Draft Letter of OfferJanuary 14, 2013

For Eligible Equity Shareholders only

Shivalik Bimetal Controls Limited(Our Company was originally incorporated as Shivalik Bimetal Controls Private Limited on June 18, 1984 under the Companies Act, 1956 with the Registrar of Companies Punjab, Chandigarh and Himachal Pradesh. Our Company was converted into public limited company on February 14, 1985 and the name of

our Company was changed to Shivalik Bimetal Controls Limited). The Corporate Identification Number of the Company is L27101HP1984PLC005862.Registered Office: 16-18, New Electronics Complex, Chambaghat, Dist. Solan, Himachal Pradesh - 173 213

Tel No: +91 1792 230175, 230578; Fax No: +91 1792 230475Corporate Office: H-2, Suneja Chambers, 2nd Floor, Alaknanda Commercial Complex, New Delhi - 110 019

Tel No: +91 11 2602 7174, 2602 8175; Fax No: +91 11 2602 6776Compliance Officer: Mr. Ram Parvesh, Company Secretary

E-mail: shivalik@shivalikbimetals.com; Website: www.shivalikbimetals.com

FOR PRIVATE CIRCULATION TO THE ELIGIBLE EQUITY SHAREHOLDERS OF SHIVALIK BIMETAL CONTROLS LIMITED ONLYDRAFT LETTER OF OFFER

ISSUE OF [●] EQUITY SHARES OF FACE VALUE OF ` 2 EACH (“EQUITY SHARES”) OF SHIVALIK BIMETAL CONTROLS LIMITED (“SHIVALIK” OR THE “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF ` [●] (INCLUDING SHARE PREMIUM OF ` [●]) PER EQUITY SHARE (“ISSUE PRICE”) FOR AN AGGREGATE AMOUNT NOT EXCEEDING ` 1,500 LAKHS TO THE ELIGIBLE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [●] EQUITY SHARES FOR EVERY [●] EQUITY SHARES HELD BY THE ELIGIBLE EQUITY SHAREHOLDERS ON THE RECORD DATE, I.E. [●], ALONGWITH ONE DETACHABLE WARRANT (REFERRED TO AS THE “WARRANT(S)”) FOR EVERY ONE EQUITY SHARE OFFERED IN THE ISSUE (THE “ISSUE”). THE ISSUE PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARES.ON EXERCISE, EACH WARRANT SHALL BE ENTITLED TO ISSUE AND ALLOTMENT OF ONE EQUITY SHARE OF FACE VALUE ` 2 EACH AT A PREMIUM. FOR FURTHER DETAILS, PLEASE REFER TO “OFFERING INFORMATION” ON PAGE 122 OF THE DRAFT LETTER OF OFFER.

PAYMENT TERMS FOR EQUITY SHARESAmount payable per Equity Share Face Value (`) Premium (`) Total (`)On application 1/- [●] [●]On first and final call 1/- [●] [●]Total 2/- [●] [●]No amount is payable for the warrants at the time of allotment of equity shares under the Rights Issue.For more information on the payment terms and Warrants, refer to the Chapter titled “Offering Information” on page 122 of the Draft Letter of Offer.

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

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

LISTINGThe existing Equity Shares of the Company are listed on BSE Limited (BSE). We have received “in-principle” approval from BSE for listing the Equity Shares to be Allotted in the Issue vide its letter dated [●]. For the purpose of this Issue, the Designated Stock Exchange is BSE.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUESPA Capital Advisors LimitedSEBI Reg. No.: INM 00001082525, C - Block Community Center,Janak Puri, New Delhi - 110 058Tel.: +91 11 4567 5500, 2551 7371Fax: +91 11 2553 2644E-mail: shivalik.rights@spagroupindia.comInvestor Grievance e-mail id: grievances.mb@spagroupindia.comWebsite: www.spacapital.comContact Person: Mr. NitiN Somani / Mr. Abhishek Jain

MAS Services LimitedSEBI Regn. No.: INR 000000049T - 34, IInd Floor, Okhla Industrial Area, Phase IINew Delhi - 110 020Tel.: +91 11 2638 7281 - 83Fax: +91 11 2638 7384E-mail: info@masserv.comInvestor Grievance e-mail id: sblr@masserv.comWebsite: www.masserv.comContact Person: Mr. N C Pal

ISSUE PROGRAMMEISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT

APPLICATION FORMSISSUE CLOSES ON

[●] [●] [●]

INDEX

TITLE PAGE NO.

DEFINITION AND ABBREVIATIONS…………………………………………………………………….. 1 CURRENCY OF FINANCIAL REPRESENTATION AND USE OF MARKET DATA…………………... 5 FORWARD LOOKING STATEMENT……………………………………………………………………… 6 RISK FACTORS……………………………………………………………………………………………… 7 THE ISSUE…………………………………………………………………………………………………… 18 SUMMARY OF FINANCIAL INFORMATION…………………………………………………………….. 19 GENERAL INFORMATION………………………………………………………………………………… 25 CAPITAL STRUCTURE……………………………………………………………………………………... 28 OBJECTS OF THE ISSUE…………………………………………………………………………………… 32 STATEMENT OF TAX BENEFITS…………………………………………………………………………. 39 SUMMARY OF OUR BUSINESS…………………………………………………………………………… 48 HISTORY AND CERTAIN CORPORATE MATTERS…………………………………………………….. 51 OUR MANAGEMENT. ……………………………………………………………………………………… 55 OUR PROMOTERS…………………………………………………………………………………………... 59 FINANCIAL STATEMENTS………………………………………………………………………………... 60 UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS FOR 6 MONTHS PERIOD ENDED SEPTEMBER 30, 2012……………………………………………………………………………... 85CAPITALIZATION STATEMENT………………………………………………………………………….. 103 STATEMENT OF ACCOUNTING RATIOS………………………………………………………………... 104 CERTAIN OTHER FINANCIAL INFORMATION (WORKING RESULTS)……………………………... 105 STOCK MARKET DATA……………………………………………………………………………………. 106 FINANCIAL INDEBTEDNESS……………………………………………………………………………… 108 OUTSTANDING LITIGATIONS……………………………………………………………………………. 110 GOVERNMENT AND OTHER APPROVALS……………………………………………………………… 112 OTHER REGULATORY AND STATUTORY INFORMATION…………………………………………... 114 OFFERING INFORMATION…………..……………………………………………………………………. 122 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION…………………………………….. 151 DECLARATION……………………………………………………………………………………………… 152

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DEFINITIONS AND ABBREVIATIONS

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

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

Unless the context otherwise requires, refers to, Shivalik Bimetal Controls Limited, a public limited company incorporated under the Companies Act, 1956

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

The Statutory Auditors of our Company, M/s Malik S & Co., Chartered Accountants, 1/101, (LGF), Old Rajinder Nagar, Sir Ganga Ram Hospital Marg, New Delhi - 110 060

Board of Directors / Board The Board of Directors of our Company, unless specified otherwise Directors / our Directors The Director(s) on the Board of our Company, unless otherwise specified Group Companies Companies, firms, ventures, etc. promoted by the Promoters of our Company, including

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

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

Promoter(s) The promoters of our Company namely, Mr. Narinder Singh Ghumman and Mr. Satinder Jeet Singh Sandhu.

Promoter Group

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

Registered Office Registered Office of our Company situated at 16-18, New Electronics Complex, Chambaghat, Dist. Solan, Himachal Pradesh - 173 213

Issue Related Terms

Term Description Abridged Letter of Offer

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

Allotment / Allotted Unless the context otherwise requires, the allotment of Equity Shares pursuant to the Issue Allottee(s) Persons to whom our Equity Shares will be issued pursuant to the Issue Applicant(s) / Investor(s) Eligible Equity Shareholders and / or Renouncees who are entitled to apply or have

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

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

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

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

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

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

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

Banker(s) to the Issue [●]

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Term Description Composite Application Form / CAF

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

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

Controlling Branches of the SCSBs

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

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

Designated Stock Exchange

The Designated Stock Exchange for this Issue shall be BSE Limited

Draft Letter of Offer The Draft Letter of Offer dated January 14, 2013, filed with SEBI for its observations, which does not contain complete particulars of the Issue.

Eligible Equity Shareholder(s)

Equity Shareholders of the Company as on the Record Date

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

Controls Limited (“Shivalik” or the “Company” or the “Issuer”) for cash at a price of ` [●] (including share premium of ` [●]) per Equity Share (“Issue Price”) for an aggregate amount not exceeding ` 1,500 lakhs to the Eligible Equity Shareholders on rights basis in the ratio of [●] Equity Shares for every [●] Equity Shares held by the Eligible Equity Shareholders on the record date, i.e. [●], alongwith one Detachable Warrant (referred to as the “Warrant(s)”) for every one Equity Share offered in the issue.

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

basis which are allotted pursuant to the Issue Issue Size The issue of [●] Equity Shares aggregating to ` 1,500 lakhs Lead Manager SPA Capital Advisors Limited Letter of Offer The Letter of Offer dated [●] filed with the Stock Exchange after incorporating the

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

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

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

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

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

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

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

Record Date [●] Registrar / Registrar to the Issue

MAS Services Limited

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

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

Self Certified Syndicate Bank / SCSB

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

Share Certificate The certificate in respect of the Equity Shares allotted to a folio Stock Exchange BSE Limited, where our Equity Shares are presently listed Warrant(s) Detachable warrants (optionally convertible) being issued to every person whom Equity

Shares shall be allotted pursuant to the Issue in the ratio of one Warrant per Equity Share offered in accordance with the terms and conditions as mentioned in the Chapter “Offering Information” on page 122 of the Draft Letter of Offer. Each such detachable Warrant shall be listed and tradable on the Stock Exchange.

Warrant Exercise Period The exercise period of Warrant shall be from February 01, 2014 to February 15, 2014. Warrant Exercise Price The warrant exercise price shall be an amount that is at a discount of 25% to the then

prevailing market price of the equity shares of the Company at the time of exercise of warrants. Since the warrant exercise price is based on the then prevailing market price of the equity shares, there is no adjustment required to be made in the warrant exercise price in case of any corporate event like bonus, split or consolidation of equity shares. Provided, however, the Warrant Exercise Price, shall at no time be lower than the face value of the underlying equity shares. The “then prevailing market price” shall be the average of the daily closing prices of the equity shares on the stock exchange during the two weeks period immediately preceding the date of commencement of the Warrant Exercise Period. The Warrant exercise price would be advertised by us in an English National Daily and one Hindi National Daily with wide circulation (including the place where our Registered Office is situated). The said warrant exercise price shall be advertised within three working days of the beginning of warrant exercise period.

Working Day Any day, other than Saturday or Sunday or public holidays, on which commercial banks in India are open for business.

Conventional and General Terms

Term Description BIFR Board for Industrial and Financial Reconstruction BSE BSE Limited Companies Act The Companies Act, 1956, as amended CDSL Central Depository Services (India) Limited

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Term Description Depositories Act The Depositories Act, 1996, as amended from time to time Depository / Depositories A depository registered with SEBI under the SEBI (Depositories and Participant)

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

Depository Participant / DP A depository participant as defined under the Depositories Act ECS Electronic Clearing System EGM Extra Ordinary General Meeting EPS Earnings per Equity Share Foreign Institutional Investor / FII

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

Financial Year / Fiscal Year / FY Twelve months ending on March 31 of a particular year FIs Financial Institutions FVCI Foreign venture capital investor, registered with SEBI under the SEBI (Foreign

Venture Capital Investor) Regulations, 2000 HUF Hindu Undivided Family Indian GAAP The generally accepted accounting principles in India Listing Agreement The equity listing agreement signed between our Company and the Stock Exchange Non Residents All Bidders who are not NRIs or FIIs and are not persons resident in India NSDL National Securities Depository Limited RBI Reserve Bank of India RONW Return on Net Worth RTGS Real Time Gross Settlement SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992,

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

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

Takeovers) Regulations, 2011, as amended

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CURRENCY OF FINANCIAL PRESENTATION

In the Draft Letter of Offer, unless the context otherwise requires, all references to one gender also refers to another gender and the word “Lac / Lakh” means “one hundred thousand”, the word “million (mn)” means “ten lac / lakh”, the word “Crore” means “ten million” and the word “billion (bn)” means “one hundred crore”. In the Draft Letter of Offer, any discrepancies in any table between total and the sum of the amounts listed are due to rounding-off. Throughout the Draft Letter of Offer, unless otherwise stated, all figures have been expressed in thousands (’000) and / or lakhs. Unless indicated otherwise, the financial data in the Draft Letter of Offer is derived from our Company’s audited financial statements as on March 31, 2012 prepared in accordance with Indian GAAP, applicable accounting standards and guidance notes issued by the ICAI, the applicable provisions of the Companies Act and other statutory and / or regulatory requirements, and the unaudited financial statements as at and for the six months period ended September 30, 2012 which have been subject to limited review in accordance with the “Accounting Standard 25 - Interim Financial Reporting” issued pursuant to the Companies (Accounting Standard) Rules, 2006 and are included in the Draft Letter of Offer as required under the SEBI ICDR Regulations. Unless indicated otherwise, the operational data in the Draft Letter of Offer is presented on a basis and refers to the operations of our Company. In the Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. There are significant differences between Indian GAAP and U.S. GAAP; accordingly, the degree to which the Indian GAAP financial statements included in the Draft Letter of Offer will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practice and Indian GAAP. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in the Draft Letter of Offer should accordingly be limited. We have not attempted to explain those differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data. For additional definitions used in the Draft Letter of Offer, see the section ‘Definitions and Abbreviations’ on page 1 of the Draft Letter of Offer.

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

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FORWARD LOOKING STATEMENTS

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

national economies; Increasing competition in or other factors affecting the industry segments in which our Company operates; Changes in laws and regulations relating to the industries in which we operate; Our ability to meet our capital expenditure requirements and/or increase in capital expenditure; Fluctuations in operating costs and impact on the financial results; Our ability to attract and retain qualified personnel; Changes in technology in future; Changes in political and social conditions in India or in countries that we may enter, the monetary policies of

India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

The performance of the financial markets in India and globally; and Any adverse outcome in the legal proceedings in which we are involved. For a further discussion of factors that could cause our actual results to differ, please refer to “Risk Factors” on page 7 of the Draft Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither we nor the Lead Manager make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. Neither we nor the Lead Manager nor any of their respective affiliates or advisors have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI / Stock Exchange requirements, we and Lead Manager will ensure that the Eligible Equity Shareholders are informed of material developments until the time of the grant of listing and trading permissions by the Stock Exchange.

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RISK FACTORS

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

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

Nature of litigation No. of cases Amount (` in lakhs) Civil matters 4 949.72 Income Tax Notice 1 1 - Service Tax Show Cause Notice 2 13 438.10

1 The amount cannot be ascertained. 2 The said amount is excluding interest and penalty, if any.

In addition to aforesaid, we have also filed a compounding application with the Registrar of Companies, Punjab, Chandigarh and Himachal Pradesh with respect to the transactions undertaken by us with our Joint Venture and Associate companies without prior approval under section 297 of the Companies Act. We cannot provide any assurance that these matters will be decided in our favour. Further, there is no assurance that similar proceedings will not be initiated against us in the future. For further details of the cases mentioned above, please see “Outstanding Litigations” on page 110 of the Draft Letter of Offer.

2. The funding requirements and the deployment of the proceeds of the Issue are based on management

estimates and have not been independently appraised. Further, the deployment of the Issue proceeds is entirely at our discretion and is not subject to any monitoring by an independent agency.

Our funding requirements and the deployment of the proceeds of the Issue are based on management estimates and have not been appraised by any bank or financial institution. Further, such estimates are based on market conditions and management expectations as of the date they were made. In view of the nature of the industry in which we operate, we may have to revise our management estimates from time to time and consequently our funding requirements may also change. Significant revisions to our funding requirements or the deployment of Issue proceeds may result in the rescheduling of our resource raising programs and an increase or decrease in our proposed expenditure for a particular object.

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Further we have not appointed any independent monitoring agency to monitor the utilization of the proceeds raised from this Issue. The Issue proceeds will be utilized at the sole discretion of the Board of Directors of our Company. For further details please refer to section titled “Objects of the Issue” on page 32 of the Draft Letter of Offer.

3. We have not yet entered into definitive agreements to utilize the entire proceeds of the Issue. Any delay in

finalization and placement of order for machinery, equipments and other assets, for which orders have not been placed, may have cost over run and impact our future probability.

We have not entered into any definitive agreement or placed orders for purchase of machinery and other assets aggregating ` 694.20 lakhs out of the total requirement of machinery for ` 1,806.24 lakhs for setting up of the unit for which funds are proposed to be raised through this Issue. Whilst the quotations obtained by us for equipment, installations and building work in connection with such projects are described in “Objects of the Issue” on page 32 of the Draft Letter of Offer, such costs are subject to change in the light of various factors beyond our control, including delays or increase in quoted prices by identified vendors. Further, plant & machinery imported for the project and kept at rented premises in Roz ka Meo, Dist. Mewat, Haryana has to be shifted and erected at the site on development and construction of factory building as per layout plans. Our inability to complete the identified projects as per the stated schedules of implementation may lead to cost overruns and may impact our future profitability.

Also the requirement of Computers, Furniture & Fixtures and Clearing & Shifting expenses relating to imported machinery aggregating to ` 63.61 lakhs are purely management estimates and not based on quotations from vendors.

4. We may face difficulties in executing our strategy including our expansion cum modernisation plans for

our manufacturing facilities, and there can be no assurance that our planned capital expenditures will result in growth and / or additional profitability for our Company.

Our proposed expansion and modernisation of operations requires capital expenditures for ` 3,313.15 lakhs. Further, we may make substantial investments in the future for establishing new manufacturing facilities and upgrading our existing manufacturing facilities. so that they comply with the international standards. Delays in the construction and equipping or expansion of our facilities could result in loss or delayed receipt of earnings, increase in financing and construction costs, and our failure to meet profit and earnings budgets may require us to reschedule or reconsider our planned capacity expansions and accordingly would have an adverse effect on our financial condition and results of operations.

For further information, see “Objects of the Issue” on page 32 of the Draft Letter of Offer.

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

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

The Bimetal industry is highly competitive. Growing competition may subject us to pricing pressures and require us to reduce the prices of our products and services in order to retain or attract customers, which may have a material adverse effect on our revenues and margins. Further, several of our competitors are large international companies. and have access to greater resources or may be able to develop or acquire technology or partner with innovators or customers at terms which are not presently feasible for us. Any failure to keep abreast with technological advancements might place our competitors at an advantageous position in terms of cost, efficiency and timely delivery of final products. while we undertake research and development (“R & D”) to develop cost and time efficiencies and to broaden our product range, in particular in certain niche segment, In the event our competitors develop better process technology or improved process yield or are able to source raw materials at competitive prices, and are therefore able to create new products or substitutes for our products at competitive prices, we may not be able to maintain our growth rate and revenues and our profitability may decline. Any of these factors may have a material adverse effect on our business and prospects.

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6. We have not applied for certain regulatory approval required for setting up of the unit for which the funds are proposed to be raised through this Issue. Failure to apply for such approval in time or rejection of our application may adversely affect our expansion plans. Further, our Company requires a number of approvals, licenses, registrations and permits for its business(es) and the failure to obtain or renew them in a timely manner may adversely affect its operations.

Our Company has received single window clearance for setting proposed manufacturing unit and approval for purchase of land, subsequent to which the land has been purchased. We have not applied for further regulatory approvals required for setting up of unit for which the funds are proposed to be raised through this Issue. The applications for such approvals will be made after placing the complete orders for plant & machineries or on receipt of the same.

We require a number of approvals, licenses, registrations and permits for our business(s). Additionally, we may need to apply for renewal of approvals which expire, from time to time, as and when required in the ordinary course. In absence of grant of such renewal, we may not be able to carry on our manufacturing operations.

For more information, please refer section titled “Government and Other Approvals” on page 112 of the Draft Letter of Offer. Furthermore, the government approvals and licenses are subject to various conditions. If we fail to comply, or a regulator claims that our Company has not complied with these conditions, our business, financial position and operations would be materially adversely affected.

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

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

We have availed of several loans and financial facilities from Indian Bank. In respect of various agreements entered into by our Company with our Lender and sanction letters issued by them to us, we are bound by certain restrictive covenants regarding capital structure and other general restrictive covenants. The major restrictive covenants as imposed by the lenders on our Company are as under: Our Company shall not, during the continuance of this loan, without written consent of the Bank: Change or in any way alter the capital structure of the Company Effect any scheme of amalgamation or reconstruction Revalue the assets of the Company Declare a dividend or distributable profits after deduction of taxes, except where the installment of

principal and interest payable to the Bank are being paid regularly Enlarge the scope of other manufacturing / trading activities Borrow or obtain credit facilities of any description from any other bank Any material changes in the project

Further, our immovable properties and plant and machinery are charged to lenders / Bank as per the terms and conditions of the term loan agreement. For details of the loans availed and assets charged, please refer to section titled "Financial Indebtedness" on page 108 of the Draft Letter of Offer. In compliance with such restrictive covenants, we have obtained the consent from our Banker, Indian Bank vide their letter dated December 28, 2012 for the proposed issue.

8. Any downgrade of our Company’s credit ratings would increase borrowing costs and constrain its access

to capital and, as a result, would negatively affect its business operations and profitability.

The cost and availability of capital is inter alia dependent on our Company’s short-term and long-term credit ratings. Ratings reflect a rating agency's opinion of our Company’s financial strength, operating performance, strategic position, and ability to meet our Company’s obligations. Our Company holds ratings from CARE of BBB- (indicating moderate safety) for its long term bank facilities and BBB- / A3 (indicating moderate safety) for its fund based facilities from Indian Bank. In relation to the non fund based facilities, our Company holds the rating of A3 (indicating moderate safety) from CARE. The ratings have been modified from BBB+ to BBB- and downgraded from A2 to A3 in the past as a result of falling profitability,

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stretched operating cycle, declining revenue contribution from its color picture tube segment and exposure to foreign exchange fluctuation risk. Any further downgrade of our Company’s credit ratings may increase borrowing costs and constrain its access to capital and debt markets, and, as a result, would negatively affect its business operations and profitability. In addition, downgrades of its credit ratings could increase the possibility of additional terms and conditions being added to any additional financing or refinancing arrangements in the future. Any such adverse development could adversely affect our Company’s business, future financial performance and results of operations.

9. We may face a risk on account of not meeting our export obligations.

We have obtained Advance License and licences under Export Promotion Capital Goods (EPCG) scheme. As per the licencing requirement under the said scheme, we are required to fulfill the export obligation of 6 times of the duty saved on the EPCG Licenses, over the next 6 years from the date of import of the Capital Goods. The total duty forgone on all EPCG Licenses is to the tune of ` 456 lakhs. Further, we also have to export goods under Advance License against the goods imported by us. Any failure to meet our export obligations will make us liable to pay to the Government of India, an amount equivalent to the duty benefit enjoyed by our Company under the said scheme along with interest. As on September 30, 2012, we have an aggregate export obligation of ` 703.04 lakhs.

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

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

We have entered into a number of related party transactions with our Promoter, Promoter Group entities, Directors / Key managerial Personnel and relatives of Key Managerial Personnel. Such transactions or any future transactions with related parties may potentially involve conflicts of interest and impose certain liabilities on our Company. The summary details of the related party transactions entered by us during the financial year ended March 31, 2012 and six months period ended September 30, 2012 are as under:

(` in ‘000) Sr. No.

Particulars September 30, 2012

March 31, 2012

1 Purchase of equity shares - 47,128 2 Rent received 202 397 3 Job work expense 360 - 4 Job work income - 446 5 Goods sold 12 537 6 Goods purchased 1773 6,296 7 Other expenses 34 517 8 Managerial Remuneration 11512 14,723 9 Professional Fees paid 375 875

10 Remuneration paid pursuant to Section 314 of the Companies Act for holding an office or place of profit

1708 3,138

11 Rent paid 240 4,91212 Security Deposit - 1,350

Total 80,319 For further details on related party transactions, see the chapter titled “Financial Statements” on page 60 and “Unaudited Condensed Interim Financial Statements for 6 months period ended September 30, 2012” on page 85 of the Draft Letter of Offer. Our Company’s policy on transactions with related parties is that such transactions are conducted on normal commercial terms in the ordinary and normal course of business. Our Company may enter into additional transactions with its related parties in the future. Although regulations in India do require disclosure of related party transactions in a listed company’s financial statements, such regulations do not require shareholders’ approval or an independent assessment of connected or related party transactions. As a result, there is no independent verification that the terms of such transactions or that any of our Company’s transactions with its related parties will benefit our Company.

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

contingent liabilities materialize.

The table below sets forth our contingent liabilities not provided for as at September 30, 2012 and March 31, 2012, as per our audited restated consolidated financial statements:

(` in ‘000) Nature of Contingent Liability September 30, 2012 March 31, 2012

A. Contingent liabilities Bank Guarantee(s) submitted 15,742 11,211 Letters of credit established by the bank - 18,033 Bills discounted 16,879 17,843 Customs duty on material imported against Advance License / EPCG Scheme, for pending export obligation

70,304 62,350

Corporate Guarantee on behalf of JV / Associate Company

55,800 55,800

Surety with Sales Tax Department 500 500 B. Commitments Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for

10,100 14,517

Total 1,69,325 1,80,254

To the extent that any such contingent liabilities materialize, our financial condition may be adversely affected. For further information, see the chapter titled “Financial Statements” on page 60 and “Unaudited Condensed Interim Financial Statements for 6 months period ended September 30, 2012” on page 85 of the Draft Letter of Offer.

12. Our Company have availed unsecured loans from Ultra Portfolio Private Limited, one of our Promoter

Group Entity, aggregating to ` 294.05 lakhs as on November 30, 2012 of which an amount of ` 178.57 lakhs is repayable on demand. Re-payment of such loan, if called at short notice, may affect our cash flows adversely to such extent.

As on November 30, 2012, we have availed unsecured loans from Ultra Portfolio Private Limited, one of our Promoter Group Entity, aggregating to ` 294.05 lakhs, of which ` 178.57 lakhs is repayable on demand. If such loan which is repayable on demand is called at short notice, it may adversely affect our cash flows to such extent. For further details, refer to the section titled “Financial Indebtedness” on page 108 of the Draft Letter of Offer.

13. We are susceptible to volatility of prices of our raw material mainly Copper Strips / Brass Strips & Alloys,

various Nickel, Ferrous and Magnesium based alloys and stainless steel. Fluctuation in the prices of the same may adversely affect our results of operations.

A significant proportion (94%) of raw material we consume is imported. Our raw material includes Copper Strips / Brass Strips & Alloys, various Nickel, Ferrous and Magnesium based alloys and stainless steel. Raw material costs are dependent on global commodity prices which are subject to fluctuations. Also prices of stainless steel are subject to fluctuation, depending on, among other factors, the number of producers and their production volumes and changes in demand in the markets. Volatility in prices of raw material may adversely affect our profitability.

14. We have historically been dependent on a relatively small number of suppliers for a significant portion of

our purchases, and there is no assurance that we will be able to broaden our supplier base in any future periods. We do not currently have long term contracts or exclusive supply arrangements with any of our suppliers, and any major disruption to the timely and adequate supplies of our raw materials could adversely affect our business, results of operations and financial condition.

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In the past, we have been dependent on a relatively small number of suppliers for a significant portion of our purchases. During the financial year 2011-12, we have procured 90.64% of the requirement of our material from 5 suppliers. We do not have long term contracts or exclusive supply arrangements with any of our suppliers. We are therefore dependent on adequate and timely deliveries by our suppliers of necessary raw materials or equipment. In the event of a delay, inadequacy or default in deliveries by any of our suppliers, we may not be able to obtain substitutes on an adequate and timely basis or on commercially acceptable terms. Furthermore, it is possible that some of our existing suppliers may choose to discontinue operations, or offer more viable terms or enter into exclusive arrangements with our competitors. A major disruption to the timely and adequate supplies of our raw materials could adversely affect our business, results of operations and financial condition.

15. We may experience difficulties in expanding our business into new regions and markets in India and

abroad and introducing our complete range of products.

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

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

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

condition and results of operations.

Our Company cannot be certain, and cannot assure you, that it will be able to maintain its recoveries in relation to its debtors in the future. Moreover, as our Company’s business expands, it may experience increase in delay or defaults in payments by its debtors. Thus, if our Company is not able to managing its bad debts, the overall revenue realization will fall and its results of operations may be adversely affected. We have already filed three cases against our customers for recovery of the amount due, details of which are given under “Outstanding Litigations” on page 110 of the Draft Letter of Offer.

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

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

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

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

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

Our businesses are subject to rapid and significant changes in technology. Although we strive to keep our technology in accordance with the latest standards, the technologies currently employed may become obsolete or may be subject to competition from new technologies in the future. The cost of implementing new technologies or expanding capacity could be significant and could adversely affect our results of operations. We are also impacted by the change in the technologies used by our customers for their products. During the last five financial years, our sales revenue from parts of color picture tube segment was as under:

Year %age of revenue from parts for color picture tube segment March 31, 2012 13.35% March 31, 2011 29.06% March 31, 2010 38.24% March 31, 2009 36.53% March 31, 2008 37.27%

With reduced overall demand for television sets with picture tubes, the demand for our products have declined resulting in adverse impact on our business and results of operations. Any such change in technologies and reduced demand from our customer may adversely impact our revenues and results of operations.

19. Our Corporate Office has been taken on lease from five persons / entities, including one Promoter Group

Company. Any termination of the lease(s) or the other relevant agreements / mutual understanding in connection with such properties or our failure to renew the same in a favourable, timely manner, or at all, could adversely affect our activities.

Our Corporate office premises have been taken on lease by us from five different persons / entities, including one Promoter Group Company. Termination of the lease or other relevant agreements / mutual understanding in connection with such properties or our failure to renew the same, on favourable conditions, in a timely manner, or at all, could require us to vacate such premises at short notice and may adversely affect our operations, financial condition and profitability.

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

attract, train and retain such persons.

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

21. We could face currency exchange risks as a portion of our revenues are from exports and major raw

materials consumed by us are imported. Further we have also availed Buyers Credit for import of plant and machinery. Fluctuation in currency rates may adversely impact our results of operations.

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The exchange rate of foreign currency vis-à-vis Indian Rupee has changed substantially in recent years and may continue to fluctuate significantly in the future. In the financial year ended March 31, 2012, we derived 43.70% of our revenues from exports and 94% of the materials consumed were imported. Further, we have also availed Buyers Credit for purchase of second hand plant and machinery from Sandvik Heating Technology AB, Sweden. Accordingly, our operating results have been and will continue to be impacted by fluctuations in the exchange rate between the Indian Rupee and foreign currency. To hedge the exposure to movement in Foreign Exchange Rates, we enter into Foreign Exchange Forward Contracts. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the company does not use those for trading or speculation purposes.

22. Any future equity offerings or issue of options under future employee stock option scheme may lead to dilution of investor’s shareholding in our company.

Purchasers of Equity Shares in this Issue may experience dilution of their shareholding to the extent we make future equity offerings and to the extent we decide to grant options to be issued under an employee stock option scheme. We do not have any ESOP scheme currently.

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

flows, working capital requirements and capital expenditures.

Out of the last five financial years ended March 31, 2012, 2011, 2010, 2009 and 2008, our Company has declared dividend during the four financial years except for that ending March 31, 2012. The amount of our future dividend payments, if any, will depend upon our future earnings, financial condition, cash flows, working capital requirements and capital expenditures. There can be no assurance that we will be able to pay dividends.

24. We have not registered our corporate logo and have applied for registration of the same in the name of

our Company. If our application for such registration is not approved our brand building exercise could be affected.

Our intellectual properties consist of the logo being used by us. We have applied for registration of the same and our application is pending with the Registrar of Trademarks. We cannot give guarantee that our pending applications will be approved by the appropriate authorities. If our application for such registration is not approved our brand building exercise could be affected. For details of our trademark registration please refer to section titled “Government and Other Approvals” on page 112 of the Draft Letter of Offer.

25. Our Promoters may have the ability to determine the outcome of any shareholder resolution.

Our Promoter Group will continue to be the largest shareholders, holding 61.34% of equity capital of our company after the Issue, assuming full subscription by all the shareholders. As significant shareholder, our Promoters may have interests which may affect the interests of shareholders and /or our interests and may have the ability to determine the outcome of any shareholder resolution.

EXTERNAL RISK FACTORS 26. Any changes in the regulatory framework could adversely affect our operations and growth prospects.

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

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

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

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

adverse affects on our operations and financial performance.

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

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

affect our business.

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

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

significant adverse impact on international or Indian financial markets or economic conditions or on Government Policy. Such incidents could also create a greater perception that investment in Indian Companies involves a higher degree of risk and could have an adverse impact on our business and on the market price of our company’s equity shares.

31. Investors will not receive the Equity shares and Warrants subscribed and allotted in this issue until

several days after they have paid for them, which will subject them to market risk.

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

32. The market value of the Equity Shares and Warrants may fluctuate due to the volatility of the securities

markets.

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

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33. Future issues or sales of equity Shares of our company may significantly affect the trading price of the Equity Shares and Warrants.

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

34. The Rights Issue is of Equity Shares aggregating to ` 1,500 lakhs along with one Detachable Warrant per

Equity Share. If the warrant holder does not exercise his option to convert the warrant into Equity Share during the warrant exercise period, the same will lapse and our Company may not be able to raise funds on such lapsed warrants. This may adversely affect the cash flows and growth of our business.

For each Equity Share offered and allotted under this Issue, the allottee will receive one Detachable Warrant convertible into one Equity Share of our Company upon exercise. The Warrant holder can apply for allotment of Equity Shares of our Company within the Warrant Exercise Period. The Warrants can be freely and separately traded till the same are tendered for exercise. The warrant exercise price shall be an amount that is at a discount of 25% to the then prevailing market price of the Equity Shares of our Company at the time of exercise of Warrants. If the warrant holder does not exercise his option to convert the Warrant into Equity Share during the Warrant Exercise Period, the same will lapse and our Company may not be able to raise funds on such lapsed Warrants. This may adversely affect the cash flows and growth of our business.

35. There will not be any adjustment in the number of Equity Shares to be issued upon exercise of Warrants

in the event of further rights issue by our Company during the tenure of Warrants and this may result in dilution of your shareholding after such rights issue.

In case our Company decides to raise funds through a rights issue of Equity Shares during the tenure of the Warrants, no adjustment would be made in the share entitlement on Warrants and there would also not be any reservations for warrant holders in the rights issue which may result in dilution of the holding of warrant holders.

36. The Warrants will bear the risk of fluctuation in the price of the Equity Shares.

Stock markets have experienced extreme volatility in the recent past that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of the Equity Shares. There may be significant volatility in the market price of the Equity Shares. The market price of the Warrants is expected to be affected by fluctuations in the market price of the Equity Shares and it is impossible to predict whether the price of the Equity Shares will rise or fall. Any decline in the price of the Equity Shares may have an adverse effect on the market price of the Warrants.

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

(“shivalik” or the “company” or the “issuer”) for cash at a price of ` [●] (including share premium of ` [●]) per equity share (“issue price”) for an aggregate amount not exceeding ` 1,500 lakhs to the eligible equity shareholders on rights basis in the ratio of [●] equity shares for every [●] equity shares held by the eligible equity shareholders on the record date, i.e. [●], alongwith one detachable warrant (referred to as the “warrant(s)”) for every one equity share offered in the issue (the “issue”). The issue price is [●] times the face value of the equity shares. On exercise, each warrant shall be entitled to issue and allotment of one equity share of face value ` 2 each at a premium. For further details, refer to “Offering Information” on page 122 of the Draft Letter of Offer.

2. The average cost of acquisition of our Equity Shares by our Promoters, Mr. Narinder Singh Ghumman and Mr. Satinder Jeet Singh Sandhu is ` 1.34 and ` 1.61 per equity share respectively. The average cost of acquisition of Equity Shares by our Promoters has been calculated by taking the average of the amounts paid by them to acquire the Equity Shares currently held by them.

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3. The Net Worth of our Company as per Audited Accounts as on March 31, 2012 and Unaudited condensed

Interim Financial Statements as on September 30, 2012 is ` 5,148.47 lakhs and ` 5,170.93 lakhs respectively.

4. The Book Value per Equity Share of our Company as per Audited Accounts as on March 31, 2012 and Unaudited condensed Interim Financial Statements as on September 30, 2012 is ` 26.81 and ` 26.93 respectively.

5. No part of the issue proceeds will be paid as consideration to our Promoter, our Directors, our key managerial employees or our promoter group companies or ventures except as mentioned in section “Objects of the Issue” on page 32 of the Draft Letter of Offer.

6. Our Company has entered into certain related party transactions as disclosed in the “Financial Statements” on page 60 and “Unaudited Condensed Interim Financial Statements for 6 months period ended September 30, 2012” on page 85 of the Draft Letter of Offer.

7. Our Promoter Group, Directors and their relatives have not financed the purchase by any other person of the equity shares of our Company during the period of six months immediately preceding the date of filing of Draft Letter of Offer with the SEBI.

8. Trading in the Equity Shares of our Company for all investors shall be in dematerialized form only. For further details, see the section titled “Offering Information” on page 122 of the Draft Letter of Offer.

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

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

11. Investors may contact the BRLM, the Registrar to the Issue or the Compliance Officer for any complaints, clarifications, etc. pertaining to the Issue.

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THE ISSUE

The details of this Issue are set out below: Equity Shares proposed to be issued by the Company [●] Equity Shares Rights Entitlement [●] Equity Shares for every [●] Equity Shares held on

the Record Date alongwith one Warrant for every one Equity Share offered in the Issue

Record Date [●] Issue Price per Equity Share ` [●] Equity Shares outstanding prior to the issue 1,92,01,400 Equity Shares of ` 2/- each Equity Shares outstanding after the Issue but before exercise of Warrants, assuming full subscription

[●] Equity Shares of ` 2/- each

Equity Shares outstanding after the Issue and assuming full exercise of Warrants

[●] Equity Shares of ` 2/- each

Objects of the Issue Please refer to section “Objects of the Issue” on page 32 of the Draft Letter of Offer

Payment terms for Equity Shares

Amount payable per Equity Share Face Value (`) Premium (`) Total (`) On application 1/- [●] [●] On first and final call 1/- [●] [●] Total 2/- [●] [●]

No amount is payable for the warrants at the time of allotment of equity shares under the Rights Issue. For more information on the payment terms and Warrants, refer to the Chapter titled “Offering Information” on page 122 of the Draft Letter of Offer.

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SUMMARY OF FINANCIAL INFORMATION

The following tables set forth the summary financial information derived from our audited financial statements as on and for financial year ended March 31, 2012 prepared in accordance with Indian GAAP and the Companies Act and the Unaudited condensed Interim Financial Statements for the period ended September 30, 2012 prepared in accordance with Indian GAAP and should be read in conjunction with the financial statements and the notes (including the significant accounting principles) thereto included in the chapter “Financial Statements” on page 60 and “Unaudited Condensed Interim Financial Statements for 6 months period ended September 30, 2012” on page 85 of the Draft Letter of Offer. For the financial year ended March 31, 2012, based on the audited financial statements BALANCE SHEET AS AT 31ST MARCH 2012

(` in ‘000) Particulars Note

No. As at March 31,

2012 As at March 31,

2011 I. EQUITY AND LIABILITIES Shareholders’ funds (a) Share capital 3 38,403 38,403 (b) Reserves and surplus 4 476,443 450,098 Non-current liabilities (a) Long-term borrowings 5 115,451 25,407 (b) Deferred tax liabilities (Net) 6 15,789 22,698 (c) Other Long term liabilities 7 4,207 3,332 (d) Long-term provisions 8 1,882 2,116 Current liabilities (a) Short-term borrowings 9 332,372 251,184 (b) Trade payables 10 59,306 138,341 (c) Other current liabilities 11 95,658 47,614 (d) Short-term provisions 12 46,198 48,156 TOTAL 1,185,709 1,027,349

II. ASSETS Non-current assets (a) Fixed assets (i) Tangible assets 13 212,657 198,042 (ii) Intangible assets 13 1,159 50 (iii)Capital work-in-progress 13 134,936 929 (b) Non-current investments 14 165,523 119,523 (c) Long-term loans and advances 15 11,965 28,371 (d) Other non-current assets 16 79,998 59,337 Current assets (a) Current Investments 17 2,930 1,984 (b) Inventories 18 319,522 282,465 (c) Trade receivables 19 160,222 227,340 (d) Cash and cash equivalents 20 7,888 16,724 (e) Short-term loans and advances 21 87,064 90,331 (f) Other current assets 22 1,845 2,253 TOTAL 1,185,709 1,027,349

III. Notes forming part of the Financial Statements 1 to 40

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STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH 2012

(` in '000 except per share data)

Particulars Note No. Year ended March 31, 2012 Year ended

March 31, 2011 I Revenue from operations 23 794,708 887,942 II Other income 24 4,596 6,509 III Total Revenue (I + II) 799,304 894,451 IV Expenses

(a) Cost of materials consumed 25 473,054 525,536 (b) Decrease/(Increase) in Stock 26 13,386 (12,557) (c) Employee benefits expense 27 74,406 60,500 (d) Finance costs 28 37,316 31,047 (e) Manufacturing and other expense 29 172,719 183,903 (f) Depreciation expense 13 21,621 18,975 Total expenses 792,502 807,404

V Profit before exceptional and extraordinary items and tax (III-IV)

6,802 87,047

VI Exceptional items (Income)/Expenses 30 (30,685) (41) VII Profit before extraordinary items and tax (V

- VI) 37,487 87,088

VIII Extraordinary Items - - IX Profit before tax (VII - VIII) 37,487 87,088 X Tax expense (a) Current tax 17,200 20,500 (b) Current tax related to previous years 851 5 (b) Deferred tax (6,909) 2,265 11,142 22,770

XI Profit (Loss) for the year (IX-X) 26,345 64,318 XII Earnings per equity share

(a) Basic 31 1.37 3.35 (b) Diluted 31 1.37 3.35

XIII Notes forming part of the Financial Statements 1 to 40

21

CASH FLOW STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012

(` in '000)

Particulars Year ended

March 31, 2012 Year ended March

31, 2011 A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit before tax and extraordinary items 37,487 87,088 Adjustments for: Depreciation 21,621 18,975 Interest Paid 31,916 30,885 Interest Received (246) (73) Amount Written Back - (5) Debtors/ Unrecoverable Amount Written Off 14,887 111 Exchange Difference on translation of foreign currency cash & cash equivalent-

Loss (16) (13)

(Profit)/Loss on sale of Fixed Asset 5,531 164 Operating Profit before Working Capital change 111,180 137,132 Adjustment for : Trade and other receivables 14,317 (16,772) Inventories (14,030) (110,463) Trade Payables (62,089) (8,062) Loans and Advances 2,992 54,473 Cash generated from operations 52,370 56,308 Direct taxes paid (14,130) (17,740) Cash flow from Ordinary items 38,240 38,568 Net Cash flow from operating Activities 38,240 38,568

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (56,759) (41,873) Sale of Fixed Assets 13,883 2,068 Capital Work In Progress (126,614) 1,623 Capital Advance 5,681 (11,757) Interest Received 246 73 Long Term Investment (46,000) (24,177) Other Investment (946) (401) Net cash (used ) in / from investing activities (210,509) (74,444)

C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Bank Borrowings 157,675 66,143 Term Loan - - Vehicle Loan (2,502) 10,729 Term Loan Paid 33,012 (6,403) Unsecured Loan 16,446 12,872 Interest Paid (31,916) (30,885) Dividend including Dividend Tax paid (9,004) (14,477) Net Cash (used) in from financing activities 163,711 37,979 Net Increase/(Decrease) In Cash And Cash Equivalents (8,558) 2,103 Cash and Cash equivalents as on 1st April, 2011 (Opening Balance) 15,830 13,714 Exchange Difference on translation of foreign currency cash & cash equivalent 16 13 Cash and Cash equivalents as on 31st March, 2012 (Closing Balance) 7,288 15,830 Cash and Cash equivalents as on 31st March, 2012 as per book 7,288 15,830

22

For the six months period ended September 30, 2012, based on the Unaudited condensed Interim Financial Statements Condensed Balance Sheet as at 30th September 2012 (` in ‘000)

Balance Sheet as at Note No. 30th September 2012 31st March 2012 Unaudited Audited

I. EQUITY AND LIABILITIES Shareholders’ funds (a) Share capital 3 38,403 38,403 (b) Reserves and surplus 4 478,690 476,444 Non-current liabilities (a) Long-term borrowings 5 109,101 115,451 (b) Deferred tax liabilities (Net) 6 15,124 15,789 (c) Other Long term liabilities 3,371 4,207 (d) Long-term provisions 1,950 1,883 Current liabilities (a) Short-term borrowings 7 270,992 332,372 (b) Trade payables 8 74,862 59,304 (c) Other current liabilities 9 180,338 95,658 (d) Short-term provisions 10 47,884 46,198 TOTAL 1,220,715 1,185,709

II. ASSETS Non-current assets (a) Fixed assets (i) Tangible assets 11 215,946 212,657 (ii) Intangible assets 11 1,045 1,159 (iii)Capital work-in-progress 11 143,555 134,936 (b) Non-current investments 12 165,523 165,523 (c) Long-term loans and advances 6,923 11,965 (d) Other non-current assets 13 77,570 79,998 Current assets (a) Current Investments 3,232 2,930 (b) Inventories 14 246,869 319,522 (c) Trade receivables 15 173,728 160,222 (d) Cash and cash equivalents 8,359 7,888 (e) Short-term loans and advances 16 176,126 87,064 (f) Other current assets 1,839 1,845 TOTAL 1,220,715 1,185,709

23

Condensed Statement of Profit & Loss for the period from 01st April 2012 to 30th September 2012

(` in ‘000) Statement of Profit & Loss for the Note No.September 2012September 2011 Unaudited Unaudited

I Revenue from operations 17 406,042 436,499

II Other income 616 2,754

III Total Revenue (I + II) 406,658 439,253

IV Expenses

(a) Cost of materials consumed 18 255,706 278,476 (b) Decrease/(Increase) in Stock 19 (11,590) (28,935) (c) Employee benefits expense 20 41,087 33,859 (d) Finance costs 21 16,341 17,670 (e) Manufacturing and other expense 22 89,882 90,441 (f) Depreciation expense 11 11,321 10,665 Total expenses 402,747 402,176 402,747 402,176

V Profit before exceptional and extraordinary items and tax (III-IV)

3,911 37,077

VI Exceptional items (Income)/Expenses 1,000 (23,213)

VII Profit before extraordinary items and tax (V - VI) 2,911 60,290 VIIIExtraordinary Items - - IX Profit before tax (VII - VIII) 2,911 60,290

X Tax expense

(a) Current tax 1,330 9,000 (b) Current tax related to previous years - - (b) Deferred tax (665) - 665 9,000 XI Profit (Loss) for the year (IX-X) 2,246 51,290

XII Earnings per equity share (a) Basic 23 0.12 2.67 (b) Diluted 23 0.12 2.67

24

Condensed Cash Flow Statement for the period ended September 30, 2012

(` in ‘000) Cash Flow statement for the period ended September 2012 September 2011

Cash Flow From Operating Activities 104,281 59,027 Cash Flow From Investing Activities (19,328) (185,286)Cash Flow From Financing Activities (84,071) 115,112 Net Increase/(Decrease)In Cash And Cash Equivalents 882 (11,147)Cash And Cash Equivalents At The Begining Of The 7,288 15,830 Cash And Cash Equivalents At The End Of The Year * 8,170 4,683

*Excludes earmarked balance with banks as Margin Money Deposits of ` 188 thousands (previous year of ` 600 thousands

25

GENERAL INFORMATION

Pursuant to a resolution passed under Section 81(1) of the Companies Act by our Board in its meeting held on December 10, 2012 and the member of the Company in their Extra Ordinary General Meeting of the Company held on January 07, 2013, it has been decided to make the following Offer to the Eligible Equity Shareholders, with a right to renounce: ISSUE OF [●] EQUITY SHARES OF FACE VALUE OF ` 2 EACH (“EQUITY SHARES”) OF SHIVALIK BIMETAL CONTROLS LIMITED (“SHIVALIK” OR THE “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF ` [●] (INCLUDING SHARE PREMIUM OF ` [●]) PER EQUITY SHARE (“ISSUE PRICE”) FOR AN AGGREGATE AMOUNT NOT EXCEEDING ` 1,500 LAKHS TO THE ELIGIBLE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [●] EQUITY SHARES FOR EVERY [●] EQUITY SHARES HELD BY THE ELIGIBLE EQUITY SHAREHOLDERS ON THE RECORD DATE, I.E. [●], ALONGWITH ONE DETACHABLE WARRANT (REFERRED TO AS THE “WARRANT(S)”) FOR EVERY ONE EQUITY SHARE OFFERED IN THE ISSUE (THE “ISSUE”). THE ISSUE PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARES. ON EXERCISE, EACH WARRANT SHALL BE ENTITLED TO ISSUE AND ALLOTMENT OF ONE EQUITY SHARE OF FACE VALUE ` 2 EACH AT A PREMIUM. FOR FURTHER DETAILS, PLEASE REFER TO “OFFERING INFORMATION” ON PAGE 122 OF THE DRAFT LETTER OF OFFER.

Registered Office & Factory Corporate Office 16-18, New Electronics Complex Chambaghat, Dist. Solan Himachal Pradesh - 173 213 Tel No: +91 1792 230175, 230578; Fax No: +91 1792 230475

H-2, Suneja Chambers, 2nd Floor, Alaknanda Commercial Complex, New Delhi - 110 019 Tel No: +91 11 2602 7174, 2602 8175; Fax No: +91 11 2602 6776

Corporate Identity Number: L27101HP1984PLC005862 Address of the Registrar of Companies Registrar of Companies, Punjab, Chandigarh and Himachal Pradesh Corporate Bhawan Plot No. 4B, Sector 27B Madhya Marg Chandigarh - 160 019 Tel. No.: +91 172 263 9415 - 16 Fax No: +91 172 263 9416 e-mail: roc.chandigarh@mca.gov.in Company Secretary and Compliance Officer Mr. Ram Parvesh Company Secretary and Compliance Officer H-2, Suneja Chambers, 2nd Floor, Alaknanda Commercial Complex, New Delhi - 110 019 Tel No: +91 11 2602 7174,