letter of offer · 2018-10-10 · fipb foreign investment promotion board form of acceptance form...

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTIONThis Letter of Offer is sent to you as shareholder(s) of FAG Bearings India Limited (“FAG India”). If you require any clarifications about theaction to be taken, you may consult your stock broker or investment consultant or Manager to the Offer/Registrar to the Offer. In case youhave recently sold your shares in FAG India, please hand over this Letter of Offer, the accompanying Form of Acceptance-cum-Acknowledgement and Form of Withdrawal to the member of stock exchange through whom the said sale was effected.

CASH OFFERby

INA Vermögensverwaltungsgesellschaft mbHRegd. Office: Industriestraße 1-3, 91074 Herzogenaurach, Germany

Tel No. +49 (0) 91 32 / 82 - 21 97; Fax No. +49 (0) 91 32 / 82 - 49 63and Person Acting in Concert:

FAG Kugelfischer Georg Schaefer AGRegd. Office: Georg-Schäfer-Straße 30, 97421 Schweinfurt, Germany

Tel No.+49 (0) 97 21 912 631; Fax No.+49 (0) 97 21 913 121 for

the purchase of up to 33,23,454 fully paid-up equity shares representing 20% of the total voting capital of

FAG Bearings India LimitedRegd. Office: Nariman Bhavan, 8th Floor, 227, Backbay Reclamation, Nariman Point, Mumbai – 400 0021

Tel No. (022) 2202 2144; Fax No. (022) 2202 7022at Rs.41.22/- per equity share comprising of a base offer price of Rs.36.82 per equity share and interest of Rs.4.40 per equityshare, with the interest being computed at the rate of 10% per annum for the period from January 9, 2002 to March 20, 2003,the date of actual payment of consideration for shares offered and accepted in the offer (the interest amount is subject tochange depending upon the actual date of payment)

Attention:(1) This Offer is being made in compliance with the Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 1997 and subsequent amendments thereof (“Regulations”) as applicable, pursuant to and in compliance withthe order/ directions issued by SEBI to INA Vermögensverwaltungsgesellschaft mbH, specifically the SEBI Chairman’s order datedOctober 19, 2002 (“the Order”).

(2) The Offer is subject to the following statutory and regulatory approvals and clearances required by the PAC to acquire sharestendered pursuant to the Offer: (i) Approval of the Foreign Investment Promotion Board (“FIPB”) or any other appropriate authorityof the Government of India; and (ii) Approval of Reserve Bank of India (“RBI”) under the Foreign Exchange Management Act, 1999(“FEMA”). As on date there are no other statutory approvals required, other than those indicated above. The PAC has made anapplication dated December 3, 2002 to FIPB in this respect.

(3) If there is any upward revision of the Offer price by the Acquirer till the last date for revision viz. February 4, 2003 or withdrawalof the Offer, the same would be informed by way of a Public Announcement in the same newspapers in which the original PublicAnnouncement had appeared. Such revised Offer Price would be payable for all the shares tendered anytime during the Offer andaccepted under the Offer.

(4) Shareholders, who have accepted the offer by tendering the requisite documents in terms of the Public Announcement / Letter ofOffer, can withdraw the same up to three working days prior to the date of the closure of the Offer i.e. February 13, 2003.

(5) If there is a competitive bid: The public offers under all the subsisting bids shall close on the same date. As the Offer Pricecannot be revised during seven working days prior to the closing date of the offers/bids, it would, therefore be in theinterest of shareholders to wait till the commencement of that period to know the final offer price of each bid and tendertheir acceptance accordingly.

(6) A copy of the Public Announcement and Letter of Offer (including Form of Acceptance-cum-Acknowledgement and Form of With-drawal) is also available on SEBI’s web-site (www.sebi.gov.in).

MANAGERS TO THE OFFER REGISTRAR TO THE OFFERICICI Securities and Finance Company Limited41/44, Minoo Desai Marg,Colaba, Mumbai – 400 005Phone: (022) 2288 2460Fax: (022) 2283 7045Email: [email protected] Person: Mr. Mehul Savla

Schedule of the Major Activities of the Offer

Activity Latest Date Day

Public Announcement (PA) Date December 2, 2002 MondaySpecified Date (for the purpose of determining the names of December 23, 2002 MondayShareholders to whom the Letter of Offer would be sent)Last date for a competitive bid December 23, 2002 MondayLast date by which Letter of Offer to be posted to shareholders January 13, 2003 MondayDate of Opening of the Offer January 20, 2003 MondayLast date for Withdrawal February 13, 2003 ThursdayDate of Closure of the Offer February 18, 2003 TuesdayLast date for revising the offer price / number of shares February 4, 2003 TuesdayLast date for communicating rejection / acceptance and payment for March 20, 2003 Thursdayaccepted shares / return of unaccepted shares

MCS LimitedSri Venkatesh BhavanPlot No. 27, Road No. 11, MIDC Area,Andheri (East), Mumbai 400 093Phone: (022) 2821 5235Fax: (022) 2835 0456Email: [email protected] Person: Mr. Ashok Gupta

LETTER OF OFFER

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TABLE OF CONTENTS

Clause No. Particulars Page

1 Disclaimer clause 4

2 Details of the Offer 4

3 Background of the Acquirer and PAC 5

4 Delisting option to the Acquirer in terms of Regulation 21(3) 9

5 Background of FAG India 10

6 Offer Price and financial arrangements 12

7 Terms and conditions of the Offer 13

8 Procedure for acceptance and settlement of the Offer 14

9 Documents for inspection 17

10 Declaration by the Acquirer (including PAC) 18

Attached Form of Acceptance-cum-Acknowledgement

Attached Form of Withdrawal

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DEFINITIONS

Acquirer/ INA INA Vermögensverwaltungsgesellschaft mbH

Act The Companies Act, 1956

BSE The Stock Exchange, Mumbai

Business Hours Monday to Friday - 10.00 a.m. to 1.00 p.m. and 2.00 p.m. to 4.00 p.m.;Saturday – 10.00 a.m. to 1.00 p.m. (Closed on Sundays and public holidays)

CDSL Central Depository Services (India) Limited

DP Depository Participant

Eligible Persons for the Offer Registered Shareholders of FAG India and Unregistered persons who own the equity shares ofFAG India, anytime before the closure of the Offer, except the Acquirer and PAC

EU European Union

FEMA Foreign Exchange Management Act, 1999

FIPB Foreign Investment Promotion Board

Form of Acceptance Form of Acceptance-cum-Acknowledgement

Letter of Offer This Letter of Offer dated January 7, 2003

Manager/ Manager to the Offer ICICI Securities and Finance Company Limited

NRIs Non-resident Indians

NSDL National Securities Depository Limited

NSE The National Stock Exchange of India Limited

Offer Offer for acquisition of up to 33,23,454 fully paid-up equity shares of face value of Rs.10/- eachof FAG India representing 20% of the total voting capital at a price of Rs.41.22/- per Share,payable in cash

Offer Period From January 20, 2003 to February 18, 2003

Offer Price Rs.41.22/- per Share comprising of a base offer price of Rs.36.82 per equity share and interest ofRs.4.40 per equity share, with the interest being computed at the rate of 10% per annum for theperiod from January 9, 2002 to March 20, 2003, the date of actual payment of consideration forshares offered and accepted in the offer (the interest amount is subject to change depending uponthe actual date of payment)

Order SEBI Chairman’s order dated October 19, 2002

Person Acting in Concert / The person acting in concert with the Acquirer for the purpose of this Offer, viz., FAGPAC / FAG AG Kugelfischer Georg Schaefer AG

Public Announcement (PA) Announcement of the Offer made by the Acquirer on December 2, 2002

RBI The Reserve Bank of India

Registrar / Registrar to MCS Limited, Mumbaithe Offer / MCS

Regulations The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)Regulations, 1997 and subsequent amendments thereof, as applicable

SEBI The Securities and Exchange Board of India

Share(s) / Equity Share(s) Fully paid up equity share(s) of face value of Rs.10/- each of FAG India

Specified Date December 23, 2002

Target Company / FAG India FAG Bearings India Limited

USA United States of America

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1. DISCLAIMER CLAUSEIT IS TO BE DISTINCTLY UNDERSTOOD THAT FILING OF DRAFT LETTER OF OFFER WITH SEBI SHOULD NOT IN ANY WAYBE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED, VETTED OR APPROVED BY SEBI. THE DRAFT LETTEROF OFFER HAS BEEN SUBMITTED TO SEBI FOR A LIMITED PURPOSE OF OVERSEEING WHETHER THE DISCLOSURESCONTAINED THEREIN ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE REGULATIONS. THIS REQUIRE-MENT IS TO FACILITATE THE SHAREHOLDERS OF FAG INDIA TO TAKE AN INFORMED DECISION WITH REGARD TO THEOFFER. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF THE ACQUIRER /PERSON ACTING IN CONCERT OR OF THE COMPANY WHOSE SHARES / CONTROL IS PROPOSED TO BE ACQUIRED OR FORTHE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER. IT SHOULD ALSOBE CLEARLY UNDERSTOOD THAT WHILE THE ACQUIRER IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, AD-EQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THIS LETTER OF OFFER, THE MANAGER TO THE OFFERIS EXPECTED TO EXERCISE DUE-DILIGENCE TO ENSURE THAT THE ACQUIRER DULY DISCHARGES ITS RESPONSIBILITYADEQUATELY. IN THIS BEHALF, AND TOWARDS THIS PURPOSE, THE MANAGER TO THE OFFER, ICICI SECURITIES ANDFINANCE COMPANY LIMITED HAS SUBMITTED A DUE-DILIGENCE CERTIFICATE DATED DECEMBER 13, 2002 TO SEBI INACCORDANCE WITH THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997 AND SUB-SEQUENT AMENDMENTS THEREOF, AS APPLICABLE. THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER,ABSOLVE THE ACQUIRER FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY CLEARANCES AS MAY BE RE-QUIRED FOR THE PURPOSE OF THE OFFER.

2. DETAILS OF THE OFFER

2.1 Background of the Offer

2.1.1 INA is a company registered under the laws of the Federal Republic of Germany, having its principal place of businessat Industriestraße 1-3, 91074 Herzogenaurach, Germany. The Acquirer is a part of the INA group of companies, which has holdingsand business activities worldwide.

2.1.2 FAG AG is a German, publicly quoted company, having several interests and holdings around the world including a 51% majorityholding in an Indian company, namely FAG Bearings India Limited. INA owns 96.5% of the shares and voting rights of FAG AG. Forthe purpose of this offer, FAG AG is a Person Acting in Concert with INA.

2.1.3 On September 10, 2001, INA published its plan to issue a public offer for all shares of FAG AG, a company registered under the lawsof the Federal Republic of Germany, having its principal place of business at Georg-Schäfer-Straße 30, 97421 Schweinfurt, Germany.On September 13, 2001 the offer of INA addressed to the shareholders of FAG AG was published. INA offered to acquire shares ofFAG AG at a price of € 11.00 per share if those shares were tendered between September 17, 2001 and October 22, 2001. On October16, 2001 INA increased the offer price from € 11.00 to € 12.00 per share. After the antitrust authorities in the EU and USA had clearedthe takeover INA acquired 89.34% of the shares of FAG AG on December 28, 2001 (hereinafter referred to as the “Transaction”).

2.1.4 FAG AG has a 51% owned subsidiary in India operating in the name of FAG Bearings India Limited, a company incorporated underthe Act, and having its Registered Office at Nariman Bhavan, 8th Floor, 227, Backbay Reclamation, Nariman Point, Mumbai – 4000021 and whose shares are listed on the BSE and the NSE. Pursuant to the Transaction, control of FAG India has changed and vestedfrom FAG AG to INA, in terms of Regulation 2(1)(c) read with Regulation 12 of the Regulations. Further, pursuant to the Transaction,INA is deemed to have acquired FAG AG, which is the parent company of FAG India, entitling INA to exercise 51% of the voting rightsof FAG AG in FAG India in terms of Regulation 10 read with Explanation (b) to Regulation 11(3) of the Regulations. It is herebyexpressly declared that consequent to the Transaction, INA does not own and / or control any equity capital in FAG India, whetherby itself or through any Person Acting in Concert with it, other than the previously mentioned equity shares constituting 51%(comprising 84,74,805 equity shares of FAG India) of the subscribed and paid up equity capital of FAG India, as a result of itsacquisition of FAG AG.

2.1.5 INA had made an application to the Takeover Panel seeking exemption from the provisions of Chapter III of the Regulations pursuantto the indirect acquisition of control over the Target Company. SEBI vide its Order rejected the said application and directed theAcquirer to make an open offer.

2.1.6 Pursuant to Regulation 10 and Regulation 12 and other provisions of Chapter III of the Regulations and in compliance with the Order,INA along with FAG AG as PAC is making an offer to the public shareholders of FAG India, to acquire a maximum of 33,23,454 fullypaid up equity shares of FAG India, representing 20% of the outstanding equity share capital of FAG India at a price of Rs.41.22 perequity share, payable in cash, which comprises of a base offer price of Rs.36.82 per equity share and interest of Rs.4.40 per equityshare, with the interest being computed at the rate of 10% per annum for the period from January 9, 2002 to March 20, 2003, thedate of actual payment of consideration for shares offered and accepted in the offer (the interest amount is subject to changedepending upon the actual date of payment). Note: Under the Order, the reference date for calculation of the offer price underRegulation 20 of the Regulations is September 10, 2001 and the Offer Price has been calculated accordingly.

2.1.7 All shares accepted pursuant to this Offer will be acquired through FAG AG (the PAC) only.

2.1.8 The Offer is not conditional on any minimum level of acceptance.

2.1.9 The shares of FAG India are listed on the BSE and the NSE. The shares of FAG India were frequently traded on BSE and NSE withinthe meaning of Regulation 20 of the Regulations in relation to the six-month period prior to September 10, 2001, the reference dateunder the Order. The average of the weekly high and low of the closing prices of the shares of FAG India on NSE, the exchangewhere the shares of FAG India were most frequently traded, for the 26-week period prior to the reference date under the Order wasRs.36.82 per share. The Offer Price of Rs.41.22 per equity share comprises of a base offer price of Rs.36.82 per equity share andinterest of Rs.4.40 per equity share, with the interest being computed at the rate of 10% per annum for the period from January 9,2002 to March 20, 2003, the date of actual payment of consideration for shares offered and accepted in the offer (the interest amount

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is subject to change depending upon the actual date of payment) and is justified as per Regulation 20 (2) of the Regulations, asapplicable, and the Order.

2.1.10 Neither the Acquirer or its Directors nor the PAC or its Directors nor FAG India or its Directors have been prohibited by SEBI fromdealing in securities, in terms of directions issued under Section 11B of the SEBI Act.

2.2 Details of the Offer

2.2.1 The Public Announcement was made on December 2, 2002 in the following newspapers in accordance with Regulation 15 of theRegulations:

Newspapers Language Editions

The Financial Express English All editions

Jansatta Hindi All editions

Sakal Marathi Mumbai

The Public Announcement is also available on the SEBI website at www.sebi.gov.in.

2.2.2 Pursuant to and subject to the terms and conditions of this Letter of Offer, the Acquirer is hereby making an Offer to the equityshareholders of FAG India to acquire from them up to 33,23,454 Shares (representing 20% of the total voting capital) at a price ofRs.41.22/- (Rupees Forty one and Paise twenty two only) per Share, payable in cash, comprising of a base offer price of Rs.36.82per equity share and interest of Rs.4.40 per equity share, with the interest being computed at the rate of 10% per annum for the periodfrom January 9, 2002 to March 20, 2003, the date of actual payment of consideration for shares offered and accepted in the offer(the interest amount is subject to change depending upon the actual date of payment). Any upward revision in the Offer with respectto the Offer Price will be announced in the above mentioned newspapers and the same price would be payable by the Acquirer forall the shares tendered anytime during the Offer.

2.2.3 The shares will be acquired by the PAC, free from all liens, charges and encumbrances and together with all rights attached thereto,including the right to all dividends, bonus and rights declared hereafter.

2.2.4 There are no outstanding partly paid up shares of FAG India.

2.2.5 The Offer is not conditional on any minimum level of acceptance i.e. the Acquirer will acquire all the Shares that are tendered in termsof the Offer up to 33,23,454 Shares, subject to the conditions specified in this Letter of Offer and Form of Acceptance-cum-Acknowledgement.

2.2.6 The Acquirer and PAC have not acquired any equity shares of FAG India since the date of the Public Announcement and up to thedate of this Letter of Offer.

2.3 Object of the Acquisition / Offer

2.3.1 The Offer to the shareholders of FAG India is made pursuant to the Order with respect to the indirect acquisition of shares in, andchange in control of FAG India pursuant to the Transaction, and in compliance with the Regulations.

2.3.2 The Acquirer does not currently have any plans to dispose off or otherwise encumber any assets of FAG India in the two years fromthe date of closure of the Offer, except in the ordinary course of business of FAG India and / or to the extent required for the purposesof restructuring, rationalizing and / or streamlining various operations, assets, liabilities, investments, businesses or otherwise of FAGIndia. The Board of Directors of FAG India will take appropriate decisions in these matters, as per the requirements of business andin line with opportunities or changes in the economic scenario, from time to time.

3. BACKGROUND OF THE ACQUIRER AND PAC

3.1 INA Vermögensverwaltungsgesellschaft mbH (“Acquirer”)

3.1.1 INA is a company registered under the laws of the Federal Republic of Germany, having its principal place of businessat Industriestraße 1-3, 91074 Herzogenaurach, Germany. The company was founded as LUGO SechsundzwanzigsteVermögensverwaltungs GmbH on May 29, 2001 and changed its name to INA Vermögensverwaltungsgesellschaft mbH on August 31,2001. INA is an unlisted company formed primarily for the administration of assets.

3.1.2 INA-Holding Schaeffler KG with its principal place of business at Herzogenaurach, Germany is the ultimate shareholder of INA. INA-Holding Schaeffler KG is owned by the Schaeffler family. INA Vermögensverwaltungsgesellschaft mbH is a member of the INA groupof companies.

3.1.3 The Board of Directors of INA is as below:

Name Residential Address

Dr. Jürgen Geißinger BeethovenstraßeHerzogenaurachGermany

Dr. Mary Jo Gresens HaydnstraßeHerzogenaurachGermany

None of these directors are on the Board of Directors of FAG India.

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3.1.4 The financial details of INA are given below:

Profit and Loss Statement (Unaudited) Period ended Financial year endedOctober 30, 2002 December 31, 2001

€ mn Rs. crores € mn Rs. Crores

Income from operations — — — —

Other income — — — —

Total Income — — — —

Total Expenditure (6.05) (28.97) (0.02) (0.10)

Profit before Depreciation, Interest and Tax (6.05) (28.97) (0.02) (0.10)

Depreciation — — — —

Interest — — — —

Profit Before Tax (6.05) (28.97) (0.02) (0.10)

Provision for Tax (23.71) (113.61) — —

Profit After Tax (29.75) (142.58) (0.02) (0.10)

Balance Sheet Statement (Unaudited) Period ended Financial year endedOctober 30, 2002 December 31, 2001

€ mn Rs. crores € mn Rs. crores

Sources of Funds

Paid-up Equity Share Capital 0.03 0.12 0.03 0.12

Paid-up Preference Share Capital — — — —

Reserves and surplus (excluding revaluation reserves) 29.75 142.58 — —

Net Worth 29.77 142.70 0.03 0.12

Share application money — — — —

Secured Loans 705.39 3,380.77 649.42 3,112.54

Unsecured Loans — — — —

Total 705.39 3,380.79 649.43 3,112.56

Uses of Funds

Net fixed Assets — — — —

Revaluation of Assets — — — —

Investments 705.32 3,380.46 649.41 3,112.49

Net Current Assets 0.07 0.34 0.01 0.07

Total misc. exp. not written-off — — — —

Total 705.39 3,380.79 649.43 3,112.56

Other Financial Data (Unaudited) Period ended Financial year endedOctober 30, 2002 December 31, 2001

€ Rs. € Rs.

Dividend (%) — — — —

Earnings Per Share (Rs.) — — — —

Return on Net Worth (%) — — — —

Book Value per Share (Rs.) — — — —

(One EUR = Rs.47.9277, Source: Bloomberg, November 25, 2002)

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3.1.5 Besides FAG India, the INA Group of companies operates in India through two wholly owned subsidiaries namely, INA Bearings IndiaPrivate Limited and LuK India Private Limited and a 51% subsidiary namely FAG Roller Bearings Private Ltd. None of these companiesare listed in India. The details of these companies are as follows:

INA Bearings India Private Limited

Date of incorporation: September 23, 1997

Nature of business: Production of bearings

Financial Information

(Rs. Lakhs)

Financial year ended, March 31, 2002 March 31, 2001 March 31, 2000

Equity capital 1,000.00 1,000.00 260.00

Reserves and surplus* - 32.82 -

Total income 785.05 121.19 -1

Profit after tax (567.06) 32.82 -1

Earnings Per Share (Rs.) - 0.58 -1

Book Value per Share (Rs.)* 4.66 10.30 10.00

* excluding revaluation reserve

1 The company had not yet commenced commercial production. No P&L had been prepared and expenses were capitalised

LuK India Private Limited

Date of incorporation: March 22, 1995

Nature of business: Production of clutches for vehicles

Financial Information

(Rs. Lakhs)

Financial year ended, March 31, 2002 March 31, 2001 March 31, 2000

Equity capital 3,393.00 2,393.00 2,093.00

Reserves and surplus* 1,143.00 1,143.00 1,143.00

Total income 4,328.41 4,098.12 4,281.86

Profit after tax (202.78) (252.88) (149.26)

Earnings Per Share (Rs.) - - -

Book Value per Share (Rs.)* 10.00 10.00 10.00


FAG Roller Bearings Private Limited

Date of incorporation: November 26, 2001

Nature of business: Production and selling of tapered roller bearings

Financial Information (Rs. Lakhs)

Period from January 1, 2002 to September 30, 2002

Equity capital 440.00

Reserves and surplus* 0.00

Total income 25.35

Profit after tax (115.84)

Earnings Per Share (Rs.) n.a.

Book Value per Share (Rs.)* 7.37


3.1.6 SEBI vide order dated December 13, 2002 has initiated adjudication proceedings against the Acquirer under section 15H{ii} of the SEBIAct, 1992 for the alleged contravention of Regulation 12 of the Regulations by INA for the failure to make the public announcementpursuant to the acquisition of control of the Target Company on September 10, 2002.

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3.2 FAG AG (Person Acting in Concert for the purpose of the Offer):

3.2.1 FAG AG is a company registered under the laws of the Federal Republic of Germany, having its principal place of business at Georg-Schäfer-Straße 30, 97421 Schweinfurt, Germany. Incorporated on July 1, 1993, FAG AG manages a group of undertakings, the activityof which covers in particular manufacturing, processing and selling all types of antifriction bearings, as well as all types of machines,mechanical installations, equipment, devices, goods and tools falling within the areas of machine construction, vehicle construction,precision engineering, measurement technology and related areas, including the parts and procedures belonging thereto. Furthermore,the object of the undertaking is holding and acquiring participations, taking over management activities and rendering services includingthe financing and financial management in respect of undertakings which develop, manufacture or sell the aforementioned products aswell as managing, hiring out and leasing property owned and held by FAG AG.

3.2.2 Prior to the incorporation of FAG AG in its current existing legal form, it had been in existence for more than hundred years; one of thefounders of one of FAG AG’s predecessors invented the industrial ball grinding machine which was the basis for the industrial productionof ball bearings.

3.2.3 FAG AG’s shares are registered on German stock exchanges in Frankfurt, München, Düsseldorf, Berlin, Stuttgart, Hannover, Hamburgand Bremen.

3.2.4 INA currently owns 96.5% of the shares and voting rights of FAG AG.

3.2.5 The Board of Directors of FAG AG is as below:

Name Residential Address

Dr. Jürgen M. Geißinger BeethovenstraßeHerzogenaurachGermany

Dr. Gerhard Vogel Walther-von-der-Vogelweide-StraßeSchweinfurtGermany

Michael Hankel An der EselshöheSchweinfurtGermany

John A. McCloskey River DriveSouthportUSA

None of these directors are on the Board of Directors of FAG India.

3.2.6 The financial information of FAG AG for the years ended December 31, 1999, 2000 and 2001 and for the 6-months ended June 30,2002 (Unaudited) is as under:

Profit and Loss Statement 6-mth ended 2001 2000 1999June 30, 2002 (Audited) (Audited) (Audited)(Unaudited)

€ mn Rs. Cr. € mn Rs. Cr. € mn Rs. Cr. € mn Rs. Cr.

Income from operations 1,154 5,532 2,224 10,659 2,211 10,597 1,884 9,028

Other income 33 156 65 312 66 315 69 329

Total Income 1,187 5,689 2,289 10,971 2,277 10,912 1,952 9,357

Total Expenditure (1,070) (5,129) (2,061) (9,879) (2,016) (9,662) (1,715) (8,219)

Profit before Depreciation Interest & Taxes 117 559 228 1,092 261 1,250 238 1,138

Depreciation (net) (62) (296) (130) (621) (132) (631) (112) (539)

Interest (15) (74) (29) (138) (35) (169) (61) (290)

Profit Before Tax 40 189 70 333 94 450 65 309

Provision for Tax (12) (56) (12) (59) (46) (222) (21) (101)

Profit After Tax 28 134 57 274 48 228 43 208

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Balance Sheet Statement 6-mth ended 2001 2000 1999June 30, 2002 (Audited) (Audited) (Audited)(Unaudited)

€ mn Rs. Cr. € mn Rs. Cr. € mn Rs. Cr. € mn Rs. Cr.

Sources of Funds

Paid-up Equity Share Capital 156 750 156 750 156 750 156 748

Paid-up Preference Share Capital — — — — — — — —

Reserves and surplus(excluding revaluation reserves) 415 1,988 430 2,062 400 1,917 419 2,006

Net Worth 571 2,738 587 2,812 556 2,667 575 2,754

Share application money — — — — — — — —

Secured Loans n.a. n.a. 91 437 120 576 162 778

Unsecured Loans 411 1,970 279 1,338 245 1,173 296 1,419

Total 1,600 7,670 1,576 7,552 1,539 7,378 1,495 7,163

Uses of Funds

Net fixed Assets 873 4,184 921 4,416 902 4,321 846 4,055

Revaluation of Assets — — — — — — — —

Investments 27 128 21 103 18 87 47 227

Net Current Assets 695 3,330 629 3,015 616 2,953 529 2,535

Total misc. exp. not written-off 6 27 4 19 3 16 72 346

Total 1,600 7,670 1,576 7,552 1,539 7,378 1,495 7,163

Other Financial Data 6-mth ended 2001 2000 1999June 30, 2002 (Audited) (Audited) (Audited)(Unaudited)

€ Rs. € Rs. € Rs. € Rs.

Dividend per Share 0.00 0.00 0.00 0.00 0.30 14.38 0.20 9.59

Earnings per Share 0.35 16.77 0.72 34.51 0.57 27.32 0.52 24.92

Return on Net Worth (%) 9.70 10.00 8.70 8.10

Book Value per Share* 9.24 442.92 9.52 456.39 9.04 433.13 8.21 393.58

*Adjusted for Revaluation Reserve and miscellaneous expenditure not written off


3.2.7 FAG AG has complied with the applicable provisions of Chapter II of the Regulations.

4. DELISTING OPTION TO THE ACQUIRER IN TERMS OF REGULATION 21(3)4.1 Pursuant to this Offer the public shareholding will not be reduced to 10% or less of the voting capital of FAG India and therefore

Regulation 21(3) of the Regulations is not applicable.

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5. BACKGROUND OF FAG INDIA (“TARGET COMPANY”)5.1 FAG Bearings India Limited, a company incorporated under the Act, is a public limited company, having its Registered Office at Nariman

Bhavan, 8th Floor, 227, Backbay Reclamation, Nariman Point, Mumbai – 400 0021.

5.2 FAG India was incorporated on April 27, 1962 as “Precision Bearings India Limited”. Subsequently its name was changed to “FAGPrecision Bearings Limited” on May 20, 1986 and finally to “FAG Bearings India Limited” on May 5, 1999. FAG India is engaged in thebusiness of manufacturing and dealing in ball and roller bearings and components. FAG India, established in 1962, has been inexistence for forty years. It has one manufacturing plant at Vadodara, Gujarat.

5.3 The equity share capital structure of FAG India is as follows:

Paid-up Equity Shares of FAG India No. of shares / Voting rights % of shares / voting rights

Fully paid-up equity shares 1,66,17,270 100

Partly paid-up equity shares –– ––

Total fully paid-up equity shares 1,66,17,270 100

Total voting rights in FAG India 1,66,17,270 100

5.4 The equity shares of FAG India are listed on BSE and NSE. According to FAG India, FAG India is in compliance with the listingrequirements and no punitive action has ever been initiated against FAG India by any of the stock exchanges where its shares are listedand FAG India has complied with the relevant provisions of Chapter II of the Regulations.

5.5 The Board of Directors of FAG India as on December 2, 2002 is as under:

Name Address

Mr. A.P. Gandhi C2/14 Safdarjung Development Area, New Delhi - 110 016Chairman

Mr. D. Jagannath FAG Bearings India Limited, Maneja, Vadodara - 390 013Managing Director

Dr. V. Sagar Remfry House at the Millennium Plaza, Sector 27, Gurgaon - 122 002

Mr. G. Morber FAG International Sales and Service GmbH Postfach 1260, 97419 Schweinfurt, Germany

Mr. Y. S. Kapadia 9, Silver Oaks Avenue, DLF Qutab Enclave, Phase – I, ‘G’ Block, Gurgaon – 122 002, HaryanaAlternate to G. Morber

Mr. F. Huber FAG Kugelfischer Georg Schaefer AG, Postfach 1260, 97419 Schweinfurt, Germany

Mr. R. Sampath Kumar Remfry & Sagar, Remfry House at the Millennium Plaza, Sector 27, Gurgaon – 122 002.Alternate to F. Huber

Mr. M.D. Garde The New India Assurance Co.Ltd., 87, M.G. Road, Mumbai - 400 023Nominee - GIC

Please note that any correspondence to the directors must be addressed to the registered office address of FAG India at NarimanBhavan, 8th Floor, 227, Backbay Reclamation, Nariman Point, Mumbai – 400 0021.

5.6 According to FAG India, there were no mergers, demergers or spin-offs involving FAG India during the last three years.

5.7 The financial details of FAG India are as under:(Rs. Lakhs)

Profit and Loss 9-month ended Year ended Year ended Year endedStatement September 30, 2002 December 31, 2001 December 31, 2000 December 31, 1999

(Unaudited) (Audited) (Audited) (Audited)

Income from operations 17,850.00 22,266.62 20,567.21 18,390.55

Other income 13.00 543.48 441.34 517.27

Total Income 17,863.00 22,810.10 21,008.55 18,907.82

Total Expenditure (14,254.00) (18,480.21) (16,427.90) (15,192.42)

Profit before DepreciationInterest & Taxes 3,609.00 4,329.89 4,580.65 3,715.40

Depreciation (net) (1,181.00) (1,610.22) (1,673.14) (1,603.03)

Interest (568.00) (797.75) (1,064.84) (1,305.41)

Profit Before Tax 1,860.00 1,921.92 1,842.67 806.96

Provision for Tax * (462.00) (420.10) (555.00) (88.00)

Profit After Tax 1,398.00 1,501.82 1,287.67 718.96

* Including deferred tax and for earlier years

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(Rs. Lakhs)

Balance Sheet 9-month ended Year ended Year ended Year endedStatement September 30, 2002 December 31, 2001 December 31, 2000 December 31, 1999

(Unaudited) (Audited) (Audited) (Audited)

Sources of Funds

Paid-up Equity Share Capital 1,661.73 1,661.73 1,661.73 1,661.73

Paid-up Preference Share Capital — — — —

Reserves and surplus(excluding revaluation reserves) — 6,933.82 6,814.31 6,239.69

Net Worth — 8,595.55 8,476.04 7,901.42

Share application money — — — —

Secured Loans — 2,673.16 5,957.61 7,524.66

Unsecured Loans — 3,833.39 2,972.35 1,668.53Total — 16,180.33 17,689.88 17,384.93

Uses of Funds —

Net fixed Assets — 10,277.91 10,473.52 10,240.57

Revaluation of Assets — — — —

Investments — 123.82 119.21 137.11Net Current Assets — 5,705.48 7,068.42 6,592.45

Total misc. exp. not written-off — 73.12 28.73 414.80

Total — 16,180.33 17,689.88 17,384.93

Other Financial Data Year ended Year ended Year endedDecember 31, 2001 December 31, 2000 December 31, 1999

(Audited) (Audited) (Audited)

Dividend per Share (Rs.) 3.50 3.50 2.70

Earnings Per Share (Rs.)* 9.03 7.75 4.33

Return on Net Worth (%) 17.47 15.19 9.10

Book Value per Share (Rs.)** 51.29 50.83 45.05

*As per FAG India Annual report, ** excluding Misc. exp. not written off

Note: Miscellaneous expense not written off has been deducted against networth for calculating the book value per share and return onnet worth.

5.8 The equity shareholding in FAG India before the Offer and after the Offer (assuming full acceptance of the Offer) is given in the tablebelow:

Shareholders’ Shareholding & voting Shares/Voting Shareholding/voting Shareholding/votingCategory rights prior to the Rights agreed to be rights to be acquired in Rights after the

Agreement / acquisition acquired which triggered the open Offer (Assuming acquisition andand Offer off the Regulations full acceptances) Offer (A+B+C)

(A ) (B ) (C ) (D )

No. of Shares % No. of Shares % No. of Shares % No. of Shares %

1. Promoter Group

a) Acquirer (INA) — — — — — — — —

b) PAC (FAG AG) 84,74,805 51.0 33,23,454 20 1,17,98,259 71.0

2. (a) FIs/ MFs/FIIs/ Banks 27,26,569 16.4

(b) Others 54,15,896 32.6

Total (a)+(b) 81,42,465 49.0 (33,23,454) (20) 48,19,011 29.0

Total (1 + 2) 1,66,17,270 100.0 — — 33,23,454 20 1,66,17,270 100.0

(% figures have been rounded-off)

The number of Shareholders of FAG India as on November 15, 2002 is 11,520.

Source: The above figures are based on the information provided by FAG India.

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6. OFFER PRICE AND FINANCIAL ARRANGEMENTS

6.1 Justification of Offer Price

The equity shares of FAG India are listed on BSE and NSE. The annualized trading turnover during the preceeding six calendar monthsended August 2001 in each of the stock exchanges is detailed below:

Name(s) of stock Total no. of shares traded Total no. of listed shares Annualised tradingexchange(s) during 6 calendar months turnover (in terms % of

ended August 2001 total listed shares)

BSE 11,28,798 1,66,17,270 6.79%NSE 19,23,498 1,66,17,270 11.58%

Source: Quotes from the respective stock exchanges

The equity shares of FAG India are deemed to be frequently traded in terms of the Regulations.

The Offer Price of Rs.41.22/- per Share, which comprises of a base offer price of Rs.36.82 per equity share and interest of Rs.4.40 perequity share, with the interest being computed at the rate of 10% per annum for the period from January 9, 2002 to March 20, 2003, thedate of actual payment of consideration for shares offered and accepted in the offer (the interest amount is subject to change dependingupon the actual date of payment), is justified in terms of Regulation 20(2) of the Regulations, as it is the highest of the following:

a Bid Price Not Applicable

b Highest price paid by the Acquirer / PAC for any acquisition including Not Applicable through a public or rights issue during the 26 weeks prior to the dateof public announcement

c Price paid by the Acquirer under preferential allotment at any time Not Applicableduring the 12 month period up to the date of closure of the Offer

d The average price calculated as per Regulation 20(2) (d) on NSE, Rs.36.82 (on NSE)*where it is traded most frequently (Note: According to the Order,the reference date for calculation of offer price is September 10, 2001)

* The Offer Price of Rs.41.22/- per Share comprises of a base offer price of Rs.36.82 per equity share and interest of Rs.4.40 per equityshare, with the interest being computed at the rate of 10% per annum for the period from January 9, 2002 to March 20, 2003, the dateof actual payment of consideration for shares offered and accepted in the offer (the interest amount is subject to change dependingupon the actual date of payment).

Details of the price and volume data on the NSE are as under:

CLOSING PRICE AT NSE

Week Week ended High (Rs.) Low (Rs.) Average (Rs.) Volume (number of shares)

1 19-Mar-01 34.80 32.85 33.83 30,1452 26-Mar-01 36.10 34.00 35.05 15,7263 2-Apr-01 34.95 32.50 33.73 32,5124 9-Apr-01 33.25 32.80 33.03 16,2455 16-Apr-01 36.10 32.70 34.40 55,0616 23-Apr-01 36.30 35.95 36.13 30,0527 30-Apr-01 37.75 35.90 36.83 28,6388 7-May-01 37.30 36.00 36.65 102,0359 14-May-01 38.00 36.80 37.40 33,132

10 21-May-01 38.25 36.90 37.58 62,05211 28-May-01 39.15 37.90 38.53 34,27512 4-Jun-01 41.45 37.90 39.68 31,15113 11-Jun-01 37.30 36.80 37.05 9,43114 18-Jun-01 37.85 37.00 37.43 14,32415 25-Jun-01 36.75 35.20 35.98 7,30616 2-Jul-01 35.90 33.70 34.80 89,25117 9-Jul-01 35.00 34.00 34.50 4,95718 16-Jul-01 35.00 33.95 34.48 25,15019 23-Jul-01 36.25 33.85 35.05 17,20220 30-Jul-01 36.30 34.95 35.63 11,58821 6-Aug-01 38.20 35.85 37.03 31,28322 13-Aug-01 38.65 37.55 38.10 16,71623 20-Aug-01 39.60 37.95 38.78 93,61624 27-Aug-01 42.30 38.90 40.60 28,84325 3-Sep-01 44.05 42.00 43.03 71,51626 10-Sep-01 43.55 40.20 41.88 19,140

Source: Quotes from NSE

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In the opinion of the Manager to the Offer, the Acquirer and the PAC, the Offer Price is justified as per Regulation 20 (2) of theRegulations, as applicable, and the Order.

No financial diligence has been carried out by the Acquirer in respect of the Target Company. No specific value was assigned to theTarget Company in the global transaction.

The income, assets and profit after tax of FAG India as a proportion to that of FAG AG are given below:

FAG AG FAG India FAG India in proportionto FAG AG

Audited 2001 2000 Rs. Cr. (%)€ mn Rs. Cr. € mn Rs. Cr. 2001 2000 2001 2000

Income from Operations 2,224 10,659 2,211 10,597 223 206 2.09 1.94

Profit After Tax 57 274 48 228 15 13 5.47 5.70

Total Assets 1,576 7,552 1,539 7,378 162 177 2.15 2.40


If the Acquirer / PAC acquires shares after the date of Public Announcement up to 7 working days prior to the closure of the Offer at aprice higher than the Offer Price, then the highest price paid for such acquisition shall be payable for all the valid acceptances receivedunder the Offer.

6.2 Financial Arrangement for the Offer

6.2.1 The total fund requirement for the acquisition of 33,23,454 equity shares held by public shareholders in FAG India at Rs.41.22 pershare, which comprises of a base offer price of Rs.36.82 per equity share and interest of Rs.4.40 per equity share, with the interestbeing computed at the rate of 10% per annum for the period from January 9, 2002 to March 20, 2003, the date of actual payment ofconsideration for shares offered and accepted in the offer (the interest amount is subject to change depending upon the actual date ofpayment), is Rs.13,69,92,774, being the aggregate amount of Rs.12,23,69,576 together with interest of Rs.1,46,23,198 at the rate of10% per annum simple interest from January 9, 2002 to March 20, 2003, the date of actual payment of consideration. Deutsche Bankhaving its office at Karolinenstraße 30, 90402 Nürnberg, Germany has certified vide its letter dated November 28, 2002, that FAG AGhas adequate resources to meet the financial obligations relating to the Offer. The Manager to the Offer is satisfied about the ability ofINA to implement the Offer through FAG AG in accordance with the Regulations.

6.2.2 In accordance with Regulation 28 of the Regulations, FAG AG has created an escrow account in the form of a bank guarantee, issuedby Deutsche Bank having its office at Hazarimal Somani Marg, Fort, Mumbai 400 001, India, valid until March 20, 2003 in favour of theManager to the Offer for an amount of Rs.3.42 crores being 25% of the total consideration payable under this Offer. The Manager to theOffer has been authorized to realize the value of the escrow account in terms of the Regulations.

6.2.3 Further, FAG AG has also made a cash deposit of €35,000 in a bank account with Deutsche Bank having its office at Karolinenstraße30, 90402 Nürnberg, Germany being in excess of 1% of the total consideration payable under this Offer. The Manager to the Offer hasbeen authorized to realize the value of the bank account in terms of the Regulations. On receipt of the requisite approval from ReserveBank of India, 1% of the total consideration payable under this Offer will be transferred from the aforesaid bank account to an accountwith the Deutsche Bank branch located in India having its office at Hazarimal Somani Marg, Fort, Mumbai 400 001.

7. TERMS AND CONDITIONS OF THE OFFER

7.1 The Offer to the shareholders of FAG India is being made pursuant to Regulation 10 and Regulation 12 and other provisions of ChapterIII and in compliance with the Regulations and pursuant to and in compliance with the Order, to acquire up to 33,23,454 equity sharesrepresenting 20% of the total voting capital of FAG India at Rs.41.22/- per Share, which comprises of a base offer price of Rs.36.82 perequity share and interest of Rs.4.40 per equity share, with the interest being computed at the rate of 10% per annum for the period fromJanuary 9, 2002 to March 20, 2003, the date of actual payment of consideration for shares offered and accepted in the offer (theinterest amount is subject to change depending upon the actual date of payment).

7.2 The Letter of Offer together with the Form of Acceptance–cum-Acknowledgement and Form of Withdrawal will be mailed to theshareholders of FAG India whose names appear on the Register of Members of FAG India and beneficial owners of the Shares of FAGIndia, whose names appear as beneficiaries on the records of the respective depositories, at the close of the business hours onDecember 23, 2002 (the Specified Date), except to the Acquirer and PAC. Accidental omission to dispatch this Letter of Offer to anyperson to whom this Offer is made or the non-receipt or delayed receipt of this Letter of Offer by any such person will not invalidate thisOffer in any way.

7.3 Any equity shares of FAG India that are subject matter of litigation or are held in abeyance due to pending court cases, wherein theshareholder(s) of FAG India may be precluded from transferring the shares during pendency of the said litigation are liable to berejected in case directions/orders regarding these shares are not received together with the shares tendered under the Offer. TheLetter of Offer in some of these cases, wherever possible would be forwarded to the concerned statutory authorities for further actionat their end.

7.4 The shares will be acquired free from all liens, charges and encumbrances and together with all rights attached thereto, including theright to all dividends, bonus and rights declared hereafter.

7.5 The Offer is not conditional on any minimum level of acceptance i.e. the PAC will acquire all the Shares that are tendered in terms ofthe Offer up to 33,23,454 Shares, subject to the conditions specified in this Letter of Offer and Form of Acceptance-cum-Acknowledgement.

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7.6 If there is any upward revision of the Offer price by the Acquirer till the last date for revision viz. February 4, 2003 or withdrawal of theOffer, the same would be informed by way of a Public Announcement in the same newspapers in which the original Public Announcementhad appeared. Such revised Offer Price would be payable for all the shares tendered anytime during the Offer and accepted under theOffer.

7.7 Shareholders who wish to tender their shares should submit documents in accordance with the procedure specified in Section 8 of thisLetter of Offer and the Form of Acceptance-cum-Acknowledgement.

7.8 Shareholders who hold shares in physical form and who wish to tender their shares will be required to send the Form of Acceptance-cum-Acknowledgement, original share certificate(s) and transfer deed(s) duly signed to the Registrar to the Offer – MCS Limited, SriVenkatesh Bhavan, Plot No. 27, Road No. 11, MIDC Area, Andheri (East), Mumbai 400 093, India, either by hand delivery duringBusiness Hours or by registered post so that the same are received on or before the close of the Offer i.e. February 18, 2003 inaccordance with the instructions specified in the Letter of Offer and in the Form of Acceptance-cum-Acknowledgement.

7.9 The Registrar to the Offer has opened a special depository account with Deutsche Bank, as the Depositary Participant in NSDL styled“MCS Ltd - Escrow A/c FAG India Open Offer”.

The details of the special depository account are as under:

DP Name MCS Limited

Depository Identification No. (DP ID) IN 300167

Client Identification No. (Beneficiary Client ID) 10011228

7.10 Beneficial owners (holders of shares in dematerialised form) who wish to tender their shares will be required to send their Form ofAcceptance-cum-Acknowledgement along with a photocopy of the delivery instruction slip in “off-market” mode or counterfoil of thedelivery instruction slip in “off-market” mode, duly acknowledged by the DP. The delivery instruction slip in favour of “MCS Ltd - EscrowA/c FAG India Open Offer” should be sent to the Registrar to the Offer: MCS Limited, Sri Venkatesh Bhavan, Plot No. 27, Road No. 11,MIDC Area, Andheri (East), Mumbai 400 093, India. Telephone No. (022) 2821 5235, Fax No. (022) 2835 0456 either by hand deliveryduring Business Hours or by registered post so as to reach on or before the close of Offer i.e. February 18, 2003 in accordance with theinstructions specified in the Letter of Offer and in the Form of Acceptance-cum-Acknowledgement. Beneficial owners should ensurethat they credit their shares in favour of the special depository account before the closure of the Offer.

Shareholders having their beneficiary account in Central Depository Services Limited (“CDSL”) will have to use inter-depository deliveryinstruction slip for the purpose of crediting their shares in favour of the special depository account with NSDL.

7.11 Locked-in Shares:

There are no locked-in shares in FAG India.

7.12 Eligibility for Accepting the Offer:

The present Offer is being made to all the shareholders of FAG India, except the Acquirer and PAC, whose names appear as on theSpecified Date (i.e. December 23, 2002) and also to those persons, except the Acquirer and PAC, who own the shares at any time priorto the closure of the Offer but are not registered shareholders.

7.13 Statutory Approvals and Conditions of the Offer:

7.13.1 The Offer is subject to the following statutory and regulatory approvals and clearances required by the PAC to acquire shares tenderedpursuant to the Offer:

i) Approval of the Foreign Investment Promotion Board (“FIPB”) or any other appropriate authority of the Governmentof India.

ii) Approval of Reserve Bank of India (“RBI”) under the Foreign Exchange Management Act, 1999 (“FEMA”).

As on date there are no other statutory approvals required, other than those indicated above. The Acquirer will notproceed with the Offer in the event the statutory approvals indicated above are refused, in terms of regulation 27of the Regulations.

7.13.2 The PAC has made an application dated December 3, 2002 to FIPB in this respect.

7.13.3 In case of delay in receipt of statutory approvals beyond March 20, 2003, SEBI has a power to grant extension of time to Acquirer/PACfor payment of consideration to shareholders, subject to the Acquirer/PAC agreeing to pay interest for the delayed period as directed bySEBI in terms of regulation 22(12) of the Regulations. Further, if the delay occurs on account of willful default by the Acquirer/ PAC inobtaining the requisite approvals, regulations 22(13) of the Regulations will become applicable.

8. PROCEDURE FOR ACCEPTANCE AND SETTLEMENT OF THE OFFER

8.1 Shareholders of FAG India who wish to avail of this Offer should forward the under-mentioned documents by hand delivery or registeredpost to the Registrar at their office - MCS Limited, Sri Venkatesh Bhavan, Plot No. 27, Road No. 11, MIDC Area, Andheri (East),Mumbai 400 093, India. Telephone No. (022) 2821 5235, Fax No. (022) 2835 0456 or by hand delivery only at the collection centresgiven under para 8.12 below, on or before the close of business hours on February 18, 2003 (offer closing date). Shareholders areadvised to ensure that the Form of Acceptance-cum-Acknowledgement and other documents are complete in all respects;otherwise the same are liable to be rejected. In the case of demat shares, the shareholders are advised to ensure that theirshares are credited in favour of the special depository account, before the closure of the Offer. The Form of Acceptance-cum-

15

Acknowledgement of such demat shares not credited in favour of the special depository account before the closure of theOffer is liable to be rejected.

8.2 Registered shareholders (holders of shares in physical form) should enclose:

l Form of Acceptance-cum-Acknowledgement duly completed and signed in accordance with the instructions contained therein, byall shareholders whose names appear on the share certificates.

l Original share certificate(s).

l Valid share transfer deed(s), duly signed as transferors by all registered shareholders (in case of joint holdings) in the same orderand as per specimen signatures registered with FAG India and duly witnessed at the appropriate place.

8.3 Beneficial owners (holders of shares in dematerialised form) should enclose:

l Form of Acceptance-cum-Acknowledgement duly completed and signed in accordance with the instructions contained therein byall the beneficial holders of shares, as per the records of the DP.

l Photocopy of the delivery instruction slip in “off-market” mode or counterfoil of the delivery instruction slip in “off-market” mode,duly acknowledged by the DP.

The details of the special depository account are as follows:

Name of the Depository Depository Identification No. Client Identification No.Participant (DP ID) (Beneficial Client ID)

MCS Limited IN 300167 10011228

8.4 Unregistered shareholders should enclose:

l Form of Acceptance-cum-Acknowledgement or an application on plain paper, duly completed and signed in accordance with theinstructions contained therein (refer para 7.8, 7.9 and 7.10 above).

l Original share certificate(s).

l Copy of the original contract note issued by the broker through whom the shares were acquired.

l Proof of lodgement of shares for transfer and acknowledgement thereof by the company or their Registrar and share transfer agent.(if the share certificates have already been lodged for transfer)

l Valid share transfer deed(s) including an additional valid transfer deed duly signed by the unregistered shareholder as thetransferor.

No indemnity is required from the unregistered owners.

8.5 Owners of shares who have tendered their shares for transfer should enclose:

l Form of Acceptance-cum-Acknowledgement duly completed and signed in accordance with the instructions contained therein.

l Copy of the letter sent to FAG India for transfer of shares.

l Valid share transfer deed(s) including valid transfer deed duly signed by the unregistered shareholder as the transferor.

8.6 Shareholders who have sent their physical shares for dematerialisation need to ensure that the process of getting shares dematerialisedis completed well in time so that the credit in the special depository account should be received on or before the date of closure of theOffer, i.e. by February 18, 2003, else the application would be rejected.

8.7 The share transfer deed should list FAG Kugelfischer Georg Schaefer AG as the transferee / buyer. All other requirements for validtransfer will be a precondition for valid acceptance.

8.8 The share certificate(s), share transfer deed(s) and the Acceptance-cum-Acknowledgement should be sent only to the Registrarto the Offer and not to the Manager to the Offer or the Acquirer or the PAC or the Target Company.

8.9 In case of non-receipt of the Letter of Offer, the eligible persons may send their consent, to the Registrar to the Offer, on a plain paperstating acceptance of the Offer with name, address, no. of shares held, distinctive nos., folio no., no. of shares offered, along withdocuments as mentioned above, so as to reach the Registrar to the Offer on or before the close of the Offer, i.e. February 18, 2003 orin case of beneficial owners they may send their application in writing to the Registrar to the Offer, on a plain paper stating acceptanceof the Offer with name, address, no. of shares held, no. of shares offered, DP name, DP ID, beneficiary account number and aphotocopy of the delivery instruction slip in “off-market” mode or counterfoil of the delivery instructions slip in “off-market” mode, dulyacknowledged by the DP, in favour of the special depository account, so as to reach the Registrar to the Offer, on or before the closeof the Offer, i.e. February 18, 2003.

8.10 Alternatively, the Letter of Offer and Form of Acceptance-cum-Acknowledgement will be available on SEBI’s website: www.sebi.gov.in,from the date of opening of the Offer. The eligible persons can download the Form of Acceptance-cum-Acknowledgement from theSEBI’s website and apply in the same.

8.11 a) As per the provisions of Section 196D(2) of the Income Tax Act, 1961 (“Income Tax Act”), no deduction of tax at sourceshall be made before remitting the consideration for equity shares tendered under the offer by Foreign InstitutionalInvestors (“FIIs”) as defined in Section 115 AD of the Income Tax Act.

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b) However, while tendering their shares under the Offer, NRIs, OCBs and other non resident shareholders will be requiredto submit a No Objection Certificate (NOC) or Tax clearance certificate (indicating the amount of tax to be deducted bythe Acquirer/PAC before remitting the consideration) obtained from the Income Tax authorities under the Income TaxAct. In case the aforesaid NOC or Tax clearance certificate is not submitted, the Acquirer/PAC will arrange to deducttax at the maximum marginal rate as may be applicable to the category of shareholders, on the entire considerationamount payable to such shareholders.

c) Non resident shareholders will need to enclose a copy of the permission received by them from RBI to acquire theshares held by them in FAG India. In case the shares are held on repatriation basis, the non resident shareholder shouldobtain and enclose a letter from its authorised dealer/ bank confirming that at the time of acquiring the said shares,payment for the same was made by the non resident shareholder from the appropriate account (e.g. NRE a/c) asspecified by RBI in its approval. In case the non resident holder is not in a position to produce the said certificate, theshares would be deemed to have been acquired on non-repatriation basis and in that case the holder shall submit aconsent letter addressed to the Acquirer, allowing the Acquirer to make the payment on a non-repatriation basis inrespect of the valid shares accepted under the Offer.

d) If any of the above stated documents (as applicable) are not enclosed along with the Form of Acceptance-cum-Acknowledgement, the shares tendered under the Offer are liable to be rejected.

8.12 The Form of Acceptance-cum-Acknowledgement along with the share certificate(s), signed transfer deed(s) and other documentsshould be submitted to the Registrar to the Offer at any of the collection centres below in accordance with the procedure as set out inthe Letter of Offer. All the centres mentioned herein below would be open on all working days as follows :

Business Hours: Monday to Friday - 10.00 a.m. to 1.00 p.m. and 2.00 p.m. to 4.00 p.m.; Saturday – 10.00 a.m. to 1.00 p.m. (Closed onSundays and public holidays)

Address Contact Person Mode of Delivery Telephone No. Fax. No.

MCS Limited Mr. Ashok Gupta Hand Delivery/ (022) 2821 5235 (022) 2835 0456Sri Venkatesh Bhavan, Registered PostPlot No. 27, Road No. 11,MIDC Area, Andheri (East),Mumbai 400 093

MCS Limited Mr. Rajendra G. Hand Delivery (022) 2269 1266 (022) 2269 1567C/O Ghia Textile Products Co.Agra Building, 1st Floor,Room No. 5,Above Bank Of Baroda,University Branch,121 M G Road, Fort,Mumbai 400 001

8.13 Applicants who cannot hand deliver their documents at the collection centres referred to above, may send the same by RegisteredPost, at their own risk and cost, to the Registrar to the Offer at their address given below:

MCS LimitedSri Venkatesh Bhavan,Plot No. 27, Road No. 11MIDC Area, Andheri (East)Mumbai 400 093

8.14 The payment of consideration will be made by the PAC in cash through crossed account payee cheque, sent by registered post foramounts exceeding Rs.1,500/- and UPC otherwise to those shareholders / unregistered owners and at their own risk, whose shares /share certificates and other documents are found in order and accepted by the Acquirer. In case of joint registered holders, cheques /demand drafts will be drawn in the name of the sole / first named holder / unregistered owner and will be sent to him/her. It is desirablethat shareholders provide bank details in the Form of Acceptance-cum-Acknowledgement, so that the same can be incorporatedin the cheque/demand draft.

8.15 In case the shares tendered in the Offer are more than the shares to be acquired under the Offer, the acquisition of shares from eachshareholder will be in accordance with Regulation 21(6) of the Regulations, on a proportionate basis.

8.16 Unaccepted share certificate(s), transfer deed(s) and other documents, if any, will be returned by Registered Post at the shareholders’/unregistered owners’ sole risk to the sole/first named shareholder/unregistered owner. Except that, in case the share certificatestendered have to be split, Acquirer/PAC will arrange to split the share certificates and send the balance share certificates (for Sharesnot accepted in the Offer) by Registered Post at the shareholders’ / unregistered owners’ sole risk to the sole / first named shareholder/ unregistered owner. Unaccepted shares held in demat form will be credited back to the beneficial owners’ depositary account with therespective depository participant as per the details furnished by the beneficial owner in the Form of Acceptance-cum-Acknowledgementor otherwise.

8.17 The Registrar to the Offer will hold in trust the share(s) / share certificate(s), shares lying in credit of the special depository account,Form of Acceptance-cum-Acknowledgement and the transfer deed(s), if any, on behalf of the shareholders / unregistered owner(s) ofFAG India who have accepted the Offer, till (a) the release of payment to the shareholders; and (b) the unaccepted shares / sharecertificates are despatched / credited back to the beneficial owner’s depository account, upon the receipt of instruction from the

17

Manager to the Offer; latest by March 20, 2003. Upon completion of the above, the Registrar to the Offer will debit the specialdepository account to the extent of shares accepted by the Acquirer/PAC and give instruction to credit the beneficial account of theAcquirer/PAC.

8.18 The Acquirer/PAC shall complete all procedures relating to the Offer latest by March 20, 2003. In case of delay in receipt of statutoryapprovals, SEBI has the power to grant extension of time to the PAC for payment of consideration to the shareholders, subject to theAcquirer / PAC agreeing to pay interest for the delayed period as directed by SEBI in terms of Regulation 22(12) of the Regulations.Further, if the delay occurs on account of wilful default by the Acquirer/PAC in obtaining the requisite approvals, Regulation 22(13) ofthe Regulations will also become applicable.

8.19 In terms of Regulation 22(5A) of the Regulations, shareholders desirous of withdrawing their acceptances tendered in the Offer can doso up to three working days prior to the date of closure of the Offer, i.e. by February 13, 2003. The withdrawal option can be exercisedby submitting the Form of Withdrawal as per the instruction below, so as to reach the Registrar to the Offer at MCS Limited, SriVenkatesh Bhavan, Plot No. 27, Road No. 11, MIDC Area, Andheri (East), Mumbai 400 093, India either by hand delivery on all days(excluding Sundays and bank holidays): Monday to Friday - 10.00 a.m. to 1.00 p.m. and 2.00 p.m. to 4.00 p.m.; Saturday – 10.00 a.m.to 1.00 p.m. or by Registered Post, on or before Thursday, February 13, 2003.

The withdrawal option can be exercised by submitting the Form of Withdrawal along with the copy of acknowledgement slip issued atthe time of submission of the Form of Acceptance cum Acknowledgement. In case of non receipt of Form of Withdrawal, the withdrawaloption can be exercised by making an application on plain paper along with the following details:

— In case of physical shares: name, address, distinctive nos., folio number, share certificate number, number of shares tendered,date of tendering the shares

— In case of dematerialized shares: name, address, number of shares tendered, DP name, DP ID, date of tendering the shares,beneficiary account number and a photocopy of the delivery instructions in “off market” mode or counterfoil of the deliveryinstruction in “off market” mode, duly acknowledged by the DP, in favour of the “MCS Ltd - Escrow A/c FAG India Open Offer”.

9. DOCUMENTS FOR INSPECTION

The following material documents are available for inspection at the office of the Manager to the Offer, ICICI Securities and FinanceCompany Limited, 41/44, Minoo Desai Marg, Colaba, Mumbai 400 005, from 10.30 am to 1.00 pm on any working day, except Saturdays,Sundays and holidays, until the Offer closes:

a) Certificate of Incorporation, Memorandum of Association and Articles of Association of INA and FAG AG;

b) Certificate of Incorporation, Memorandum of Association and Articles of Association of FAG India;

c) Unaudited financial statements of INA for seven months ended December 31, 2001 and ten months ended October 31, 2002;

d) Audited annual reports of FAG AG for the financial years ended December 31, 1999, 2000, 2001 and unaudited results for thesix months ended June 30, 2002;

e) Audited annual reports of FAG India for the financial years ended December 31, 1999, 2000, 2001 and unaudited results for thenine months ended September 30, 2002;

f) Published copy of Public Announcement dated December 2, 2002;

g) Letter dated November 28, 2002 from Deutsche Bank confirming that FAG AG has adequate resources to meet the financialobligations relating to the Offer;

h) Letter dated November 28, 2002 from Deutsche Bank confirming deposit of at least 1% of Offer obligation in the escrow accountand a lien marked in favour of Manager to the Offer;

i) Copy of Bank Guarantee;

j) Copy of the Order;

k) Copy of agreement with Depository Participant for opening a special depository account for the purpose of the Offer;

l) Copy of the public announcement and letter of offer made to the shareholders of FAG AG by INA;

m) Copy of the control agreement dated April 19, 2002 between INA and FAG AG.

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10. DECLARATION BY THE ACQUIRER (INCLUDING PAC)

The Board of Directors of the Acquirer and PAC accept full responsibility for the information contained in this Letter of Offer, Form ofAcceptance-cum-Acknowledgement and Form of Withdrawal. The Acquirer including PAC shall be jointly and severally responsible forensuring compliance of the Regulations. All information contained in this document is as on the date of the Public Announcement,unless stated otherwise. Mr. Klaus Deißenberger, has been authorized by the Board of Directors of INA VermögensverwaltungsgesellschaftmbH and FAG Kugelfischer Georg Schaefer AG to be the authorized signatory to the Letter of Offer.

By the Order of the Board,

ForINA Vermögensverwaltungsgesellschaft mbHFAG Kugelfischer Georg Schaefer AG

sd/-

Place : Herzogenaurach, Germany Date : January 7, 2003

Attached : (1) Form of Acceptance-cum-Acknowledgement

(2) Form of Withdrawal

FORM OF ACCEPTANCE-CUM-ACKNOWLEDGEMENTFrom :

Name :Address :

To,MCS LimitedSri Venkatesh Bhavan, Plot No. 27, Road No. 11, MIDC Area, Andheri (East), Mumbai 400 093

Sr. No Ledger Folio No. Certificate No. Distinctive Nos. No. of Shares

From To

Total No. of Shares

Signed and Delivered FULL NAME(S) OF THE HOLDER (S) AND ADDRESS SIGNATURE(S)

First/Sole Holder

Joint Holder 1

Joint Holder 2

Joint Holder 3

Note: In case of joint holdings, all shareholders must sign.Place : Date :So as to avoid fraudulent encashment in transit, the shareholder(s) may provide details of bank account of the first/sole shareholder and the consideration chequeor demand draft will be drawn accordingly. In case of beneficial owners, the consideration cheque/ demand draft will be drawn as per the bank details obtainedfrom their respective depository accounts.

Dear Sir,Sub :Open Offer for purchase of up to 33,23,454 fully paid-up equity shares of FAG India representing 20% of its total voting capital at an offer price

of Rs.41.22/- per equity share, which comprises of a base offer price of Rs.36.82 per equity share and interest of Rs.4.40 per equity share, withthe interest being computed at the rate of 10% per annum for the period from January 9, 2002 to March 20, 2003, the date of actual paymentof consideration for shares offered and accepted in the offer (the interest amount is subject to change depending upon the actual date ofpayment), by INA Vermögensverwaltungsgesellschaft mbH (“Acquirer”) and FAG Kugelfischer Georg Schaefer AG (“PAC”)

I/We refer to the Letter of Offer dated January 7, 2003 for acquiring the equity shares held by me/us in FAG India.I/We, the undersigned have read the Letter of Offer and understood its contents including the terms and conditions as mentioned therein.I/We, holding shares in physical form, accept the Offer and enclose the original share certificate(s) and duly signed transfer deed(s) in respect of my/our shares asdetailed below.

DP’s Name & ID Client ID No. of Shares

I/We holding shares in demat form accept the Offer and enclose photocopy / counterfoil of the delivery instruction duly acknowledged by DP in respect of my equityshares as detailed below.

I/We confirm that the equity shares of FAG Bearings India Limited which are being tendered herewith by me/us under this Offer, are free from liens, charges andencumbrances of any kind whatsoever.I/We note and understand that the original share certificate(s) and valid share transfer deed(s) will be held in trust for me/us by the Registrar to the Offer untilthe time the Acquirer/ PAC makes payment of purchase consideration as mentioned in the Letter of Offer. I/We also note and understand that the Acquirer/ PACwill pay the purchase consideration only after verification of the documents and signatures.I/We have done an off market transaction for crediting the shares to the special depository account for which necessary instructions have been given to my/ourDP. I/We note and understand that the Shares would lie in the special depository account till the time the Acquirer/PAC makes payment of purchase considerationas mentioned in the Letter of Offer.I/We authorise the Acquirer/PAC to accept the shares so offered which they may decide to accept in consultation with the Manager to the Offer and in terms ofthe Letter of Offer and I/we further authorise the Acquirer to return to me/us, equity share certificate(s) in respect of which the Offer is not found valid/not accepted,specifying the reasons thereof.I/We authorise the Acquirer/PAC to send by registered post for amounts exceeding Rs.1,500/- and UPC otherwise, the draft/cheque, in settlement of the amountto the sole/first holder at the address mentioned below.Yours faithfully,

Name of the Bank Account No. Savings/Current/(Others: Please specify)

Address of the Branch Pin

---------------------------------------------------------------------------------------------- Tear along this line --------------------------------------------------------------------------------------------------ACKNOWLEDGEMENT SLIP

Received from Mr./Ms. __________________________________________________________________________________________________________________Address _____________________________________________________________________________________________________________________________Physical shares: Folio No. ________________ / Demat shares: Client ID________________ ; DP ID ________________ ;Form of Acceptance along with :o Physical shares: No. of shares- ____________________ ; No. of certificates enclosed- ______________________o Demat shares: Copy of delivery instruction for __________________________________ number of shares enclosed(Tick whichever is applicable)

Signature of Official _______________________ Date of Receipt _____________________

Stamp of collection centre

OFFER

OPENS ON January 20, 2003

CLOSES ON February 18, 2003

"

"

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Note : All future correspondence, if any, should be addressed to Registrar to the Offer

MCS Limited(Unit : FAG Bearings India Limited)

Plot No. 27, Road No. 11, MIDC Area, Andheri (East), Mumbai 400 093Phone: (022) 2821 5235 Fax: (022) 2835 0456

FORM OF WITHDRAWALFrom :

Name :

Address :

To,MCS LimitedSri Venkatesh Bhavan, Plot No. 27, Road No. 11, MIDC Area, Andheri (East), Mumbai 400 093

Sub : Open Offer for purchase of up to 33,23,454 fully paid-up equity shares of FAG India representing 20% of its total voting capital at an offer priceof Rs.41.22/- per equity share, which comprises of a base offer price of Rs.36.82 per equity share and interest of Rs.4.40 per equity share, withthe interest being computed at the rate of 10% per annum for the period from January 9, 2002 to March 20, 2003, the date of actual paymentof consideration for shares offered and accepted in the offer (the interest amount is subject to change depending upon the actual date ofpayment), by INA Vermögensverwaltungsgesellschaft mbH (“Acquirer”) and FAG Kugelfischer Georg Schaefer AG (“PAC”)

I/We refer to the Letter of Offer dated January 7, 2003 for acquiring the equity shares held by me/us in FAG India.I/We, the undersigned have read the Letter of Offer and understood its contents including the terms and conditions as mentioned therein.I/We hereby consent unconditionally and irrevocably to withdraw my/our shares from the Offer and I/we further authorise the Acquirer to return to me/us, thetendered equity share certificate(s)/ share(s) at my/our sole risk.I/We note that upon withdrawal of my/our Shares from the Offer, no claim or liability shall lie against the Acquirer/ PAC/ Manager to the Offer/ Registrar to theOffer.I/We note that this Form of Withdrawal should reach the Registrar to the Offer at any of the collection centres mentioned in the Letter of Offer or as mentionedoverleaf as per the mode of delivery indicated therein on or before the last date of withdrawal i.e. February 13, 2003.I/We note that the Acquirer/ PAC / Manager to the Offer/Registrar to the Offer shall not be liable for any postal delay/loss in transit of the Shares held in physicalform and also for the non receipt of Shares held in the dematerialised form in the DP account due to inaccurate/incomplete particulars/instructions.I/We also note and understand that the Acquirer/ PAC will return the original share certificate(s), share transfer deed(s) and Shares only on completion of verificationof the documents, signatures and beneficiary position as available from the Depositories from time to time.The particulars of tendered original share certificate(s) and duly signed transfer deed(s) are detailed below:

Sr. No Ledger Folio No. Certificate No. Distinctive Nos. No. of Shares

From To

Total No. of Shares

I/We note that the Shares will be credited back only to that Depository Account, from which the Shares have been tendered and necessary standing instructions havebeen issued in this regard.I/We confirm that the particulars given above are true and correct.In case of dematerialised Shares, I/we confirm that the signatures have been verified by the DP as per their records and the same have been duly attested.Yours faithfully,

OFFER

OPENS ON January 20, 2003

LAST DATE FOR WITHDRAWAL February 13, 2003

CLOSES ON February 18, 2003

I/We hold the following Shares in dematerialised form and had done an off-market transaction for crediting the Shares to the “MCS Ltd - Escrow A/c FAG India OpenOffer” as per the following particulars:-

Name of the Depository Participant Depository Identification No. (DP ID) Client Identification No. (Beneficial Client ID)

MCS Limited IN 300167 10011228

DP’s Name & ID Client ID No. of Shares

Please find enclosed a photocopy of the depository delivery instruction(s) duly acknowledged by DP. The particulars of the account from which my/our Shares havebeen tendered are as detailed below:-

Signed and Delivered FULL NAME(S) OF THE HOLDER (S) AND ADDRESS SIGNATURE(S)

First/Sole Holder

Joint Holder 1

Joint Holder 2

Joint Holder 3

Note: In case of joint holdings, all shareholders must sign.Place : Date :

---------------------------------------------------------------------------------------------- Tear along this line --------------------------------------------------------------------------------------------------

ACKNOWLEDGEMENT SLIPReceived Form of Withdrawal from Mr./Ms. _________________________________________________________________________________________________

Address _____________________________________________________________________________________________________________________________

Physical shares: Folio No. ________________ / Demat shares: Client ID________________ ; DP ID ________________ ;

for _____________ number of shares.

Signature of Official _______________________ Date of Receipt _____________________

Stamp of collection centre

"

"

INSTRUCTIONS

1. Shareholders desirous of withdrawing their acceptances tendered in the Offer can do so up to three working days prior to the date of closureof the Offer, i.e. February 13, 2003.

2. The withdrawal option can be exercised by submitting the Form of Withdrawal, duly signed and completed, along with the copy ofacknowledgement slip issued at the time of submission of the Form of Acceptance-cum-Acknowledgement.

3. The Form of Withdrawal along with enclosure should be sent only to the Registrar to the Offer so as to reach the Registrar of the Offer at anyof the collection centres below on all days (excluding Sundays and bank holidays): Monday to Friday - 10.00 a.m. to 1.00 p.m. and 2.00 p.m.to 4.00 p.m.; Saturday – 10.00 a.m. to 1.00 p.m.:

Collection Centres

Address Contact Person Mode of Delivery Telephone No. Fax. No.

MCS Limited Mr. Ashok Gupta Hand Delivery/ (022) 2821 5235 (022) 2835 0456Sri Venkatesh Bhavan, Registered PostPlot No. 27, Road No. 11,MIDC Area, Andheri (East),Mumbai 400 093India

MCS Limited Mr. Rajendra G. Hand Delivery (022) 2269 1266 (022) 2269 1567C/o Ghia Textile Products Co.Agra Building, 1st Floor,Room No. 5,Above Bank of Baroda,University Branch,121 M G Road, Fort,Mumbai 400 001India

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Note : All future correspondence, if any, should be addressed to Registrar to the OfferMCS Limited

(Unit : FAG Bearings India Limited)Plot No. 27, Road No. 11, MIDC Area, Andheri (East), Mumbai 400 093

Phone: (022) 2821 5235 Fax: (022) 2835 0456

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