisory role oversubsidiaries was ended.

With the General Insurance Business (Nationalization) Amendment Act 2002 (40 of 2002) coming into force from 21st March 2002GIC ceased to be a holding company of its subsidiaries. Their ownership were vested with Government of India.

The directors on the board of GIC are:

i. Mr. P.C. Ghoshii. Mr. H.S. Wadhwaiii. Mr. P.B. Ramanujamiv. Mr. A.K. Purwarv. Mr. G.C. Chaturvedivi. Mr. V. Leeladharvii. Mr. S.B. Mathur

Financial details of GIC for the past three years

Rs in LacsParticulars 2003-04 2002-03 2001-02Total Income 416297 383279 267123

Net Profit after Tax 103762 26146 30670

Equity Capital 21500 21500 21500

Reserves (excluding revaluation reserves) 391769 295292 271660

Net Worth 413219 316735 293063

Earning Per Share (Rs.)

(Face Value Rs.100) 483.00 131.00 145.00

Litigation details pertaining to GIC:There are no litigations by/against GIC as on 31st March 2004.

2. National Insurance Company Limited (NICL)

Since incorporation in the year 1906, NICL has been carrying out general insurance business under private management until1972, the year of its nationalization. In the same year 22 foreign and 11 Indian insurance companies were amalgamated with NICL,as a subsidiary company of General Insurance Corporation of India. Besides catering to average insurance requirements of allsections of Indian society, NICL also provides customized and innovative insurance solutions through a wide array of products.

35


Apart from domestic insurance business, the company also undertakes Re-insurance and overseas operations. NICL also providesfinancial assistance to corporate sector by way of term-loans, underwriting and direct subscription to shares/debentures/bonds etc.

Headquartered in Kolkata, it has an organizational network of over 964 offices with a workforce of over 20,000 trained people. Thecompany also has operations in Hong Kong and Nepal and ranks among the top global business insurers.

The directors on the board of NICL are:

i. Mr. H.S. Wadhwa

ii. Mr. G. Bhujbal

iii. Mr. O.N. Singh

iv. Mr. B.P. Deshmukh

v. Mr. Y.P. Chopra

vi. Mr. T.K. Das

Financial details of NICL for the past three years





Earning Per Share (Rs.) 13.49 9.04 8.67

The accounts for the year ended 31st March 2004 are in the process of being finalised.

Litigation details pertaining to NICL:

There are about 2,13,989 claims amounting to Rs. 1784.12 crores pending before various motor accident tribunals. The figuresstated are provisional and subject to audit.

3. United India Insurance Company Limited (United India)

United India is a leading general insurance company with more than three decades of experience in non-life insurance businessformed by the merger of 22 companies, consequent to nationalization of general insurance.

United India has a countrywide network of 24 regional offices, 371 divisional offices, 717 branch offices and 185 micro officesacross the country. The company is in the process of interconnecting all the offices by wide area network.

The directors on the board of United India are:

i. Mr. V. Jagannathan

ii. Mr. G.C. Chaturvedi

iii. Mr. S.C. Gupta

iv. Mr. M. Raghavendra

v. Mr. B. Chakrabarti

vi. Mr. T.K. Roy

36


Financial details of United India for the past three yearsRs in Lacs

Particulars 2002-03 2001-02 2000-01Total Income 224110 217015 231287





The accounts for the year ended 31st March 2004 are in the process of being finalised.

Litigation details pertaining to United India:

As on 31st March 2004 there are about 264001 claims amounting to Rs. 2655.81 crores pending before various motor accidenttribunals.

4. The Oriental Insurance Company Limited (OICL)

OICL is one of the four general Insurance companies in India under the aegis of the GIC of India. It is one of the oldest insurancecompanies and was established in the year 1947. The company headquartered in New Delhi transacts all kinds of general insurancebusiness ranging from very big projects to small rural insurance covers.

The company has 21 regional offices, 311 divisional offices and 635 branch offices. It specializes in devising special covers forlarge projects like power plants, petro-chemical, steel plants and chemical plants.

The directors on the board of OICL are:i. Mr. S.L. Mohanii. Mr. S.S. Kohliiii. Mr. R. Ranganathaniv. Mr. P.K. Morv. Mr. S.K. Chananavi. Mr. R.C. Jain

Financial details of OICL for the past three years

Rs in LacsParticulars 2003-04# 2002-03 2001-02Total Income 290000.00 286800.00 249900.00

Net Profit after Tax 31648.00 6399.00 (25444.00)

Equity Capital 10000.00 10000.00 10000.00

Reserves (excluding revaluation reserves) 102218.00 73391.00 57280.00

NAV (Rs.) 112.22 83.39 67.28

Earning Per Share (Rs.) 31.65 6.40 (25.44)

# The final accounts for the year 2003-04 have been adopted by the board and the figures provided are subject to Comptroller &Auditor General (CAG) comments and shareholders approval.

Litigation details pertaining to OICL:

By virtue of the company’s operation in providing motor insurance, there have been a number of litigations against the company forsettlement of motor third party insurance claims. Similarly several of OICL’s customers have approached various legal forums fornon-settlement/short-settlement of claims. These are litigations in the normal course of business operations. These apart therehave been cases filed in matters relating to personnel department and estate department as well. The company handles theselitigations at the Branch/Division/Region and a few by the head office.

There is no central data bank in respect of litigation claims filed against/by OICL. There were 2,34,950 claims for an estimatedamount of Rs. 2,266 crores as on 31st March 2003 and the figures for year ended 31st March 2004 (provisional unaudited) are2,44,055 claims for an amount of Rs. 2,492 crores.

37


5. The New India Assurance Company Limited (New India)

New India was incorporated on 23rd July 1919 and commenced transacting business on 14th October 1919. In 1956 the life insurancebusiness was nationalized and was transferred to LIC of India. In the year 1971, the Government nationalized all general insurancecompanies and subsequently New India’s ownership was transferred to the newly formed GIC of India in 1973. New India wasreconstituted under the scheme of merger taking over 23 Indian companies under its fold.

New India is a leading global insurance group, with offices and branches throughout India and various countries abroad. Thecompany services the Indian subcontinent with a network of 1112 offices, comprising 26 regional offices, 397 divisional offices and688 branches. With approximately 24,000 employees, New India has the largest number of specialist and technically qualifiedpersonnel at all levels of management, who are empowered to underwrite and settle claims of high magnitude.

New India has been rated “A” (Excellent) by A.M. Best Co., making it the only Indian insurance company to have been rated by aninternational rating agency. Rating based on following factors:

� Superior capital position� Strong operating performance� Only company to develop significant international operations, long record of successful trading outside India.

The directors on the board of New India are:

i. Mr. Rajendra Beriii. Mr. G.C. Chaturvediiii. Mr. R.K. Joshiiv. Mr. A.V. Purushothamanv. Mr. Kumar Bakhruvi. Dr. A.K. Khandelwal

Financial details of New India for the past three years





Net Worth 394300 340400 318900

Earning per share (Rs.) 59.22 25.58 14.20

Litigation details pertaining to New India:

New India being a general insurance company the litigations filed by/against the company mainly relate to claim settlements (majorportion being motor third party claims). There are 2,36,705 motor third party claims outstanding in courts/tribunals as on 31st March2004 involving an amount of Rs. 3065.65 crores.

Note:As per Government of India notification dated 07th August 2002 and 21st March 2003 New India, OICL, NICL, United India havebeen delinked from GIC w.e.f. 21st March 2004. The Government of India holds the share capital of these companies.

6. IFCI Limited (IFCI)

At the time of independence in 1947, India’s capital market was relatively under-developed. Although there was significant demandfor new capital, there was a dearth of providers. Merchant bankers and underwriting firms were almost non-existent. And commercialbanks were not equipped to provide long-term industrial finance in any significant manner.

It is against this backdrop that the government established IFCI on 01st July 1948, as the first Development Financial Institution(DFI) in the country to cater to the long-term finance needs of the industrial sector. The newly established DFI was provided access

38


to low-cost funds through the central bank’s Statutory Liquidity Ratio or SLR which in turn enabled it to provide loans and advancesto corporate borrowers at concessional rates.

This arrangement continued until the early 1990s when it was recognized that there was need for greater flexibility to respond to thechanging financial system. It was also felt that IFCI should directly access the capital markets for its fund requirements. It is with thisobjective that the constitution of IFCI was changed in 1993 from a statutory corporation to a company under the Indian CompaniesAct, 1956. Subsequently, the name of the company was also changed to “IFCI Limited” w.e.f. October 1999.

Shareholding pattern of IFCI as on 31st March 2004

Name of Shareholder No. of shares %age holdingMutual Funds, Banks, FIIs & UTI 384,862,911 60.26%

Private Corporates 39,416,533 6.17%

NRI / OCBs 1,413,176 0.22%

Public 212,983,142 33.35%

TOTAL 638,675,762 100.00%

Financial details of IFCI for the past three yearsRs in Lacs

Particulars 2003-04 2002-03 2001-02Total Income 110457.20 143323.60 224964.90

Net Profit after Tax (322978.10) (25969.70) (88470.00)

Equity Capital 63887.60 63887.60 63887.60


Net Worth (285550.30) 37818.90 6405.53

Earning per share (Rs.) (51.28) (4.78) (14.57)

Litigation details pertaining to IFCI

� As on 31st March 2004 IFCI had filed 802 recovery applications involving an amount of Rs. 1065300 lacs in various debtrecovery tribunals.

� As on 31st March 2004 two claims were pending in courts against IFCI Limited, which have not been acknowledged as debtsamounting to Rs. 4600 lacs.

7. Specified Undertaking of the Unit Trust of India (SUUTI):

Unit Trust of India (UTI) was established in 1964, by an act of parliament to encourage and mobilize savings of small investorsthrough sale of ‘Units’ and to channelise these resources into corporate investments. Over the years it has rapidly grown anddiversified to be an important part of the Indian Financial system. UTI’s wide range of plans/schemes/funds cover a broad spectrumof investment goals.

During August 2002, The Cabinet Committee on Economic Affairs (CCEA) had approved the UTI reform package, wherein the UTIwould be divided into two parts, the UTI–I comprising of US64 and all other assured return schemes and the new UTI-II comprisingof all net asset value based schemes. While government appointed Administrator and a team of advisors nominated by theGovernment would manage the UTI-I, UTI-II will be managed by professional Chairman and Board of Trustees and will be structuredas per SEBI Regulations. Accordingly, UTI Act was repealed on 01st February, 2003 paving the way for the bifurcation of UTI intoUTI-I and UTI-II.

Consequent to the passage of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 by the Parliament theSpecified Undertaking of the Unit Trust of India (SUUTI) came into effect from 01st February 2003 and the equity shares of GICHFLheld by the erstwhile UTI were transferred to the Administrator of the SUUTI.

The Government has appointed Mr. M. Damodaran as the Administrator of the SUUTI. The Government has also appointed aBoard of Advisors to advise and assist the Administrator in carrying on the management of the SUUTI. The members of the Boardare:

39


i. Mr. U.K. Sinhaii. Mr. M.G. Bhideiii. Mr. A.N. Shanbag

The following schemes are being currently managed by the SUUTI:

Sr. No Schemes under UTI – I1. 6.75% US-64 Bond Portfolio

2. 6.60% ARS Bond Portfolio

3. Monthly Income Plan 1999 II

4. Monthly Income Plan 2000

5. Monthly Income Plan 2000 (Second)

6. Monthly Income Plan 2000 (Third)

7. Monthly Income Plan 2001

8. Special Unit Scheme – 99

Provisional figures of Assets under Management of SUUTI as on 31st March 2004:

Rs. in lacs

Equity and Preference Shares 1854790

Corporate Debt (Debentures) 512737

Government Securities 291633

Money Market and Deposits 96027

Total 2755187

Relationship between UTISEL and promoter of GICHFL:

“UTISEL was promoted by the erstwhile Unit Trust of India (UTI) as its wholly owned subsidiary. Subsequent to the repealment ofthe UTI Act, the stake (100%) of UTISEL is now held by the Specified Undertaking of the Unit Trust of India (SUUTI). Mr. A.R.M.Rao, Managing Director of UTISEL is on the board of GICHFL as a nominee director representing UTI since 28th July 2001.However, UTISEL neither has any control nor exercises any control directly or indirectly over GICHFL

Litigation details pertaining to SUUTI

i. There are 8 cases relating to US-64. The units of US-64 have since been converted into Government of India Tax FreeBonds.

ii. There are 6 cases relating to property disputes. The approximate amount involved is Rs. 4.27 crores.iii. There are 2 miscellaneous cases filed with the amount involved being Rs. 3.84 crores.iv. There are 228 miscellaneous consumer court cases filed with an amount involved of Rs. 3.00 crores.

GROUP COMPANIES

1. GIC Asset Management Company Limited (GIC AMC):

GIC AMC was incorporated on 25th May 1993 by GIC and the four public sector general insurance companies to manage theoperations and investments of GIC Mutual Fund.

The directors on the board of GIC AMC are:

i. Mr. P.C. Ghoshii. Mr. S.V. Haribhaktiiii. Mr. V.H. Pandyaiv. Dr. P.C. Chatterjeev. Mr. M. Raghavendravi. Mr. R.L. Baxivii. Mr. G.M. Dave

40


Financial details of GIC AMC for the past three yearsRs in Lacs




Reserves (excluding revaluation reserves) — — —

Net Worth 1799 1628 1157


Litigation details pertaining to GIC AMC

There are no pending litigations against GIC AMC, its Directors including defaults to financial institutions/banks/non payment ofstatutory dues.

2. Loss Prevention Association of India Limited (LPA):LPA is engaged in promoting safety and loss control through education, training and consultancy in India an abroad since 1978. Itswork involves both education and engineering aspects of safety. LPA is a company limited by guarantee without Share Capital. Itis promoted by General Insurance Corporation of India Limited, The New India Assurance Company Limited, Oriental InsuranceCompany Limited, National Insurance Company Limited and United India Insurance Company Limited.

The directors on the board of LPA are:

i. Mr. P.C. Ghoshii. Mr. V. Jagannathiii. Mr. P.B. Ramanujamiv. Mr. S.L. Mohanv. Mr. Rajendra Berivi. Mr. H.S. Wadhwavii. Dr. K.C. Mishraviii. Mr. G. Bhujabalix. Mr. T.R. Vishwanathan

Litigation details pertaining to LPA

There are no pending litigations against the company, its Directors including defaults to financial institutions/banks/non payment ofstatutory dues.

3. UTI Bank Limited (UTI Bank):

UTI Bank was the first private sector bank to be set up under the new guidelines issued in 1993 by the Government of India,consequent to announcement of a policy of reform of the Indian financial sector. The bank was promoted by erstwhile Unit Trust ofIndia, LIC, GIC, NICL, New India, United India and OICL. Unit Trust of India contributed the entire initial capital of Rs. 100 crores.

UTI Bank obtained the certificate of incorporation on 03rd December 1993 and the certificate of commencement of Business on 14th

December 1993. Its first branch at Ahmedabad was opened in April 1994. The bank has over 277 branches including 67 extensioncounters as on date in metropolitan, urban and semi urban areas and has developed a wide customer base.

The directors on the board of UTI Bank are:i. Mr. P.J. Nayakii. Mr. K. Narasimha Murthyiii. Mr. M. Raghavendraiv. Mr. Surendra Singhv. Mr. N.C. Singhalvi. Mr. Yash Mahajanvii. Mr. R.N. Bhardwajviii. Mr. A.T. Pannir Selvamix. Mr. J.R. Varmax. Mr. Ajeet Prasad

41


Financial details of UTI Bank for the past three yearsRs in Lacs






Book Value 49.07 39.88 32.05

Shareholding pattern of UTI Bank as on 31st March 2004

Name of Shareholder No. of shares %age holdingPromoters 124,767,395 53.88%

Mutual Funds, Banks, FIIs 44,579,241 19.25%& UTI

Private Corporates 3,907,039 1.69%

NRI 402,764 0.17%

Public 29,374,131 12.68%

Others 28,550,000 12.33%

TOTAL 231,580,570 100.00%

Litigation details pertaining to UTI Bank

The following is the summarized position of the litigation details of UTI Bank:

Cases filed by UTI Bank for recovery of its dues:

Sr. No Particulars No of cases Amount Involved(Rs. lacs)

1 For non payment of loans taken against pledge of Demat 60 570.86shares, consumer loans and personal loans

2 Cases filed before various Debt Recovery Tribunals for 42 26949.55recovery of bank dues

Cases filed against UTI Bank:


1 Cases filed before various consumer courts 29 42.39

2 Various other cases filed before various forums including 15 4007.32Banking Ombudsman and cases filed under Criminal Law

42


VENTURES PROMOTED BY THE PROMOTERS:

1. Ventures promoted by GIC:

i. Agricultural Insurance Company of India (AICIL): AICIL was incorporated on 20th December 2002 under theCompanies Act, 1956 with a paid up share capital of Rs. 200 crores to transact in crop insurance and other alliedagriculture business in India. AICIL was formed to take over agricultural insurance, which was operated by GIC of Indiasince inception of the scheme. GIC of India promoted AICIL in collaboration with NABARD and the four erstwhilesubsidiary companies of GIC of India. GIC of India holds 35% equity stake in AICIL.

ii. GIC AMC: GIC and its erstwhile subsidiaries floated a Mutual Fund in the year 1991. Subsequently in 1993, as per SEBIregulations GIC AMC was formed. GIC and its erstwhile subsidiaries hold 40%, SOROS holds 40% and the rest is heldby GICHFL.

iii. India International Pte; Singapore: The operations of the erstwhile subsidiary companies in Singapore were mergedand the company was formed collectively by GIC and its erstwhile subsidiary companies to carry out non-life businessin Singapore. The shares of this company are not listed.

iv. Kenindia Assurance Co. Limited, Nairobi: It is a composite Life and Non-Life Insurance company. The share capitalis being held by the GIC and its erstwhile subsidiaries (45%, 9% by each), LIC of India holds 10% and locals hold thebalance.

In addition, GIC of India has recently subscribed to 30% of the initial share capital (i.e. $US 65,000) of LIC (Mauritius) OffshoreLimited. LIC of India is holding the balance capital. This newly incorporated company has recently started its business operations.

2. Ventures promoted by The National Insurance Company Limited

i. UTI Bank Limitedii. GIC Asset Management Company Limitediii. Oriental Capital Assurance Berhard (formerly known as United Oriental Assurance Berhard)iv. India International Insurance Pte Limitedv. Kenindia Assurance Company Limitedvi. Agricultural Insurance Company of India Limitedvii. GIC Housing Finance Limited

3. Ventures promoted by United India Insurance Company Limited:

i. Zenith Securities & Investments Limitedii. GIC Housing Finance Limitediii. GIC Asset Management Company Limitediv. UTI Bank Limitedv. Oriental Capital Assurance Berhard (formerly known as United Oriental Assurance Berhard)vi. India International Insurance Pte. Limitedvii. Kenindia Assurance Company Limitedviii. Agricultural Insurance Company of India Limited

4. Ventures promoted by New India:

i. The New India Assurance Company (Sierra Leone) Limitedii. The New India Assurance Company (Trinidad & Tobago) Limitediii. Kenindia Assurance Company Limitediv. India International Insurance Pte Limited

43


5. Ventures promoted by IFCI:

Subsidiaries1 IFCI Venture Capital Funds Limited2 IFCI Financial Services Limited

IFCI Lead*1 Assets Care Enterprise Limited2 North India Technical Consultancy Organisation Limited3 Madhya Pradesh Consultancy Organisation Limited4 HARDICON Limited5 ICRA Limited6 Himachal Consultancy Organisation Limited7 Foremost Factors Limited8 Rajasthan Consultancy Organisation Limited9 Tourism Finance Corporation of India Limited

* IFCI has taken a lead role in promoting these companies.

6. Ventures managed by SUUTI:

The Administrator of the SUUTI manages the Development Reserve Fund, which has invested in UTI Bank Limited and othercompanies viz. UTI Securities Limited, UTI Investor Services Limited and Indian Institute of Capital Markets (formerly UTIInstitute of Capital Markets).

FINANCIAL DETAILS FOR THE PAST THREE YEARS OF VENTURES PROMOTED BY THE PROMOTERS

1. Agricultural Insurance Company of India Limited (AICIL)

Date of Incorporation: 20th December 2002

Nature of Activities: Crop Insurance and other allied agriculture business

Rs in LacsFinancial details 2003-04Total Income 20569.00

Net Profit after Tax (82.92)

Equity Capital 20000.00

Reserves (excluding revaluation reserves) Nil

Earning per share (Rs.) (4.08)

2. GIC Asset Management Company Limited

For financial details please refer under the heading Group company details.

44


4. Kenindia Assurance Co. Limited, Nairobi

Date of incorporation: 06th December 1978.

Nature of Activities: General Insurance and Life Insurance.Rs in Lacs

Financial details For the year ended 31st December

2003 2002 2001

Total Income 13763.80 13432.60 12991.60

Net Profit after Tax 614.50 549.60 268.80

Equity Capital 1773.10 1568.60 1564.20


Net Asset Value per share 221.19 195.07 183..17


5. UTI Bank Limited

For financial details please refer under the heading Group company details.

6. Oriental Capital Assurance Berhard (formerly known as United Oriental Assurance Berhard)


3. India International Pte; Singapore

Date of Incorporation: 03rd December 1987

Nature of Activities: General Insurance and reinsurance

In Singapore Dollars (SGD)Financial details For the year ended 31st December

2003 2002 2001Total Income 163481733.00 120922222.00 77256770.00


Equity Capital 25000000.00 25000000.00 25000000.00


Net Asset Value per share 5.42 4.97 4.54

Earning per share (SGD.) 0.51 0.47 0.55

Nature of Activities: General insurance and reinsurence

In Malaysian Ringit ‘000Financial details For the year ended 31st December

2003 2002Total Income 128381.00 120099.00

Net Profit after Tax 19323.00 15254.00

Equity Capital 100013.00 100013.00

Reserves (excluding revaluation reserves) 33469.00 21346.00

Net Worth 133482.00 121359.00

Earning per share (In RM) 19.30 15.30

45


7. Zenith Securities & Investments Limited

Date of Incorporation: 28th March 1916

Nature of Activities: Investments

Rs in Lacs

Financial details 2003-04 2002-03 2001-02

Total Income 52.00 17.00 24.00


Equity Capital 10.00 10.00 10.00



8. The New India Assurance Company (Sierra Leone) Limited

Date of Incorporation: 14th May 1973

Nature of Business: General Insurance

Figures in local currency Leone in ‘000Financial details For the year ended 31st December

2003 2002 2001Total Income 25876.00 (35272.00) 82687.00*


Equity Capital (Called up) 500.00 500.00 500.00

Reserves (excluding revaluation reserves) (18843.00) 86324.00 121596.00

Net Worth (18343.00) 86824.00 122096.00

* Premium written less reinsurance.

9. The New India Assurance Company (Trinidad & Tobago) Limited

Date of Incorporation: 1977

Nature of Business: General Insurance

Figures in local currency Trinidad & Tobago $ in ‘000

Financial details For the year ended 31st December

2003 2002 2001

Total Income 35464.00 32027.00 —


Equity Capital 17617.00 17617.00 17617.00


Net Worth 29820.00 25216.00 17673.00

46


10. IFCI Venture Capital Funds Limited

Date of Incorporation: 1975

Nature of Business: Project Financing

Rs in Lacs


Total Income 227.10 243.00 271.00


Equity Capital 785.00 785.00 785.00


Net Worth 1338.00 1231.00 1162.00


11. IFCI Financial Services Limited

Date of Incorporation: 04th January 1995

Nature of Business: Stock Broking, Corporate Sales Agent for General Insurance and Life Insurance, DPServices, Selling of Mutual Funds.

Rs in Lacs


Total Income 233.00 125.00 136.00


Equity Capital 675.00 675.00 675.00


NAV (per share) 15.77 14.77 14.70


12. Assets Care Enterprise Limited

Date of Incorporation: 11th June 2002

Nature of Business: Asset Reconstruction and Securitisation

Rs in Lacs

Financial details 2003-04# 2002-03

Total Income 81.00 4.00

Net Profit after Tax 6.00 0.00

Equity Capital 500.00 500.00

Reserves (excluding revaluation reserves) 6.00 0.00

NAV (per share) 10.12 10.00

Earning per share (Rs.) 0.12 0.00

# Unaudited provisional results

47


13. North India Technical Consultancy Organisation Limited


Nature of Business: Consultancy ServicesRs in Lacs


Total Income 96.00 94.00 107.00





14. Madhya Pradesh Technical Consultancy Organisation Limited

Date of Incorporation: 23rd March 1979

Nature of Business: Industrial Consultancy and promote entrepreneurship through self-employment.

Rs in Lacs

Financial details 2003-04# 2002-03 2001-2002

Total Income 263.49 260.88 187.20





Net Worth 59.82 30.88 29.61

# Provisional

15. HARDICON Limited

Date of Incorporation: 11th June 1985

Nature of Business: Industrial, Financial and Management Consultancy.Rs in Lacs

Financial details 2003-04# 2002-03 2001-2002

Total Income 49.82 57.64 48.21




Net Worth 9.90 9.48 7.51

Earning per share (Rs.) (Face value Rs.100/-) 7.00 22.00 21.00

# The operational results for the year ended 31st March 2004 are yet to be adopted by the shareholders of thecompany at the General Body meeting.

48


16. ICRA Limited


Nature of Business: Credit Rating, Advisory Services, Information Services.

Rs in Lacs


Total Income 4000.00 3655.00 3222.00


Equity Capital 881.00 881.00 881.00


Net Worth 9024.00 8337.00 7636.00


17. Himachal Consultancy Organisation Limited

Date of Incorporation: 10th February 1977

Nature of Business: Technical Consultancy and Training.

Rs in Lacs


Total Income 83.12 70.37 52.74




18. Foremost Factors Limited


Nature of Business: Factoring of Domestic and Export receivables.

Rs in Lacs


Total Income 553.00 466.00 401.00


Equity Capital 2000.00 2000.00 2000.00



49


19. Rajasthan Consultancy Organisation Limited


Nature of Business: Technical Consultancy, Training.

Rs in Lacs


Total Income 9.47 12.07 11.95




20. Tourism Finance Corporation of India Limited


Nature of Business: Financing of tourism related projects

Rs in Lacs


Total Income 9125.00 11661.00 12142.00


Equity Capital 6742.00 6742.00 6742.00



Book Value (Rs) 24.68 23.69 23.23

The details of litigations involving the ventures promoted by promoters are mentioned under the heading“Outstanding Litigations”.

COMPANIES THAT THE PROMOTER GROUP HAS DISASSOCIATED IN THE LAST THREE YEARS.

There are no companies with whom the promoter group has disassociated itself with in the past three years.

COMMON PURSUITS

There are no common pursuits between the above-mentioned group companies and GICHFL.

CHANGES IN AUDITORS IN THE LAST THREE YEARS

There has not been any change in the Statutory Auditors of the Company for the past 3 years.

BUSINESS OF THE COMPANY

GIC Housing Finance Limited is in the business of providing housing finance to individuals and those into construction business.GICHFL offers the following products to its customers:

1. Own Your Home Scheme: This scheme is perfectly suited to individual home loan borrowers, aiming to own a house. TheCompany offers a bouquet of options to the borrower in terms of tenure, rate of interest and value added services.

2. Home loan to NRI: This product specifically caters to the needs of NRIs who want to purchase their own home in India.Generally these transactions prove to be very fruitful to the Company because of the creditworthiness of the NRI as well asthe high value of the transaction.

3. Tailor made products: The Company has designed tailor made products to suit individual needs and specifications de-pending on various criteria.

50


MAJOR CUSTOMERS OF THE COMPANY

The major customers of the Company are individual loan borrowers.

MARKETING AND SELLING ARRANGEMENTS

GICHFL has set–up 23 branch/satellite offices covering major cities and towns for soliciting business. It has got a strong marketingteam, which is further assisted by Direct Selling Agents (DSAs). The Company also caters to walk-in customers among others. Ithas direct tie-ups with reputed builders to provide finance to individual borrowers. Besides this, the Company is active in advertisingand marketing arrangements through property exhibitions and housing loan melas organized from time to time.

COMPETITION

The competition in the housing finance sector has increased tremendously with many players (mainly banks) entering into themarket in the recent years. Commercial banks have entered the housing finance sector in a big way, attracted as they are backedby the mortgage-based security, and helped by their access to large funds at a relatively low-cost. Also housing finance is nowclassified as priority sector lending for banks and therefore more banks are entering this field. This fast-changing environment hashad a telling impact on HFCs as their spreads have come under pressure.

Competition has propelled the players to engage in price wars. Aggressive rate cuts were employed by the players to attractconsumers. Housing loan rates have fallen by about 6.75% since April 2000, which is higher than 5.82% decline in the benchmark10-year government securities (G-sec) rate. In the last year itself, as competition has intensified, rates have declined by 2.50%.Apart from pushing down lending rates, competitive pressures have compelled players to reduce their administrative costs andprocessing fees. These fees are even waived off in several cases.

Other reason that resulted in keeping the interest rate on housing loans under check is the fact that there is enough liquidity in thesystem. Banks are flush with funds but have limited deployment avenues. Since the housing finance segment is showing goodgrowth rates, banks are diverting funds in this sector. So, stiff competition along with the current liquidity is the main factors holdingback an uptake in home-loan rates. Thus all these factors have put significant pressure on the lenders’ spreads.

51


PROPERTY:Our registered corporate office is based at Universal Insurance Building, Mumbai.

The following list sets out details relating to our principal establishments:

Sr. No Location Area Leave and Licence/Lease/Freehold

1. Registered office, Mumbai 3500 square feet Leasehold

2. Branch Office, Madurai, Chennai. 501.62 square feet Leasehold

3. Branch Office Coimbatore. 481 square feet Leasehold

4. Branch Office, Thane (W) Mumbai 1050 square feet Leave and Licence

5. Branch Office, Thane (W) Mumbai 350 square feet Leave and Licence

6. Branch Office, Cochin 1000 square feet Leasehold

7. Branch Office, Bhubaneshwar 600 Square feet Leasehold

8. Branch Office, Jaipur 858 Square feet Leasehold

9. Service Centre, New Delhi 473 square feet Leasehold

10. Service Centre, New Delhi 1027 square feet Leasehold

11. Branch Office, Chinchwad, Pune 718 square feet Leave and Licence

12. Branch Office, Chinchwad, Pune 308 square feet Leave and Licence

13. Branch Office, Navi Mumbai 572 square feet Leave and Licence




17. Branch Office, Chandigarh Leasehold

18. Branch Office, Chennai 2442 square feet Leasehold

19. Branch Office, Lucknow 600 square feet Leasehold

20. Branch Office, Noida 720 square feet Leasehold

21. Branch Office, Panvel, Mumbai 1251 square feet Leave and Licence

22. Branch Office, Trivandrum 980 square feet Leasehold

23. Branch Office, Vishakapatanam 51.631 square meter Freehold

24. Branch Office, Pune 700 square feet Freehold

25. Branch Office, Goa 92 square meter Freehold

26. Branch Office, Hyderabad 817.50 square feet Leasehold

The Company vide a letter of acceptance dated 10th July 2001 accepted an offer for the occupation of the property situated atKolkata and that the Company has not entered into an agreement for the same. Further, certain lease/leave and licenceagreements relating to properties situated at Coimbatore, Thane (W), Navi Mumbai, Chandigarh, Hyderabad and Lucknow haveexpired and the same has not been renewed. However, the Company occupies the said premises and is paying the lease rentalsregularly.

52


INDUSTRY

Overview of the housing finance industry

The Indian housing finance industry has grown by leaps and bounds in past few years. The robust growth experienced by theindustry in the last few years has been triggered by a number of factors. Earlier the cost of the house used to be in multiple of nearlytwenty times the annual income of the buyers, whereas today that multiple is less than 4.5 times. This multiple has come downmainly because income levels have gone up, while the tax rates have fallen. So with less tax and more income there is more moneyleft with people to spend. Also interest rates, which earlier used to be between 16-18% in past - that has halved. Further propertyprices have significantly declined or remained stable over the last 7 to 8 years. Moreover the Government has been providing taxincentives to people to buy house with the interest on housing loans now tax deductible upto Rs. 1.50 lacs per annum compared toonly Rs. 15,000/- in March of 1998.

The industry growth is also being driven by other factors like evolution of the nuclear family system, an increasing per capitaincome, the gradual disintegration of the joint family system, a desire for independent home ownership and an increasing preferenceto finance the acquisition than pay for it cash down. The sector has emerged as one of the outstanding successes over the lastdecade. Total home loan disbursement by banks and housing finance companies (HFCs) has risen from about Rs 30000 crores in2001-02 to more than Rs 50000 crores in 2002-03.

Home Loan Disbursements

Year HFCs Bank Total Growth(%)

99-00 9812.03 9911.35 19723.38 —

00-01 12637.85 9787.24 22425.09 13.7

01-02 14614.44 14744.85 29359.29 30.9

02-03 *17832.17 33840.53 51672.70 76.0

*Provisional figures Figures in Rs croresSource: National Housing Bank (NHB)

Future Prospects & Outlook

Housing loan disbursements by HFCs was around Rs. 17,832 crores in the fiscal 2002-2003. Considering the disbursements of Rs.295.59 crores, the market share of GICHFL in the housing finance market in India was 1.66%. The consolidated disbursementfigures by the HFCs for the fiscal 2003-2004 are not yet published. GICHFL has disbursed housing loans of Rs. 448.81 croresduring the period.

The housing industry remains of strategic importance to the economy, with backward and forward linkages to several ancillarysectors. Mortgages in India contribute approximately 2% to GDP as against 15% to 20% in many south East Asian countries andalmost 51% in U.S.A., reflecting a huge untapped potential in India. During the Tenth Five-Year Plan period (2002-2007) it isestimated that an aggregate outlay of Rs. 7,26,300 crores is required for the housing sector, of which the contribution envisagedfrom public institutional sources is only Rs. 4,15,000 crores. Therefore, substantial contribution from private sector players would berequired to tackle the growing housing shortage.

Sustained growth in the housing finance industry has attracted several competitors, whose portfolios of housing loans have grownconsiderably. Against this milieu, the RBI has been sounding caution on the maintenance of credit quality through effective asset-liability management and prudent loan to value ratios. Going forward, profitability in the housing finance business is going to be theprime driver in terms of long-term sustainability of the key players in the market. In this context, GICHFL has retained its status asone of the major players in the market. The individual loan segment, which constitutes the largest market potential, will remain afocus area for GICHFL. On the funding side, GICHFL will continue to strive to diversify its resource base and as in the past,channelise efforts into minimizing costs so as to pass on the maximum benefit to the customer.

53


PRUDENTIAL NORMS

The Company strictly follows Income recognition and Asset classification norms as specified in the NHB Directions 2001 videnotification no. NHB.HFC.DIR.1/CMD/2001 dated 27th September 2001. The important norms which the GICHFL follows is mentionedbelow:

Income Recognition: Income including interest/discount or any other charges on NPA shall be recognized only when it is actuallyrealized. Any such income recognized before the asset became non-performing and remaining unrealized shall be reserved.

Asset classification: The Company after taking into account the degree of well defined credit weaknesses and extent of dependenceon collateral security for realisation, classifies its assets as under:

1) Standard Assets

2) Sub-standard Assets

3) Doubtful Assets and

4) Loss Assets

Provisioning requirement: The Company after taking into account the time lag between an account becoming nonperforming, itsrecognition as such, the realization of the security and the erosion over time in the value of security charged, makes provisionsagainst sub-standard assets, doubtful assets and loss assets as follows:

1) Loss Assets: The entire assets are written off. If the assets are permitted to remain in the books for any reason, 100% of theoutstandings are provided for.

2) Doubtful assets: 100% provision to the extent to which the advance is not covered by realizable value of the security. Therealizable value is estimated on a realistic basis. In addition depending on the period for which the asset has remaineddoubtful provision to the extent of 20% to 50% of the secured portion (i.e. estimated realizable value of the outstandings) ismade on the following basis

Period for which the asset has been considered as doubtful % of provision

Upto 1 year 20

1 to 3 years 30

More than 3 years 50

3) Substandard assets: A general provision of 10% of the total outstanding is made.

54


MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SELECTED FINANCIAL INFORMATION

The following selected financial data have been prepared in accordance with Indian Accounting Standards, in conjunction with ourfinancial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.The audited financial statements have been prepared in Indian Rupees and have been prepared in accordance with Indian AccountingStandards for the fiscal years ended 2002, 2003 and 2004. For detailed financial statements, prepared in accordance with IndianAccounting Standards, as required by Guidelines, please refer “Auditor’s Report” of this Letter of Offer.

Statement of Profit and Loss for the fiscals ended March 31, 2002, 2003 and 2004.

Rs in Lacs (except per share data)

Particulars For the year ended

31-03-2002 31-03-2003 31-03-2004

Income:

Operating Income 9,163 9,676 9,920

Investment and other Income 74 77 90

Total (A) 9,237 9,753 10,010

Expenditure:

Interest 7,599 7,272 6,990

Staff Expenses 162 199 185

Other Expenses 383 450 567

Miscellaneous expenses written off 6 5 5

Interest Tax - - -

Depreciation 56 43 40

Non-Performing assets written off 342 823 200

Provision for Non-performing assets (Net) 521 201 565

Total (B) 9,069 8,993 8,552

Net Profit Before Tax and Extra ordinary Items (A-B) 168 760 1,458

Less: Taxation 150 235 526

Deferred Tax Assets (102) (136) (180)

Extraordinary Items - - -

Net Profit After Tax and Extra ordinary items 120 661 1,112

Earning per share 0.67 3.67 6.17

Return on Net Worth 1.44% 7.54% 11.61%

Net Asset Value per share 46.38 48.72 53.23

The following discussion of our financial condition and results of operations should be read together with the audited financialstatements for each of the fiscals ended 31st March 2002, 2003 and 2004, including the notes thereto and the reports thereon,which appear elsewhere in this Letter of Offer. The audited financial statements are prepared in accordance with Indian AccountingStandards.

The fiscal ends on 31st March of each year, so all references to a particular fiscal are to the twelve-month period ended 31st Marchof that year.

55


2004 v/s 2003

The operating income of the Company is up by 2.52% to Rs. 9920 lacs up from the previous year figure of Rs. 9676 lacs. The totalsanctions for the year was Rs. 55075 lacs as compare to Rs. 33285 lacs in the previous year. The disbursement for the period isRs. 44881 lacs as compared to the previous disbursements amounting to Rs. 29559 lacs.

The interest cost of the Company has come down from Rs. 7272 lacs in the previous year to Rs. 6990 lacs inspite of increase inbusiness. The average cost of borrowing for the Company is 7.60% for the year ended 31-03-2004 as compared to 9.97% for theyear ended 31-03-2003.

NPAs written off and provisioning for NPAs was done to the tune of Rs. 765 lacs as against the previous year figure of Rs. 1024 lacs.

As a consequence of this the PBT of the Company is Rs. 1458 lacs showing a growth of 91% over the previous year figure. PAT hasalso increased to Rs. 1112 lacs registering an impressive growth of 68% over the previous year.

2003 v/s 2002

The operating income of the Company has shown an increase from Rs. 9163 lacs to Rs. 9676 lacs. This was primarily due toincrease in fees & other charges.

The interest expended by the Company has reduced by 5% during the said period. The Company has spent Rs. 7272 lacs asagainst the previous year amount of Rs. 7599 lacs because of renegotiating the interest with the existing lenders, inspite of substantialincrease in business. During this period the Company had approved loans to the tune of Rs. 33285 lacs as compared to theprevious year figure of Rs. 25743 lacs. The disbursements made by the Company during the year were Rs. 29559 lacs as comparedto Rs. 22500 lacs during the previous year.

NPAs written off and provisioning for NPAs was done to the tune of Rs. 1024 lacs as against the previous year figure of Rs. 863 lacs.

PBT during the period was up to Rs. 760 lacs from Rs. 168 lacs showing an increase of 352%. This was due to lower interest costand higher income by way of fees and other charges.

PAT has also shown the same trend going up to Rs. 661 lacs against the previous year figure of Rs. 120 lacs thereby registering anincrease by 450%.

2002 v/s 2001

The operating income of the Company has shown only a marginal increase of 0.74% over the previous year. This was primarily dueto the fact that interest rates on housing loan had gone down during the period.

The interest cost during the period was up to Rs. 7599 lacs as against the previous year amount of Rs.6849 lacs. This was due tohigher interest rates at which the Company had borrowed in earlier years.

The Company has followed prudent practice of writing off NPA & provisioning for NPAs to the tune of Rs. 863 lacs.

The profit before tax (PBT) was Rs. 168 lacs against the previous year PBT of 643 lacs. Also the profit after tax (PAT) was 120 lacsas compared to the previous years PAT of Rs. 433 lacs. This was mainly due to the fact of provisioning for NPA and also due tohigher interest expenditure.

Unusual or infrequent events and transaction

There were no unusual or infrequent events or transactions during the last 3 years.

Significant economic changes that materially affected or are likely to affect income from continued operations

During the past three years the property rates and interest rates have bottomed out and remained stable. The Company is affectedby the interest rates prevalent in the economy and the property prices that are in force. Any changes in the economic policyaffecting the above will have an impact on the Company.

Known trend or uncertainties

Other than as described in this Letter of Offer, to our knowledge, there are no known trends or uncertainties that have or had or areexpected to have a material adverse impact on revenue or income of the company from continuing operations.

56


Future relationship between cost and revenue

The relationship between cost and revenues is directly linked to the cost of borrowing and lending. The business strategy of theCompany is such that its spreads will be maintained irrespective of the cost of funds and revenue generated.

Status of any publicly announced new products or business segment.

There are no new products/business segments, which the Company has entered into.

Extent of seasonality in the business

The business of the Company is of providing housing finance and is not seasonal in nature.

Any significant dependence on any one customer or supplier

The Company does not depend on any single customer or supplier. Its major customers are individuals whose base is well spreadout.

Competitive Conditions

The competition in the housing finance sector has increased tremendously with many players (mainly banks) entering into themarket in the recent years. Commercial banks have entered the housing finance sector in a big way, attracted as they are backedby the mortgage based security, and helped by their access to large funds at a relatively low cost. Also housing finance is nowclassified as priority sector lending for banks and therefore more banks are entering this field. This fast-changing environment hashad a telling impact on HFCs as their spreads have come under pressure.

Competition has propelled the players to engage in price wars. Aggressive rate cuts were employed by the players to attractconsumers. Housing loan rates have fallen by about 6.75% since April 2000, which is higher than 5.82% decline in the benchmarkten-year government securities (G-sec) rate. In the last year itself, as competition has intensified, rates have declined by 2.50%.Apart from pushing down lending rates, competitive pressures have compelled players to reduce their administrative costs andprocessing fees. These fees are even waived off in several cases.

Other reason that resulted in keeping the interest rate on housing loans under check is the fact that there is enough liquidity in thesystem. Banks are flush with funds but have limited deployment avenues. Since the housing finance segment is showing goodgrowth rates, banks are diverting funds in this sector. So, stiff competition along with the current liquidity is the main factors holdingback an uptake in home-loan rates. Thus, all these factors have put significant pressure on the lenders’ spreads.

GICHFL caters to the needs of the semi urban and rural population as well, in addition to the urban population. The Company hasan average loan size of Rs. 3.50 lacs, spread over a large number of people.

Details of adverse events affecting the Company since the last financial statement

No circumstances have arisen since the date of the last financial statement that materially adversely affects / likely to affect thetrading or profitability of the Company or the value of its assets or its ability to pay its liabilities within the next twelve months.

Material Developments

There are no material developments from the date of last balance sheet as disclosed in this Letter of Offer.

57


SELECTED FINANCIAL DATA

AUDITORS REPORT

The Board of Directors,GIC Housing Finance Limited,3rd Floor, Universal Insurance Building,Sir P.M. Road,Fort,Mumbai – 400 001.

Dear Sirs,

Re: Proposed Rights Issue

Offer to issue and allot 89,75,561 Equity Shares of Rs.10/- each between a price band of Rs. 15/- to 18/- per share on Rightsbasis in the ratio of 1 Equity Share for every 2 Equity Shares held.

We have examined the financial information contained in the statements annexed to this report i.e. Annexures 1 to 9 which areproposed to be included in the Letter of Offer of GIC Housing Finance Ltd. in connection with the proposed Rights Issue as requiredby Clause B of Part II part of Schedule II of the Companies Act, 1956 and Guidelines titled Securities and Exchange Board of India(Disclosure and Investor Protection) Guidelines, 2000 (‘Guidelines’) issued by the Securities and Exchange Board of India (SEBI)in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992, and we report that:

1. We have examined the ‘Statement of Profits and Losses’ of the Company for each of the financial years ending 31st March,2000, 31st March, 2001, 31st March, 2002, 31st March,2003 and 31st March, 2004, and the ‘Statement of Assets andLiabilities’ as at those dates enclosed as Annexure-1 and Annexure-2 to this report and confirm that:

i. These statements reflect the profits and losses and assets and liabilities for each of the relevant periods as extractedfrom the Profit and Loss Accounts for the Financial years ended 31st March 2000, 31st March, 2001, 31st March 2002,31st March 2003 and 31st, March 2004 and the Balance Sheets as on those dates. audited by us, after making thereinthe disclosures and adjustments required to be made in accordance with the provisions of paragraph 6.18.7 (iv)(a) & (b)of the Securities and Exchange Board of India (Disclosures and Investor Protection) Guidelines, 2000, to the extentapplicable.

ii. The Significant Accounting Policies adopted by the Company as on 31st March 2004 are enclosed as Annexure-3 to thisreport.

2. We have examined the ‘Statement of Accounting Ratios’ of the Company for each of the five financial years ended 31stMarch, 2000, 31st March, 2001, 31st March, 2002, 31st March, 2003 and 31st March, 2004, enclosed as Annexure-4 to thisreport and confirm that they have been correctly computed from the figures as stated in the ‘Statement of Profits and Losses’and ‘Statement of Assets and Liabilities’ of the Company referred to in paragraph 1 (i) above.

3. We have examined the accompanying ‘Statement of Related Party Disclosure’ to the extent applicable for the five financialyears ended 31st March, 2000, 31st March, 2001, 31st March, 2002, 31st March, 2003, 31st March, 2004 enclosed asAnnexure-5 to this report and confirm that the relationships and transactions between the Company and its related partieshave been appropriately reported in accordance with ‘AS-18’ Related Party Disclosures’ issued by The Institute of CharteredAccountants of India.

4. We have examined the ‘Statement of Dividend Paid’ by the Company in respect of each of the years ended 31st March,2000, 31st March, 2001, 31st March, 2002, 31st March, 2003 and 31st March, 2004 on the Shares of the Company,enclosed as Annexure-6 to this report and confirm that it correctly records the dividend paid in respect of each of those years.

5. We have examined the ‘Statement of Tax Shelter’ for the years ended 31st March, 2000, 31st March, 2001, 31st March,2002, 31st March, 2003 and 31st March, 2004, enclosed as Annexure-7 to this report and report that, in our opinion itcorrectly reflects the ‘Tax Shelter’ for each of those years and period.

58


6. We have examined the ‘Capitalisation Statement’ enclosed as Annexure-8 to this report and report that it correctly recordsthe matters stated therein.

7. We have examined the ‘Cash Flow Statement’ in respect of each of the years ended 31st March, 2000, 31st March, 2001,31st March, 2002, 31st March, 2003, 31st March, 2004, enclosed as Annexure-9 to this report and confirm that, in ouropinion, these statements have been prepared by the Company in accordance with the requirement of Accounting Standards3 (Cash Flow Statements) issued by the Institute of Chartered Accountants of India.

We further report that the information mentioned in the above paras 2-7 above has been correctly computed from the figures asstated in the statements of Profits and Losses and Assets and Liabilities referred to in paragraph 1 above.

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

M.P. Chitale & Co.,Chartered Accountants

Place: Mumbai

Date: 24th July 2004

59


Statement of Assets and Liabilities Rs. in lacs Particulars Position as at Financial Year ended on 31-Mar-00 31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04A Housing Loans: 58,508 62,742 70,839 84,758 110,900 Less: Provision for non performing Loans 1,074 410 693 1,061 1,562 57,434 62,332 70,146 83,697 109,338 -B Fixed Assets - Gross Block 575 584 598 617 652 Less: Depreciation 183 252 308 344 382 Net Block 392 332 290 273 270 Less: Revaluation Reserve - - - - - Net Block after Revaluation Reserve 392 332 290 273 270 -C Investments - Cost of Investments 1,975 1,699 1,489 1,488 1,387 Less: Provision for Non Performing Inv 192 671 802 1,033 1,218 1,783 1,028 687 455 169

- D Current Assets: -

Sundry Debtors(Secured) 521 1,395 745 826 677 Cash and Bank Balance: 1,136 1,269 2,201 1,388 1,611 Loans & Advances 3,323 3,163 3,148 3,666 4,491 Other Current Assets 173 311 149 98 199 Total = D 5,153 6,138 6,243 5,978 6,978

- Total E =A+B+C+D 64,762 69,830 77,366 90,403 116,755

-F Deferred Tax Asset - - 238 375 555G Total Assets - G= A + B +C+D+F 64,762 69,830 77,604 90,778 117,310

Loan Funds, Current Liabilities and Provision -H Liabilities & Provisions - Loan Funds: Secured Loans 53,069 59,276 66,435 74,375 89,521 Unsecured Loans 1,059 155 102 5,022 15,018 54,128 59,431 66,537 79,397 104,539

I Current Liabilities and Provisions 2,550 2,132 2,717 2,611 3,189 Total J =H+I 56,678 61,563 69,254 82,008 107,728K Net Worth (K = G-J ) 8,084 8,267 8,350 8,770 9,582 - Represented by: -L Share Capital 1,797 1,797 1,797 1,797 1,797M Reserves 6,309 6,486 6,563 6,978 7,785N Misc. Expenditure not written-off 22 16 10 5 -O Total = L+ M - N 8,084 8,267 8,350 8,770 9,582

60


Statement of Profits & Losses (Rs. In Lacs)

Particulars For the financial year

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

Income:

Operating Income 8,199 9,095 9,163 9,676 9,920

Investment and other Income 332 85 74 77 90

Total (A) 8,531 9,180 9,237 9,753 10,010

Expenditure:

Interest 6,317 6,849 7,599 7,272 6,990

Staff Expenses 155 153 162 199 185

Other Expenses 457 347 383 450 567

Miscellaneous expenses written off 8 6 6 5 5

Interest Tax 160 - - - -

Depreciation 54 72 56 43 40

Non-Performing assets written off - 965 342 823 200

Provision for Non-performing assets (Net) 680 145 521 201 565

Total (B) 7,831 8,537 9,069 8,993 8,552

Net Profit Before Tax and Extra ordinary Items (A-B) 700 643 168 760 1,458

Less: Taxation 305 210 150 235 526

Deferred Tax Assets - - (102) (136) (180)

Extraordinary Items - - - - -

Net Profit After Tax and Extra ordinary items 395 433 120 661 1,112

61


Statement of Accounting Ratios (Rs. in lacs)


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

1

a Net Profit after tax 395 433 120 661 1,112

b No. of Equity Shares 180 180 180 180 180

Earning per share=

Net profit after tax/No. of equity share 2.19 2.41 0.67 3.67 6.17

2

a Net Profit after tax 395 433 120 661 1,112

b Net worth 8,084 8,267 8,350 8,770 9,582

Return on Net Worth= 0.05 0.05 0.01 0.08 0.12

Net Profit after tax/Net worth

3

a No. of Equity Shares 180 180 180 180 180

b Net Worth 8,084 8,267 8,350 8,770 9,582

Net Asset Value per share = 44.91 45.93 46.38 48.72 53.23

Net worth/ No. of Equity Shares

Note: Ratios not in Rs Lacs

Statement of Dividend paid and Tax thereon

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

No. of Shares 17,974,572 17,974,572 17,974,572 17,974,572 17,974,572

Rate of Dividend 10% 10% 10% 12.50% 15%

Dividend on above (Rs.) 17,974,572 17,974,572 17,974,572 22,468,215 26,961,858

Tax on proposed dividend (Rs.) 3,954,406 1,833,406 - 2,878,740 3,454,488

62


Statement of Secured Loans

Rs. in Lacs

Particulars March 31, 2004 Rate of Date of LastInterest Installment

Secured Loans:

From Scheduled Banks

VIJAYA BANK 5,000 6.95% 17.01.2009

VIJAYA BANK - II 1,838 6.95% 09.07.2009

THE KALYAN JANATA SAHAKARI BANK LTD. 253 7% 28.03.2008

NEW INDIA CO-OP.BANK LTD. 1,300 7% 31.12.2009

ANDHRA BANK 3,740 6.95% 13.09.2008

VYASYA BANK LTD. 522 6.80% 23.12.2004

BANK OF PUNJAB LTD. (I) 617 6.75% 20.05.2005

BANK OF PUNJAB LTD. (II) 375 6.75% 12.09.2005

BANK OF PUNJAB LTD.(III) 3,000 6.75% 26.06.2010

PUNJAB NATIONAL BANK (I) 4,058 6.96% 30.09.2010

PUNJAB NATIONAL BANK (II) 8,783 6.96% 04.10.2009

BANK OF INDIA (III) 3,000 6.96% 01.10.2006

BANK OF INDIA (IV) 5,000 6.96% 21.03.2009

BANK OF INDIA (V) 5,000 6.96% 01.07.2012

ORIENTAL BANK OF COMMERCE 9,597 6.78% 28.08.2008

ORIENTAL BANK OF COMMERCE - II 5,000 6.78% 10.02.2009

INDUSIND BANK - II 8,784 6.90% 10.01.2010

STATE BANK OF INDORE 5,000 6.35% 10.09.2010

STATE BANK OF HYDERABAD 5,000 6.314% 05.03.2010

UNION BANK OF INDIA 6,514 6.70% 12.03.2012

LORD KRISHNA BANK 2,000 6.35% 17.03.2009

From National Housing Bank 2,305 13% 11.05.2004

From National Housing Bank 804 11.50% 11.05.2004

From National Housing Bank 325 9% 11.05.2004

From National Housing Bank 135 8.724% 11.05.2004

From National Housing Bank 1,570 8.676% 11.05.2004

The loans are secured by way of first charge on Book-Debts equivalent to loan outstanding.

89,521 Total

63


Statement of Unsecured Loans

Rs. in Lacs

As on 31/03/04

Particulars Amount Interest Rate Repayment Schedule

Unsecured Loans

Canara Bank 10,000 5.70% 07.06.2004

Bank of Maharashtra 5,000 5.25% 05.09.2004

Deposits from Public 18 12.50% 31.10.2005*

15,018

Statement of Loans and Advances


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

Advance Tax and Tax 2,550 2,721 2,814 3,302 4,144deducted at source

Inter corporate Loans 553 207 100 80 —

Advances recoverable in Cash 151 194 210 241 293or kind or for face value to be received

Sundry Deposits 69 41 24 43 54

3,323 3,163 3,148 3,666 4,491

Total

Total

* Last Date of Repayment

64


Statement of Taxation

(Rs. in lacs)


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

Profit before taxation as per 700 643 168 760 1,458

Profit and Loss a/c

Rate of Income Tax 38.50% 39.55% 35.70% 36.75% 35.875%

Tax at Notional Rate 269 254 60 279 523

Adjustments:

Provision for NPA 680 145 521 201 565

Difference in depreciation (26) (6) 8 3 1

Dividend income exempt u/s 10(33) (70) (23) (11) (28) (23)

Other Adjustments

Miscellaneous Expenditure 7 6 6 6 5

Provision for leave Encashment 0 0 0 5 2

Provision for Bonus 7 - 0 - -

(Profit)/Loss on sale of Invt. (121) 20 (17) - -

(profit)Loss on Sale of Asset 20 2 - (1) -

Deduction u/s 36(1)(viii) (408) (292) (270) (345) (555)

Prior Period Adjustments - - - 7 -

Net Adjustment 89 (148) 237 (152) (5)

Tax Expense/(Shelter) 34 (58) 85 (56) (1)

Tax on profits 303 196 145 223 522

65


Statement of Investments as on March 31, 2004

Particulars Face value No. Rs.

Unquoted Investments:

Long term Investments:

Equity Shares

GIC Asset Management Co. Ltd 10 2,099,996 20,999,960

Jeevan Bima Sahayog Asset Management Co. Ltd 10,000 1,120 11,200,000

The New India Co-op Bank Ltd. 10 5,000 50,000

The Janakalyan Co-op Bank Ltd. 10 5,000 50,000

The Kalyan Janta Co-op Bank Ltd. 25 2,000 50,000

32,349,960

Redeemable Preference Shares

15.5% NEPC MICON Ltd. 10 500,000 5,000,000

16% Modern Threads Ltd. 100 100,000 10,000,000

14.5% Vitara Chemicals Ltd. 100 200,000 20,000,000

16% Premier Housing & Industrial Enterprises Ltd. 100 200,000 20,000,000

15% Ramanasekhar Steels Ltd. 100 100,000 10,000,000

15% Electrex India Ltd. 100 200,000 20,000,000

16% Ace Laboratories Ltd. 100 200,000 20,000,000

105,000,000

Non-Convertible Bonds

15.75% Secured redeemable

Non-Convertible Vidyut Bonds Services (Series1/98) 50,000 6 300,000

13.75% A.P.Infrastructure Dev. Corp. 100,000 3 300,000

13.90% Sardar Sarovar Narmada Nigam 50,000 10 500,000

1,100,000

138,449,960

Less: Provision for Non performing Investment 121,799,968

(A) 16,649,992

Current Investments:

Investment in Units of

Mutual Funds

Prudential ICICI Liquid Plan 10 14,971.975 232,891

IDBI Money Fund 1997 10 1,670.990 20,398

UTI Money Market Fund 10 3,176.173 55,643

308,932

Less: Provision for non performing Investment -

(B) 308,932

Total (A) +(B) 16,958,924

66


Statement of Cash Flows Rs. in Lacs


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

A: Cash Flow From Operating Activities:

Net profit before tax and extra ordinary items 699.62 643.43 168.14 759.86 1,457.28

Adjusted for:

Deprecation 53.67 71.89 55.60 42.84 40.36

Miscellaneous Expenditure Written off 7.85 6.00 5.50 5.50 4.83

Non performing Assets written off - 965.17 341.89 822.98 200.00

Provision for doubtful debts 679.55 145.28 521.58 201.64 565.33

Prior Period Adjustments (Net) (3.40) (57.83) - 6.92 -

(Profit)/Loss on Sale of Investments (121.37) 20.11 (16.96) (12.50) (3.61)

Dividend and interest income on investment - - - (46.94) (41.64)

Operating Profit before Wk.Cap. Changes 1,315.93 1,794.05 1,075.75 1,780.30 2,222.55

Adjusted for:

(Increase)/Decrease in Current Assets (193.13) (1,082.75) 736.74 (568.84) (856.79)

Increase/(Decrease) in Current Liabilities 29.01 (489.06) 585.14 (150.19) 532.36

Operating Profit After Wk.Cap. Changes 1,151.81 222.24 2,397.63 1,061.27 1,898.12

Adjusted for:

(Increase)/Decrease in Housing Loans (8,466.57) (5,199.16) (8,439.21) (14,324.32) (26,141.27)

Cash generated from Operating Activity (7,314.74) (4,976.92) (6,041.58) (13,263.05) (24,243.15)

Taxation (344.54) (228.33) (150.00) (263.79) (560.54)

Net cash generated from operating activity (7,659.29) (5,205.25) (6,191.58) (13,526.84) (24,803.69)

B: Cash Flow from Investment Activities

Acquisition of Fixed Assets (Net) (63.26) (11.82) (14.52) (26.18) (36.39)

Purchase of Investments (3,516.02) (2,165.17) (6,140.63) (22,000.01) (16,329.76)

Sale of Investment 7,635.00 2,420.88 6,367.98 22,013.11 16,434.18

Dividend and Interest income on investment - - - 46.94 41.64

Net cash Generated from Investment Activity 4,055.72 243.89 212.83 33.86 109.67

C: Cash Flow from Financing Activities

Calls unpaid Received (Including Premium) - - - - -

Loans Borrowed (Net of Repayments) 2,445.46 5,302.19 7,106.55 12,860.64 25,141.38

Share issue Expenses - - - - -

Dividend (179.75) (179.75) (179.75) (179.75) (224.68)

Net cash generated from Financing Activity 2,265.71 5,122.44 6,926.80 12,680.89 24,916.70

Net Cash & Cash Equivalents Generated (1,337.86) 161.08 948.05 (812.09) 222.68

Cash & Cash Equivalents as at Beginning of the Year 3,257.08 1,919.22 2,080.30 2,200.66 1,388.57

Cash & Cash Equivalents as at End of the Year 1,919.22 2,080.30 3,028.35 1,388.57 1,611.25

67


Capitalisation Statement

Rs. in Lacs

Particulars Pre-issue as at As Adjusted 31/03/2004 for issue

Short Term Debt 15,000 15,000

(Repayable in one year)

Long Term Debts

From Schedule Banks 84,381 84,381

Interest accrued and Due -

(secured by way of first charge on

book-debts equivalent to loan outstanding)

From National Housing Bank 5,139 5,139

(secured by way of first charge on

book-debts equivalent to loan outstanding)

Total 104,520 104,520

Shareholders Fund*:

Share Capital 1,797 2,693

Reserves 7,785 8,328

Total Shareholders Funds 9,582 11,021

* After considering the forfeiture of shares as at 30th June 2004.

Disclosure Required as per Accounting standard 18 (AS 18) ‘ Related Party Disclosure’

The Company has related party relationships with various parties/companies for thefinancial year 1999-2000 to 2003-04.

List of Related Parties:1. General Insurance Corporation of India.2. The New India Assurance Company Ltd.3. National Insurance Company Ltd.4. The Oriental Insurance Company Ltd.5. United India Insurance Company Ltd.

68


The Company has related party transactions as below:

Financial Year Name of the party Nature of transaction Amount(Rs in Lacs).

Repayment of 1,783

Secured Loans


Insurance Premium 17

paid

Repayment of 2,183

Secured Loans



paid

Repayment of 13,147

Secured Loans



paid

Repayment of 0

Secured Loans

2002-2003 GIC and Subsidiaries. Interest Paid 0.2

Insurance Premium 14.02

paid

Repayment of 0

Secured Loans



paid

NOTES FORMING PART OF THE ACCOUNTS:

1 Housing loans are secured by: -

a) Equitable mortgage of property and / or;

b) Assignment of Life Insurance Policies and/or guarantee of solvent guarantors and/or any other acceptable collateralsecurities wherever applicable, and,

c) Corporate Guarantees, wherever applicable.

2. Contingent Liabilities: -

Tax disputes in appeal Rs. 4,57,18,198 (Previous Year – Rs. 4,57,18,198)

69


3. INVESTMENTS BOUGHT AND SOLD DURING THE YEAR BY THE COMPANY: -

NAME BOUGHT SOLD

UNITS AMOUNTS UNITS AMOUNTS (RS) (RS)

Prudential ICICI Liquid Plan 5,03,50,138. 464 76,65,00,000 5,03,38,867.72 76,65,00,000

IDBI Money Market Fund 7,12,41,169. 987 73,74,75,000 7,12,40,415.087 73,76,18,407

UTI Money Market Fund 74,67,727. 3749 12,90,00,000 74,66,058 12,90,00,000

4. Segment Reporting: (AS-17)There are no separate reportable segments as per Accounting Standard on Segment Reporting (AS- 17) as the Company’smain business is to provide loans for purchase, construction, repairs & renovation etc. of residential units.

5. Earning Per Share:(AS-20)

Particulars Year Ended Year Ended31-03-04 31-03-03

Profit attributable to EquityShareholders (in Rs.) 11,11,41,657 6,61,07,607

No of Weighted Average Equity Shares outstandingduring the year (Basic & Diluted) 1,80,04,922 1,80,04,922

Nominal Value of Equity Shares (in Rs.) 10 10

Basic Earnings per Share(in Rs.) (Basic & Diluted) 6.17 3.67

6. Deferred Tax Assets: (AS – 22)

In compliance with the Accounting Standard relating to “Accounting for Taxes on Income” (AS-22) issued by the Institute ofChartered Accountants of India, the Company has taken credit of Rs. 1,80,13,296/- in Profit and Loss Account during thecurrent financial year.

The tax effects of significant timing (temporary) differences that resulted in Deferred tax assets and liabilities and descriptionof Financial Statement items that creates these differences are as follows:

Particulars For the current year For the Previous year2003-04 2002-03

Rs. Rs.

Deferred Tax Assets:

Provision for NPA 1,79,49,456 1,35,45,652

Depreciation on Fixed Assets 53,238 97,057

Loss on Sale of Fixed Assets 14,976 ——

Deferred Tax Liability:

Depreciation on Fixed Assets —— ——

Profit on Sale of Fixed Assets (4,374) (21,165)

Net Deferred Tax Asset 1,80,13,296 1,36,21,544

70


7. Debts due from:

Directors: Rs. 12,99,990/- on account of Housing Loans. (Maximum balance due during the year Rs. 12,99,990/-)

Other Officers: Rs. 4,45,201/- on account of Housing Loans/Other recoverable Amounts. (Maximum balance due duringthe year Rs. 4,48,201/-)

Figures for previous year have been regrouped wherever necessary.

8. All sundry debtors are outstanding upto six months.

SIGNIFICANT ACCOUNTING POLICIES:

1. SYSTEM OF ACCOUNTING:

The Company adopts the accrual concept in the preparation of the Accounts, following the historical cost convention.

2. PROVISIONING FOR HOUSING LOANS, INVESTMENTS AND INTER CORPORATE DEPOSITS:i. Housing loans and inter corporate loans are classified into “Performing” and “Non-Performing” assets in terms of guidelines

laid down by the National Housing Bank. Housing loans and inter corporate loans are classified as standard, sub-standard, doubtful and loss assets.

ii. Provisions for non-performing assets and investments are made on a periodic review in accordance with the directives/guidelines laid down by the National Housing Bank.

3. INCOME ON HOUSING LOANS:

i. Repayment of housing loans is by way of Equated Monthly Installments (EMI) comprising principal and interest. Interestis calculated on the outstanding loan balance at the beginning of every month. EMIs commence once the entire loan isdisbursed. Pending commencement of EMIs, Pre-EMI interest is payable every month.

ii. Interest on Housing Loans, which are classified as Non-Performing assets, is recognized on realization as per thedirectives/guidelines laid down by National Housing Bank.

iii. Penal Interest, Fees and Other Charges are recognized when received.

4. INVESTMENTS:

i. Investments are accounted and valued at cost plus incidental expenditure incurred in connection with acquisition.

ii. Investments are classified into two categories i.e. Long-term investments and Current investments.

iii. Income on investments which are classified as Non performing is recognized on realization as per the directives/guidelines laid down by National Housing Bank.

5. FIXED ASSETS:

Fixed Assets are capitalized at cost.

6. DEPRECIATION:

Depreciation on Fixed Assets is provided on the reducing balance method at the rates specified by Schedule XIV of theCompanies Act, 1956.

7. RETIREMENT BENEFITS:

i. Contribution to Provident Fund is charged to accounts on accrual basis.

ii. Provision for leave encashment has been made on basis of actuarial valuation.

iii. Gratuity is accounted for on the basis of the premium paid to Life Insurance Corporation of India under the GroupGratuity Scheme.

8. MISCELLANEOUS EXPENDITURE:

Public Issue expenses are amortized over a period of ten years.

71


OUTSTANDING LITIGATIONS

1. Commercial litigation

1.A. Commercial litigation cases filed by the Company

Parties Authority beforewhich pending

Brief part of suit/appeal Status Amount of claiminvolved (Rs.)

GICHFL v/s. Smt.Bindhu and Mr. R.RadhakrishnaPillai

Revenue RecoveryTribunal, TrivandrumDistrict

The Company had advanced housing loanto the defendant and the same is to becollected as if it were arrears of landrevenue.

Pending 1,76,127

GICHFL v/s. M/s.Anugraha Buildersand others

District and SessionsCourt, Coimbatore

The Company has filed this recovery suitfor recovery of short-term constructionfinance advanced to the defendantstogether with interest.

Notice issued 1,30,92,078

GICHFL v/s. SmtUma Singh

Court of Senior CivilJudge, Delhi

The Company has filed this recovery suitfor recovery of housing loan amountadvanced to the defendants together withinterest payable as per the loanagreement.

Pending 55,448

GICHFL v/s. M/s.ShailiConstructionsPrivate Limitedand others

District Judge, RangaReddy District


Pending 10,59,74,334

GICHFL v/s. Smt.Rajani Samsonand others

II Additional Senior CivilJudge Court,Vishakhapatnam


Pending 1,82,053

GICHFL v/s. Mr. J.Vijay Raghavan,Mr. Ramesh andMr. Jagdish Bapat

District and SessionsCourt Judge, Delhi


Pending 3,25,717

GICHFL v/s. Mr.Ram PrakashSharma and others

Court of Senior CivilJudge, Delhi


Pending 39,590

GICHFL v/s. Smt.Anu Pandey andMr. YogeshKumar

District and SessionsCourt, Delhi


Pending 4,10,505

72




GICHFL v/s. Mr.D. Appalanaiduand others

Senior Civil JudgeCourt, Anakapalle

The Company has filed this recovery suitunder order VII rule 1 read with section 26of the Civil Procedure Code, 1908 forrecovery of housing loan amountadvanced to the defendants together withinterest payable as per the loanagreement.

Pending 2,22,455

GICHFL v/s. Mr.Anuj Kumar Sharmaand others

Court of Civil Judge(S.D.) Ghaziabad

The Company has filed this recovery suitunder order XXXIV rule 4 and 5 of the CivilProcedure Code, 1908 for recovery ofhousing loan amount advanced to thedefendants together with interest payableas per the loan agreement

Pending 5,50,625

GICHFL v/s.Crescent HousingPrivate Limited

Madras High Court The Company has filed this recoverysuit under order IV rule 1 read withorder VII rule 1 and order XXXIV of theCivil Procedure Code, 1908 forrecovery of short-term loan advancedto the defendants towards constructiontogether with interest payable as perthe loan agreement.

Interlocutory orderpassed to restrainthe defendants notto change thepurpose of theadvance made bythe Company to thedefendants forconversion ofresidential flats toservice apartments,pending disposal ofthe civil suit hasbeen granted by thecourt and that theorder is still in force.

4,47,94,037

GICHFL v/s. Mr.Syed AbdulRasheed andothers

City Civil Judge,Bangalore

The Company has filed this recovery suitunder section 26 read with order VII rule 1of the Civil Procedure Code, 1908 forrecovery of housing loan advanced to thedefendants together with interest payableas per the loan agreement.

Pending 30,74,378

GICHFL v/s.Liquidators ofGanatara PrivateLimited and others

Bombay High Court The Company had advanced project loan tothe defendants for construction of houses.The defendants were not in a position togive possession to the purchasers of theflats and they in turn filed a winding uppetition against the defendants and theCompany for recovery of flats. TheCompany has filed a recovery suit forrecovery of the loan amount advanced tothe defendants together with interest as perthe agreement with the defendants

The winding uppetition has beendismissed and therecovery suit filedby the byCompany ispending.

6,68,94,936

73




GICHFL v/s. Mr.Jassu H. Bhatiaand others

Bombay High Court The Company has filed this recoverysuit for recovery of project loan amountadvanced for construction of houses tothe defendants together with interestpayable as per the loan agreement.

Pending 1,46,30,586

GICHFL v/s.Seasons BuildersPrivate Limitedand others

Bombay High Court The Company has filed this recovery suitfor recovery of project loan amountadvanced for construction of houses tothe defendants together with interestpayable as per loan agreement.

Pending 25,00,000

GICHFL v/s. JHBConstructionCompany PrivateLimited

Bombay High Court The Company has filed this recovery suitfor recovery of short-term loan amountadvanced for construction of a commercialcum residential housing project to thedefendants together with interest payableas per loan agreement.

Pending 6,72,74,063

GICHFL v/s. Mr.Govindharajan andothers

Principal District Judge,Tiruchirappalli

The Company has filed this recovery suitunder order 7 rule 1 read with order 34rule 15 of the Civil Procedure Code, 1908for recovery of housing construction loanamount advanced to the defendantstogether with interest payable as per loanagreement.

Pending 5,88,284

GICHFL v/s. Mr.JosephManoharan andothers

Sub Judge,Tiruchirappalli

The Company has filed this recovery suitunder order 7 rule 1 read with order 34 rule15 of the Civil Procedure Code, 1908 forrecovery of housing construction loanamount advanced to the defendantstogether with interest payable as per loanagreement.

Pending 6,16,489

GICHFL v/s. Mrs.Junaitha Hussainand others

Sub Judge,Tiruchirappalli

The Company has filed this recovery suitunder order 7 rule 1 read with order 34rule 15 of the Civil Procedure Code, 1908for recovery of housing construction loanamount advanced to the defendantstogether with interest payable as per loanagreement.

Pending 4,13,959

GICHFL v/s.Kandala GroupConstructionsPrivate Limited

Principal SubordinateJudge,Thiruvanthapuram

The Company has filed this recovery suitfor recovery of project loan amountadvanced for construction of houses to thedefendants together with interest payableas per the loan agreement.

Pending 1,17,84,668

74




GICHFL v/s. M/s.Citizens Buildersand others

Bombay High Court The Company has filed this recovery suitfor recovery of project loan amountadvanced for construction of houses to thedefendants together with interest payableas per the loan agreement.

An order has beenpassed forappointment ofcourt receiver inrespect of 20 flatsand has grantedinjunction on theother suitsecurities. TheCompany hasappealed againstthe order andrequiresappointment ofcourt receiver inrespect of theentire suitsecurities.

3,04,16,966

GICHFL v/s. M/s.Vora EstateDevelopers andothers

Bombay High Court The Company has filed this recovery suitfor the recovery of short-term loanadvanced for construction of residentialhousing project to the defendants withinterest payable as per loan agreement.

Pending 5,14,18,083

GICHFL v/s. Mr.MaheshRewachandKhanna andothers

Court of Hon’ble Judge(S.D.) at Thane


Pending 35,33,956

GICHFL v/s. Mr.RajendrakumarSatapa Khumase



Pending 4,86,574

GICHFL v/s. Mr.Anil Jethalal Bhedaand others



Pending 10,80,263

GICHFL v/s. Mr.Jasjit Singh Bhattyand others


The Company has filed this suit forrecovery of housing loan amountadvanced to the defendants and fordeclaration that the suit property standsduly and validly mortgaged in favour ofthe Company and that it is validsubsisting and binding upon thedefendants.

Pending 45,62,724

75




Mr. v/s. SaratChandra Das v/s.Jyoman BuildersPrivate Limitedand GICHFL

1. B. Commercial litigation filed against the Company

Kerala High Court The Company is made an additional partyto the suit filed by one of the creditors ofdefendant no.1 for winding up of thecompany for non-completion of the project.

Pending 3,50,00,000



2. Criminal Cases filed by the Company

GICHFL v/s. ShailiConstructionsPrivate Limited andothers

MetropolitanMagistrate CriminalCourt, Hyderabad

A criminal complaint filed u/s 138 of theNegotiable Instruments Act, 1881, fordishonour of cheque.

Pending 50,00,000

GICHFL v/s.Directors, GanatraBuilders PrivateLimited andothers

Metropolitan Magistrate,Ballard Pier, Mumbai


Pending 50,00,000

GICHFL v/s.Hamco Mining &Smelting Limitedand othersMetropolitan

Magistrate, BallardPier, Mumbai


Pending 1,03,562

GICHFL v/s.Hamco Mining &Smelting Limitedand others

MetropolitanMagistrate, BallardPier, Mumbai


Pending 50,00,000

GICHFL v/s. M/s.Vora Developersand othersMetropolitan

Magistrate, BallardPier, Mumbai


Pending 1,00,00,000

GICHFL v/s.ShreeKhidkaleshwarLand Developersand others



A memorandumof understandingis entered intobetween theCompany and thedefendants. Thedefendants haveagreed to pay thedues and theCompany hasagreed towithdraw thepending case.The case ispending till thenext hearing.

1,00,00,000

76




GICHFL v/s.Electrex IndiaLimited and others



Pending 10,00,000

GICHFL v/s. M/s.BhagyalakshmiGarments and Mr.Mahesh Khanna,Proprietor

Judicial MagistrateFirst Class Court,Vashi, Navi Mumbai


Pending 90,735

GICHFL v/s. M/s.Citizen Buildersand others



Pending 2,50,00,000

GICHFL v/s.Season BuildersPrivate Limitedand others



Pending 1,37,502

GICHFL v/s.Season BuildersPrivate Limited andothers



Pending 10,00,000

GICHFL v/s.Season BuildersPrivate Limitedand others



Pending 10,00,000

GICHFL v/s. ShriJassu H. Bhatia,proprietor of M/s.City Builders



Pending 2,39,584

GICHFL v/s. LithosEstate DevelopersPrivate Limitedand others



Pending 1,45,00,000

GICHFL v/s. LithosEstate DevelopersPrivate Limited andothers



Pending 1,00,00,000

GICHFL v/s. LithosEstate DevelopersPrivate Limitedand others



Pending 75,00,000




Pending 75,00,000

77







Pending 10,00,000

GICHFL v/s. JHBConstructionPrivate Limited andothers



Pending 1,00,00,000

GICHFL v/s. JHBConstructionPrivate Limitedand others



Pending 1,70,00,000

GICHFL v/s. JHBConstructionPrivate Limited andothers



Pending 1,00,00,000

GICHFL v/s. JHBConstructionPrivate Limitedand others



Pending 50,00,000

GICHFL v/s.Mr. V.A.S. AnandKumar

Metropolitan Magistrate,Egmore, Chennai


Pending 1,35,000

GICHFL v/s. JHBConstruction PrivateLimited and others



Pending 50,00,000

GICHFL v/s.M/s KandalaConstructionPrivate Limitedand others

Additional Chief JudicialMagistrate Court,Thiruvananthapuram


Pending 55,00,000

GICHFL v/s.Mr. Sardar JaspalSingh

Chief MetropolitanMagistrate, PatialaHouse, New Delhi


Pending 25,000

GICHFL v/s.Mr. Dipvinder Singh


A criminal complaint filed u/s 138 ofthe Negotiable Instruments Act,1881, for dishonour of cheque.

Pending 10,552

GICHFL v/s.Mr. AshwiniPawar



Pending 82,049

GICHFL v/s.Smt Aruna Mittal



Pending 2,02,531

78




GICHFL v/s. Mr.Devender Singh



Pending 36,800

GICHFL v/s. Mr.Mohd. I. Shaikh

Court of JudicialMagistrate First Classat Vashi, Navi Mumbai


2,50,000



3. Taxation litigation involving the Company

Taxation litigation filed by the Company

GICHFL v/s.Commissioner ofIncome Tax(Appeals)

Income Tax AppellateTribunal, Mumbai

The Company has filed an appealagainst the order passed by theCommissioner of Income Tax (Appeals)for levying income tax on notionalinterest income accrued on non-performing assets of the Company forassessment year 1997-1998.

Pending 15,20,286



The Company has filed an appeal againstthe order passed by the Commissioner ofIncome Tax (Appeals) for levying incometax on notional interest income accruedon non-performing assets of the Companyfor assessment year 1998-1999.

Pending 1,00,16,598



The Company has filed an appeal againstthe order passed by the Commissioner ofIncome Tax (Appeals) for levying income taxon notional interest income accrued on non-performing assets of the Company forassessment year 1999-2000.

Pending 3,41,81,314

GICHFL v/s.Deputy

Commissioner ofIncome TaxCommissioner ofIncome Tax (Appeals)

The Company has filed an appeal againstthe order passed by the DeputyCommissioner of Income Tax for levyingincome tax on notional interest incomeaccrued on non-performing assets of theCompany for assessment year 2001-2002.

Pending Company hasalready paid theamount of incometax claimed by theIncome Taxdepartment

GICHFL v/s.DeputyCommissioner ofIncome Tax

Commissioner ofIncome Tax (Appeals)

The Company has appealed against theorder passed by Deputy Commissioner ofIncome Tax for disallowing expenses fromtaxable income for having been incurred inrelation to earning of exempt income forassessment year 2001-2002.

Pending Company hasalready paid theamount of incometax claimed by theIncome Taxdepartment

79




4. Labour litigation case filed by the Company

GICHFL v/s. SmtP. Parvathi andthe PresidingOfficer, LabourCourt – IHigh Court,

Andhra Pradesh atHyderabad

The Company has appealed the interimorder passed by the Presiding Officer ofthe Labour Court for reinstatement of thecomplainant with back wages. TheCompany has already deposited theamount of wages in the court.

Final hearingpending

No liability to beincurred. TheCompany hasalready depositedthe claim amountin the court.

5) Litigation details of Promoter Group

5.A) Litigation details pertaining to NICL:

There are about 2,13,989 claims amounting to Rs. 1784.12 crores pending before various motor accident tribunals. Thefigures stated are provisional and subject to audit.

5.B) Litigation details pertaining to United India:

As on 31st March 2004 there are about 2,64,001 claims amounting to Rs. 2655.81 crores pending before various motoraccident tribunals.

5.C) Litigation details pertaining to OICL:

By virtue of the company’s operation in providing motor insurance, there have been a number of litigations against thecompany for settlement of motor third party insurance claims. Similarly several of OICL’s customers have approachedvarious legal forums for non-settlement/short-settlement of claims. These are litigations in the normal course of businessoperations. These apart there have been cases filed in matters relating to Personnel Department and Estate Department aswell. The company handles these litigations at the Branch/Division/Region and a few by the Head Office.

There is no central data bank in respect of litigation claims filed against/by Oriental Insurance. There were 234950 claims foran estimated amount of Rs. 2266 crores as on 31st March 2003 and the figures for year ended 31st March 2004 (provisionalunaudited) are 244055 claims for an amount of Rs. 2492 crores.

5.D) Litigation details pertaining to New India:

New India being a general insurance company the litigations filed by/against the company mainly relate to claim settlements(major portion being motor third party claims). There are 2,36,705 motor third party claims outstanding in courts/tribunals ason 31st March 2004 involving an amount of Rs. 3065.65 crores.

5.E) Litigation details pertaining to IFCI:

� As on 31st March 2004 IFCI had filed 802 recovery applications involving an amount of Rs. 1065300 lacs in various debtrecovery tribunals.

� As on 31st March 2004 two claims were pending in courts against IFCI Limited, which have not been acknowledged asdebts amounting to Rs. 4600 lacs.

5.F) Litigation details pertaining to SUUTI:

i. There are 8 cases relating to US-64. The units of US-64 have since been converted into Government of India Tax FreeBonds.

ii. There are 6 cases relating to property disputes. The approximate amount involved is Rs. 4.27 crores.

iii. There are 2 miscellaneous cases filed with the amount involved being Rs. 3.84 crores.

iv. There are 228 miscellaneous consumer court cases filed with an amount involved of Rs. 3.00 crores.

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6) Litigation details Group Companies

6.A) Litigation details pertaining to UTI Bank:

The following is the summarized position of the litigation details of UTI Bank:

i) Cases filed by UTI Bank for recovery of its dues:


1 For non payment of loans taken against pledge of 60 570.86Demat shares, consumer loans and personal loans

2 Cases filed before various Debt Recovery Tribunals 42 26949.55for recovery of bank dues

ii) Cases filed against UTI Bank:


1 Cases filed before various consumer courts 29 42.39

2 Various other cases filed before various for a includingBanking Ombudsman and cases filed under Criminal Law 15 4007.32

7) Litigation details of Ventures Promoted by Promoters

7.A) Litigation details pertaining to IFCI Financial Services Limited:

There is one case filed against the company under the minimum wages act filed by a contract worker. The amount involved is notascertainable.

7.B) Litigation details pertaining to IFCI Venture Capital Funds Limited:

The following is the summarized position of the litigation details of IFCI Venture Funds Limited:


1 Legal Suits filed by IFCI Venture Capital Funds Limited 60 1,274

2 Suits filed against IFCI Venture Capital Funds Limited 01 2

7.C) Litigation details pertaining to Madhya Pradesh Consultancy Organisation Limited:

There are four cases filed against the company. The amount involved is not ascertainable.

7.D) Litigation details pertaining to HARDICON Limited:

There are no litigations filed by or against the company as on 31st March 2004 except suits filed by two ex-employees indifferent courts of law, protesting the termination of their services. The amount involved is not ascertainable.

7.E) Litigation details pertaining to ICRA Limited:

Leafin Depositor’s Association has filed a criminal case against ICRA Limited in the Criminal Court, Nampally, Hyderabad onaccount of default made by Leafin India Limited in the payment of public deposits for which the company had given creditrating, however the amount is not ascertainable.

7.F) Litigation details pertaining to Foremost Factors Limited:

As on 31st March 2004 there are 12 cases filed by the company with amount involved being Rs. 1.07 crores.

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7.G) Litigation details pertaining to Tourism Finance Corporation of India Limited:

As on 31st March 2004 there are 51 cases filed by the company with principal amount involved being Rs. 155.39 crores.

7.H) Litigation details pertaining to Kenindia Assurance Company Limited:

The following is the summarized position of the litigation details of Kenindia Assurance Company Limited:


1 Litigations filed by the company 873 419 lacs

2 Litigations filed against the company(Third party personal injury, Third party property damage,Workmen Compensation etc.) 8259 2354 lacs

7.I) Litigation details pertaining to The New India Assurance Company (Sierra Leone) Limited:

As per the Balance Sheet as on 31st December 2003:‘The company has denied liability for claims amounting to US$ 86,79,769 and 77,70,556 Liberian $on the Liberian branchfrom the situation in Liberia. There are pending litigations for which the company has obtained legal opinion that it will incurno liability on these claims.’

7.J) Litigation details pertaining to The New India Assurance Company (Trinidad & Tobago) Limited:

As per the Balance Sheet as on 31st December 2003:‘The company has denied liability for claims intimated arising from the events of 27th July 1990. This is based on legal advice,which is based on reinsurers’ common stand that these losses are not covered under treaty wordings. Also, no provisionshave been made for legal costs, which may be incurred in respect of court actions arising out of these claims.

The company is defending various legal actions relating to claims in dispute. These arose during the normal course ofbusiness. After taking legal advice, the management has established certain provisions that are reflected in these financialstatements. The actual outcome of these legal actions could result in payments that differ from provisions established bymanagement.’

8) Litigations involving Directors:

Mr. A.R.M. Rao, Director of GICHFL, was a Nominee Director with Willard India Limited in which he has been made a partyto the litigation, the details of which are as under:

Parties Authority before Brief part of suit/appeal Status Amount of liabilitywhich pending involved

(Rs. in lakhs)

Hindustan City Court, The defendant no. 2 is made a Pending 17.50 Sanitaryware Bahadurgarh, party to this case, which pertains Industries Limited Haryana to repayment of inter corporate v/s. Willard India deposits taken from the plaintiffs. Limited and Mr. A.R.M. Rao

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PROMISE VS PERFORMANCE IN RESPECT OF PREVIOUS ISSUES

The Company had made a public issue of 53,99,600 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 40/- per shareaggregating Rs. 26,99,80000 in the year 1995. The promises made in the prospectus at the time of the IPO and the actual performancesof the Company are given below:

Particulars For the year ended March 31 (In Rs lacs)

1995 1996 1997

Projected Actual Variation Projected Actual Variation Projected Actual Variation% % %

Sanctions 9300 11537 24.10 14000 20223 44.45 17000 16360 -3.76

Disbursements 7080 5649 -20.21 9100 12453 36.85 11400 14279 25.25

Operating Income: 1839 1437 -21.86 3107 2580 -16.96 4294 4692 9.27

Investment Income 293 571 94.88 310 794 156.13 212 355 67.45

Fees & Other Charges 110 152 38.18 207 359 73.43 408 262 -35.78

Total Income 2242 2160 -3.66 3624 3733 3.01 4914 5309 8.04

PBDIT 1971 1964 -0.36 3249 3340 2.80 4544 4739 4.29

Interest 1320 1156 -12.42 2176 1729 -20.54 3270 3229 -1.25

Depreciation 22 13 -40.91 37 20 -45.95 60 26 -56.67

PBT 629 795 26.39 1036 1591 53.57 1214 1484 22.24

PAT 455 623 36.92 750 1134 51.20 879 1023 16.38

EPS (Rs) 4.27 5.56 30.21 4.17 6.30 51.08 4.88 5.68 16.39

Dividend (%) 12.5 15 20.00 15 17 13.33 17 20 17.65

Book Value (Rs) 31.61 31.06 -1.74 34.46 36.61 6.24 37.64 40.15 6.67

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STOCK MARKET DATA FOR EQUITY SHARES OF THE COMPANY

(i) The following is the movement in the share price of the Company on the BSE:

High* Low* AverageCalendar price

Year Date (Rs.) Volume Date (Rs.) Volume (Rs.)

2001 02-07-2001 10.45 18 15-05-2001 6.35 100 8.58

2002 25-06-2002 17.05 15850 18-01-2002 7.85 200 11.62

2003 09-12-2003 44.00 679402 17-02-2003 11.05 2400 20.31

* High/Low prices based on closing quotations on the BSE(ii) The following is the movement in the share price of the Company on the NSE:

High* Low* AverageCalendar price

Year Date (Rs.) Volume Date (Rs.) Volume (Rs.)

2001 14-02-2001 10.15 9250 25-09-2001 6.60 1200 8.55

2002 24-07-2002 17.10 101527 11-01-2002 8.05 1800 11.56

2003 09-12-2003 44.00 1447475 14-02-2003 11.10 1700 20.26

* High/Low prices based on closing quotations on the Exchange(iii) The closing market price of the equity share of the Company on the BSE and NSE on the day after the Board approved the

Issue, i.e. 22nd June 2004 was Rs. 27.40 per share and Rs. 27.05 per share respectively. (Source: www.bseindia.com andwww.nseindia.com)

(iv) The total volume of equity shares traded in each month, monthly high and low prices for equity shares for the precedingsix months on the BSE are as follows:

Period High Date of High Shares Low Date of Shares Traded Average Total VolumePrice Price Traded on the Price Low Price on the day of Price for the Month

(Rs.) quotation day of (Rs.) quotation Low PriceHigh Price

March 2004 31.40 05-03-2004 6200 25.55 24-03-2004 6640 28.96 263631

April 2004 35.00 15-04-2004 11706 30.50 01-04-2004 3025 32.80 242980

May 2004 31.15 04-05-2004 3643 25.20 31-05-2004 16163 26.80 188653

June 2004 29.10 10-06-2004 6988 25.00 01-06-2004 3850 26.68 197544

July 2004 29.75 21-07-2004 4828 26.60 08-07-2004 3435 28.17 189149

August 2004 29.60 31-08-2004 45530 27.00 27-08-2004 22762 27.94 463255

(v) The total volume of equity shares traded in each month, monthly high and low prices for equity shares for the precedingsix months on the NSE are as follows:

Period High Date of High Shares Low Date of Shares Traded Average Total VolumePrice Price Traded on the Price Low Price on the day of Price for the Month

(Rs.) quotation day of (Rs.) quotation Low PriceHigh Price

March 2004 31.45 08-03-2004 37521 25.55 24-03-2004 19975 30.35 674828

April 2004 34.95 15-04-2004 85052 30.60 01-04-2004 18511 32.64 635685

May 2004 30.70 05-05-2004 22760 24.80 31-05-2004 24664 28.50 511833

June 2004 29.05 10-06-2004 30628 25.00 01-06-2004 12626 26.70 321867

July 2004 29.80 21-07-2004 40759 26.55 08-07-2004 24188 28.10 446453

August 2004 29.75 31-08-2004 162757 26.95 26-08-2004 47946 27.88 736936

(vi) The Equity Shares of the Company are actively traded on BSE and NSE.

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BASIS OF ISSUE PRICE

Quantitative Factors

1. Earning Per Share (EPS)

Year EPS (Rs.) Weight

2001-2002 0.67 1

2002-2003 3.67 2

2003-2004 6.17 3

Weighted Average EPS 4.42

2. Price/Earning Ratio (P/E) on issue price of Rs. 16:

Based on Weighted average EPS of Rs. 4.42 3.62

Based on 2003-2004 EPS of Rs. 6.17 2.59

*Industry P/E -

Highest 6.2

Lowest 3.5

Industry Composite 5.02

*Peer group comparison

Particulars P/E EPS (Rs) RONW(%)

Dewan Housing Finance 5.1 5.7 16.33

Can Fin Homes 3.5 9.8 14.63

LIC Housing Finance 6.2 22.3 17.40

GRUH Finance 6.0 4.8 20.08

* Source: Capital Market, July 19 – August 01, 2004.

3. Return on Net Worth

Year RoNW (%) Weight

2001-2002 1.44 1

2002-2003 7.54 2

2003-2004 11.61 3

Weighted Average RoNW 8.56

4. Minimum Return on Total Net Worth after Issue needed to maintain EPS at Rs. 6.17 is 15.08%.

5. Net Asset Value per share (NAV) as on 31-03-2004 : Rs. 53.23

Please refer to page no. 58 under ‘Auditor’s Report’ of the Letter of Offer for detailed workings of the abovementionedaccounting ratios.

Qualitative Factors

Profit making and consistently dividend paying Company since its public issue in 1995.

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Information as required by Government of India, Ministry of Finance, Circular No. F2/5/SE/76, dated February 5, 1977 asamended vide their Circular of even number dated March 8, 1977 is given below:

1. Working Results of the CompanyUnaudited financial results for the period ended 30th June 2004

Particulars (Rs. in lacs)

Income from Operations ................................................... 2675.00

Other Income .................................................................... 24.00

Total Income ..................................................................... 2699.00

Profit before depreciation and tax ..................................... 342.00

Provision for Depreciation ................................................. 9.00

Profit/(Loss) Before Tax .................................................... 333.00

Provision for Tax ............................................................... 150.00

Deferred Tax Asset ........................................................... (125.00)

Estimated /(Loss) Net Profit after tax ................................ 308.00

2. Save as stated elsewhere in the Letter of Offer, there are no material changes and commitments, which are likely to affect thefinancial position of the Company since March 31, 2004 (i.e. last date up to which audited information is incorporated in theLetter of Offer)

3.a) Week end prices of Equity Shares of the Company for the last four weeks on the BSE and NSE are as below:

Week endedon

Closing RateBSE

Highest PriceBSE*

Lowest PriceBSE*

Closing RateNSE

Highest PriceNSE*

Lowest PriceNSE*

Aug 13, 2004 27.85 28.25 27.55 27.85 28.05 27.60

Aug 20, 2004 28.00 28.00 27.55 27.95 27.95 27.35

Aug 27, 2004 27.00 27.80 27.00 27.00 27.75 26.95

Sept 03, 2004 31.85 31.85 28.30 31.85 31.85 28.25

* High/Low prices based on closing quotations on the Exchange

b) The closing Price of the Equity Shares of the Company on the BSE and NSE on 10th September, 2004 was Rs. 27.85 andRs. 27.85 per equity Share (ex-rights price) respectively.

DEFAULTS IN THE PAYMENT/REFUNDS OF DEBENTURES, FIXED DEPOSITS, INTEREST ON FIXED DEPOSITS,DEBENTURE INTEREST AND INSTITUTIONAL DUES

There are no defaults, non-payment/over dues of statutory dues, institutional/company dues and dues towards holders of debentures,bonds and fixed deposits and arrears of preference shares, other than unclaimed liabilities of the Company, except as stated in theparagraph ‘Outstanding Litigations’ in this Letter of Offer.

PARTICULARS REGARDING LISTED COMPANIES UNDER THE SAME MANAGEMENT WHICH HAVE MADE ANY CAPITALISSUES DURING THE LAST 3 YEARS

There are no listed Companies under the same management within the meaning of Section 370(1B) of the Act.

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Status of complaints received from SEBI

As of the date of this Letter of Offer, no complaints were pending with SEBI.

Overall status of Investor Grievances

Company’s secretarial department located at the Corporate office of the Company at Universal Insurance Building, 3rd Floor, SirP.M. Road, Fort, Mumbai - 400 001 closely monitors and co-ordinates with the R&T Agents, for attending to and resolving thecomplaints of its shareholders. The average time taken by the Registrars for attending to routine grievances is 7-8 days from thedate of receipt of complaints. In case of non-routine grievances where verification with other agencies is involved, it would be theendeavor of the Registrars to attend to them as expeditiously as possible.

Company received 57 complaints relating to investor grievance during the quarter ended 30th June 2004 and all were repliedsatisfactorily to the concerned investors and no investor complaint was pending as on 30th June 2004.

Sharepro Services, Registrars to the Issue, will handle the Company’s investor grievances arising out of the Issue. All grievancesrelating to the Issue may be addressed to the Registrars to the Issue giving full details such as folio number, DP ID / client IDnumber, name and address of the first applicant, number of Equity Shares applied for, CAF serial number, amount paid on applicationand the collection centre where the application was deposited, along with a photocopy of the acknowledgement slip. In case ofrenunciation, the same details of the renouncee should be furnished.

The Company has appointed a Compliance Officer who may be contacted for any pre-issue/post-issue related problems.

ISSUE EXPENSES

The expenses of the Issue including brokerage, fees and reimbursement to the Lead Managers, Registrars, printing and distributionexpenses, publicity, listing fees, stamp duty and other expenses are estimated at around Rs. 40 lacs and will be met out of theproceeds of the Issue. The following table gives a break-up of the estimated issue expenses and contingencies

Particulars Rs. Lacs

Fees to Lead Managers to the Issue 15,00,000

Fees to Registrars to the Issue 1,35,000

Fees to Legal Advisors to the Issue 1,50,000

Fees to Auditors to the Issue 30,000

Stock Exchange Listing Fees 60,000

Statutory Advertisement Expenses 3,00,000

Printing / Postage 14,50,000

Other expenses 2,00,000

Stamp Duty 1,80,000

Total 40,05,000

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EXPERT OPINION

The Company has not obtained any expert opinions, except that of M/s Crawford Bayley & Co., as Legal Advisors to the issue andM/s M.P. Chitale & Co., Chartered Accountants who have given the Tax Benefits Certificate.

OPTION TO SUBSCRIBE

Save as otherwise stated elsewhere in this Letter of Offer, the Company has not given any option to subscribe for any EquityShares of the Company.

MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS

The following contracts (not being contracts entered into in the ordinary course of business carried on by the Company or enteredinto more than two years before the date of this Letter of Offer), which are or may be deemed material have been entered or are tobe entered into by the Company. These contracts and also the documents for inspection referred to hereunder, may be inspectedat the Registered Office of the Company situated at Universal Insurance Building, 3rd Floor, Sir P.M. Road, Fort, Mumbai-400001from the date of this Letter of Offer until the date of closure of the Issue from Monday through Friday from 11.00 am to 03.00 pm.

A. MATERIAL CONTRACTS

1. Memorandum of Understanding dated 29th June 2004, entered into with the UTI Securities Limited, Lead Manager to theIssue.

2. Memorandum of Understanding dated 01st July 2004 entered into with M/s Sharepro Services, Registrars to the Issue.

B. DOCUMENTS

1. Memorandum and Articles of Association of the Company.

2. Certificate of Incorporation of the Company.

3. Certificate of change of name of the Company.

4. Certificate of Registration with National Housing Bank. Certificate No. 01.0025.02 dated 07th May 2002.

5. Copy of the resolution passed at the meeting of the Board of Directors held on 21st June 2004, approving this Issue.

6. Tripartite Agreement dated 18th March 2004 between GICHFL, Sharepro Services and NSDL for offering depository option tothe investors.

7. Tripartite Agreement dated 26th February 2004 between GICHFL, Sharepro Services and CDSL for offering depositoryoption to the investors.

8. Consents of the Directors, Company Secretary, Auditors, Lead Managers to the Issue, Legal Advisor to the Issue, Bankersto the Issue and Registrars to the Issue, to include their names in the Letter of Offer to act in their respective capacities.

9. Letter dated 24th July 2004 from M/s. M.P. Chitale & Co., Chartered Accountants confirming Tax Benefits as mentioned inthis Letter of Offer.

10. The report of the Auditors.

11. Annual Reports of the Company for the last five Financial Years.

12. Copies of the Initial listing application made to the Stock Exchanges.

13. Copies of the in-principle approval received from the Stock Exchanges.

14. Letter No. CFD/DIL/SR/19642/2004, dated 02nd September 2004 issued by The Securities and Exchange Board of India forthe Issue and reply to the same.

15. Due Diligence Certificate dated 02nd August 2004 from UTI Securities Limited.

16. Letter of intent from promoters for subscribing to rights entitlement.

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DECLARATION

All the relevant provisions of the Companies Act, 1956, and the guidelines issued by the Government or the guidelines issued bythe Securities and Exchange Board of India established under the Securities and Exchange Board of India Act, 1992, as the casemay be, have been complied with and no statement made in the Letter of Offer contravenes any of the provisions of the CompaniesAct, 1956, or the Securities and Exchange Board of India Act, 1992 or rules made thereunder or guidelines issued (including theSEBI (Disclosure and Investor Protection) Guidelines, 2000), as the case may be.

Yours faithfully

For GIC Housing Finance Limited

Signed by Directors

Mr. P.C. Ghosh

* Mr. V. Jagannathan

* Mr. Rajendra Beri

* Mr. Sham Lal Mohan

* Mr. H.S. Wadhwa

Mr. N.R. Ranganathan

Mr. M.K. Tandon

* Mr. R.M. Malla

Mr. A.R.M. Rao

Mr. R.L. Baxi

* Mr. Manu Chadha

Mr. A.K. Guha

* Through their duly constituted attorney Mr. A.K. Guha

Place: Mumbai

Date: 13th September, 2004

Encl: Composite Application Form.

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