Placement Document

Not for Circulation

Serial Number []
Dated October 29, 2010

TILAKNAGAR INDUSTRIES LTD.
(Incorporated as The Maharashtra Sugar Mills Ltd on July 29, 1933 under the Companies Act, VII of 1913. Pursuant to fresh certificate of incorporation
dated August 06, 1993 issued by Registrar of Companies, Mumbai, Maharashtra, the name of our Company changed to Tilaknagar Industries Ltd. The
Corporate Identification Number of our Company is L15420PN1933PLC133303)

Tilaknagar Industries Ltd ( Company / Issuer) is issuing upto 14,210,500 equity shares of face value ` `` ` 10/- each, (Placement Shares),
at a price of ` `` `95.00 per Placement Share, including a premium of ` `` ` 85.00 per Placement Share, aggregating to approximately ` `` ` 1,350 Million,
(Offering)

OFFERING IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009, AS AMENDED
THIS ISSUE AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING DONE IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED, (SEBI REGULATIONS) , AND OUTSIDE THE
UNITED STATES IN RELIANCE ON REGULATION S (REGULATION S) UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (SECURITIES ACT). THIS
PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR, AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN
OFFER TO THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTOR WITHIN OR OUTSIDE INDIA OTHER THAN QUALIFIED INSTITUTIONAL BUYERS
(AS DEFINED UNDER THE SEBI REGULATIONS)
Any invitation, offer and sale of the Placement Shares shall only be made pursuant to this Placement Document, the Application Form and the Confirmation of Allocation
Note. See Issue Procedure on page 102 of this Placement Document. The distribution of this Placement Document or the disclosure of its contents without our
Companys prior consent to any person, other than Qualified Institutional Buyers, (as defined in the SEBI Regulations), (QIBs), and persons retained by QIBs, to advise
them with respect to their purchase of the Placement Shares, is unauthorised and prohibited. Each prospective Investor, by accepting delivery of this Placement
Document agrees to observe the foregoing restrictions, and not to make copies of this Placement Document or any other document referred herein.
THIS PLACEMENT DOCUMENT HAS NOT BEEN REVIEWED BY THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI), THE RESERVE BANK OF INDIA
(RBI), THE BOMBAY STOCK EXCHANGE LTD. (BSE), THE NATIONAL STOCK EXCHANGE OF INDIA LTD. (NSE) OR ANY OTHER REGULATORY OR LISTING
AUTHORITY AND IS INTENDED ONLY FOR USE BY QIBs. THE OFFERING IS MEANT ONLY FOR QIBs ON A PRIVATE PLACEMENT BASIS AND IS NOT AN OFFER TO
THE PUBLIC OR TO ANY OTHER CLASS OF INVESTORS.
This Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies (RoC) in India, and will not be circulated or
distributed to the public in India or any other jurisdiction and will not constitute a public offer in India or any other jurisdiction.
Investments in equity and equity-related securities involve a certain degree of risk and prospective investors should not invest any amount in this Offering
unless they are prepared to bear the risk of losing all or part of the amount invested by them. Prospective investors are advised to carefully make their own
equires and read this Placement Document the chapter titled Risk Factors before deciding to invest in this Offering.
The information on our Companys website or any website directly or indirectly linked to our Companys website does not form part of this Placement Document and
prospective investors should not rely on such information contained in, or available through, such websites.
All of our Companys outstanding equity shares of face value ` `` ` 10/- each, (Equity Shares), are listed on the BSE and the NSE (collectively hereinafter
referred to as Stock Exchanges). The closing price of Equity Shares on the BSE and the NSE on October 26, 2010 was Rs 99.85 and ` `` ` 99.80 per Equity Share,
respectively. Applications shall be made for the listing of the Placement Shares offered through this Placement Document on the BSE and on the NSE. The
Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the
Placement Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of our Company or the Placement Shares.
YOU ARE NOT AUTHORISED TO (1) DELIVER THIS PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2) REPRODUCE THIS PLACEMENT DOCUMENT IN ANY
MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS
INSTRUCTION MAY RESULT IN A VIOLATION OF THE SEBI REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.
A copy of this Placement Document has been delivered to the Stock Exchanges. A copy of this Placement Document will be filed with the Stock Exchanges and delivered
to SEBI for record purposes in accordance with SEBI Regulations.
THIS PLACEMENT DOCUMENT HAS BEEN PREPARED BY OUR COMPANY SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH THE PROPOSED
OFFERING OF THE PLACEMENT SHARES DESCRIBED IN THIS PLACEMENT DOCUMENT.
The Placement Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (Securities Act), and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. Persons (as defined in Regulation S under the Securities Act (Regulation S) except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Placement
Shares are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S. For further information, see sections titled Selling
Restrictions and Transfer Restrictions .
This Placement Document is dated October 29, 2010.
BOOK RUNNING LEAD MANAGERS


INDIA INFOLINE LTD.
10
th
Floor, One IBC,
841, Senapati Bapat Marg, Lower Parel, (W)
Mumbai 400 013, Maharashtra, India

SPA MERCHANT BANKERS LTD.
Address-101-A, 10th Floor,
Mittal Court, Nariman Point
Mumbai-400021, Maharashtra, India



T
h
i
s

P
l
a
c
e
m
e
n
t

D
o
c
u
m
e
n
t

i
s

n
o
t

a
n

o
f
f
e
r

t
o

s
e
l
l

a
n
y

P
l
a
c
e
m
e
n
t

S
h
a
r
e
s

a
n
d

i
s

n
o
t

s
o
l
i
c
i
t
i
n
g

a
n

o
f
f
e
r

t
o

s
u
b
s
c
r
i
b
e

t
o


P
l
a
c
e
m
e
n
t

S
h
a
r
e
s
.


I
t

i
s

b
e
i
n
g

i
s
s
u
e
d

f
o
r

t
h
e

s
o
l
e

p
u
r
p
o
s
e

o
f

i
n
f
o
r
m
a
t
i
o
n

o
r

d
i
s
c
u
s
s
i
o
n

r
e
l
a
t
i
n
g

t
o

t
h
e

P
l
a
c
e
m
e
n
t

S
h
a
r
e
s

t
h
a
t

m
a
y

b
e

i
s
s
u
e
d

t
h
r
o
u
g
h

t
h
i
s

P
l
a
c
e
m
e
n
t

D
o
c
u
m
e
n
t
.




TABLE OF CONTENTS

NOTICE TO INVESTORS............................................................................................................................................................. iii
REPRESENTATIONS BY INVESTORS .....................................................................................................................................v
OFFSHORE DERIVATIVE INSTRUMENTS............................................................................................................................x
DISCLAIMER CLAUSE OF THE STOCK EXCHANGE........................................................................................................ xi
PRESENTATION OF FINANCIAL AND OTHER INFORMATION............................................................................... xii
INDUSTRY AND MARKET DATA.......................................................................................................................................... xiv
FORWARD-LOOKING STATEMENTS .................................................................................................................................. xv
ENFORCEMENT OF CIVIL LIABILITIES ...........................................................................................................................xvii
CERTAIN DEFINITIONS AND ABBREVIATIONS ........................................................................................................ xviii
SUMMARY OF THE ISSUE ......................................................................................................................................................xxii
SUMMARY OF BUSINESS........................................................................................................................................................ xxv
SELECTED FINANCIAL INFORMATION OF OUR COMPANY .................................................................................. xxx
RISK FACTORS................................................................................................................................................................................ 1
MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE EQUITY SHARES...25
USE OF PROCEEDS......................................................................................................................................................................30
CAPITALISATION.........................................................................................................................................................................31
DIVIDEND POLICY.......................................................................................................................................................................32
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.................................................................................................................................................................................33
INDUSTRY OVERVIEW..............................................................................................................................................................49
BUSINESS........................................................................................................................................................................................58
BOARD OF DIRECTORS AND SENIOR MANAGEMENT...............................................................................................74
PRINCIPAL SHAREHOLDERS .................................................................................................................................................87
REGULATIONS AND POLICIES...............................................................................................................................................94
ISSUE PROCEDURE.................................................................................................................................................................. 102
PLAN OF DISTRIBUTION....................................................................................................................................................... 112
SELLING RESTRICTIONS....................................................................................................................................................... 113
TRANSFER RESTRICTIONS.................................................................................................................................................. 117
THE SECURITIES MARKET OF INDIA.............................................................................................................................. 118
DESCRIPTION OF THE EQUITY SHARES........................................................................................................................ 130
TAXATION.................................................................................................................................................................................... 139
LEGAL PROCEEDINGS............................................................................................................................................................ 147
RECENT DEVELOPMENTS.................................................................................................................................................... 149
GENERAL INFORMATION..................................................................................................................................................... 154
FINANCIAL STATEMENTS.................................................................................................................................................... 155
INDEPENDENT ACCOUNTANTS........................................................................................................................................ 186
DECLARATION........................................................................................................................................................................... 187

iii
NOTICE TO INVESTORS

Our Company confirms that, to its best knowledge and belief, having made all reasonable enquiries,
this Placement Document contains all information with respect to our Company and the Placement
Shares which is material in the context of this Offering. The statements contained in this Placement
Document relating to our Company, its Subsidiaries, its associates, its joint ventures and the
Placement Shares are, in all material respects, true and accurate and not misleading, the opinions and
intentions expressed in this Placement Document with regard to our Company and the Placement
Shares are honestly held, have been reached after considering all relevant circumstances, are based
on information presently available to our Company and are based on reasonable assumptions. There
are no other facts in relation to our Company, its Subsidiaries, and the Placement Shares, the
omission of which would, in the context of the Offering, make any statement in this Placement
Document misleading in any material respect. Further, all reasonable enquiries have been made by
our Company to ascertain such facts and to verify the accuracy of all such information and
statements. The Book Running Lead Managers have not separately verified all the information
contained in this Placement Document (financial, legal or otherwise). Accordingly, neither the Book
Running Lead Managers nor any of its members, employees, counsel, officers, directors,
representatives, agents or affiliates makes any express or implied representation, warranty or
undertaking, and no responsibility or liability is accepted, by the Book Running Lead Managers, as to
the accuracy or completeness of the information contained in this Placement Document or any other
information supplied in connection with the Placement Shares. Each person receiving this Placement
Document acknowledges that such person has neither relied on the Book Running Lead Managers
nor on any person affiliated with any of the Book Running Lead Managers in connection with its
investigation of the accuracy of such information or its investment decision, and each such person
must rely on its own examination of our Company and the merits and risks involved in investing in
the Placement Shares issued pursuant to the Offering. Any prospective investor should not construe
anything in this Placement Document as legal, business, tax, acounting or investment advice.

No person is authorised to give any information or to make any representation not contained in this
Placement Document and any information or representation not so contained must not be relied
upon as having been authorised by or on behalf of our Company or the Book Running Lead Managers.
The delivery of this Placement Document at any time does not imply that the information contained
in it is correct as at any time subsequent to its date.

The Placement Shares have not been approved, disapproved or recommended by any
regulatory authority in any jurisdiction, including the U.S. Securities and Exchange
Commission or any state securities commission in the United States. No authority has passed
on or endorsed the merits of this Offering or the accuracy or adequacy of this Placement
Document. Any representation to the contrary is a criminal offence in the United States and
may be a criminal offence in other jurisdictions.

The distribution of this Placement Document and the issue of the Placement Shares in certain
jurisdictions may be restricted by law. As such, this Placement Document does not constitute, and
may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in
which such offer or solicitation is not authorised or to any person to whom it is unlawful to make
such offer or solicitation. In particular, no action has been taken by our Company and the Book
Running Lead Managers which would permit an Offering of the Placement Shares or distribution of
this Placement Document in any jurisdiction, other than India. Accordingly, the Placement Shares
may not be offered or sold, directly or indirectly, and neither this Placement Document nor any
Offering materials in connection with the Placement Shares may be distributed or published in or
from any country or jurisdiction that would require registration of the Placement Shares in such
country or jurisdiction. Please refer to the section titled Transfer Restrictions on page 117 of this
Preliminiary Placement Document.

iv

In making an investment decision, investors must rely on their own examination of our Company, its
Subsidiaries and the terms of this Offering, including the merits and risks involved. Investors should
not construe the contents of this Placement Document as legal, tax, accounting or investment advice.
Investors should consult their own counsel and advisors as to business, legal, tax, accounting and
related matters concerning this Offering. In addition, neither our Company nor the Book Running
Lead Managers are making any representation to any offeree or purchaser of the Placement Shares
regarding the legality of an investment in the Placement Shares by such offeree or purchaser under
applicable legal, investment or similar laws or regulations. Each purchaser of the Placement Shares in
this Offering is deemed to have acknowledged, represented and agreed that it is eligible to invest in
India and in our Company under Chapter VIII of the SEBI Regulations and is not prohibited by SEBI
or any other regulatory authority from buying, selling or dealing in securities.

The information on our Companys website or the website of the Book Running Lead Managers, does
neither constitute nor form part of this Preliminiary Placement Document.

This Placement Document contains summaries of certain terms of certain documents, which
summaries are qualified in their entirety by the terms and conditions of such documents.

Each purchaser of Placement Shares in the Issue also acknowledges that it has been afforded an
opportunity to request from our Company and review information relating to our Company and the
Placement Shares.

v
REPRESENTATIONS BY INVESTORS


References herein to you are to the prospective investors in the Offering. By subscribing to any
Placement Shares in the Offering, you are deemed to have represented, warranted, acknowledged
and agreed to our Company and the Book Running Lead Managers as follows:

you are a Qualified Institutional Buyer as defined in Regulation 2(1)(zd) of the SEBI
Regulations, (QIB), have a valid and existing registration under applicable laws of India (as
applicable), and undertake to acquire, hold, manage or dispose of any Placement Shares that
are allocated to you for the purposes of your business in accordance with Chapter VIII of the
SEBI Regulations;
If you are not a resident of India, you are a QIB (other than a multilateral or bilateral
financial institution) or you are a FII (including a sub-account other than a sub-account
which is a foreign corporate or a foreign individual) or a FVCI, and have a valid and existing
registration with the SEBI and the applicable laws in India;

if you are Allotted Placement Shares pursuant to the Offering, you shall not, for a period of
one year from the date of Allotment, sell the Placement Shares so acquired except on the
Stock Exchanges;

you are aware that the Placement Shares have not been and will not be registered under the
SEBI regulations or under any other law in force in India. The Preliminary Placement
Document and this Placement Document have not been verified or affirmed by the SEBI or
the Stock Exchanges or any other regulatory authority and will not be filed with the
Registrar of Companies and is intended for use by the QIBs. The Preliminary Placement
Document has been filed with the Stock Exchanges for record purposes only and has been
displayed on the websites of our Company and the Stock Exchanges. This Placement
Document will be filed with the Stock Exchanges and SEBI for record purposes only and will
be displayed on the websites of our Company and the Stock Exchanges;

you are entitled to subscribe for the Placement Shares under the laws of all relevant
jurisdictions which apply to you and that you have fully observed such laws and obtained all
such governmental and other consents in each case which may be required thereunder and
complied with all necessary formalities;

you are entitled to acquire the Placement Shares under the laws of all relevant jurisdictions
and that you have all necessary capacity and have obtained all necessary consents and
authorities to enable you to commit to this participation in the Offering and to perform your
obligations in relation thereto (including, without limitation, in the case of any person on
whose behalf you are acting, all necessary consents and authorities to agree to the terms set
out or referred to in this Placement Document) and will honor such obligations;

you confirm that, either: (i) you have not participated in or attended any investor meetings
or presentations by our Company or its agents (Companys Presentations) with regard to
our Company, the Placement Shares or the Offering; or (ii) if you have participated in or
attended any Companys Presentations: (a) you understand and acknowledge that the Book
Running Lead Managers may not have knowledge of the statements that our Company or its
agents may have made at such Companys Presentations and are therefore unable to
determine whether the information provided to you at such Companys Presentations may
have included any material misstatements or omissions, and, accordingly you acknowledge
that the Book Running Lead Managers have advised you not to rely in any way on any
information that was provided to you at such Companys Presentations, and (b) confirm that,

vi
to the best of your knowledge, you have not been provided any material information that
was not publicly available;

neither we nor the Book Running Lead Managers nor any of their respective shareholders,
directors, officers, employees, counsel, representatives, agents or affiliates is making any
recommendations to you, advising you regarding the suitability of any transactions it may
enter into in connection with the Offering and that participation in the Offering is on the
basis that you are not and will not, upto the allotment of the Placement Shares be a client of
the Book Running Lead Managers and that the Book Running Lead Managers have no duties
or responsibilities to you for providing the protection afforded to their clients or for
providing advice in relation to the Offering and is in no way acting in a fiduciary capacity to
you;

all statements other than statements of historical fact included in this Placement Document,
including, without limitation, those regarding our Companys financial position, business
strategy, plans and objectives of management for future operations (including development
plans and objectives relating to our Companys business), are forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties and other
important factors that could cause actual results to be materially different from future
results, performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous assumptions
regarding our Companys present and future business strategies and environment in which
our Company will operate in the future. You should not place undue reliance on forward-
looking statements, which speak only as at the date of this Placement Document. Our
Company assumes no responsibility to update any of the forward-looking statements
contained in this Placement Document;

you have been provided a serially numbered copy of each of the Preliminary Placement
Document and this Placement Document and have read the Preliminary Placement
Document and this Placement Document in its entirety, including, in particular, the section
titled Risk Factors;

you are aware and understand that the Placement Shares are being offered only to QIBs and
are not being offered to the general public and the Allotment of the same shall be on a
discretionary basis;

you are aware that if you are Allotted more than 5% of the Placement Shares in this Issue,
our Company shall be required to disclose your name and the number of the Placement
Shares Allotted to you to the Stcok Exchanges and the Stock Exchanges will make the same
available on their website;

you have made, or been deemed to have made, as applicable, the representations set forth
under section titled Transfer Restrictions;

you are purchasing the Placement Shares in reliance on Regulation S under the Securities
Act;

that in making your investment decision, (i) you have relied on your own examination of our
Company and the terms of the Offering, including the merits and risks involved, (ii) you have
made and will continue to make your own assessment of our Company, the Placement
Shares and the terms of the Offering based on such information as is publicly available, (iii)
you have consulted your own independent advisors or otherwise have satisfied yourself
concerning without limitation, the effects of local laws and all laws applicable to you, (iv) you
have relied solely on the information contained in this Placement Document and no other

vii
disclosure or representation by our Company or any other party; and (v) you have received
all information that you believe is necessary or appropriate in order to make an investment
decision in respect of our Company and the Placement Shares (vi) relied upon your own
investigation and resources in deciding to invest in the Issue;

you are a sophisticated investor and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the investment in the
Placement Shares and you and any accounts for which you are subscribing the Placement
Shares (i) are each able to bear the economic risk of the investment in the Placement Shares;
(ii) will not look to our Company and/or the Book Running Lead Managers for all or part of
any such loss or losses that may be suffered; (iii) are able to sustain a complete loss on the
investment in the Placement Shares; (iv) have no need for liquidity with respect to the
investment in the Placement Shares; and (v) have no reason to anticipate any change in your
or their circumstances, financial or otherwise, which may cause or require any sale or
distribution by you or them of all or any part of the Placement Shares. You acknowledge that
an investment in the Placement Shares involves a high degree of risk and that the Placement
Shares are, therefore, a speculative investment. You are seeking to subscribe to the
Placement Shares in this Issue for your own investment and not with a view to resale or
distribution;

the Book Running Lead Managers or any of their respective shareholders, directors, offices,
employees, counsel, representatives, agents or affiliates have not provided you with any tax
advice or otherwise made any representations regarding the tax consequences of the
Placement Shares (including but not limited to the Offering and the use of the proceeds from
the Placement Shares). You will obtain your own independent tax advice and will not rely on
the Book Running Lead Managers when evaluating the tax consequences in relation to the
Placement Shares (including but not limited to the Offering and the use of the proceeds from
the Placement Shares). You waive and agree not to assert any claim against the Book
Running Lead Managers with respect to the tax aspects of the Placement Shares or the
Offering or as a result of any tax audits by tax authorities, wherever situated;

that where you are acquiring the Placement Shares for one or more managed accounts, you
represent and warrant that you are duly authorised in writing, by each such managed
account to acquire the Placement Shares for each managed account; and to make the
representations, warranties, acknowledgements and agreements herein for and on behalf of
each such account, reading the reference to you to include such accounts;

you are not a Promoter and are not a person related to the Promoters, either directly or
indirectly and your Application does not directly or indirectly represent the Promoters or
Promoter Group of our Company;

you have no rights under a shareholders agreement or voting agreement with the Promoters
or persons related to the Promoters, no veto rights or right to appoint any nominee director
on the Board of Directors of our Company other than the acquired in the capacity of a lender
which shall not be deemed to be a person related to the Promoter;

you have no right to withdraw your Application after the Bid Closing Date;

you are eligible to apply and hold Placement Shares so Allotted and together with any
Placement Shares held by you prior to the Offering. You further confirm that your holding
upon the Offering of the Placement Shares shall not exceed the level permissible as per any
applicable regulation;

the Application Form submitted by you would not eventually result in triggering a

viii
requirement to make public announcement to acquire Equity Shares in accordance with the
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended (the
Takeover Code);

to the best of your knowledge and belief together with other prospective Investors in the
Offering that belong to the same group or are under common control as you, the Allotment
under the Offering shall not exceed 50 percent of the Offering. For the purposes of this
representation:

a. the expression belongs to the same group shall derive meaning from the concept of
companies under the same group as provided in sub-section (11) of Section 372 of the
Companies Act.

b. control shall have the same meaning as is assigned to it by clause (c) of Regulation 2 of
the Takeover Code.

you shall not undertake any trade in the Placement Shares credited to your Depository
Participant account until such time that the final listing and trading approval for the
Placement Shares is issued by the Stock Exchanges;
you are aware that the in-principle approvals have been obtained from the Stock Exchanges
in terms of clause 24(a) of the Equity Listing Agreement for listing and admission of the
Placement Shares to trading on the Stock Exchanges market for listed securities and the
application for the final listing and trading approval will be made only after Allotment of the
Placement Shares in the Issue. There can be no assurance that the final approvals for listing
of the Placement Shares will be obtained in time or at all. Our Company shall not be
responsible for any delay or non-receipt of such final approval or any loss arising from such
delay or non-receipt;

you are aware and understand that the Book Running Lead Managers have entered into a
Placement Agreement with our Company whereby the Book Running Lead Managers have,
subject to the satisfaction of certain conditions set out therein, undertaken to use its
reasonable endeavours to seek to procure subscription for the Placement Shares;

that the contents of this Placement Document are exclusively the responsibility of our
Company and that neither the Book Running Lead Managers nor any person acting on its
behalf has or shall have any liability for any information, representation or statement
contained in this Placement Document or any information previously published by or on
behalf of our Company and will not be liable for your decision to participate in the Offering
based on any information, representation or statement contained in this Placement
Document or otherwise. By accepting a participation in this Offering, you agree to the same
and confirm that you have neither received nor relied on any other information,
representation, warranty or statement made by or on behalf of the Book Running Lead
Managers or our Company or any other person and neither the Book Running Lead
Managers nor our Company nor any other person will be liable for your decision to
participate in the Offering based on any other information, representation, warranty or
statement that you may have obtained or received;

that the only information you are entitled to rely on, and on which you have relied in
committing yourself to acquire the Placement Shares is contained in this Placement
Document, such information being all that you deem necessary to make an investment
decision in respect of the Placement Shares and that you have neither received nor relied on
any other information given or representations, warranties or statements made by the Book
Running Lead Managers or our Company and neither the Book Running Lead Managers nor
our Company will be liable for your decision to accept an invitation to participate in the

ix
Offering based on any other information, representation, warranty or statement;

you agree to indemnify and hold our Company and the Book Running Lead Managers
harmless from any and all costs, claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of the representations and
warranties in this section. You agree that the indemnity set forth in this section shall survive
the resale of the Placement Shares by or on behalf of the managed accounts;

that you are eligible to invest in India under applicable law, including the Foreign Exchange
Management (Transfer or Issue of Security by Person Resident Outside India) Regulations,
2000, as amended, and have not been prohibited by the SEBI from buying, selling or dealing
in securities;

that you understand that the Book Running Lead Managers do not have any obligation to
purchase or acquire all or any part of the Placement Shares purchased by you in the Offering
or to support any losses directly or indirectly sustained or incurred by you for any reason
whatsoever in connection with the Offering, including non-performance by us of any of our
respective obligations or any breach of any representations or warranties by us, whether to
you or otherwise;

that you are a reputed investor who is seeking to purchase the Placement Shares for your
own investment and not with a view to distribution; In particular, you acknowledge that (i)
an investment in the Placement Shares involves a high degree of risk and that the Placement
Shares are, therefore, a speculative investment, (ii) you have sufficient knowledge,
sophistication and experience in financial and business matters so as to be capable of
evaluating the merits and risk of the purchase of the Placement Shares, and (iii) you are
experienced in investing in private placement transactions of securities of companies in a
similar stage of development and in similar jurisdictions and have such knowledge and
experience in financial, business and investments matters that you are capable of evaluating
the merits and risks of your investment in the Placement Shares;

you agree that any dispute arising in connection with the Issue will be governed by and
construed in accordance with the laws of Republic of India, and the courts in Mumbai, India
shall have exclusive jurisdiction to settle any disputes which may arise out of or in
connection with this Placement Document and the Preliminary Placement Document;

each of the representations, warranties, acknowledgements and agreements set out above
shall continue to be true and accurate at all times up to and including the Allotment, listing
and trading of the Placement Shares in the Issue;

our Company, the Book Running Lead Manager, their respective affiliates and other will rely
on the truth and accuracy of the foregoing representations, warranties , acknowledgements
and undertakings, which are given by the Book Running Lead Managers on their own behalf
and on behalf of our Company, and are irrevocable; and

that all references to you are to the prospective investors in the Placement Shares; and that
each of the representations, warranties, acknowledgements and undertakings set out above
shall continue to be true and accurate at all times up to and including the Allotment of the
Placement Shares.



x
OFFSHORE DERIVATIVE INSTRUMENTS

Subject to compliance with all applicable Indian laws, rules , regulations, guidelines and approvals
and in terms of Regulation 15A(1) of the Securities Exchange Board of India (Foreign Institutional
Investors) Regulation, 1995, as amended, (the FII Regulations),, foreign institutional investors as
defined in SEBI Regulations (referred to as FIIs) therein, including FII affiliates of the Book
Running Lead Managers, may issue, deal in or hold, off-shore derivative instruments such as
participatory notes, equity linked notes or any other similar instruments against Placement Shares
allocated in this Offering (all such off-shore derivative instruments referred to herein as P-Notes),
listed or proposed to be listed on any stock exchange in India only in favor of those entities which
are regulated by any appropriate relevant foreign regulatory authorities in the countries of their
incorporation or establishment subject to compliance of know your client requirements. The FII
shall also ensure that no further issue or transfer of any instrument referred to above is made to any
person other than a regulated entity. P-Notes have not been and are not being offered or sold
pursuant to this Placement Document.

Neither this document nor this Placement Document contains or will contain any information
concerning P-Notes or the issuer(s) of any P-Notes, including, without limitation, any information
regarding any risk factors relating thereto.

Any P-Notes that may be issued are not securities of our Company and do not constitute any
obligations of, claim on, or interests in our Company. Our Company has not participated in any offer
of any P-Notes, or in the establishment of the terms of any P-Notes, or in the preparation of any
disclosure related to any P-Notes. Any P-Notes that may be offered are issued by, and are solely the
obligations of, third parties that are unrelated to our Company. Our Company, its affiliates and the
Book Running Lead Managers do not make any recommendation as to any investment in P-Notes
and do not accept any responsibility whatsoever in connection with any P-Notes.

Any P-Notes that may be issued are not securities of the Book Running Lead Managers or of our
Company and do not constitute any obligations of, or claim on the Book Running Lead Managers or
of our Company. FII affiliates of the Book Running Lead Managers may purchase to the extent
permissible under law, Placement Shares in the Offering and may issue P-Notes in respect thereof.

Prospective investors interested in purchasing any P-Notes have the responsibility to obtain
adequate disclosures as to the issuer(s) of such P-Notes and the terms and conditions of any
such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any
P-Notes or any disclosure related thereto. Prospective investors are urged to consult with
their own financial, legal, accounting and tax advisors regarding any contemplated
investment in P-Notes, including whether P-Notes are issued in compliance with applicable
laws and regulations.

xi
DISCLAIMER CLAUSE OF THE STOCK EXCHANGES

As required, a copy of this Placement Document has been submitted to the Stock Exchanges. The
Stock Exchanges do not in any manner:

1. warrant, certify or endorse the correctness or completeness of any of the contents of the
Preliminary Placement Document and/or this Placement Document;

2. warrant that our Companys Placement Shares will be listed or will continue to be listed on
the Stock Exchanges; or

3. take any responsibility for the financial or other soundness of our Company, its Promoters,
its management or any scheme or project of our Company;

Further, such submission should not for any reason be deemed or construed to mean that the
Preliminary Placement Document and/or this Placement Document have been cleared or approved
by the Stock Exchanges. Every person who desires to apply for or otherwise acquire any Placement
Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have
any claim against any of the Stock Exchanges whatsoever by reason of any loss which may be
suffered by such person consequent to or in connection with such subscription/acquisition whether
by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.


xii
PRESENTATION OF FINANCIAL AND OTHER INFORMATION


Certain Conventions

In this Placement Document, unless the context otherwise indicates or implies, references to you,
offeree, purchaser, subscriber, recipient, investors and potential investor are to the
prospective investors in this Offering, references to our Company, the Company or the Issuer
are to Tilaknagar Industries Ltd.

Financial and Other Information

Our Company and its Subsidiaries prepare their financial statements in accordance with Indian
GAAP. Indian GAAP differs in certain respects from International Financial Reporting Standards
(IFRS) and U.S. GAAP. We do not provide a reconciliation of our financial statements to IFRS or U.S.
GAAP. Accordingly, the degree to which the financial statements prepared in accordance with Indian
GAAP included in this Placement Document will provide meaningful information is entirely
dependent on the readers level of familiarity with the respective accounting practices.

In this Placement Document, references to USD, $ and U.S. dollars are to the legal currency of
the United States and references to ` and Rupees are to the legal currency of India. All references
herein to the U.S. or the United States are to the United States of America and its territories and
possessions and all references to India are to the Republic of India and its territories and
possessions.

Unless otherwise stated, references in this Placement Document to a particular year are to the
calendar year ended on December 31 and to a particular fiscal or fiscal year are to the fiscal year
ended on March 31.

Our Company publishes its financial statements in Rupees. Our Companys financial statements
included herein have been prepared in accordance with Indian GAAP and the Companies Act. Unless
otherwise indicated, all financial data in this Placement Document are derived from our Companys
financial statements prepared in accordance with Indian GAAP. We urge you to consult your own
advisors regarding such differences and their impact on our financial data. Any reliance by persons
not familiar with Indian accounting practices on the financial disclosures presented in this Placement
Document should accordingly be limited.

The financial statements of our Company, including the audited financial statements of our Company
as at and for the financial years ended March 31, 2008, 2009 and 2010 which have been prepared in
accordance with Indian GAAP and applicable guidance notes issued by the Institute of Chartered
Accountants of India, and the unaudited consolidated financial information for the half year ended
September 30, 2009 and 2010, which have been reviewed in accordance with Standard on Review
Engagement (SRE) 2410, Engagements to Review Financial Statements issued by the Institute of
Chartered Accountants of India, are included in this Placement Document and are referred to herein
as the Financial Statements.

Any discrepancies between the amounts listed and total thereof, in the tables included herein, are
due to rounding off.



xiii
Exchange Rate Information
Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar
equivalent of the Rupee price of the Placement Shares on the Stock Exchanges. These fluctuations will
also affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Placement
Shares.

The following table sets forth, for the periods indicated, information with respect to the exchange
rate between the Rupee and the U.S. dollar (in Rupees per U.S. dollar) based on the reference rates
released by the Reserve Bank of India. The exchange rate as at March 31, 2010 was ` 45.14= USD 1.
(Source: Reserve Bank of India). No representation is made that the Rupee amounts actually represent
such amounts in U.S. dollars or could have been or could be converted into U.S. dollars at the rates
indicated, any other rates or at all.

Year ended March 31
Period End Average High Low
(` per USD 1.00)
2008...................................................................... 39.97 40.24 43.15 39.27
2009...................................................................... 50.95 45.91 52.06 39.89
2010.. 45.14
47.42 50.53 44.94
Quarter ends
First Quarter Fiscal 2011 (ended June 30, 2010).........
46.60 45.67 47.57 44.33
Quarter Ended Sep 30, 2010
44.92 46.50 47.33 44.92

Source: Reserve Bank of India

xiv


INDUSTRY AND MARKET DATA
Information regarding market position, growth rates and other industry data pertaining to
businesses of our Company contained in this Placement Document consists of estimates based on
data reports compiled by government bodies, professional organizations and analysts, data from
other external sources and knowledge of the markets in which our Company competes. The
statistical information included in this Placement Document relating to the various sectors in which
our Company operates has been reproduced from various trade, industry and government
publications and websites.

This data is subject to change and cannot be verified with complete certainty due to limits on the
availability and reliability of the raw data and other limitations and uncertainties inherent in any
statistical survey. In many cases, there is no readily available external information (whether from
trade or industry associations, government bodies or other organizations) to validate market-related
analysis and estimates, so our Company has relied on internally developed estimates.

Neither our Company nor the Book Running Lead Managers have independently verified this data
and neither our Company nor the Book Running Lead Managers make any representation regarding
the accuracy and completeness of such data. Similarly, while our Company believes its internal
estimates to be reasonable, such estimates have not been verified by any independent sources and
neither our Company nor the Book Running Lead Managers can assure potential investors as to their
accuracy.

The extent to which the market and industry data used in this Placement Document is
meaningful depends on the readers familiarity with and understanding of the methodologies
used in compiling such data.

xv
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Placement Document that are not statements of historical fact
constitute forward-looking statements. Investors can generally identify forward-looking
statements by terminology such as aim, anticipate, believe, continue, could, estimate,
expect, intend, may, objective, plan, potential, project, pursue, shall, should, will,
would, or other words or phrases of similar import. All statements regarding our Companys
expected financial condition and results of operations and business plans and prospects are forward-
looking statements. These forward-looking statements include statements as to our Companys
business strategy, revenue and profitability, planned projects and other matters discussed in this
Placement Document that are not historical facts. All forward-looking statements are subject to
risks, uncertainties and assumptions about our Company that could cause actual results to differ
materially from those contemplated by the relevant forward-looking statement. Important factors
that could cause actual results to differ materially from our Companys expectations include, among
others:

Performance of the financial markets in India, including the securities, commodities and
foreign exchange markets;
Our ability to service our debt;
The ability to successfully implement our strategy and our growth and expansion plans;
General, political, economic, social and business conditions in India and other countries;
Our Companys ability to attract and retain key employees and wage costs in India;
Changes in the foreign exchange control regulations in India;
Increasing competition;
Changes in laws and regulations applicable to us;
Worldwide economic and business conditions;
Terrorist attacks and other acts of violence, natural disasters and other environmental
conditions and outbreaks of infectious diseases in India, Asia and elsewhere; and
Decreased demand for our products in the Indian and global markets;
Decrease in domestic and international prices for our products;
Increase in interest rates at which we can raise debt financing;
Adverse fluctuations in the exchange rate of the Rupee versus major international
currencies, including the U.S. dollar;
Decrease in Indian import tariffs or increase in domestic duties;
Increasing transportation costs, including freight to key export markets, or the non-
availability of transportation due to strikes, shortages or for any other reason;
Strikes or work stoppages by our employees;
Changes in government policies affecting the spirits industry or sales in India or globally,
including an increasing number of states in India prohibiting alcohol consumption and sale;
Industrial accidents arising from improper handling of combustible or explosive materials,
improper operations of machines, human errors or other reasons at our manufacturing
facilities or during transportation;
Natural disasters, outbreaks of diseases or heavy rains; and an increase in raw materials
costs, in particular, molasses costs.
Limited ability to increase the price of our products during a year as a result of the increase
in raw material costs.


Additional factors that could cause actual results, performance or achievements to differ materially
include, but are not limited to, those discussed under the sections titled Risk Factors
Managements Discussion and Analysis of Financial Condition and Results of Operations of

xvi
Company, Industry Overview and Business on pages 33, 49 and 58 respectively of this
Preliminiary Placement Document.

The forward-looking statements contained in this Placement Document are based on the beliefs of
management, as well as the assumptions made by and information currently available to
management. Although our Company believes that the expectations reflected in such forward-
looking statements are reasonable at this time, it cannot assure prospective investors that such
expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place
undue reliance on such forward-looking statements. If any of these risks and uncertainties
materialise, or if any of our Companys underlying assumptions prove to be incorrect, our Companys
actual results of operations or financial condition could differ materially from that described herein
as anticipated, believed, estimated or expected. All subsequent forward-looking statements
attributable to our Company are expressly qualified in their entirety by reference to these cautionary
statements.

All forward-looking statements are subject to risks, uncertainties and assumptions about our
Company that could cause actual results to differ materially from those contemplated by the relevant
statement. Our Company assumes no obligations to update the forward-looking statements
contained herein to reflect actual results, changes in assumptions or changes in factors affecting
these forward-looking statements.



xvii
ENFORCEMENT OF CIVIL LIABILITIES
Our Company is a limited liability company incorporated under the laws of India. All of our
Companys directors and key managerial personnel named herein are residents of India and all or a
substantial portion of assets of our Company or such persons are located in India. As a result, it may
be difficult for investors to effect service of process upon our Company or such persons outside India
or to enforce judgments obtained against such parties outside India.

Recognition and enforcement of foreign judgments is provided for under Section 13 of the Code of
Civil Procedure, 1908 (the Civil Code) on a statutory basis. Section 13 of the Civil Code provides
that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon except: (i)
where the judgment has not been pronounced by a court of competent jurisdiction; (ii) where the
judgment has not been given on the merits of the case; (iii) where it appears on the face of the
proceedings that the judgment is founded on an incorrect view of international law or a refusal to
recognise the law of India in cases in which such law is applicable; (iv) where the proceedings in
which the judgment was obtained were opposed to natural justice; (v) where the judgment has been
obtained by fraud; and (vi) where the judgment sustains a claim founded on a breach of any law in
force in India.

Under the Civil Code, a court in India shall, upon the production of any document purporting to be a
certified copy of a foreign judgment, presume that the judgment was pronounced by a court of
competent jurisdiction, unless the contrary appears on record.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign
judgments. However, Section 44A of the Civil Code provides that where a foreign judgment has been
rendered by a superior court within the meaning of that section in any country or territory outside
India which the Government has by notification declared to be in a reciprocating territory, it may be
enforced in India by proceedings in execution as if the judgment had been rendered by the relevant
court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not
being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in
respect of a fine or other penalties and does not include arbitration awards.

Each of the United Kingdom, Singapore and Hong Kong has been declared by the Government to be a
reciprocating territory for the purposes of Section 44A of the Civil Code but the United States has not
been so declared. A judgment of a court in a jurisdiction which is not a reciprocating territory may be
enforced only by a fresh suit upon the judgment and not by proceedings in execution. The suit must
be filed in India within three years from the date of the judgment in the same manner as any other
suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages
on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an
Indian court would enforce foreign judgments if it viewed the amount of damages awarded as
excessive or inconsistent with public policy in India or would violate or contravene Indian law.
Further, any judgment or award in a foreign currency would be converted into Rupees on the date of
such judgment or award and not on the date of payment. A party seeking to enforce a foreign
judgment in India is required to obtain approval from the Reserve Bank of India, (RBI) to repatriate
outside India any amount recovered pursuant to the execution of such a judgment. In addition, any
judgment in a foreign currency would be converted into Indian Rupees on the date of the judgment
and not on the date of payment and any such amount may be subject to income tax in accordance
with applicable laws.

.


xviii

CERTAIN DEFINITIONS AND ABBREVIATIONS
Our Company has prepared this Placement Document using certain definitions and abbreviations
which you should consider when reading the information contained herein.

The following list of certain capitalised terms used in this Placement Document is intended for the
convenience of the reader/prospective investor only and is not exhaustive

The terms defined in this section shall have the meaning set forth herein, unless specified otherwise
in the context thereof, and references to any statue or regulations or policies shall include
amendments thereto, from time to time.

Company Related Terms

Term Description
Articles/Articles of Association The Articles of Association of our Company
Auditors M/s. Batliboi & Purohit, Chartered Accountants, the statutory auditors of our
Company
Board / Board of Directors The Board of Directors of our Company or committees constituted thereof
our Company, the
Company or the Issuer
Tilaknagar Industries Ltd
our or we or us Tilaknagar Industries Ltd and/or its Subsidiaries, unless the context requires
otherwise
ESOP 2008 To create, offer, issue and allot at any time to or to the benefit of such persons
who are in the permanent employment of our Company under the employee
stock option scheme of our Company of 2008 as authorised by the shareholders
of our Company
ESOP 2010 To create, offer, issue and allot at any time to or to the benefit of such persons
who are in the permanent employment of our Company under the employee
stock option scheme of our Company of 2010 as authorised by the shareholders
of our Company
Equity Shares Equity shares of face value ` 10/- each of Tilaknagar Industries Ltd
Memorandum or
Memorandum of Association
The Memorandum of Association of our Company
Placement Shares Equity shares of face value ` 10/- each of Tilaknagar Industries Ltd. offered
and to be placed, issued and allotted pursuant to the Offering
Prag The subsidiary of our Company, namely, Prag Distillery (P) Ltd.
Surya The subsidiary of our Company, namely, Surya Organic Chemicals (P) Ltd
Promoters Mr. Amit Dahanukar and Mrs. Shivani Amit Dahanukar
Registered Office The registered office of our Company is at P.O. Tilaknagar, Tal. Shrirampur, Dist.
Ahmednagar, Maharashtra- 413720, India
Subsidiaries The subsidiary companies of Tilaknagar Industries Ltd, namely, Prag Distillery
(P) Ltd. and Surya Organic Chemicals (P) Ltd.

Offering Related Terms

Term Description
Allocated /Allocation The allocation of Placement Shares following the determination of the Issue
Price to Investors on the basis of Application Forms submitted by them, in
consultation with the Book Running Lead Manager in compliance with Chapter
VIII of the SEBI Regulations
Allotment/Allotted The allotment and issue of Placement Shares pursuant to this Offering
Allottees Persons to whom Placement Shares of our Company are issued pursuant to the
Offering
Application(s) An offer by a QIB pursuant to the Application Form for subscription of
Placement Shares under this Offering.

xix
Term Description
Application Form The form (including any revisions thereof) pursuant to which a QIB shall
submit an Application in the Offering
Bid Closing Date October 29, 2010
Book Running Lead Managers Book Running Lead Manager to the Offering, in this case being India Infoline
Ltd. and SPA Merchant Bankers Ltd.
CAN/Confirmation of
Allocation Note
Note or advice or intimation to not more than 49 QIBs confirming the
Allocation of Placement Shares to such QIBs after discovery of the Issue Price
and requesting payment for the entire Issue Price for the Equity Shares
allocated to such QIB
Cut-off Price The Issue Price of the Placement Shares which shall be finalised by our
Company in consultation with the Book Running Lead Manager
Escrow Agreements Escrow agreements dated October 27, 2010 executed between our Company,
Book Running Lead Manager and the Escrow Banks
Escrow Banks IndusInd Bank Limited and Deutsche Bank AG
Escrow Bank Account


A special bank account opened by our Company with each of the Escrow Banks
in terms of the arrangement between our Company, the Book Running Lead
Manager and the Escrow Banks, into which the application monies payable by
QIBs in connection with subscription to Placement Shares pursuant to the
Offering shall be deposited
Floor Price The floor price of ` 88.75 for the Placement Shares, which has been calculated
in accordance with Chapter VIII of the SEBI Regulations
Closing Date On or abount November 3, 2010
Issue Opening Date October 27, 2010
Issue Price A price of ` 95.00 per Equity Share
Issue Size The issue of 14,210,500 Placement Shares aggregating to approximately `
1,350 millions
Offering The offer and placement of the 14,210,500 Placement Shares to QIBs, pursuant
to Chapter VIII of the SEBI Regulations
Pay-in Date Last date specified in the CAN sent to QIBs, as applicable
Placement Document This Placement Document dated October 29, 2010 issued in accordance with
the provisions of Regulation 84 in Chapter VIII of the SEBI Regulations
Preliminary Placement
Document
The Preliminary Placement Document dated October 27, 2010 issued in
accordance with Chapter VIII of the SEBI Regulations
QIBs or Qualified Institutional
Buyers
Qualified Institutional Buyer as defined under Regulation 2(1)(zd) of the SEBI
Regulations
QIP Qualified Institutions Placement under Chapter VIII of the SEBI Regulations
RBI Reserve Bank of India
RoC Registrar of Companies, Pune, Maharashtra
Stock Exchanges BSE and the NSE


Conventional and General Terms/ Abbreviations

Term/Abbreviation Full Form
AGM Annual General Meeting
AS Accounting Standards issued by the Institute of Chartered Accountants of India
AY Assessment Year
BOLT BSE On-line Trading
BSE Bombay Stock Exchange Ltd.
CAR Capital Adequacy Ratio
CDSL Central Depository Services (India) Ltd.
CESTAT Customs, Excise and Service Tax Appellate Tribunal
CIN Corporate Identification Number
CIT(A) Commisioner of Income Tax (Appeals)
Civil Code The Code of Civil Procedure, 1908
Companies Act The Companies Act, 1956 and The Companies Act, VII of 1913, as amended
Delisting Regulations Securities Exchange Board of India (Delisting of Equity Shares) Regulations,

xx
Term/Abbreviation Full Form
2009, as amended from time to time.
Depository A depository registered with SEBI under the SEBI (Depositories and Participant)
Regulations, 1996
Depositories Act The Depositories Act, 1996
DER Debt Equity Ratio
DP/Depository Participant A depository participant as defined under the Depositories Act, 1996
DP ID Depository Participants Identity
DIPP The Indian Department of Industrial Policy and Promotion, Ministry of Commerce
and Industry, Government of India
EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation
ECB External Commercial Borrowings
ECS Electronic Clearing Service
EGM Extraordinary General Meeting
EPS Earnings Per Share, i.e., profit after tax available to Equity Shares during the fiscal
year divided by the weighted average outstanding number of Equity Shares during
that fiscal year

ESIC Employee State Insurance Corporation
FDI Foreign Direct Investment
FEMA The Foreign Exchange Management Act, 1999
FII Foreign Institutional Investor (as defined under the SEBI (Foreign Institutional
Investors) Regulations,1995) registered with SEBI under applicable laws in India
Financial Statements The financial statements of our Company, including the audited consolidated
financial statements of our Company for Fiscal 2008, Fiscal 2009 and Fiscal 2010
prepared in accordance with Indian GAAP , and the unaudited consolidated
financial information for the half year ended September 30, 2009 and 2010,
which have been reviewed in accordance with Standard on Review Engagement
(SRE) 2410, Engagements to Review Financial Statements issued by the Institute
of Chartered Accountants of India, included in this Placement Document

Financial Year/Fiscal/FY Period of twelve months ending March 31 of that particular year
FIPB Foreign Investment Promotion Board
GDP Gross Domestic Product
GIR Number General Index Registry Number
GoI Government of India
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
India The Republic of India
Indian GAAP Generally Accepted Accounting Principles followed in India
IT Information Technology
ITAT Income Tax Appellate Tribunal
IT Act Indian Income Tax Act, 1961
ITES Information Technology Enabled Services
Mn/Million Million
Mutual Fund A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations,
1996
NSDL National Securities Depositaries Ltd.
NSE National Stock Exchange of India Ltd.
p.a. Per annum
P/E Ratio Price/Earnings Ratio
PAN Permanent Account Number
PAT Profit After Tax
PBT Profit Before Tax
RBI The Reserve Bank of India
Regulation S Regulation S under the Securities Act
Rs. or ` or Rupees Rupees, being the lawful currency for the time being of India
SEBI Act The SEBI Act, 1992, as amended

xxi
Term/Abbreviation Full Form
SEBI The Securities Exchange Board of India
SEBI Regulations The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as
amended
SEBI VCF Regulations SEBI (Venture Capital Fund) Regulations, 1996
Securities Act The U.S. Securities Act of 1933, as amended
SICA Sick Industrial Companies (Special Provisions) Act, 1985, as amended
STT Securities Transaction Tax
Takeover Code SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, as
amended
Trademarks Act The Trademarks Act, 1999, as amended
UIN Unique Identification Number
US GAAP Generally Accepted Accounting Principles in the United States of America
WTO World Trade Organisation

Technical and Industry terms

Term Description
APBCL Andhra Pradesh Beverages Corporation Ltd
Cases
Packing units for bottles comprising of 9 liters for IMFL and 7.8
liters for Beer.
CAGR Compounded Annual Growth Rate
CIA World Factbook Factbook of Central Intelligence Agency
CRISIL Research
The research report published by Credit Rating and Information
Services of India Ltd.
CBU Contracted Bottling Units
CSD Canteen Stores Department
ENA Extra Neutral Alcohol
GDP Gross Domestic Product
IMFL Indian Made Foreign Liquor
KBCL Kerala State Beverages Corporation Ltd
KLPD Kilo Litres Per Day
KSBCL Karnataka State Beverages Corporation Ltd
MSML The Maharashtra Sugar Mills Ltd
RS Rectified Spirit
TASMAC Tamil Nadu State Marketing Corporation Ltd
TDIL Tilaknagar Distilleries and Industries Ltd


xxii
SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue. This summary should be read in
conjunction with, and is qualified in its entirety by, the more detailed information appearing elsewhere
in this Placement Document, including under the sections Risk Factors, Use of Proceeds, Placement,
Issue Procedure and Description of the Placement Shares.

Issuer Tilaknagar Industries Ltd.
Issue size 14,210,500 Placement Shares, agggregating to approximately ` 1,350
million.
A minimum of 10% of Issue size shall be available for allocation to
Mutual Funds only. If no Mutual Fund is aggreable to take up the
minimum portion mentioned above, such minimum portion or part
thereof may be allotted to other eligible QIBs.
Issue Price ` 95.00 per Placement Share.
Eligible Investors QIBs as defined in Regulation 2(1)(zd) of the SEBI Regulations. See
section titled Issue Procedure Qualified Institutional Buyers.
Equity Shares issued and
outstanding
immediately prior to the
Offering
96,954,300 Equity Shares of ` 10 each, aggregating to ` 969.54
million
Please note:
Our Company has, pursuant to a resolution passed by he board of
directors of our Company at their meeting held on August 7, 2010,
authorized a bonus issue of Equity Shares wherein for every Equity
Share held on September 30, 2010, (the Record Date) the holders
thereof will be entitles to two fully paid up Equity Shares of our
Company, (Bonus Equity Shares). Accordingly, the holders of any
Equity Shares allotted upon the exercise of any outstanding warrants
or stock options which have vested under our Companys stock option
schemes, prior to the Record Date will be eligible to receive such
Bonus Equity Shares as well.
Our Company had, pursuant to a preferential allotment, issued and
allotted on September 20, 2010, 2,767,500 warrants exercisable for
one Equity Share per such warrant. The Equity Shares allotted upon
the exercise of the aforesaid warrants are eligible for bonus Equity
Shares in a ratio of two Equity Shares for each Equity Share to be
allotted upon the exercise of such warrants. The maximum number of
Equity Shares, to be allotted as a result of exercise of warrants
(assuming that all the aforesaid warrants are exercised for Equity
Shares) is 8,302,500 Equity Shares.
Pursuant to shareholders resolution dated August 06, 2008 passed at
an Annual General Meeting, the consent was granted to the Board to
create, offer, issue and allot at any time to or to the benefit of such
persons who are in the permanent employment of our Company to
subscribe to such number of options under the ESOP 2008 that the
issue of the equity shares of our Company shall not exceed in
aggregate 10% of the issued, subscribed and paid up equity shares of

xxiii
our Company as on March 31, 2008 that is up to 572,507 equity
shares.
Pursuant to shareholders resolution dated September 20, 2010
passed at an Annual General Meeting, the consent was granted to the
Board to create, offer, issue and allot at any time to or to the benefit of
such persons who are in the permanent employment of our Company
to subscribe to such number of options exercisable by the employees
under the ESOP 2010 that the issue of the equity shares of our
Company shall not exceed in aggregate 5% of the issued, subscribed
and paid up equity shares of our Company as on March 31, 2010 that
is up to 1,615,500 equity shares.
For further details please refer to the section tiled Principal
Shareholders beginning on page 87 of this Placement Document.
Equity Shares issued and
outstanding
immediately after the
Offering
111,164,800 Equity Shares of `10 each
Floor Price The Floor Price of ` `` ` 88.75 for the Placement Shares, which has been
claculated in accordance with Chapter VIII of the SEBI Regulations.
Listing Our Company has made an application to the Stock Exchanges in
terms of clause 24(a) of the listing agreement to obtain in-principle
approval for the listing of the Placement Shares, which has been
received from the Stock Exchanges and an application for the final
listing and trading approval will be made after allotment of Placement
Shares.
Transferability
Restrictions
The Placement Shares being Allotted pursuant to this Offering shall
not be sold for a period of one year from the date of Allotment except
on the Stock Exchanges. The Placement Shares are subject to certain
transfer restrictions. See Transfer Restrictions.
Use of Proceeds The total proceeds of this Offering will be ` 1,349,997,500.00. After
deducting the issue expenses of approximately ` 31.00 millions, the
net proceeds of this Offering will be approximately ` 1,315.50
millions.
For further details, please refer section titled Use of Proceeds.
Risk Factors See section titled Risk Factors for a discussion of factors you should
consider before investing in Placement Shares of our Company.
Closing The Allotment of the Placement Shares offered pursuant to this
Offering is expected to be made on or about November 3, 2010
(Closing Date).
Ranking The Placement Shares being issued shall be subject to the provisions of
our Companys Memorandum and Articles of Association and shall
rank pari passu in all respects with the existing Equity Shares including
rights in respect of dividends. The shareholders will be entitled to
participate in dividends and other corporate benefits, if any, declared
by our Company after the Closing Date, in compliance with the

xxiv
Companies Act. Shareholders may attend and vote in shareholders
meetings on the basis of one vote for every Equity Share held. See
section titled Description of the Equity Shares and Key Provisions of
our Articles of Association.
Security Codes for the
Equity Shares
ISIN : INE133E01013
BSE Code : 507205
NSE Code : TI

xxv
SUMMARY OF BUSINESS

The following summary is qualified in its entirety by, and should be read in conjunction with, more
detailed information of our financial statements appearing elsewhere in this Placement Document
along with the risks discussed under the section titled Risk Factors. In this section our Company
refers to Tilaknagar Industries Ltd., and we, us and our refers to Tilaknagar Industries Ltd. and/or
its Subsidiaries, unless the context requires otherwise.
Overview
Our Company is an established and recognized player in the IMFL industry with a strong presence in
South India. Our Company was originally incorporated in the year 1933 as The Maharashtra Sugar
Mills Ltd. (MSML) for manufacturing sugar and allied products. Subsequently in the year 1973, a
wholly owned subsidiary of MSML, Tilaknagar Distilleries and Industries Ltd. (TDIL) was
incorporated to make industrial alcohol, Indian Made Foreign Liquor (IMFL) and sugar cubes. The
current form of our Company, namely, Tilaknagar Industries Ltd. was formed after a scheme of
amalgamation between, MSML and TDIL was approved by the Honble High Court of Bombay on July
16, 1993. Our Company is promoted individuals from the Dahanukar family.
We are engaged in the business of manufacturing products in the IMFL market. Currently our
product portfolio consists of more than forty brands across a diverse range of product segments and
price points. We own two millionaire brands-Mansion House Brandy and Madira Rum. For the year
ended March 31, 2010, Mansion House brandy and Madira Rum had sales volume of 3.76 million
cases and 1.05 million cases respectively. Our Company has a growing presence in Canteen Stores
Department (CSD), currently with 11 (eleven) registered brands. These include 7 (seven) brands
acquired by us from Alcobrew Distilleries India Private Ltd. towards the end of Fiscal 2010 which
were already registered with the CSD. We market a large number of our products in the southern
states in India and are gradually assuming a pan national presence. For the year ended March 31,
2010, 89.94 % of our sales volume was generated from the Southern states. We also have a growing
international business and are currently exporting our products to Western Africa, Middle East, Far
East and Caribbean countries. Exports constituted 0.97% of our sales volume for the year ended
March 31, 2010.
The IMFL market has grown at a 15 % Compounded Annual Growth Rate (CAGR) over the past five
years, with volumes increasing nearly 1.5 times in Fiscal 2010. The growth in demand has been
primarily due to rapid economic growth, rising disposable incomes, favourable demographics and
greater social acceptability of alcohol consumption in India. According to CRISIL Research the
production volume in the IMFL market was 210-240 million cases in the Fiscal 2010. The IMFL
market is characterized by a limited number of large manufacturers. Almost 50% of the IMFL market
is controlled by United Spirits Ltd.
We are also equipped with manufacturing and bottling facilities spread over thirty one facilities
strategically located across India. Out of these, three facilities are owned by us and our subsidiaries.
In addition, we operate our manufacturing and bottling operations through 7 lease and 21 tie-up
arrangements. Our primary manufacturing facility is in the sugar rich belt of Shrirampur,
Maharashtra with an installed capacity of 100 Kilo Litres Per Day (KLPD), which includes the new
molasses based ENA plant with an installed capacity of 50 KLPD in Shrirampur, Maharashtra which
commenced production in November, 2009. Further our green field grain based distillation project is
expected to be commissioned shortly with a capacity of 100 KLPD at Shrirampur.
Our Company has a licensed bottling capacity of 500,000 cases per year. In addition to our own
capacities our subsidiaries Prag and Surya have licensed bottling capacity of 600,000 cases per

xxvi
annum and 1,080,000 cases per annum, respectively. The total gross sales of our brands and other
sales including sales through tie up arrangements reached ` 10,000 million during the year Fiscal
2010.
The gross sale of our brands and other sales including those through tie up units was ` 10,001.01
Million for the Fiscal 2010 as compared to ` 4897.14 million during the Fiscal year 2009.
Our consolidated total income for the fiscal years ended March 31, 2008, 2009 and 2010 was `
1,524.10 million, `2,520.73 million and `3,906.27 million respectively and our consolidated profit
after tax for the fiscal years ended March 31, 2008, 2009 and 2010 was `121.22 million, `197.80
million and `348.87 million respectively. Our total income and profit after tax have increased at a
CAGR of 60.09% and 69.65%, respectively between Fiscal 2008 and Fiscal 2010. For the same period
our volume of sales grew at a CAGR of 37.72 %. Our consolidated total income for the half years
ended September 30, 2010 and September 30, 2009 was ` `` ` 2,122.49 million and ` `` ` 1,375.62 million,
respectively. Our profit after tax for the aforementioned periods was ` `` ` 170.79 million and ` `` ` 105.98
million, respectively.
Our facilities at Shrirampur hold an ISO 14001-2004 environment management certificate dated
April 22, 2009 issued by Det Norske Veritas Management System Certificate in connection with
manufacture of spirit, ENA, IMFL, industrial chemicals (diethyl oxalate and turkey red oil) and sugar
cubes.
Competitive Strengths
Diversified brand portfolio.
We have a brand portfolio of over 40 brands which are positioned at various price points to
cater to various demand segments. Our flagship brands are Mansion House Brandy,
Madira Rum, Courrier Napolean Brandy, and Senate Royale which contribute to 67.06
% of our sales in terms of volume for the years ended on March 31, 2010. For the years
ended March 31, 2009, and 2010 our brand Mansion House Brandy has experienced a year
on year growth rate of 54.25 % and 71.52 %, respectively. For the same period the year on
year growth rate of Madira Rum was 714.8 %. and 198.8 %, respectively. The Mansion
House Brandy and Madira Rum caters to the premium and regular segments, respectively.
The strong positioning of these brands has contributed to sustained increases in our
revenues and we expect this trend to continue as the spirit industry grows. We create new
brands though our innovative design of product outlook, blend and bottling size amongst
others. Recently we launched another brand called Blacpower Whisky.
Manufacturing capabilities:
Our Company has 31 (thirty one) manufacturing and bottling units spread across India with
its primary manufacturing facility located in the sugar-rich belt of Shrirampur, Maharashtra.
Our manufacturing units comprise of 3 (three) owned units, 7 (seven) lease arrangements
and 21 (twenty one) tie-up units across the country.
Our primary manufacturing facility at Shrirampur, Maharashtra has an installed capacity of
100 KLPD of ENA which includes a recently set up molasses based ENA plant with a capacity
of 50 KLPD of ENA. The ENA produced from this plant caters to our Companys bottling
activities in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Puducherry.
We are also in the process of commissioning a green field project with a grain based
distillery of 100 KLPD of ENA at Shrirampur, Maharashtra. This plant will also be able to run

xxvii
on molasses based feedstock. This will enable our Company to launch premium products
domestically and internationally. The grain facility will also provide for a natural hedge
against the fluctuations in molasses price. The ENA produced from this plant will cater to our
Companys increasing bottling capacities in Maharashtra and South India.
Efficient Distribution Sales Force
As a part of our strategy we sell through state corporations, distributor channels and direct
sales to organizations such as CSD. We market our sales in the retail segment through state
corporations, wholesalers, distributors and direct sales. As on September 30, 2010 we have a
distribution network consisting of approximately 215 sales personnel. We have been
increasing and intend to continue increasing our sales team, particularly in rural areas
where we expect growth to be more significant. We believe our wide distribution reach will
allow us to achieve optimal product penetration going forward and increase our revenues
and profit margins.
Significant Market Share in the South India market particularly in brandy, whisky and the CSD
segments.
Our Company has a dominant presence in high key growth markets such as Kerala,
Karnataka, Puducherry, Andhra Pradesh and Tamil Nadu. Our sales in these states, in terms
of volume in Fiscal ended March 31, 2010, were 7.20 million cases, comprising 89.94% of
our total sales volumes. Our flagship brand Mansion House Brandy caters to premium and
semi-premium segments.
Our Company has a growing presence in the CSD. Recently, we acquired 7 (seven) brands
from Alcobrew Distilleries India Private Ltd. in Fiscal 2010 which were already registered
with the CSD. Consequently our total portfolio of registered brands in the CSD segment has
increased to eleven brands. Our volumes in the CSD segment increased from 0.14 million
cases in Fiscal 2009 to 0.31 million cases in Fiscal 2010.
Economies of Scale and Locational Advantages
We enjoy cost advantages due to the economies of scale of our operations and cost savings
on raw material transportation due to the location of our manufacturing facilities, which are
located in Shrirampur, in the state of Maharashtra, which is in a sugar belt, one of the key
elements to the raw materials of this Industry. In addition, our distribution network allows
us to reach our customers in a cost effective manner due to the coverage of our owned
bottling units and tie up arrangements in various states in India.
Product Quality:
Our Company has won a number of awards, such as (i) Best Business Partner of CSD for the
year 2009-10, and, (ii) Emerging Company of the Year award at BevIndia in 2010. In addition
our Mansion House Brandy has been recognised as the Brandy of the year at INDSPIRIT in
2009. Our facilities at Shrirampur hold an ISO 14001-2004 environment management
certificate dated April 22, 2009 issued by Det Norske Veritas Management System Certificate
in connection with manufacture of spirit, ENA, IMFL, industrial chemicals (diethyl oxalate
and turkey red oil) and sugar cubes.
Experienced Management Team:
We have long experience in the business. We believe that our management, marketing and
technical teams are qualified and experienced and have contributed to our growth and

xxviii
development. The key management personnel referred to in the section Board of Directors
and Senior Management of this Placement Document have an average experience of more
than 25 years. Our marketing and technical teams are experienced in marketing our
products and in the manufacturing and bottling of our products. The strength and quality of
our management has been instrumental in implementing our business strategies. We believe
that a motivated and empowered employee base is essential to maintaining our competitive
advantage.
Business Strategy
Focus on Brand Building and Expanding Brand Portfolio:
We have a portfolio of more than 40 brands. As a part of our strategy we are focused on
expanding our brands portfolio across market segments and expanding existing established
brands. In Fiscal 2010 we introduced two brands in the IMFL market namely Duchess
V,S.O.P and MH V.S.O.P. In addition we also revamped our existing brands namely the
Senate Royale Whisky and Mansion House Brandy to turn them into brands of
international quality.
We started manufacturing three new brands in the first quarter of Fiscal 2011 which caters
to different markets at different price points. Our strategy involves increasing our market
share through brand extensions in existing markets and by catering to different markets by
introducing different price points. We also intend to introduce brands particularly in the
whisky segment as we believe that this segment is expected to be the dominant spirit
segment in the future in India. In light of this we recently launched Blacpower Whisky.
Acquisition of New Brands and bottling capacity and foray into new geographies:
As a part of our strategy we continue to acquire new brands to establish our presence in new
geographies. In Fiscal 2010, we successfully concluded the acquisition of 7 (seven) brands
from Alcobrew Distilleries India Private Ltd. The acquisition of these brands will strengthen
our market presence in the northern and eastern part of India. We expect to continue
acquisitions of brands to augment our capabilities. In addition we intend to expand our
bottling capacity to meet our growing business needs.
In Fiscal 2008 we acquired our subsidiaries Prag and Surya which were instrumental in
augmenting our in house bottling capacity. We are currently focusing to increase the bottling
capacities in both our Subsidiaries. Our Company has a bottling capacity of 500,000 cases
per year. In addition to our own capacities our subsidiaries Prag and Surya have bottling
capacities of 600,000 cases per annum and 1,080,000 cases per annum, respectively.
As a part of our strategy, we intend to expand our presence in the whisky segment. We have
recently launched the Blacpower Whisky and revamped the Senate Royale whisky. We
intend to expand our presence in North India through expansion of our whisky portfolio.
Focus on the CSD Segment:
Canteen Stores Department, (CSD), represents a significant source of consumption of
spirits products in India. We seek to continue to increase sales of our IMFL branded products
to the CSD by increasing sales of existing registered brands and by introducing new products
to the CSD.
CSD caters to the requirements of the Indian army, air-force, navy and its retired personnel.
The CSD has 34 depots across India.

xxix
Our sales in the CSD segment grew by 118.12% from Fiscal 2009, (0.14 million cases), to
Fiscal 2010, (0.31 million cases).
Expand our Export Sales:
We regularly export our products across segments to Western Africa, Middle East, Far East
and Caribbean Countries. We have increased our export penetration though the export of
our brands Senate Royale Whisky and Classic Whisky. We intend to expand our
international reach in scale and coverage by adding more brands to our export list.
Capacity Expansion
We are focusing on inorganic and organic growth to drive our market share.
Our primary manufacturing facility at Shrirampur, Maharashtra has an installed capacity of
100 KLPD of ENA which includes a recently set up molasses based ENA plant with a capacity
of 50 KLPD of ENA. The ENA produced from this plant caters to our Companys bottling
activities in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Puducherry.
We are also in the process of commissioning a green field project with a grain based
distillery of 100 KLPD of ENA at Shrirampur, Maharashtra. This will enable our Company to
launch premium products domestically and internationally. This plant will also be able to
run on a molasses based feed stock. The ENA produced from this plant will cater to our
Companys increasing bottling capacities in Maharashtra and South India.

xxx
SELECTED FINANCIAL INFORMATION OF OUR COMPANY
The summary selected financial information set forth below are the audited consolidated financial
statements of our Company for Fiscal 2008, Fiscal 2009 and Fiscal 2010. The selected financial and
operating data have been derived from the financial statements of our Company included elsewhere in
this Placement Document. The financial information included in this Placement Document does not
reflect our Companys results of operations, financial position and cash flows for the future and its past
operating results are no guarantee of its future operating performance. Our Companys financial
statements are prepared and presented in accordance with Indian GAAP. For a summary of our
Companys significant accounting policies and the basis of presentation of its financial statements, see
the notes to the financial statements under the section titled Financial Statements, of this Placement
Document. The selected financial information set forth below should be read in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of Operations and the
audited financial statements Fiscal 2008, Fiscal 2009 and Fiscal 2010

xxxi

TILAKNAGAR INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
As at As at As at
31st March 2010 31st March 2009 31st March 2008

I SOURCES OF FUNDS

1. Shareholders' Funds
a. Share capital 323.10 139.49 57.25
b. Share Warrant - 70.65 70.65
c. Employee Stock Option Outstanding 2.83 - -
d. Reserves & surplus 1,700.83 1,215.09 1,064.40
2,026.76 1,425.23 1,192.30
2. Loan Funds
a. Secured loans 2,721.18 1,167.68 574.73
b. Unsecured loans 1,813.53 83.64 3.14

3. Deferred Tax Liability 119.55 62.36 37.39
6,681.02 2,738.91 1,807.56

II APPLICATION OF FUNDS

1. Goodwill 38.92 38.92 7.60

2. Fixed Assets

a. Gross block 2,351.36 1,549.16 1,310.88
b. Less: Depreciation 280.98 181.08 118.40
c. Net block 2,070.38 1,368.08 1,192.48
Add : Capital Work-In-Progress 1,637.40 390.94 135.22
3,707.78 1,759.02 1,327.70
d. Less: Impairment of assets 1.70 1.70 1.70
3,706.08 1,757.32 1,326.00

3. Investments 2.88 0.35 0.35

4. Current Assets, Loans & Advances 4,080.21 1,916.97 1,074.59
Less: Current Liabilities & Provisions 1,147.07 974.70 601.07
Net Current Assets 2,933.14 942.27 473.52

5. Miscellaneous Expenditure - 0.05 0.10
(To the extend not adjusted or written off)



6,681.02

2,738.91

1,807.56


Significant accounting policies & Notes on
accounts








xxxii
TILAKNAGAR INDUSTRIES LTD.

SUMMARY CONSOLIDATED PROFIT AND LOSS STATEMENT INFORMATION
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
For the year ended For the year ended For the year ended
31st March 2010 31st March 2009 31st March 2008
INCOME:
Sales 5,497.99 4,050.75 2,293.83
Less: Excise duty 1,635.92 1,558.66 813.27
3,862.07 2,492.09 1,480.56
Other Income 44.20 28.64 43.54
3,906.27 2,520.73 1,524.10
EXPENDITURE :
(Increase) / Decrease in stock (189.41) (153.41) (69.60)
Cost of material 1,700.55 1,129.79 556.88
Employees' remuneration and benefits 201.30 200.54 125.60
Manufacturing and other expenses 1,348.15 887.75 621.62
Finance Cost 235.85 107.09 55.15
Preliminary & Pre-operative Exp written off 0.05 0.05 0.05
Depreciation / Amortization 71.27 32.76 21.90
3,367.76 2,204.57 1,311.60

Profit for the year 538.51 316.16 212.50
Less: Prior Period Adjustments - (0.11)
Profit before taxation 538.51 316.05 212.50
Less: Provision for taxation
Current years' 132.45 87.50 82.54
Previous years' - 3.94 -
Fringe Benefit Tax - 1.86 1.57
Deferred Tax 57.19 24.97 7.16
189.64 118.27 91.28
Profit after taxation 348.87 197.80 121.22
Add: Balance brought forward from previous years 327.28 167.89 77.72
Amount available for appropriations 676.15 365.69 198.95
APPROPRIATIONS:
Transferred to General Reserve 33.50 21.50 17.00
Proposed dividend 88.66 14.45 12.02
Dividend distribution tax (including surcharge & cess) 15.07 2.46 2.04
Balance transferred to balance sheet 538.92 327.28 167.89


676.15 365.69 198.95

Significant accounting policies & Notes on accounts





xxxiii




TILAKNAGAR INDUSTRIES LTD.
Consolidated Cash flow statement for the year ended 31st March, 2010
2009-2010 2008-2009
Rs Million Rs Million Rs Million Rs Million
A.CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax & extraordinary items 538.51 316.05
Adjustment for:
Depreciation 71.27 32.76
(Surplus) / Loss on sale of assets 0.12 0.22
Provision for taxes of earlier years - -
Miscellaneous expenses written off 0.05 0.05
Interest (net) 232.95 105.64
Dividend received - (0.00)
304.39 138.67
Operating Profit before working capital changes
Adjustment for:
(Increase) / Decrease in inventory (251.75) (375.25)
(Increase) / Decrease in trade receivables (165.94) (94.19)
(Increase) / Decrease in loans and advances (1,527.96) (452.02)
(Decrease) / Increase in trade payable and provisions 172.36 431.94
(1,773.29) (489.52)
Proceeds from short term borrowings 1,353.68 -
Tax provision (132.45) (93.30)
NET CASH FROM OPERATING ACTIVITIES 290.86 (128.09)
B.CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets (2,050.76) (494.76)
Sale of fixed assets 0.57 0.37
Increase in investments (2.53) (31.45)
Dividend received - -
Interest received 2.89 1.46
NET CASH FROM INVESTING ACTIVITIES (2,049.83) (524.38)
C.CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of share capital including premium 386.47 82.24
Proceeds from borrowings (net) 1,929.71 721.31
Interest paid (235.84) (107.10)
Dividend and tax thereon (103.73) (16.90)
NET CASH FROM FINANCING ACTIVITIES 1,976.61 679.55
NET INCREASE IN CASH & CASH EQUIVALENTS 217.62 27.07
Opening cash & cash equivalents 48.05 20.98
Closing cash & cash equivalents 265.67 48.05

1

RISK FACTORS
Investing in the Placement Shares involves a high degree of risk. Prospective investors should carefully
consider the risks and other uncertainties described below, in addition to the other information contained
in this Placement Document, before making any investment decision relating to the Placement Shares. The
occurrence of any of the following events could have a material adverse effect on our Companys business,
results of operations, financial condition and future prospects and cause the market price of our Equity
Shares including the Placement Shares to fall significantly resulting in loss of all or a part of your
investment and/or our Companys ability to pay dividends could be impaired. Additional risks not
described below or not currently known to our Company or that our Company currently deems immaterial
may also adversely affect the market price of the Placement Shares and that an investor could
consequently lose all or a part of his investment in the Placement Shares. In particular, any potential
investor in or purchaser of the Equity Shares should pay particular attention to the fact that our Company
is a company governed by Indian legal and regulatory requirements which may differ from those which
prevail in other countries. Prospective investors should also note that certain statements in this Placement
Document, including information with respect to our Companys plans and strategy, constitute forward-
looking statements as discussed in the section entitled Forward-Looking Statements.
Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the
financial or other implication of any of the risks described in this section. The numbering of the risk factors
has been done to facilitate the ease of reading and reference, and does not in any manner indicate the
importance of one risk factor over another.
In making an investment decision, prospective investors must rely on their own examination of our
Company and the terms of the Offering, including the merits and risks involved.

1 Any unfavourable outcome in connection with the proceedings initiated against our
Company in connection with alleged unauthorized use of certain trademarks could
adversely affect our reputation, brand value, results of operations and financial
conditions.

U.T.O. Nederland B.V., (UTO), has instituted a suit (Suit No. 632 of 2009) before the High
Court of Judicature at Bombay on March 01, 2009 inter-alia against our Company seeking
appropriate orders in connection with the protection of the trademarks MANSION HOUSE
and SAVOY CLUB in respect of Alcoholic Beverages under Class-33 of the Trademarks Act
which are allegedly registered in the name of UTO. UTO has sought to restrain our Company
from the use of the aforesaid marks in connection with certain products manufactured and
marketed by our Company on the alleged grounds that our Company has infringed upon the
rights of UTO associated with the said marks. The aforesaid suit is pending for final hearing
and disposal.


As alleged by UTO, they had entered into a Licensing and Manufacturing Agreement dated July
07, 1983 under which our Company was licensed and permitted to use the aforesaid
trademarks. The license was on an exclusive and irrevocable basis subject to the condition that
our Company shall procure specified minimum quantities of concentrate from UTO and
procure all required concentrates for producing and selling alcoholic beverages under the two
brand names. Furthermore, our Company and UTO have entered into two agreements dated
February 23, 1987, pursuant to which UTO has ceded their aforesaid trademarks in favour of
our Company on certain conditions, including that if UTO could no longer supply concentrate
to our Company, the said trademarks would revert back to the UTO. It was alleged by UTO that
our Company has stopped purchasing concentrate from UTO since the year 1993 and has also

2
altered the recipes and formulae for the products sold under the aforesaid trademarks and
were not using concentrate purchased from UTO.

Futhermore, our Company has instituted a suit, (O.S. No. 578/2009), in October 2009 before
the Court of the Honble Chief Judge at Hyderabad seeking a decree to permanently restrain
UTO from making any claims on the trademark label Mansion House French Brandy, similar
other trademarks and using or interfering with the trademark Mansion House French Brandy
registered in the name of our Company, vide trademark registration no. 612191 dated
November 22, 1993.

Incidentally Mansion House Brandy is one of our flagship brands and has accounted for
47.01%, 39.55%, and 33.70% of our sales based on volume for the Fiscals 2010, 2009 and
2008, respectively. Any unfavourable outcome of the aforesaid proceedings, would affect our
ability to use the aforementioned marks in connection with our operations and consequently,
we may not be able to derive the goodwill that we enjoy under the aforementioned brands. We
operate in a competitive environment and we believe that the brand recognition of our product
entails us to a significant competitive advantage, and therefore if we are unable to use the
aforementioned brands in connection with our products, our goodwill, reputation, brand value,
results of operations and financial condition could be adversely affected. Further any such
unfavourable outcome could require us to incur additional cost which could adversely affect
our profitability. For further details, please refer to the section titled Legal Proceedings on
page 147 of this Placement Document.


2 We are involved in winding up proceedings in the High Court of Bombay. Any unfavourable
outcome in such proceedings could affect our ability to carry on our operations, our
financial condition and profitability.


Our Company has filed appeals against the orders passed by the High Court of Bombay, with
respect to two winding up petitions initiated by M/S. Ding Dong Liquors (DDL) vide Appeal
No.180 of 2008 and Anupama Wine Distributors (AWD), vide Appeal No. 225 of 2009. DDL
had initiated a winding up petition against our Company (Comp. Petition No. 943 of 2007) on
February 18, 2008 before Honble High Court of Judicature at Bombay under sections 433, 434
and 439 of the Companies Act seeking an order of winding up our Company on the ground of
non payment of refundable deposit to the value of ` 25,000,000 from our Company post the
termination of contractual obligations arising under the contract dated September 7, 1998
entered into between our Company and DDL. The Honble High Court of Judicature at Bombay
vide an order dated March 07, 2008 directed our Company to deposit a sum of ` 12.7 million
within four weeks from the date of passing the order with the Honble High Court of Judicature
at Bombay. Our Company has filed an appeal (Appeal No.180 of 2008) before Honble High
Court of Judicature at Bombay on March 28, 2008 against the alleged order dated March 07,
2008 passed by the Honble High Court of Judicature at Bombay on the following grounds (i)
our Company was not entitled to pay deposit as ordered by the Honble High Court of
Judicature at Bombay as the said liability of payment of deposit has arisen on the part of
default of DDL and (ii) DDL is not entitled to refund of deposits till the accounts are reconciled.
Our Company has made a deposit of ` 12.70 million before the High Court of Bombay vide
demand draft no 739354 on April 03, 2008.

AWD had initiated a winding up petition against our Company (Comp. Petition No. 803 of
2007) on August 23, 2008 before Honble High Court of Judicature at Bombay under sections
433, 434 and 439 of the Companies Act seeking an order of winding up our Company on the
ground of non payment of refundable deposit to the value of ` 42,100,000 from our Company
and payment of excise duties on behalf of our Company by AWD post the termination of
contractual obligations. The Honble High Court of Judicature at Bombay vide an order dated
March 16, 2009 directed our Company to deposit a sum of ` 42.1 million on or before June 30,

3
2009. Our Company has filed an appeal (Appeal No.225 of 2009) before Honble High Court of
Judicature at Bombay on May 08, 2009 against the alleged order dated March 16, 2009 passed
by the Honble High Court of Judicature at Bombay on the grounds that the sum of ` 40 million
as demanded was not due and payable to AWD. Our Company has made a deposit of ` 42.1
million before the High Court of Bombay vide bank guarantee no 0607009BG0001002 on
August 21, 2009.

The High Court of Bombay has pursuant to an order dated July 06, 2009 clubbed both the
matters and the same is pending hearing. If we are unsuccessful in defending our interests in
such proceedings for any reason, we may be required to pay debts, regardless of their merits,
which would materially adversely affect our financial condition, or subject to orders, to wind
up our business and cease our operations. Filing of a winding-up proceedings against us could
potentially trigger an event of default under some of our loan and security agreements For
further details concerning the winding up proceedings against our Company, please see section
titled Legal Proceedings on page 147 of this Placement Document.

3 We rely heavily on our brand portfolio. Failure to successfully maintain or promote our
brand portfolio may adversely affect our results of operations.

We generate our sales primarily from the sale of IMFL branded spirits products. Therefore, our
brand portfolio is critical for our success as we believe that market perception of a brand is one
of the key factors for consumers to make decisions to purchase IMFL spirits products. We
currently own and manufacture through ourselves and our Subsidiaries 9 brands selling more
than 100,000 cases per annum, these brands are Mansion House Brandy, Madira Rum, Mansion
House XO Brandy, Hottt Shot Super Whisky, Hot Silk Whisky, Courrier Napolean Brandy, Shot
Whisky, Shot Brandy and Senate Royale Whisky. In particular, we currently own and
manufacture two millionaire brands(whose sales exceeded 1 million cases in Fiscal 2010), they
are Mansion House Brandy and Madira Rum. If we are unsuccessful in promoting our brands or
fail to maintain our brand position, market perception and consumer acceptance of our brands
may be eroded, and our business, financial condition, results of operations and prospects may
be materially adversely affected. Any negative publicity or disputes involving our brands could
materially adversely affect our business, financial condition, results of operations and
prospects. For further details in connection with the volume of sales, please refer section titled
Business and Management Discussion and Analysis of Financial Information on page 58 and
33, respectively of this Placement Document.

4 Our inability to seek renewal of the tie-up and lease arrangements/agreements with
regards to manufacturing and bottling may cause material adverse effect to our business
and results of operation.

We enter into tie up and lease arrangements with third parties for the manufacturing and
bottling operations of our brands. Such arrangements enable us to minimize our capital
expenditure by leveraging upon the benefits that such third party enjoys in the relevant states
including surplus capacities and regulatory approvals and licenses.

Under the lease arrangements the manufacturing facilities and bottling units are taken on lease
and/ or leave and license agreements with various third parties. In addition, we may also enter
into such arrangements with other third parties in the future. Any adverse impact on the title,
ownership rights, development rights of the owners from whose premises we operate or
breach of the contractual terms of such leave and license agreements or any inability to renew
the said leases and/or leave and license agreements on terms acceptable to us may impede our
business operations and possibly force us to establish operations at another facility.

Under the tie up arrangements, third parties provide us with the infrastructure and manpower
necessary for the bottling of our spirits products, including labour, water, electricity, plant and
machinery and are responsible to obtain relevant licenses and permits for such operations.

4
Though we have entered into tie-up arrangements in the past, there is no assurance that our
Company would be able to continue with such arrangements or enter into new tie-ups in the
future. The tie-up arrangements contributed approximately 48.13%, 42.54%, and 16.45% of
our volume of sales in fiscal 2010, 2009 and 2008, respectively.

These tie-up/lease arrangements are generally short term in nature and our Company may fail
to seek renewal of these arrangements. Since, there are limited number of such license holders
in India, there is an increased competition to enter into tie ups with such license holders at
competitive prices. Our failure to seek renewal of these contracts with the tie-up units may as
well result in our competitors acquiring the same.


5 We are subject to extensive statutory and/or regulatory requirements and any failure to
comply with such requirements could subject us to penalties or sanctions, which in turn
could adversely affect our business, the results of our operations and financial conditions.

As a company engaged in the manufacture of alcohol and liquor products we and our
customers are subject to extensive regulatory requirements. The production of liquor products
requires manufacturers to obtain licenses from the respective State Governments under the
local State laws. These licenses also determine the production capacity of each facility.
Similarly, the food sanitation and packaging laws in India that regulate our business include
the Food Safety and Standards Act, which provides for the prevention of adulteration of food
and food articles. Local laws in various States regulate the levy of excise duty on any alcoholic
liquor for human consumption, while the Customs Act, 1962 and the Customs Tariff Act, 1975
regulate the custom duties leviable on import of goods to India. Various local governments also
levy octroi duty on the entry of certain products, including liquor, in such city/town for
consumption, use or sale thereof. The Bombay Prohibition Act, 1949 applicable in Gujarat read
with the Bombay Denatured Spirit (Gujarat Amendment) Rules, 1988, Bombay Prohibition
(Manufacture of Spirit) (Gujarat) Rules, 1963, the Mizoram Liquor Total Prohibition Act, 1995,
the Nagaland Liquor Total Prohibition Act, 1989, Manipur Liquor Prohibition Act, 1911, impose
various restrictions upon the manufacturing of liquor, construction or employment of any
person in any distillery or brewery, importing, exporting, transportation or possession of
liquor, and selling or buying of liquor in the areas covered by such states. The Cable Television
Networks (Regulation) Act, 1995, as amended, read with the Cable Television Network Rules,
1994, as amended, prescribe an advertising code which provides that advertising in the cable
services shall be so designed as to conform to the laws of India and should not offend morality,
decency and religious susceptibilities of the subscribers of cable services. In addition, the
advertising code prohibits advertisements which indirectly or directly promote production,
sale or consumption of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants.
Similarly, the Press Council of India has also laid down norms of journalistic conduct, which
explicitly states that no advertisement shall be published, which promotes directly or
indirectly production, sale or consumption of cigarettes, tobacco products, wine, alcohol, liquor
and other intoxicants.

If we are found to have violated an applicable regulation, administrative or judicial
proceedings may be initiated against us that may result in censures, fines, trading bans,
deregistration or suspension of our business licenses, the suspension or disqualification of our
officers or employees, or other adverse consequences. We could also be subject to constraints
or conditions on operating our business activities and may incur fines, receive regulatory
cautions or show cause notices and be barred from engaging in certain business activities. The
imposition of any of these or other penalties or restrictions could have a material adverse
effect on our business, reputation, financial condition and results of operations.


6 Our future operating results are difficult to predict and may differ from our past
performance.

We have registered significant growth in our operations over the past three fiscal years. Our

5
net sales and profit after tax have increased at a CAGR of 61.51% and 69.65%, respectively
between Fiscal 2008 and Fiscal 2010. For the same period our volume of sales grew at a CAGR
of 37.72 %. There can be no assurance that we will be able to maintain similar rates of growth
in future. Our operating results may fluctuate in the future due to a number of factors, many of
which are beyond our control. Our results of operations during any fiscal year and on a year on
year basis are difficult to predict. Our business, results of operations and financial condition
may be materially adversely affected by:

decreased demand for our products in the Indian and global markets;
a decrease in domestic and international prices for our products;
an increase in interest rates at which we can raise debt financing;
adverse fluctuations in the exchange rate of the Rupee versus major international
currencies, including the U.S. dollar;
decrease in Indian import tariffs or increase in domestic duties;
increasing transportation costs, including freight to key export markets, or the non-
availability of transportation due to strikes, shortages or for any other reason;
strikes or work stoppages by our employees;
changes in government policies affecting the spirits industry or sales in India or globally,
including an increasing number of states in India prohibiting alcohol consumption and
sale;
industrial accidents arising from improper handling of combustible or explosive materials,
improper operations of machines, human errors or other reasons at our manufacturing
facilities or during transportation;
natural disasters, outbreaks of diseases or heavy rains; and an increase in raw materials
costs, in particular, molasses costs.
limited ability to increase the price of our products during a year as a result of the increase
in raw material costs.

7 There are various legal proceedings and disputes against us.

We are party to various legal proceedings before judicial, tax, statutory and quasi-judicial
authorities. Some of these proceedings involve potential substantial liability for us. Such legal
proceedings could divert management time and attention, and consume financial resources in
their defence or prosecution. Further, an adverse judgment in any of these legal proceedings
could have an adverse impact on our financial condition, results of operations and business
prospects. For further details concerning the legal proceedings which could have a material
adverse effect on our Company, see Legal Proceedings. The number of legal proceedings and
disputes pending against us are as stipulated in the table below:

Category Company Directors

Criminal proceedings
2 1
Civil proceedings
5 Nil
Tax proceedings
2 Nil


8 Any unfavourable outcome in the criminal proceedings initiated against our Company and
Directors, which, could have an adverse effect on our reputation, business, results of
operations and financial condition.

One Mr Benedict William, ex-employee of our Company has filed a criminal complaint (C.C. No.
252/2010) against our Company and Directors on June 22, 2010 in connection with the

6
termination of his services from the Company on the alleged grounds of act of insubordination,
acts of fraud and malfeasance before Chief Metropolitan Magistrate, Hyderabad under section
200 of Criminal Procedure Code alleging offence/s under sections 504,506,505(2) r/w section
34 of Indian Penal Code for defamation, criminal intimidation, and public mischief under the
abovementioned sections.

There can be no assurance that the outcome of these litigations will be in the favour of our
Company or our Directors. In the event the outcome/orders passed by the respective courts
are against our Company or these Directors, their involvement in the promotion of our
Company may be limited, which may have an adverse effect on our operations and may cause
the reputation of our Company and Directors to suffer. Our Company and the Directors would
face penal and criminal liability if proven guilty of the charges. For more details of these
litigations / proceedings, please see section titled Legal Proceedings on page 147 of this
Placement Document.

9 We rely on third party suppliers for certain raw materials. Unfavorable fluctuations in the
price, availability and quality of raw materials could cause production delays and increase
production costs.

In order to manufacture our products, we require raw materials, including, molasses and
coarse grain. We purchase such materials from a wide range of suppliers to mitigate our
reliance on any one supplier. There can be no guarantee that we will be able to maintain our
diversity of suppliers or adequate supply of such raw materials at all times. Additionally, the
prices of our primary raw materials are volatile and fluctuate based on a number of factors
outside our influence. We do not have any long-term price guarantees with our raw materials
suppliers. There can be no assurance that the price of our raw materials will not increase in the
future or that we will be able to pass on such increases to our customers. Our failure to achieve
corresponding sales price increases in a timely manner, sales price erosion without a
corresponding reduction in raw materials costs, a significant shortage of supply of these goods,
delays in availability or any failure to renegotiate favourable raw materials supply contracts
are all factors that could have a material adverse effect on our business, financial condition,
results of operations and prospects.

10 Our production depends upon the availability of certain principal raw materials such as
molasses and coarse grain. Our failure to procure such raw material at commercially
favourable terms including at competitive prices, in a timely manner, or at all could
adversely affect our business, results of operations and financial condition.

We rely on raw materials such as molasses and coarse grain for the production of our spirits
products. The supplies of these agricultural products may be adversely affected by severe
weather conditions, which may result in disruption of our operations. In addition, agricultural
products in India, including molasses and coarse grain depend on seasonal monsoon rains for
irrigation. Delayed monsoon seasons, drought or flooding could cause disruption of supplies of
such products or result in lack of supplies for an extended period of time or increases in prices
of such agricultural products. Moreover, availability of our primary raw material, molasses
depend on the production of sugarcane. Any fluctuation in production and availibility of
sugarcane would in turn affect our results of operations. In addition, our primary raw material
molasses can be used to produce ethanol. An increase in consumption of ethanol for blending
with petrol could increase the cost of molasses thus affecting our procurement costs. Our
financial condition and results of operation may be adversely affected if such an increase
occurs in the price of the molasses.

11 We face risks and uncertainties associated with the implementation of our expansion
projects.

We plan to continue to expand our brand and product portfolios and our production and

7
distribution networks in India and abroad. We may face following risks and uncertainties in
such expansion activities, if undertaken:

we may not be able to develop, acquire and promote additional successful brands;

funding anticipated to be deployed towards the cost of any expansion project may not
become available in a timely manner or at all or to meet our debt service obligations and
guarantees;

cost overruns could adversely affect our operating results;

we may not be able to obtain or install production equipment on time or to our satisfaction
due to unforeseen and unavoidable circumstances;

we may face difficulties in recruiting, training and retaining sufficient skilled technical,
marketing and management personnel; and

we may be unable to develop adequate internal administrative functions and systems and
controls, particularly the financial, operational, communications and other internal
systems.

While we have successfully implemented expansion projects in the past, there can be no
assurance that we will be able to execute any current or future expansion strategies on time or
within budget or that we will achieve our objectives. Any failure to do so could materially
adversely affect our business, results of operations and financial condition.


12 Our inability to adjust our product mix in line with market demand and change in
customer preferences may adversely impact our business.

Our future success will depend in part on our ability to develop and market IMFL
products/brands which meet changing customer demands and our ability to anticipate and
respond to market demands. There can be no assurance that we will be successful in
developing new IMFL brands or that we will be able to meet changes in customer preferences
or that we will be cost competitive. In the event, we fail to make such changes to our product
mix in a timely and cost-effective manner, or to produce and market IMFL products that
capture market demand, our overall profitability could be adversely affected.

We may continue in future to introduce new brands and improve our existing products/brands
through brand extensions. However, there can be no assurance that new products launched by
us now or in the future will be successful or that any initial success will be maintained. If
unsuccessful, our business and financial condition and results of operation will be adversely
affected. Moreover, if the demand for alternatives of one of our products is created or keeps
growing and impacts the market for our products, our results of operations may be adversely
affected. For further reference, please see section titled Business on page 58 of this
Placement Document.


13 The loss or shutdown of operations at any of our manufacturing facilities or our Bottling
Facilities could have a material adverse effect on our business, financial condition and
results of operations.

Our business is dependent on our manufacturing facilities and our bottling units. Our
manufacturing facilities and bottling units are subject to operating risks, such as the
breakdown or failure of equipment, power supply or processes, performance below expected
levels of output or efficiency, obsolescence, labour disputes, strikes, lock-outs, the continued

8
availability of the services of our external contractors, earthquakes and other natural disasters,
industrial accidents and the need to comply with the directives of relevant government
authorities. The occurrence of any of these risks could significantly affect our operating results.
Although our Company and our Subsidiaries take precautions to minimize the risk of any
significant operational problems at these facilities, our business, financial condition and results
of operations may be adversely affected by any disruption of operations at our manufacturing
facilities and bottling units, including due to any of the factors mentioned above.

14 We sell our IMFL through government corporations which account for a significant
portion of our sales. Any disruption in the volume of our sales through government
corporations, whether due to eligibility criteria or otherwise could adversely affect our
financial condition and results of operations

A significant portion of our sales is through government corporations. Regulatory
requirements for registering our brands and subsequently selling them through government
corporations differ from state to state. We have to comply with various pre requisites so as to
be eligible to sell our products to government corporations. For the years ended March 31,
2010, 2009 and 2008, our sales to government corporations accounted for 89.37%, 90.31%
and 91.27%, respectively, of our total sales based on volumes. Our operations and/or
profitability could be adversely affected by any disruption in the volume of our sales through
government corporations, whether due to eligibility criteria or otherwise.

15 If our products do not get sold through government corporations within stipulated periods
of time, we may be liable to pay certain charges to the relevant government corporations.

We sell various products through various government corporations, in certain states in India.
These government corporations send our products to various retail stores through various
depots, for onward sales to the final consumer.

We receive the payment for the sale of our products through the relevant government
corporations when our products are sold to the final consumer. If however, the said products
are not sold within a stipulated period of time, we are, after the said period of time, required to
pay certain charges till the sale of the said products as demurrage charges. The demurrage
charges are directly linked to the amount of time that the product lies unsold beyond the
aforementioned stipulated period of time. In such a case however, we do have a choice of
having the relevant products returned to us rather than continuing to pay the aforesaid
charges. Our operations, productivity and profitability could be adversely affected by the
aforesaid return of our products and/or the said charges.


16 We depend upon consumer preferences and spending habits with regard to our spirits
products, and if consumer spending habits change, or if we are unable to respond
effectively and in a timely manner to those changes, our operations and/or profitability
could be adversely affected.

The Indian liquor industry is subject to significant changes in consumer preferences and
spending habits. The levels and patterns of consumer preferences and spending habits in
relation to spirits products in India are subject to a number of factors, including economic
factors such as the general state of the economy, relevant tax rates and consumer income
levels.

Such changes may result in reduced demand and lower prices for our products, limitations on
our ability to pass through increased taxes and higher product costs to price-sensitive
consumers, increased levels of selling and promotional expenses and decreased sales of our
higher-priced premium brands. Furthermore, if we fail to respond to competitive pressures or
to introduce new products on a timely basis, or if new or enhanced products offered by us do

9
not achieve a significant degree of market acceptance, we could lose customers and market
share. These factors, singly of in the aggregate could have a material adverse effect on our
operations and/or profitability.


17 Our Promoters will continue to retain majority shareholding in us after this Issue, which
will allow them to exercise significant influence over us. We cannot assure you that our
Promoters will always act in our or your best interest.

The majority of our issued and outstanding Equity Shares are currently beneficially owned by
our Promoters. Upon completion of this Issue, our Promoters will own 58,320,875 million
Equity Shares, or 52.46% of our post-Issue Equity Share capital. Accordingly, our Promoters
will continue to exercise significant influence over our business policies and affairs and all
matters requiring shareholders approval, including the composition of our Board of Directors,
the adoption of amendments to our certificate of incorporation, the approval of mergers,
strategic acquisitions or joint ventures or the sales of substantially all of our assets, and the
policies for dividends, lending, investments and capital expenditures. This concentration of
ownership also may delay, defer or even prevent a change in control of our Company and may
make some transactions more difficult or impossible without the support of these
shareholders. The interests of the Promoters as our controlling shareholders could conflict
with our interests or the interests of our other shareholders. We cannot assure you that our
Promoters will act to resolve any conflicts of interest in our or your favor.

18 Pursuant to a preferential allotment in September 2010, our Company has issued certain
warrants convertible into Equity Shares to persons and entities belonging to our
Companys promoter group. Any exercise of warrants will dilute your shareholding in the
Company.

On September 20, 2010, our Company had, pursuant to a preferential allotment, issued and
allotted 2,767,500 warrants exercisable for one Equity Share per such warrant. However, the
Equity Shares allotted upon the exercise of the aforesaid warrants are eligible for bonus Equity
Shares in the same ratio as the other Equity Shares After the allotment of warrants.

Our Company has, pursuant to a resolution passed by the board of directors of our Company at
their meeting held on August 7, 2010, authorized a bonus issue of Equity Shares wherein for
every Equity Share held on September 30, 2010, (the Record Date) the holders thereof will
be entitles to two fully paid up Equity Shares of our Company, (Bonus Equity Shares).
Accordingly, the holders of any Equity Shares allotted upon the exercise of any outstanding
warrants or stock options which have vested under our Companys stock option schemes, prior
to the Record Date will be eligible to receive such Bonus Equity Shares as well.

The maximum number of Equity Shares, to be allotted as a result of exercise of warrants
(assuming that all the aforesaid warrants are exercised for Equity Shares) is 8,302,500 Equity
Shares. As on September 30, 2010 all of the aforesaid warrants were outstanding. If the
warrant holders seek to exercise such warrants for Equity Shares their percentage of Equity
Shareholding in our Company may increase which will result in your shareholding being
diluted, and may also adversely affect the trading price of our Equity Shares. For further
details, please see section titled Principal Shareholders and Board of Directors and Senior
Management on pages 87 and 74, respectively of this Placement Document.


19 Our indebtedness and the conditions and restrictions imposed by the lenders under the
financing arrangements could adversely affect our ability to conduct our business and
operations.

We have entered into agreements with certain banks and financial institutions for term loans

10
and short term working capital facilities, which contain restrictive covenants, including, but
not limited to, requirements that we obtain consent from the lenders prior to altering our
capital structure, making a further issue of any shares, effecting any scheme of amalgamation,
restructuring or any scheme of expansion or new project, declaring dividends, creating any
charge or lien on the security, changing our core management team, alteration of our
memorandum and articles of association, investing in our share capital, entering into any
borrowing arrangements, or appointing any nominee director on our Board. Moreover, some of
the loan agreements contain financial covenants that require us to maintain, among other
things, specified debt equity and other ratios. There can be no assurance that we will be able to
comply with these financial or other covenants or that we will be able to obtain consents
necessary to take actions that we believe are required to operate and grow our business.
Furthermore, a default, including our inability to service our debt, on some of our loans may
also trigger cross-defaults. An event of default under any debt instrument, if not cured, or
waived, could have a material adverse effect on us.

20 We may not be able to target higher growth markets and newer geographies, which could
have an adverse effect on the results of our operations and effect our profitability.

The ability of our Company to grow depends on our ability to expand into newer markets. Our
Company has strong presence in the brandy and whisky segment in South India. As a part of
the strategy, our Company intends to expand in the North and Eastern India and in the CSD
segment. Expansion into the newer markets is dependent on the ability to successfully market
products in newer markets. In the event our Company is not able to target higher growth
markets and newer geographies, it could have an adverse effect on the results of our
operations and affect our profitability.


21 We have certain contingent liabilities not provided for which may adversely affect our
financial condition.

The following table sets forth our contingent liabilities, on a consolidated basis, as of the last
audited financial statement i.e. as of March 31, 2010:


For further details see the sections titled Financial Information in this Placement Document.
To the extent that any of these or future contingent liabilities become actual liabilities, it would
adversely affect our results of operations and financial condition.

Particulars
As at
31-03-10
(Rupees in million)
(a) Corporate guarantees issued to banks on behalf of Subsidiary
Company
250.00
(b) Bank guarantees issued on behalf of the Company 51.76
(c) In respect of disputed sales tax matter, pending before the Sales
tax tribunal, contested by the Company

Nil
(d) In respect of disputed Income tax matters, pending before the
appropriate Income tax authorities, contested by the Company
For A.Y. 2007-08
For A.Y. 2005-06
For A.Y. 2004-05
For A.Y. 1992-93



86.07
Nil
22.27
Nil
(e) In respect of disputed service tax matter, pending before the
appropriate Central Excise authorities, contested by the
Company

2.02
(f) Disputed matters under arbitration pending disposal 20.14

11

22 The seasonality of the spirits industry requires us to predict demand and build up
inventory accordingly.

The spirits industry is characterized by seasonal demands for its products. Historically,
demand has tended to be the highest during the months of November through January.
Accordingly, we must plan our annual production levels based on our predictions of demand,
including a build-up of inventory prior to peak sales periods. We make these predictions from
our own market assessments as well as sales targets provided by our customers. However, if
we were to make an inaccurate prediction of such demands, it could have an adverse effect on
the business. In addition, during seasons of lower demand, we continue to incur overhead
expenses, but our sales from operations may be delayed or reduced.

23 The success of our business is substantially dependent upon the services of key
management personnel, the loss of any of whom could adversely affect our business.

We are led by a team of experienced senior professionals and skilled personnels and personnel
to oversee the operations and growth of our business. Our success is substantially dependent
upon the expertise and services of these members of the management team. Competition for
senior management personnel in the IMFL industry in which we engage is intense, and we may
not be able to retain our existing experienced senior professionals and skilled personnels,
attract experienced senior professionals of similar capabilities or retain new experienced
senior professionals in the future. The loss of the services of such persons could have an
adverse effect on our business, results of operations and financial condition.

24 Advertising of spirits products is restricted in India.

Advertising of spirits products in the media is restricted in India under the Cable Television
Networks (Regulation) Amendment Act, 2002 and the Cable Television Network (Amendment)
Rules, 2009. The spirits industry has become the focus of increased social and political
attention in India as a result of public concern over problems relating to alcohol abuse,
including health consequences, drinking by persons under the legal age. As a result, we are
unable to advertise our products by traditional means. Instead, we rely on word-of-mouth and
other means. The Press Council of India has also laid down norms of journalistic conduct,
which explicitly states that no advertisement shall be published, which promotes directly or
indirectly production, sale or consumption of cigarettes, tobacco products, wine, alcohol, liquor
and other intoxicants. The inability to launch national advertising campaigns is detrimental to
the development of any business in the spirits industry, including ours.


25 Majority of our property and assets are secured in favour of our lenders.

Majority of our property and assets are subject to mortgage or other security interests to
secure our payment obligations to our lenders. If we fail to satisfy our debt service obligations
as they become due, the lenders could exercise their creditors rights, including foreclosing our
property and assets subject to mortgage and other security interests. If this occurs, we would
not be able to continue to utilize the property and assets subject to foreclosure and our
operations would be disrupted during such foreclosure. If we are unable to source funds to
repay such indebtedness within the time period specified by the creditors, the creditors could
sell our property and assets to third parties. We may not be able to repurchase or locate
alternative property and assets at commercially reasonable terms, or at all, to continue our
operations.


26 We face competition from Indian and international spirits manufacturers,


12
The GoI has been reducing the import duties on spirits products over the past few years. As a
result, we may become subject to increased competition from foreign spirits companies. Our
principal domestic competitors are United Spirits Ltd., or USL and Radico Khaitan Ltd., which
are substantially larger, more diversified and have greater financial, personnel and marketing
resources than us and therefore may have certain competitive advantages. We export a portion
of our products to the Western Africa, Middle East, Far East and Caribbean countries. Exports
constituted 0.97% of our sales volume for the year ended March 31, 2010 and therefore also
compete in these overseas markets.

Although we have broad product lines and are continually developing our products, there can
be no assurance that we will be able to compete effectively in the markets in which we operate
currently or in which we propose to operate in the future. If we are unable to effectively
compete against international or domestic competitors, we could face decreased market share,
increased pricing pressure and eroded margin, which would materially adversely affect our
financial condition and results of operations.


27 Our inability to enter into arrangements with the distributors and retailers in the open
market would adversely affect our results of operations and business.

In an open market distribution channel, the government grants licences to distributors and
retailers. Liquor manufacturers are allowed to choose distributors within a state, who in turn
can sell to retailers at a margin. Though we have entered into such arrangements with
distributors in the past, there can be no assurance that we would be able to continue doing the
same considering the short term nature of the distributors licences. In the event, we fail to
enter into such arrangements in the future, it may adversely affect our business and results of
operation.


28 Increased environmental regulation and changing consumer environmental awareness
could affect our operations.

Manufacturing enterprises in India, including us, are subject to central and state environmental
related laws and regulations. The Water (Prevention and Control of Pollution) Act, 1974 (the
Water Act) in 1974 and the Air (Prevention and Control of Pollution) Act, 1981 (the Air
Act) have been enacted to provide for the prevention, control and abatement of water and air
pollution. For details please refer to the section titled Regulation and Policies

The GoI maintains a zero tolerance policy regarding effluent, a by-product of the molasses
distillation process when creating ENA. Accordingly, we must undertake certain capital
expenditures in order to properly treat effluent at our molasses distilleries. We also must
comply with environmental regulations relevant to our operations such as, among others,
waste disposal, soil groundwater contamination and air emissions. In addition, certain
State/Central Governments through new ordinances may prohibit or restrict the use or
disposal of certain products that are among the types of products produced by us. If such
prohibitions or restrictions were to be widely adopted, such regulatory and environmental
measures could adversely affect demand for our products and thereby have a material adverse
effect upon us. Moreover, there can be no assurance that we will be able to maintain our
environmental licenses and permits in order to be able to continue our operations.
Additionally, a decline in consumer preference for our products due to environmental
considerations could have a material adverse effect upon our business. If any of our facilities
are shut down, we will need to incur costs arising from compliance with regulations, appealing
decisions affecting those facilities, resuming production and continuing to pay labour and other
costs. We could, therefore, be materially adversely affected by existing environmental
requirements.


13
29 We may not be able to adequately protect our intellectual property.

We rely on various trademarks including Mansion House, Madira Rum, Courrier Napolean,
and Senate Royale Whisky, to protect our intellectual property, which is critical to our
business. Currently we have 8 registered copyrights, 45 registered trademarks and have filed
56 applications for the registration of trademarks. In the event we fail to obtain these
trademark registrations our trademarks could be used by our competitors or any other third
parties, which could have a material adverse effect on our results of operations. We constantly
seek to protect our trademarks against unauthorized use or infringement, but any such
precautions may not provide meaningful protection against competitors or protect the value of
our trademarks.

Further, with respect to the already registered trademarks and any trademarks that our
Company may procure in future; our Company may fail to seek renewal of these trademarks. In
the event we fail to seek renewal of these trademarks, it may adversely affect our sales and
thereby our business, results of operation and financial condition.

30 We may not have obtained all necessary licences and approvals as applicable to our
business, and thereby the same could have an adverse effect on the results of operations.

We are subject to various legislations and regulations (both central and state), under which we
are required to obtain licences/approvals/consents under various applicable laws. We may be
at default of not obtaining or not seeking renewal of necessary licences/approvals/consents
from the relevant government authorities, thereby requiring us to pay penalties as may be
prescribed under the relevant legislation/regulation and may also result in closure of
operations. Our directors/promoters may also be penalised (by either fine or imprisonment)
for not maintaining the necessary licences/approvals/consents. In the event, either civil
liability is imposed on our Company or our Promoters are penalised, it would adversely affect
our results of operation and business.

31 We may not be able to prevent the counterfeiting of our products.

We, like our competitors in the spirits industry, are at a risk of our products being
counterfeited by third parties re-using our packaging to sell their products. These products
would be formulated differently and may be of inferior quality. We have implemented certain
safeguards against these actions through special tamper-resistant packaging such as guala
caps. However, if our reputation were to suffer as a result of such counterfeiting, our financial
condition and results of operations could be materially adversely affected.

32 We may be exposed to product liability, property damage or personal injury claims, which
may adversely affect our reputation and business.

Businesses in the liquor industry can be adversely affected by consumer complaints from
customers or government authorities resulting from product quality, illness, injury or other
health concerns, alcohol abuse or other issues stemming from one product or a number of
products. There could also be public interest litigations against the spirit industry or against
our Company. Adverse publicity surrounding such allegations may negatively affect us,
regardless of whether the allegations are true, by discouraging customers from buying our
products. We could also incur significant liabilities if a lawsuit or claim results in a decision
against us and substantial litigation costs regardless of the result. Such legal proceedings could
also divert management time and attention. Such risks relating to product liability may
increase as legal concepts in product liability begin to develop and mature in India and in other
countries and regions where our products are now exported or may be sold in the future.

In line with the standard industry practice, we do not maintain product liability insurance
coverage and our business, results of operations and prospects may be adversely affected by a

14
successful product liability claim against us. Regardless of the ultimate merits of a claim or
dispute, we may face significant costs and expenses to defend such claims or enter into
settlement agreements, and we may suffer serious damage to our reputation, be subject to
substantial monetary damages and be subject to government investigations. Such cases may
lead to fines and sanctions against us and result in negative publicity of our brands, all of which
could have a material adverse effect on our business, prospects, financial condition and results
of operations.

33 Contamination of our products could hurt our reputation and decrease our sales.

Our business could be harmed in the event of actual or alleged contamination or deterioration
of our spirits products. A risk of contamination or deterioration exists at each stage of the
production cycle, including the production and delivery of raw materials, the distilling and
packaging of spirits products, the stocking and delivery of spirits products to distributors and
retailers, and the storage and shelving of products at the points of final sale. Moreover, any
incidents of this kind, even those involving spirits manufactured by others, could also have a
negative impact on our business, results of operations, financial condition and prospects.

34 We may not have adequate insurance coverage for claims against us.

We face the risk of loss resulting from product liability, intellectual property, antitrust,
contractual, warranty, environmental, fraud and other lawsuits, whether or not such claims are
valid. In addition, our insurance may not be adequate to cover such claims or may not be
available to the extent we expect. Our insurance costs can be volatile and, at any time, can
increase given changes in market supply and demand. We may not be able to obtain adequate
insurance coverage in the future at acceptable costs. A successful claim that exceeds or is not
covered by our policies could require us to pay substantial sums. In addition, we may not be
able to obtain adequate insurance coverage for certain risks such as political risk, terrorism or
war.


35 International market risks and trade barriers may affect our business.

Any developments in tariffs and non-tariff barriers, quotas and other trade barriers by
countries from which we import raw materials or to which we export our products will have
an effect on our profitability. There can be no assurance that Scotland, or countries in the
Middle East, Southeast Asia, Africa, Carribean countries or any other jurisdiction on which we
rely for the supply of raw materials and/or in which we operate will not impose trade
restrictions on us in the future. Any such imposition of trade barriers may have an adverse
effect on our results of operations and financial condition.

EXTERNAL RISK FACTORS

Risks Relating to India

36 Political instability or changes in the Central Government could adversely affect economic
conditions in India generally and consequently our Companys business
Major part of our income is derived from the Indian market. Consequently, our Companys
performance and the market price and liquidity of our Equity Shares may be affected by
changes in exchange rates and controls, interest rates, government policies, rates of
investments and saving, taxation, social and ethnic instability and other political and economic
developments affecting India.

15
The Central Government has traditionally exercised and continues to exercise a significant
influence over many aspects of the economy. The business of our Company, and the market
price and liquidity of the Equity Shares may be affected by interest rates, changes in Central
Government policy, taxation, social and civil unrest and other political, economic or other
developments in or affecting India.
Since 1991, successive Indian Governments have pursued policies of economic liberalization,
including significantly relaxing restrictions on the private sector. Nevertheless, the role of the
Indian central and state governments in the Indian economy as producers, consumers and
regulators has remained significant. Since 1996, the Government has changed several times.
The present Government, formed in May 2009, has announced policies and taken initiatives
that support the continued economic liberalization policies that have been pursued by
previous governments. We cannot assure you that these liberalization policies will continue in
future. The rate of economic liberalization could change, and specific laws and policies
affecting foreign investment, currency exchange and other matters affecting investment in our
securities could change as well. Any change in Indias economic liberalization and deregulation
policies could adversely affect business and economic conditions in India generally and our
business in particular.

37 If regional hostilities, terrorist attacks or social unrest or conflicts involving India could
affect the financial markets in India and adversely affect our business
The Asian region has from time to time experienced instances of civil unrest, terrorist attacks
and hostilities among neighbouring countries. Since early 2003, there have been military
hostilities and civil unrest in Afghanistan and Iraq. Military activity or terrorist attacks in India
in the future could influence the Indian economy by creating a greater perception that
investments in Indian companies involve higher degrees of risk. These hostilities and tensions
could lead to political or economic instability in India and a possible adverse effect on the
Indian economy, our Companys business, its future financial performance and on the market
for securities of Indian companies, including the Equity Shares.
Furthermore, India has also experienced social unrest in some parts of the country. If such
tensions occur in other parts of the country, leading to overall political and economic
instability, it could have an adverse effect on our Companys business, future financial
performance and the market for the Equity Shares.

38 Financial instability in other countries could disrupt Indian financial markets and our
Companys business and have an adverse effect on the market for the Placement Shares
The Indian financial markets and the Indian economy are influenced by economic and market
conditions in other countries, particularly emerging market countries in Asia. Financial turmoil
in Asia, Latin America, Russia and elsewhere in the world in recent years has had limited
impact on the Indian economy. Although economic conditions are different in each country,
investors reactions to developments in one country can have adverse effects on the securities
of companies in other countries, including India. A loss of investor confidence in the financial
systems of other emerging markets due to negative economic development such as rising fiscal
or trade deficit or a default on sovereign debt in emerging markets may cause volatility in
Indian financial markets and, indirectly, in the Indian economy in general. Any worldwide
financial instability could also have a negative impact on the Indian economy. This in turn
could negatively impact on the movement of exchange rates and interest rates in India. Any
significant financial disruption could have an adverse effect on our Companys business, future
financial performance and the market for the Placement Shares.

39 Foreign investors are subject to foreign investment restrictions under Indian law that
limit our Companys ability to attract foreign investors, which may adversely impact the

16
market price of the Equity Shares.
Under the foreign exchange regulations currently in force in India, transfers of shares between
non-residents and residents are freely permitted (subject to certain exceptions) if they comply
with the pricing guidelines and reporting requirements specified by the RBI. If the transfer of
shares, which are sought to be transferred, is not in compliance with such pricing guidelines or
reporting requirements or fall under any of the exceptions referred to above, the prior
approval of the RBI will be required. Additionally, shareholders who seek to convert the Rupee
proceeds from a sale of shares in India into foreign currency and repatriate that foreign
currency from India may require a no objection/ tax clearance certificate from the relevant
taxation authority as may be required under the extant laws/procedures. There can be no
assurance that any approval required from the RBI or any other government agency can be
obtained on any particular terms or at all.
40 Investors may have difficulty enforcing foreign judgments against our Company or its
management
The enforcement by investors of civil liabilities, including the ability to effect service of process
and to enforce judgments obtained in courts outside of India may be affected adversely by the
fact that we are incorporated under the laws of the Republic of India, and most of our executive
officers and directors reside in India. All of our assets and most of the assets of our executive
officers and directors are also located in India. As a result, it may be difficult to effect service of
process upon us and any of these persons outside of India or to enforce judgments obtained
against us and these persons, in courts outside of India.
Section 44A of the Indian Code of Civil Procedure, 1908, as amended, provides that where a
foreign judgment has been rendered by a court in any country or territory outside India, which
the Government has by notification declared to be a reciprocating territory, it may be enforced
in India by proceedings in execution as if the judgment had been rendered by the relevant
court in India. The United Kingdom has been declared by the Government to be a reciprocating
territory for the purposes of Section 44A. However, the United States has not been declared by
the Government to be a reciprocating territory for the purposes of Section 44A. A judgment of a
court in the United States may be enforced in India only by a suit upon the judgment, subject to
Section 13 of the Indian Code of Civil Procedure, 1908, and not by proceedings in execution.
The suit must be brought in India within three years from the date of the judgment in the same
manner as any other suit filed to enforce a civil liability in India. Generally, there are
considerable delays in the disposal of suits by Indian courts. It is unlikely that a court in India
would award damages on the same basis as a foreign court if an action is brought in India.
Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed
the amount of damages awarded as excessive or inconsistent with Indian practice. A party
seeking to enforce a foreign judgment in India is required to obtain prior approval from the
RBI under FEMA to repatriate any amount recovered. See Enforcement of Civil Liabilities.
41 There may be less company information available in Indian securities markets than in
securities markets in other more developed countries
There is a difference between the level of regulation, disclosure and monitoring of the Indian
securities markets and the activities of investors, brokers and other participants and that of
markets in the United States and other more developed economies. SEBI is responsible for
ensuring and improving disclosure and other regulatory standards for the Indian securities
markets. SEBI has issued regulations and guidelines on disclosure requirements, insider
trading and other matters. There may, however, be less publicly available information about
Indian companies than is regularly made available by public companies in more developed
economies. As a result investors may have access to less information about the business,
results of operations and financial conditions of our Company and of the competitors that also
are listed on the BSE and the NSE and other stock exchanges in India than investors may have
in the case of companies subject to the reporting requirements of other, more developed
countries.

17
42 You may be restricted in your ability to exercise preemptive rights under Indian law and
thereby may suffer future dilution of your ownership position.
Under the Companies Act, as amended, a public limited company incorporated in India must
offer holders of its equity shares preemptive rights to subscribe and pay for a proportionate
number of shares to maintain their existing ownership percentages before the issuance of any
new equity shares, unless the preemptive rights have been waived by adoption of a special
resolution by holders of three-fourths of the equity shares that are present at the relevant
meeting. If you are in a jurisdiction that requires registration or qualification of the new
securities, you may be unable to exercise your preemptive rights for the Equity Shares unless
such registration or qualification is effective with respect to the rights or an exemption from
the registration or qualification requirements is available to you. Our Company may elect not
to file a registration statement or otherwise qualify the preemptive rights available by Indian
law to investors in your jurisdiction. To the extent that you are unable to exercise preemptive
rights granted in respect of the Equity Shares, your proportional interests in our Company
would be reduced.
43 Rights of shareholders under Indian law may be more limited than under the laws of other
jurisdictions.
Legal principles relating to the validity of corporate procedures, directors fiduciary duties and
liabilities, and shareholders rights may differ from those that would apply to a company in
another jurisdiction. Shareholders rights under Indian law may not be as extensive as
shareholders rights under the laws of other countries or jurisdictions. Investors may have
more difficulty in asserting their rights as a shareholder than as a shareholder of a corporation
in another jurisdiction.
44 A slowdown in economic growth in India could cause our Companys business to suffer
Our Companys performance and growth are dependent on the health of the Indian economy.
The economy could be adversely affected by various factors such as political or regulatory
action, including adverse changes in liberalisation policies, social disturbances, terrorist
attacks and other acts of violence or war, natural calamities, interest rates, and various other
factors. Any slowdown in the Indian economy may adversely impact our Companys business
and financial performance and the price of the Placement Shares.
45 Natural calamities could have a negative impact on the Indian economy and cause our
Companys business to suffer.
India has experienced natural calamities such as earthquakes, tsunami, floods and drought in
the past few years. The extent and severity of these natural disasters determine their impact on
the Indian economy. For example, as a result of drought conditions in the country during fiscal
2003, the agricultural sector recorded a negative growth of 5.2 per cent. The erratic progress of
the monsoon in 2004 affected sowing operations for certain crops. In addition, prolonged
spells of below normal rainfall or other natural calamities could have a negative impact on the
Indian economy, adversely affecting our Companys business and the price of the Placement
Shares.
Pandemic disease, caused by a virus such as H5N1 (the avian flu virus), or H1N1 (the swine
flu virus), could have a severe adverse effect on our Companys business. The potential impact
of such a pandemic on our Companys results of operations and financial position is highly
speculative, and would depend on numerous factors, including:
the rate of contagion if and when that occurs;
the regions of the world most affected;
the effectiveness of treatment of the infected population;
our Companys insurance coverage and related exclusions;
the possible macroeconomic effects of a pandemic on our Companys business;

18
the effect of lapses and surrenders of existing policies, as well as sales of new policies.
46 Any downgrading of Indias debt rating by an independent international rating agency
may harm our Companys ability to raise debt financing
Any adverse revisions to Indias credit ratings for domestic and international debt by
international rating agencies may adversely affect our Companys ability to raise additional
financing and the interest rates and other commercial terms at which such additional financing
is available. This could have a material adverse effect on our Companys capital expenditure
plans, business and financial performance.
47 Trade deficits could have a negative effect on our business and the trading price of the
Equity Shares.
Indias trade relationships with other countries can influence Indian economic conditions. If
India's trade deficits increase or become unmanageable, the Indian economy, and consequently
our business, future financial performance and the trading price of the Equity Shares could be
adversely affected.
48 A decline in Indias foreign exchange reserves may affect liquidity and interest rates in the
Indian economy, which could adversely impact our financial condition.

Indias foreign exchange reserves as of March 31, 2010 stood at U.S$254.7 billion, which
represented an increase of U.S$13.3 billion over same period in March, 2009.. A decline in
Indias foreign exchange reserves could impact the valuation of the Rupee and could result in
reduced liquidity and higher interest rates which could adversely affect our future financial
performance.

49 The market value of your investment may fluctuate due to the volatility of the Indian
securities markets
Indian securities markets are more volatile than the securities markets in certain countries
which are members of the OECD. Indian stock exchanges have, in the past, experienced
substantial fluctuations in the prices of listed securities.
Despite increased annual turnover of equity, and currency products on the Indian stock
exchanges in recent years, these stock exchanges (including the BSE and the NSE) have
experienced problems which, if such or similar problems were to continue or recur, could
affect the market price and liquidity of the securities of Indian companies, including the
Placement Shares. These problems have included temporary exchange closures, broker
defaults, settlement delays and strikes by brokers. In addition, the governing bodies of Indian
stock exchanges have from time to time imposed restrictions on trading in certain securities,
limitations on price movements and margin requirements. Furthermore, from time to time,
disputes have occurred between listed companies, stock exchanges and other regulatory
bodies, which in some cases may have a negative effect on market sentiment.
50 Significant differences exist between Indian GAAP and International Accounting Standards
(IAS)/ International Financial Reporting Standards (IFRS), which may be material to
the financial information prepared and presented in accordance with Indian GAAP
contained in this Placement Document. Our Companys failure to successfully adopt IFRS
required effective April 2013 could have a material adverse effect on its stock price.
As stated in the reports of our Companys statutory auditors included in this Placement
Document, the financial statements included in this Placement Document are prepared and
presented in conformity with Indian GAAP. Our Company is not required, and no attempt has
been made, to reconcile any of the information given in this Placement Document to any other
principles or to base it on any other standards. Indian GAAP differs from accounting principles
and auditing standards with which prospective investors may be familiar in other countries,
such as IAS/IFRS. Significant differences exist between Indian GAAP and IAS/IFRS, which may
be material to the financial information prepared and presented in accordance with Indian

19
GAAP contained in this Placement Document. In making an investment decision, potential
investors must rely upon their own examination of our Company, the Description of the
Equity Shares and the financial information contained in this Placement Document.
The Institute of Chartered Accountants of India, the accounting body that regulates the
accounting firms in India, has announced a road map for the adoption of, and convergence
with, the International Financial Reporting Standards, or IFRS, pursuant to which all public
companies in India, such as our Company, will be required to prepare their annual and
interim financial statements under IFRS beginning with the fiscal period commencing April 1,
2013 to April 1, 2014 depending on the net worth of the company and certain other factors.
Further, the Ministry of Corporate Affairs has also adopted a similar plan for adoption of and
convergence with the IFRS. Because there is significant lack of clarity on the adoption of and
convergence with IFRS and absence of significant body of established practice on which to
draw upon in forming judgments regarding its implementation and application, our Company
has not yet determined with any degree of certainty the impact that such adoption will have on
its financial reporting. There can be no assurance that our Companys financial condition,
results of operations, cash flows or changes in shareholders equity will not appear materially
worse under IFRS than under Indian GAAP. As our Company transitions to IFRS reporting, it
may encounter difficulties in the ongoing process of implementing and enhancing its
management information systems. Moreover, there is increasing competition for the small
number of IFRS-experienced accounting personnel available as more Indian companies begin
to prepare IFRS financial statements. There can be no assurance that our Companys adoption
of IFRS will not adversely affect its reported results of operations or financial condition, and
any failure to successfully adopt IFRS within the stipulated time could have a material adverse
effect on our Companys stock price.
51 Third-party statistical and financial data in this Placement Document may be incomplete
or unreliable.
We have not independently verified the data in this Placement Document that comes from
industry publications and other third party sources and therefore we cannot assure you that
they are complete or reliable. Such data may also be produced on different bases from those
used in other countries. Therefore, discussions of matters relating to India, its economy and
our industry in this Placement Document are subject to the caveat that the statistical and other
data upon which such discussions are based may be incomplete or unreliable.
Risks Associated with the Placement Shares

52 Your ability to acquire and sell Placement Shares is restricted by the distribution,
solicitation and transfer restrictions set forth in this Placement Document.
The Placement Shares have not and will not be registered under the U.S. Securities Act, any U.S.
state securities laws or the laws of any jurisdiction other than India. Furthermore, the
Placement Shares are subject to restrictions on transferability and resale. You are required to
inform yourself about and observe these restrictions. See the discussions in this Placement
Document under the headings Selling Restrictions and Transfer Restrictions beginning on
pages 113 and 117, respectively, of this Placement Document. We, our representatives and our
agents will not be obligated to recognize any acquisition, transfer or resale of the Placement
Shares made other than in compliance with applicable legal restrictions.
53 Your ability to acquire and sell your Placement Shares is restricted under Indian law.
Indian laws impose restrictions on the acquisition and transfer of Indian securities by persons
resident outside India. The information below does not purport to be a complete analysis of the
restrictions under Indian laws for the acquisition and/or transfer of securities in an Indian
company by a person resident outside India. None of our Company and the Book Running Lead
Managers or their respective directors, officers, agents, affiliates and representatives accepts
any responsibility or liability for advising any investor on whether such investor is eligible to
acquire the Placement Shares. Under the portfolio investment scheme under the Foreign

20
Exchange Management Act, 1999, as amended (FEMA), registered FIIs may freely sell the
Placement Shares on the Stock Exchanges. Under such portfolio investment scheme, a single FII
cannot own more than 10% of the total issued capital of our Company. In respect of an FII
investing on behalf of its sub-accounts, the investment on behalf of each sub-account cannot
exceed 10% of the total issued capital of our Company. If the sub-account is held by foreign
corporates or individuals, the maximum permissible limit is 5% for each such sub-account.
Further, the total holding of FIIs or sub accounts of FIIs put together cannot exceed 24% of our
Companys paid up equity capital, except pursuant to the passing of a board resolution
followed by a special resolution of the shareholders, subject to any applicable sectoral cap /
statutory ceiling. However, as of the date of this Placement Document, pursuant to a
shareholders special resolution passed at their AGM dated September 20, 2010 and by a
resolution passed by our Board of Directors at their meeting held on August 7, 2010 the
aforementioned limits has been increased to the maximum permissible sectoral cap allowed in
connection with foreign investments in our Company as per the prevalent FDI policy.
The RBI has granted general permission to persons resident outside India to transfer shares
held by them to an Indian resident, subject to compliance with certain terms and conditions
and reporting requirements. Prior to the repatriation of sale proceeds, certain filings must be
made with an authorized dealer remitting the proceeds along with certain documents.
This discussion on Indian regulatory approvals does not address any restrictions on transfers
applicable to Placement Shares held by individuals who are non-resident Indians (as defined in
FEMA regulations). Non-resident Indians should contact their advisers to understand the
consequences of an investment in the Placement Shares. This discussion also does not address
any restrictions on the acquisition and/or transfer of any Placement Shares by or to an OCB.
OCBs and persons proposing to transfer any Placement Shares to an OCB should contact their
advisers to understand the implications of such restrictions on the acquisition or transfer of
any Placement Shares by or to an OCB.
In addition, the SEBI (Venture Capital Funds) Regulations, 1996, as amended, and the SEBI
(Foreign Venture Capital Investors) Regulations, 2000, as amended, specify certain restrictions
on investments by venture capital funds (VCFs) and foreign venture capital investors
(FVCIs) registered with the SEBI. VCFs and FVCIs should contact their advisers to understand
the consequences of an investment in the Placement Shares.

54 Your ability to sell your Placement Shares to a resident of India may be subject to delays if
RBI or any other Government agencys approval is required.

Under current Indian regulations and practice, approval of the RBI is required for the sale of
Placement Shares by a non-resident to a resident of India unless the sale is made on a
recognized stock exchange in India through a stock broker or a merchant banker registered
with SEBI at the market price in accordance with the terms of the pricing guidelines specified
by the RBI in case of an off-market transfer. The conversion of the Rupee proceeds from such
sale into foreign currency and the repatriation of that foreign currency from India under
certain circumstances also require the approval of the RBI. As foreign exchange controls are in
effect in India, the RBI will approve the price at which Placement Shares are transferred based
on a specified formula and a higher price per Equity Share may not be permitted. Approvals
required from the RBI or any other government agency may not be obtained on terms
favorable to a non-resident investor or at all. Further, prior to the repatriation of sale proceeds,
a no objection/tax clearance certificate may be required from the relevant taxation authority
as may be required under the extant laws/procedures.
We cannot guarantee that any approval will be obtained in a timely manner or at all. Because
of possible delays in obtaining requisite approvals, investors in the Placement Shares may be
prevented from realizing gains during periods of price increases or limiting losses during
periods of price declines.

21

55 A third party could be prevented from acquiring control over us because of anti-takeover
provisions under Indian law.

There are provisions in Indian law that may discourage a third party from attempting to
acquire control of our Company, even if a change in control would result in the purchase of
your Placement Shares at a premium to the market price or would otherwise be beneficial to
you.
The Takeover Code requires that a person who, together with persons acting in concert with
him, holds 15% or more but less than 55% of the Placement Shares or voting rights in any
company, or who holds 55% or more but less than 75% of the Placement Shares or voting
rights in any company and acquires shares or voting rights under the second proviso to
Regulation 11(2) of the Takeover Code, is required to disclose any purchase or sale
representing 2% or more of the Placement Shares or voting rights of that company (together
with the aggregate shareholding after such acquisition or sale) to that company and the stock
exchanges on which the companys Placement Shares are listed within two days of the
purchase or sale and is also required to make annual disclosure of his holdings to that
company (which in turn is required to disclose such shareholding to each of the stock
exchanges on which the companys Placement Shares are listed).
Any acquisition of additional voting shares or voting rights by an acquirer who, together with
persons acting in concert with him, holds 55% or more but less than 75% of the shares or
voting rights in a company (or, less than 90% of the shares or voting rights in the company,
where the company concerned had obtained the initial listing of its shares by making an offer
of at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCRR) would
require such an acquirer to make an open offer to acquire a minimum of 20% of the shares or
voting rights which it does not already own in the company; provided however that such
acquirer may, without making a public announcement, acquire, either by himself or through or
with persons acting in concert with him, additional shares or voting rights entitling him up to
5% voting rights in the company, through open market purchase in normal segment on the
stock exchange but not through bulk deal/ block deal/ negotiated deal/ preferential allotment.
Also, if the shareholding or voting rights of such acquirer increases by up to 5% pursuant to a
buyback of shares by the company, then this requirement is not triggered. In any case, the post-
acquisition shareholding of the acquirer together with persons acting in concert with him
should not increase beyond 75%.
These provisions may discourage or prevent certain types of transactions involving an actual
or potential change in control of our Company. For more information, see The Securities
Market of India on page 118 of this Placement Document.

56 The price of the Equity Shares may fluctuate for reasons beyond our control and, which
may make future prices of the Equity Shares difficult to predict.

The price and trading volumes of the Equity Shares can be volatile. Some of the factors that
could affect our share price are:
speculation in the press or investment community about, or actual changes in, our
business, strategic position, market share, organizational structure, operations, financial
condition, financial reporting and results, value or liquidity of our investments, exposure
to market volatility, prospects, business combination or investment transactions, or
executive team;
the announcement of new products, services, technological innovations or acquisitions by
us or our competitors;

22
quarterly increases or decreases in revenue, gross margin, earnings or cash flow from
operations, changes in estimates by the investment community or guidance provided by
us, and variations between actual and estimated financial results;
announcements of actual and anticipated financial results by our competitors and other
companies in the markets in which we operate;
Volatility in the Indian and global securities market or in the rupees value relative to the
U.S. dollar, the Euro and other foreign currencies; and
Significant developments in Indias economic liberalization and deregulation policies.
General or industry-specific market conditions or stock market performance or domestic or
international macroeconomic and geopolitical factors unrelated to our performance also may
affect the price of our Equity Shares. In particular, the stock market as a whole recently has
experienced extreme price and volume fluctuations that have affected the market price of many
technology companies in ways that may have been unrelated to those companies' operating
performance. For these reasons, investors should not rely on recent trends to predict future
share prices, financial condition, results of operations or cash flows.
57 Because our Equity Shares are quoted in Indian rupees in India, investors may be subject
to potential losses arising out of exchange rate risk on the Indian rupee and risks
associated with the conversion of Indian rupee proceeds into foreign currency.
Investors are subject to currency fluctuation risk and convertibility risk since the Equity Shares
are quoted in Indian rupees on the Indian stock exchanges on which they are listed. Dividends
on the Equity Shares will also be paid in Indian rupees. In addition, investors that seek to sell
Equity Shares will have to obtain approval from RBI, unless the sale is made on one of the Stock
Exchanges or in connection with an offer made under regulations regarding takeovers. The
volatility of the Indian rupee against the U.S. dollar and other currencies subjects investors
who convert funds into Indian rupees to purchase our Equity Shares to currency fluctuation
risks.

58 Any further issue of Equity Shares and offering of equity-linked instruments by our
Company may dilute an investor's shareholding and significant sales of Equity Shares by
our major shareholders may affect the trading price of the Equity Shares.
Any future equity offerings by our Company may lead to the dilution of investor shareholding
in our Company or affect the market price of the Equity Shares. Additionally, sales of a large
number of the Equity Shares by our Company's principal shareholders could adversely affect
the market price of the Equity Shares. In addition, any perception by investors that such
issuances might occur could also affect the market price of the Equity Shares.
Our Company has, pursuant to a resolution passed by the board of directors of our Company at
their meeting held on August 7, 2010, authorized a bonus issue of Equity Shares wherein for
every Equity Share held on September 30, 2010, (the Record Date) the holders thereof will
be entitles to two fully paid up Equity Shares of our Company, (Bonus Equity Shares). The
shareholders of the Company at the AGM held on September 20, 2010 had approved the issue
of bonus shares in the ratio of two equity shares for every one equity share held by the
shareholder on the record date. September 30, 2010 had been fixed as the record date by the
Board of the Directors of the Company.

Accordingly all Equity shares arises on conversion of outstanding convertible warrants and on
exercise of stock options which are in force as on September 30, 2010 will be eligible for the
bonus shares as approved by the members of the Company at the AGM, as stated above.
Our Company had, pursuant to a preferential allotment, issued and allotted on September 20,
2010, 2,767,500 warrants exercisable for one Equity Share per such warrant. The Equity
Shares allotted upon the exercise of the aforesaid warrants are eligible for the bonus Equity

23
Shares in the same ratio as other Equity Share upon the exercise of such warrants.
Pursuant to shareholders resolution dated August 06, 2008 passed at an Annual General
Meeting, the consent was granted to the Board to create, offer, issue and allot at any time to or
to the benefit of such persons who are in the permanent employment of our Company to
subscribe to such number of options under the ESOP 2008 that the issue of the equity shares of
our Company shall not exceed in aggregate 10% of the issued, subscribed and paid up equity
shares of our Company as on March 31, 2008 that is up to 572,507 equity shares.
Pursuant to shareholders resolution dated September 20, 2010 passed at an Annual General
Meeting, the consent was granted to the Board to create, offer, issue and allot at any time to or
to the benefit of such persons who are in the permanent employment of our Company to
subscribe to such number of options exercisable by the employees under the ESOP 2010 that
the issue of the equity shares of our Company shall not exceed in aggregate 5% of the issued,
subscribed and paid up equity shares of our Company as on March 31, 2010 that is up to
1,615,500 equity shares.
For further details please refer to the section tiled Principal Shareholders beginning on page
87 of this Placement Document.

59 An investor will not be able to sell any of the Placement Shares subscribed in the Offering
other than on a recognized Indian stock exchange for a period of 12 months from the date
of the Offering of Placement Shares.
Pursuant to the SEBI Regulations, for a period of 12 months from the date of the issue of
Placement Shares in the Offering, investors subscribing to Placement Shares in the Offering
may only sell their Shares on any of the Indian Stock Exchange(s) and may not enter into any
off-market trading in respect of these Placement Shares. There can be no assurance that these
restrictions will not have an impact on the price or liquidity of the Placement Shares.

60 Holders may be subject to Indian taxes arising out of capital gains on the sale of the
Placement Shares.
The sale of Placement Shares by any holder may give rise to tax liability in India. For further
details, please see section titled Taxation on page 139 in this Placement Document.

61 There is no guarantee that the Placement Shares will be listed on any or all of the Indian
Stock Exchange(s) in a timely manner or at all, and any trading closures at the Indian
Stock Exchange(s) may adversely affect the trading price of our Equity Shares or a
shareholder's ability to sell its Equity Shares.
In accordance with Indian law and practice, permission for listing of the Placement Shares will
not be granted until after the Placement Shares offered in the Offering have been issued and
allotted. Approval will require all other relevant documents authorizing the issuing of
Placement Shares to be submitted. There could be a failure or delay in listing the Placement
Shares on the Indian Stock Exchanges. Any failure or delay in obtaining the approval would
restrict your ability to dispose of your Placement Shares.
The regulation and monitoring of Indian securities markets and the activities of investors,
brokers and other participants differ, in some cases significantly, from those in Europe and the
U.S. The BSE and the NSE have in the past experienced problems, including temporary
exchange closures, broker defaults, settlements delays and strikes by brokerage firm
employees, which, if continuing or recurring, could affect the market price and liquidity of the
securities of Indian companies, including the Placement Shares, in both domestic and
international markets. For instance, on May 18, 2009, following an unprecedented rise of over
17% in the Sensex and the Nifty as a reaction to the success of the new coalition government in

24
the recent general election, the Indian stock market was shut down at noon and resumed
trading only the next day.
A closure of, or trading stoppage on, either of the Indian Stock Exchanges could adversely affect
the trading price of the Equity Shares or a shareholders ability to sell Equity Shares at a
particular point in time. Historical trading prices may not be indicative of the prices at which
the Equity Shares will trade in the future.






25

MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE EQUITY SHARES


The Equity Shares of our Company have been listed and traded on the BSE and the NSE. The stock
market data presented below set forth, for the periods indicated, the high, low and average market
prices and the trading volumes on the BSE and the NSE for our Companys Equity Shares.

As of the date of this Placement Document, 96,954,300 Equity Shares of our Company were
subscribed and paid up.

The following tables set forth the reported high and low of closing market prices of our Equity Shares
(of face value of ` `` ` 10 each) on the BSE and the NSE and the number of Equity Shares traded on the
days such high and low prices were recorded, for the Fiscal years 2008, 2009 and 2010.

BSE

Fiscal
Year
High
(` `` `)
Date of
High
Number
of
Equity
Shares
traded
on date
of high
Volume
on date
of high
(` `` ` In
Million)
Low
(` `` `)
Date of
Low
Numbe
r of
Equity
Shares
traded
on date
of low
Volume
on date
of low
(` `` ` In
Million)
Averag
e price
for the
period
(` `` `)
*

2008 293.90 18 Jan, 2008 42,102 12.98 43.65 2 Apr, 2007 3,218 0.14 153.65
2009
184.15 23 April
2008
6,357 1.18 64.00 19 Mar,
2009
4,916 0.31 112.92
April 1,
2009 to
Septemb
er 1,
2009
(1)

229.80 31 Aug,
2009
33,459 7.78 71.75 1 Apr, 2009 1,944 0.14 137.39
Septemb
er 2,
2009
(1)

to
October
4,
2009
(2)

84.15 4 Sep, 2009 17,189 1.44 67.65 30 Sep,
2009
15,370 1.04 76.07
October
5,
2009
(2)

to
October
11,
2009
(3)

67.05 9 Oct, 2009 13,748 0.93 65.85 6 Oct, 2009 37,409 2.45 66.51
October
12,
2009
(3)

to March
31, 2010
132.15 26 Mar,
2010
1,577,953 207.87 57.90 4 Nov, 2009 10,089 0.58 90.80
* Average of the daily closing prices

1. As approved by our shareholders at the Extraordinary General Meeting held on August 24,
2009, issue of 2 fully paid up bonus Equity Shares for every 1 fully paid-up Equity Shares.
However, in accordance with BSE norms, the trading of the Equity Shares on ex-bonus issue
basis commenced on September 2, 2009.
2. The trading of the Equity Shares post conversion of compulsorily convertible cumulative
preference shares and warrants by the Company commenced on October 5, 2009.

26

3. The bonus shares issued in lieu of conversion of compulsorily convertible preference shares
commenced trading with effect from October 12, 2009

Source: market price information is sourced from www.bseindia.com.

Notes
In case of two days with the same closing price, the date with higher volume has been
considered.

NSE

The Equity Shares of our Company have been listed and traded on the NSE since July 16, 2010.


Stock price information for the last six months

The following tables set forth the reported high and low closing prices of our Equity Shares on the
BSE and the NSE, the number of Equity Shares traded on the days such high and low prices were
recorded and the volume of securities traded in each month during the last six months preceding the
date of filing of this Placement Document.

BSE

Month,
Year
High
(` `` `)
Date of
High
Number
of Equity
Shares
traded
on date
of high
Volume
on date of
high (` `` ` In
Million)
Low
(` `` `)
Date of
Low
Numbe
r of
Equity
Shares
traded
on
date of
low
Volume
on date
of low
(` `` ` In
Million)
Average
price
for the
period
(` `` `)*
April 1, 2010
to April 22,
2010
(1)

172.0
0
16 Apr,
2010
896,005 153.07 140.20 1 Apr, 2010 950,817 127.94 156.17
April 23,
2010
(1)
to
April 25,
2010
(2)

151.8
5
23 Apr,
2010
420,939 64.18 151.85 23 Apr,
2010
420,939 64.18 151.85
April 26,
2010
(2)
to
April 30,
2010
161.6
5
30 Apr,
2010
152,519 24.31 149.60 28 Apr,
2010
61,655 9.29 156.19
May, 2010
156.9
0
3 May, 2010 61,853 9.73 135.20 25 May,
2010
92,954 12.62 142.75
June, 2010
154.5
5
30 Jun, 2010 162,454 24.63 129.25 8 Jun, 2010 47,587 6.29 138.92
July, 2010
195.3
0
23 Jul, 2010 542,266 108.33 153.60 6 Jul, 2010 43,626 6.82 171.73
August, 2010
233.6
0
11 Aug,
2010
915,830 214.88 190.35 5 Aug, 2010 62,967 12.17 211.55
September 1,
2010 to
September
16, 2010
(3)

232.4
5
9 Sep, 2010 116,163 26.83 218.15 1 Sep, 2010 90,661 19.82 227.12
September
17, 2010
(3)
to
September
27, 2010
(4)

265.7
5
24 Sep,
2010
189,636 50.57 225.20 17 Sep,
2010
63,610 14.46 250.14
September
28, 2010
(4)
to
85.85 28 Sep,
2010
241,456 20.95 84.50 30 Sep,
2010
33,560 2.84 85.03

27
Month,
Year
High
(` `` `)
Date of
High
Number
of Equity
Shares
traded
on date
of high
Volume
on date of
high (` `` ` In
Million)
Low
(` `` `)
Date of
Low
Numbe
r of
Equity
Shares
traded
on
date of
low
Volume
on date
of low
(` `` ` In
Million)
Average
price
for the
period
(` `` `)*
September
30, 2010
* Average of the daily closing prices

1. The equity shares arising out of conversion of compulsorily convertible cumulative
preference shares allotted on preferential basis commenced trading with effect from April
23, 2010.
2. The bonus shares in lieu of such conversion and kept in abeyance commenced trading with
effect from April 26, 2010
3. The equity shares allotted under the Employee Stock Option Scheme commenced trading
with effect from September 17, 2010
4. As approved by our shareholders at the Annual General Meeting held on September 20,
2010, issue of 2 fully paid up bonus Equity Shares for every 1 fully paid-up Equity Shares.
However, in accordance with BSE norms, the trading of the Equity Shares on ex-bonus issue
basis commenced on September 28, 2010.

Source: market price information is sourced from www.nseindia.com.

Notes:
In case of two days with the same closing price, the date with higher volume has been
considered.


NSE

Month,
Year
High
(` `` `)
Date of
High
Number
of Equity
Shares
traded
on date
of high
Volume
on date of
high (` `` ` In
Million)
Low
(` `` `)
Date of
Low
Numbe
r of
Equity
Shares
traded
on date
of low
Volume
on date
of low
(` `` ` In
Million)
Average
price
for the
month
(` `` `)*
July, 2010
195.8
0
23 July,
2010
434,488 86.82 168.20 16 Jul,
2010
577,023 95.30 186.84
August, 2010
234.3
0
11 Aug,
2010
755,332 176.68 190.10 5 Aug,
2010
44,151 8.52 211.64
September 1,
2010 to
September
16, 2010
(1)

232.2
0
9 Sep, 2010 124,850 28.91 218.05 1 Sep, 2010 75,242 16.45 227.10
September
17, 2010
(1)
to
September
27, 2010
(2)

266.3
0
24 Sep,
2010
173,489 46.28 225.25 17 Sep,
2010
123,253 28.05 249.94
September
28, 2010
(2)
to
September
30, 2010
85.75 28 Sep,
2010
305,323 26.51 84.50 29 Sep,
2010
55,340 4.74 84.95
* Average of the daily closing prices

1. The equity shares allotted under the Employee Stock Option Scheme commenced trading
with effect from September 17, 2010

28
2. As approved by our shareholders at the Annual General Meeting held on September 20,
2010, issue of 2 fully paid up bonus Equity Shares for every 1 fully paid-up Equity Shares.
However, in accordance with BSE norms, the trading of the Equity Shares on ex-bonus issue
basis commenced on September 28, 2010.

Source: market price information is sourced from www.bseindia.com.

Notes
High, low and average prices are of the daily closing prices.
The equity shares commenced trading on the NSE from July 16, 2010.

Details of the number of equity shares and volumes of business transacted during the last six months
and the fiscal years ended March 31, 2008, March 31, 2009 and March 31, 2010 on the Stock
Exchanges are given below.

Month BSE NSE

Volume
(No. of Equity Shares)
Turnover
( In ` `` ` Million)
Volume
(No. of Equity
Shares)
Turnover
(In ` `` ` Million)

April 1 , 2010 to April
22, 2010
(1)

6,410,651 1001.80 NA NA
April 23, 2010
(1)
to
April 25, 2010
(2)

420,939 64.18 NA NA
April 26, 2010
(2)
to
April 30, 2010
518,705 81.17 NA NA
May, 2010
3,444,433 495.38 NA NA
June, 2010
2,540,627 361.49 NA NA
July, 2010
5,178,450 922.30 3,246,409 600.39
August, 2010
4,859,420 1068.30 4,042,657 890.35
September 1, 2010 to
September 16, 2010
(3)

1,065,463 242.95 1,036,943 236.89
September 17, 2010
(3)

to September 27,
2010
(4)

1,985,618 502.87 2,189,865 553.79
September 28, 2010
(4)

to September 30,
2010
327,435 28.29 392,239 33.92


Fiscal 2008
5,274,911 761.89 NA NA
Fiscal 2009
577,775 66.85 NA NA
April 1, 2009 to
September 1, 2009
(5)

733,796 122.56 NA NA
September 2 2009
(5)

to October 4, 2009
(6)

404,455 30.79 NA NA
October 5, 2009
(6)
to
October 11, 2009
(7)

87,431 5.78 NA NA
October 12, 2009
(7)
to
March 31, 2010
12,385,846 1,397.51 NA NA
(Source: www.bseindia.com; www.nseindia.com)

1. The equity shares arising out of conversion of compulsorily convertible cumulative
preference shares allotted on preferential basis commenced trading with effect from April
23, 2010.
2. The bonus shares in lieu of conversion mentioned in (1) above and kept in abeyance
commenced trading with effect from April 26, 2010
3. The equity shares allotted under the Employee Stock Option Scheme commenced trading

29
with effect from September 17, 2010
4. As approved by our shareholders at the Annual General Meeting held on September 20,
2010, issue of 2 fully paid up bonus Equity Shares for every 1 fully paid-up Equity Shares.
However, in accordance with BSE norms, the trading of the Equity Shares on ex-bonus issue
basis commenced on September 28, 2010.
5. As approved by our shareholders at the Extraordinary General Meeting held on August 24,
2009, issue of 2 fully paid up bonus Equity Shares for every 1 fully paid-up Equity Shares.
However, in accordance with BSE norms, the trading of the Equity Shares on ex-bonus issue
basis commenced on September 2, 2009.
6. The trading of the Equity Shares post conversion of compulsorily convertible cumulative
preference shares and warrants by the Company commenced on October 5, 2009.
7. The bonus shares issued in lieu of conversion of the compulsorily convertible preference
shares mentioned in (6) above commenced traded with effect from October 12, 2009

The following table sets forth the market price of the equity shares on the BSE and the NSE on the
first trading day following the Board meeting approving the Issue.
Date BSE NSE
Open High Low Close Open High Low Close
August 9, 2010 201.80 224.20 201.00 214.30 202.80 224.40 195.05 213.60
(Source: www.bseindia.com and www.nseindia.com)

30
USE OF PROCEEDS

The total proceeds of this Offering is expected to be ` 1,349,997,500.00. The net proceeds of the
Issue, after deduction of management fees, placement fees, selling commission, offer fees, discounts
and commissions, if any, but before deduction of other expenses associated with the Issue, are
estimated to be approximately ` 1,315.50 million.

Subject to compliance with applicable laws and regulations, our Company intends to use the net
proceeds received from this Offering for (i) meeting the costs of expansion, (ii) development costs of
existing and new projects (iii) acquisitions, (iv) investments by way of equity and/or loan in our
Companys existing and new subsidiaries, (v) incurring capital expenditure in connection with our
Companys and/or our Subsidiaries businesses, (vi) deleveraging of balance sheet, (vii) general
corporate purposes and (viii) for any other uses that may be permissible under applicable statutory
and/or regulatory requirements.

In accordance with the policies set up by the Board of Directors of our Company and as permissible
under applicable laws and government policies, the management of our Company will have the
flexibility in deploying the proceeds received from this Offering. Pending utilization for the purposes
described above, our Company intends to use the proceeds to temporarily invest in credit worthy
instruments, including money market mutual funds and deposits with banks and corporates. Such
investments would be in accordance with applicable laws and the investment policies approved by
the Board of Directors from time to time.


31
CAPITALISATION

The following table sets forth our Companys indebtedness and capitalisation as of March 31, 2010,
which has been extracted from our Companys audited, consolidated financial statements and as of
September 30, 2010 based on consolidated limited review financial statements which were prepared
on actual basis and on adjusted basis giving effect to the Offering.

This capitalisation table should be read together with Summary Financial Information,
Managements Discussion and Analysis of Financial Condition and Results of Operations, and the
Financial Statements and related notes included elsewhere in this Placement Document.


As on March 31,
2010
(Consolidated
Audited)
As on September 30, 2010
(Consolidated Limited Review)
(` in Million) (` in Million)

Unadjusted Unadjusted As Adjusted
Indebtedness
Secured Loans 2,721.17 2,943.40 2,943.40
Unsecured Loans 1,813.53 2,035.90 2,035.90
Total Indebtedness (A) 4,534.70 4,979.30 4,979.30

Shareholders Funds
Share Capital 323.10 969.54 1,111.65
Reserves and Surplus 1,700.84 1,210.47 2,418.36
Share Warrants - 151.52 1,51.52
Employee Stock Option outstanding 2.83 2.83 2.83
Total Shareholders Funds (B) 2,026.77 2,334.36 3,684.36

Total Capitalisation (A+B) 6,561.47 7,313.66 8,663.66
Note: 1) 1,717,521 and 5,073,363 numbers of Employee Stock Options were outstanding as at March
31, 2010 and September 30, 2010 respectively.

2) 2,767,500 numbers of Share Warrants were outstanding as at September 30, 2010.

32
DIVIDEND POLICY

Dividend Policy

The declaration and payment of dividend will be recommended by the Board of Directors and
approved by the shareholders at their discretion and will depend on our Companys revenues, cash
flows, financial condition (including capital position) and other factors. The declaration and
payment of equity dividend would be governed by the applicable provisions of the Companies Act
and Articles of Association of our Company.

The following table details the dividend declared by our Company on the Equity Shares for the
Financial Years ended March 31, 2008, 2009 and 2010:

Particulars March 31, 2008 March 31, 2009 March 31, 2010
Face Value of Equity Shares (` per
share)
10/- 10/ 10/-
Rate of Dividend (%) 21% 25% 25%
Dividend per Equity Share (`) 2.1 2.5 2.5
Total Dividend declared (` In
million)
12.02 14.31 80.78
Tax on Total Dividend paid (` in
million)
2.04 2.43 13.73


The amounts paid as dividend in the past are not necessarily indicative of the dividend amounts, if any,
payable or to be paid in the future.

33
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

You should read the following discussion of our financial condition and results of operations together
with our audited consolidated financial statements under Indian GAAP including the schedules,
annexure and notes thereto and the reports thereon, which appear in this Placement Document,
beginning on page 155. Indian GAAP differs in certain significant respects from IFRS, U.S. GAAP and other
accounting principles and auditing standards in other countries with which prospective investors may be
familiar. The degree to which the financial statements included in this Placement Document will provide
meaningful information is dependent on the readers level of familiarity with Indian accounting
practices, Indian GAAP, the Companies Act and the SEBI ICDR Regulations. Any reliance on the financial
disclosures presented in this Placement Document by persons not familiar with these Indian practices,
law and rules should be limited. We have not attempted to explain these 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 the financial data herein.
This discussion contains forward-looking statements and reflects our current views with respect to
future events and financial performance. Actual results may differ materially from those anticipated in
these forward-looking statements as a result of certain factors such as those set forth in the section
"Risk Factors" included elsewhere in this Placement Document.
Our Fiscal year ends on March 31 of each year, so all references to a particular Fiscal year are to the
12-month period ended March 31 of that year. In this section only, any reference to "we, "us" or "our"
refers to Tilaknagar Industries Ltd. and its Subsidiaries on a consolidated basis.
Overview
Our Company is an established and recognized player in the IMFL industry with a strong presence in
South India. Our Company was originally incorporated in the year 1933 as The Maharashtra Sugar
Mills Ltd. (MSML) for manufacturing sugar and allied products. Subsequently in the year 1973, a
wholly owned subsidiary of MSML, Tilaknagar Distilleries and Industries Ltd. (TDIL) was
incorporated to make industrial alcohol, Indian Made Foreign Liquor (IMFL) and sugar cubes. The
current form of our Company, namely, Tilaknagar Industries Ltd. was formed after a scheme of
amalgamation between, MSML and TDIL was approved by the Honble High Court of Bombay on July
16, 1993. Our Company is promoted individuals from the Dahanukar family.
We are engaged in the business of manufacturing products in the IMFL market. Currently our
product portfolio consists of more than forty brands across a diverse range of product segments and
price points. We own two millionaire brands-Mansion House Brandy and Madira Rum. For the year
ended March 31, 2010, Mansion House brandy and Madira Rum had sales volume of 3.76 million
cases and 1.05 million cases respectively. Our Company has a growing presence in Canteen Stores
Department (CSD), currently with 11 (eleven) registered brands. These include 7 (seven) brands
acquired by us from Alcobrew Distilleries India Private Ltd. towards the end of Fiscal 2010 which
were already registered with the CSD. We market a large number of our products in the southern
states in India and are gradually assuming a pan national presence. For the year ended March 31,
2010, 89.94 % of our sales volume was generated from the Southern states. We also have a growing
international business and are currently exporting our products to Western Africa, Middle East, Far
East and Caribbean countries. Exports constituted 0.97% of our sales volume for the year ended
March 31, 2010.
The IMFL market has grown at a 15 % Compounded Annual Growth Rate (CAGR) over the past five
years, with volumes increasing nearly 1.5 times in Fiscal 2010. The growth in demand has been

34
primarily due to rapid economic growth, rising disposable incomes, favourable demographics and
greater social acceptability of alcohol consumption in India. According to CRISIL Research the
production volume in the IMFL market was 210-240 million cases in the Fiscal 2010. The IMFL
market is characterized by a limited number of large manufacturers. Almost 50% of the IMFL market
is controlled by United Spirits Ltd.
We are also equipped with manufacturing and bottling facilities spread over thirty one facilities
strategically located across India. Out of these, three facilities are owned by us and our subsidiaries.
In addition, we operate our manufacturing and bottling operations through 7 lease and 21 tie-up
arrangements. Our primary manufacturing facility is in the sugar rich belt of Shrirampur,
Maharashtra with an installed capacity of 100 Kilo Litres Per Day (KLPD), which includes the new
molasses based ENA plant with an installed capacity of 50 KLPD in Shrirampur, Maharashtra which
commenced production in November, 2009. Further our green field grain based distillation project is
expected to be commissioned shortly with a capacity of 100 KLPD at Shrirampur.
Our Company has a licensed bottling capacity of 500,000 cases per year. In addition to our own
capacities our subsidiaries Prag and Surya have licensed bottling capacity of 600,000 cases per
annum and 1,080,000 cases per annum, respectively. The total gross sales of our brands and other
sales including sales through tie up arrangements reached ` 10,000 million during the year Fiscal
2010.
The gross sale of our brands and other sales including those through tie up units was ` 10,001.01
Million for the Fiscal 2010 as compared to ` 4897.14 million during the Fiscal year 2009.
Our consolidated total income for the fiscal years ended March 31, 2008, 2009 and 2010 was `
1,524.10 million, `2,520.73 million and `3,906.27 million respectively and our consolidated profit
after tax for the fiscal years ended March 31, 2008, 2009 and 2010 was `121.22 million, `197.80
million and `348.87 million respectively. Our total income and profit after tax have increased at a
CAGR of 60.09% and 69.65%, respectively between Fiscal 2008 and Fiscal 2010. For the same period
our volume of sales grew at a CAGR of 37.72 %. Our consolidated total income for the half years
ended September 30, 2010 and September 30, 2009 was ` `` ` 2,122.49 million and ` `` ` 1,375.62 million,
respectively. Our profit after tax for the aforementioned periods was ` `` ` 170.79 million and ` `` ` 105.98
million, respectively.
Our facilities at Shrirampur hold an ISO 14001-2004 environment management certificate dated
April 22, 2009 issued by Det Norske Veritas Management System Certificate in connection with
manufacture of spirit, ENA, IMFL, industrial chemicals (diethyl oxalate and turkey red oil) and sugar
cubes.
PRINCIPLES OF CONSOLIDATION

(i) The consolidated financial statements relate to our Company and its wholly owned
subsidiary companies viz.: Prag Distillery (P) Ltd., and Surya Organic Chemicals (P) Ltd.
The consolidated financial statements have been prepared on the following basis.

(a) The financial statements of our Company and its subsidiary companies are
combined on a line-by-line basis by adding together the book value of like
assets, liabilities , income and expenses, after fully eliminating intra- group
balances and intra group transactions resulting in unrealized profits or losses
in accordance with Accounting Standard (AS) 21- Consolidated financial
Statements notified Companies (Accounting Standards) Rules 2006.
(b) The difference between the cost of investment in the subsidiaries and our
Companys share of net assets at the time of acquisition of shares in the
subsidiaries is recognized in the financial statements as Goodwill or Capital

35
Reserve as the case may be.
(c) The financial statements of the Subsidiaries are drawn upto the same reporting
date as that of our Company and as far as possible, the consolidated financial
statements are prepared using uniform accounting policies for like
transactions and other events in similar circumstances and are presented in
the same manner as our Companys separate financial statements.

(ii) Investments other than in subsidiaries have been accounted as per Accounting Standard
(AS-13) on Accounting for Investments notified Companies (Accounting Standards)
Rules 2006.

SIGNIFICANT ACCOUNTING POLICIES

(i) Basis of Preparation of Financial Statement:

The financial Statements have been prepared using historical cost convention and on the
basis of going concern in accordance with generally accepted accounting principles in
India, Accounting Standards notified under Section 211(3C) of the Companies Act, 1956
and other relevant provisions of the Companies Act, 1956.

(ii) Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made
that affect the reported amount of assets and liabilities on the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period. Difference between the actual results and estimates are recognized in the period in
which the results are known/ materialized.

(iii) Revenue Recognition:

All revenue and expenses are accounted for on accrual basis. Revenue is recognized when
no significant uncertainties exist in relation to the amount of eventual receipt.

(a) Sales are recognized on dispatch of goods to customers and are inclusive of
central / state excise duty.
(b) Insurance and other claims are accounted for as and when admitted by the
appropriate authorities.

(iv) Inventories:

Inventories are stated at the lower of cost and net realizable value. Cost is determined on
the basis of Weighted Average method.
(a) Raw materials, Stores & Components and Work-in-Process are valued at material
cost.
(b) Finished goods valued at manufacturing cost which comprise direct material,
direct labor, other direct cost and other related manufacturing overheads. Excise
duty payable on finished goods stock is added to the cost.


36
(v) Fixed Assets:

(a) Fixed assets are stated at their original cost of acquisition /installation, net of
accumulated depreciation, amortization and impairment losses.
(b) Capital work-in-progress is stated at the amount incurred up to the date of the
Balance Sheet.
(c) Expenditure incurred during construction/erection period (Including finance cost
relating to borrowed funds for construction or acquisition of fixed assets) on
project under implementation are included under Capital work-in-progress.
These expenses are appropriated to fixed assets on commencement of
commercial production.
(d) Fixed assets purchased under Hire purchase arrangements, includes expenditure
incurred till the assets are put to use.
(e) Intangible assets are stated at cost of acquisition less accumulated amortization.

(vi) Depreciation:

Depreciation is provided on the Written Down Value Method or Straight Line Method
in the manner and at the rates specified in schedule XIV of the Companies Act, 1956 as
specified in the accounting policies of the respective Companys standalone financial
statements.

(vii) Provisions and Contingencies:

Provision is recognized when there is a present obligation as a result of past event that
probably requires an outflow of resources and a reliable estimate can be made of the
amount of obligation. A disclosure on contingent liability is made when there is a possible
obligation or present obligation that probably will not require an out flow of resources or
where reliable estimate of the amount of the obligation cannot be made. However
contingent assets are neither provided for nor disclosed.
For further details see the section titled Financial Statements at page 155 of this Placement
Document.

ACCOUNTING FOR TIE-UP UNITS

We have entered into 21 tie-up arrangements with various third parties for carrying on
manufacturing and bottling operations in various states in India where sale of IMFL products are
permitted. Under this arrangement we supply the input materials to the tie-up units as per our
quality norms. Our blenders and other key employees are stationed at the bottling units to oversee
the blending and bottling operations. Invoices are raised by the bottlers and gross sales are booked
in their accounts and in respect of such arrangements the turnover is not treated as 'Sales' of the
Company. However the surplus generated out of these arrangements is included in the '
Sales/Income from Operations'.
We also provide our tie-up partners with working capital and take charge of collection of accounts
receivable from our customers. We are ultimately responsible for the profit or loss resulting from
the operations. On the other hand, our tie-up partners provide us with the infrastructure and
manpower necessary for the bottling of our spirits products, including labor, water, electricity,
plant and machinery and are responsible to obtain relevant licenses and permits for such
operations.



37
FACTORS AFFECTING RESULTS OF OPERATIONS

Several factors affect our results of operations, financial condition and cash flow. These factors
include:

Reliance on brand portfolio. We generate our sales primarily from the sale of IMFL branded spirits
products. Therefore, our brand portfolio is critical for our success as we believe that market
perception of a brand is one of the key factors for consumers to make decisions to purchase IMFL
spirits products. Our existing brand portfolio consists of various brands which are positioned at
various price points which cater to various demand segments. Heading our brand portfolio are our
flagship brands- Mansion House and Madira Rum. The Mansion House brand targets the
premium and semi premium segment while the Madira Rum brand caters to the regular segment.
Both these brands are millionaire brands (whose sales exceeded 1 million cases in Fiscal 2010). We
currently own and manufacture through ourselves or and our Subsidiaries 7 additional brands
selling more than 100,000 cases per annum. These include Mansion House XO Brandy, Hottt Shot
Super Whisky, Hot Silk Whisky, Courrier Napolean Brandy, Shot Whisky, Shot Brandy, Mansion
House Brandy, Madira Rum and Senate Royale Whisky. The strong positioning of our brands has
contributed to sustained increases in our revenues and we expect this trend to continue as the IMFL
market grows. Our brand position, market perception and consumer acceptance of our brands,
accordingly depend on our ability to promote our existing brand portfolio and our ability to establish
new brands from time to time. As a business strategy, we continue to expand our brand portfolio by
acquiring newer brands. Towards the end of fiscal 2010, we acquired seven brands from Alcobrew
Distilleries (India) Private Ltd. for expanding our presence in the CSD segment and in the northern
markets.

Reliance upon tie-up and leasing arrangements. We enter into tie up and lease arrangements with
third parties for the manufacturing and bottling operations of our brands. Such arrangements enable
us to optimize our capital expenditure by leveraging upon the benefits that such third party enjoys in
the relevant states including surplus capacities and regulatory approvals and licenses. Under the
lease arrangements the manufacturing facilities and bottling units are taken on lease and/or leave
and license agreements with various third parties. In addition, we may also enter into such
arrangements with other third parties in the future. Our ability to maintain and successfully renew
the said lease agreements on terms acceptable affects our business operations and possibly requires
us to establish operations at another facility. Under the tie up arrangements, third parties provide us
with the infrastructure and manpower necessary for the bottling of our spirits products, including
labour, water, electricity, plant and machinery and are responsible to obtain relevant licenses and
permits for such operations. Currently, our Company has 7 lease arrangement and 21 tie-up
arrangements across the country. Though we have entered into tie-up arrangements in the past,
there is no assurance that our Company would be able to continue with such arrangements or enter
into new tie-ups in the future. The tie-up arrangements contributed approximately 48.13%, 42.54%
and 16.45% of our volume of sales in Fiscals 2010, 2009 and 2008. Since, there are limited number of
such license holders in India, there is an increased competition to enter into tie ups with such license
holders at competitive prices. Our failure to seek renewal of these contracts with the tie-up units may
as well result in our competitors acquiring the same.

Price of raw material. We rely on raw materials such as molasses and coarse grain for the production
of our spirits products. The supplies of these agricultural products may be adversely affected by
severe weather conditions, which may result in disruption of our operations. In addition, agricultural
products in India, including molasses and coarse grain depend on seasonal monsoon rains for
irrigation. Delayed monsoon seasons, drought or flooding could cause disruption of supplies of such
products or result in lack of supplies for an extended period of time or increases in prices of such
agricultural products. Molasses is the primary raw material used in our production process. The cost
of molasses has been subject to fluctuations in the past and is expected to continue to fluctuate in the
future. These fluctuations are related, at least in part, to the supply of and demand for sugar cane.
Sugar cane production varies greatly from state to state in India, and thus the availability and costs

38
varies from state to state in India. In addition, the availability of molasses could be adversely affected
by adverse weather conditions or other reasons, which could further lead to increases in the price of
molasses. In addition, molasses can be used to produce ethanol. Since the Government has now
allowed blending of Ethanol with Petrol, there could be an increase in demand for molasses which
can result in an increase in our costs of procuring molasses/ENA and/or our ability to procure
molasses/ENA in sufficient quantities for the production of spirits. Our financial condition and
results of operations accordingly are subject to any volatility in the cost of molasses and the cyclical
nature of the sugar industry.

Ability to target high growth markets and newer geographies: Our ability to grow depends on our
ability to expand into newer markets. We have a strong presence in the brandy and whisky segment
in South India. As a part of our strategy, we intend to expand in North and Eastern India and in the
CSD segment. Expansion into newer markets entail significant capital investments and is dependent
on our ability to successfully market our products in these markets. Our ability to successfully
expand our geographical footprint is critical for us to be able to maintain and improve our
profitability.

Growth in the Indian alcohol industry. Our financial results have been, and are expected to be, affected
by the growth in the Indian IMFL market. See Industry. The IMFL market can be classified into five
segments- whisky, brandy, rum, vodka and gin. The IMFL market has grown at a 15 per cent CAGR
over the past five years, with volumes increasing nearly 1.5 times in fiscal 2009-10. The growth in
demand has been primarily due to rapid economic growth, rising disposable incomes, favourable
demographics and greater social acceptability of alcohol consumption in India. According to Crisil
Research, IMFL consumption is expected to increase by 14-16 per cent CAGR to 440-480 million
cases by fiscal 2014-15. A shift from country liquor to IMFL particularly in the northern states is
expected to primarily drive IMFL consumption.
Government Regulations: Our revenues are dependent in large part on the prices we are able to
charge consumers for the liquor we sell. The State Government controls the wholesale and/or retail
distribution networks in many of the markets in which we operate. In certain states, the government
corporation controls the entire distribution channel - at the wholesale level as well as retail level. In
certain other states, the government grants licences to distributors and retailers at a fixed price and
for a fixed period, typically 1 year. In other states, the state government auctions the right to retail
liquor in those areas for a specific period to private entities. Thus, any changes in government
regulations and policies could affect our results of operations and financial condition. For further
details, please see Risk Factor No 5 under the section titled Risk Factors on page 1 of this
Placement Document.
Seasonality in demand: The alcohol industry is characterized by seasonal demands for its products
with demand typically peaking in the winter months. Accordingly, we must plan our annual
production levels based on our predictions of demand, including a build-up of inventory prior to
peak sales periods. For further details, please see Risk Factor No 22 under the section titled Risk
Factors on page 1 of this Placement Document.
Competition. We face intense competition from existing players in the IMFL market (including the
domestic market and the export markets). United Spirits Ltd. occupies a dominant position within
the IMFL market. The other major competitors in the Indian IMFL market include Radico Khaitan
Ltd., Pernod Ricard India Private Ltd. and Allied Blenders & Distillers Private Ltd.. We also participate
in the export markets through the export of our IMFL branded products to the Western Africa,
Middle East, Far East and Caribbean countries. We seek to remain competitive by emphasizing the
quality of our products and packaging and the efficiency of distribution and supply. We expect
competition to intensify with increased greenfield expansion by existing players and entry of new
players in the market which may compete with more well-established players.

Availability of skilled personnel. We are heavily dependent on highly trained and skilled personnel.

39
We have generally been successful in recruiting the talent we need. However, many factors could
make it more difficult, or more expensive, for us to recruit and retain the personnel we need,
particularly as we grow our business. Any inability to attract and retain suitable skilled personnel
could affect both our profitability and our ability to expand our operations.

RESULTS OF OPERATIONS

The following table sets forth the Companys consolidated income as at and for each of the financial
years ended March 31, 2010, 2009 and 2008:
` in Millions
PARTICULARS As at March
31, 2010
% of Total
Income
As at March
31, 2009
% of Total
Income
As at March
31, 2008
% of Total
Income
INCOME
Sales (Gross) 5,497.99 140.75 4,050.75 160.70 2,293.83 150.50
Less: Excise Duty 1,635.92 41.88 1,558.66 61.83 813.27 53.36
Sales (Net) 3,862.07 98.87 2,492.09 98.86 1,480.56 97.14
Other Income 44.2 1.13 28.64 1.14 43.54 2.86
Total 3,906.27 100.00 2,520.73 100.00 1,524.10 100.00

EXPENDITURE
(Increase) / Decrease in stock (189.41) (4.85) (153.41) (6.09) (69.6) (4.57)
Cost of material 1,700.55 43.53 1,129.79 44.82 556.88 36.54
Employees' remuneration and
benefits 201.3 5.15 200.54 7.96 125.6 8.24
Manufacturing and other
expenses 1,348.15 34.51 887.75 35.22 621.62 40.79
Finance Cost 235.85 6.04 107.09 4.25 55.15 3.62
Preliminary & Pre-operative
Exp written off 0.05 0.00 0.05 0.00 0.05 0.00
Depreciation / Amortization 71.27 1.82 32.76 1.30 21.9 1.44
Total 3,367.76 86.21 2,204.57 87.46 1,311.60 86.06

Profit for the year 538.51 - 316.16 - 212.5 -
Less: Prior Period Adjustments - - (0.11) 0.00 - -
Profit before taxation 538.51 13.79 316.05 12.54 212.5 13.94
Less: Provision for taxation
Current years' 132.45 3.39 87.5 3.47 82.54 5.42
Previous years' - 3.94 0.16 -
Fringe Benefit Tax - 1.86 0.07 1.57 0.10
Deferred Tax 57.19 1.46 24.97 0.99 7.16 0.47
189.64 4.85 118.27 4.69 91.28 5.99
Profit after taxation 348.87 8.93 197.8 7.85 121.22 7.95

COMPONENTS OF INCOME AND EXPENDITURE

INCOME

Our income consists of (a) our income from sales, and (b) other income.

Sales

Our income from sales comprises sales of products from owned and leased units, net income from
tie-up units and other operating income. Sales are recognized on dispatch of goods to customers and
are inclusive of central / state excise duty.

Other Income


40
Our other income comprises our income from (a) duty drawback on exports, (b) miscellaneous
receipts, (c) sundry balance written back, (d) interest income primarily comprises interest on fixed
deposits from banks, and (d) gain on exchange rate fluctuations.


EXPENDITURE

(Increase)/Decrease in Work in Process and Finished Stock

This is not an expenditure item but comprises of adjustments made in connection with the difference
in closing stock and opening stock of Work in Process and Finished Stock of Rum, Whisky, Brandy,
and Vodka to arrive at correct cost of production.

Cost of Material

Our expenditure in connection with raw material consumed comprises expenditure incurred in
connection with consumption costs of molasses/ENA and, other materials used for our
manufacturing operations and costs incurred in connection with packing material and consumables.

Employees' remuneration and benefits

Employees' remuneration and benefits comprises expenditure incurred in connection with salary
and wages, contribution to provident fund and family pension fund, labour and staff welfare
expenses and gratuity.

Manufacturing and other expenses

Our manufacturing and other expenses comprise expenses incurred in connection with (a) power
and fuel, (b) provision for excise duty on finished goods, (c) finished goods written off, (d) repairs
and maintenance, (e) insurance, (f) rent, (g) conversion cost, (h) legal and professional charges, (i)
auditors remuneration, (j) rates and taxes, (k) sales tax, (m) freight, transport charges and other
expenses, (n) selling expenses comprising among others discounts, sales, promotion advertising
expenses, (o) travelling and conveyance expenses, (p) printing and stationery, (q) communication
expenses, (r) vehicle running expenses, (s) loss on sale of assets, (t) director sitting fees, (u)
commission to independent directors, (v) other miscellaneous expenses, and (w) deferred revenue
expenditure

Finance Cost

Our finance costs comprise interest paid on fixed deposits, term loans, cash credit facilities and
working capital demand facilities, and bank charges.

Depreciation / Amortization

Depreciation is provided on the Written Down Value Method or Straight Line Method in the
manner and at the rates specified in schedule XIV of the Companies Act, 1956 as specified in the
accounting policies of the respective Companys standalone financial statements.


Results for the Fiscal Year Ended March 31, 2010 compared to the Fiscal Year Ended March 31,
2009

Income


41
Our total income increased by 54.97% from ` 2,520.73 million in Fiscal 2009 to ` 3,906.27 million in
Fiscal 2010 on account of the following:


Our Company undertook and consummated various expansion activities during Fiscal 2010,
which inter-alia included commissioning of a 50,000 LPD ENA plant. We enhanced volumes
(including volumes of tie-up operations) by 44.31% from 5.54 million cases in Fiscal 2009 to
8.00 million cases in Fiscal 2010. Our net sales increased by 54.97 % from ` 2,492.09 million
in Fiscal 2009 to ` 3,862.07 million in Fiscal 2010 on account of (a) an increase in sales from
products from ` 3,767.44 million in Fiscal 2009 to ` 4,416.58 million in Fiscal 2010, (b) an
increase in income from tie up units from ` 268.79 million in Fiscal 2009 to ` 1,063.37
million in Fiscal 2010, and (c) an increase in our other operating income from ` 14.52
million in Fiscal 2009 to ` 18.04 million in Fiscal 2010.

Other income increased by 54.33% from ` 28.64 million in Fiscal 2009 to ` 44.20 million in
Fiscal 2010 on account of an increase in income from duty drawback on exports from ` 3.07
million in Fiscal 2009 to ` 4.30 million in Fiscal 2010, a significant increase in sundry
balance written back from ` 3.35 million in Fiscal 2009 to ` 22.09 million in Fiscal 2010, and
a marginal increase in interest income from ` 1.46 million in Fiscal 2009 to ` 2.89 million in
Fiscal 2010. This was offset by a decrease in miscellaneous receipts from ` ` ` ` 20.67 million in
fiscal 2009 to ` ` ` ` 16.46 million in Fiscal 2010 and a loss on exchange fluctuation of ` ` ` ` 1.54
million in Fiscal 2010 as against a gain of ` ` ` ` 0.09 million in Fiscal 2009.

Expenditure

Our total expenditure increased by 52.76% from ` 2,204.57 million in Fiscal 2009 to ` 3,367. 76
million in Fiscal 2010 on account of the following:

Our stock increased by 23.47% from ` 153.41 million in Fiscal 2009 to ` 189.41 million in
Fiscal 2010 primarily on account of our increase in volumes and capacity utilization in Fiscal
2010. As mentioned above, this in any case is not an item of expenditure but a system to
arrive at the correct cost of production.

Our cost of material increased by 50.52% from ` 1,129.79 million in Fiscal 2009 to `
1,700.55 million in Fiscal 2010 on account of a substantial increase in consumption of raw
material and packing material and consumables in Fiscal 2010 in light of our aforesaid
increase in volumes during Fiscal 2010.

Our employee remuneration and benefits expenses marginally increased by 0.38% from `
200.54 million in Fiscal 2009 to ` 201.30 million in Fiscal 2010 on account of an increase in
contribution to provident fund and family pension fund in Fiscal 2010 and an increase in
labour and staff welfare expenses. This was partially offset by a marginal decline in salary
and wages and gratuity costs.

Our manufacturing and other expenses also increased by 51.86% from ` 887.75 million in
Fiscal 2009 to ` 1,348.15 million in Fiscal 2010 primarily on account of (a) a substantial
increase in conversion cost from ` 51.69 million in Fiscal 2009 to ` 329.97 million in Fiscal
2010, (b) an increase in legal and professional charges from ` 32.66 million in Fiscal 2009 to
` 35.04 million in Fiscal 2010, (c) a substantial increase in sales tax from ` 18.18 million in
Fiscal 2009 to ` 35.82 million in Fiscal 2010, (d) an increase in freight, transport charges and
other expenses from ` 82.06 million in Fiscal 2009 to ` 86.63 million in Fiscal 2010, (e) a
substantial increase in selling expenses from ` 325.27 million in Fiscal 2009 to ` 487.79
million in Fiscal 2010, and (f) a substantial increase in miscellaneous expenses from ` 53.56
million in Fiscal 2009 to ` 158.39 million in Fiscal 2010.

42

Our finance costs increased substantially from ` 107.09 million in Fiscal 2009 to ` 235.84
million in Fiscal 2010 on account of an increase in the interest paid on term loans, working
capital facility and finance charges.

Depreciation/amortization increased substantially from ` 32.76 million to ` 71.27 million in
light of depreciation booked for plant and machinery added during the year in connection
with our expansion activities in Fiscal 2010.

Profit

On account of the aforementioned reasons our profit before tax and profit after tax increased by
70.39% and 69.65% respectively, from ` 316.05 million in Fiscal 2009 to ` 538.51 million in Fiscal
2010 and from ` 197.80 million in Fiscal 2009 to ` 348.87 million in Fiscal 2010, respectively.

Results for the Fiscal Year Ended March 31, 2009 compared to the Fiscal Year Ended March 31,
2008

Income

Our total income increased by 65.39% from ` 1,524.10 million in Fiscal 2008 to ` 2,520.73 million in
Fiscal 2009 on account of the following:

Our volumes increased by 31.43% from 4.22 million cases in Fiscal 2008 to 5.54 million
cases in Fiscal 2010. Resultantly, our net sales increased by 68.32 % from ` 1,480.56 million
in Fiscal 2008 to ` 2,492.09 million in Fiscal 2009, which included a substantial increase in
sales of products from ` 1,990.32 million in Fiscal 2008 to ` 3,767.44 million in Fiscal 2009,
a decrease in income from tie-up units from ` 297.55 million in Fiscal 2008 to ` 268.79
million in Fiscal 2009, and an increase in other operating income from ` 5.96 million in
Fiscal 2008 to ` 14.52 million in Fiscal 2009.

Other income decreased by 34.22% from ` 43.54 million in Fiscal 2008 to ` 28.64 million in
Fiscal 2009 primarily on account of a decrease in income from miscellaneous receipts from `
41.31 million in Fiscal 2008 to ` 20.67 million in Fiscal 2009. This was partially offset by an
increase in duty drawback on exports from ` ` ` ` 1.31 million in Fiscal 2008 to ` ` ` ` 3.07 million in
Fiscal 2009, an increase in sundry balance written back from ` ` ` ` 1.15 million in Fiscal 2008 to
` ` ` ` 3.35 million in Fiscal 2009 and a gain on exchange fluctuation of ` ` ` ` 0.09 million in Fiscal
2009 as against a loss of ` ` ` ` 0.23 million in Fiscal 2009. In addition, in Fiscal 2009 we had an
interest income of ` ` ` ` 1.46 million in fiscal 2009.

Expenditure

Our total expenditure increased by 68.08% from ` 1,311.60 million in Fiscal 2008 to ` 2,204.57
million in Fiscal 2009 on account of the following:

Our stock substantially increased by 120.42% from ` 69.60 million in Fiscal 2008 to ` 153.40
million in Fiscal 2009 primarily on account of our increase in volumes in Fiscal 2009. As
mentioned above, this in any case is not an item of expenditure but a system to arrive at the
correct cost of production.

Our cost of material substantially increased by 102.88% from ` 556.88 million in Fiscal 2008
to ` 1,129.79 million in Fiscal 2009 on account of a substantial increase in consumption of
raw material and packing material and consumables in Fiscal 2009 in light of our aforesaid
increase in volumes during Fiscal 2009.

43

Our employee remuneration and benefits expenses increased by 59.67% from ` 125.60
million in Fiscal 2008 to ` 200.54 million in Fiscal 2009 on account of an increase in salary
and wages, contribution to provident fund and family pension fund and an increase in labour
and staff welfare expenses in Fiscal 2009.

Our manufacturing and other expenses also increased by 42.81% from ` 621.62 million in
Fiscal 2008 to ` 887.75 million in Fiscal 2009 primarily on account of (a) a substantial
increase in provision for excise duty on finished goods from ` 6.67 million in Fiscal 2008 to `
40.42 million in Fiscal 2009, (b) an increase in repairs and maintenance from ` 16.82 million
in Fiscal 2008 to ` 30.34 million in Fiscal 2009, (c) a substantial increase in rent from ` 41.46
million in Fiscal 2008 to ` 131.58 million in Fiscal 2009, (d) a substantial increase in
conversion cost from ` 26.02 million in Fiscal 2008 to ` 51.69 million in Fiscal 2009, (b) an
increase in legal and professional charges from ` 25.07 million in Fiscal 2008 to ` 32.66
million in Fiscal 2009, (c) a substantial increase in sales tax from ` 4.90 million in Fiscal
2008 to ` 18.18 million in Fiscal 2009, (d) a substantial increase in freight, transport charges
and other expenses from ` 44.94 million in Fiscal 2008 to ` 82.06 million in Fiscal 2009, (e)
a substantial increase in selling expenses from ` 230.22 million in Fiscal 2008 to ` 325.27
million in Fiscal 2009, and (f) a substantial increase in travelling and conveyance expenses
from ` 6.30 million in Fiscal 2008 to ` 10.67 million in Fiscal 2009.

Our finance costs increased by 94.18% from ` 55.15 million in Fiscal 2008 to ` 107.09
million in Fiscal 2009 on account of an increase in the interest paid on term loans and an
increase in bank charges.

Depreciation/amortization increased by 49.59% from ` 21.90 million to ` 32.76 million in
light of depreciation booked for the plant and machinery added during the year in
connection with the Companys 50 KLPD multi-pressure distillation plant, which however,
was commissioned in Fiscal 2010.

Profit

On account of the aforementioned reasons our profit before tax and profit after tax increased by
48.73% and 63.17% respectively, from ` 212.50 million in Fiscal 2008 to ` 316.05 million in Fiscal
2009 and from ` 121.22 million in Fiscal 2008 to ` 197.80 million in Fiscal 2009, respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Companys primary liquidity needs have been to finance the growth of its business and our
expenditures. The Company has historically financed the majority of its working capital, capital
expenditure and other requirements through its operating cash flow, working capital facilities and
term loans from banks and financial institutions.

FINANCIAL CONDITION

Assets

The following table sets forth the principal components of our assets as of the dates indicated:


44


We believe that we will have sufficient capital resources from our operations, the net proceeds of this
offering of equity shares and other financings from banks, financial institutions and other lenders to
meet our capital requirements for at least the next twelve months.

Liabilities

The following table sets forth the principal components of our liabilities as of the dates indicated:

As of March 31,

2010 2009 2008

(` in millions)

Secured Loans 2,721.17 1,167.68 574.73
Unsecured Loans 1,813.53 83.64 3.14
Deferred Tax Liabilities 119.55 62.36 37.39


Secured loans
The following table sets forth the principal components of our secured loans as of the dates
indicated:

As of March 31,

2010 2009 2008

(` in millions)

Long Term Loans
Term Loans from Banks 1,466.26 413.20 221.20
Short Term Loans (Cash Credit including
working capital demand loans)
1,238.27 748.16 348.57
Hire Purchase Car Loan 16.65 6.32 4.96
Total 2,721.18 1,167.68 574.73

Secured loans increased by 133.04 % from ` 1,167.68 million as on March 31, 2009 to ` 2,721.17
million as on March 31, 2010.

Unsecured loans
The following table sets forth the principal components of our unsecured loans as of the dates
indicated:
As of March 31,

2010 2009 2008


(` in millions)
Fixed assets (net block and capital work in
progress) as adjusted for impairments
3,706.08 1,757.33 1,326.00
Investments 2.88 0.35 0.35
Inventory 843.26 591.51 216.26
Sundry debtors 819.95 654.02 559.82
Cash and bank balance 265.68 48.06 20.98
Loans and advances 2,151.32 623.36 277.52

45
As of March 31,

2010 2009 2008

(` in millions)

Fixed Deposits - 0.61 2.07
Unsecured Loans from Banks 1,663.53 49.96 -
Unsecured Loans from Promoters and
Others
150.00 33.07 1.07
Total 1,813.53 83.64 3.14

Our Unsecured loans increased substantially from ` 83.64 million as on March 31, 2009 to `
1,813.53 million as on March 31, 2010.

Net Cash Flows

Note: The two subsidiaries viz. Parag and Surya were acquired in Fiscal 2008. Hence, the first year for
preparing consolidated financial statements was Fiscal 2008 and hence the previous years figures of 2006-
2007 were not consolidated. Accordingly, the cash flow statement for the Fiscal 2008 representing the
movement of net increase in cash and cash equivalents between 2007-2008 and 2006-2007 has not been
prepared. For further details, please see the section Financial Statements in this Placement Document.


The following table details the cash flows of the Company for the periods presented:


For the Fiscal year ended

2010 2009
(` `` ` Million)
Net cash provided by/(used in) ................................
Operating activities ................................
290.86 (128.09)
Investing activities ................................
(2,049.83) (524.38)
Financing activities ................................
1,976.61 679.55
Net increase/(decrease) in cash
and cash equivalents ................................
217.62 27.07

Operating Activities

Net cash flow from operating activities for the fiscal year 2010 was ` `` ` 290.86 million, consisting of net
profit before tax and extraordinary items of ` `` ` 538.51 million as adjusted for, among other things,
depreciation of ` ` ` ` 71.27 million, loss on sale of assets of ` ` ` ` 0.12 million, miscellaneous expenses
written off of ` ` ` ` 0.05 million, net interest of ` ` ` ` 232.95 million as further adjusted for an increase in
inventories of ` ` ` ` 251.75 million as a result of acquisition of expansion of capacity; a increase in trade
receivables of ` ` ` ` 165.94 million; an increase in loans and advances of ` ` ` ` 1,527.96 million as offset by
an increase in trade payables and provisions of ` ` ` ` 172.36 million, proceeds from short term
borrowings of ` ` ` ` 1353.68 million on account of working capital loans and tax provision of ` ` ` ` 132.45
million .

Net cash used from operating activities for the fiscal year 2009 was ` ` ` ` 128.09 million, consisting of
net profit before tax and extraordinary items of ` ` ` ` 316.05 million as adjusted for, among other things,
depreciation of ` ` ` ` 32.76 million, loss on sale of assets of ` ` ` ` 0.22 million, miscellaneous expenses
written off of ` ` ` ` 0.05 million, net interest of ` ` ` ` 105.64 million as further adjusted for an increase in
inventories of ` ` ` ` 375.25 million as a result of expansion of capacity; a increase in trade receivables of

46
` ` ` ` 94.19 million; an increase in loans and advances of ` ` ` ` 452.02 million as offset by an increase in
trade payables and provisions of ` ` ` ` 431.94 million and tax provision of ` ` ` ` 93.30 million.




Investing Activities

Net cash used in investing activities for the fiscal year 2010 was ` ` ` ` 2049.83 million consisting of,
amongst other things, purchase of fixed assets of ` ` ` ` 2,050.76 million, investments of ` `` `2.53 million,
partially offset by interest received of ` `` `2.89 million and sale of fixed assets of ` `` `0.57 million.

Net cash used in investing activities for the fiscal year 2009 was ` `` `524.38 million consisting of,
amongst other things, purchase of fixed assets of ` `` `494.76 million, investments of ` `` `31.45 million,
partially offset by interest received of ` `` `1.46 million and sale of fixed assets of ` `` `0.37 million


Financing Activities

Net cash from financing activities for the fiscal year 2010 was ` `` `1,976.61 million, and consisted
primarily of the proceeds of issue of share capital (including premium) of ` `` `386.47 million, proceeds
from borrowing (net) of ` `` `1,929.71 million partially offset by interest paid of ` `` `235.84 million and
dividend and dividend tax thereon of ` `` `103.73 million.

Net cash from financing activities for the fiscal year 2009 was ` `` `679.55 million, and consisted
primarily of the proceeds of issue of share capital (including premium) of ` `` `82.24 million, proceeds
from borrowing (net) of ` `` `721.31 million partially offset by interest paid of ` `` `107.10 million and
dividend and dividend tax thereon of ` `` `16.90 million.


Contractual Obligations and Capital Commitments

The estimated amount of contracts remaining to be executed on capital accounts and not provided
for is approximately ` `` `607.87 million (net of advances) as on March 31 , 2010.

Contingent Liabilities

Particulars
As at
31-03-10
(Rupees in
million)
As at
31-03-09
(Rupees in
million)
As at
31-03-08
(Rupees in
million)
(a) Corporate guarantees issued to banks on
behalf of Subsidiary Company
250.00

Nil

Nil
(b) Bank guarantees issued on behalf of the
Company
51.76 6.2 6.87
(c) In respect of disputed sales tax matter,
pending before the Sales tax tribunal,
contested by the Company

Nil

1.34

1.34
(d) In respect of disputed Income tax matters,
pending before the appropriate Income
tax authorities, contested by the Company
For A.Y. 2007-08
For A.Y. 2005-06
For A.Y. 2004-05
For A.Y. 1992-93





86.07
Nil
22.27
Nil




Nil
Nil
Nil
1.00




Nil
70.36
16.66
1.00

47







We do not have any off-balance sheet arrangements, derivative instruments or other relationships
with unconsolidated entities that would have been established for the purpose of facilitating off-
balance sheet arrangements.

Related Party Transactions

For details in connection to related party transactions, see Related Party Disclosures of the section
titled Financial Statements at page 176 of this Placement Document.

Qualitative Disclosure about Market Risks

General

Market risk is the risk of loss of future earnings, to fair values or to future cash flows that may result
from a change in the price of a financial instrument. The value of a financial instrument may change
as a result of changes in the foreign currency exchange rates, interest rates, commodity prices, equity
prices and other market changes that affect market risk sensitive instruments. Market risk is
attributable to all market risk sensitive financial instruments including investments, foreign currency
receivables, payables and debt.

Interest rate risk

Our interest rate risk arises in connection with our term loans and working capital facilities from
banks. Our investments are primarily in subsidiaries, which do not expose us to significant interest
rate risk. Upward fluctuations in interest rates related to our borrowings could increase the cost of
both existing and new debts. We do not currently use any derivative instruments to modify the
nature of our exposure to floating rate indebtedness or our deposits so as to manage interest rate
risks

Significant developments after March 31, 2010 that may affect our future results of operations

Except as stated elsewhere in this Placement Document, to our knowledge no circumstances have
arisen since the date of the last financial statements as disclosed in this Placement Documents which
materially and adversely affect or are likely to affect, the operations or profitability of our Company,
or the value of our assets or our ability to pay our material liabilities within the next twelve months.
Except as stated in this Placement Document, there is no development subsequent to March 31, 2010
that we believe is expected to have a material impact on the reserves, profits, earnings per share and
book value of our Company. For further details please refer to the section Recent Developments on
page 149 of this Placement Document.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to impact our accounting policies
or the manner of our financial reporting. However, the Institute of Chartered Accountants of India
has announced a road map for the adoption of, and convergence of Indian GAAP with, IFRS, pursuant
to which all public companies in India, such as us, will be required to prepare their annual and
(e) In respect of disputed service tax matter,
pending before the appropriate Central
Excise authorities, contested by the
Company


2.02

Nil



Nil
(f) Disputed matters under arbitration
pending disposal
20.14 20.14

Nil

48
interim financial statements under IFRS after a stipulated time. Because there is significant lack of
clarity on the adoption of and convergence with IFRS and there is not yet a significant body of
established practice on which to draw in forming judgments regarding its implementation and
application, we have not determined with any degree of certainty the impact that such adoption will
have on our financial reporting.


49
INDUSTRY OVERVIEW


The following information includes extracts from publicly available information, data and statistics
derived from official sources and other sources we believe to be reliable, but which has not been
independently verified by us or the Book Running Lead Managers. The information in this Chapter is
derived from various government/Industry Association publications, CRISIL Research (Distillers and
Brewers Annual Review August 2010 and the State of the Distillers and Brewers Industry, August 2010)
and other sources. Neither we, nor the Book Running Lead Managers or any other person connected
with the issue have verified this information. Industry sources and publications generally state that the
information contained therein has been obtained from sources generally believed to be reliable, but
their accuracy, completeness and underlying assumptions are not guaranteed and their reliability
cannot be assured and accordingly, investment decisions should not be based on such information.

Growth of the Indian Economy

The Indian economy's growth rate has averaged over 7.0% per year since 1997, growing by 9.0%,
7.4% and 7.4% in 2007, 2008 and 2009, respectively(Source: CIA World Factbook). The Indian
economy is further poised to grow at 9.7% in 2010 and 8.4% in 2011 (Source: IMF World Economic
Outlook Update, October 2010). The GDP growth rates for certain developed and developing
economies for each of 2007, 2008 and 2009 are set out below:

GDP Real Growth Rate Estimates
Countries
2007
(in percentage)
2008
(in percentage)
2009
(in percentage)
Brazil 6.1 5.1 (0.2)
China 13.0 9.0 9.1
India 9.0 7.4 7.4
Russia 8.1 5.6 (7.9)
Japan 2.3 (1.2) (5.3)
United States 1.9 0 (2.6)
United Kingdom 2.7 (0.1) (4.9)
(Source: CIA World Factbook Website)

India is becoming increasingly urbanised and wealthy. Indias urban population has increased from
198 million in 1987 to 337 million in 2008, reflecting an increased share of urban population to total
population from 25% to 30% over the same period. (Source: The World Bank World Development
Indicators, 2010) At the same time, Indias per capita income has risen rapidly while demographics
remain favourable- a trend which is expected to boost consumption in the near future.

Overview of Indian Alcohol Industry

The Indian alcohol industry is broadly segregated into beer, distilled spirits and wine. The chart sets
forth below each of the segments of the Indian alcohol industry.

50
Alcohol Industry
Beer Distilled Spirits Wine
Indian Beer
Imported Beer
IMFL
Imported Spirits
Country Liquor
Illicit Liquor
Indian Wine
Imported Wine

Source: CRISIL Research

Beer: The beer segment is sub-divided into:
Indian made beer: Apart from beer made by Indian companies, the segment includes foreign
brands which are produced in India. According to CRISIL Research the total consumption of Indian
made beer was approximately 190 million cases in fiscal 2009-10.
Imported beer: The domestic consumption of imported beer is negligible as compared to that of
Indian made beer.

Distilled spirits: The distilled spirits segment is sub-divided into:
IMFL (Indian Made Foreign Liquor): IMFL is an industry term used in India to describe foreign
spirits that are now made in India, which are distinguished from traditional country liquor,
historically manufactured in India. In addition, IMFL is distinguished from beer and wine. IMFL
includes whisky, gin, vodka, rum and brandy.
Imported spirits
Country liquor: Country liquor is a cheaper alternative to IMFL. It is a less refined product than
IMFL and its presence is largely regional in nature and concentrated in the Northern states.
Illicit liquor: Illicit liquor is liquor produced illegally without any licences to produce alcohol. Illicit
liquor is an unrefined product (with far lesser rounds of distillation, dilution and blending) in
comparison to the other sub-segments of spirits. Also, often the raw materials used in the
production of illicit liquor are different from molasses, due to which consumption of illicit liquor
can be harmful to health.

Wine: The wine segment is sub-divided into:
Indian made wine
Imported wine

Trends in the Indian alcohol industry

Over the past 5 years (2004-05 to 2009-10), the Indian alcohol industry registered a robust CAGR of
15-17 per cent, with 410-440 million Cases consumed in the fiscal 2009-10. The IMFL market leads

51
the industry in terms of consumption. Beer is the second largest segment in terms of consumption
while wine is a small segment of the total market.

Southern India is the key consuming region for alcohol (IMFL, beer and wine), with almost one-third
of total domestic consumption coming from two states - Andhra Pradesh and Tamil Nadu. The
western state of Maharashtra is also an important market for alcohol. However, northern states have
relatively lower consumption, owing to the prevalence of country liquor in these markets. The chart
below sets forth the consumption of consumption pattern of IMFL, beer and wine in fiscal 2009-10

IMFL (~54%)
Beer (~46%)
Wine (~0%)

Source: CRISIL Research

The IMFL market

IMFL is the largest segment within the Indian alcohol industry. According to CRISIL Research, the
consumption of IMFL was ~210-240 million cases in fiscal 2009-10. The IMFL consumption has
grown significantly in the last few years owing to rapid economic growth, rising disposable incomes,
favorable demographics and greater social acceptability of alcohol consumption in India.

IMFL Market Structure, Size and Growth

The IMFL market is characterized by a limited number of large manufacturers. According to CRISIL
Research, the top five manufacturers account for 69% of the IMFL market. Almost 50% of the IMFL
market is controlled by United Spirits. Apart from United Spirits and Tilaknagar Industries Ltd, the
other major players in the IMFL market include Pernord Ricard, Radico Khaitan, Allied Blenders
Distillers, Tilaknagar Industries Ltd., Mohan Meakin and Jagatjit Industries.

Whisky comprises a major component of the IMFL segment with a consumption of 110-130 million
cases in fiscal 2009-10 thus contributing 55-58% of the IMFL market. The share of rum and brandy
are almost equal although the share of rum has been declining in percentage terms over the past few
years. The share of gin and Vodka in the IMFL segment is negligible. The following chart sets forth the
segment wise breakup of consumption in the IMFL segment in fiscal 2009-10.


52
57%
20%
18%
3%
2%
0%
10%
20%
30%
40%
50%
60%
Whisky Brandy Rum Vodka Gin

Source: CRISIL Research

IMFL consumption has grown by 15 per cent CAGR over the past five years, with volumes increasing
nearly 1.5 times in fiscal 2009-10. The growth in demand has been primarily due to increasing social
acceptance for alcohol. Also spurring the double-digit consumption growth is changing demographics
and increase in disposable incomes.

According to CRISIL Research, in 2009-10, the pan-India per capita consumption of IMFL stood at
approximately 0.19 cases per annum:
The southern states of Andhra Pradesh and Tamil Nadu had higher per capita consumption.
In the northern states, Delhi had a high per capita consumption.
Although Maharashtra is a key IMFL region in terms of production volumes, the state had low
per capita consumption.

While demand for IMFL products was ~210-240 million cases in fiscal 2009-10, IMFL capacities
stand at 430-450 million cases. With a mere 50 per cent capacity utilization approximately, the
IMFL market is characterised by an overcapacity situation. This is primarily due to players
expanding capacities or going in for contract manufacturing, considering the stringent regulatory
controls over inter-state movement of alcohol.

A sizeable portion of IMFL consumption is contributed by southern states, with Tamil Nadu and
Andhra Pradesh accounting for almost 40 per cent of total IMFL consumption. The ban on country
liquor across most southern states is the primary driver for IMFL consumption in the South.
Conversely, the northern states share in the total IMFL consumption pie is relatively less as north
India (especially the state of Uttar Pradesh) is an important market for country liquor.

The following table sets forth the breakup of sales volume within the IMFL segment in key
consuming states in Fiscal09-10:


53
Tamil Nadu and
Andhra
Pradesh, 40%
Maharashtra, 12%
Punjab, 5%
Rajasthan, 4%
Haryana, 4%
Delhi, 4%
Others, 31%

Source: CRISIL Research

Whisky: Whisky is the largest spirits segment in the IMFL market. According to CRISIL Research,
whisky comprised 57% of the IMFL market, in terms of sales volume in fiscal 2009-10. Whisky can
be categorized into prestige, regular, premium/semi premium and economy. The types of whiskies
are classified according to the price and quality of the drink.

Brandy: Brandy is the second largest spirits segment in the IMFL market. According to CRISIL
Research, brandy comprised 20% of the IMFL market, in terms of sales volumes, in fiscal 2009-10.
Typically in India, brandy is blended with neutral alcohol and mature grape brandy, post which
flavouring agents are added, as desired. Brandy is consumed largely in the southern states in India,
such as Tamil Nadu, Kerala, Andhra Pradesh and Karnataka.

Rum: Rum is the third largest spirits segment in the IMFL market. In terms of sales volume, it
comprised 18% of the IMFL market in the fiscal 2009-10 according to CRISIL Research.

Vodka and Gin: Vodka and Gin are a smaller portion of the spirits segment in India and accounted
for 3% and 2% of the IMFL market respectively in the fiscal 2009-10 according to CRISIL Research.

Key Drivers of the IMFL market

The IMFL market is expected to be driven by the following factors in the future:

1. Economic growth: The Indian economy's growth rate has averaged over 7.0% per year since
1997, growing by 9.0%, 7.4% and 7.4% in 2007, 2008 and 2009, respectively. (Source: CIA
World Factbook). The Indian economy is further poised to grow at 9.7% in 2010 and 8.4% in
2011 (Source: IMF World Economic Outlook Update, October 2010).

2. Favourable demographics: According to CRISIL Research, Indias population is projected to
grow by 2 per cent over the next 5 years. Currently, around 62 per cent of the countrys
population is within the age group of 15-59 years. Going forward, the percentage of population
within the 15-59 age bracket is expected to increase. Hence, a rise in the number of people
coming under the legal drinking age bracket is expected to drive alcohol consumption.

54

3. Higher disposable income: Higher economic growth is expected to translate to higher
disposable income. This is likely to result into higher affordability, especially for the middle
class, which in turn, is expected to increase discretionary spending over items like alcoholic
beverages.

4. Increasing social acceptance: Drinking alcohol has of late witnessed growing social acceptance
in India. Also, women drinking alcohol is increasingly considered socially acceptable, especially
in the cosmopolitan cities. Such a shift in lifestyle is expected to drive consumption of alcohol
beverages. The emergence of bars, restaurants and nightclubs and the entry of international
brands in the spirits market in India have been driving the rising consumption of alcohol or
alcohol based products among men and women in major cities in India. Exposure to western
culture and a changing social environment are likely to be other key drivers of alcohol
consumption in India.

5. Shift from country liquor to IMFL: Country liquor is typically considered a cheaper alternative
to IMFL, with northern states, especially Uttar Pradesh, being important markets for country
liquor. However, going forward, with the expected increase in disposable incomes and the
brand perception of IMFL, consumers are likely to shift their preference from country liquor to
IMFL. This is expected to be the primary demand driver for increase in IMFL consumption in
the northern states.


Raw Materials

IMFL is manufactured from molasses, as well as from grains such as barley, rice, wheat, corn and oat.
Raw material for fermentation usually differs among the various spirits. Corn malt is used in whisky,
molasses in the case of rum and country liquor, grapes in brandies and wine, any starch for gin and
vodka and barley for beer. Production of alcoholic drinks from sources other than molasses is very
small in India. Molasses accounts for 4 to 5% of the total sugar cane crushed by sugar mills within
the country. Raw material availability is a key concern depending on the sugar cane crop as well as
sugar production, which is also highly regulated by the Government.

The alternative uses of molasses, specifically in the production of ethanol (a crude oil substitute)
could lead to an upsurge of prices in the near future. A number of sugar mills have set up ethanol
plants, as have some refineries. There is usually price fluctuation of molasses from November to
March each year as the sugar crushing season progresses. Sugar mills have limited storage capacities
and as the sugar crushing season progresses, the lack of storage capacity forces many sugar mills to
distress sales. Competing uses of molasses could push up raw material prices and adversely impact
the IMFL industry.


Distribution Channel

Based on the distribution channels of alcohol in each state, the markets are broadly divided into:
Government-controlled market (or government corporation)
Open market or free market
Auction market

1. Government-controlled market: A government corporation controls the entire distribution
channel - at the wholesale level as well as retail level. The liquor is bought by state-run agencies
directly from liquor producers at a price accepted by the state. The duration for which the prices
are fixed is typically 1 year. Some of the state corporations are Kerala State Beverages
Corporation Ltd. (KBCL), Tamil Nadu State Marketing Corporation Ltd. (TASMAC) and

55
Andhra Pradesh Beverage Corporation Ltd. (APBCL) and Karnataka State Beverages
Corporation Ltd. (KSBCL). A variant to the government controlled market is the hybrid
market. Here the government controls either the wholesale or retail markets. For e.g. in Delhi,
wholesale distribution is not controlled. However, retail distribution is regulated by the
government.

2. Open market or free market: The government has no control over the distribution channels
(both wholesaler and retailer). Hence, prices are not regulated by the government. Instead,
prices are decided by demand and supply forces. However, the government grants licences to
distributors and retailers at a fixed price and for a fixed period, typically 1 year. Through this the
government controls the number of distributors and retailers in the market A free market
structure allows liquor manufacturers to choose distributors within a state, who in turn can sell
to retailers at a margin. This not only removes cartelisation but also increases the range of choice
for consumers in terms of better product quality and availability of brands. Thus, as more states
liberalise their distribution network, the liquor manufacturers would stand to benefit.

3. Auction market: In this type of market, a state is divided into several smaller geographical
regions. Subsequently, the state government auctions the right to retail liquor in those areas for a
specific period to private entities. The highest bidder wins the right for a particular area,
following which the contractor negotiates with manufacturers to source liquor to be supplied in
the awarded area.

The table below sets forth the structure of the distribution network in certain key states in India:

State Distributor Retailer Type of market
Karnataka Government control Free Hybrid
Andhra Pradesh Government control Free Hybrid
Delhi Open Government / Private Hybrid
Tamil Nadu
Government control Government control Government control
Kerala
Government control Government control Government control
Maharashtra Open Open Open
Goa Open Open Open
West Bengal Open Open Open
Pondicherry Open Open Open
Punjab Private Private Auction
Haryana Private Private Auction
Source: CRISIL Research

4. Canteen Stores Department: Canteen Stores Department (CSD) is a government agency which
provides basic amenities like household requisites, general use items, liquor etc to the armed
forces. The main aim of the CSD is to provide good quality amenities (this includes liquor) at a
relatively subsidised rate to the armed forces. In CSD, the government exercises control over the
distribution as well as retail channels. Of the total liquor consumed in India, a small portion is
consumed by CSD.

Future Outlook in the IMFL Sector

According to CRISIL Research, IMFL consumption is expected to increase by 14-16 per cent CAGR to
440-480 million cases by fiscal 2014-15. A shift from country liquor to IMFL particularly in the
northern states is expected to primarily drive IMFL consumption. The continuing ban on country
liquor in the southern states is likely to ensure that south India remains the key market for IMFL.


56
Going forward, volume growth from northern markets, especially Delhi, Haryana and Punjab, is
likely to outpace the growth of volumes in the southern states. This is largely due to the expected
shift from country liquor to IMFL in the northern states on account of the expected increase in
disposable income and superior brand perception of IMFL over country liquor.

Government Regulation on the Spirits Industry in India

The IMFL market is highly regulated. Some of the key regulations affecting the IMFL market are
given below:

Excise Regulations
Excise duty imposes a liability on a manufacturer to pay excise duty on production or manufacture of
goods in India. The Central Excise Act, 1944 is the principal legislation in this respect, which provides
for the levy and collection of excise and prescribes procedures for clearances from the relevant
factory once the goods have been manufactured. The Customs Act, 1962 and the Customs Tariff Act,
1975 regulate the customs duties leviable on import of goods to and export of goods from India.
Further, each state has notified its separate excise rates.

Prohibition
The Bombay Prohibition Act, 1949 applicable in Gujarat read with the Bombay Denatured Spirit
(Gujarat Amendment) Rules, 1988, Bombay Prohibition (Manufacture of Spirit) (Gujarat) Rules,
1963, the Mizoram Liquor Total Prohibition Act, 1995, the Nagaland Liquor Total Prohibition Act,
1989, Manipur Liquor Prohibition Act, 1911, prohibit the manufacturing of liquor, construction or
employment of any person in any distillery or brewery, importing, exporting, transportation or
possession of liquor, and selling or buying of liquor. However, the prohibition does not extend to
certain exempted articles including, any medicinal preparation containing alcohol unfit for use as
intoxicating liquor, any antiseptic preparation or solution containing alcohol which is unfit for use as
intoxicating liquor.

Prohibition on advertising

The Cable Television Networks (Regulation) Act, 1995, as amended, read with the Cable Television
Network Rules, 1994, as amended, prescribe an advertising code which provides that advertising in
the cable services shall be so designed as to conform to the laws of India and should not offend
morality, decency and religious susceptibilities of the subscribers of cable services. In addition, the
advertising code prohibits advertisements which indirectly or directly promote production, sale or
consumption of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants (prohibited
products).

The Press Council of India has laid down norms of journalistic conduct, which explicitly states that no
advertisement shall be published, which promotes directly or indirectly production, sale or
consumption of cigarettes, tobacco products, wine, alcohol, liquor and other intoxicants.

For Further details please see Regulations and Policies on page 94 of this Placement Document.


57
Disclaimer

CRISIL limited has used due care and caution in preparing this report. Information has been obtained
by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy,
adequacy or completeness of any information and is not responsible for any errors or omissions or
for the results obtained from the use of such information. No part of this report may be published /
reproduced in any form without CRISILs prior written approval. CRISIL is not liable for investment
decisions which may be based on the views expressed in this report. CRISIL Research operates
independently of, and does not have access to information obtained by CRISILs Rating Division,
which may, in its regular operations, obtain information of a confidential nature that is not available
to CRISIL Research.


58
BUSINESS
The following summary is qualified in its entirety by, and should be read in conjunction with, more
detailed information of our financial statements appearing elsewhere in this Placement Document
along with the risks discussed under the section titled Risk Factors. In this section our Company
refers to Tilaknagar Industries Ltd., and we, us and our refers to Tilaknagar Industries Ltd. and/or
its Subsidiaries, unless the context requires otherwise.
Overview
Our Company is an established and recognized player in the IMFL industry with a strong presence in
South India. Our Company was originally incorporated in the year 1933 as The Maharashtra Sugar
Mills Ltd. (MSML) for manufacturing sugar and allied products. Subsequently in the year 1973, a
wholly owned subsidiary of MSML, Tilaknagar Distilleries and Industries Ltd. (TDIL) was
incorporated to make industrial alcohol, Indian Made Foreign Liquor (IMFL) and sugar cubes. The
current form of our Company, namely, Tilaknagar Industries Ltd. was formed after a scheme of
amalgamation between, MSML and TDIL was approved by the Honble High Court of Bombay on July
16, 1993. Our Company is promoted individuals from the Dahanukar family.
We are engaged in the business of manufacturing products in the IMFL market. Currently our
product portfolio consists of more than forty brands across a diverse range of product segments and
price points. We own two millionaire brands-Mansion House Brandy and Madira Rum. For the year
ended March 31, 2010, Mansion House brandy and Madira Rum had sales volume of 3.76 million
cases and 1.05 million cases respectively. Our Company has a growing presence in Canteen Stores
Department (CSD), currently with 11 (eleven) registered brands. These include 7 (seven) brands
acquired by us from Alcobrew Distilleries India Private Ltd. towards the end of Fiscal 2010 which
were already registered with the CSD. We market a large number of our products in the southern
states in India and are gradually assuming a pan national presence. For the year ended March 31,
2010, 89.94 % of our sales volume was generated from the Southern states. We also have a growing
international business and are currently exporting our products to Western Africa, Middle East, Far
East and Caribbean countries. Exports constituted 0.97% of our sales volume for the year ended
March 31, 2010.
The IMFL market has grown at a 15 % Compounded Annual Growth Rate (CAGR) over the past five
years, with volumes increasing nearly 1.5 times in Fiscal 2010. The growth in demand has been
primarily due to rapid economic growth, rising disposable incomes, favourable demographics and
greater social acceptability of alcohol consumption in India. According to CRISIL Research the
production volume in the IMFL market was 210-240 million cases in the Fiscal 2010. The IMFL
market is characterized by a limited number of large manufacturers. Almost 50% of the IMFL market
is controlled by United Spirits Ltd.
We are also equipped with manufacturing and bottling facilities spread over thirty one facilities
strategically located across India. Out of these, three facilities are owned by us and our subsidiaries.
In addition, we operate our manufacturing and bottling operations through 7 lease and 21 tie-up
arrangements. Our primary manufacturing facility is in the sugar rich belt of Shrirampur,
Maharashtra with an installed capacity of 100 Kilo Litres Per Day (KLPD), which includes the new
molasses based ENA plant with an installed capacity of 50 KLPD in Shrirampur, Maharashtra which
commenced production in November, 2009. Further our green field grain based distillation project is
expected to be commissioned shortly with a capacity of 100 KLPD at Shrirampur.
Our Company has a licensed bottling capacity of 500,000 cases per year. In addition to our own
capacities our subsidiaries Prag and Surya have licensed bottling capacity of 600,000 cases per
annum and 1,080,000 cases per annum, respectively. The total gross sales of our brands and other

59
sales including sales through tie up arrangements reached ` 10,000 million during the year Fiscal
2010.
The gross sale of our brands and other sales including those through tie up units was ` 10,001.01
Million for the Fiscal 2010 as compared to ` 4897.14 million during the Fiscal year 2009.
Our consolidated total income for the fiscal years ended March 31, 2008, 2009 and 2010 was `
1,524.10 million, `2,520.73 million and `3,906.27 million respectively and our consolidated profit
after tax for the fiscal years ended March 31, 2008, 2009 and 2010 was `121.22 million, `197.80
million and `348.87 million respectively. Our total income and profit after tax have increased at a
CAGR of 60.09% and 69.65%, respectively between Fiscal 2008 and Fiscal 2010. For the same period
our volume of sales grew at a CAGR of 37.72 %. Our consolidated total income for the half years
ended September 30, 2010 and September 30, 2009 was ` `` ` 2,122.49 million and ` `` ` 1,375.62 million,
respectively. Our profit after tax for the aforementioned periods was ` `` ` 170.79 million and ` `` ` 105.98
million, respectively.
Our facilities at Shrirampur hold an ISO 14001-2004 environment management certificate dated
April 22, 2009 issued by Det Norske Veritas Management System Certificate in connection with
manufacture of spirit, ENA, IMFL, industrial chemicals (diethyl oxalate and turkey red oil) and sugar
cubes.
Competitive Strengths
Diversified brand portfolio.
We have a brand portfolio of over 40 brands which are positioned at various price points to
cater to various demand segments. Our flagship brands are Mansion House Brandy,
Madira Rum, Courrier Napolean Brandy, and Senate Royale which contribute to 67.06
% of our sales in terms of volume for the years ended on March 31, 2010. For the years
ended March 31, 2009, and 2010 our brand Mansion House Brandy has experienced a year
on year growth rate of 54.25 % and 71.52 %, respectively. For the same period the year on
year growth rate of Madira Rum was 714.8 %. and 198.8 %, respectively. The Mansion
House Brandy and Madira Rum caters to the premium and regular segments, respectively.
The strong positioning of these brands has contributed to sustained increases in our
revenues and we expect this trend to continue as the spirit industry grows. We create new
brands though our innovative design of product outlook, blend and bottling size amongst
others. Recently we launched another brand called Blacpower Whisky.
Manufacturing capabilities:
Our Company has 31 (thirty one) manufacturing and bottling units spread across India with
its primary manufacturing facility located in the sugar-rich belt of Shrirampur, Maharashtra.
Our manufacturing units comprise of 3 (three) owned units, 7 (seven) lease arrangements
and 21 (twenty one) tie-up units across the country.
Our primary manufacturing facility at Shrirampur, Maharashtra has an installed capacity of
100 KLPD of ENA which includes a recently set up molasses based ENA plant with a capacity
of 50 KLPD of ENA. The ENA produced from this plant caters to our Companys bottling
activities in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Puducherry.
We are also in the process of commissioning a green field project with a grain based
distillery of 100 KLPD of ENA at Shrirampur, Maharashtra. This plant will also be able to run
on molasses based feedstock. This will enable our Company to launch premium products

60
domestically and internationally. The grain facility will also provide for a natural hedge
against the fluctuations in molasses price. The ENA produced from this plant will cater to our
Companys increasing bottling capacities in Maharashtra and South India.
Efficient Distribution Sales Force
As a part of our strategy we sell through state corporations, distributor channels and direct
sales to organizations such as CSD. We market our sales in the retail segment through state
corporations, wholesalers, distributors and direct sales. As on September 30, 2010 we have a
distribution network consisting of approximately 215 sales personnel. We have been
increasing and intend to continue increasing our sales team, particularly in rural areas
where we expect growth to be more significant. We believe our wide distribution reach will
allow us to achieve optimal product penetration going forward and increase our revenues
and profit margins.
Significant Market Share in the South India market particularly in brandy, whisky and the CSD
segments.
Our Company has a dominant presence in high key growth markets such as Kerala,
Karnataka, Puducherry, Andhra Pradesh and Tamil Nadu. Our sales in these states, in terms
of volume in Fiscal ended March 31, 2010, were 7.20 million cases, comprising 89.94% of
our total sales volumes. Our flagship brand Mansion House Brandy caters to premium and
semi-premium segments.
Our Company has a growing presence in the CSD. Recently, we acquired 7 (seven) brands
from Alcobrew Distilleries India Private Ltd. in Fiscal 2010 which were already registered
with the CSD. Consequently our total portfolio of registered brands in the CSD segment has
increased to eleven brands. Our volumes in the CSD segment increased from 0.14 million
cases in Fiscal 2009 to 0.31 million cases in Fiscal 2010.
Economies of Scale and Locational Advantages
We enjoy cost advantages due to the economies of scale of our operations and cost savings
on raw material transportation due to the location of our manufacturing facilities, which are
located in Shrirampur, in the state of Maharashtra, which is in a sugar belt, one of the key
elements to the raw materials of this Industry. In addition, our distribution network allows
us to reach our customers in a cost effective manner due to the coverage of our owned
bottling units and tie up arrangements in various states in India.
Product Quality:
Our Company has won a number of awards, such as (i) Best Business Partner of CSD for the
year 2009-10, and, (ii) Emerging Company of the Year award at BevIndia in 2010. In addition
our Mansion House Brandy has been recognised as the Brandy of the year at INDSPIRIT in
2009. Our facilities at Shrirampur hold an ISO 14001-2004 environment management
certificate dated April 22, 2009 issued by Det Norske Veritas Management System Certificate
in connection with manufacture of spirit, ENA, IMFL, industrial chemicals (diethyl oxalate
and turkey red oil) and sugar cubes.
Experienced Management Team:
We have long experience in the business. We believe that our management, marketing and
technical teams are qualified and experienced and have contributed to our growth and
development. The key management personnel referred to in the section Board of Directors

61
and Senior Management of this Placement Document have an average experience of more
than 25 years. Our marketing and technical teams are experienced in marketing our
products and in the manufacturing and bottling of our products. The strength and quality of
our management has been instrumental in implementing our business strategies. We believe
that a motivated and empowered employee base is essential to maintaining our competitive
advantage.
Business Strategy
Focus on Brand Building and Expanding Brand Portfolio:
We have a portfolio of more than 40 brands. As a part of our strategy we are focused on
expanding our brands portfolio across market segments and expanding existing established
brands. In Fiscal 2010 we introduced two brands in the IMFL market namely Duchess
V,S.O.P and MH V.S.O.P. In addition we also revamped our existing brands namely the
Senate Royale Whisky and Mansion House Brandy to turn them into brands of
international quality.
We started manufacturing three new brands in the first quarter of Fiscal 2011 which caters
to different markets at different price points. Our strategy involves increasing our market
share through brand extensions in existing markets and by catering to different markets by
introducing different price points. We also intend to introduce brands particularly in the
whisky segment as we believe that this segment is expected to be the dominant spirit
segment in the future in India. In light of this we recently launched Blacpower Whisky.
Acquisition of New Brands and bottling capacity and foray into new geographies:
As a part of our strategy we continue to acquire new brands to establish our presence in new
geographies. In Fiscal 2010, we successfully concluded the acquisition of 7 (seven) brands
from Alcobrew Distilleries India Private Ltd. The acquisition of these brands will strengthen
our market presence in the northern and eastern part of India. We expect to continue
acquisitions of brands to augment our capabilities. In addition we intend to expand our
bottling capacity to meet our growing business needs.
In Fiscal 2008 we acquired our subsidiaries Prag and Surya which were instrumental in
augmenting our in house bottling capacity. We are currently focusing to increase the bottling
capacities in both our Subsidiaries. Our Company has a bottling capacity of 500,000 cases
per year. In addition to our own capacities our subsidiaries Prag and Surya have bottling
capacities of 600,000 cases per annum and 1,080,000 cases per annum, respectively.
As a part of our strategy, we intend to expand our presence in the whisky segment. We have
recently launched the Blacpower Whisky and revamped the Senate Royale whisky. We
intend to expand our presence in North India through expansion of our whisky portfolio.
Focus on the CSD Segment:
Canteen Stores Department, (CSD), represents a significant source of consumption of
spirits products in India. We seek to continue to increase sales of our IMFL branded products
to the CSD by increasing sales of existing registered brands and by introducing new products
to the CSD.
CSD caters to the requirements of the Indian army, air-force, navy and its retired personnel.
The CSD has 34 depots across India.

62
Our sales in the CSD segment grew by 118.12% from Fiscal 2009, (0.14 million cases), to
Fiscal 2010, (0.31 million cases).
Expand our Export Sales:
We regularly export our products across segments to Western Africa, Middle East, Far East
and Caribbean Countries. We have increased our export penetration though the export of
our brands Senate Royale Whisky and Classic Whisky. We intend to expand our
international reach in scale and coverage by adding more brands to our export list.
Capacity Expansion
We are focusing on inorganic and organic growth to drive our market share.
Our primary manufacturing facility at Shrirampur, Maharashtra has an installed capacity of
100 KLPD of ENA which includes a recently set up molasses based ENA plant with a capacity
of 50 KLPD of ENA. The ENA produced from this plant caters to our Companys bottling
activities in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Puducherry.
We are also in the process of commissioning a green field project with a grain based
distillery of 100 KLPD of ENA at Shrirampur, Maharashtra. This will enable our Company to
launch premium products domestically and internationally. This plant will also be able to
run on a molasses based feed stock. The ENA produced from this plant will cater to our
Companys increasing bottling capacities in Maharashtra and South India.
Products
We generate our sales primarily from our brands in the IMFL market (IMFL Products). In
addition, we provide ENA in bulk to our tie up units to manufacture our own IMFL Products. Our
IMFL portfolio comprises primarily of brandy, whisky and rum.
Brief descriptions of the products in the IMFL market are as follows:
Brandy: Brandy is the second largest spirits segment in the IMFL market. According to CRISIL
Research, in Fiscal 2010 brandy comprised 20% of the IMFL market, in terms of sales volumes,
Typically in India, brandy is blended with neutral alcohol and mature grape brandy, post which
flavouring agents are added, as desired. Brandy is consumed largely in the southern states in India,
such as Tamil Nadu, Kerala, Andhra Pradesh and Karnataka. Brandy is the largest sub-segment
within our IMFL product portfolio. For the year ended March 31, 2009 and March 31, 2010, our
sales volume in brandy was 2.3 million cases and 5.2 million cases respectively.
Whisky: Whisky is the largest spirits segment in the IMFL market. According to CRISIL Research, in
Fiscal 2010 whisky comprised 57% of the IMFL market, in terms of sales volume. Whisky can be
categorized into prestige, scotch, super premium and regular. The type of whiskies is classified
according to the price and quality of the drink. Whisky is the second largest sub-segment within our
IMFL product portfolio. For the year ended March 31, 2009 and March 31, 2010, our sales volume in
whisky was 2.8 million cases and 1.6 million cases respectively.
Rum: Rum is the third largest spirits segment in the IMFL market. In terms of sales volume, in Fiscal
2010 it comprised 18% of the IMFL market according to CRISIL Research. For the year ended March
31, 2009 and March 31, 2010, our sales volume in rum was 0.4 million cases and 1.1 million cases
respectively.
Vodka and Gin: Vodka and Gin are a smaller portion of the spirits segment in India and in Fiscal

63
2010 accounted for 3% and 2% respectively in the IMFL market according to CRISIL Research.
IMFL Branded Products
The following table shows our total sales volumes in the IMFL market for the periods indicated:
Year ended March 31
2010 2009 2008
Mn
Cases
% of total Mn
Cases
% of total Mn
Cases
% of total


Brandy 5.22 65.2 2.33 42.1 1.50 35.7
Whisky
1.64 20.5 2.77 50.0 2.63 62.4
Rum 1.08 13.5 0.40 7.2 0.05 1.1
Vodka 0.01 0.1 0.00 0.1 0.00 0.0
Gin 0.05 0.6 0.04 0.7 0.03 0.8
Total 8.00 100.0 5.54 100.0 4.22 100.0
The following table shows the total sales volumes and the percentage share of our two major brands
of our total sales volume for the periods indicated are as follows:
Year ended March 31
2010 2009 2008
Mn
Cases
% Mn
Cases
% Mn
Cases
%


Mansion House
Brandy
3.76 47.01 2.19 39.55 1.42
33.70
Madira XXX (Rum) 1.05 13.09 0.35 6.32 0.04 1.02

Brands
We currently own and manufacture more than 9 brands selling more than 100,000 cases per annum,
which are:
Mansion House Brandy
Madira Rum
Mansion House XO Brandy
Hottt Shot Super Whisky
Hottt Silk Whisky
Courrier Napoleon Brandy
Shot Whisky
Shot OLP Brandy
Senate Royale whisky
Of these 9 brands, we currently have 2 (two) millionaire brands whose sales exceeded 1.0 million

64
cases per annum they are as follows:
Mansion House Brandy
Madira Rum
Whisky
We intend to expand our offerings within the whisky segment. Hotshot Super Whisky is our top
selling brand with a sales volume of 0.45 million cases in fiscal 2010. The brand is focused on the
regular segment.
For the years fiscal 2008, 2009, and 2010, our sales volume in the whisky segment was 2.63 million
cases, 2.77 million cases and 1.64 million cases respectively. Our flagship brands in the semi-
premium segment are Senate Royale Whisky and Blacpower Whisky. We intend to focus on this
segment in the future. A brief description of these brands is as below:
The Senate Royale Whisky is made from a unique blend of the finest scotch malts and select Indian
spirits. During the Fiscal 2010 we have devoted significant research and development consequent to
which it has been upgraded and re-launched in the market in Fiscal 2011. As of March 31, 2010, we
sold 0.20 million case of the Senate Royale Whisky brand.
In addition Blacpower Whisky, a new brand has commenced production in Fiscal 2010.
Brandy
Southern India is the primary market for our brandy products. Our flagship brands in this segment
are Mansion House Brandy and Courrier Napoleon Brandy. A brief description of our flagship
brands are as below:
Mansion House Brandy: is our flagship brand and it entered the Millionaires club in the Fiscal
2009 and in Fiscal 2010 sold over 3.76 Million cases of 9 litres each.
Courrier Napoleon Brandy: is another lead brand in our Brandy portfolio. The brand is positioned
in the premium segment and is a blend made from selected grapes distilled in cognac pot stills of
France. For Fiscal 2010 Courrier Napoleon Brandy has sold over 0.36 million cases. Courrier
Napoleon Brandy is a focus brand and we are hopeful that it will soon enter the Millionaires Club.
The following table shows the sales volume of brandy from 2008 to 2010:
Year ended March 31

Total sales of brandy (million
cases)
Total sales of Mansion House
Brandy (million cases)

Share of flagship
brand %

2008 1.50 1.42 94.5%
2009 2.34 2.19 93.9%
2010 5.22 3.76 72.1%
Rum

65
Rum is mainly categorized in the semi-premium and regular segments in the IMFL market. Rum is
particularly popular with the Indian defence forces and comprises a significant proportion of the
total sales to the CSD.
Our flagship brand in this segment is the Madira Rum. A brief description of our flagship brand is
as below:
Madira Rum: is our highest selling rum Brand. In Fiscal 2010 Madira Rum has become a focus
brand and this has resulted in a high growth rate. Madira Rum entered the Millionaires club in
Fiscal 2010 by selling 1.05 Million cases of 9 litres each. It has also been accredited with the fastest
growing brand in the domestic segment..
The following table shows the sales volume of rum from 2008 to 2010:
Gin
Gin is a small portion of our IMFL business and comprises 0.64% of our total sales volume for the
year ended March 31, 2010. Our sales volume for gin for the fiscal year ended March 31, 2008,
2009 and 2010 were 32,293 cases, 36,884 cases and 50,839 cases respectively. Our flagship brand
in this segment is Savoy Club.
Vodka
Vodka is a smallest portion of our IMFL business and comprises 0.05% of our total sales volume for
the year ended March 31, 2010. Our sales volume for vodka for the fiscal years 2008, 2009 and
2010 was 1,918 cases, 4,648 cases and 9,955 cases respectively.
Manufacturing Process for Spirits
The manufacturing process of our spirits products can generally be summarized by the following
chart:


Year ended March 31
Total sales of
rum(million cases)
Total sales of Madira Rock Rum
(million cases)
Share of flagship
brand %

2008 0.05 0.04 93.0%
2009 0.40 0.35 88.2%
2010 1.08 1.05 96.7%

66

Fermentation
Molasses
Ethyl Alcohol
+ Carbon
Di-oxide
Analyser
Column
Rectifier/
Distillation
Column
Storage Tanks
Rectfied Spirit IMFL
Ethanol
Country
Liquor
Distillation Dilution and blending
Steam


Manufacturing Process of Whisky, Rum and Brandy
Whisky, rum and brandy are manufactured from molasses-based spirit and high-end whisky is
manufactured from grain and/or malt-based spirit. For grain-based spirit, the main raw materials
are grains like sorghum, rice, wheat and millet. The grains are ground to produce flour, which is
mixed with hot water, creating slurry. Various enzymes are added to this slurry, which convert
the starch content into sugar. The slurry is diluted in a ratio of 1:3 with processed water and the
diluted slurry is fermented for approximately 50 hours. The resulting mixture is then distilled to
create ENA.
The distilled ENA is diluted to the required strength with an alcohol content of 25%, 36% or
42.8% depending upon the product to be manufactured and is mixed with a blend at the bottling
stage. Depending upon the brand specifications, separate blends are prepared. The main
ingredients of the blend are ethyl alcohol, matured spirits, colours, demineralised water, caramel
and flavourings. Finally, the bottled product is packaged for distribution.
Manufacturing Process of Vodka
Vodka is generally manufactured either from molasses-based spirit or grain-based spirit. In the case
of molasses-based spirit, the process used is similar to that described above for whisky, using ENA
but for the fact that generally ENA is further refined through charcoalation process. It may or may
not be flavored. The bottled product is packaged for distribution.
Manufacturing Process of Gin
ENA is used to manufacture gin products. The ENA is blended at the bottling stage to produce gin.
Depending upon the brand specifications, separate blends are again prepared, with the main
ingredients being ethyl alcohol, demineralised water and flavour essence. Finally, the bottled product
is packaged for distribution.
Owned Facilities

67
Production Facilities
Our Company has manufacturing and bottling set up with thirty one facilities spread across India. Out
of these 31 facilities, we own 3 facilities along with our subsidiaries, currently having a capacity of
100 KLPD of ENA, and 2.18 million cases of bottling capacity. Our primary manufacturing facility is in
the sugar rich belt of Shrirampur, Maharashtra with an installed capacity of 100 KLPD including
recently set up a plant with an installed capacity of 50 KLPD molasses in the same region.
Besides, as mentioned above, we are in the process of starting commercial production at our new
100 KLPD grain based distillery.The molasses-based distillery produces alcohol derived from
molasses, which is used to manufacture most of our IMFL product such as whisky, rum and brandy.
The grain-based distillery on commencing production in the future shall produce alcohol derived
from grains such as sorghum, millet and rice, which is used to manufacture whisky and vodka.
Molasses and grain based distilleries are and will be used to manufacture the following spirits
products:
Molasses-based distilleries whisky, rum, brandy and vodka;
Grain-based distilleries Whisky , vodka
Bottling Facilities
Our Company has a bottling capacity of 500,000 cases per year. In addition our subsidiaries Prag and
Surya have bottling capacity of 600,000 and 1,080,000 cases per annum respectively. Besides, our
Company has 7 lease arrangements and 21 tie-ups across the country for carrying out manufacturing
and bottling activities.
Leased and Tie-up facilities
We have entered into various lease arrangements and tie ups with third parties to expand our
manufacturing and bottling capacities. Currently our Company has 7 (seven) lease arrangements and
twenty one tie-ups across the country for carrying out manufacturing and bottling activities.
These tie ups and lease arrangements are in various states in India where sale of IMFL products is
permitted to manage our exposure to taxes levied on inter-state movement of finished or in-process
spirits in India, reduce the cost of breakage during long-distance transportation, maintain the price
competitiveness of our products and to deliver our products to our customers on time.
While leased facilities are used as our own by paying lease rentals at agreed rates, under tie up
arrangements we provide them with ENA, bottles, packaging materials, purchase orders placed by
our customers and our planned production schedules for them to perform the bottling services for
us. We are responsible for quality control of the IMFL products bottled by tie-up units. We are
ultimately responsible for the profit or loss resulting from the operations.
Leased Units
As a part of our business strategy, we have lease arrangement with 7 manufacturing units across
India. Under the lease arrangement, we use all capacities installed of the lessee and pays the lease
rentals for use of such facilities. Our lease units are located in the states of Andhra Pradesh, Kerala
and Goa. As on March 31, 2010, our sales volume from the lease units was 2.91 million cases.
Tie-up units

68
We have tie-ups with 21 units for our manufacture and bottling operations. Under this arrangement
we provide input materials as per the quality norms. Our blenders are stationed at the bottling units
to oversee the blending and bottling operations. The entire working capital for the tie-up units is
funded by us while the net receipts, i.e. Gross sales less, excise duty, cost of materials and other
manufacturing expenses, if any, are recognised as Income from tie up units.
These units provide us with the infrastructure and manpower necessary for the bottling of our IMFL
products, including labour, water, electricity, plant and machinery and are responsible to obtain
relevant licenses and permits for such operations.
As on March 31, 2010, total sales of our products through these tie up units was 3.85 million cases.
Packaging
We source packaging materials from various vendors in India to increase cost efficiency. The primary
packaging materials are glass bottles, labels, caps, mono cartons and canister for special packing.
Sales and Distributions
Under the existing regulations, we currently distribute our products only through three channels
namely:
Government-controlled market (or government corporation)
CSD Segment
Open market or free market
Government Corporations
We sell various products through various government corporations, in the states of Delhi, Andhra
Pradesh, Karnataka, Kerala, Orissa, Chattisgarh, Rajasthan, Madhya Pradesh and Tamil Nadu. These
government corporations send our products to various retail stores through various depots, for
onward sales to the final consumer.

We receive the payment for the sale of our products through the relevant government corporations
when our products are sold to the final consumer.

If however, the said products are not sold within a stipulated period of time, we are, after the said
period of time, required to pay certain charges till the sale of the said products as demurrage charges.
The demurrage charges are directly linked to the amount of time that the product lies unsold beyond
the aforementioned stipulated period of time. In such a case however, we do have a choice of having
the relevant products returned to us rather than continuing to pay the Corporation Charges.

Please also see Risk Factor No 15 under the section titled Risk Factors on page 1 of this Placement
Document.
While in the Government controlled markets our customers remain constant, being the government
corporations, the CSD Segment and the open market, the customers varies from fiscal to fiscal.
Our major customers are (i) Kerala State Beverages Corporation, (ii) Tamil Nadu State Marketing
Corporation Ltd (iii) Andhra Pradesh Beverage Corporation and (iv) Karnataka Beverages
Corporation Ltd.

69
Open Market
Under this system, the government sells licenses to applicants for a fee, which entitles them to sell
alcohol in the market. This system is beneficial for both the alcohol companies and the end
consumers as the pricing is determined by the markets. In the open market, we sell through our
products through distributor channels, who posses such licenses in the states and Union Territories
of Maharashtra, Goa, Daman and Diu, Gujarat, Puducherry, West Bengal, Sikkim, Assam and
Meghalaya.
CSD Segment
We have 11 (eleven) products registered with the CSD, which consist of the following.
1 Mansion House French Brandy
2 Courrier Napoleon Finest Pure Grape French Brandy
3 Senate Royale Whiskey
4 Matured Bonking Rum
5 TI Nigro He-mans XXX Matured Rum
6 TI Black Colt Matured XXX Rum
7 TI White House Premium Whiskey
8 Madira XXX Rum
9 TI Golden Chariot Rare Whisky
10 TI Bachelor Deluxe Whisky
11 TI White House VSOP Brandy

The pricing of a particular product we supply to the CSD is approved by the CSD based on the price of
that product prevailing in the non-defence market. Please refer to the section Risk Factors

We sell our products mainly through the wholesaler-to-retailer route with our involvement with the
distributors in the supply chain. We currently have approximately 112 distributors, who in turn sell
to approximately 227 sales depots for further distribution to approximately 28,600 retailers.
Typically, our sales force in a particular state receives orders from the wholesalers and notifies our
production facilities in Shrirampur and other places for manufacturing to meet customer demand.

We have established an extensive distribution network in India with a strong sales and distribution
team of approximately 215 personnel. Such a team allows us to achieve our sales targets and to
expand our customer reach. We divide our distribution network in India into eight zones, each with a
head.
Markets
The IMFL market can be classified into five segments- whisky, brandy, rum, gin and vodka. The IMFL
market has grown at a 15 per cent CAGR over the past five years, with volumes increasing nearly 1.5
times in fiscal 2009-10. The growth in demand has been primarily due to rapid economic growth,
rising disposable incomes, favourable demographics and greater social acceptability of alcohol
consumption in India. According to CRISIL Research the production volume of IMFL was ~210-240
million cases in the fiscal 2009-10. The IMFL market is characterized by a limited number of large
manufacturers. According to CRISIL Research, almost 50% of the IMFL market is controlled by
United Spirits. Whisky comprises a major component of the IMFL market contributing 55-58% of the
IMFL market while brandy accounts for 20% share of the IMFL market.
Southern India is the key consuming region with Tamil Nadu and Andhra Pradesh accounting for
almost 40 per cent of total IMFL market consumption. The ban on country liquor across most
southern states is the primary driver for consumption of products in the IMFL market in South.
Conversely, the northern states share in the total IMFL consumption pie is relatively less as north
India (especially the state of Uttar Pradesh) is an important market for country liquor.

70
Competition
The major competitors in the IMFL industry are USL, Radico Khaitan Ltd., Pernod Ricard India
Private Ltd. and Allied Blenders & Distillers Private Ltd. There are a few international participants
that operate in India through their own subsidiaries or joint ventures, including Bacardi
International Ltd., although their presence is relatively small. We also participate in the export
markets through the export of our IMFL branded products to the Middle East Western Africa, Far
East and the Caribbean countries. Further, there exists an unregulated and unorganized spirits sector
in India, which does not comply with all industry and government laws and regulations, including the
payment of excise taxes.
We face competition from all existing players in the IMFL market. We seek to remain competitive by
emphasizing the quality of our products and packaging and the efficiency of distribution and supply.
See Managements Discussion and Analysis of Financial Condition and Results of Operations
Factors Affecting the Results of Our Operations Competition.
Raw Materials and Major Suppliers
The key raw materials used for manufacturing IMFL Products is ENA which is manufactured from: (i)
Molasses and (ii) Coarse grain.
We maintain a diverse base of suppliers from which we source our raw materials. We obtain
molasses from the sugar mills in and around Shrirampur in the state of Maharashtra. As explained
earlier this proves advantageous for us as our primary production facility is also situated there. We
obtain grain from suppliers throughout India.
Other materials
Our main suppliers of glass bottles include Haldyn Glass Gujarat Ltd., AGI Glaspac, Glassex India (P)
Ltd. Our main suppliers for our master cartons and mono cartons include Magicase Enterprises (P)
Ltd. amongst other small suppliers. Our supplier for guala caps is Guala Closures (India) (P) Ltd.
Properties
Our Company holds clear, freehold and marketable title of the properties located at Belapur,
Shrirampur, Eklahere and Ranjankhol which were transferred in the name of our Company either by
way of an agreement to sale or transferred by virtue of scheme of amalgamation sanctioned by the
High Court of Bombay between Tilaknagar Distilleries and Industries Ltd. and The Maharashtra
Sugar Mills Ltd. in the year 1993.
The details of properties belonging to our Company on leasehold or on leave or license basis are
summarized in the table below:

Sr.
No.
Description of the Property Area
Leasehold Properties
1. 18 K.M Hyderabad-Bangalore, NH, Shamshabad- 509323,
RR District, Andhra Pradesh
-
2. Davaluru, Kankipadu, Krishna District, Andhra Pradesh 7.34 acres
3. Srirampur, Maharashtra 4170.78 sq. feet
4. Medchal, RR District, Andhra Pradesh 23,700 sq. feet
5. L-22, Cuncolim Industrial Estate, Cuncolim Goa- 403703 13,000 sq. meters
6. House No.21-9-141, Sadlapally Hindupur, Ananthpur 1.75 acres

71
Sr.
No.
Description of the Property Area
District- 5150211, Andhra Pradesh
7. PB No.1, Muringoor, P.O, Chalakudy, Thrissur District,
Kerala- 680316
-
8. Chebrollu village, West Godavari District, Andhra Pradesh -
9. Chebrollu village, West Godavari District, Andhra Pradesh -
10. No.5/2, Building No.22, 2
nd
Floor, East Park Road, K.P. East,
Bangalore- 01

1250 sq. feet
11. Plot No. IA-262, Sector-III, Salt Lake City, Kolkata- 700097

900 sq. feet
Leave & Licensed Properties
1. Flat No. 109, 2nd Floor in Reliance Residency, Indira Park,
Ramakrishna Math Road, Hyderabad- 29
-
2. House No. 1-2-607/11/A, Opposite SBH Colony, Behind
Old DBR Mills, Gandhinagar, Hyderabad-500080

280 sq. feet.
3. House No. 31/1583 B, Downstairs, Gandhy Jayanthy Road,
Thammanam, Kochi

-
4. Flat No. 501 and 601 , C-Wing, Shree Sai Nath Housing
Society, Anand Nagar, Near Vakola Police Station,
Santacruz (East), Mumbai

606 sq ft. each flat aggregating
to 1212 sq. ft.
5. Flat No. 503, Building No. C-4, Lok Manasarovar, Mulund
(West) Mumbai-400080

Carpet area of 903 sq ft. and
built up area of 1190 sq ft.
(approx.)
6. Flat No. A-501 & A-502, Silver Beach Apartments, Opposite
Juhu Post Office, Juhu Mumbai- 400049

-
7. Flat No. 704, A Wing, 7th Floor, Abrol Vastu Park
Evershine Nagar, Malad (West), Mumbai- 400064

1315 sq. ft. super built-up
8. No. J-45, Sector 41, District Gautambudh Nagar, Noida,
Uttar Pradesh -201301

-
9. Flat 1703, A Wing, Evershine Embassey, Veera Desai
Road, Andheri West, Mumbai- 400053

-

Intellectual Property
Our technology strategy is to selectively acquire and license third-party technology when we believe
it is beneficial to us. Our selection process incorporates many factors, including the cost of the
technology, our and our customers requirements, raw material and energy costs, impact on product
quality, capital costs, maintenance requirements and reliability. We believe generally that the most
cost-effective way for us to acquire technology is to partner with foreign industry leaders. We also
make use of our own in-house development teams and monitor developments in production
techniques at our competitors, to the extent practicable.
We have 8 registered copyrights, 45 registered trademarks and have filed 56 applications for the
registration of trademarks. We do not have any patents. Save as disclosed above, we do not have any

72
other material intellectual property rights. For further details, please refer to the Section Risk
Factors.
Our Company has taken standard fire and special perils policy for material damages caused due to
fire, lightning, explosion/implosion, aircraft damage, riot, strike, damage due to terrorism covering
building, plant & machinery & stock, furniture, fixtures & fittings, etc of our Company. Our Company
has also taken annual turn over policy covering risks related to inland & overseas transit and stock
transfer, floater policy covering risks of tanks containing liquids at various facilities of our Company
and money insurance policy covering risks against loss of money in transit occasioned by robbery,
theft or other fortuitous cause.
Our Company believes that its insurance coverage is adequate and consistent with industry
standards. As at the date of this Placement Document, there have been no material claims made by
our Company or any of our Company entities under the insurance policies. These insurance policies
are generally valid for one year and are renewed annually by of our Company.
Regulation and Environmental Matters
Our business operations, and our ownership and operation of real property, are subject to a broad
range of national, state, local and foreign environmental, health and safety laws and regulations
pertaining to release, emission and discharge of substances, remediation of contaminated soil and
ground- water, waste handling and disposal and employee health and safety.
Employees and Labour Relations
As on September 30, 2010, we had a total of 470 executive and management members and
employees at our production facilities and offices.
Corporate Social Responsibility
Since December 2008, our Company has encouraged sports such as table tennis, badminton,
volleyball, cricket, tennis, chess and carom. Our company provides necessary equipment and
gymkhana facilities to about 120 children of various age groups which have helped three
international players and national and state level players in various games apart from sponsoring
seven swimmers at the state and national level championships.
Our Company runs the Dahanukar English Medium High School which was started in 1975 and has a
current strength of 621 students and 42 faculty members. The school has a 100% pass percentage
for the Secondary School Certification exam with all students scoring first class. Our Company also
supports a Marathi medium school for children at Tilaknagar, Shrirampur which was started in 1945
and has strength of 530 students and 22 staff and teachers and is well equipped with amenities and
facilities. The school runs various programmes for student scholarships, cultural competitions,
sports and yoga classes.
Our Company has taken initiatives through its Maa Ananteshwaridevi Annakshetra at various places
in India to provide free food daily to over 4,200 men, women and children at pandals setup for that
purpose in Tilaknagar and our Companys various other business centers across the country. Free
food is also distributed at some of the villages, which cannot avail of aid due to distance and
inhospitable terrain. The groceries for the Annakshetra are sourced from consumer stores which are
fully funded by our Company.
Our Company also supports the orphanage Anand Vihar at Rajankhol, Shrirampur. Apart from
providing grocery items and milk for the children, our Company also provides them support for their
scholastic and extra-curricular needs.

73
Our Company also undertakes various environmental initiatives. Our Company organized a month
long tree plantation programme at Mumbai and Shrirampur, whereby environmental training and
awareness, tree plantations was undertaken by the participants. Through the month of July, 2010
over 40,000 saplings of forest and fruit trees were distributed free of cost to the various people,
spanning more than 100 gram panchayats.



74

BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Board of Directors

The general supervision, direction and management of our operation and business is vested in our
Board, which exercises its powers subject to our Memorandum and Articles of Association and the
requirements of Indian laws. As per our Articles of Association, we are required to have not have less
than 3 (three) directors and not more than 12 (twelve) directors. Currently, our Company has 8
(eight) directors, of which 5 (five) are independent directors. Mr. Amit Dahanukar is the Chairman on
our Board and Managing Director of our Company.

Pursuant to the Companies Act, not less than two-thirds of the total number of our directors shall be
persons whose period of office is subject to retirement by rotation and one-third of such directors,
or if their number is not three or a multiple of three, then the number nearest to one-third, shall
retire from office at every Annual General Meeting. The directors to retire are those who have
longest held their office since their last appointment. A retiring director is eligible for re-election.
Our directors are not required to hold any qualification shares.

The following table sets forth details regarding the Board of Directors as at the date of this Placement
Document:

Sr.
No.
Name, Designation, Category, DIN,
Fathers Name
Address, Occupation
Age Other Directorships

1. Mr. Amit Dahanukar
Chairman and Managing Director

S/o Late Mr. Arun Dahanukar

10, Ratnakar, 26, Dr. B Indrajit Road,
Off Narayan Dabholkar Road, Malabar
Hill, Mumbai 400006

Occupation: Business

DIN 00305636
34 1. Surya Organic
Chemicals (P) Ltd.
2. Prag Distillary (P)
Ltd.
3. Arunodaya
Investments Private
Ltd.
4. M.L. Dahanukar and
Company Private Ltd.

2. Mrs. Shivani Amit Dahanukar
Executive Director

W/o Mr. Amit Dahanukar

10, Ratnakar, 26, Dr. B Indrajit Road,
Off Narayan Dabholkar Road, Malabar
Hill, Mumbai 400006

Occupation: Business

DIN: 00305503
33 1. Surya Organic
Chemicals (P) Ltd.
2. Prag Distillary (P)
Ltd.
3. Arunodaya
Investments Private
Ltd.
4. M.L. Dahanukar and
Company Private Ltd.

3. Mr. S.V. Mazumdar
Non Executive Independent Director

S/o Mr. Vinayak Muzumdar
82 1. The Oudh Sugar Mills
Ltd.
2. Indian Link Chain
Manufacturers Ltd.

75
Sr.
No.
Name, Designation, Category, DIN,
Fathers Name
Address, Occupation
Age Other Directorships


Roxana, 109, Maharshi Karve Road,
Mumbai 400020
Occupation: Professional

DIN: 00006935
3. Phil Corporation Ltd.

4. Mr. V.B Haribhakti
Non Executive Independent Director

S/o Mr. Bhagwandas Haribhakti

51, Maker Tower B Cuffe Parade,
Mumbai- 400005

Occupation: Professional

DIN: 0088062
81 1. Bajaj Electricals Ltd.
2. Citadel Realty and
Developers Ltd.
3. Simplex Realty Ltd.
4. Anglo-French Drug
Industries Ltd.
5. Ester Industries Ltd.
6. Lakshmi Automatic
Loom Works Ltd.
7. Hindustan
Composites Ltd.
8. BDO Consulting
Private Ltd.
9. Mirae Asset Trustee
Company Private Ltd.


5. Dr. Vishnu Kanhere
Non Executive Independent Director

S/o Mr. Krishna Kanhere

4, Dwarka, Shastri Hall, Jaoji Dadaji
Road, Mumbai 400007

Occupation: Professional

DIN: 00999861
52 1. Pratish Nandy
Communication Ltd.
2. PNC Productions Ltd.
6. Dr. Ravindra Bapat
Non Executive Independent Director

S/o Mr. Dinkar Bapat

B-1002, Jagat Vidya Co-operative
Housing Society Ltd,, Mumbai,
Maharashtra 400051

Occupation: Professional

DIN: 00353476
68 1. Haffkine Bio-
Pharmaceutical
Corporation Ltd.
2. Haffkine Ajintha
Pharmaceuticals Ltd.
3. Radiant Tradevest
Private Ltd.
4. Travel Masters
(Mumbai) Private Ltd.
5. Laguna Developers
Private Ltd.
6. Nishant Finance &
Trading Private Ltd.
7. Sabrina Trading
Company Private Ltd.
8. Topgrow Agro &
Infrastructural
Private Ltd.

76
Sr.
No.
Name, Designation, Category, DIN,
Fathers Name
Address, Occupation
Age Other Directorships

9. RVS Educational and
Charitable
Foundation (Section
25 Company)
10. Yashaswini Samajik
Abhiyan (Section 25
Company)
7. Mr. C.V. Bijlani
Non Executive Director

S/o Mr. Verhomal Bijlani

24 B, Yogi Krupa, 15, Manish Nagar,
Four Bunglows, Andheri West,
Mumbai Maharashtra 400053

Occupation: Professional

DIN: 02039345
70 1. Mission Vivacare Ltd.


8. Mr. Madan Goyal
Non Executive Independent Director

S/o Mr. Bhagwandas Goyal

501, Park Wes-4, Raheja Estate,
Kalupwadi Road, Boriwali (E) Mumbai
Maharashtra 400066

Occupation: Professional

DIN: 00377825
67 1. Primeview (India)
Infin Private Ltd.



Nationality

All the Directors of our Company are Indian nationals.

Brief profiles

Mr. Amit Dahanukar

Mr. Amit Dahanukar, age 34 years, is a Chairman and Managing Director on the Board of our
Company. He is graduate in electrical engineering with a masters degree in engineering management
from Stanford University, U.S.A. He is responsible for spearheading the future initiatives of our
Company. He was appointed as Chairman and Managing Director with effect from June 1 2006.


Mrs. Shivani Amit Dahanukar

Mrs. Shivani Amit Dahanukar, age 33 years, is an Executive Director in the Board of our Company.
She holds a masters in business administration from the University of San Francisco; she also
graduated in law from the Government Law College, University of Mumbai. She oversees our

77
Companys daily operations. She was appointed as Executive Director with effect from August 22,
2007.

Mr. S.V. Mazumdar

Mr. S.V. Muzumdar, age 82 years, is a Non Executive Independent Director on the Board of our
Company. He holds a graduate degree in law. He possesses vast knowledge and experience in
corporate taxation and management. He is on the Board of many reputed companies. He is associated
with our Company for the last three decades. He was appointed as a Director with effect from January
7, 1970.

Mr. V.B Haribhakti

Mr. V.B. Haribhakti, age 81 years, is a Non Executive Independent Director on the Board of our
Company. He is a chartered accountant practitioner for the last several years. He has also received
gold medal in the final chartered accountants examination, Mr. Haribhakti was the president of
Institute of Chartered Accountants of India during 1967-68. He was also the member of the Council of
the Institute of Chartered Accountants of India during 1961-73. He has valuable experience in the
field of accountancy and management. Mr. Haribhakti is associated with our Company since March,
1977. He was appointed as Director with effect from March 15, 1977.

Dr. Vishnu Kanhere

Dr. Vishnu Kanhere, age 52 years, is a Non Executive Independent Director on the Board of our
Company. He is a practicing chartered accountant and a qualified cost accountant. He is a certified
fraud examiner Association of Certified Fraud Examiners, U.S.A and a certified information system
auditor Information Systems Audit and Control Association, U.S.A. He has successfully completed
I.C.R.A. (UK) approved Certified Lead Auditors course for ISO 9000:2000 quality system auditor. He
was appointed as Director with effect from October 28, 2004.

Dr. Ravindra Bapat

Dr. Ravindra Bapat, age 68 years, is a Non Executive Independent Director on the Board of our
Company. He is an Emeritus Professor, Department of Surgical Gastroenterology at the Seth G. S.
Medical College and K.E.M Hospital, Parel, Mumbai. He is a member of the Governing Council of Tata
Memorial Centre and Trustee of Yashwantrao Chavan Pratishthan, Ayurvidya Vardhini & Sanyog
Trust, Mumbai. He is also the Chairman of Haffkine Bio-pharmaceutical Corporation Ltd. He was
appointed as Director with effect from September 28, 2006.

Mr. C.V. Bijlani

Mr. C. V. Bijlani, age 70 years, is a Non Executive Director on the Board of our Company. He started
his career as lecturer in economics. Further he has been experience in various fields of banking and
finance e.g. project finance, capital structuring, merchant banking, investment banking, forex,
mergers and acquisitions, industrial rehabilitation, joint ventures, external commercial borrowings,
leasing, hire purchase, human resource development, accounts, taxation. legal, general
administration etc. He has held senior positions with public and private sector banks. He was
appointed as Non-Executive Director with effect from July 2, 2009.

Mr. Madan Goyal

Mr. Madan Goyal, age 67 years, is a Non Executive Independent Director on the Board of our
Company. He holds a graduate degree in management studies with a vast experience of 43 years in
commercial banking, investment banking and human resources management. He has been associated
with the State Bank of India for a period of 25 years holding senior positions. He is also the Chairman

78
of Primeview (India) Infin Pvt. Ltd. He was appointed as Non-Executive Director with effect from
August 3, 2009

Relationship of the Directors

None of the Directors of our Company are related to each other except Mr. Amit Dahanukar and Mrs.
Shivani Amit Dahanukar who are husband and wife.

Borrowing Powers of the Directors

Pursuant to a resolution dated September 20, 2010 passed at an Annual General Meeting by the
Members of our Company in accordance with the provisions of the Companies Act, 1956, the consent
of the Members of our Company was granted to the Board of Directors or any committee thereof as
may be authorized by the Board of Directors to borrow any sum or sums of money (including non
fund based facilities), whether secured or unsecured, in Indian or foreign currency from time to time
at their discretion, for the purpose of the business of our Company, from any one or more banks,
financial institutions and other persons, firms, bodies corporate, notwithstanding that the monies to
be borrowed together with the monies already borrowed by our Company (apart from temporary
loans obtained from our Companys bankers in the ordinary course of business) shall not, at any time,
exceed ` 10,000 million over and above the aggregate of the paid up capital and free reserves of our
Company.

Shareholding of Directors

As on September 30, 2010 the details of the Equity Shares and warrants held by our Directors is as
follows:

Sr.
No.
Particulars No. of Equity Shares Number of options
outstanding granted
under ESOP-2008
1. Mr. Amit Dahanukar 13,198,959 Nil
2. Mrs. Shivani Amit Dahanukar 39,371,043 Nil
3. Mr. S.V. Muzumdar 7,551 6,666
4. Mr. V.B. Haribhakti 9,000 6,666
5. Dr. Vishnu Kanhare Nil 6,666
6. Dr. Ravindra Bapat 20,250 6,666
7. Mr. C.V. Bijlani Nil 6,666
8. Mr. Madan Goyal Nil 6,666

Remuneration and benefits to our Directors

Remuneration to Managing Director of our Company*:

Mr. Amit Dahanukar, Managing Director:

Pursuant to a resolution dated May 14, 2009 passed by the Board of Directors of our Company and
shareholders resolution dated August 01, 2009 passed at an Annual General Meeting of our
Company, Mr. Amit Dahanukar, has been reappointed as the Managing Director of our Company for
a period of three years commencing from November 07, 2009 and pursuant to resolution dated
September 20, 2010 passed by the shareholders of our Company at an Annual General Meeting the
details of the remuneration payable with effect from April 01, 2010 to Mr. Amit Dahanukar and
terms and conditions of his appointment are as set out below:

Details of the terms and conditions and remuneration of Mr. Amit Dahanukar:


79
1. Salary: ` 1,280,000/- (Rupees One million two hundred and eighty thousand only) per month

2. Commission: Payment of commission calculated with reference to the net profit of our Company
for each financial year as may be fixed by the Board of Directors, subject to ceiling laid down in
section 309 of the Companies Act.

3. Performance Incentive: As per the rules of our Company.

4. Perquisites and Allowances: In addition to the Salary, the Chairman and Managing Director shall
be entitled to the following perquisites and allowances:

Accommodation: Furnished or otherwise, shall be provided by our Company or HRA in lieu
thereof subject to a limit of sixty percent of the annual salary.

Medical Reimbursement: For self and family in accordance with the rules of our Company
and scheme as applicable to other senior executives.

Leave Travel Assistance: For self and family in accordance with the rules of our Company
and scheme as applicable to other senior executives.

Personal Accident Insurance: Premium not to exceed ` 4000/- per annum.

Leave: Leave on full pay as per the rules of our Company subject to maximum of one
months leave for every eleven months service.

Encashment of Leave: Encashment of leave at the end of tenure will not be included in the
computation of the ceiling on perquisites.

Provident Fund: Benefits under the Provident Fund Scheme of our Company in accordance
with the rules of our Company and regulations in force from time to time.

Pension and Superannuation Fund: Benefits under our Companys Pension and
Superannuation Fund Scheme in accordance with our Companys rules and regulations and
Schemes in force from time to time, to the extent these two are not taxable under the Income
Tax Act, 1961.

Gratuity: Gratuity payable in accordance with the rules and approved scheme of our
Company which does not exceed half months salary (15 days) for each completed year of
service, subject to a ceiling laid down thereunder from time to time.

Car: Free use of Companys car including maintenance and operation together with driver,
the monetary value of which may be evaluated as per Income Tax Rules, 1962.

Telephone: Free telephone facility at residence.

Provision for use of car for official duties and telephone facility at residence shall not be
included in computation of perquisites for the purpose of calculation of perquisites for the
purpose of calculation of the said ceiling.

Club Fees: Fees for clubs, subject to a maximum of two clubs, excluding admission and life
membership fees.

Minimum Remuneration: Notwithstanding anything to the contrary herein contained,
where in any financial year during the currency of the tenure of the Executive Director, our

80
Company has no profits or its profits are inadequate, our Company will pay remuneration by
way of salary and perquisites as specified in Section II of Part II of Schedule XIII to the
Companies Act, 1956, as may be amended from time to time.

Gross remuneration payable on monthly basis to Mr Amit Dahanukar in Fiscal 2010 is ` 23,940,610.

Mrs. Shivani Amit Dahanukar, Executive Director:

Pursuant to a resolution dated May 14, 2009 passed by the Board of Directors of our Company and
shareholders resolution dated August 01, 2009 passed at an Annual General Meeting of our
Company, Mrs. Shivani Amit Dahanukar, has been reappointed as an Executive Director of our
Company for a period of three years commencing from October 01, 2009 and pursuant to resolution
dated September 20, 2010 passed by the shareholders of our Company at an Annual General
Meeting the details of the remuneration payable with effect from April 01, 2010 to Mrs. Shivani
Amit Dahanukar and terms and conditions of her appointment are as set out below:

Details of the terms and conditions and remuneration of Mrs. Shivani Amit Dahanukar:

1. Salary: ` 1,210,000/- (Rupees One million two hundred and ten thousand only) per month

2. Commission: Payment of commission calculated with reference to the net profit of our Company
for each financial year as may be fixed by the Board of Directors, subject to ceiling laid down in
section 309 of the Companies Act.

3. Performance Incentive: As per the rules of our Company.

4. Perquisites and Allowances: In addition to the Salary, Mrs. Shivani Amit Dahanukar shall be
entitled to the following perquisites and allowances:

Medical Reimbursement: For self in accordance with the rules of our Company and
scheme as applicable to other senior executives

Personal Accident Insurance: Premium not to exceed ` 4000/- per annum

Leave: Leave on full pay as per the rules of our Company subject to maximum of one
months leave for every eleven months service.

Encashment of Leave: Encashment of leave at the end of tenure will not be included in the
computation of the ceiling on perquisites.

Provident Fund: Benefits under the Provident Fund Scheme of our Company in accordance
with the rules of our Company and regulations in force from time to time.

Pension and Superannuation Fund: Benefits under our Companys Pension and
Superannuation Fund Scheme in accordance with our Companys rules and regulations and
schemes in force from time to time, to the extent these two are not taxable under the Income
Tax Act, 1961

Gratuity: Gratuity payable in accordance with the rules and approved scheme of our
Company which does not exceed half months salary (15 days) for each completed year of
service, subject to a ceiling laid down thereunder from time to time

Car: Free use of Companys car including maintenance and operation together with driver,
the monetary value of which may be evaluated as per Income Tax Rules, 1962.

81

Provision for use of car for official duties shall not be included in computation of perquisites
for the purpose of calculation of the said ceiling,

Club Fees: Fees for clubs, subject to a maximum of two clubs, excluding admission and life
membership fees.

Minimum Remuneration: Notwithstanding anything to the contrary herein contained,
where in any financial year during the currency of the tenure of the Executive Director, our
Company has no profits or its profits are inadequate, our Company will pay remuneration by
way of salary and perquisites as specified in Section II of Part II of Schedule XIII to the
Companies Act, 1956, as may be amended from time to time.

Gross remuneration payable on monthly basis to Mrs. Shivani Amit Dahanukar in Fiscal 2010 is `
23,940,611

Remuneration of Non Executive Directors

Pursuant to resolution dated August 22, 2007 passed by the shareholders at an Annual General
Meeting of our Company and in accordance with the Articles of Association of our Company, the Non
Executive Directors were entitled to receive commission not exceeding 1% of the net profits of our
Company

The following table shows the amount of sitting fees paid to the Non Executive Directors for the
financial year 2009-10:

Sr.
No.
Name of Director Sitting Fees Commission
1. Mr. S.V. Muzumdar 55,000 798,021
2. Mr. V.B. Haribhakti 60,000 798,021
3. Dr. Vishnu Kanhare 70,000 798,020
4. Dr. Ravindra Bapat 45,000 798,020
5. Mr. C.V. Bijlani 35,000 798,020
6. Mr. Madan Goyal 15,000 798,020


Interest of Directors

All of our Directors may be deemed to be interested to the extent of fees payable to them for
attending meetings of the Board or a Committee thereof as well as to the extent of other
remuneration and reimbursement of expenses payable to them under our Articles of Association, and
to the extent of remuneration paid to them for services rendered as an officer or employee of our
Company.

Our Directors may also be regarded as interested in the Equity Shares or ESOPs or dividends, if any,
held by them or by the companies/firms/ventures promoted by them or that may be subscribed by
or allotted to the companies, firms, trusts, in which they are interested as Directors, members,
partners, trustees and Promoters, pursuant to this Issue. All of our Directors may also be deemed to
be interested to the extent of any dividend payable to them and other distributions in respect of the
said Equity Shares.

Except as stated in the section titled Financial Statements- Related Party Disclosures beginning on
page 176, and to the extent of shareholding in our Company, our Directors do not have any other
interest in our business.


82
Payment or benefit to officers of our Company

Except as stated in this Placement Document, no amount or benefit has been paid or given within the
two preceding years or is intended to be paid or given to any of our Directors except the sitting fees
for attending Board Meeting.

Corporate Governance

Overview

Our Company is in compliance with the corporate governance regime in accordance with the
guidelines imposed by the SEBI, the BSE, the NSE and other regulatory authorities in India.

We have complied with the requirements relating to corporate governance detailed in Clause 49 of
the Equity Listing Agreement, particularly those relating to composition of the Board of Directors
and the Constitution of Committees.

Our Company has maintained an optimum combination of Executive and Non-Executive Directors.
As of the date of this Placement Document, the Board consisted of 8 (eight) Directors of which 5
(five) were Independent Directors. During Fiscal 2010, the Board of Directors of our Company met
7 (seven) times.

Our Company has an Executive Chairman and the management of our Company is headed by the
Chairman & Managing Director, who operates under the overall supervision, direction and control
of the Board. The Board reviews and approves strategy and oversees the actions and results of the
management to ensure that the long-term objectives of enhancing stakeholder value are met.

Corporate Governance is administered through our Board and the Committees of the Board. We have
different committees constituted by our Board, these are: (i) Audit Committee; (ii) Remuneration
Committee; (iii) Shareholders / Investor Grievance Committee; and (iv) Compensation Committee.
The Board of Directors is committed in its responsibility for all constituents including investors,
regulatory authorities and employees. Our Company believes that the essence of corporate
governance is transparency, accountability, investor protection, better compliance with statutory
laws and regulations, value creation for shareholders / stakeholders. Our Company further believes
that all its operations and actions must serve the underlying goal of enhancing overall shareholders
value over a sustained period of time and at the same time protect the interest of stakeholders.

Our Company is committed to application of good management practices, compliance of law, and
adherence to ethical standards and commitment to values. Our Company believes in aligning its
business structure in the lines of transparency, integrity, professionalism and accountability at the
highest level. Accordingly a Code of Conduct (Code) has been defined to maintain the standard of
business conduct for our Company and to ensure compliance with requirement of clause 49 of the
listing agreement. An important element of the revised Clause 49 relates to adoption of Code of
Conduct for the Board of Directors and senior management. The Code is applicable to all members of
the Board of Directors, senior management one level below the Executive Directors including all
functional heads.

Pursuant to the SEBI (Prohibition of Insider Trading) Regulations, 1992, our Company has also
adopted the Code of Conduct for Prevention of Insider Trading.

We are compliant with the provisions of Clause 49 of the Listing Agreement with the Stock Exchanges
as amended from time to time.

Committees of our Board


83
A brief description of each of our committees is set forth below:

Audit Committee

The Audit Committee was constituted pursuant to the resolution dated May 07, 2002 passed by the
Board of Directors of our Company.

Our Board of Directors have re- constituted Audit Committee pursuant to the resolution dated July
02, 2009 passed by the Board of Directors of our Company. The Audit Committee presently
comprises of Mr. S.V. Muzumdar, Dr. Vishnu Kanhare, Mr. C.V. Bijlani and Mr. V.B. Haribhakti as the
Chairman of the Audit Committee.

The terms of reference of the Audit Committee includes the following:

1. Overseeing our Companys financial reporting process and disclosure of financial information.
2. Recommending to the Board, the appointment, reappointment of Statutory Auditors, fixation of
audit fees and approving payments for any other services.
3. Reviewing with the management, the annual and quarterly financial statements before
submission to the Board.
4. Reviewing with Management, performance of Statutory and Internal Auditors and adequacy of
internal control systems.
5. Reviewing the adequacy of internal audit function.
6. Discussing with Internal Auditors of any significant findings and follow-ups thereon.
7. Reviewing the findings of any internal investigations by the Internal Auditors.
8. Reviewing the following information:
Management Discussion and Analysis of financial condition and results of operations;
Statement of significant related party transactions;
Management letters/ letters of internal control weaknesses issued by the Statutory
Auditors;
Internal audit reports relating to internal control weaknesses;
The appointment, removal and remuneration of the Internal Auditor;
Financial Statements and investments made by the unlisted Subsidiary Companies

During the Fiscal 2010, 4 (four) meetings of the Audit Committee of our Company were held.

Compensation Committee

The Compensation Committee was constituted pursuant to the resolution dated September 22, 2007
passed by the Board of Directors of our Company.

The Compensation Committee presently comprises of Mrs. Shivani Amit Dahanukar, Dr. Ravindra
Bapat and Dr. Vishnu Kanhere as the Chairman of the Compensation Committee.

The terms of reference of Compensation Committee involve ascertaining the detailed terms and
conditions for issuing ESOPs and/ or Sweat Equity Shares and deciding their entitlement and
recommending the same to the Board of Directors, wherever necessary. The terms of reference of
Compensation Committee also include administration of Employee Stock Option Scheme and
exercising the powers and performing the duties as prescribed under Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

During the Fiscal 2010, 2 (two) meetings of the Compensation Committee were held.

Shareholders/Investors Grievance Committee


84
The Shareholders/Investors Grievance Committee was constituted pursuant to the resolution dated
May 07, 2002 passed by the Board of Directors of our Company.

Our Board of Directors has re- constituted the Shareholders/Investors Grievance Committee
pursuant to the resolution dated July 02, 2009 passed by the Board of Directors of our Company.
The Investor Grievance Committee presently comprises of Mr. V.B. Haribhakti, Mr. Amit Dahanukar,
Mr. C.V. Bijlani and Mr. S.V. Muzumdar as the Chairman of the Investor Grievance Committee.

The terms of reference of the Shareholders/Investors Grievance Committee include specifically to
look into the redressing of Shareholders/Investors complaints, like matters relating to
transfer/transmission of shares, non-receipt of Annual Reports, non-receipt of dividend, etc.

During the Fiscal 2010, 4 (four) meetings of the Shareholders/Investors Grievance Committee of our
Company were held.

Remuneration Committee

The Remuneration Committee was constituted pursuant to the resolution dated August 01, 2003
passed by the Board of Directors of our Company.

Our Board of Directors has re- constituted the Remuneration Committee pursuant to the resolution
dated July 02, 2009 passed by the Board of Directors of our Company. The Remuneration Committee
presently comprises of Mr. S.V. Muzumdar, Dr. Vishnu Kanhere, Mr. C.V. Bijlani and Mr. V.B.
Haribhakti as the Chairman of the Remuneration Committee.

The terms of reference of the Remuneration Committee involve determination on our Companys
policy on specific remuneration packages for Executive Directors and Non Executive Directors. It
also includes recommendation of revision in the remuneration of top executives below the Board of
Directors, etc. The recommendation of Remuneration Committee are considered and approved by
the Board subject to the approval of the shareholders, wherever necessary.

During the Fiscal 2010, 1(one) meeting of the Remuneration Committee of our Company was held.


Organisational Structure


85
Mr. Amit Dahanukar
Chairman & Managing Director
Head
Operations
Mrs. Shivani A. Dahanukar
Executive Director
Management Structure
BOARD OF DIRECTORS
Head
Purchase
Head Legal
& CVO
Head Sales
&
Marketing
Head
Exports &
CSD
Chief
Financial
Officer
Company
Secretary
Head HR

KEY MANAGEMENT

Profiles of Key Managerial Personnel


Dr. Sukhbir Puri
Sr. Vice President (Operations)

Dr. Sukhbir Puri, holds a doctorate degree in chemistry, and has over 36 (Thirty Six) years of
extensive experience comprising of 5 (five) years in marketing and 32 (Thirty-two) years in
manufacturing/ operations. He is the president of the Indian Chamber of Commerce & Industry
Committee on Environmental Concerns and is a member of Bureau of Indian Standards-FAD-14
Committee in Food & Beverages.

Mr. Lalit Sethi
Chief Financial Officer

He is a chartered accountant having over 20 years of experience in the field of finance and accounts
across various sectors. He oversees the financial functions of our Company.

Dr. Keshab Nandy Sr. Vice President (Legal) & Chief Vigilance Officer


86
He is a multiple graduate and post-graduate degree holder with distinction in English, human
resource development, law, management; alongwith a doctorate in management. Dr. Nandy oversees
the legal functions of our Company and is also director in the board of Prag Distillery (P) Ltd. and
Surya. He has won several awards for excellence in different areas of management, notably the
prestigious Quality Culture Award at the World Quality Congress in 2003.

Mr. Raja Mukherjee
General Manager Marketing

He holds a post graduate degree in management studies and an executive graduate degree in
business management from Indian Institute of Management, Calcutta. Mr. Raja has had extensive
experience of over 10 (Ten) years in marketing, corporate strategy and sales. He has been heading
the all India marketing and sales function at our Company since September 2009.


Shareholding Pattern of Key Managerial Personnel

As on September 30, 2010, the details of the Equity Shares and number of stock options granted
under ESOP-2008 to the aforementioned Key Managerial Personnel are as follows:

Sr.
No.
Name of the Key Managerial Personal No. of Equity
Shares
No. of options
outstanding
granted under the
ESOP-2008
1. Dr. Sukhbir Puri Nil 30,000
2. Mr. Lalit Sethi 6,300 48,900
3. Dr. Keshab Nandy Nil 57,000
4. Mr. Raja Mukherjee Nil 21,000


87
PRINCIPAL SHAREHOLDERS
Capital structure

As of the date of this Offering, our Companys capital structure is as indicated in the following table:

Particulars Amount
(Rs in Million.)
Authorised Share Capital
150,000,000 Equity Shares of ` 10/- each. 1,500.00

Issued, Subscribed and Paid-up Share Capital before this Offering
96,954,300* Equity Shares of ` 10/- each. 969.54

*Shareholders of the Company at the AGM held on September 20, 2010 had approved the issue of
bonus shares in the ratio of two equity shares for every one equity share held by the shareholder on
the record date. September 30, 2010 had been fixed as the record date by the Board of the Directors
of the Company.

Accordingly all Equity shares arises on conversion of outstanding convertible warrants and on
exercise of stock options which are in force as on September 30, 2010 will be eligible for the bonus
shares as approved by the members of the Company at the AGM, as stated above . Accordingly the
exercise price will be adjusted giving effect to the bonus shares.

Our Company had, pursuant to a preferential allotment, issued and allotted on September 20, 2010,
2,767,500 warrants exercisable for one Equity Share per such warrant. The Equity Shares allotted
upon the exercise of the aforesaid warrants are eligible for bonus Equity Shares in a ratio of two
Equity Shares for each Equity Share to be allotted upon the exercise of such warrants. The maximum
number of Equity Shares, to be allotted as a result of exercise of warrants (assuming that all the
aforesaid warrants are exercised for Equity Shares) is 8,302,500 Equity Shares.

For details in connection with the employee stock option schemes of our Company please refer
elsewhere in this section of this Placement Document.

For further details please refer to the section titled Principal Shareholders beginning on page 87 of
this Placement Document.


88
Changes in authorised share capital of our Company in the last five years since the date of this
Placement Document


Sr
No.
Date of Shareholders
Meeting
Changes in the Authorised Share Capital
1. August 22, 2007 The authorized share capital of ` 100,000,000 divided into
10,000,000 equity shares of Rs 10/- each was increased to `
300,000,000 divided into 30,000,000 equity shares of Rs 10/-
each
2. March 16, 2009

The authorized share capital of Rs 300,000,000 divided into
30,000,000 equity shares of Rs 10/- each was increased to `
384,600,000/- divided into 30,000,000 equity shares of Rs 10/-
each and 900,000 compulsorily convertible preference shares
of ` 94/- each
3. August 24, 2009 The authorized share capital of ` 384,600,000/- divided into
30,000,000 equity shares of Rs 10/- each and 900,000
compulsorily convertible preference shares of ` 94/- each was
increased to 584,600,000/- divided into 50,000,000 equity
shares of Rs 10/- each and 900,000 compulsorily convertible
preference shares of ` 94/- each
Pursuant to resolution dated September 20, 2010 passed by the shareholders of our Company,
the authorized share capital of ` `` ` 584,600,000/- divided into 50,000,000 equity shares of Rs 10/-
each and 900,000 compulsorily convertible preference shares of ` `` ` 94/- each was reclassified
into the authorized share capital of ` `` ` 584,600,000/- divided into 58,460,000 equity shares of ` `` `
10/- each.
4. September 20, 2010 The authorized share capital of ` 584,600,000/- divided into
58,460,000 equity shares of ` 10/- each was increased to `
1,500,000,000 divided into 150,000,000 equity shares of ` 10/-
each.

Shareholding Pattern

The shareholding pattern of our Company as on September 30, 2010 is as follows:

Total shareholding as
a percentage of total
number of shares
Catego
ry code
Category of shareholder Number of
shareholders
Total
number of
shares
Number of
shares held
in
dematerializ
ed form
As a
percentage
of (A+B)
As a
percentage
of (A+B+C)
(A) Shareholding of
Promoter and Promoter
Group

(1) Indian
(a) Individuals/ Hindu
Undivided Family
11 53,565,906 52,440,837 55.25 55.25
(b) Central Government/ State
Government(s)
0 0 0 0 0
(c) Bodies Corporate 5 4,755,069 4,708,989 4.90 4.90

89
Total shareholding as
a percentage of total
number of shares
Catego
ry code
Category of shareholder Number of
shareholders
Total
number of
shares
Number of
shares held
in
dematerializ
ed form
As a
percentage
of (A+B)
As a
percentage
of (A+B+C)
(d) Financial Institutions/
Banks
0 0 0 0 0
(e) Any Other
(specify)
0 0 0 0 0
Sub-Total (A)(1) 16 58,320,975 57,149,826 60.15 60.15
(2) Foreign
(a) Individuals (Non-Resident
Individuals/ Foreign
Individuals)
0 0 0 0 0
(b) Bodies Corporate 0 0 0 0 0
(c) Institutions 0 0 0 0 0
(d) Any Other (specify) 0 0 0 0 0
Sub-Total (A)(2) 0 0 0 0 0
Total Shareholding of
Promoter and Promoter
Group (A)=
(A)(1)+(A)(2)
16 58,320,975 57,149,826 60.15 60.15
(B) Public shareholding
(1) Institutions
(a) Mutual Funds/ UTI 1 2,507,148 2,507,148 2.59 2.59
(b) Financial Institutions/
Banks
19 40,434 23,046 0.04 0.04
(c) Central Government/ State
Government(s)
- - - - -
(d) Venture Capital Funds - - - - -
(e) Insurance Companies - - - - -
(f) Foreign Institutional
Investors
8 11,395,716 11,395,716 11.75 11.75

90
Total shareholding as
a percentage of total
number of shares
Catego
ry code
Category of shareholder Number of
shareholders
Total
number of
shares
Number of
shares held
in
dematerializ
ed form
As a
percentage
of (A+B)
As a
percentage
of (A+B+C)
(g) Foreign Venture Capital
Investors
- - - - -
(h) Any Other (specify) - - - - -
Sub-Total (B)(1) 28 13,943,298 13,925,910 14.38 14.38
(2) Non-institutions
(a) Bodies Corporate 475
5,338,986 5,281,488
5.51 5.51
(b) Individuals -
i. Individual shareholders
holding nominal share
capital up to ` 1 lakh.
ii. Individual shareholders
holding nominal share
capital in excess of ` 1
lakh.

13319


79

11,709,564


6,606,990

9,481,572


6,576,543

12.07


6.81

12.07


6.81

(c) Any Other (specify)
I Clearing Member 109 462,759 462,759 0.48 0.48
II NRI (Repat) 107 571,728 561,927 0.59 0.59
III Employees
Sub-Total (B)(2) 14,089 24,690,027 22,364,289 25.47 25.47
Total Public
Shareholding (B)=
(B)(1)+(B)(2)
14,117 38,633,325 36,290,199 39.85 39.85

91
Total shareholding as
a percentage of total
number of shares
Catego
ry code
Category of shareholder Number of
shareholders
Total
number of
shares
Number of
shares held
in
dematerializ
ed form
As a
percentage
of (A+B)
As a
percentage
of (A+B+C)
TOTAL (A)+(B) 14,133 96,954,300 93,440,025 100.00 100.00
(C) Shares held by
Custodians and against
which Depository
Receipts have been
issued
--- --- --- --- ---
GRAND TOTAL
(A)+(B)+(C)
14,133 96,954,300 93,440,025 100.00 100.00

As of September 30, 2010, none of the shares held by Promoters and Promoter Group are pledged.

Persons and Entities owning more than 1% (one percent) of our Equity Shares

Each person or entity known to our Company to beneficially own more than 1% (one percent) of
our outstanding Equity Shares is listed below. Each shareholder listed below is both the holder on
record and the beneficial owner with the sole power to vote and invest in our Equity Shares listed
next to his name below. The following table sets out the persons and entities who beneficially own
more than 1% (one percent) of our Equity Shares as at September 30, 2010:

Sr. No. Name of the shareholder Number of
equity shares
Percentage (%)

Promoter and Promoter Group

1
Shivani Amit Dahanukar 39,371,043
40.62
2
Amit Arun Dahanukar 8,610,108
8.89
3
Amit Dahanukar 4,459,686
4.60
4
M L Dahanukar & Co Private Ltd 3,267,144
3.37
5
Arunoday Investment Private Ltd 1,078,407
1.11
6
Priyadarshini Arun Dahanukar 353,070
0.36
7
Anupama Arun Dahanukar 302,103 0.31
8
M l Dahanukar and Co Pvt Ltd 250,911 0.26
9
Priyadarshini Arun Dahanukar 168,507 0.17
10
Anupama Arun Dahanukar 155,520 0.16
11
Amit Dahanukar 129,165 0.13
12
Arunoday Investments Pvt Ltd 112,527 0.12
13
M.L.Dahanukar & co. Private Ltd 46,080 0.05
14
Priyadarshini Arun Dahanukar 9,450 0.01
15
Priyadarshini Arun Dahanukar 5,067 0.01

92
Sr. No. Name of the shareholder Number of
equity shares
Percentage (%)
16
Priyadarshini Arun Dahanukar 2,187 0.00
TOTAL 58,320,975 60.15
Non-Promoter Group
1 IDFC Premier Equity Fund 2,507,148 2.59
2 Citigroup Global Markets Mauritius 4,695,000 4.84
3 The Royal Bank of Scotland N.V, (London) 4,005,000 4.13
4 Emerging India Focus Funds 1,979,241 2.04
5 Biju P John

1,480,815 1.53
TOTAL
14,667,204
15.13



ESOP 2008

Pursuant to shareholders resolution dated August 06, 2008 passed at an Annual General Meeting, the
consent was granted to the Board to create, offer, issue and allot at any time to or to the benefit of
such persons who are in the permanent employment of our Company to subscribe to such number of
options under the ESOP 2008 that the issue of the equity shares of our Company shall not exceed in
aggregate 10% of the issued, subscribed and paid up equity shares of our Company as on March 31,
2008 that is up to 572,507 equity shares. The details of ESOP 2008 as on March 31, 2010:

ESOP Scheme, 2008 Sr. No. Particulars
First Grant Second Grant
1. Number of stock options granted 111,000 (cum Bonus) 1,444,521 (ex Bonus)
2. The Pricing Formula The exercise price
shall
be calculated at a
discount not higher
than 75% of the
average of the daily
high and low of the
prices for the
Company's equity
shares quoted on
Bombay Stock
Exchange, during the
15 days preceding the
date of vesting of stock
options subject to
minimum exercise
price being ` 40/- per
stock option*
The exercise price
shall be calculated at a
discount not higher
than 75% of the
average of the daily
high and low of the
prices for our
Company's Equity
Shares quoted on
Bombay Stock
Exchange, during the
15 days preceding the
date of vesting of stock
options subject to
minimum exercise
price being `75/- per
stock option*
3. Number of stock options vested - -
4. Number of stock options exercised - -
5. Total number of shares arising as a
result of exercise of stock options
- -
6. Number of stock options lapsed - -

93
7. Number of stock options cancelled 20,000 (cum bonus) -
8. Variation in the terms of stock options N.A. N.A.
9. Money realised by exercise of stock
options (`)
- -
10. Total Number of stock options in force 91,000 (cum Bonus)
i.e.
273,000 ex Bonus
1,444,521 (ex Bonus)
11. Employee-wise details of stock options
granted to:

(i) Senior Managerial Personnel
Name No of stock options granted
First Grant Second Grant
Dr. Sukhbir Puri NIL 30,000
Dr. Keshab Nandy 27,000 30,000
Mr. Bineet Walia 3,000 NIL
Mr. Lalit Sethi 21,000 30,000
Mr. Raja Mukherjee NIL 21,000
Mr. Gaurav Thakur (resigned with
effect from October 6, 2010
24,000 21,000
(ii) Employees who were granted,
during any one year, stock options
amounting to 5% or more of the stock
options granted during the year
NIL NIL
(iii) Identified employees who were
granted stock option, during any one
year, equal or exceeding 1% of the
issued capital (excluding outstanding
warrants and conversions) of our
Company at the time of grant.
NIL NIL
Date of grant July 2, 2009 January 28, 2010
1. Risk Free Interest Rate 5.79%-6.45% 5.87 %- 7.13%
2. Expected Life 2- 5 years 2- 5 years
3. Expected Volatility 69.59% - 73.55% 69.29%
4. Dividend Yield 2% 2%
5. Price of the underlying share in
market at the time of the option grant
(Rs)
143.45 99.45
*Shareholders of the Company at the AGM held on September 20, 2010 had approved the issue of
bonus shares in the ratio of two equity shares for every one equity share held by the shareholder on
the record date. September 30, 2010 had been fixed as the record date by the Board of the Directors
of the Company. Accordingly the exercise price will be adjusted giving effect to the bonus shares.


ESOP 2010

Pursuant to shareholders resolution dated September 20, 2010 passed at an Annual General Meeting,
the consent was granted to the Board to create, offer, issue and allot at any time to or to the benefit of
such persons who are in the permanent employment of our Company to subscribe to such number of
options exercisable by the employees under the ESOP 2010 that the issue of the equity shares of our
Company shall not exceed in aggregate 5% of the issued, subscribed and paid up equity shares of our
Company as on March 31, 2010 that is up to 1,615,500 equity shares.

94
REGULATIONS AND POLICIES

The regulations set out below are not exhaustive and are only intended to provide general information
to prospective investors and is neither designed nor intended to be a substitute for professional legal
advice. Taxation statutes such as the Income Tax Act, 1961, Central Sales Tax Act, 1956 and applicable
local sales tax statutes, labour regulations such as the Employees State Insurance Act, 1948 and the
Employees Provident Fund and Miscellaneous Act, 1952, and other miscellaneous regulations such as
the Trade and Merchandise Marks Act, 1958 and applicable Shops and Establishments statutes apply to
us as they do to any other Indian company and therefore have not been detailed below. The statements
below are based on the current provisions of Indian law and the judicial and administrative
interpretations thereof, which are subject to change or modification by subsequent legislative,
regulatory, administrative or judicial decisions.

REGULATIONS PERTAINING TO SPIRITS INDUSTRY

Regulation and Taxes

We sell our products primarily in the Indian market and accordingly the regulations in force in India
affect the business operations of both companies. At the outset it may be noted that the constitution
of India gives exclusive power to the State Governments to make laws regulating the production,
manufacture, possession, transport, purchase and sale of intoxicating liquor and the levy of excise
duties thereon. We are also governed by the general laws framed by the Central and State
Governments regarding the setting up of factories, pollution control and the maintenance of quality
standards, packaging and protection of labor. We are also subject to various duties levied by the
Central and State Governments (other than excise duties which are levied exclusively by the State
Governments). We believe that we are in compliance in all material respects with all presently
applicable Governmental laws and regulations and that the cost of administration of compliance with
such laws and regulations does not have, and is not expected to have, a material adverse impact on
their businesses.

Laws Governing Production

The production of liquor products requires manufacturers to obtain licenses from the respective
State Governments under the local State laws. These licenses also determine the production capacity
of each facility.

Food Sanitation Laws

The food sanitation and packaging laws in India that regulate our business include the Food Safety
and Standards Act (FSSA). The FSSA provides for the prevention of adulteration of food and food
articles and provides that food articles, labeling and packaging of foods are required to meet the
sanitary standards.

Taxation Laws Pertaining to Sale of Alcohol

Local laws in various States regulate the levy of excise duty on any alcoholic liquor for human
consumption; The Customs Act, 1962 and the Customs Tariff Act, 1975 regulate the custom duties
leviable on import of goods to India. The Income Tax Act, 1961 also deals with profits and gains from
the business of trading in alcoholic liquor and provides that every seller, while selling alcoholic
beverages for human consumption, shall collect from the buyer an amount equal to 1% of the total
amount sold as income tax. Local laws in various states levy octroi duty on the entry of certain
products, including liquor for the consumption, use or sale in each respective State. In the State of
Maharashtra, the Bombay Municipal Corporation Act, 1888 together with the Bombay Municipal

95
Corporation (Levy of) Octroi Rules, 1965 govern the levy of octroi duty in Maharashtra. Similar acts
in various states levy octroi duty on liquor.

Excise Regulations

Excise duty imposes a liability on a manufacturer to pay excise duty on production or manufacture of
goods in India. The Central Excise Act, 1944 is the principal legislation in this respect, which provides
for the levy and collection of excise and prescribes procedures for clearances from the relevant
factory once the goods have been manufactured. The Customs Act, 1962 and the Customs Tariff Act,
1975 regulate the customs duties leviable on import of goods to and export of goods from India.

Further, each state has notified its separate excise rates. For instance, the Bombay Prohibition Act,
1949, applicable in Maharashtra, and similar local laws in other states regulate the levy of excise duty
on alcoholic liquor for human consumption. Various state governments also levy octroi duty on the
entry of certain products, including liquor, in such state for consumption, use or sale thereof.

Prohibition

The Bombay Prohibition Act, 1949 applicable in Gujarat read with the Bombay Denatured Spirit
(Gujarat Amendment) Rules, 1988, Bombay Prohibition (Manufacture of Spirit) (Gujarat) Rules,
1963, the Mizoram Liquor Total Prohibition Act, 1995, the Nagaland Liquor Total Prohibition Act,
1989, Manipur Liquor Prohibition Act, 1911, prohibit the manufacturing of liquor, construction or
employment of any person in any distillery or brewery, importing, exporting, transportation or
possession of liquor, and selling or buying of liquor in the areas covered by such states. However, the
prohibition does not extend to certain exempted articles including, any medicinal preparation
containing alcohol unfit for use as intoxicating liquor, any antiseptic preparation or solution
containing alcohol which is unfit for use as intoxicating liquor.

In addition, certain restrictions under the Bombay Prohibition Act, 1949, applicable in Maharashtra,
the Tamil Nadu Prohibition Act, 1937 in Tamil Nadu and the Prohibition Act, 1950 in Kerala, the
Andhra Pradesh Prohibition Act, 1995, restrict the production, possession and use of liquor
(including a highly regulated regime for country liquor) for all purposes other than medicinal,
scientific, industrial or similar purposes. These laws prescribe the kinds of potable alcohol which are
exempted from such prohibition and prescribe standards for the manufacture or processing of
different forms of potable alcohol, and also prescribe licensing requirements for such manufacture.

Prohibition on advertising

The Cable Television Networks (Regulation) Act, 1995, as amended, read with the Cable Television
Network Rules, 1994, as amended, prescribe an advertising code which provides that advertising in
the cable services shall be so designed as to conform to the laws of India and should not offend
morality, decency and religious susceptibilities of the subscribers of cable services. In addition, the
advertising code prohibits advertisements which indirectly or directly promote production, sale or
consumption of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants (prohibited
products). However, it allows advertising of a product that uses a brand name or logo, which is also
used for the prohibited products subject to certain conditions including, that the story board or
visual of the advertisement must depict only the product being advertised and not prohibited
products in any form or manner, that the advertisement must not make any direct or indirect
reference to the prohibited products and that the advertisement must not contain any nuances or
phrases promoting the prohibited products.
The Press Council of India has also laid down norms of journalistic conduct, which explicitly states
that no advertisement shall be published, which promotes directly or indirectly production, sale or
consumption of cigarettes, tobacco products, wine, alcohol, liquor and other intoxicants.

REGULATION OF FOREIGN INVESTMENT IN INDIA

96

Foreign investment in India is primarily governed by the provisions of the Foreign Exchange
Management Act, 1999 (FEMA) and the rules and regulations promulgated thereunder. The RBI, in
exercise of its powers under FEMA, has issued the Foreign Exchange Management (Transfer or Issue
of Security by a Person Resident Outside India) Regulations, 2000 (the FEMA Regulations), which
prohibit, restrict and regulate the transfer or issue of securities to a person resident outside India.
Pursuant to the FEMA Regulations, no prior consent or approval is required from the RBI for foreign
direct investment under the automatic route within the specified sectoral caps prescribed for
various industrial sectors. In respect of all industries not specified under the automatic route, and in
respect of investments in excess of the specified sectoral limits under the automatic route, approval
for such investment may be required from the FIPB and/or the RBI.
Further, FIIs may purchase shares and convertible debentures of an Indian company under the
portfolio investment scheme through registered brokers on recognized stock exchanges in India.
Regulation 1(4) of Schedule II of the FEMA Regulations provides that the total holding by each FII or
SEBI approved subaccount of an FII shall not exceed 10% of the total paid-up equity capital of an
Indian company or 10% of the paid-up value of each series of convertible debentures issued by an
Indian company and the total holdings of all FIIs and sub-accounts of FIIs added together shall not
exceed 24% of the paid-up equity capital or paid-up value of each series of convertible debentures.
However, this limit of 24% may be increased up to the statutory ceiling as applicable, by the Indian
company concerned passing a resolution by its board of directors followed by the passing of a special
resolution to the same effect by its shareholders. However, as of the date of this Placement
Document, pursuant to a shareholders special resolution passed at their AGM dated September 20,
2010 and by a resolution passed by our Board of Directors at their meeting held on August 7, 2010
the aforementioned limits has been increased to the maximum permissible sectoral cap allowed in
connection with foreign investments in our Company, as per the prevalent FDI policy.


OTHER REGULATIONS

Certain other laws and regulations that are relevant to the operation of our Companys business
include the following:

Competition Act

The Competition Act 2002 (the Competition Act ) aims to prevent anti-competitive practices that
cause or are likely to cause an appreciable adverse effect on competition in the relevant market in
India. The Competition Act regulates anti-competitive agreements, abuse of dominant position and
combinations. The Competition Act, although enacted in 2002, is being brought into force in a phased
manner. Provisions relating to anti-competitive agreements and abuse of dominant position were
brought into force with effect from May 20, 2009 and thereafter the Competition Commission of
India (the CCI) became operational from May 20, 2009. Sections 5 and 6 (dealing with
combinations, mergers and acquisitions) are yet to be notified, by the GoI.

Under the Competition Act, the CCI has powers to pass directions/impose penalties in cases of anti-
competitive agreements, abuse of dominant position and combinations. In the event of failure to
comply with the orders or directions of the CCI, without reasonable cause, such person is punishable
with a fine extending to ` 0.1 million for each day of such non-compliance, subject to a maximum of `
100 million. If there is a continuing non-compliance the person may be punishable with
imprisonment for a term extending up to three years or with a fine which may extend up to ` 250
million or with both as the Chief Metropolitan Magistrate, Delhi may deem fit. In case of offences
committed by companies, the persons responsible for the conduct of the business of the company
will be liable under the Competition Act, except when the offence was committed without their
knowledge and they had exercised due diligence to prevent it. Where the contravention committed
by the company took place with the consent or connivance of, or is attributable to any neglect on the
part of, any director, manager, secretary or other officer of the company, such person is liable to be

97
punished. The Competition Act also provides that the CCI has the jurisdiction to investigate and pass
orders in relation to an anti-competitive agreement, abuse of dominant position or a combination,
which even though entered into, or taking place outside India or governed by foreign law or signed
between one or more non-Indian parties, but causes an appreciable adverse effect in the relevant
market in India.

Intellectual Property Laws

Trademarks A trademark is used in relation to goods so as to indicate a connection in the course of
trade between the goods and some person having the right as proprietor or user to use the mark. A
mark may consist of a word or invented word, signature, device, letter, numeral, brand, heading,
label, name written in a particular style and so forth. The Trademarks Act, 1999 governs the
registration, acquisition, transfer and infringement of trademarks and remedies available to a
registered proprietor or user of a trademark. The registration of a trademark is valid for a period of
ten (10) years but can be renewed in accordance with the specified procedure.
Copyrights A copyright is an exclusive right to do or authorizes to do certain acts in relation to
literary, dramatic, musical and artistic works, cinematographic films and sound recordings. The
Copyright Act, 1957 provides for registration of copyrights, transfer of ownership and licensing of
copyrights, and infringement of copyrights and remedies available in that respect. Depending upon
the subject, copyright is granted for a certain period of time, up to a maximum of seventy years,
subsequent to which the work falls in the public domain and any act of reproduction of the work by
any person other than the author would not amount to infringement.

Designs The Design Act, 2000 (the Designs Act) provides for the application and registration of
designs in India, provided that the design is not contrary to public order or morality. The purpose of
the Designs Act is to grant exclusive rights to designs such as a feature of shape, configuration,
pattern or ornament, and to obtain relief in case of infringement for commercial purposes as a
design. Application for registration of a design has to be made to the Controller-General of Patents,
Designs and Trademarks who is the Controller of Designs for the purposes of the Designs Act. The
term of a registered design is initially for a period of ten years, unless it is renewed under the
provisions of the Designs Act. The Designs Act also provides for penalties for infringement, falsifying
and falsely applying designs.

Patents A new product or process, involving an inventive step and capable of being made or used in
an industry is patentable. The Patents Act, 1970, as amended read with the Patents Rules, 2003, as
amended (Patents Law) provides for grant of exclusive patents for new inventions and
registration of industrial designs. For an invention to be patentable, it should be technical in nature
and should meet certain criteria as prescribed under the Patents Law. An inventor may make an
application, either alone or jointly with another, or his/their assignee or legal representative of any
deceased inventor or his assignee. An application for registration of a patent must be made to the
Controller-General of Patents, Designs and Trademarks who is the Controller of Patents under the
Patents Law. The term of a patent is initially for a period of 20 years from the date of filing of the
application for a patent, unless it is renewed in accordance with the Patents Law. The Patents Law
also provides for penalties for infringement, falsifying and falsely applying patents.


Labour Legislation:

As part of our business, we are required to comply from time to time with certain laws in relation to
the employment of labour. A brief description of certain labour legislations which are applicable to
our operations is set forth below:

Factories Act, 1948

The Factories Act, 1948, as amended (the Factories Act), defines a factory to be any premises on

98
which on any day in the previous 12 months, 10 or more workers are or were working and in which a
manufacturing process is being carried on or is ordinarily carried on with the aid of power; or where
at least 20 workers are or were working on any day in the preceding 12 months and on which a
manufacturing process is being carried on or is ordinarily carried on without the aid of power. State
governments prescribe rules with respect to the prior submission of plans, their approval for the
establishment of factories and the registration and licensing of factories.
The Factories Act provides that the occupier of a factory (defined as the person who has ultimate
control over the affairs of the factory and in the case of a company, any one of the directors) shall
ensure the health, safety and welfare of all workers while they are at work in the factory, especially in
respect of safety and proper maintenance of the factory such that it does not pose health risks, the
safe use, handling, storage and transport of factory articles and substances, provision of adequate
instruction, training and supervision to ensure workers health and safety, cleanliness and safe
working conditions. If there is a contravention of any of the provisions of the Factories Act or the
rules framed thereunder, the occupier and manager of the factory may be punished with
imprisonment or with a fine.

Minimum Wages Act, 1948

The Minimum Wages Act, 1948, as amended, provides a framework for State governments to
stipulate the minimum wage applicable to a particular industry. The minimum wage may consist of a
basic rate of wages and a special allowance; or a basic rate of wages and the cash value of the
concessions in respect of supplies of essential commodities; or an all-inclusive rate allowing for the
basic rate, the cost of living allowance and the cash value of the concessions, if any. Workmen are to
be paid for overtime at overtime rates stipulated by the appropriate government. Contravention of
the provisions of this legislation may result in imprisonment for a term up to six months or a fine up
to `500 or both.

Payment of Bonus Act, 1965

Pursuant to the Payment of Bonus Act, 1965, as amended (the Bonus Act), an employee in a factory
or in any establishment where 20 or more persons are employed on any day during an accounting
year, who has worked for at least 30 working days in a year is eligible to be paid a bonus.
Contravention of the provisions of the Bonus Act by a company is punishable with imprisonment or a
fine, against persons in charge of, and responsible to the company for the conduct of the business of
the company at the time of contravention.

Employees State Insurance Act, 1948

The Employees State Insurance Act, 1948, as amended (the ESI Act), provides for certain benefits to
employees in case of sickness, maternity and employment injury. All employees in establishments
covered by the ESI Act are required to be insured, with an obligation imposed on the employer to
make certain contributions in relation thereto. In addition, the employer is also required to register
itself under the ESI Act and maintain prescribed records and registers.

Contract Labour (Regulation and Abolition) Act, 1970

The Contract Labour (Regulation and Abolition) Act, 1970, as amended (the CLRA), requires
establishments that employ, or have employed on any day in the previous 12 months, 20 or more
workmen as contract labour to be registered and prescribes certain obligations with respect to the
welfare and health of contract labour. The CLRA requires the principal employer of an establishment
to which it applies to make an application to the registering officer in the prescribed manner for
registration of the establishment. In the absence of registration, contract labour cannot be employed
in the establishment. Likewise, every contractor to whom the CLRA applies is required to obtain a
license and not to undertake or execute any work through contract labour except under and in
accordance with the license issued. To ensure the welfare and health of contract labour, the CLRA

99
imposes certain obligations on the contractor including the establishment of canteens, rest rooms,
drinking water, washing facilities, first aid facilities, other facilities and payment of wages. However,
in the event the contractor fails to provide these amenities, the principal employer is under an
obligation to provide these facilities within a prescribed time period. Penalties, including both fines
and imprisonment, may be imposed for contravention of the provisions of the CLRA.

Employees Provident Fund and Miscellaneous Provisions Act, 1952

The Employees Provident Fund and Miscellaneous Provisions Act, 1952, as amended, provides for
the institution of compulsory provident fund, pension fund and deposit linked insurance funds for
the benefit of employees in factories and other establishments. Liability is placed both on the
employer and the employee to make certain contributions to the funds mentioned above.

Payment of Gratuity Act, 1972

Under the Payment of Gratuity Act, 1972, as amended, an employee who has been in continuous
service for a period of five years will be eligible for gratuity upon his retirement, resignation,
superannuation, death or disablement due to accident or disease. The entitlement to gratuity in the
event of death or disablement is not contingent upon an employee having completed five years of
continuous service.

Environmental Legislation:

Manufacturing projects must also ensure compliance with environmental legislation such as the
Water (Prevention and Control of Pollution) Act 1974 (WPA), the Air (Prevention and Control of
Pollution) Act, 1981 (APA) and the Environment Protection Act, 1986. The WPA aims to prevent
and control water pollution. This legislation provides for the constitution of a Central Pollution
Control Board and State Pollution Control Boards. The functions of the Central Board include
coordination of activities of the State Boards, collecting data relating to water pollution and the
measures for the prevention and control of water pollution and prescription of standards for streams
or wells. The State Pollution Control Boards are responsible for the planning for programmes for
prevention and control of pollution of streams and wells, collecting and disseminating information
relating to water pollution and its prevention and control; inspection of sewage or trade effluents,
works and plants for their treatment and to review the specifications and data relating to plants set
up for treatment and purification of water; laying down or annulling the effluent standards for trade
effluents and for the quality of the receiving waters; and laying down standards for treatment of
trade effluents to be discharged. This legislation debars any person from establishing any industry,
operation or process or any treatment and disposal system, which is likely to discharge trade effluent
into a stream, well or sewer without taking prior consent of the State Pollution Control Board. The
Central and State Pollution Control Boards constituted under the WPA are also to perform functions
as per the APA for the prevention and control of air pollution. The APA aims for the prevention,
control and abatement of air pollution. It is mandated under this Act that no person can, without the
previous consent of the State Board, establish or operate any industrial plant in an air pollution
control area. No person operating any industrial plant, in any air pollution control area shall
discharge or cause emission of any air pollutant in excess of the standards prescribed by the State
Board in this regard.

Environment (Protection) Act, 1986

The Environment (Protection) Act, 1986 was enacted as a general legislation to safeguard the
environment from all sources of pollution by enabling coordination of the activities of the various
regulatory agencies concerned, to enable creation of an authority with powers for environmental
protection, regulation of discharge of environmental pollutants etc. The purpose of the Act is to act as
an "umbrella" legislation designed to provide a frame work for Central government co-ordination of
the activities of various central and state authorities established under previous laws, such as Water

100
Act & Air Act. It includes water, air and land and the interrelationships which exist among water, air
and land, and human beings and other living creatures, plants, micro-organisms and property.

Consent for operation of the plant under the APA

The Air (Prevention and Control of Pollution) Act 1981 has been enacted to provide for the
prevention, control and abatement of air pollution. The statute was enacted with a view to protect
the environment and surroundings from any adverse effects of the pollutants that may emanate from
any factory or manufacturing operation or activity. It lays down the limits with regard to emissions
and pollutants that are a direct result of any operation or activity. Periodic checks on the factories are
mandated in the form of yearly approvals and consents from the corresponding Pollution Control
Boards in the state.

Consent for operation of the plant under the WPA

The Water Act was enacted in 1974 in order to provide for the prevention and control of water
pollution by factories and manufacturing industries and for maintaining or restoring the
wholesomeness of water. In respect to an Industrial Undertaking it applies to the (i) Occupier (the
owner and management of the undertaking) (ii) Outlet (iii) Pollution and (iv)Trade effluents. The Act
requires that approvals be obtained from the corresponding Pollution Control Boards in the state.

Water (Prevention and Control of Pollution) Cess Act, 1977

The Water Cess Act is a legislation providing for the levy and collection of a cess on local authorities
and industries based on the consumption of water by such local authorities and industries so as to
enable implementation of the Water Act by the regulatory agencies concerned.

Environment Impact Assessment Notifications

The Environment Impact Assessment Notification S.O.60(E), issued on January 27, 1994 (the 1994
Notification) under the provisions of the Environment (Protection) Act, 1986, as amended (the
EPA), prescribes that for the construction of certain power projects specified in the 1994
Notification, in the case of new projects, if the investment is more than ` 1,000 million and in the case
of expansion or modernization projects, if the investment is more than ` 500 million, the prior
environmental clearance of the MoEF is required. The environmental clearance must be obtained
from the MoEF according to the procedure specified in the 1994 Notification. No construction work,
preliminary or other, relating to the setting up of a project can be undertaken until such clearance is
obtained. The application to the MoEF is required to be accompanied by a project report which
should include, inter-alia, an Environmental Impact Assessment Report and an Environment
Management Plan. The Impact Assessment Authority evaluates the report and plan submitted. Such
assessment is required to be completed within a period of 90 days from receipt of the requisite
documents from the project developer/manager. Thereafter, a public hearing has to be completed
and a decision conveyed within 30 days. The clearance granted is valid for a period of five years from
the commencement of the construction or operation of the project. The project developer/manager
concerned is required to submit a half yearly report to the Impact Assessment Authority to enable it
to effectively monitor the implementation of the recommendations and conditions subject to which
the environmental clearance has been given. If no comments from the Impact Assessment Authority
are received within the time limits specified above, the project will be deemed to have been approved
by the project developer/manager.

On September 14, 2006, the Environmental Impact Assessment Notification S.O.1533 (the 2006
Notification) superseded the 1994 Notification. Under the 2006 Notification, the environmental
clearance process for new projects consists of four stages screening, scoping, public consultation
and appraisal. After completion of public consultation, the applicant is required to make appropriate
changes in the draft Environment Impact Assessment Report and the Environment Management

101
Plan. The final Environment Impact Assessment Report has to be submitted to the concerned
regulatory authority for appraisal. The regulatory authority is required to give its decision within
105 days of the receipt of the final Environment Impact Assessment Report.

Hazardous Waste (Management and Handling) Rules, 1989

The Hazardous Waste (Management and Handling) Rules, 1989, as amended, impose an obligation on
each occupier and operator of any facility generating hazardous waste to dispose of such hazardous
wastes properly and also imposes obligations in respect of the collection, treatment and storage of
hazardous wastes. Each occupier and operator of any facility generating hazardous waste is required
to obtain an approval from the relevant state pollution control board for collecting, storing and
treating the hazardous waste.

Public Liability Insurance Act, 1991

The Public Liability Insurance Act, 1991, as amended (the Public Liability Act) imposes liability on
the owner or controller of hazardous substances for any damage arising out of an accident involving
such hazardous substances. A list of hazardous substances covered by the legislation has been
enumerated by the Government by way of a notification. The owner or handler is also required to
take out an insurance policy insuring against liability under the legislation. The rules made under the
Public Liability Act mandate that the employer has to contribute towards the Environment Relief
Fund, a sum equal to the premium paid on the insurance policies. This amount is payable to the
insurer.




102
ISSUE PROCEDURE

Below is a summary, intended to provide a general outline of the procedures for the bidding, application
payment, Allocation and Allotment of the Placement Shares to be issued pursuant to the Offering. The
procedure followed in the Offering may differ from the one mentioned below, and investors are
presumed to have apprised themselves of the same from our Company or the Book Running Lead
Managers

The investors are advised to inform themselves of any restrictions or limitations that may be applicable
to them and are required to consult their respective advisers in this regard. Investors that apply in this
Offering will be required to confirm and will be deemed to have represented to our Company, the Book
Running Lead Managers and their respective directors, officers, agents, affiliates and representatives
that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire
Equity Shares of our Company. Our Company and the Book Running Lead Managers and their respective
directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising
any investor on whether such investor is eligible to acquire Equity Shares of our Company. Also see
Selling Restrictions and Transfer Restrictions respectively of this Placement Document

Qualified Institutions Placement

The Issue is being made to QIBs in reliance upon Chapter VIII of the SEBI Regulations through the
mechanism of QIP. Under Chapter VIII of the SEBI Regulations, a listed company in India may issue
equity shares/fully convertible debenture/partly convertible debenture/ nonconvertible debt
instruments along with warrants and convertible securities (other than warrants), which are
convertible/exchangeable with equity shares at a later date to QIBs, provided that:

a special resolution approving the qualified institutions placement has been passed by its
shareholders; Such special resolution must specify (a) that the allotment of equity shares is
proposed to be made pursuant to the QIP and (b) the relevant date;

equity shares of the same class of such company are listed on a stock exchange in India that
has nation-wide trading terminals for a period of at least one year prior to the date of
issuance of notice to its shareholders for convening the meeting to pass the special
resolution;

such company complies with the minimum public shareholding requirements set out in the
listing agreement with the stock exchange referred to above;

At least 10% of the equity shares issued to QIBs must be allotted to mutual funds, provided
that, if this portion or any part thereof to be allotted to mutual funds remains unsubscribed,
it may be allotted to other QIBs. A QIB has been specifically defined under Regulation 2
(1)(zd) of the SEBI Regulations and not otherwise excluded pursuant to Regulation 86(1)(b).

Investors are not allowed to withdraw their Bids after the closure of the Issue.

Additionally, there is a minimum pricing requirement under the SEBI Regulations. The issue price of
the securities shall not be less than the average of the weekly high and low of the closing prices of the
issuers equity shares of the same class quoted on the stock exchange during the two weeks
preceding the relevant date.

The relevant date refers to the date of the meeting on which the board of directors or the
committee of directors duly authorised by the board of the issuer decides to open the proposed issue.
And stock exchange means any of the recognised stock exchanges in India in which the equity

103
shares of the same class of the issuer are listed and on which the highest trading volume in such
shares has been recorded during the two weeks immediately preceding the relevant date.

Securities must be allotted within 12 months from the date of the shareholders resolution approving
the QIP. The securities issued pursuant to a QIP must be issued on the basis of a placement document
that shall contain all material information including the information specified in Schedule XVIII of the
SEBI Regulations. The placement document is a private document provided to not more than 49
investors through serially numbered copies and is required to be placed on the website of the
concerned stock exchange and of the issuer with a disclaimer to the effect that it is in connection with
an issue to QIBs and no offer is being made to the public or to any other category of investors. A copy
of the placement document is required to be filed with the SEBI for record purposes within 30 days
of the allotment of the securities.

Pursuant to the provisions of Section 67 of the Companies Act, for a transaction that is not a public
offering, an invitation or offer may not be made to more than 49 persons.

The minimum number of allottees for each QIP shall not be less than:

two, where the issue size is less than or equal to Rs.2.5 billion; and

five, where the issue size is greater than `2.5 billion.

No single allottee shall be allotted more than 50% of the issue size.
QIBs that belong to the same group or that are under common control shall be deemed to be a single
allottee.


The aggregate of the proposed QIP and all previous QIPs made in the same financial year shall not
exceed five times the net worth of the issuer as per its audited balance sheet of the previous financial
year. The issuer shall furnish a copy of the placement document to each stock exchange on which its
equity shares are listed.

Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date
of allotment, except on a recognised stock exchange in India.

Our Company has received the in-principle approval of the Stock Exchanges under Clause 24(a) of
the Listing Agreement. Our Company has also filed a copy of the Preliminary Placement Document
and this Placement Document with the Stock Exchanges.

Issue Procedure

Our Company and the Book Running Lead Managers shall circulate serially numbered copies of the
Preliminary Placement Document and the Application Form, either in electronic or physical form, to
not more than 49 QIBs.

The list of QIBs to whom the Application Form is delivered shall be determined by the Book Running
Lead Managers in consultation with us. Unless a serially numbered Preliminary Placement
Document along with the Application Form is addressed to a particular QIB, no invitation to
subscribe shall be deemed to have been made to such QIB. Even if such documentation were to
come into the possession of any person other than the intended recipient, no offer or invitation to
offer shall be deemed to have been made to such person.

QIBs may submit an Application Form, including any revisions thereof, during the Bidding Period to
the Book Running Lead Managers.


104
QIBs will be required to indicate the following in the Application Form:

name of the QIB to whom Placement Shares are to be Allotted;

number of Placement Shares Bid for;

price at which they are agreeable to subscribe for the Placement Shares, provided that QIBs
may also indicate that they are agreeable to submit an Application Form at Cut-off Price;
and

details of the depository accounts to which the Placement Shares should be credited.

Note: Each sub-account of an FII, other than a sub-account which is a foreign corporate or a
foreign individual, will be considered as an individual QIB and separate Application Forms
would be required from each such subaccount. FIIs or sub-accounts of FIIs are required to
indicate the SEBI FII/ sub-account registration number in the Application Form. Applications
by various schemes/funds will be treated as one application from such mutual fund

Once a duly completed Application Form is submitted by a QIB, such Application Form constitutes an
irrevocable offer and cannot be withdrawn after the Bid Closing Date. The Bid Closing Date shall be
notified to the Stock Exchanges and the QIBs shall be deemed to have been given notice of such date
after receipt of the Application Form.

Upon receipt of the Application Form, our Company shall determine the Issue Price and the number
of Equity Shares to be issued pursuant to the Issue in consultation with the Book Running Lead
Managers. Upon determination of the Issue Price and the QIBs to whom Allocation shall be made, the
Book Running Lead Managers will send the CANs to the QIBs who have been Allocated the Placement
Shares. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for the QIB to
pay the entire Issue Price for all the Equity Shares Allocated to such QIB. The CAN shall contain
details such as the number of Equity Shares Allocated to the QIB and payment instructions including
the details of the amounts payable by the QIB for Allotment of the Placement Shares in its name and
the Pay-In Date as applicable to the respective QIB.

Pursuant to receiving a CAN, each QIB shall be required to make the payment of the entire
application monies for the Placement Shares indicated in the CAN at the Issue Price, only through
electronic transfer to our Companys designated bank account by the Pay-In Date as specified in the
CAN sent to the respective QIBs.

Upon receipt of the application monies from the QIBs, our Company shall Allot Placement Shares as
per the details in the CANs to the QIBs. Our Company shall not Allot Placement Shares to more than
49 QIBs.

Our Company will intimate to the Stock Exchanges the details of the Allotment and apply for
approvals for listing on the Stock Exchanges prior to crediting the Equity Shares into the Depository
Participant accounts of the QIBs.

After receipt of the listing approval from the Stock Exchanges, our Company shall credit the
Placement Shares into the Depository Participant accounts of the respective QIBs. Our Company shall
then apply for the trading permissions from the Stock Exchanges.

The Placement Shares that have been credited to the Depository Participant accounts of the QIBs
shall be eligible for trading on the Stock Exchanges only upon the receipt of final trading and listing
approvals from the Stock Exchanges. Upon receipt of the final trading and listing approval from the
Stock Exchanges, our Company shall inform the QIBs who have received an Allotment of the receipt
of such approval. Our Company and the Book Running Lead Managers shall not be responsible for

105
any delay or non-receipt of the communication of the final trading and listing permissions from the
Stock Exchanges or any loss arising from such delay or non-receipt. Final listing and trading
approvals granted by the Stock Exchanges are also placed on their respective websites. QIBs are
advised to apprise themselves of the status of the receipt of the permissions from the Stock
Exchanges or our Company.

Qualified Institutional Buyers

Only QIBs as defined in Regulation 2(1)(zd) of the SEBI Regulations, and not otherwise excluded
pursuant to Regulation 86(1)(b)of the SEBI Regulations are eligible to invest. Currently, the
definition of a QIB includes:

Mutual funds, venture capital funds and foreign venture capital investors registered with
SEBI;

Foreign institutional investors and sub-account (other than a sub-account which is a foreign
corporate or foreign individual), registered with SEBI;

Public financial institutions as defined in section 4A of the Companies Act;

Scheduled commercial banks;

Multilateral and bilateral development financial institutions;

State industrial development corporations;

Insurance companies registered with Insurance Regulatory and Development Authority;

Provident funds with minimum corpus of `250 million;

Pension funds with minimum corpus of `250 million;

National Investment Fund set up by Government of India; and

Insurance funds set up and managed by army, navy or air force of the Union of India.

Please note that pursuant to amendments to the SEBI Regulations, a sub-account of an FII that
is a foreign corporate or foreign individual is no longer included under the definition of a QIB.

FIIs are permitted to participate through the portfolio investment scheme in this Issue. FIIs
are permitted to participate in the Issue subject to compliance with all applicable laws and
such that the shareholding of the FIIs does not exceed specified limits as prescribed under
applicable laws in this regard.

The issue of Equity Shares to a single FII should not exceed 10.00% of our post-Issue, issued capital.
In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on
behalf of each subaccount shall not exceed 10.00% of our total issued capital, or 5.00% of our total
issued capital in case such subaccount is a foreign corporate or an individual currently the aggregate
FII holding in our Company cannot exceed the maximum permissible sectoral cap in connection with
our Company.

No Allotment shall be made pursuant to the Issue, either directly or indirectly, to any QIB being our
Companys promoters or any person related to our Companys promoters. QIBs which have all or any
of the following rights shall be deemed to be persons related to our promoters:

106

rights under a shareholders agreement or voting agreement entered into with our
Companys promoters or persons related to our Companys promoters;

veto rights; or

a right to appoint any nominee director on the Board.

provided, however, a QIB which does not hold any of our Equity Shares and which has acquired the
aforesaid rights in the capacity of a lender shall not be deemed to be related to a Promoter.

Our Company and the Book Running Lead Managers are not liable for any amendment or
modification or change to applicable laws or regulations, which may occur after the date of
this Placement Document. QIBs are advised to make their independent investigations and
satisfy themselves that they are eligible to apply. QIBs are advised to ensure that any single
application from them does not exceed the investment limits or maximum number of Equity
Shares that can be held by them under applicable law or regulation or as specified in this
Placement Document. Further, QIBs are required to satisfy themselves that their Bids would
not eventually result in triggering a tender offer under the Takeover Code.

A minimum of 10% of the Placement Shares offered in the Issue shall be Allotted to Mutual
Funds. If no Mutual Fund is agreeable to take up the minimum portion as specified above, such
minimum portion or part thereof may be Allotted to other QIBs.

Note: Affiliates or associates of the Book Running Lead Managers who are QIBs may participate in the
Issue in compliance with applicable laws.

Application Process

Application Form

QIBs shall only use the serially numbered Application Forms supplied by the Book Running Lead
Managers in either electronic form or by physical delivery for the purpose of making a Bid (including
revision of a Bid) in terms of the Preliminary Placement Document and this Placement Document.

By making a Bid (including the revision thereof) for Equity Shares through Application Forms, the
QIB will be deemed to have made the following representations and warranties and the
representations, warranties and agreements made under Transfer Restrictions:

1. The QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the SEBI Regulations has
a valid and existing registration under applicable laws of India and is eligible to participate
in this Issue;

2. The QIB confirms that it is not a Promoter and is not a person related to the Promoters,
either directly or indirectly and its Application Form does not directly or indirectly
represent our Promoter or Promoter Group;

3. The QIB confirms that it has no rights under a shareholders agreement or voting agreement
with the Promoters or persons related to the Promoters, no veto rights or right to appoint
any nominee director on the Board;

4. The QIB has no right to withdraw its Bid after the Bid Closing Date;

5. The QIB confirms that if Placement Shares are Allotted through this Issue, it shall not, for a
period of one year from Allotment, sell such Equity Shares otherwise than on the Stock

107
Exchanges;

6. The QIB confirms that the QIB is eligible to apply and hold Equity Shares so Allotted and
together with any Equity Shares held by the QIB prior to the Issue, the QIB further confirms
that the holding of the QIB, does not and shall not, exceed the level permissible as per any
applicable regulations applicable to the QIB;

7. The QIB confirms that the Application Form would not result in triggering a tender offer
under the Takeover Code;

8. The QIB confirms that to the best of its knowledge and belief together with other QIBs in the
Issue that belongs to the same group or are under same control, the Allotment to the QIB
shall not exceed 50% of the Issue Size. For the purposes of this statement:

(a) The expression belongs to the same group shall derive meaning from the concept
of companies under the same group as provided in sub-section (11) of Section 372
of the Companies Act;

(b) Control shall have the same meaning as is assigned to it under clause (c) of sub-
regulation (1) of Regulation 2 of the Takeover Code.

9. The QIBs shall not undertake any trade in the Equity Shares credited to its Depository
Participant account until such time that the final listing and trading approvals for the Equity
Shares are issued by the Stock Exchanges.

QIBS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR DEPOSITORY
PARTICIPANTS NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND
BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS MUST ENSURE THAT THE
NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE
DEPOSITORY ACCOUNT IS HELD.

Demographic details such as address and bank account will be obtained from the Depositories as per
the
Depository Participant account details given above.

The submission of an Application Form by a QIB shall be deemed a valid, binding and irrevocable
offer for the QIB to pay the entire Issue Price for its share of the Allotment (as indicated by the CAN)
and becomes a binding contract on the QIB upon issuance of the CAN by us in favour of the QIB.

Submission of Application Form

All Application Forms must be duly completed with information including the name of the QIB, the
price and the number of Equity Shares applied for. The Application Form shall be submitted to the
Book Running Lead Managers either through electronic form or through physical delivery at the
following address:

INDIA INFOLINE LTD.
Address
10
th
Floor, One IBC,
841, Senapati Bapat Marg,
Lower Parel (West),
Mumbai 400 013
Maharashtra, India
Contact Person: Pinak R Bhattacharyya/Sachin Kapoor
Email: ti.qip@iiflcap.com

108
Tel: +91-22-46464600
Fax:+91-22-24215600

SPA MERCHANT BANKERS LTD.
Address-101-A, 10th Floor,
Mittal Court, Nariman Point, Mumbai-400021
Contact person- Ms. Menka Jha
Email: menka.jha@spagroupindia.com
Tel:+91-22-2240439000
Fax-+91-22-22021466

The Book Running Lead Managers shall not be required to provide any written acknowledgement of
the same. Submission of Bid cum Application Form by a QIB shall be deemed to be a valid, binding
and irrevocable offer from the QIB to pay the entire Issue Price for its shares of Allotment (as
indicated by the CAN) and shall become a binding contract between the QIB and the Company upon
issuance of CAN by the Company in favor of the QIB.

Permanent Account Number or PAN

A copy of each QIBs PAN card is required to be submitted with the Application Form. Applications
without this information will be considered incomplete and are liable to be rejected. QIBs should not
submit the GIR number instead of the PAN as the Application Form is liable to be rejected on this
ground.

Pricing and Allocation

Build up of the book

The QIBs shall submit their Bids (including the revision of bids) within the Bidding Period to Book
Running Lead Managers.

Price discovery and allocation

Our Company, in consultation with the Book Running Lead Managers, shall determine the Issue Price,
which shall be at or above the Floor Price.

After finalisation of the Issue Price, our Company has updated the Preliminary Placement Document
with the Issue details and will file the same with the Stock Exchanges and SEBI as this Placement
Document.

Method of Allocation

Our Company shall determine the Allocation in consultation with the Book Running Lead Managers
on a discretionary basis and in compliance with Chapter VIII of the SEBI Regulations.

Bids received from the QIBs at or above the Issue Price shall be grouped together to determine the
total demand. The Allocation to all such QIBs will be made at the Issue Price. Allocation to Mutual
Funds for up to a minimum of 10.00% of the Issue Size shall be undertaken subject to valid Bids
being received at or above the Issue Price.

THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD
MANAGERS IN RESPECT OF ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBS. QIBS
MAY NOTE THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE
DISCRETION OF OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD
MANAGERS AND QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED

109
VALID APPLICATION FORMS AT OR ABOVE THE ISSUE PRICE. NEITHER OUR COMPANY NOR
ANY OF THE BOOK RUNNING LEAD MANAGERS IS OBLIGED TO ASSIGN ANY REASON FOR ANY
NON ALLOCATION.

All Application Forms duly completed along with payment and a copy of the PAN card or PAN
allotment letter shall be submitted to the Book Running Lead Managers as per the details provided in
the respective CAN.

Number of Allottees

The minimum number of Allottees in the Issue shall not be less than:

two, where the Issue Size is less than or equal to ` 2,500.00 million; or
five, where the Issue Size is greater than ` 2,500.00 million;

Provided that no single Allottee shall be Allotted more than 50.00% of the aggregate amount of the
Issue Size,
and

Provided further that QIBs belonging to the same group or those who are under common control shall
be deemed to be a single Allottee for the purpose of this clause. For details of what constitutes same
group or control, please see- Application Process - Application Form.

The maximum number of Allottees of Equity Shares shall not be greater than 49. Further the
Equity Shares will be Allotted within 12 months from the date of the shareholders resolution
approving the Issue.

CAN

Based on the Application Forms received, our Company, in consultation with the Book Running Lead
Managers, in their sole and absolute discretion, decide the QIBs to whom the serially numbered CAN
shall be sent, pursuant to which the details of the Equity Shares Allocated to them and the details of
the amounts payable for Allotment of such Equity Shares by the Pay-in Date in their respective
names shall be notified to such QIBs. Additionally, a CAN will include details of the bank accounts for
transfer of funds if done electronically, address where the application money needs to be sent, Pay-In
Date as well as the probable designated date, being the date of credit of the Equity Shares to the
respective QIBs account.

The eligible QIBs would also be sent a serially numbered Placement Document either in electronic
form or by physical delivery along with the serially numbered CAN.

The dispatch of the serially numbered Placement Document and the CAN to the QIBs shall be deemed
a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by the
Book Running Lead Managers and to pay the entire Issue Price for all the Equity Shares Allocated to
such QIB.

QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be
Allotted to them pursuant to the Issue.

Bank Account for Payment of Application Money

Our Company has opened the Tilaknagar Industries Ltd. QIP Escrow Account with Deutsche
Bank AG and IndusInd Bank Ltd., in terms of the arrangement among us, the Book Running Lead
Managers and Deutsche Bank AG and IndusInd Bank Ltd. as the escrow banks. The QIB will be

110
required to deposit the entire amount payable for the Equity Shares Allocated to it by the Pay-In Date
as mentioned in the respective CAN.

If the payment is not made favouring the Tilaknagar Industries Ltd. QIP Escrow Account
within the time stipulated in the CAN, the Application Form and the CAN of the QIB are liable to be
cancelled.

In case of cancellations or default by the QIBs, our Company and the Book Running Lead Managers
have the right to reallocate the Equity Shares at the Issue Price among existing or new QIBs at their
sole and absolute discretion, subject to the compliance with the requirement of ensuring that the
Application Forms are sent to not more than 49 QIBs.

Payment Instructions

The payment of application money shall be made by the QIBs in the name of Tilaknagar Industries
Ltd. QIP Escrow Account as per the payment instructions provided in the CAN.

Payments are to be made only through electronic fund transfer.

Designated Date and Allotment of Placement Shares

The Company will endeavor to complete the Allotment of Equity Shares by the probable Designated
Date for those QIBs who have paid subscription money as stipulated in the respective CANs. The
Equity Shares will not be Allotted unless the QIBs pay the Issue Price to the Tilaknagar Industries
Ltd. QIP Escrow Account as stated above.

In accordance with the SEBI Regulations, Equity Shares will be issued and Allotment shall be made
only in dematerialised form to the Allottees. Allottees will have the option to materialise the Equity
Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act.

Our Company, at its sole discretion, reserve the right to cancel the Issue at any time up to Allotment
without assigning any reason whatsoever.

Following the Allotment and credit of Equity Shares into the QIBs Depository Participant accounts,
our Company will apply for final trading and listing approvals from the Stock Exchanges. In the event
of any delay in the Allotment or credit of Equity Shares, or receipt of trading or listing approvals or
cancellation of the Issue, no interest or penalty would be payable by us or the Book Running Lead
Managers.

The Escrow Banks shall not release the monies lying to the credit of the Tilaknagar Industries Ltd.
QIP Escrow Account to our Company, until our Company delivers to the Escrow Banks the final
approval of the Stock Exchanges for the listing and trading of the Equity Shares to be issued pursuant
to the Issue. After finalisation of the Issue Price, our Company has updated the Preliminary
Placement Document with the Issue details and will file the same with the Stock Exchanges as this
Placement Document. Our Company shall also submit this Placement Document to SEBI within 30
days of the date of Allotment for record purposes. Pursuant to a circular dated March 5, 2010 issued
by the SEBI, Stock Exchanges are required to make available on their websites the details of those
allottees in Issue who have been allotted more than 5% of the securities offered, viz. names of the
allottees and number of securities allotted to each of them, pre and post Issue shareholding pattern
of our Company in the format specified in clause 35 of the Listing Agreement along with this
Placement Document.
In the event that the Company is unable to issue and allot the Equity Shares offered in the Issue or on
cancellation of the Issue, the money received from QIBs shall be refunded.

Submission to SEBI

111

The Company shall submit this Placement Document to SEBI within 30 days of the date of Allotment
for record purposes.

Other Instructions

Right to Reject Applications

Our Company, in consultation with the Book Running Lead Managers, may reject Bids, in part or in
full, without assigning any reason whatsoever. The decision of our Company and the Book Running
Lead Managers in relation to the rejection of Bids shall be final and binding.

Placement Shares in Dematerialised form with NSDL or CDSL

The Allotment of the Equity Shares in this Issue shall be only in dematerialised form (i.e., not in
physical
certificates but represented by the statement issued through the electronic mode).

A QIB applying for Equity Shares to be issued pursuant to the Issue must have at least one beneficiary
account with a Depository Participant of either NSDL or CDSL prior to making the Bid. Allotment to a
successful QIB will be credited in electronic form directly to the beneficiary account (with the
Depository Participant) of the QIB.

Equity Shares in electronic form can be traded only on the stock exchanges having electronic
connectivity with NSDL and CDSL. The Stock Exchanges have electronic connectivity with NSDL and
CDSL.

The trading of the Equity Shares to be issued pursuant to the Issue would be in dematerialised form
only for all QIBs in the demat segment of the respective Stock Exchanges.

Our Company will not be responsible or liable for the delay in the credit of Equity Shares to be issued
pursuant to the Issue due to errors in the Application Form or otherwise on part of the QIBs.

112
PLAN OF DISTRIBUTION

Placement Agreement

The Book Running Lead Managers have entered into a memorandum of understanding with our
Company (the Placement Agreement), pursuant to which the Book Running Lead Managers have
agreed to procure subscriptions for the Placement Shares to be issued pursuant to the Offering on a
best efforts basis.

The Placement Agreement contains customary representations, warranties and indemnities from our
Company and the Book Running Lead Managers, and it is subject to termination in accordance with
the terms contained therein.

This Placement Document has not been, and will not be, registered as a prospectus with the RoC and,
no Placement Shares will be offered in India or overseas to the public or any members of the public in
India or any other class of investors, other than QIBs. No assurance can be given on liquidity or
sustainability of trading market for the Equity Shares including the Placement Shares of our
Company post the Offering.



113

SELLING RESTRICTIONS

The distribution of this Placement Document and the offer, sale or delivery of the Equity Shares is
restricted by law in certain jurisdictions. Persons who come into possession of this Placement Document
are advised to take legal advice with regard to any restrictions that may be applicable to them and to
observe such restrictions. This Placement Document may not be used for the purpose of an offer or sale
in any circumstances in which such offer or sale is not authorized or permitted.

General

No action has been or will be taken in any jurisdiction that would permit a public offering of the
Equity Shares or the possession, circulation or distribution of this Placement Document or any other
material relating to us or the Equity Shares in any jurisdiction where action for the purpose is
required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly and neither
this Placement Document nor any other offering material or advertisements in connection with the
Equity Shares may be distributed or published, in or from any country or jurisdiction except under
circumstances that will result in compliance with any applicable rules and regulations of any such
country or jurisdiction. The Issue will be made in compliance with the applicable SEBI Regulations.
Each subscriber of the Equity Shares in the Issue will be required to make, or to be deemed to have
made, as applicable, the acknowledgments and agreements as described under Transfer
Restrictions.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the
Prospectus Directive (each, a Relevant Member State), an offer of the Equity Shares to the public
may not be made in that Relevant Member State prior to the publication of a prospectus in relation to
the Equity Shares which has been approved by the competent authority in that Relevant Member
State or, where appropriate, approved in another Relevant Member State and notified to the
competent authority in that Relevant Member State, all in accordance with the Prospectus Directive,
except that an offer of Equity Shares to the public in that Relevant Member State at any time may be
made:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if
not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during
the last financial year; (2) a total balance sheet of more than Euro 43,000,000 and (3) an
annual net turnover of more than Euro 50,000,000, as shown in its last annual or
consolidated accounts; or

(c) in any other circumstances which do not require the publication by us of a prospectus
pursuant to Article 3 of the Prospectus Directive.

Provided that no such offer of Equity Shares shall result in the requirement for the publication by the
Company or the Placement Agent of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an offer of Equity Shares to the public in
relation to any Equity Shares in any Relevant Member State means the communication in any form
and by any means of sufficient information on the terms of the offer and the Equity Shares to be
offered so as to enable an investor to decide to purchase or subscribe the Equity Shares, as the same
may be varied in that Member State by any measure implementing the Prospectus Directive in that

114
Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes
any relevant implementing measure in each Relevant Member State.

Hong Kong

The Equity Shares may only be offered or sold in Hong Kong (i) to 'professional investors' as defined
in the SFO and any rules made under the SFO, or (ii) in other circumstances which do not result in the
document being a 'prospectus' as defined in the Companies Ordinance (Cap. 32) or which do not
constitute an offer to the public within the meaning of that Ordinance; and the Placement Agent has
not issued, or had in their possession for the purposes of issue, and will not issue, or have in their
possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,
invitation or document relating to the Equity Shares, which is directed at, or the contents of which
are likely to be accessed or read by, the public in Hong Kong(except if permitted to do so under the
securities laws of Hong Kong) other than with respect to Equity Shares which are or are intended to
be disposed of only to persons outside Hong Kong or only to 'professional investors' as defined in the
SFO and any rules made under the SFO.

Singapore

This Placement Document has not been registered as a prospectus with the Monetary Authority of
Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the Securities and
Futures Act). The Equity Shares may not be offered or sold or made the subject of an invitation for
subscription or purchase nor may this Placement Document or any other document or material in
connection with the offer or sale or invitation for subscription or purchase of any Equity Shares be
circulated or distributed, whether directly or indirectly, to the public or any member of the public in
Singapore other than (a) to an institutional investor or other person falling within Section 274 of the
Securities and Futures Act, (b) to a relevant person, or any person pursuant to Section 275(1A) of the
Securities and Futures Act, and in accordance with the conditions specified in Section 275 of the
Securities and Futures Act, or (c) otherwise than pursuant to, and in accordance with the conditions
of, any other applicable provision of the Securities and Futures Act.

Each of the following relevant persons specified in Section 275 of the Securities and Futures Act
which has subscribed or purchased Equity Shares, namely a person who is: (a) a corporate (which is
not an accredited investor) the sole business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a
trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and
each beneficiary is an accredited investor, should note that shares, debentures and units of shares
and debentures of that corporation or the beneficiaries rights and interest in that trust shall not be
transferable for six months after that corporation or that trust has acquired the Equity Shares under
Section 275 of the Securities and Futures Act except: (1) to an institutional investor under Section
274 of the Securities and Futures Act or to a relevant person, or any person pursuant to Section
275(1A) of the Securities and Futures Act, and in accordance with the conditions, specified in Section
275 of the Securities and Futures Act; (2) where no consideration is given for the transfer; or (3) by
operation of law.

United Kingdom

The Placement Agent:

(a) has not offered or sold, and prior to the expiry of a period of six months from the issue date
of any Equity Shares, will not offer or sell any securities of the Company to persons in the
United Kingdom except to 'qualified investors' as defined in section 86(7) of the FSMA or
otherwise in circumstances which have not resulted in an offer to the public in the United
Kingdom;


115
(b) has complied and will comply with all applicable provisions of FSMA with respect to
anything done by it in relation to the Equity Shares in, from or otherwise involving the
United Kingdom; and

(c) in the United Kingdom, will only communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning of section 21 of the FSMA)
to persons that are 'qualified investors' and who are (a) 'investment professionals' falling
within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (the Order) or (b) high net worth entities and/or other persons to whom it
may lawfully be communicated falling within Article 49(2)(a) to (d) of the Order in
circumstances in which section 21(1) of the FSMA does not apply to the Company.

United States

The Equity Shares have not been and will not be registered under the Securities Act, and may not be
offered or sold within the United States except in certain transactions exempt from the registration
requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by
Regulation S.

The Equity Shares are being offered and sold outside of the United States in reliance on Regulation S
under the Securities Act. Each purchaser of the Equity Shares offered by this Placement Document
will be deemed to have made the representations, agreements and acknowledgements as described
under Transfer Restrictions.

India

The Placement Document has not been and will not be registered as a prospectus with the Registrar
of Companies in India and the Equity Shares will not be offered or sold directly or indirectly, to the
public or any members of the public in India or any other class of investors other than QIBs.

United Arab Emirates

This Placement Document is strictly private and confidential and is being distributed to a limited
number of investors and must not be provided to any person other than the original recipient, and
may not be reproduced or used for any other purpose.

By receiving this Placement Document, the person or entity to whom it has been issued understands,
acknowledges and agrees that this Placement Document has not been approved by the U.A.E. Central
Bank, the U.A.E. Ministry of Economy and Planning or any other authorities in the U.A.E., nor has the
placement agent, if any, received authorization or licensing from the U.A.E. Central Bank, the U.A.E.
Ministry of Economy and Planning or any other authorities in the United Arab Emirates to market or
sell securities within the United Arab Emirates. No marketing of any financial products or services
has been or will be made from within the United Arab Emirates and no subscription to any securities,
products or financial services may or will be consummated within the United Arab Emirates. It
should not be assumed that the placement agent, if any, is a licensed broker, dealer or investment
advisor under the laws applicable in the United Arab Emirates, or that it advises individuals resident
in the United Arab Emirates as to the appropriateness of investing in or purchasing or selling
securities or other financial products. The interests in the Equity Shares may not be offered or sold
directly or indirectly to the public in the United Arab Emirates. This does not constitute a public offer
of securities in the United Arab Emirates in accordance with the Commercial Companies Law, Federal
Law No. 8 of 1984 (as amended) or otherwise.

By receiving this Placement Document, the person or entity to whom it has been issued understands,
acknowledges and agrees that the Equity Shares have not been and will not be offered, sold or
publicly promoted or advertised in the Dubai International Financial Centre other than in compliance

116
with laws applicable in the Dubai International Financial Centre, governing the issue, offering or sale
of securities. The Dubai Financial Services Authority has not approved this Placement Document nor
taken steps to verify the information set out in it, and has no responsibility for it.

Nothing contained in this Placement Document is intended to constitute investment, legal, tax,
accounting or other professional advice. This Placement Document is for your information only and
nothing in this Placement Document is intended to endorse or recommend a particular course of
action. You should consult with an appropriate professional for specific advice rendered on the basis
of your situation.

117
TRANSFER RESTRICTIONS

Purchasers of the Equity Shares in this Issue are not permitted to sell the Equity Shares for a period
of one year from the date of allotment except through the Stock Exchanges.

Subject to the foregoing:

Each purchaser of the Equity Shares will be deemed to have represented and agreed as follows:

It is authorized to consummate the purchase of the Equity Shares in compliance with all
applicable laws and regulations.

It acknowledges (or if it is a broker-dealer acting on behalf of a customer, its customer has
confirmed to it that such customer acknowledges) that such Equity Shares have not been and
will not be registered under the Securities Act.

It certifies that either (A) it is, or at the time the Equity Shares are purchased will be, the
beneficial owner of the Equity Shares and is located outside the United States (within the
meaning of Regulation S) or (B) it is a broker-dealer acting on behalf of its customer and its
customer has confirmed to it that (i) such customer is, or at the time the Equity Shares are
purchased will be, the beneficial owner of the Equity Shares, and (ii) such customer is located
outside the United States (within the meaning of Regulation S).

It agrees that it will not offer, sell, pledge or otherwise transfer such Equity Shares except in an
offshore transaction complying with Rule 903 or Rule 904 of Regulation S or pursuant to any
other available exemption from registration under the Securities Act and in accordance with all
applicable securities laws of the States of the United States and any other jurisdiction, including
India.

It acknowledges that the Company, the Placement Agent, its affiliates, and others will rely upon
the truth and accuracy of the foregoing acknowledgements, representations and agreements and
agrees that, if any of such acknowledgements, representations or agreements deemed to have
been made by virtue of its purchase of the Equity Shares are no longer accurate, it will promptly
notify us.

Any resale or other transfer or attempted resale or other transfer, made other than in compliance with
the above-stated restrictions will not be recognized by the Company.


118
THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from publicly available documents from various
sources, including officially prepared materials from the SEBI, the BSE and the NSE, and has not been
prepared or independently verified by our Company or the Book Running Lead Managers or any of their
respective affiliates or advisors.

The Indian Securities Market

India has a long history of organised securities trading. In 1875, the first stock exchange was
established in Mumbai.

Stock Exchange Regulations

Indian stock exchanges are regulated primarily by SEBI, as well as by the Government of India acting
through the Ministry of Finance, Capital Markets Division, under the Securities Contracts
(Regulation) Act 1956, as amended (SCRA) and the Securities Contracts (Regulation) Rules, 1957,
as amended (SCRR), which, along with the rules, bye-laws and regulations of the respective stock
exchanges, regulate the recognition of stock exchanges, the qualifications for membership thereof
and the manner in which contracts are entered into and enforced between members of the stock
exchanges.

The SEBI Act, granted powers to SEBI to regulate the Indian securities markets, including stock
exchanges and other intermediaries in the capital markets, to promote and monitor self-regulatory
organisations, to prohibit fraudulent and unfair trade practices and insider trading and to regulate
substantial acquisitions of shares and takeovers of companies. SEBI has also issued guidelines and
regulations concerning minimum disclosure requirements by public companies, rules and
regulations concerning investor protection, insider trading, substantial acquisitions of shares and
takeovers of companies, buy-backs of securities, delisting of securities, employee stock option
schemes, stockbrokers, merchant bankers, underwriters, mutual funds, foreign institutional
investors, credit rating agencies and other capital markets participants. The SEBI has the powers to
amend the listing agreements and bye-laws of stock exchanges in India. Any amendment of the bye-
laws of the stock exchanges in India requires the prior approval of SEBI.

The Companies (Amendment) Act, 2000, amended the Companies Act and incorporated significant
provisions relating to securities, options in securities and equity shares with differential rights.
Further, the Companies Act, as amended, has empowered SEBI to administer certain provisions of
the Companies Act in so far as they relate to the issue and transfer of securities and non payment of
dividends by listed public companies as well as companies intending to list their securities on any
recognized stock exchange in India, and to conduct inspection of a companys records in respect of
matters relating to the issue and transfer of securities. The power to prosecute defaulting companies
in compliance with the said matter has also been vested with SEBI.

SEBI has also set up a committee for the review of Indian securities laws, which has proposed a draft
Securities Bill. The draft Securities Bill, if enacted in its present form may result in a substantial
revision in the laws relating to securities transactions in India. The Companies Bill was originally
introduced in the Lok Sabha on October 23, 2008, however it has been re-introduced in the Lok
Sabha on August 3, 2009 with certain modifications.

Listing

The listing of securities on recognised Stock Exchanges is regulated by the Companies Act, the SCRA,
the SCRR, the SEBI Act and the listing agreement of the respective stock exchanges. Further, under

119
the SCRR, the governing body of each stock exchange is empowered to suspend trading of or dealing
in a listed security for breach of our Companys obligations under such agreement, subject to our
Company receiving prior notice of the intent of the stock exchange. In the event that a suspension of a
companys securities continues for a period in excess of quarters and half years, our company may
appeal to the Securities Appellate Tribunal (SAT) established under the SEBI Act to set aside the
suspension. SEBI has the power to veto stock exchange decisions in this regard. SEBI also has the
power to amend such Listing Agreements and the bye-laws of the stock exchanges in India.

Clause 49 of the Listing Agreement introduced by SEBI encompasses the framework of Corporate
Governance for all listed companies. Every company that wants to list its shares on the stock
exchanges in India must enter into a listing agreement with the concerned stock exchange. Clause 49
inter-alia provides that:

The Board of directors of our company shall have an optimum combination of executive and
non-executive directors with not less than fifty per cent of the board of directors comprising
of non-executive directors.

Where the Chairman of the Board is a non-executive director, at least one-third of the Board
should comprise of independent directors and in case he is an executive director, at least half
of the Board should comprise of independent directors. However where the non-executive
Chairman is a promoter of our Company or is related to any promoter or person occupying
management positions at the Board level or at one level below the Board, at least one-half of
the Board of our Company shall consist of independent directors.

We have entered into Listing Agreements with the Stock Exchanges for the continuous listing of our
Equity Shares. Each of these agreements and/ or the Takeover Code requires that:

we adhere to certain corporate governance requirements including ensuring the minimum
number of independent directors on the board, and composition of various committees such
as audit committees and remuneration committees;
we adhere to continuing disclosure requirements and must publish unaudited financial
statements on a quarterly basis and immediately inform the stock exchanges of any
unpublished price sensitive information;
we maintain a minimum level of shares held by the public as required under these
agreements;
if any person acquires more than five per cent of our Equity Shares or voting rights we and
the acquirer shall comply with the provisions of the Takeover Code;
no person shall acquire, or agree to acquire, 15.00% or more of our Equity Shares or voting
rights, unless the provisions of the Takeover Code are complied with; and
if any takeover offer is made or if there is any change in management control, then we and
the persons securing management control of us need to comply with the Takeover Code.

Any non-compliance with the terms and conditions of the Listing Agreements with the Stock
Exchanges may entail the delisting of our Equity Shares from such stock exchanges, which will affect
future trading of those Equity Shares.

Minimum Level of Public Shareholding

The Listing Agreement requires that all listed companies are required to ensure a minimum level of
public shareholding at 25 per cent. of the total number of issued shares of a class or kind for the
purpose of continuous listing.

The Ministry of Finance has, by a notification dated September 4, 2010, amended Rule 19(2)(b) of the
SCRR. In terms of this amendment, a company is required to satisfy the stock exchanges that at least

120
25 per cent. (or at least 10 per cent., if the post issue capital of our Company as calculated at offer
price is more than ` 4,000 crores) of each class or kind of equity shares or convertible debentures is
offered and allotted to the public. The requirement of the post issue capital being greater than `
4,000 crores does not apply to a company whose draft offer document was filed with the SEBI prior
to the amendment, if this was in compliance with the provisions of Rule 19(2)(b) of the SCRR as it
was in force prior to the amendment. Further, an additional provision, Rule 19A, has been inserted in
the SCRR by this amendment. This provision requires a listed company having a public shareholding
of less than 25 per cent. to bring its public shareholding to at 25 per cent. by increasing its public
shareholding by at least 5 per cent. per annum from the date of commencement of the amendment.
This provision is also applicable to a listed company whose public shareholding falls below 25 per
cent. in any year.

Delisting

The provisions of the SEBI (Delisting of Equity Shares) Regulations, 2009, as amended (Delisting
Regulations) and the SCRR govern voluntary and compulsory delisting of equity shares of listed
Indian companies from any of the recognised stock exchanges. No company can apply for permission
to delist: (i) pursuant to a buy back of equity shares or preferential allotment made by a company or
(ii) unless a period of three years has elapsed since the listing of that class of equity shares on any
recognized stock exchange. Furthermore, if any instruments issued by our Company which are
convertible into the same class of equity shares that are sought to be delisted are outstanding,
delisting is disallowed. A company may voluntarily delist from a stock exchange provided that (a) the
securities of our Company have been listed for a minimum period of three years on any recognised
stock exchange, (b) the delisting has been approved by two-thirds of the public shareholders, and (c)
our Company, the promoter and/or the director of our Company provide an exit opportunity and
purchase the outstanding securities from those holders who wish to sell them at a price determined
in accordance with the Delisting Regulations, provided further that the condition in (c) above may be
dispensed with by SEBI if the securities remain listed on the NSE or the BSE.

In the event a company seeks to voluntarily delist from a stock exchange, it is required to provide an
exit opportunity to the other shareholders (Delisting Offer) and seek the in-principle approval of
the stock exchange. This exit opportunity involves a price discovery process known as the book
building process. A Delisting Offer can be launched by any promoter seeking to delist the securities
of our Company. The Delisting Offer needs to be supported by a resolution approved by the board of
directors and a resolution approved by three-fourths of the shareholders of the listed company
through a postal ballot. In addition, the special resolution of the shareholders can be acted upon if,
and only if, the votes cast by public shareholders in favour of the proposal amount are at least two
times the number of votes cast by public shareholders against it (non-promoters and holders of
depository receipts are considered non-public shareholders). Following the approval of the
shareholders, the promoter would issue a public announcement (i.e. a public notice) in relation to the
Delisting Offer. The offer price shall have a floor price which shall be determined in the manner
provided in the Delisting Regulations. The floor price for delisting must, therefore be determined by
calculating the average of the weekly high and low of the closing prices during the last 26 weeks or
two weeks preceding the date on which the recognized stock exchange were notified. The offer must
fulfill the criteria prescribed in the Delisting Regulations to be successful. Upon closure of open offer
process, all shareholders whose equity shares are verified will be paid the final price stated in the
public announcement within 10 working days.

The Delisting Regulations and the SCRR also provide the stock exchanges the power to delist the
securities of companies on certain grounds, including if a company is incurring losses during the
preceding three consecutive years and has negative net worth; the trading in the securities of our
Company has remained suspended for a minimum period of six months; the securities of a company
have remained infrequently traded during the preceding three years; our Company or any of its
promoters or directors have been convicted for failure to comply with any provisions of the SEBI Act
or the Depositories Act or rules and regulations made thereunder and awarded a penalty of not less

121
than three years; or there has been failure to raise the public shareholdings within a specified time to
the minimum level applicable to our Company under its listing agreement. Any order for compulsory
delisting can be made only after considering representations received from aggrieved persons.
Delisting Regulations also provide that in the event that the securities of a company are delisted by a
stock exchange, the fair value of securities shall be determined by an independent valuer appointed
by the stock exchange from a panel of experts selected by the stock exchange. The Delisting
Regulations do not permit the listing of equity shares once delisted for a period of 5 years (in a
voluntary delisting) and 10 years (if the stock exchanges initiate the delisting).

The Ministry of Finance has, on September 10, 2009, proposed certain amendments to the Securities
Contracts (Regulation) Rules, 1957 and notified delisting rules under Rule 21 of the Securities
Contract (Regulation) Rules, 1957 on September 15, 2009 (MoF Notification) in relation to
voluntary and compulsory delisting, to bring them in line with the Delisting Regulations. Due to
their recent issuance, the applicability of the Delisting Regulations and MoF Notification have not
been tested in any manner and hence it is possible that some of the clauses may be amended to make
either the Delisting Regulations or the MoF Notification more effective or clarify any ambiguities
contained therein. Investors are requested to consult their advisors before taking any steps under
the Delisting Guidelines.

Disclosures under the Companies Act and Securities Regulations

Under the Companies Act, a public issue of securities in India must be made by means of a
prospectus, which must contain information specified in the Companies Act and the SEBI
Regulations, as amended. The prospectus must be filed with the Registrar of Companies having
jurisdiction over the place where a companys registered office is situated, which in the case of our
Company is the Registrar of Companies located at Pune, Maharashtra. A companys directors are
subject to civil and criminal liability for misstatements/misrepresentations in a prospectus. The
Companies Act also sets forth procedures for the acceptance of subscriptions and the allotment of
securities among subscribers and establishes maximum commission rates for the sale of securities.
SEBI has issued detailed guidelines through the SEBI Regulations concerning disclosures by public
companies and investor protection.

Public limited companies are required under the Companies Act and SEBI Regulations to prepare, file
with the Registrar of Companies and circulate to their shareholders audited annual accounts which
comply with the Companies Acts disclosure requirements and regulations governing their manner of
presentation and which include sections pertaining to corporate governance, related party
transactions and the managements discussion and analysis as required under the respective listing
agreement. In addition, a listed company is subject to continuing disclosure requirements pursuant
to the terms of its listing agreement with the relevant stock exchange. Accordingly, listed companies
are now required to publish unaudited financial statements (subject to a limited review by our
Companys auditors) on a quarterly basis and are required to inform stock exchanges immediately
regarding any stock price-sensitive information.

Indian Stock Exchanges

There are now currently 19 recognised stock exchanges in India. Most of the stock exchanges have
their own governing board for self-regulation. A number of these exchanges have been directed by
SEBI to file schemes for demutualisation as a measure of moving towards greater investor protection.

The BSE and the NSE together hold a dominant position among the stock exchanges in terms of the
number of listed companies, market capitalisation and trading activity.

In order to contain the risk arising out of the transactions entered into by the members of various
stock exchanges either on their own account or on behalf of their clients, the stock exchanges have
designed risk management procedures, which include compulsory prescribed margins on the

122
individual broker members, based on their outstanding exposure in the market, as well as stock-
specific margins from the members.

With effect from April 1, 2003, the stock exchanges in India operate on a trading day plus two, or T+2,
rolling settlement system. At the end of the T+2 period, obligations are settled with buyers of
securities paying for and receiving securities, while sellers transfer and receive payment for
securities. For example, trades executed on a Monday would typically be settled on a Wednesday. In
order to contain the risk arising out of the transactions entered into by the members of various stock
exchanges either on their own account or on behalf of their clients, the stock exchanges have
designed risk management procedures, which include compulsory prescribed margins on the
individual broker members, based on their outstanding exposure in the market, as well as stock-
specific margins from the members.

To restrict abnormal price volatility, SEBI has instructed stock exchanges to apply the fol1owing
price bands calculated at the previous days closing price (there are no restrictions on price
movements of index stocks):

Market Wide Circuit Breakers. In order to restrict abnormal price volatility in any particular stock,
SEBI has instructed the stock exchanges to apply daily circuit breakers, which do not allow
transactions beyond certain price volatility. An index based market-wide (equity and equity
derivatives) circuit breaker system has been implemented and the circuit breakers are applied to the
market for movement by 10%, 15% and 20% for two prescribed market indices: the BSE Sensex for
the BSE and the Nifty for the NSE (NSE Nifty), whichever is breached earlier. If any of these circuit
breaker thresholds are reached, trading in al1 equity and equity derivatives markets nationwide is
halted.

Price Bands. In addition to the market-wide index based circuit breakers, there are currently in place
varying individual scrip wise bands (except for scrips on which derivative products are available or
scrips included in indices on which derivative products are available) of 20% either ways for all
other scrips.

BSE

The BSE, established in 1875, is the oldest stock exchange in India. It is the first stock exchange in
India to have obtained permanent recognition in 1956 from the Government of India under the SCRA.
It has evolved over the years into its present status as a premier stock exchange of India. Pursuant to
the BSE (Corporatisation and Demutualization) Scheme 2005 of SEBI, with effect from August 20,
2005, the BSE has been corporatised and demutualised and is now a company under the Companies
Act.

The BSE switched over from an open outcry trading system to an online trading network in May
1995 and has today expanded this network to over 349 cities in India. Only a member of the BSE has
the right to trade in the stocks listed on the BSE.

Derivatives trading commenced on the BSE in 2000. The BSE also has wholesale and retail debt
trading segments. The retail trading in Government securities commenced in September 2003.

As of December, 2009, the BSE had 1,007 members, comprising 173 individual members, 811 Indian
companies and 23 FIIs. Only a member of the BSE has the right to trade in the stocks listed on the
BSE. As of September 2009, there were 4,946 companies trading on the BSE. As of December 2009,
the total numbers of scrips traded are 2,999 and the estimated market capitalisation of stocks
trading on the BSE was ` 60,798.92 billion. In December 2009, the average daily turnover on the BSE
was ` 46.71 billion. (Source: BSE)

NSE

123

The NSE was established by financial institutions and banks to serve as a national exchange and
provide nationwide on-line satellite-linked screen-based trading facilities with electronic clearing
and settlement for securities including government securities, debentures, public sector bonds and
units. It has evolved over the years into its present status as one of the premier stock exchange of
India. The NSE was recognised as a stock exchange in April 1993 and commenced operations in the
wholesale debt market segment in September 1994.

In May 2010, the average daily traded value of the capital market segment was ` 129,375 million. The
NSE launched the NSE 50 index, now known as S&P CNX NIFTY, on April 22, 1996 and the Mid-cap
Index on January 1, 1996. As of April 30, 2010, the market capitalisation of the capital market
segment of the NSE was approximately ` 61,179 billion. NSE has a wide network in major
metropolitan cities, screen based trading and a central monitoring system.

Trading Hours

Trading on both the BSE and the NSE normally occurs Monday through Friday, between 9 a.m. and
3:30 p.m. The BSE and the NSE are closed on public holidays.

Stock Market Indices

S&P CNX Nifty is a diversified 50 stock index accounting for 21 sectors of the economy. It is used for a
variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds.
S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a
joint venture between the NSE and CRISIL.

The two indices which are generally used in tracking the aggregate price movements on the BSE are
SENSEX and BSE 100 Index. The BSE Sensitive Index, or the Sensex, consists of listed shares of 30
large market capitalisation companies. The companies are selected on the basis of market
capitalisation, liquidity and industry representation. Sensex was first compiled in 1986 with the fiscal
year ended March 31, 1979. The BSE 100 Index (formerly the BSE National Index) contains listed
shares of 100 companies including the 30 in Sensex with 1983-1984 as the base year.

Trading Procedure

In order to facilitate smooth transactions, in 1995, BSE replaced its open outcry system with BSE On-
line Trading (BOLT) facility in 1995. This totally automated screen based trading in securities was
put into practice nation-wide. This has enhanced transparency in dealings and has assisted
considerably in smoothening settlement cycles and improving efficiency in back-office work.

Internet-Based Securities Trading and Services

SEBI approved internet trading in January 2000. Internet trading takes place through order routing
systems, which route client orders to exchange trading systems for execution. This permits clients to
trade using brokers Internet trading systems. Stock brokers interested in providing this service are
required to apply for permission to the relevant stock exchange and also have to comply with certain
minimum conditions stipulated by SEBI.

Takeover Code

Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed
by the Takeover Code, which prescribes certain thresholds or trigger points that give rise to these
obligations, as applicable. The Takeover Code is under constant review by SEBI and was last amended
on April 13, 2010. Once the equity shares are listed, the provisions of the Takeover Code will apply to
any acquisition of our Companys shares/ voting rights/ control.


124
The principal features of the Takeover Code are set forth below:

Any acquirer (meaning a person who, directly or indirectly, acquires or agrees to acquire equity
shares or voting rights in a company, either by himself or with any person acting in concert) who
acquires equity shares or voting rights that would entitle him to more than 5%, 10%, 14%, 54%
or 74% of the equity shares or voting rights in a company (together with our Companys equity
shares or voting rights, if any, already held by such acquirer) is required to disclose the aggregate
of his equity shareholding or voting rights in that company to our Company (which in turn is
required to disclose such shareholding to each of the stock exchanges on which our Companys
equity shares are listed) and to each of the stock exchanges on which our Companys equity
shares are listed within two days of (a) the receipt of allotment information; or (b) the
acquisition of equity shares or voting rights, as the case may be. The term shares has been
defined under the Takeover Code to shares in the share capital of a company carrying voting
rights and includes any other security which entitles a person to acquire shares with voting
rights but does not include preference shares.

A person who, together with persons acting in concert with him, holds 15% or more but less than
55% of the equity shares or voting rights in any company, or who holds 55% or more but less
than 75% of the equity shares or voting rights in any company and acquires shares or voting
rights under the second proviso to Regulation 11(2) of the Takeover Code, is required to disclose
any purchase or sale representing 2% or more of the equity shares or voting rights of that
company (together with the aggregate shareholding after such acquisition or sale) to that
company and the stock exchanges on which our Companys equity shares are listed within two
days of the purchase or sale and is also required to make annual disclosure of his holdings to that
company (which in turn is required to disclose such shareholding to each of the stock exchanges
on which our Companys equity shares are listed).

Promoters or persons in control of a company are also required to make annual disclosure of
their holding in a specified manner. The company is also required to make annual disclosure of
holdings of its promoters or persons in control as on March 31 of the respective year to each of
the stock exchanges on which its equity shares are listed. SEBI has recently amended the
Takeover Code to make it mandatory for the promoters and promoter group of listed companies
to disclose the creation and enforcement of a pledge on the equity shares held by such persons.

An acquirer cannot acquire equity shares or voting rights which (taken together with the existing
equity shares or voting rights, if any, held by him or by persons acting in concert with him) would
entitle such acquirer to exercise 15% or more of the voting rights in a company, unless such
acquirer makes a public announcement offering to acquire a minimum of 20% of the equity
shares of the company at a price not lower than the price determined in accordance with the
Takeover Code. Such offer has to be made to all public shareholders of the company (defined as
holders of shareholdings held by persons other than the promoter (as defined under the
Takeover Code)). A copy of the public announcement is required to be delivered, on the date, on
which such announcement is published, to SEBI, the company and the stock exchanges on which
the companys equity shares are listed.

No acquirer who, together with persons acting in concert with him, has acquired, in accordance
with law, 15% or more but less than 55% of the shares or voting rights in a company, shall
acquire, either by himself or through or with persons acting in concert with him, additional
shares or voting rights that would entitle him to exercise more than 5% of the voting rights with
post acquisition shareholding or voting rights not exceeding 55% in any financial year ending
March 31, unless such acquirer makes a public announcement offering to acquire a further
minimum of 20% of the equity shares of the target company at a price not lower than the price
determined in accordance with the Takeover Code.

An acquirer who, together with persons acting in concert with him, has acquired, in accordance

125
with law, 55% or more but less than 75% of the equity shares or voting rights in a company (or,
where the company concerned had obtained the initial listing of its shares by making an offer of
at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCRR, less than 90%
of the shares or voting rights in the company) may not, either by itself or through persons acting
in concert with it, acquire any additional equity shares or voting rights in the company, unless
such acquirer makes an open offer to acquire a minimum of 20% of the shares or voting rights
which it does not already own in the company, provided that an acquirer together with persons
acting in concert may acquire additional shares or voting rights entitling him to up to 5% voting
rights in a company without making a public announcement if (i) the acquisition is made through
open market purchase on the stock exchanges or the increase in the shares or voting rights is
pursuant to a buy-back of shares by the target company and (ii) the post acquisition shareholding
of the acquirer and persons acting in concert does not exceed 75%.

Where an acquirer who (together with persons acting in concert) holds 55% or more, but less
than 75% of the shares or voting rights in a target company (or, where the concerned company
had obtained the initial listing of its shares by making an offer of at least 10% of the issue size to
the public pursuant to Rule 19(2)(b) of the SCRR, less than 90% of the shares or voting rights in
the company), intends to consolidate its holdings while ensuring that the public shareholding in
the target company does not fall below the minimum level permitted by the listing agreement
with the stock exchanges, the acquirer may do so by making an open offer in accordance with the
Takeover Code. Such open offer would be required to be made for the lesser of (i) 20% of the
voting capital of the company, or (ii) such other lesser percentage of the voting capital of the
company as would, assuming full subscription to the open offer, enable the acquirer (together
with persons acting in concert), to increase the holding to the maximum level possible, which is
consistent with the target company meeting the requirements of minimum public shareholding
specified in the listing agreement with the stock exchanges.

In addition, regardless of whether there has been any acquisition of equity shares or voting rights
in a company, an acquirer cannot directly or indirectly acquire control over a company (for
example, by way of acquiring the right to appoint a majority of the directors or to control the
management or the policy decisions of the company) unless such acquirer makes a public
announcement offering to acquire a minimum of 20% of the voting equity shares of the company.
In addition, the Takeover Code introduces the chain principle by which the acquisition of a
holding company will obligate the acquirer to make a public offer to the shareholders of each
subsidiary company which is listed.

Further, if an acquisition made pursuant to an open offer results in the public shareholding in the
target company being reduced below the minimum level required under the listing agreement
with the stock exchanges, the acquirer would be required to take steps to facilitate compliance by
the target company with the relevant provisions of the listing agreement with the stock
exchanges, within the time period prescribed therein.

The Takeover Code sets out the contents of the required public announcements as well as the
minimum offer price. The minimum offer price depends on whether the shares of the company
are frequently or infrequently traded (as defined in the Takeover Code). In case the shares of
the company are frequently traded, the offer price shall be the higher of:

the negotiated price under the agreement for the acquisition of shares in the company;
the highest price paid by the acquirer or persons acting in concert with him for any
acquisitions, including through an allotment in a public, preferential or rights issue, during
the 26-week period prior to the date of public announcement; and
the average of the weekly high and low of the closing prices of the shares of the company
quoted on the stock exchange where the shares of the company are most frequently traded
during the 26-week period prior to the date of public announcement, or the average of the
daily high and low of the prices of the shares as quoted on the stock exchange where the

126
shares of the company are most frequently traded during the two weeks preceding the date
of public announcement, whichever is higher.

The Takeover Code permits conditional offers as well as an acquisition and consequent delisting
of the shares of a company and provides specific guidelines for the gradual acquisition of shares
or voting rights. Specific obligations of the acquirer and the board of directors of the target
company in the offer process have also been specified. Acquirers making a public offer are also
required to deposit in an escrow account a percentage of the total consideration which amount
will be forfeited in the event that the acquirer does not fulfil his obligations.

The general requirements to make such a public announcement do not, however, apply entirely
to bailout takeovers when a promoter (i.e. a person or persons in control of the company,
persons named in any offer document as promoters and certain specified corporate bodies and
individuals) is taking over a financially weak company but not a sick industrial company
pursuant to a rehabilitation scheme approved by a public financial institution or a scheduled
bank. A financially weak company is a company which has at the end of the previous financial
year accumulated losses which have resulted in the erosion of more than 50% but less than
100% of the total sum of its paid up capital and free reserves as at the beginning of the previous
financial year. A sick industrial company is a company registered for more than five years
which has at the end of any financial year accumulated losses equal to or exceeding its entire net
worth.

The Takeover Code, subject to certain conditions specified in the Takeover Code, exempts certain
specified acquisitions from the requirement of making a public offer, including, among others, the
acquisition of shares (1) by allotment in a public issue or a rights issue, (2) pursuant to an
underwriting agreement, (3) by registered stockbrokers in the ordinary course of business on
behalf of clients, (4) in unlisted companies, (5) pursuant to a scheme of reconstruction or
amalgamation, (6) pursuant to a scheme under Section 18 of the SICA, (7) resulting from
transfers between companies belonging to the same group of companies or between promoters
of a publicly listed company and relatives, (8) by way of transmission through inheritance or
succession, (9) resulting from transfers by Indian venture capital funds or foreign venture capital
investors registered with SEBI, to promoters of a venture capital undertaking or venture capital
undertaking pursuant to an agreement between such venture capital funds or foreign venture
capital investors with such promoters or venture capital undertaking, (10) by the Government of
India controlled companies, unless such acquisition is made pursuant to a disinvestment process
undertaken by the Government of India or a State Government, (11) change in control by
takeover/restoration of the management of the borrower company by the secured creditor in
terms of the Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002, (12) acquisition of shares by a person in exchange of equity shares received
under a public offer made under the Takeover Code and (13) in terms of guidelines and
regulations relating to delisting of securities as specified by SEBI. The Takeover Code does not
apply to acquisitions in the ordinary course of business by public financial institutions either on
their own account or as a pledgee. An application may also be filed with the takeover panel
seeking exemption from the open offer requirements of the Takeover Code. Pursuant to a recent
amendment, a listed company can apply to SEBI to waive requirements under the Takeover Code
in relation to an acquisition of a listed company in circumstances where the board of the listed
company has been taken over by the Government of India and there is a plan for a transparent
and competitive process for the operations of the listed company.

Recent amendments to the Takeover Code provide that where American depository receipts and
global depositary receipts holders are entitled to exercise voting rights on the shares underlying
such American depository receipts and global depositary receipts, open offer obligations as
aforesaid shall be triggered upon crossing the same threshold limits.

SEBI is further empowered to relax, upon application by a target company, the provisions of

127
Chapter III of the regulations, which pertain to the disclosure and the open offer requirements, in
the event the directors of such company have been removed and replaced by the regulatory
authorities for the orderly conduct of the affairs of the company and the replaced board has,
amongst others, devised a plan for a transparent, open and competitive process for the continued
operation of the company in the interests of all stakeholders of the company without furthering
the interests of any particular acquirer. In the event the SEBI has granted such relaxation, no
competitive bidding is allowed after a bid has been publicly announced by an acquirer.

Recent amendments to the Takeover Code also obligate every promoter and person forming part
of the promoter group of a listed company to disclose to the company details of pledge of shares
of that company held by such person and the revocation of pledge within seven working days
from the date of creation of the pledge or the revocation, as the case maybe. A listed company is
further required to disclose such information to all the stock exchanges on which its shares are
listed within seven working days of its receipt thereof if, during any quarter ending March,
September and December of any year, the aggregate number of pledged shares of a promoter or
every person forming part of the promoter group (taken together with shares already pledged
during that quarter by such promoter or persons) exceeds 25,000 or 1 percent of the total
shareholding or voting rights of the company, whichever is lower.

Insider Trading Regulations

The SEBI (Prohibition of Insider Trading) Regulations, 1992 (Insider Trading Regulations) have
been notified by SEBI to prevent insider trading in India by prohibiting and penalising insider trading
in India. The Insider Trader Regulations prohibit an insider from dealing, either on his own behalf
or on behalf of any other person, in the securities of a company listed on any stock exchange when in
possession of unpublished price sensitive information. The terms unpublished and price-sensitive
information are defined in the Insider Trading Regulations. The Insider Trading Regulations define
an insider to mean any person who (i) is or was connected with the company or is deemed to have
been connected with the company and who is reasonably expected to have access to unpublished
price sensitive information in respect of securities of a company or (ii) has received or has had access
to such unpublished price sensitive information.

The prohibition under Regulation 3A of the Insider Trading Regulations also extends to a company
dealing, while in the possession of unpublished price sensitive information, in securities of another
company or its associate listed on any stock exchange and is not restricted to insiders alone. It is to
be noted that recently SEBI has amended the Insider Trading Regulations to provide certain defences
to the prohibition on companies in possession of unpublished price sensitive information dealing in
securities.

Unpublished means information which is not published by our Company or its agents and is not
specific in nature. The Insider Trading Regulations clarify that speculative reports in print or
electronic media shall not be considered as published information. Price sensitive information means
any information which relates directly or indirectly to a company and which if published is likely to
materially affect the price of securities of the company, such as the periodical financial results of the
company, intended declaration of dividends (both interim and final), issue of securities or buy-back
of securities, any major expansion plans or execution of new projects; amalgamation, mergers or
takeovers; disposal of the whole or substantial part of the undertaking; and significant changes in
policies, plans or operations of the company.. Under the Insider Trading Regulations, no insider shall
communicate or counsel or procure, directly or indirectly, any unpublished price-sensitive
information to any other person who while in possession of such unpublished price-sensitive
information shall not deal in securities.

The Insider Trading Regulations make it compulsory for listed companies and certain other entities
associated with the securities market to establish an internal code of conduct to prevent insider
trading deals and also to regulate disclosure of unpublished price sensitive information within such

128
entities so as to minimise misuse thereof. To this end, the Insider Trading Regulations provide a
model code of conduct. Further, the Insider Trading Regulations specify a model code of corporate
disclosure practices to prevent insider trading, which is to be implemented by all listed companies
and other such entities. The model code of conduct has also been amended to prohibit all directors/
officers/ designated employees who buy or sell any number of shares of the company from entering
into opposite transactions during the next six months following the prior transaction. All directors
and designated employees have also been prohibited from taking positions in derivative transactions
in shares of the company at any time. Further, certain provisions pertaining to, inter alia, reporting
requirements have also been extended to dependants of directors and designated employees of the
company.

The Insider Trading Regulations require any person who holds more than 5% of the outstanding
shares or voting rights in any listed company to disclose to the company the number of shares or
voting rights held by such person on becoming such holder within two working days of:

(i) the receipt of intimation of allotment of shares; or

(ii) the acquisition of the shares or voting rights, as the case may be.

On a continuing basis, under the Insider Trading Regulations, any person who holds more than 5% of
the shares or of the voting rights in any listed company is required to disclose to the company the
number of shares or voting rights held by him and any change in shareholding or voting rights (even
if such change results in the shareholding falling below 5%) if there has been change in such holdings
from the last disclosure made, provided such change exceeds 2% of the total shareholding or voting
rights in the company. Such disclosure is required to be made within two working days of:

(i) the receipt of intimation of allotment of the shares; or

(ii) the acquisition or the sale of the shares or voting rights.

Further, all directors and officers of a listed company are required to disclose to the company the
number of shares or voting rights held and positions taken derivatives by such person in such
company within two working days of becoming a director or officer of such company. All directors
and officers of a listed company are also required to make periodic disclosures of their shareholding
in the company as specified in the Insider Trading Regulations.

Depositories

In August 1996, the Indian Parliament enacted the Depositories Act, 1996 which provides a legal
framework for the establishment of depositaries to record ownership details and effect transfers in
electronic book-entry form. SEBI framed the SEBI (Depositories and Participants) Rules and
Regulations, 1996 which provide for the formation of such depositaries and the registration of
participants as well as the formation of the rights and obligations of the depositaries, participants,
beneficial owners and issuers. The depositary system has significantly improved the operation of the
Indian securities markets.

The Depositories Act requires that every person subscribing to securities offered by an issuer has the
option either to receive the security certificate or hold the securities with a depository. The National
Securities Depository Ltd. and the Central Depository Services Ltd. are two depositories that provide
electronic depository facilities for the trading of equity and debt securities in India.

Trading of securities in book-entry form commenced in December 1996. In order to encourage
dematerialisation of securities, SEBI has set up a working group on dematerialisation of securities
comprising foreign institutional investors, custodians, stock exchanges, mutual funds and the
National Securities Depository Ltd. to review the progress of securities and trading in dematerialised

129
form and to recommend scrips for compulsory, dematerialised trading in a phased manner. In
January 1998, SEBI notified of various companies for compulsory dematerialised trading by certain
categories of investors such as foreign institutional investors (FIIs) and other institutional
investors and also notified compulsory dematerialised trading in specified scrips for all retail
investors. Subsequently, SEBI has significantly increased the number of scrips in which
dematerialised trading is compulsory for all investors. Under the Depositories Act and guidelines
issued by SEBI, our Company shall give the option to subscribers/shareholders to receive the
security certificates and hold securities in dematerialised form with a depositary.

However, even in the case of scrips notified for compulsory dematerialised trading, investors, other
than institutional investors, are permitted to trade in physical shares on transactions outside the
stock exchange where there are no requirements of reporting such transactions to the stock
exchange and on transactions on the stock exchange involving lots of less than 500 securities.

Transfers of shares in book-entry form require both the seller and the purchaser of the equity shares
to establish accounts with depositary participants registered with the depositaries established under
the Depositories Act, 1996. Charges for opening an account with a depository participant, transaction
charges for each trade and custodian charges for securities held in each account vary depending
upon the practice of each depository participant and have to be borne by the accountholder. Upon
delivery, the shares shall be registered in the name of the relevant depositary on the companys
books and this depositary shall enter the name of the investor in its records as the beneficial owner,
thus effecting the transfer of beneficial ownership. The beneficial owner shall be entitled to all rights
and benefits and be subject to all liabilities in respect of his/her securities held by a depositary. Every
person holding equity share capital of the company and whose name is entered as a beneficial owner
in the records of the depository is deemed to be a member of the concerned company. The
Companies Act requires that Indian companies making any initial public issue of securities for or in
excess of `100 million should issue such securities in dematerialised form.

Derivatives

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended
in February 2000 and derivative contracts were included within the term securities, as defined by
the SCRA. Trading in derivatives in India takes place either on separate and independent derivatives
exchanges or on a separate segment of an existing stock exchange. The derivative exchange or
derivative segment of a stock exchange functions as a self regulatory organisation under the
supervision of SEBI. Derivatives products have been introduced in a phased manner in India starting
with future contracts in September 2000 and index options, stock options and stock futures in
September 2000, July 2001 and November 2001, respectively.


130
DESCRIPTION OF THE EQUITY SHARES

Set forth below is certain information relating to our Companys share capital, including brief
summaries of certain provisions of our Memorandum and Articles of Association, the Companies Act,
the Securities Contracts (Regulation) Act, 1956 and certain related legislations of India, all as
currently in effect relating to the rights attached to the Equity Shares.

General

As on the date of this Placement Document, the authorised share capital of our Company is ` 1,500
million divided into 150,000,000 Equity Shares.

Our Equity Shares are listed on the BSE and the NSE.

The security identification codes for our Equity Shares are as follows:
ISIN : INE133E01013
BSE Code : 507205
NSE Code : TI

Equity Share Capital History

Articles of Association

Our Company is governed by our Articles of Association.

Dividends

Under the Companies Act, unless the Board recommends the payment of a dividend, the shareholders
at a general meeting have no power to declare any dividend. Subject to certain conditions laid down
by Section 205 of the Companies Act, no dividend can be declared or paid by a company for any
financial year except out of the profits of the company in accordance with the provisions of the
Companies Act or out of the profits of the company for any previous financial year(s) arrived at after
providing for depreciation in accordance with the provisions of the Companies Act and remaining
undistributed or out of both or out of moneys provided by the Central or State Government for
payment of dividend in pursuance of a guarantee given by that government. The Articles of
Association of our Company provide that the shareholders at a general meeting may declare a lower,
but not higher, dividend than that recommended by the Board. Dividends are generally declared as a
percentage of the par value. The Board has the power to recommend such dividend payable to the
shareholders in proportion to the time from which payment by the shareholders was made for such
Shares. The dividend recommended by the Board and approved by the shareholders at a general
meeting is distributed and paid to shareholders in proportion to the paid-up value of their Shares as
of the Record Date for which such dividend is payable. In addition, the Board may declare and pay
interim dividends. Under the Companies Act, dividends can only be paid in cash to shareholders
listed on the register of shareholders on the date which is specified as the record date or book
closure date. The Board may retain any dividend on which our Company has a lien and may apply
the same for satisfying debts, liabilities or engagements in respect of which the lien exists. The
Placement Shares to be issued upon the conversion of the Bonds will be fully paid-up when delivered.

The Placement Shares issued upon conversion of the Bonds will rank pari passu, subject to listing and
the preceding paragraph, with our Companys existing Shares in all respects, including entitlement of
the dividend declared. Any dividend declared shall be deposited in a separate bank account within
five days from the date of the declaration of such dividend. Dividends must be paid within 30 days

131
from the date of the declaration and any dividend which remains unpaid or unclaimed after that
period must be transferred within seven days of the expiry of the 30-day period (as mentioned above)
to a special unpaid dividend account held at a scheduled bank. Any money which remains unpaid or
unclaimed for seven years from the date of such transfer must be transferred by our Company to the
Investor Education and Protection Fund established by the Government pursuant to which no claim
shall lie against our Company or the Investor Education and Protection Fund. Directors of our
Company may be held criminally liable for any default of the aforementioned provisions.
Under the Companies Act, our Company may only pay a dividend in excess of 10.0 per cent of paid-up
capital, in respect of any financial year, out of the profits of that year after it has transferred to its
reserves a percentage of its profits for that year ranging between 2.5 per cent and 10.0 per cent.,
depending on the rate of dividend proposed to be declared/paid in that year. The Companies Act
further provides that if the profit for a year is inadequate or absent, the dividend for that year may be
declared out of the accumulated profits earned in previous years and transferred to reserves, subject
to the following conditions: (i) the rate of dividend to be declared may not exceed the lesser of the
average of the rates at which dividends were declared in the five years immediately preceding that
year, or 10.0 per cent of paid-up capital; (ii) the total amount to be drawn from the accumulated
profits from previous years and transferred to reserves may not exceed an amount equivalent to 10.0
per cent of paid-up capital and reserves and the amount so drawn is first to be used to set off the
losses incurred in the financial year before any dividends in respect of preference or equity shares is
declared; and (iii) the balance of reserves after withdrawals must not be below 15.0 per cent of paid-
up capital.
Capitalisation of Reserves and Issue of Bonus Shares

The Articles of Association of our Company permit a resolution of the shareholders in a general
meeting to resolve that certain amounts standing to the credit of certain reserves or securities
premiums can be capitalised and distributed by way of a bonus share, in the same proportion and on
the footing that such shareholders became entitled to capital. Such amounts may also be utilised on
behalf of our Companys shareholders to pay in full, either at par or premium, any un-issued shares
or debentures and or pay any amounts for the time being unpaid on any shares held by the members
and that such distribution or payment shall be accepted by the shareholders in full satisfaction of
their interest in such capitalised sum.
Any issue of bonus shares would be subject to the guidelines issued by the SEBI in this regard. The
relevant SEBI guidelines prescribe that no company shall, pending conversion of convertible
securities, issue any shares by way of bonus unless a similar benefit is extended to the holders of
such convertible securities, through reservation of shares in proportion to such convertible part of the
convertible securities falling due for conversion. The declaration of bonus shares in lieu of a dividend
cannot be made. The bonus issue shall be made out of free reserves built out of genuine profits or
share premium collected in cash only. The reserves created by revaluation of fixed assets cannot be
capitalised. Further, a company should have sufficient reason to believe that it has not defaulted in
respect of the payment of statutory dues of the employees, such as contribution to provident fund,
gratuity and/or bonus.
The issuance of bonus shares must be implemented within 15 days from the date of approval by the
Board and, where Shareholders approval is required the issue shall be completed within 60 days
from the date of the meeting of the Board where the issue was announced.

Pre-Emptive Rights and Alteration of Share Capital

Subject to the provisions of the Companies Act, our Company may increase its share capital by
issuing new Shares. In accordance with the provisions of Section 81 of the Companies Act, such new
Shares shall be offered to the persons who on the date of offer are holders of the Placement Shares of
our Company in proportion to the amount paid-up on those Shares at that date. The offer shall be

132
made by notice specifying the number of Shares offered and the date (being not less than 15 days
from the date of the offer) after which the offer, if not accepted, will be deemed to have been declined.
After such date, the Board may dispose of the Placement Shares offered in respect of which no
acceptance has been received, in such manner as they think most beneficial to us. The offer is deemed
to include a right exercisable by the person concerned to renounce the Placement Shares offered to
him/her in favour of any other person provided that the person in whose favour such Shares have
been renounced is approved by the Board in their absolute discretion.
Under the provisions of the Companies Act, new Shares may be offered to any persons whether or
not those persons include existing shareholders, if a special resolution to that effect is passed by the
shareholders of the issuer in a general meeting or, where only a simple majority of shareholders
present and voting have passed the resolution, the Indian Governments permission has been
obtained.

Our Company may, by ordinary resolution, from time to time, alter its Memorandum of Association to
subdivide the Placement Shares for a larger amount than is fixed by the Memorandum of Association
provided that the same proportionate liability shall continue on the Placement Shares so reduced or
increased as existed on the original Shares before such subdivision or consolidation, or it may cancel
Shares which, at the date of passing of the resolution, have not been taken or agreed to be taken by
any person and diminish the amount of its share capital by the amount of Shares cancelled.

Our Companys issued share capital may be increased by the exercise of upon the conversion of
convertible debentures issued. The issue of any convertible debentures or the taking of any
convertible loans, other than from the Government and financial institutions, requires the approval of
a special resolution of Shareholders.

Our Company can also alter its share capital by way of a reduction of its capital or by undertaking a
buyback of its shares under the prescribed SEBI guidelines. For further details see Acquisition of Our
Companys Own Shares below
The Articles of Association of our Company provide that it may, in a general meeting, from time to
time increase its capital by the creation of new Shares and may consolidate or subdivide its share
capital, convert all or any of its fully paid-up Shares into stock and reconvert that stock into fully
paid-up Shares or cancel Shares which have not been taken up by any person. It may also from time
to time by special resolution reduce its capital and pay capital on the grounds that it may be called up
again or otherwise.
Our Companys Articles of Association also provide that if at any time its share capital is divided into
different classes of shares, the rights attached to any one class (unless otherwise provided by the
terms of issue of the shares of that class) may be varied with the consent in writing of the holders of
three-fourths of the issued shares of that class, or with the sanction of a special resolution, passed at
a separate meeting of the holders of the shares of that class.
Preference Shares
Preference share capital is that part of the paid-up capital of our Company which fulfils both of the
following requirements, namely:
(i) that, as regards dividends, it carries or will carry a preferential right to be paid a fixed
amount or an amount calculated at a fixed rate; and
(ii) with respect to capital, it carries, or will carry on a winding-up of our Company, a
preferential right to be repaid the amount of the capital paid up or deemed to have been
paid-up.

133
The preference shares do not confer any further rights to participate in our Companys profits or
assets. Holders of preference shares are not entitled to vote at general meetings except:
(A) in relation to resolutions placed before our Company that directly affect the rights attached
to the holders preference shares; and/or
(B) where the dividend due on such capital has remained unpaid:
(i) in the case of cumulative preference shares, in respect of an aggregate period of not
less than two years preceding the date of commencement of the meeting; and
(ii) in the case of non cumulative preference shares, either in respect of a period of not
less than two years or in respect of an aggregate period of not less than three years
comprised in the six years ending with the expiry of the financial year immediately
preceding the commencement of the meeting.
Further, preference shareholders are also allowed to vote on any resolutions which directly affect the
rights attached to their preference shares, such as a resolution for the winding up of our Company or
repayment or reduction of share capital.
Under the Companies Act, our Company may issue redeemable preference shares, but (i) no such
shares shall be redeemed except out of the profits which would otherwise be available for dividends
or out of the proceeds of a fresh issue of shares made for the purposes of the redemption; (ii) no such
shares shall be redeemed unless they are fully paid; (iii) the premium, if any, payable on redemption
shall have been provided for out of our Companys profits or out of our Companys securities
premium account, before the shares are redeemed; (iv) where any such shares are redeemed
otherwise than out of the proceeds of a fresh issue, there shall be transferred, to a reserve fund to be
called the Capital Redemption Reserve Account, out of profits which would otherwise have been
available for dividends, a sum equal to the nominal amount of the shares redeemed; and (v) the
provisions of the Companies Act relating to the reduction of the share capital of a company shall
apply as if such reserve account were paid-up share capital of such company. Preference shares must
be redeemable before the expiry of a period of 20 years from the date of their issue.
General Meetings of Shareholders

There are two types of general meetings of the Shareholders:

(i) annual general meetings; and
(ii) extraordinary general meetings.

Our Company must hold its annual general meeting each year within 15 months of the previous
annual general meeting, and in any event not later than six months after the end of each accounting
year unless extended by the Registrar of Companies (the RoC), at our Companys request for any
special reason for a period not exceeding quarters and half years. The Board may in accordance with
the Articles of Association convene an extraordinary general meeting of Shareholders when
necessary or at the request of a Shareholder or Shareholders holding in the aggregate not less than
10 per cent of the paid-up capital of our Company (carrying a right to vote in respect of the relevant
matter on the date of the deposit of the requisition). A general meeting of the Shareholders is
generally convened by the Secretary of our Company in accordance with a resolution of the Board.

Written notices convening a meeting setting out the date, place and agenda of the meeting must be
given to members at least 21 clear days (excluding the days of mailing, and receipt, and such service
shall be deemed to have been effected on the expiry of 48 hours after the same is posted) prior to the
date of the proposed meeting. A general meeting may be called after giving shorter notice if consent
is received from all Shareholders in the case of an annual general meeting and from Shareholders

134
holding not less than 95 per cent of the paid-up capital of our Company in the case of any other
general meeting. Currently, our Company gives written notices to all members and, in addition, gives
public notice of general meetings of Shareholders in a daily newspaper of general circulation in the
region of the registered office of our Company. General meetings are generally held at our Companys
registered office. The quorum for a general meeting of our Company is five Shareholders attending in
person. No business shall be transacted at any general meeting without the appropriate quorum.

A company intending to pass a resolution relating to matters such as, but not limited to, the
amendment of the objects clause of the memorandum of association, the issuing of shares with
different voting or dividend rights, a variation of the rights attached to a class of shares or
debentures or other securities, a buyback of shares under the Companies Act or the giving of loans or
the extending of guarantees in excess of limits prescribed under the Companies Act and guidelines
issued thereunder, is required to have the resolution passed by means of a postal ballot instead of
transacting the business in the general meeting of our Company. A notice to all Shareholders shall be
sent along with a draft resolution explaining the reasons therefore and requesting each Shareholder
to send his/her assent or dissent in writing on a postal ballot within a period of 30 days from the date
of posting the letter. Postal ballot includes voting by electronic mode.

Voting Rights

At a general meeting upon a show of hands, every member holding Shares and entitled to vote and
present in person has one vote. Upon a poll, the voting rights of each Shareholder entitled to vote and
present in person or by proxy are in the same proportion as the capital paid up on each Share held by
such Shareholder bears to the total paid-up capital of our Company. Voting is by a show of hands,
unless a poll is ordered by the chairman of the meeting demanded by a Shareholder or Shareholders
holding at least 10 per cent. of the voting rights in respect of the resolution or by those holding
Shares on which an aggregate sum of not less than `50,000 (i.e. 5,000 shares of ` 10 each) has been
paid up. Unless otherwise specified in the Articles, the chairman of the meeting has a casting vote.
Bondholders will have no voting rights or other direct rights of a Shareholder with respect to the
Shares underlying the Bonds.

Ordinary resolutions may be passed by simple majority of those present and voting. Special
resolutions require that the votes cast in favour of the resolution by those present and voting must
be at least three times the votes cast against the resolution. Under the Companies Act, matters that
require special resolution include amendments to the Articles of Association, a members voluntary
winding-up, dissolution, merger or consolidation, and the issue of shares to persons other than
existing shareholders. Furthermore, under the Companies Act, the approval of a scheme of
compromise or arrangement requires the approval of a majority of at least 75 per cent in value of the
Shareholders or creditors present and voting.

A Shareholder may exercise his voting rights by proxy to be given in the form required by the Articles
of Association. The instrument appointing a proxy is required to be lodged with our Company at least
48 hours before the time of the meeting. A Shareholder may, by a single power of attorney, grant a
general power of representation regarding several general meetings of Shareholders. Any
Shareholder of our Company may appoint a proxy. A corporate Shareholder is also entitled to
nominate a representative to attend and vote on its behalf at general meetings, subject to the
necessary resolution having been passed by the corporate Shareholder. A proxy may not vote except
on a poll and does not have a right to speak at meetings. A Shareholder which is a legal entity may
appoint an authorised representative who can vote in all respects as if a member both by a show of
hands and by a poll. The Companies Act allows for a company to issue shares with differential rights
as to dividends, voting or otherwise, subject to certain conditions prescribed under applicable law. In
this regard, the laws require that, for a public company to issue shares with differential voting rights:
(i) our Company must have had distributable profits in accordance with the Companies Act for the
three financial years preceding the years in which it was decided to issue such shares; (ii) our
Company must not have defaulted in filing annual accounts and annual returns for the three financial

135
years immediately preceding the financial year in which our Company proposes to issue such shares;
(iii) the articles of association of our Company must allow for the issuance of shares with differential
voting rights; and (iv) the conditions as set forth in the Companies (Issue of Share Capital with
Differential Voting Rights) Rules, 2001 must be complied with.

Postal Ballot

Under the provisions of the Companies Act, the Indian Government has framed rules for listed
companies for voting by postal ballot instead of transacting the business in general meeting of our
Company, in case of certain resolutions including resolutions for the alteration of the objects clause
in our Companys Memorandum of Association, the buyback of shares, the issue of shares with
differential voting rights, a sale of the whole or substantially the whole of an undertaking of a
company, providing loans and extending guarantees in excess of prescribed limits, changing of the
registered office of our Company in certain circumstances and for any variation in the rights attached
to a class of shares or debentures or other securities. A resolution passed by means of postal ballot
shall be deemed to have been duly passed at a general meeting physically convened. A notice to all
the shareholders has to be sent along with a draft resolution explaining the reasons therefore and
requesting that they send their assent or dissent in writing on a postal ballot within a period of 30
days from the date of posting the notice. Postal voting includes voting in electronic form.
Register of Shareholders and Record Dates

Our Company is obliged to maintain a register of Shareholders at its registered office or, with the
approval of its Shareholders by way of a special resolution and with prior intimation to the Registrar
of Companies, at some other place in the same city. The register and index of beneficial owners
maintained by a depository under the Depositories Act is deemed to be an index of members and
register and index of debenture holders. Our Company recognises as Shareholders only those
persons who appear on its register of Shareholders and it cannot recognise any person holding any
Share or part of it upon any trust, express, implied or constructive, except as permitted by law.

In the case of Shares held in physical form, our Company, through its registrar and share transfer
agent, registers transfers of Shares on the register of Shareholders upon lodgement of the duly
stamped share transfer form executed by or on behalf of the transferor and by or on behalf of the
transferee and duly completed in all respects, accompanied by a share certificate or, if there is no
certificate, the letter of allotment in respect of Shares transferred. In respect of the transfer of Shares
in dematerialised form, the depository transfers Shares by entering the name of the purchaser in its
books as the beneficial owner of the Shares. In turn, our Company enters the name of the depository
in its records as the registered owner of the Shares. The beneficial owner is entitled to all the rights
and benefits, as well as the liabilities, attached to the Shares that are held by the depository. Transfer
of beneficial ownership through a depository is exempt from any stamp duty but each depository
participant may be subject to certain charges. A transfer of shares by way of share transfer form
attracts stamp duty at the rate of 0.25 per cent of the transfer price.

For the purpose of determining the Shareholders, our Company may, after giving not less than seven
days previous notice by advertisement in a newspaper circulating in the district where the
registered office of our Company is situated, close the register for periods not exceeding in the
aggregate 45 days in any one year or 30 days at any one time. In order to determine the Shareholders
entitled to dividends our Company keeps the register of Shareholders closed for approximately 10 to
20 days, generally before the annual general meeting. Under the listing regulations of the stock
exchanges on which our Companys outstanding Shares are listed, our Company may, upon at least
15 days advance notice (or 21 days advance notice in the event our Companys Shares are traded on
the stock exchanges in physical form) to such stock exchanges, set a record date and/or close the
register of Shareholders in order to ascertain the identity of Shareholders. The trading of Shares and
the delivery of certificates in respect thereof may continue while the register of Shareholders is
closed.

136

Under the Companies Act, our Company is also required to maintain a register of debenture holders.

Annual Reports and Financial Results

Our Companys audited financial statements for the relevant Fiscal Year, the directors report and the
auditors report (collectively the Annual Report) must be laid before the annual general meeting.
These also include certain other financial information of our Company, a corporate governance
section and managements discussion and analysis and are made available for inspection at our
Companys registered office during normal working hours for 21 days prior to the annual general
meeting.

Under the Companies Act, our Company must file its Annual Report with the RoC within 30 days from
the date of the relevant annual general meeting. Under the Listing Agreements, six copies are
required to be simultaneously sent to the BSE and the NSE. Our Company must file an Annual Return
which includes a list of the Shareholders, debenture holders, its indebtedness and other information
within 60 days of the conclusion of its annual general meeting. Our Company must also publish its
financial results in at least one English language daily newspaper circulating in the whole or
substantially the whole of India and also in a newspaper published in the language of the region
where our Companys registered office is situated.

Our Company files certain information online, including its annual report, interim financial
statements, report on corporate governance, shareholding pattern statement, and such other
statements, information or reports as may be specified by SEBI from time to time or in accordance
with the requirements of its Listing Agreements.

Transfer of Shares

Following the introduction of the Depositories Act and the repeal of erstwhile Section 22A of the
Securities Contract Regulation Act, the equity shares of a public company became freely transferable,
subject only to the provisions of Section 111A of the Companies Act. Since our Company is a public
company, the provisions of Section 111A of the Companies Act will apply to it. In accordance with the
provisions of Section 111A(2) of the Companies Act, the Board may refuse to register a transfer of
Shares within two months from the date on which the instrument of transfer or intimation of
transfer, as the case may be, is delivered to our Company, if it has sufficient cause to do so. If the
Board refuses to register a transfer of Shares, the Shareholder wishing to transfer his, her or its
Shares may file an appeal with the Indian company law board (the Company Law Board) and our
Company Law Board can direct our Company to register such transfer.

Pursuant to Section 111A(3) of the Companies Act, if a transfer of Shares contravenes any of the
provisions of the SEBI Act or the regulations issued thereunder, the Sick Industrial Companies
(Special Provisions) Act, 1985 or any other laws in India, our Company Law Board may, on an
application made by our Company, a depository, a participant, an investor or SEBI, within two
months from the date of transfer of any Shares or debentures held by a depository or from the date
on which the instrument of transfer or the intimation of the transmission was delivered to our
Company, as the case may be, direct the rectification of the register of records after such inquiry as it
thinks fit. Our Company Law Board may, at its discretion, issue an interim order suspending the
voting rights attached to the relevant Shares before making or completing its enquiry into the alleged
contravention. Furthermore, the provisions of Section 111A of the Companies Act do not restrict the
right of a holder of Shares or debentures to transfer such Shares or debentures and any person
acquiring such Shares or debentures shall be entitled to voting rights, unless the voting rights have
been suspended by our Company Law Board. By the Companies (Second Amendment) Act, 2002, our
Company Law Board is proposed to be replaced by the National Company Law Tribunal which is
expected to be set up shortly. Furthermore, the SICA is sought to be repealed by the Sick Industrial
Companies (Special Provisions) Repeal Act, 2003, although the same is yet to be notified and hence

137
not yet in force.

Shares held through depositories are transferred in the form of book-entries or in electronic form in
accordance with the regulations laid down by SEBI. These regulations provide the regime for the
functioning of the depositories and the participants, and set out the manner in which the records are
to be kept and maintained, and the safeguards to be followed in this system. Transfers of beneficial
ownership of shares held through a depository are exempt from stamp duty. Our Company has
entered into an agreement for such depository services with National Securities Depository Ltd. and
Central Depository Services (India) Ltd. SEBI requires that, for trading and settlement purposes, our
Companys Shares be in book entry form for all investors, except for transactions that are not made
on a stock exchange and transactions that are not required to be reported to the stock exchange (see
The Securities Market of India Depositories). The requirement to hold Shares in book-entry form
will apply to Bondholders when they acquire Shares upon conversion. In order to trade in our
Companys Shares in the Indian market, the converting Bondholder will be required to comply with
the procedures above.

Pursuant to its Listing Agreements, in the event that our Company has not effected the transfer of
Shares within one month, or where our Company has failed to communicate to the transferee any
valid objection to the transfer within the stipulated time period of one month, it is required to
compensate the aggrieved party for the loss of opportunity caused by the delay. The Companies Act
provides that the shares or debentures of a public listed company (such as our Company) shall be
freely transferable.

Acquisition by our Company of its own Shares

Our Company is prohibited from acquiring its own Shares unless the consequent reduction of capital
is effected by an approval of at least 75 per cent of its Shareholders voting on the matter in
accordance with the Companies Act and is also sanctioned by the High Court of Judicature having
jurisdiction over the city where our Companys registered office is situated. Moreover, subject to
certain conditions, our Company is prohibited from giving, whether directly or indirectly and
whether by means of a loan, guarantee, the provision of security or otherwise, any financial
assistance for the purpose of or in connection with a purchase or subscription made or to be made by
any person of or for any Shares in our Company or its holding company. Pursuant to the insertion of
Section 77A in the Companies Act, a company has been empowered to purchase its own shares or
other specified securities out of its free reserves, the securities premium account or the proceeds of
any shares or other specified securities (other than the kind of shares or other specified securities
proposed to be bought back), subject to certain conditions, including: (i) the buyback should be
authorised by the articles of association of our Company; (ii) a special resolution should have been
passed in a general meeting of our Company authorising the buyback; (iii) the buyback is for less
than 25 per cent of the total paid-up capital and free reserves, provided that the buyback of equity
shares in any financial year shall not exceed 25 per cent. of the total paid-up equity share capital in
that year; (iv) the ratio of the debt (including all amounts of unsecured and secured debt) owed by
our Company is not more than twice the capital and free reserves after such buyback; (v) all the
shares or other specified securities for buyback are fully paid up; and (vi) the buyback is in
accordance with the Securities and Exchange Board of India (Buyback of Securities) Regulations,
1998.

The second condition mentioned above would not be applicable if the buyback is for less than 10 per
cent of the total paid-up equity capital and free reserves of our Company and provided that such
buyback has been authorised by the board of directors of our Company. Further, a company, after
buying back its securities, is not permitted to buy back any securities for a period of 365 days from
the buyback or to issue new securities for six months from the buyback date except by way of bonus
issue or the conversion of warrants, preference shares or debentures into equity shares. Each
buyback has to be completed within a period of 12 months from the date of the passing of the special
resolution or the resolution of the board of directors, as the case may be. A company buying back its

138
securities is required to extinguish and physically destroy the securities bought back within seven
days of the last date of completion of the buyback. Further, a company buying back its securities is
not permitted to buyback any securities for a period of one year from the buyback and to issue
securities for six months except by way of bonus issue or in discharge of subsisting obligations such
as conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or
debentures into equity shares.

A company is also prohibited from purchasing its own shares or specified securities through any
subsidiary company, including its own subsidiary companies, or through any investment company or
group of investment companies (other than a purchase of shares in accordance with a scheme for the
purchase or subscription of shares by trustees of, or for shares to be held by or for the benefit of
employees of, our Company) or if our Company is defaulting on the repayment of deposit or interest,
redemption of debentures or preference shares or payment of dividend to a shareholder or
repayment of any term loan or interest payable thereon to any financial institution or bank, if our
Company is listed and wishes to buy back its shares or specified securities for the purpose of
delisting its shares or specified securities or in the event of non-compliance with certain other
provisions of the Companies Act.

The buyback of securities can be from existing security holders on a proportionate basis or from the
open market or from odd lots or by purchasing securities issued to the employees of our Company
pursuant to a scheme of stock option or sweat equity.

Disclosure of Ownership Interest

Section 187C of the Companies Act requires beneficial owners of equity shares of Indian companies
that are not holders on record to declare to our Company details of the holder on record and the
holder on record to declare the details of the beneficial owner. Any person who fails to make the
required declaration within 30 days from the date on which the beneficial interest in the shares is
acquired may be liable for a fine of up to `1,000 for each day the declaration is not made. Any charge,
promissory note or other collateral agreement created, executed or entered into with respect to any
share by the registered owner thereof, or any hypothecation by the registered owner of any share
pursuant to which a declaration is required to be made under Section 187C of the Companies Act,
shall not be enforceable by the beneficial owner or any person claiming through the beneficial owner
if such declaration has not been made. Failure to comply with Section 187C of the Companies Act will,
inter alia, not affect the obligation of our Company to register a transfer of equity shares or to pay
any dividends to the registered holder of any equity shares in respect of which this declaration has
not been made.

Liquidation Rights

Subject to the provisions of the Companies Act (including the rights of employees, the requirement to
pay statutory dues and the rights of creditors as contained in Sections 529A and 530 thereof) and the
rights of the holders of any other shares entitled by their terms of issue to preferential repayment
over the Shares, in the event of our Companys winding-up, the holders of the Shares are entitled to
be repaid the amounts of capital paid up or credited as paid up on such Shares or, in case of a
shortfall, proportionately. All surplus assets after payments due to workmen, statutory creditors, and
secured and unsecured creditors belong to the holders of the equity shares in proportion to the
amount paid up or credited as paid up on such shares respectively at the commencement of the
winding-up.






139
TAXATION

The information provided below sets out the possible tax benefits available to the shareholders in a
summary manner only and is not a complete analysis or listing of all potential tax consequences of the
purchase, ownership and disposal of equity shares, under the current tax laws presently in force in India.
It is not exhaustive or comprehensive and is not intended to be a substitute for professional advice.
Investors are advised to consult their own tax consultant with respect to the tax implications of an
investment in the Equity Shares particularly in view of the fact that certain recently enacted legislation
may not have a direct legal precedent or may have a different interpretation on the benefits, of which an
investor can avail.

YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX IMPLICATIONS
AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF THE EQUITY SHARES IN YOUR
PARTICULAR SITUATION.

GENERAL TAX BENEFITS

1. Key benefits available to the Company under the Income tax Act,1961(the Act)

A. BUSINESS INCOME

I. Depreciation

The Company is entitled to claim depreciation on specific tangible and intangible assets
owned by it and used for the purpose of its business under section 32 of the act.
In case of any new plant and machinery (other than ships and aircraft) that will be acquired
by the company and is put to use for 180 days or more, the company may be entitled to a
further sum equal to 20% of the actual cost of such machinery or plant subject to condition
specified in section 32 of the act in the year in which it is first put to use.
Unabsorbed depreciation, if any, for an assessment year (AY) can be carried forward
without any time limit and set off against any source of income in the subsequent AY as
per section 32 of the Act.

II. Preliminary Expenses

Under section 35D, the Company is eligible for deduction in respect of specified preliminary
expenses incurred by the company, in connection with extension of its undertaking or in
connection with setting up a new unit of an amount equal to 1/5th or such expenses over
five successive AY subject to conditions and limits specified in the said section.

III. Expenditure Incurred on Voluntary Retirement Scheme :

As per section 35DDA, the company is eligible for deduction in respect of payments made to
its employees in connection which their voluntary retirement in accordance with any
scheme or schemes of an amount equal to 1/5
th
of such payment over five successive in AY
subject to conditions and limits specified in that section.

IV. Expenditure on Scientific Research

As per section 35, the company is eligible for deduction in respect of any expenditure (not
being expenditure on the acquisition of any land) on scientific research related to the
business subject to conditions specified in that section.


140
Finance Act,2010 has amended section 35(2AB), subject to fulfilment of conditions
specified there in, by extending weighted deduction (a sum equal to 2 times of
expenditure not being expenditure on the acquisition of any land or building ) for in
house research and development for companies engaged in any business of manufactured or
production of any article or thing except those provided in the Eleventh schedule of the act
and would be applicable w.e.f. F.Y. 2010-11

V. Set off and carry forward of business loss:

Business losses (not from speculation business), if any, can be set off against of any income
of that year and the balance would be carried forward and set off against business profits for
eight subsequent AYs .

VI. Minimum Alternative Tax

The finance Act, 2010 increased the rate of minimum alternative tax to 18% w.e.f. FY
2010- 11
The finance (no.2) Act, 2009 also inserted a new clause in section 115JB which provides that
if any provision for diminution in value of any assets has been debited to the profit and loss
account, it shall be added to the net profit as shown in the profit and loss account for the
purpose of computation of book profit. Similar amendment is also made in section 115JA of
the Income tax Act.
The amendment in section 115JA is made retrospectively from 1
st
day of April,1998 and will
accordingly apply in relation to assessment year 1998 to 1999 and subsequent years.
The amendment in section 115JA is made retrospectively from 1
st
day of April,2001 and will
accordingly apply in relation to the assessment year 2001-02 and subsequent years.

VII. MAT Credit

The company is required to pay tax on the book profits under the provisions of section
115JB in case where tax on its total income the term defined under section 2(45) of the IT
act] is less than 18% w.e.f. FY 1
st
April 2010 of its book profit ( the term defined under
section 115JB of the IT Act) such tax is referred to as minimum alternate tax (MAT)

The difference between the MAT payable under section 115JB of the IT Act and the tax on its
total income payable for that assessment year shall be allowed to be carried forward as
MAT credit up to tenth assessment year (effective from 2009-10) immediately
succeeding the assessment year in which the tax credit becomes allowable. The MAT credit
can be utilized to be set off against taxes payable on the total income computed under the
provisions of the IT act other than 115JB thereof if any, in the subsequent assessment year
in accordance with the provisions and limits specified in section 115JAA of the IT act.

B. CAPITAL GAINS :

I. - Long Term Capital Gain(LTCG)

LTCG means capital gain arising from the transfer of a capital assets being share held in a
company or any other security listed in a recognized stock exchange in India or unit of the
Unit Trust Of India or a unit of a mutual fund specified under clause (23D) of section 10 or a
Zero coupon bond , held by an assessee for more than 12 months.
In respect of any other capital assets , LTCG means capital gain arising from the transfer of
the assets , held by an assessee for more than 36 months.

- Short Term Capital Gains (STCG)

141
STCG means Capital gain arising from the transfer of capital asset being share held in a
company or any other security listed in a recognized stock exchange in India or unit of the
Unit Trust Of India or a unit of a mutual fund specified under clause (23D) of a section 10 or
a Zero coupon bond , held by an assessee for 12 months or less.
In respect of any other capital assets , STCG means capital gain arising from the transfer of
an asset , held by an assessee for 36 months or less.

II. a. LTCG arising on transfer of equity share of a company or units of an equity oriented
fund (as defined) which has been set up under a scheme of a mutual
fund specified under section 10 (23D),on a recognized stock exchange on or after
October 1
st
, 2004 are exempt from tax under section 10 (38)of the Act, provided the
transaction if chargeable to security transactions tax (STT) and subject to conditions
specified in that section .

b. With effect from AY 2007-08 , income by way of LTCG exempt u/s 10(38)of a
company is taken into a account in computing book profit and income tax is payable
under section 115JB.

III. As per second proviso read with 3
rd
proviso to Section 48, LTCG arising on transfer of capital
asset , which is chargeable to tax other than bonds and debentures (excluding capital
indexed bonds issued by the Government), is to be computed by deducting the indexed cost
of acquisition and indexed cost of improvement from the full value of consideration.
a. As per section 112, LTCG is taxed @ 20% plus applicable surcharge thereon and 3%
Education and Secondary and Higher education cess on tax plus Surcharge (if
any)(hereinafter referred to as applicable Surcharge +Education and Secondary and
Higher Education Cess).
b. However as per proviso to section112 (1), if such tax payable on transfer of listed
securities / units/Zero coupon bond which is chargeable to tax, exceed 10% of the
LTCG , without availing benefit of indexation , then the excess tax shall be ignored.

IV. As per section 111A of the Act, STCG arising on equity shares of the company or units of
equity oriented mutual fund (as defined under section 10(23D)), on recognised stock
exchange are subject to tax @ 15%(plus applicable surcharge+ Education and Secondary and
Higher Education Cess).provided the transaction chargeable to STT. In other case, i.e. where
the transaction is not subjected to STT, the short term capital gain would be chargeable as a
part of the total income.

V. As per section 70 read with section 74, short term capital loss arising during a year is
allowed to be set off against short term as well as long term capital gain arising in that year.
Balance loss if any, should be carried forward and available for set of against subsequent
years short term and long term capital gain for subsequent 8 years.

VI. As per section 70 read with section 74, long term capital loss arising during a year is allowed
to be set off only against long term capital gains. Balance loss if any, should be carried
forward and available for set of against subsequent years long term capital gains for
subsequent 8 years.

VII. Under section 54EC of the Acts, capital gains arising on transfer of a long term capital asset is
exempt from capital gains tax if such capital gains are invested within a period of a 6 months
after the date of such transfer in specified bond issued by the following and subject to the
conditions specified therein:-
National Highway Authority of India constituted under section 3 of National Highway
Authority of India Act, 1988.

142
Rural Electrification Corporation Ltd., a company formed and registered under the
companies Act 1956.
If only part of the long term capital gain is reinvested, the exemption shall be
proportionately reduced.
However, if the new bonds are transferred or converted into money within a period of three
years from the date of their acquisition, the amount of capital gains exempted earlier, shall
be taxable as a capital gains in the year of transfer or conversion.
With effect from 1
st
April, 2007 the investment in the long term specified asset made by the
company during the financial year should not exceed 50 Lakh rupees.

C. INCOME FORM OTHER SOURCES

Dividend Income:

As per section 10 (34) of the IT Act, income by way of dividend referred to in section 115-O
received by the Company on its investments in shares of another Domestic company is
exempt from income tax in the hands of the company.
Income received in respect of units of mutual fund specified under section 10(23D) of the act
(other than income arising from transfer of units in such mutual funds) shall be exempt from
tax under section 10(35) of the Act.
However, it is pertinent to note that section 14A of the IT act provides that no deduction
shall be allowed in respect of any expenditure incurred in relation such exempt income.


2. Key benefits available to the Members of the Company

A. Under the Income Tax Act, 1961

1. All Members

By virtue of Section 10(38) of the Income Tax Act, 1961, income arising from transfer of
long-term capital asset, being an equity share in the Company is exempt from tax, provided
such transaction is chargeable to the Securities Transaction Tax. However, the long-term
capital gain of a share holder being a company shall be subject to income tax computation on
book profit under section 115JB of the Income Tax Act, 1961.


By virtue of Section 111A, short term capital gain on transfer of equity share of the Company
shall be chargeable to tax @ 15% plus applicable surcharge and education cess, provided
such transaction is chargeable to Securities Transaction Tax.

Securities Transaction Tax (STT) paid in respect of taxable securities transactions will be
allowed as a deductible expenditure as amended by the Finance Act, 2008.

2. Resident Members

As per Section 10(34) of the IT Act, income earned by way of dividend income from a
domestic Company referred to in Section 115(O) of the IT Act, are exempt from tax in the
hands of the shareholders.

Benefits outlined in Paragraph I(B) excluding sub-paragraph II(b) thereof, are also
applicable to resident shareholders. Levy of surcharge in case of individuals has been
removed vide Finance (No.2) Act, 2009. In addition to the same, the following benefits are
also available to resident shareholders.

143

Under Section 54EC of the Income Tax Act, 1961 and subject to the conditions and to the
extent specified therein, long term capital gains arising on the transfer of shares of the
Company will be exempt from capital gains tax if the capital gains are invested within a
period of 6 months from the date of transfer, subject to maximum limit of ` 50 lakhs during
any financial year if investment is made from the assessment year 2007 08 onwards in the
bonds redeemable after 3 years issued by:

- National Highways Authority of India constituted under section 3 of National Highways
Authority of India Act, 1988;

- Rural Electrification Corporation Ltd., a Company formed and registered under the
Companies Act, 1956;

If only part of the net consideration is so reinvested, the exemption shall be proportionately
reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified
assets are transferred or converted within three years from the date of their acquisition.

Under Section 54F of the Income Tax Act, 1961 and subject to the conditions and to the
extent specified therein, long term capital gains arising to an individual or Hindu Undivided
Family (HUF) on transfer of shares of the Company will be exempt from capital gain tax
subject to other conditions, if the net consideration from such shares are used for purchase
of residential house property within a period of one year before and two years after the date
on which the transfer took place or for construction of residential house property within a
period of three years after the date of transfer.


3. Non Resident Indians/Members (other than FIIs and Foreign Venture Capital
Investors)

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

Tax on Investment Income and Long Term Capital Gain

A non resident Indian (i.e. an individual being a citizen of India or person of Indian Origin)
has an option to be governed by the provisions of Chapter XIIA of the Income Tax Act, 1961
viz. Special Provisions Relating to certain Incomes of Non-Residents.

Under Section 115E of the Income Tax Act, 1961, where shares in the Company are
subscribed for in convertible Foreign Exchange by a Non Resident Indian, capital gains
arising to the non resident on transfer of shares held for period exceeding 12 months shall
be concessionally taxed at the flat rate of 10% (plus applicable surcharge and education
cess) without indexation benefit but with protection against foreign exchange fluctuation.
Capital gain on transfer of Foreign Exchange Assets, not to be charged in certain cases

Under provisions of Section 115F of the Act, long term capital gains arising to a non resident
Indian from the transfer of-shares of the Company subscribed to in convertible Foreign
Exchange shall be exempt from Income Tax if the net consideration is reinvested in specified
assets within six months of the date of transfer. If only part of the net consideration is so
reinvested, the exemption shall be proportionately reduced. The amount so exempted shall
be chargeable to tax subsequently, if the specified assets are transferred or converted within
three years from the date of their acquisition.


144
Return of Income not to be filed in certain cases

Under provisions of Section 115G of the Income Tax Act, 1961, it shall not be necessary for a
Non-Resident Indian to furnish his return of Income if his only source of income is
investment income or long term capital gains or both arising out of assets acquired,
purchased or subscribed in convertible foreign exchange and tax deductible has been
deducted at source there from.

Other Provisions

Under the first proviso to Section 48 of the Income Tax Act, 1961, in case of a non-resident in
computing the capital gains arising from transfer of shares of the Company acquired in
convertible foreign exchange (as per exchange control regulations) protection is provided
from fluctuations in the value of rupee in terms of foreign currency in which the original
investment was made. Cost indexation benefits will not be available in such a case.

Under Section 54EC of the Income Tax Act, 1961 and subject to the conditions and to the
extent specified therein, long term capital gains arising on the transfer of shares of the
Company will be exempt from capital gains tax if the capital gains are invested within a
period of 6 months from the date of transfer subject to maximum limit of ` 50 lakhs during
any financial year if investment is made from the assessment year 2007 08 onwards in the
bonds redeemable after 3 years issued by:

- National Highways Authority of India constituted under section 3 of National Highways
Authority of India Act, 1988;

- Rural Electrification Corporation Ltd., a Company formed and registered under the
Companies Act, 1956;

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

Under Section 54F of the Income Tax Act. 1961 and subject to the condition and to the extent
specified therein, long term capital gains arising to an individual or Hindu Undivided Family
(HUF) on transfer of shares of the Company will be exempt from Capital gains tax subject to
other conditions, if the net consideration from such shares are used for purchase of
residential house property within a period of one year before and two years after the date on
which the transfer took place or for construction of residential house property within a
period of three years after the date of transfer.


4. Mutual Funds

In terms of Section 10(23D) of the Income Tax Act, 1961, mutual funds registered under the
Securities and Exchange Board of India and such other mutual funds set up by public sector banks or
public financial institutions authorized by the Reserve Bank of India subject to the conditions
specified therein are eligible for exemption from income tax on their entire income, including income
from investment in the shares of the company.


5. Foreign Institutional Investors (FIls)


145
i. By virtue of Section 10(34) of the IT Act, income earned by way of dividend income from another
domestic company referred to in Section 115(O) of the IT Act, are exempt from tax in the hands of the
institutional investor.

ii. The income by way of short term capital gains or long term capital gains realized by FIIs on sale
of shares in the Company would be taxed at the following rates as per Section 115AD of the Income
Tax Act, 1961:

Short term capital gains (STCG) arising on transfer of securities where such transaction is
not chargeable to STT shall be taxed at 30% (plus applicable surcharge and Education Cess)

As per section 111A Short term capital gains arising on transfer of securities where such
transaction is chargeable to STT, shall be taxable at the rate of 15%.(plus applicable
surcharge and Education Cess)

Long term capital gains - 10% (without cost indexation) plus applicable surcharge and
Education Cess. (Shares held in a company would be considered as a long term capital asset
provided they are held for a period exceeding 12 months).

iii. Under Section 54EC of the Income Tax Act, 1961 and subject to the conditions and to the
extent specified therein, long term capital gains arising on the transfer of shares of the Company will
be exempt from capital gains tax if the capital gain are invested within a period of 6 months after the
date of such transfer subject to maximum limit of ` 50 lakhs during any financial year if investment is
made from the assessment year 2007 08 onwards in the bonds redeemable after 3 years issued by:

- National Highways Authority of India constituted under section 3 of National Highways Authority
of India Act, 1988;

- Rural Electrification Corporation Ltd., registered under the Companies Act, 1956; If only part of the
capital gain is so reinvested, the exemption shall be proportionately reduced. The amount so
exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted
within three years from the date of their acquisition.

6. Venture Capital Companies/Funds

In terms of Section 10 (23FB) of the Income Tax Act, 1961, all Venture Capital Companies/Funds
registered, with Securities and Exchange Board of India, subject to the conditions specified, are
eligible for exemption from income tax on all their income, including income from dividend.

B. Under the Wealth Tax Act, 1957

Shares of the Company held by the shareholder will not be treated as an asset within the meaning of
Section 2 (ea) of Wealth Tax Act, 1957, hence Wealth Tax Act will not be applicable.

C. Under the Gift Tax Act, 1957

Gift of shares of the Company made on or after October 1, 1998 are not liable to Gift Tax

SPECIAL TAX BENEFITS
a. There are no special tax benefits available to the company.
b. There are no special tax benefits available to the shareholders of the company.


Notes:

146
a) All the above benefits are as per the current tax law and will be available only to the
sole/first name holder in case the shares are held by joint holders unless otherwise provided
in the Act.
b) In respect of non-residents, the tax rates and the consequent taxation mentioned above will
be further subject to any benefits available under the relevant Double Tax Avoidance
Agreement (DTAA), if any, between India and the country in which the non-resident has
fiscal domicile.
c) Wherever applicable, the benefits mentioned hereinabove are subject to fulfilment of the
specified conditions and up to the limits as mentioned in the relevant provisions.
d) In view of the individual nature of tax consequences, each investor is advised to consult
his/her own tax advisor with respect to specific tax consequence of his/her participation in
the scheme.
e) Direct Tax code proposed to be introduced with effect from 01-04-2011 would replace the
Act.


147
LEGAL PROCEEDINGS
Save as stated hereinbelow, our Directors and/or our Company are not involved in any legal
proceedings which may adversely affect our operations, financial position and profitability. Save as
stated herein, there are no material defaults, non payments or over dues of statutory dues, institutional
or bank dues or dues towards holders of debentures, bonds and fixed deposits and arrears of preference
shares.

1. U.T.O. Nederland B.V., (UTO), has instituted a suit (Suit No. 632 of 2009) before the High Court
of Judicature at Bombay on March 01, 2009 inter-alia against our Company seeking appropriate
orders in connection with the protection of the trademarks MANSION HOUSE and SAVOY
CLUB in respect of Alcoholic Beverages under Class-33 of the Trademarks Act which are
allegedly registered in the name of UTO. UTO has sought to restrain our Company from the use of
the aforesaid marks in connection with certain products manufactured and marketed by our
Company on the alleged grounds that our Company has infringed upon the rights of UTO
associated with the said marks. The aforesaid suit is pending final hearing and disposal.


As alleged by UTO, they had entered into a Licensing and Manufacturing Agreement dated July
07, 1983 under which our Company was licensed and permitted to use the aforesaid trademarks.
The license was on an exclusive and irrevocable basis subject to the condition that our Company
shall procure specified minimum quantities of concentrate from UTO and procure all required
concentrates for producing and selling alcoholic beverages under the two brand names.
Furthermore, our Company and UTO have entered into two agreements dated February 23,
1987, pursuant to which UTO has ceded their aforesaid trademarks in favour of our Company on
certain conditions, including that if UTO could no longer supply concentrate to our Company, the
said trademarks would revert back to the UTO. It was alleged by UTO that our Company has
stopped purchasing concentrate from UTO since the year 1993 and has also altered the recipes
and formulae for the products sold under the aforesaid trademarks and were not using
concentrate purchased from UTO.

Futhermore, our Company has instituted a suit, (O.S. No. 578/2009), in October 2009 before the
Court of the Honble Chief Judge at Hyderabad seeking a decree to permanently restrain UTO
from making any claims on the trademark label Mansion House French Brandy, similar other
trademarks and using or interfering with the trademark Mansion House French Brandy
registered in the name of our Company, vide trademark registration no. 612191 dated
November 22, 1993.

The matter is pending final disposal by the Court.

2. Our Company has filed appeals against the orders passed by the High Court of Bombay, with
respect to two winding up petitions initiated by M/S. Ding Dong Liquors (DDL) vide Appeal
No.180 of 2008 and Anupama Wine Distributors (AWD), vide Appeal No. 225 of 2009. DDL had
initiated a winding up petition against our Company (Comp. Petition No. 943 of 2007) on
February 18, 2008 before Honble High Court of Judicature at Bombay under sections 433, 434
and 439 of the Companies Act seeking an order of winding up our Company on the ground of non
payment of refundable deposit to the value of ` 25,000,000 from our Company post the
termination of contractual obligations arising under the contract dated September 7, 1998
entered into between our Company and DDL. The Honble High Court of Judicature at Bombay
vide an order dated March 07, 2008 directed our Company to deposit a sum of ` 12.7 million
within four weeks from the date of passing the order with the Honble High Court of Judicature at
Bombay. Our Company has filed an appeal (Appeal No.180 of 2008) before Honble High Court of
Judicature at Bombay on March 28, 2008 against the alleged order dated March 07, 2008 passed
by the Honble High Court of Judicature at Bombay on the following grounds (i) our Company
was not entitled to pay deposit as ordered by the Honble High Court of Judicature at Bombay as

148
the said liability of payment of deposit has arisen on the part of default of DDL and (ii) DDL is not
entitled to refund of deposits till the accounts are reconciled. Our Company has made a deposit of
` 12.70 million before the High Court of Bombay vide demand draft no 739354 on April 03, 2008.

AWD had initiated a winding up petition against our Company (Comp. Petition No. 803 of 2007)
on August 23, 2008 before Honble High Court of Judicature at Bombay under sections 433, 434
and 439 of the Companies Act seeking an order of winding up our Company on the ground of non
payment of refundable deposit to the value of ` 42,100,000 from our Company and payment of
excise duties on behalf of our Company by AWD post the termination of contractual obligations.
The Honble High Court of Judicature at Bombay vide an order dated March 16, 2009 directed
our Company to deposit a sum of ` 42.1 million on or before June 30, 2009. Our Company has
filed an appeal (Appeal No.225 of 2009) before Honble High Court of Judicature at Bombay on
May 08, 2009 against the alleged order dated March 16, 2009 passed by the Honble High Court
of Judicature at Bombay on the grounds that the sum of ` 40 million as demanded was not due
and payable to AWD. Our Company has made a deposit of ` 42.1 million before the High Court of
Bombay vide bank guarantee no 0607009BG0001002 on August 21, 2009.

The High Court of Bombay has pursuant to an order dated July 06, 2009 clubbed both the
matters and the same is pending hearing

3. Our Company has preferred an appeal before the Central Excise and Sales Tax Appellate
Tribunal, (CESTAT), Mumbai seeking to set aside an order dated October 07, 2008 (Order no.
JAK (223) 105/08), whereby the Commissioner of Central Excise (Appeals) had confirmed a
demand of ` 1,008,880 and on our Company and ` 1,008,880 represented a penalty in
connection with non payment of service tax with respect job work undertaken by our Company.
The aforementioned appeal is pending final hearing and disposal.

4. One Mr Benedict William, ex-employee of our Company has filed a criminal complaint (C.C. No.
252/2010) against our Company and Directors on June 22, 2010 in connection with the
termination of his services from the Company on the alleged grounds of act of insubordination,
acts of fraud and malfeasance before Chief Metropolitan Magistrate, Hyderabad under section
200 of Criminal Procedure Code alleging offence/s under sections 504,506,505(2) r/w section 34
of Indian Penal Code for defamation, criminal intimidation, and public mischief under the
abovementioned sections.

Notices

5. A legal notice has been issued by Mr. Harinder Singh Gill (Complainant) against our Company
under the Consumer Protection Act dated March 22, 2010, alleging deficiency of services on part
of our Company. The Complainant has claimed ` 50,000 as compensation against our Company.
6. A notice (ILM/ASIC/PRO/PC-41/07-08) dated April 09, 2008 has been issued by Department of
Legal Metrology against our Company. It has been alleged by the department that our Company
is in default of the provisions of The Standards of Weights and Measures Act, 1976 read with
Standards of Weights and Measures (Packaged Commodities) Rules, 1977 with respect to pre-
packed package of Mansion House French Brandy and have asked our Company to pay a fine.



149

RECENT DEVELOPMENTS
Save as disclosed hereinafter, there have been no developments since March 31, 2010 which materially
effect the operations, or financial condition of our Company:

1. Our Company has, pursuant to a resolution passed by the board of directors of our Company
at their meeting held on August 7, 2010, authorized a bonus issue of Equity Shares wherein
for every Equity Share held on September 30, 2010, the holders thereof will be entitles to
two fully paid up Equity Shares of our Company.
2. Our Company had, pursuant to a preferential allotment, issued and allotted on September
20, 2010, 2,767,500 warrants exercisable for one Equity Share per such warrant. The Equity
Shares allotted upon the exercise of the aforesaid warrants are eligible for bonus Equity
Shares in a ratio of two Equity Shares for each Equity Share to be allotted upon the exercise
of such warrants.
3. Pursuant to shareholders resolution dated September 20, 2010 passed at an Annual General
Meeting, the consent was granted to the Board to create, offer, issue and allot at any time to
or to the benefit of such persons who are in the permanent employment of our Company to
subscribe to such number of options exercisable by the employees under the ESOP 2010 that
the issue of the equity shares of our Company shall not exceed in aggregate 5% of the issued,
subscribed and paid up equity shares of our Company as on March 31, 2010 that is up to
1,615,500 equity shares.
4. Pursuant to shareholders resolution dated September 20, 2010 passed at an Annual General
Meeting, and by a resolution passed by our Board of Directors at their meeting held on August
7, 2010 the aforementioned limits has been increased to the maximum permissible sectoral
cap allowed in connection with foreign investments in our Company, as per the prevalent FDI
policy.
5. Pursuant to shareholders resolution dated September 20, 2010 passed at an Annual General
Meeting, the authorized share capital of our Company of ` 584,600,000/- divided into
58,460,000 equity shares of ` 10/- each was increased to ` 1,500,000,000 divided into
150,000,000 equity shares of ` 10/- each.

6. On October 22, 2010, we published our selected unaudited consolidated reviewed interim
financial results for the six months period ended September 30, 2010 in terms of the Clause
41 of the listing agreement entered into with the Stock Exchanges. We have reproduced the
same as submitted to the Stock Exchanges, in terms of the listing agreements. These selected
unaudited consolidated reviewed interim financial results may not be comparable with the
consolidated financial statements appearing elsewhere in the Placement Document.














150


TILAKNAGAR INDUSTRIES LTD.
Consolidated Unaudited Financial Results for the Quarter & Half Year ended September 30, 2010
(Rs in lacs)
Particulars
Quarter Ended Half year ended

30.09.2010 30.09.2009 30.09.2010 30.09.200
9

Unaudited Unaudited Unaudited Unaudited
Previous
Year Ended
31/03/2010
(Audited)
1 (a)
Net Sales / Income from
Operations
12,708.60 7,020.33 21,100.45 13,604.36 38,620.74
(b) Other Operating Income 84.56 115.00 124.45 151.87 441.91
2 Expenditure
a
(Increase) / Decrease in
Stock-in-trade & Work-
in-progress (657.16) (647.30) 336.23 (1,009.97) (1,894.12)
b
Consumption of Raw
Materials 5,370.73

3,902.72

8,035.33

7,882.01 17,005.55
c
Purchase of Traded
Goods

-

-

-

-

-
d Employees Cost 497.81 491.18 1,131.97 1,027.88 2,012.97
e Depreciation 331.39 164.36 618.39 271.64 712.69
f Other Expenditure 3,928.51 1,702.03 6,384.57 3,316.09 13,481.83
g Total 9,471.28 5,612.99 16,506.49 11,487.65 31,318.92
3
Profit from Operations
before Other Income,
Interest &
Exceptional Items (1-2) 3,321.88 1,522.34 4,718.41 2,268.58 7,743.73
4 Other Income

-

-

-
5
Profit before Interest &
Exceptional items (3 + 4) 3,321.88 1,522.34 4,718.41 2,268.58 7,743.73
6 Interest 1,427.62 594.55 2,157.53 848.75 2,358.41
7
Profit after Interest but
before Exceptional items
(5 - 6) 1,894.26 927.79 2,560.88 1,419.83 5,385.31
8 Exceptional Items

-

-

-

-

-
9
Profit (+) / Loss (-) from
ordinary activities before
tax (7 + 8) 1,894.26 927.79 2,560.88 1,419.83 5,385.31
1
0 Tax expense 633.00 185.00 853.00 360.00 1,896.39
1
1
Net Profit (+) / Loss (-)
from ordinary activities
after tax (9 - 10) 1,261.26 742.79 1,707.88 1,059.83 3,488.93
1
2
Extraordinary items (net
of Tax expenses)

-

-

-

-

-
1
3
Net Profit (+) / Loss (-)
for the period (11-12) 1,261.26 742.79 1,707.88 1,059.83 3,488.93
1
4
Paid-up Equity Share
Capital(Face value of the
share Rs.10/- each) 9,695.43 3,028.52 9,695.43 3,028.52 3,231.00

151
Convertible Warrant

1,515.21 ---

1,515.21 --- ---

12% C.C.Preference
Shares of Rs.94/- each
fully paid up ---

634.44 ---

634.44 ---
1
5
Reserves excluding
Revaluation Reserves as
per Balance Sheet 9,381.35

of previous accounting
year
1
6
Earnings per Share
(EPS)(Rs.)
a
Basic and diluted EPS
before extra-ordinary
items for the period,

for the year to date and
for the previous year(not
annualized)
Basic

1.30

0.87

1.76

1.24

4.03
Diluted

1.26

0.87

1.71

1.24

4.00
b
Basic and diluted EPS
after extra-ordinary
items for the period,

for the year to date and
for the previous year(not
annualized)
Basic

1.30

0.87

1.76

1.24

4.03
Diluted

1.26

0.87

1.71

1.24

4.00

1
7 Public Shareholding
- Number of shares 38,633,325 7,797,681 38,633,325 7,797,681 12,469,675

- Percentage of
Shareholding 39.85% 25.75% 39.85% 25.75% 38.59%
1
8
Promoters and promoter
group
Shareholding
a) Pledged/ Encumbered --- --- ---
- Number of Shares

- Percentage of shares ( as
a % of the total

shareholding of the
promoter and promoter
group )

- Percentage of shares ( as
a % of the total

share capital of the
Company)

b) Non encumbered
- Number of Shares

58,320,975

22,487,523

58,320,975

22,487,523

19,840,325

- Percentage of shares ( as
a % of the total 100% 100% 100% 100% 100%

152

shareholding of promoter
and promoter group)

- Percentage of shares ( as
a % of the total share
capital of the Company) 60.15% 74.25% 60.15% 74.25% 61.41%
Notes :
1
The Company in compliance with the provisions of Clause 41 of the Listing Agreement, has opted to
publish the consolidated financial results. The standalone financial results will, however, be made
available to the Stock Exchanges where the companys securities are listed and will also be posted on
the Companys website.

2
The Consolidated Financial Statements have been prepared in accordance with Accounting Standard on
consolidated financial statements.

3
The above unaudited Financial Results reviewed by the Audit Committee have been approved and taken
on record by the Board of Directors at its meeting held on October 22, 2010

4
The Consolidated Financial results comprise the financial results of Tilaknagar Industries Ltd. and its
100% subsidiaries Surya Organic Chemicals (P) Ltd. and Prag Distillery (P) Ltd. and have been prepared
in accordance with the AS-21 issued by the ICAI.

5
Standalone Information
Particulars Quarter Quarter Half Year Half Year
Previous
year
ended ended ended ended ended
30.09.2010 30.09.2009 30.09.10 30.09.09
31.03.201
0
Unaudited Unaudited Unaudited Unaudited Audited
1
Net Sales/ Income
from Operations 9,154.08 6,020.85 16,152.16 11,922.87 35,172.90
2 Profit before Tax 1,120.60 555.22 1,675.25 970.73 4,996.05
3 Profit after Tax 750.60 406.22 1,122.25 691.73 3,312.26

6

The statutory auditors have carried out a "Limited Review" of the consolidated unaudited financial
results of the Company for the quarter ended September 30, 2010.

7

The Company is predominantly engaged in the business of manufacture and sale of Indian Made Foreign
Liquor (IMFL) and its related products, which constitute a single business segment.

8

The Company has franchisee arrangements in some states and in respect of such arrangements the
turnover of Rs 20,211.09 lacs ( Rs 13,136.87 lacs ) during the quarter ended September 30, 2010 and Rs
38,804.18 lacs ( Rs 20,944.57 lacs) during the half year ended September 30, 2010 has not been treated
as 'Sales'. However the surplus generated out of these arrangements is included in the ' Sales/Income
from Operations'. Thus the total sales of the Companys' brand is Rs 33,818.06 lacs (Rs 22,547.27 lacs)
during the quarter ended September 30, 2010 and Rs 59,450.78 lacs (Rs 40,750.40 lacs) during the half
year ended September 30, 2010.

9

The Company did not have investor complaints pending on July 1, 2010. During the quarter seven
investor complaints were received and the same were resolved. There were no investor complaints
pending as on September 30, 2010

10

During the quarter ended September 30, 2010, the Company has granted 286,821 stock options under
Employee Stock Option Scheme 2008 as amended on September 20, 2010 ("ESOP Scheme") and as on
September 30, 2010 5,073,363 Options were outstanding under the ESOP Scheme

11

During the quarter, the Company has allotted 64,636,200 Bonus Equity Shares of Rs. 10/ - each to the
shareholders of the Company in the ratio of two equity shares for every one equity share held by them

153
by capitalization of free reserves .

12
During the quarter, the Company has allotted 8,100 Equity Shares of the face value of Rs 10/- each
pursuant to ESOP Scheme 2008 to the employees of the Company on exercise of options vested to them.
13 The Company has allotted 2,767,500 Warrants convertible into Equity Shares of face value of Rs. 10/-
each with in 18 months from the date of allotment at an exercise price of Rs 219/- (including Rs 209/-
towards premium) on preferential allotment basis to a Promoter group Company on September 20,
2010.

14

Employee costs for this quarter includes the provisions for Employee Retirement Benefits on pro-rata
basis.


15

The Unaudited statement of assets and liabilities is as under:
(Rs Lacs)

Half Year Ended on


Particulars
30/09/2010 30/09/2009


Shareholders Funds


a) Capital
11,210.64

3,662.96

b) Employee Stock Option Outstanding
78.30

-

c) Reserves & Surplus
12,104.72

15,335.07

Loan Funds
49,793.03

26,259.19

Deferred tax liabilities
1,383.49

623.59

Total
74,570.18

45,880.81
Fixed Assets

38,441.08

32,981.52

Investments
28.77

3.46

Current Assets, Loans and Advances
-

-

a) Inventories
7,761.70

8,096.51

b)Sundry debtors
9,268.23

9,440.22

c)Cash and bank balances
1,802.31

1,199.98

d)Other current assets
-

-

e)Loan and advances
28,427.86

2,221.75

Less : Current liabilties and provisions
-

-

a)Liabilities
10,532.37

6,953.91

b)Provisions
627.40

1,108.72

Total
74,570.18

45,880.81



16
The previous period figures have been regrouped wherever necessary.



154
GENERAL INFORMATION

1. Our Company was incorporated as The Maharashtra Sugar Mills Ltd on July 29, 1933 under
the Companies Act, VII of 1913. Pursuant to fresh certificate of incorporation dated August
06, 1993 issued by Registrar of Companies, Bombay, Maharashtra, and after its merger with
Tilaknagar Distilleries and Industries Ltd the name of our Company changed to Tilaknagar
Industries Ltd. The Corporate Identification Number of our Company is
L15420PN1933PLC133303

2. The registered office of our Company shifted from Industrial Assurance Building, 3
rd
Floor,
Churchgate Mumbai, 400020 to P.O. Tilaknagar, Taluka Shrirampur, District Ahmednagar-
413720 with effect from December 24, 2008.

3. The Equity Shares of our Company were listed and traded on the BSE and on the NSE.

4. The Placement Shares are to be listed on the BSE and the NSE.

5. The Offering was authorised and approved by the Board of Directors on August 07, 2010 and
approved by the shareholders of our Company through resolution dated September 20, 2010
passed at an Annual General Meeting of our Company.

6. Copies of Memorandum and Articles of Association of our Company will be available for
inspection during usual business hours on any weekday (except Saturdays and public
holidays) at our Companys registered office.

7. Our Company has obtained all consents, approvals and authorizations required in
connection with this Offering.

8. There has been no material change in our Companys financial or trading position since
March 31, 2010, the date of the latest financial statements except as otherwise disclosed in
this Placement Document.

9. Except as disclosed in this Placement Document, there are no material litigation or
arbitration proceedings against or affecting our Company or its assets or revenues, nor is our
Company aware of any pending or threatened litigation or arbitration proceedings, which
are or might be material in the context of this Offering of Placement Shares.

10. Our Companys Auditors are M/s. Batliboi & Purohit Chartered Accountants who have
audited the financial statements of our Company as of and for the years ended March 31,
2008, March 31, 2009 and March 31, 2010.

11. Our Company confirms that it is in compliance with the minimum public shareholding
requirements as required under the terms of the listing agreements with the Stock
Exchanges.

12. The Floor Price for the Offering is ` 88.75, calculated in accordance with Regulation 85 of the
SEBI Regulations, as certified by M/s. Batliboi & Purohit Chartered Accountants.


155
FINANCIAL STATEMENTS
AUDITORS REPORT
Auditors Report on Consolidated Financial Statements of Tilaknagar Industries Ltd.
To the Board of Directors of Tilaknagar Industries Ltd.
1. We have audited the attached Consolidated Balance Sheet of Tilaknagar Industries Ltd. (the
Company) and its subsidiaries (The Company and its subsidiaries constitute The Group) as at
31 March, 2008, 2009, 2010, the Consolidated Profit and Loss Account for the years ended 31
March, 2008, 2009, 2010 and the Consolidated Cash Flow Statement of the group for the years
ended 31 March, 2009 and 2010, both annexed thereto. These financial statements are the
responsibility of the companys management and have been prepared on the basis of the
separate financial statements. Our responsibility is to express an opinion on these Consolidated
Financial Statements based on our audit.
2. The figures disclosed in the financial statements are extracted from the respective years audited
financial statements and our opinion on the financial statements stated herein is as stated in the
opinion for each of the years. In forming an opinion for each of the years, we conducted our audit
in accordance with the auditing standards generally accepted in India. These Standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by the
Management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
3. We did not audit the financial statements of the subsidiaries for the years ended 31 March, 2008
and 2009, whose financial statements reflect total assets of ` 139.70 million and `173.49 million
as at 31 March 2008 and 2009 respectively, total revenue of ` 33.53 million and ` 71.38 million
and cash flows amounting to ` (10.16) million and `4.46 million for the years ended on 31 March
2008 and 2009 respectively. These financial statements and other information of the
subsidiaries have been audited by other auditors whose reports have been furnished to us by the
Management of the group and our opinion, in so far it relates to amounts included in respect of
these subsidiaries, is based solely on the report of other auditors.
4. Without qualifying our report we draw attention to Note No (xviii), (xix) and (xx) to the Notes to
Accounts mentioning the changes made in the enclosed Consolidated accounts as compared to
the published financial statements for the said years.
5. We report the Consolidated Financial Statements have been prepared by the Company in
accordance with the requirements of Accounting Standards 21 'Consolidated Financial
Statements' issued by the Institute of Chartered Accountants of India.
Based on our Audit, and on consideration of reports of other Auditors on the Financial
statements and on other financial information and to the best of our information and according
to the explanation given to us, we are of the opinion that the attached Consolidated Financial
Statements give a true and fair view in conformity with the accounting principles generally
accepted in India:


156
(i) in case of the Consolidated Balance Sheet, of the state of affairs of the Group as at
31 March, 2008, 2009, 2010;
(ii) in case of the Consolidated Profit and Loss Account, of the Consolidated Profit of the
Group for the years ended 31 March, 2008, 2009, 2010; and
(iii) in case of the Consolidated Cash Flow Statement, of the Cash Flows of the Group for
the years ended 31 March, 2009 and 2010.
This report is for inclusion in the Preliminary Placement Document / Placement Document being
issued by the Company in connection with the proposed Qualified Institutions Placement under
chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements), Regulation 2009, as amended and that no offer is being made to public or to any
other category of investors.
Further this report is not to be used, referred to or distributed for any other purpose without our
prior written consent.

For BATLIBOI & PUROHIT
Chartered Accountants
Firm Regn.No.101048W

Kaushal Mehta
Partner
Place: Mumbai (Membership No. 111749)
Date: 27-10-2010


157
TILAKNAGAR INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEET INFORMATION
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
As at As at As at
SCH 31st March 2010 31st March 2009 31st March 2008

I SOURCES OF FUNDS

1. Shareholders' Funds
a. Share capital A' 323.10 139.49 57.25
b. Share Warrant A1' - 70.65 70.65
c. Employee Stock Option Outstanding 2.83 - -
d. Reserves & surplus B' 1,700.83 1,215.09 1,064.40
2,026.76 1,425.23 1,192.30
2. Loan Funds
a. Secured loans C' 2,721.18 1,167.68 574.73
b. Unsecured loans D' 1,813.53 83.64 3.14

3. Deferred Tax Liability 119.55 62.36 37.39
6,681.02 2,738.91 1,807.56
II APPLICATION OF FUNDS

1. Goodwill 38.92 38.92 7.60

2. Fixed Assets E'

a. Gross block 2,351.36 1,549.16 1,310.88
b. Less: Depreciation 280.98 181.08 118.40
c. Net block 2,070.38 1,368.08 1,192.48
Add : Capital Work-In-Progress 1,637.40 390.94 135.22
3,707.78 1,759.02 1,327.70
d. Less: Impairment of assets 1.70 1.70 1.70
3,706.08 1,757.32 1,326.00

3. Investments F' 2.88 0.35 0.35

4. Current Assets, Loans & Advances G' 4,080.21 1,916.97 1,074.59
Less: Current Liabilities & Provisions H' 1,147.07 974.70 601.07
Net Current Assets 2,933.14 942.27 473.52

5. Miscellaneous Expenditure H1' - 0.05 0.10
(To the extend not adjusted or written off)



6,681.02

2,738.91

1,807.56


Significant accounting policies & Notes on accounts

L






158
TILAKNAGAR INDUSTRIES LTD.

SUMMARY CONSOLIDATED PROFIT AND LOSS STATEMENT INFORMATION
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
For the year ended For the year ended For the year ended
SCH. 31st March 2010 31st March 2009 31st March 2008
INCOME:
Sales I'(1) 5,497.99 4,050.75 2,293.83
Less: Excise duty 1,635.92 1,558.66 813.27
3,862.07 2,492.09 1,480.56
Other Income I'(2) 44.20 28.64 43.54
3,906.27 2,520.73 1,524.10
EXPENDITURE :
(Increase) / Decrease in stock I'(3) (189.41) (153.41) (69.60)
Cost of material I'(4) 1,700.55 1,129.79 556.88
Employees' remuneration and benefits J' 201.30 200.54 125.60
Manufacturing and other expenses K' 1,348.15 887.75 621.62
Finance Cost 235.85 107.09 55.15
Preliminary & Pre-operative Exp written off 0.05 0.05 0.05
Depreciation / Amortization 71.27 32.76 21.90
3,367.76 2,204.57 1,311.60

Profit for the year 538.51 316.16 212.50
Less: Prior Period Adjustments - (0.11)
Profit before taxation 538.51 316.05 212.50
Less: Provision for taxation
Current years' 132.45 87.50 82.54
Previous years' - 3.94 -
Fringe Benefit Tax - 1.86 1.57
Deferred Tax 57.19 24.97 7.16
189.64 118.27 91.28
Profit after taxation 348.87 197.80 121.22
Add: Balance brought forward from previous years 327.28 167.89 77.72
Amount available for appropriations 676.15 365.69 198.95
APPROPRIATIONS:
Transferred to General Reserve 33.50 21.50 17.00
Proposed dividend 88.66 14.45 12.02
Dividend distribution tax (including surcharge & cess) 15.07 2.46 2.04
Balance transferred to balance sheet 538.92 327.28 167.89


676.15 365.69 198.95

Significant accounting policies & Notes on accounts

L



159







TILAKNAGAR INDUSTRIES LTD.
SCHEDULES FORMING PART OF CONSOLIDATED BALANCE SHEET
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
SCHEDULE 'A' As at As at As at
31st March 2010 31st March 2009 31st March 2008
SHARE CAPITAL
AUTHORISED
50,000,000 equity shares of Rs. 10/- each 500.00 300.00 300.00
(P.Y. 30,000,000 equity shares of Rs. 10/- each)
900,000 Compulsorily Convertible Cumulative Preference Shares (CCPS) 84.60 84.60 ---
of Rs 94/- each (P.Y. 900,000 CCPS of Rs. 94/- each)

ISSUED, SUBSCRIBED AND PAID UP :
32,310,000 equity shares of Rs. 10/- each fully paid up 323.10 57.25 57.25
(P.Y. 5,725,068 equity shares of Rs. 10/- each)
Of the above shares :-
(a) 21,842,675 equity shares of Rs.10/- each fully paid-up
bonus shares by capitalisation of reserves.
(b) 1,237,500 equity shares of Rs.10/- each were allotted as
fully paid-up pursuant to a scheme of amalgamation.
(c) 44,696 equity Shares of 10/- each were allotted for
consideration other than cash.
Nil (P.Y. 874,932)12% Compulsorily Convertible Cumulative 82.24
Preference Shares (CCPS) of Rs.94/- each fully paid up
323.10 139.49 57.25
SCHEDULE 'A1'

SHARE WARRANT

Nil ( P.Y. 4,500,000 of Rs. 157 each) share warrants of Rs.157/- - 70.65 70.65
each - 10% paid up
- 70.65 70.65
SCHEDULE 'B'

RESERVES & SURPLUS
1. Share Premium Account:
As per last Balance Sheet 20.96 20.96 20.96
Add : Additions during the year 415.43 - -
Less : Utilised for issue of bonus shares 215.40 - -
220.99 20.96 20.96
2. General Reserve :
As per last Balance Sheet 72.16 50.66 33.66
Transfer from Profit & loss account 33.50 21.50 17.00
105.66 72.16 50.66

3. Capital Reserve 72.55 1.90 2.02

4. Revaluation Reserve 792.79 822.87 822.87
Less : Amortised 30.08 30.08 -
762.71 792.79 822.87


5. Profit & Loss Account 538.92 327.28 167.89
1,700.83 1,215.09 1,064.40


160



SCHEDULES FORMING PART OF CONSOLIDATED BALANCE SHEET
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
SCHEDULE 'C' As at As at As at
SECURED LOANS 31st March 2010 31st March 2009 31st March 2008

1. Long Term Loans:

From Banks 1,466.26 413.20 221.20
(Against first charge on the fixed assets of the Company
situated at Shrirampur, Dist.Ahmednagar and second charge on
current assets)

2. Short Term Loans :
Cash Credit (including working capital demand loan) 1,238.27 748.16 348.57
(Against hypothecation of stock of raw materials,
work-in-process, finished goods, stores, chemicals &
book debts and second charge on the fixed assets of
the Company situated at Shrirampur, Dist. Ahmednagar)

Hire purchase car loan (with Banker's lien on cars) 16.65 6.32 4.96

2,721.18 1,167.68 574.73
SCHEDULE D'

UNSECURED LOANS

1. Fixed deposits - Shareholders & Others - 0.61 2.07
2. Unsecured Loans
From Banks 1,663.53 49.96 -
From Promoters & Others 150.00 33.07 1.07

1,813.53 83.64 3.14


161

SCHEDULES FORMING PART OF CONSOLIDATED BALANCE SHEET
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
Schedule E G R O S S B L O C K DEPRECIATION / AMORTIZATION N E T B L O C K
As At Additions Deductions Revaluation As At As At
Deduct
ions For the On As At As At As At

01st April
2009 31st Mar 2010 01st April 2009 year
Revalua
tion
31st Mar
2010 31st Mar 2010 31st Mar 2009

TANGIBLE ASSETS
Land

540.52 - - - 540.52 -

- -

- - 540.52 540.52
Buildings

232.69 24.60 - - 257.29 38.77

- 6.36

10.48

55.61 201.68 193.92
Plant & Machinery

676.31 714.11 - - 1,390.42 108.94

- 35.54

19.60

164.08 1,226.34 567.36
Furniture & Fixtures

19.24 23.07 - - 42.31 7.87

- 4.34

-

12.21 30.10 11.37
Computers

28.94 18.98 - - 47.92 4.78

- 15.37

-

20.15 27.77 24.16
Electrical Installation
& Fittings

6.50 0.42 - - 6.92 1.90

- 0.63

-

2.53 4.39 4.60
Motor Car and

24.81 23.14 2.12 - 45.83 9.39

1.43 7.08

-

15.04 30.79 15.42
Transport Vehicles
Roads & Bridges

2.70 - - - 2.70 0.69

- 0.20

-

0.89 1.81 2.01
Library Books

0.03 - - - 0.03 0.03

- -

-

0.03 - -
Live Stock

0.03 - - - 0.03 -

- -

- - 0.03 0.03
INTANGIBLE
ASSETS
Product Development

17.39 - - - 17.39 8.70

- 1.74

-

10.44 6.95 8.69



1,549.16 804.32 2.12 - 2,351.36 181.07

1.43 71.26

30.08

280.98 2,070.38 1,368.09
Capital WIP

390.95 1,246.45 1,637.40 1,637.40 390.95
Grand Total

1,940.11 2,050.78 2.12 - 3,988.78 181.08

1.43 71.27

30.08

281.00 3,707.78 1,759.04
2008-09

1,446.10 494.75 0.75 - 1,940.10 118.40

0.16 32.76

30.08

181.08 1,759.032
2007-08

342.98 281.23 0.98 822.87 1,446.10 97.05

0.56 21.91

-

118.40 1,327.70

162
SCHEDULES FORMING PART OF CONSOLIDATED BALANCE SHEET
(All amounts in Indian Rupees Million, except share data and where otherwise stated)

As at As at As at
Shares/ 31st March 2010
31st March
2009
31st March
2008
Units
SCHEDULE F'
INVESTMENTS

Long Term
1. Government Securities :
(Unquoted)

7 Year National Savings
Certificates of face value of
Rs.51,400/- (Certificates worth
Rs. 44,000/- deposited

0.05

0.05

0.05
with Government authorities)
6 Year National Savings
Certificates (Deposited with
Government authorities)

0.004

0.004

0.004


0.06

0.06

0.06
2. Shares in Joint Stock
Companies, etc.(Unquoted):
Mula Pravara Electric Co-
operative Society LTD. Equity

0.25

0.25

0.25
Shree Suvarna Sahakari Bank
Ltd. Equity

0.002

0.002

0.002
Maharashtra State Financial
Corporation Equity

0.01

0.01

0.01
Rupee Co-op Bank Ltd Equity

0.03

0.03

0.03
Shamrao Vithal Co-operative
Bank Ltd Equity

0.03

-

-


0.32

0.29

0.29
Current

Investment in mutual funds
(Unquoted)
Monthly Income Plan Units

122,880.32

2.50

-

-



2.88

0.35

0.35







163
SCHEDULES FORMING PART OF CONSOLIDATED BALANCE SHEET
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
SCHEDULE 'G' As at As at As at
CURRENT ASSETS, LOANS & ADVANCES 31st March 2010 31st March 2009 31st March 2008
CURRENT ASSETS
Inventory (at cost)
Raw materials 218.39 84.01 32.66
Stores, components 194.41 262.48 95.96
Work-in-process 230.79 34.94 7.83
Stock-in-trade 199.67 206.11 79.81
Stock-in-transit - 3.97 -
843.26 591.51 216.26
Sundry debtors (unsecured)
(a) Debtors outstanding exceeding six months
Considered good - 84.17 72.09
Considered doubtful 13.33 -
13.33 84.17 72.09
(b) Other debts 806.63 569.85 487.73
819.96 654.02 559.82
Cash and bank balances
Cash and cheques on hand 166.57 13.85 7.73
In Current Accounts with Scheduled Banks 18.44 4.97 3.69
In Fixed Deposits with Scheduled Banks 80.66 29.23 9.56
265.67 48.05 20.98
LOANS & ADVANCES
(Unsecured considered good)
Advances recoverable in cash or in kind or
for value to be received 697.69 231.57 151.16
Advance with Tie-up Units 1,196.86 205.92 60.30
Balance with Excise Authorities 12.80 12.87 9.51
Deposits with Court 39.68 39.65 33.01
Other Deposits 204.29 133.38 23.55
2,151.32 623.39 277.53
4,080.21 1,916.97 1,074.59




SCHEDULES FORMING PART OF CONSOLIDATED BALANCE SHEET


164

(All amounts in Indian Rupees Million, except share data and where otherwise stated)
SCHEDULE 'H' As at As at As at
CURRENT LIABILITIES & PROVISIONS 31st March 2010 31st March 2009 31st March 2008


CURRENT LIABILITIES
Sundry Creditors
Micro & Small Enterprises (Refer Note xiv) - - 4.66
Others 491.75 518.08 376.16
Unclaimed dividend 0.97 0.79 0.58
Unclaimed Deposits 0.02 0.81 0.02
Trade Deposits (Unsecured, interest free) 394.66 277.76 162.64
887.40 797.44 544.06
PROVISIONS
Provision for Taxation 71.22 52.55 24.48
Proposed Dividend 88.66 14.45 12.02
Dividend Distribution Tax 15.07 2.46 2.04
Provision for Gratuity 2.80 21.05 12.32
Provision for leave encashment 8.90 7.60 6.15
Other Provisions 73.02 79.15
259.67 177.26 57.01

1,147.07 974.70 601.07
SCHEDULE H1

MISCELLANEOUS EXPENDITURE
Deferred Revenue Expenditure 0.05 0.10 3.07
As per last Balance Sheet

Less: Written off during the year


(0.05)

(0.05)

(2.97)
- 0.05 0.10

165


SCHEDULES FORMING PART OF CONSOLIDATED PROFIT AND LOSS ACCOUNT
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
SCHEDULES FORMING PART OF CONSOLIDATED PROFIT AND LOSS ACCOUNT
(All amounts in Indian Rupees Million, except share data and where otherwise stated)
SCHEDULE 'I' (1)
For the year ended
31st March 2010
For the year ended
31st March 2009
For the year ended
31st March 2008
SALES
Sales of products 4,416.58 3,767.44

1,990.32
Income from tie-up units 1,063.37 268.79 297.55
Other operating income 18.04 14.52 5.96
5,497.99 4,050.75

2,293.83
SCHEDULE I' (2)
OTHER INCOME
Duty drawback on exports 4.30 3.07 1.31
Miscellaneous receipts 16.46 20.67 41.31
Sundry balance written back 22.09 3.35 1.15
Interest income 2.89 1.46 -
Gain/ (Loss) on exchange fluctuation (1.54) 0.09

(0.23)
44.20 28.64 43.54
SCHEDULE I' (3)
(INCREASE) / DECREASE IN STOCK
Opening Stock
i) Work-in-process 34.94 7.83 0.85
ii) Finished goods 206.11 79.81 17.19
241.05 87.64 18.04
Less : Closing Stock
i) Work-in-process 230.79 34.94 7.83
ii) Finished goods 199.67 206.11 79.81
430.46 241.05 87.64
Net (Increase)/Decrease in Stock

(189.41) (153.41)

(69.60)
SCHEDULE I' (4)
COST OF MATERIAL
i) Raw Material Consumption
Opening Stock 84.01 32.66 21.26
Add: Purchases 850.61 617.75 174.53
Less: Closing Stock 218.39 84.01 32.66
716.23 566.40 163.13
ii) Packing Material & Consumables 984.32 563.39 393.75
1,700.55 1,129.79 556.88

166

Year ended
31st March 2010
Year ended
31st March 2009
Year ended
31st March 2008
SCHEDULE J'


EMPLOYEES' REMUNERATION & BENEFITS
Salary and wages 158.94 167.12 101.28
Contribution to provident fund and family pension fund 13.50 10.16 5.43
Labour and staff welfare expenses 26.06 12.10 7.49
Gratuity 2.80 11.16 11.40
201.30 200.54 125.60
SCHEDULE K'
MANUFACTURING AND OTHER EXPENSES:
Power and fuel 22.73 24.63 58.75
Provision for Excise Duty on finished goods (Refer Note xi) (6.13) 40.42 6.67
Finished Goods written off - - 10.73
Repairs & maintenance 29.99 30.34 16.82
Insurance 7.20 6.35 5.29
Rent 60.14 131.58 41.46
Conversion cost 329.97 51.69 26.02
Legal and professional charges 35.04 32.66 25.07
Auditors Remuneration 0.55 0.36 0.33
Rates and taxes 52.19 62.32 80.46
Sales tax 35.82 18.18 4.90
Freight, transport charges & other expenses 86.63 82.06 44.94
Selling expenses (Discounts,Sales Promotion & Advertising etc.) 487.79 325.27 230.22
Travelling and conveyance expenses 20.31 10.67 6.30
Printing and stationery 5.60 3.80 1.62
Communication expenses 12.91 7.11 4.69
Vehicle running expenses 3.83 2.94 1.39
Loss on sale of assets 0.12 0.22 0.07
Director sitting fees 0.28 0.30 0.34
Commission to Independent Directors 4.79 3.29 2.51
Miscellaneous expenses 158.39 53.56 50.13
Deferred Revenue Expenditure - - 2.91
1,348.15 887.75 621.62


167


TILAKNAGAR INDUSTRIES LTD.
Consolidated Cash flow statement for the year ended 31st March, 2010
2009-2010 2008-2009
Rs Million Rs Million Rs Million Rs Million
A.CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax & extraordinary items 538.51 316.05
Adjustment for:
Depreciation 71.27 32.76
(Surplus) / Loss on sale of assets 0.12 0.22
Provision for taxes of earlier years - -
Miscellaneous expenses written off 0.05 0.05
Interest (net) 232.95 105.64
Dividend received - (0.00)
304.39 138.67
Operating Profit before working capital changes
Adjustment for:
(Increase) / Decrease in inventory (251.75) (375.25)
(Increase) / Decrease in trade receivables (165.94) (94.19)
(Increase) / Decrease in loans and advances (1,527.96) (452.02)
(Decrease) / Increase in trade payable and provisions 172.36 431.94
(1,773.29) (489.52)
Proceeds from short term borrowings 1,353.68 -
Tax provision (132.45) (93.30)
NET CASH FROM OPERATING ACTIVITIES 290.86 (128.09)
B.CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets (2,050.76) (494.76)
Sale of fixed assets 0.57 0.37
Increase in investments (2.53) (31.45)
Dividend received - -
Interest received 2.89 1.46
NET CASH FROM INVESTING ACTIVITIES (2,049.83) (524.38)
C.CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of share capital including premium 386.47 82.24
Proceeds from borrowings (net) 1,929.71 721.31
Interest paid (235.84) (107.10)
Dividend and tax thereon (103.73) (16.90)
NET CASH FROM FINANCING ACTIVITIES 1,976.61 679.55
NET INCREASE IN CASH & CASH EQUIVALENTS 217.62 27.07
Opening cash & cash equivalents 48.05 20.98
Closing cash & cash equivalents 265.67 48.05



168


SCHEDULE FORMING PART OF CONSOLIDATED ACCOUNTS OF THE COMPANY AND ITS SUBSIDIARIES
SCHEDULE L SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS:
1. Principal of Consolidation:

(iii) The consolidated financial statements relate to Tilaknagar Industries Ltd (the company) and its
wholly owned subsidiary companies viz.: Prag Distillery (P) Ltd., and Surya Organic Chemicals
(P) Ltd. The consolidated financial statements have been prepared on the following basis.
(d) The financial statements of the Company and its subsidiary companies are combined on
a line-by-line basis by adding together the book value of like assets , liabilities , income
and expenses, after fully eliminating intra- group balances and intra group transactions
resulting in unrealized profits or losses in accordance with Accounting Standard (AS)
21- Consolidated financial Statements notified Companies (Accounting Standards)
Rules 2006.
(e) The difference between the cost of investment in the subsidiaries and the Companys
share of net assets at the time of acquisition of shares in the subsidiaries is recognized
in the financial statements as Goodwill or Capital Reserve as the case may be.
(f) The financial statements of the Subsidiaries are drawn upto the same reporting date as
that of the Company and as far as possible, the consolidated financial statements are
prepared using uniform accounting policies for like transactions and other events in
similar circumstances and are presented in the same manner as the Companys
separate financial statements.

(iv) Investments other than in subsidiaries have been accounted as per Accounting Standard (AS-13) on
Accounting for Investments notified Companies (Accounting Standards) Rules 2006.

2. Significant Accounting Policies

(i) Basis of Preparation of Financial Statement:

The financial Statements have been prepared using historical cost convention and on the basis of
going concern in accordance with generally accepted accounting principles in India, Accounting
Standards notified under Section 211(3C) of the Companies Act, 1956 and other relevant provisions
of the Companies Act, 1956.

(ii) Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect
the reported amount of assets and liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference between the actual results
and estimates are recognized in the period in which the results are known/ materialized.

(iii) Revenue Recognition:

All revenue and expenses are accounted for on accrual basis. Revenue is recognized when no
significant uncertainties exist in relation to the amount of eventual receipt.

(c) Sales are recognized on dispatch of goods to customers and are inclusive of central / state
excise duty.
(d) Insurance and other claims are accounted for as and when admitted by the appropriate
authorities.


169
(iv) Inventories:
Inventories are stated at the lower of cost and net realizable value. Cost is determined on the basis
of Weighted Average method.
(c) Raw materials, Stores & Components and Work-in-Process are valued at material cost.
(d) Finished goods valued at manufacturing cost which comprise direct material, direct labor,
other direct cost and other related manufacturing overheads. Excise duty payable on finished
goods stock is added to the cost.

(v) Fixed Assets:
(f) Fixed assets are stated at their original cost of acquisition /installation, net of accumulated
depreciation, amortization and impairment losses.
(g) Capital work-in-progress is stated at the amount incurred up to the date of the Balance Sheet.
(h) Expenditure incurred during construction/erection period (Including finance cost relating to
borrowed funds for construction or acquisition of fixed assets) on project under
implementation are included under Capital work-in-progress. These expenses are
appropriated to fixed assets on commencement of commercial production.
(i) Fixed assets purchased under Hire purchase arrangements, includes expenditure incurred till
the assets are put to use.
(j) Intangible assets are stated at cost of acquisition less accumulated amortization.

(vi) Depreciation:
Depreciation is provided on the Written Down Value Method or Straight Line Method in the
manner and at the rates specified in schedule XIV of the Companies Act, 1956 as specified in the
accounting policies of the respective Companys standalone financial statements.

(vii) Impairment of Assets:
Impairment loss is recognized wherever the carrying amount of an asset is in excess of its
recoverable amount and the same is recognized as an expense in the statement of profit and loss and
the carrying amount of the said asset is reduced to its recoverable amount.
Reversal of impairment losses recognized in prior years is recorded when there is an indication that
the impairment losses recognized for the asset no longer exist or have decreased.

(viii) Investments:
a. Long Term Investments (non-trade, unquoted) are stated at cost. Provision for diminution in
value is made only if in the opinion of management such a decline is other than temporary.
b. Current Investments are shown at cost / fair value whichever is lower.

(ix) Foreign Currency Conversion:
Foreign currency transactions are recorded at the rate of exchange prevailing on the date of
transaction. Foreign currency denominated monetary items as at the balance sheet date are
translated at the rate prevailing on the date of balance sheet. Exchange rate difference arising on the
settlement of monetary items including yearend translations are recognized in the profit & loss
account.

(x) Provisions and Contingencies:
Provision is recognized when there is a present obligation as a result of past event that probably
requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A
disclosure on contingent liability is made when there is a possible obligation or present obligation
that probably will not require an out flow of resources or where reliable estimate of the amount of
the obligation cannot be made. However contingent assets are neither provided for nor disclosed.

(xi) Research and Development:
Revenue expenditure on research and development is charged to the profit & loss of the year in
which it is incurred.


170
Expenditure incurred on development of new product / brand is amortised over a period of 10
years taking into consideration its anticipated future benefits.

(xii) Borrowing Cost:
Borrowing costs attributed to the acquisition of fixed assets are capitalized as a part of the cost of
asset upto the date the asset is put to use. Other borrowing costs are charged to the profit & loss
account in the year in which these are incurred.

(xiii) Employee Benefits:

(a) Defined Contribution Plan:

Employee benefits in the form of contribution to Provident Fund managed by Government
Authorities, Employees State Insurance Corporation and Labour Welfare Fund are considered
as defined contribution plan and the same is charged to the Profit & Loss Account of the year
when the contribution to the respective funds are due.

(b) Defined Benefit Plan:

Retirement benefits in the form of gratuity etc. are considered as defined benefit obligations
and are provided at the present value of the amounts payable as on that date of the balance
Sheet, determined by using actuarial valuation techniques. Actuarial gains /losses, if any, are
recognized in the Profit & Loss Account.

(c) Leave Encashment.

Liability on account of the un-availed earned leave has been provided at the year-end on actual
basis.

(xiv) Employee Stock Compensation Cost:
The Company measures compensation cost relating to employee stock option using the intrinsic
value method. Compensation cost for stock option represent the excess of the market price over the
exercise price of the shares granted under Employee Stock Option Scheme is amortised in
accordance with guidelines issued by Securities and Exchange Board of India (SEBI), in this regard.

(xv) Taxation:
(a) Provision for Income Tax is determined on the basis of the estimated taxable income and
amount expected to be paid to the tax authorities in accordance with the Provisions of the
Income Tax Act, 1961.

(b) Deferred Tax is recognized in respect of deferred tax assets (subject to the consideration of
prudence) and to the extent there is virtual certainty that the asset will be realized in future
and deferred tax liabilities on timing differences, being the difference between taxable
income and accounting income that originate in one year and are capable of reversal in
subsequent years.

(xvi) Earnings Per Share:
Basic earnings per share are calculated by dividing the net profit for the year attributable to equity
share holders by the weighted average number of equity shares outstanding during the period.


171
For the purpose of calculating the diluted earnings per share the net profit for the year attributable
to equity share holders by the weighted average number of equity shares outstanding during the
period are adjusted for the effects of all dilutive potential equity shares.

2. NOTES ON ACCOUNTS

(i) Contingent liability not provided for:


Particulars
As at
31-03-10
(Rs Million)
As at
31-03-09
(Rs Million)
As at
31-03-08
(Rs Million)
(a) Corporate guarantees issued to banks on
behalf of Subsidiary Company
250

Nil

Nil
(b) Bank guarantees issued on behalf of the
Company
51.76 6.20 6.87
(c) In respect of disputed sales tax matter,
pending before the Sales tax tribunal,
contested by the Company

Nil

1.34

1.34
(d) In respect of disputed Income tax matters,
pending before the appropriate Income
tax authorities, contested by the Company
For A.Y. 2007-08
For A.Y. 2005-06
For A.Y. 2004-05
For A.Y. 1992-93



86.07
Nil
22.27
Nil


Nil
Nil
Nil
1.00


Nil
70.36
16.66
1.00
(e) In respect of disputed service tax matter,
pending before the appropriate Central
Excise authorities, contested by the
Company


2.02

Nil



Nil
(f) Disputed matters under arbitration
pending disposal
20.14 20.14

Nil

(ii) Estimated amount of contracts remaining to be executed on capital accounts and not provided
for is approx Rs. 607.87 million, 2008-2009 Rs.90 million and 2007-2008 Rs 43 million. (net of
advances)
(iii) Finance cost comprises of:


Particulars
2009-10
(Rs Million)
2008-2009
(Rs Million)
2007-2008
(Rs Million)

(a) Interest on term loans 78.43 5.97 18.83
(b) Interest on cash credits / Working Capital 122.23 81.74 27.93

172
Demand Loan
(c) Others 35.18 19.39 8.40
Total: 235.84 107.10 55.16

(iv) Operating Lease:

The Company has taken Bottling units on operating lease at various locations and during
the financial year Rs. 20.97 million ( Rs 38.99 million 2008-2009 and Rs 13.99 million 2007-2008)
paid towards lease rentals has been charged to profit & loss account.

(v) The disclosure of Accounting Standard 15 Employee Benefits is as follows:

Defined Contribution Plan

The Company has charged in the profit & loss account during the financial year an amount of Rs.
13.50 million (Rs.10.16 million 2008-2009 and Rs 5.21 million 2007-2008 under defined
contribution plan as employers contribution to Provident Fund.

Defined Benefit Plan

The Employees gratuity fund scheme managed by LIC is a defined benefit plan. The present value of
obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which
recognizes each period of service as giving rise to additional unit of employee benefit entitlement
and measures each unit separately to build up the final obligation. The obligation for leave
encashment is recognized in the manner as gratuity.


(Amount in Rs million)
FUNDED NON
FUNDED
FUNDED NON
FUNDED
FUNDED NON
FUNDED
GRATUITY LEAVE GRATUITY LEAVE GRATUITY LEAVE
2009-2010 2009-10 2008-09 2008-09 2007-08 2007-08
Present value of
Commitments 10.87 - 21.05 1.74 19.16 6.15
Fair Value of Plans 8.07 - 7.43 - 6.84 -
Net Liability in the
Balance Sheet 2.80 8.90 13.62 1.74 12.32 6.15
Defined benefit
commitments - - - - - -
Opening Balance 21.05 - 19.16 - 17.89 -
Current Service
Cost 2.65 - 2.13 - 1.38 -
Interest expenses 1.90 - 1.70 - 1.54 -
Paid benefits - - - - - -
Actuarial (gains)
loss Transfer
received (14.72) - (1.95) - (1.65) -
Closing balance 10.87 - 21.05 - 19.16 -
Plan Assets - - - - - -
Opening balance 7.43 - 6.84 - 6.18 -

173
Expected return on
scheme assets 0.59 - 0.55 - 0.50 -
Contributions by
the company - - - - 0.09 -
Paid Funds - - - - - -
Actuarial (gains)
loss 0.05 - 0.04 - 0.07 -
Transfer Received - - - - - -
Closing balance 8.07 - 7.43 - 6.84 -
Return on plan
assets - - - - - -
Expected return on
plan assets 0.59 - 0.55 - 0.50 -
Actuarial (gains)
loss 0.05 - 0.04 - 0.07 -
Actual return on
plan assets 0.64 - 0.59 - 0.57 -
Expenses on
defined benefit
plan - - - - - -
Current service
costs 2.65 - 2.13 - 1.38 -
Past service cost
- - - - - -
Interest expenses 1.90 - 1.70 - 1.54 -
Expected return on
investments (0.59) - (0.55) - (0.50) -
Net actuarial (gain)
loss (14.77) - (1.99) - (1.72) -
Expenses charged
to profit and loss
account (10.82) - 1.30 - 0.70 -





Investment Details
%
Invested
%
Invested
%
Invested

31.03.2010 31.03.2009 31.03.2008


Funds Managed by Insurer
100 100 100
Public Sector Unit Bonds
- - -
State/Central Guaranteed securities - - -
Special deposit schemes - - -
Other (excluding bank balances) - - -
Actuarial
assumptions
Gratuity
(funded)

Gratuity
(funded)

Gratuity
(funded)


Mortality (LIC) 1994-96 Ultimate

1994-96
Ultimate

1994-96
Ultimate

Discount rate (per annum) 8.25%

8.00%

8.00%


174

(vi) Employee Stock Option Scheme
(a) The Shareholders of the Company at the Annual General Meeting held on August 06, 2008
approved Employee Stock Option Scheme (ESOP) 2008.

(b) During the year ended 31
st
March, 2010 the following scheme was in operation:

Particulars Grant 1 Grant 2
Date of Grant 02
nd
July,2009 28
th
Jan 2010
Date of the Board Approval 02
nd
July,2009 28
th
Jan 2010
Date of the Shareholders Approval 06
th
Aug, 2008 06
th
Aug, 2008
Number of options granted **273,000 1,444,521
Vesting period from the date of grant 4 years 4 years
Exercise period from the date of vesting 2 years 2 years

** Post adjustment of Bonus in the ratio of 2:1 shares and net of cancellation and re-issue of stock
option during the financial year.

(c) The details of the options as on 31
st
March, 2010 are as under:

Particulars As at 31
st

March 2010
As at 31
st

March 2009
Options outstanding at the beginning of the year Nil Nil
Options granted during the year 1,717,521 Nil
Options cancelled during the year Nil Nil
Options outstanding at the end of the year 1,717,521 Nil

** Net of cancellation and re-issue of stock option during the financial year.

(d) The weighted average fair value of stock options granted during the financial year was Rs.
5,573,552 (Previous Year Rs. Nil). The Black Scholes valuation model has been used for
computing the weighted average fair value considering the following inputs:

Particulars Grant 1 Grant 2
Dates of Grant 02.07.2009 28.01.2010
Market Price (Rs. per share) on the dates of grant 143.45 99.45
Volatility 71.49% 68.67%
Risk free rate 6.24% 6.76%
Exercise price 120 75
Expected rate of return on plan assets
(per annum)
8.00%

8.00%

8.00%

Rate of escalation in salary (per
annum)
5.00%

5.00%

5.00%


175
Time to maturity (years) 5 5
Dividend yield 2% 2%
Option fair value ( Rs. per share) 66.80 49.11

(e) Since the Company, used the intrinsic value method, the impact on the reported net profit and
earnings per share by applying the fair value method is as under

Particulars 31
st
March 2010 31
st
March 2009
Net Profit as Reported available to Equity Share holders 339.67 197.64
Add: Employee stock compensation under intrinsic value 2.83 Nil
Less: Employee stock compensation under fair value
method
5.57 Nil
Adjusted Net profit.. 336.92 197.64
Earnings per share
Basic:
-As reported 17.23 11.51
-Adjusted 17.09 11.51
Diluted:
-As reported 16.84 10.95
-Adjusted 16.70 10.95

(vii) Segment Reporting:
The Company is predominantly engaged in the business of manufacture and sale of Indian made
foreign liquor and its related products which constitute a single business segment.

(viii) Related Party Disclosures:

The disclosures pertaining to the related parties as required by the Accounting Standard 18 Related
Party Disclosure issued by the Institute of Chartered Accountants of India, as applicable, are as
under:

(a) List of Related parties and relationship

Sr.
No.
Name of the related party

Relationship
1. Prag Distillery (P) Ltd. Subsidiary Company
2. Surya Organics Chemicals (P) Ltd. Subsidiary Company
3. Mr. Amit Dahanukar Key Managerial Personnel
(Chairman & Managing Director)
4. Mrs. Shivani Amit Dahanukar Key Managerial Personnel
(Executive Director)
5. M.L. Dahanukar & Co. Pvt. Ltd. Company in which Key Managerial
Personnel has substantial interest

176
6. Arunoday Investments Pvt. Ltd. Company in which Key Managerial
Personnel has substantial interest
7. Dr. Priyadarshini A. Dahanukar Relative of Key Managerial Personnel

(b) Transactions during the financial year with related parties: 2009-2010
(Rs million)
Sr.
No
Nature of Transaction Key Managerial
personnel
Company with
substantial
Interest
Relatives of Key
Managerial
Personnel
1. Payment to Key
Managerial Personnel
47.88


- -
2. Loans taken - 150 -
3. Rent 2.45 0.72 0.69
4. Outstanding:
Payable

-


150


-



Transactions during the financial year with related parties: 2008-2009
(Rs million)
Sr.
No
Nature of
Transaction
Key
Managerial
personnel
Company with
substantial
Interest
Relatives of
Key
Managerial
Personnel
1. Payment to Key
Managerial
Personnel
32.85


- -
2. Loans taken - - -
3. Rent 1.93 0.72 0.67

Transactions during the financial year with related parties: 2007-2008
(Rs million)
Sr.
No
Nature of
Transaction
Key
Managerial
personnel
Company with
substantial
Interest
Relatives of
Key
Managerial
Personnel
1. Payment to Key
Managerial
Personnel
25.13

- -
2. Loans taken - - -
3. Rent - 0.72 0.18

(ix) The break-up of deferred tax is as under:

177
(In Rs million)
As at
31
st
March,
2010
As at
31
st
March,
2009
As at
31
st
March,
2008
Opening Deferred Tax liability 62.36 37.39 30.23
Add: Deferred Tax (Assets) /Liability
during the year on account of
difference in depreciation &
Others
57.19 24.97 7.16
Closing Deferred Tax liability 119.55 62.36 37.39

(x) Auditors remuneration charged to accounts: (In Rs million)
2009-10

2008-09

2007-08

a. Audit Fees 0.45 0.26 0.23
b. Auditors remuneration in other capacity 0.10 0.10 0.11
Total 0.55 0.36 0.34

(xi) Provision for excise duty on finished goods manufactured but yet to be cleared from the factory as at
31st March, 2010 estimated at Rs. 73.02 million (Previous Year Rs. 79.15 million) has been provided
in the books and also considered in valuation of closing stock of finished goods. Provision for excise
duty on finished goods charged in the Profit and Loss Account for the financial year is as follows :-


2009-10 2008-09

2007-08




Provision for excise duty on finished goods at
the beginning of the year


79.15

38.73


32.06
Provision for excise duty on finished goods at
the end of the year
73.02 79.15 38.73


Provision for excise duty on finished goods
charged in the Profit and Loss Account

(6.13)


40.42

6.67


(xii) There are no amounts outstanding in respect of unpaid dividend / fixed deposits for more than
seven years to be transferred to Investor Education & Protection Fund.

(xiii) The amount of secured and unsecured loans from banks outstanding at the end the financial year
has been guaranteed by the personal guarantee of Chairman & Managing Director of the Company.


178
(xiv) The Company has not received the required information from suppliers regarding their status under
the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to
Micro, Small and Medium Enterprises have not been made.


(xv) Earnings per share:
2009-2010

2008-2009

2007-2008


Profit After Tax (Rs Million)
348.89 197.80 121.22

Less : Dividend on Preference Shares & Tax
thereon
9.22 0.16 -
Profit after Tax and after Preference Dividend 339.67 197.64 121.22

Basic Earnings Per Share 17.23 11.51 7.06
Diluted Earnings Per Share 16.84 10.95 6.72
Face Value per Equity Share 10 10 10




(xvi) Other Significant notes:

(a) The Companys glass manufacturing unit was given to Ramnath Glass Containers Pvt. Ltd
(RGCPL) managed by Mehta Brothers on lease for carrying out their business, which had
discontinued the operations in the year 2003 and handed over the unit back to the Company in
totally unworkable conditions without fulfilling their legal obligations under the agreement.
Due to this the Company had to pay the statutory liabilities and settle the dues of the workmen
on behalf of RGCPL / Mehta Brothers. The Company has initiated the legal action against the
RGCPL / Mehta Brothers (for recovery of amount paid together with interest and damages
amounting to Rs.76.2 million).

(b) The Companys distributor Ding Dong Liquors has filed a winding up petition on the Company
in the High Court of Judicature of Bombay for recovery of Security Deposit of Rs.25 million. The
Company withheld the Security Deposit on the grounds that Ding Dong Liquors had failed to
deliver the C Forms and did not pay the Company Rs.12.30 million for goods purchased from
the Company. The Honble High Court vide its Order directed the Company to deposit a sum of
Rs.12.70 million out of the total amount claimed by Ding Dong Liquors. The Company has
deposited the above sum with the Court and filed an appeal against the said Order.
Further, the Company has filed a separate suit for recovery of dues of Rs.39 million and C-forms
against Ding Dong Liquors.

(c) Anupama Wine Distributors has filed a suit before the City Civil Court, Bangalore claiming
Rs.73.11 million towards refund of security deposit and other dues. The Honble Court vide its
Order dated 22.12.2007 dismissed their application for attachment of property for recovery of the
above dues. The Company has filed a counter claim for Rs.119.30 million against Anupama Wine
Distributors and the matter is pending for hearing.

(d) Anupama Wine Distributor has filed a company petition against the Company before Bombay High
Court and against that the Honble Bombay High Court has vide order dated 16
th
March, 2009
directed to the Company to Deposit a sum of Rs.42.10 millions. The Company has deposited the
above sum with the Court and filed an appeal against the said Order.



179
(xvii) Details of Security provided for various credit facilities :-

All Long term loans from Banks First pari passu charge on all fixed assets of
the Company wherever situated
Second charge on all current assets raw
materials, work-in-process, finished goods,
stores, chemicals & book debts
All Cash Credit (including working
capital demand loan)

Hypothecation of stock of raw materials,
work-in-process, finished goods, stores,
chemicals & book debts
Second charge on all immovable and movable
properties of the Company.


(xviii) The published consolidated accounts of 2007-2008 did not include the financial statements of Prag
Distillery Pvt Ltd (a 100% Subsidiary Company) as the audited financials of the same were not
received for the year ended March 31, 2008 till the date of adoption of the accounts of Tilaknagar
Industries Ltd for the said financial year. Further, the transactions were not material for the Group as a
whole and hence the accounts were not consolidated.

As the audited financial statements of Prag Distillery Pvt Ltd (a 100% Subsidiary Company) for the
year 2007-2008 have been subsequently received, the same has now been consolidated in the
enclosed consolidated financial statements for 2007-2008.

(xix) The first year of consolidation was 2007-2008 and hence the previous years figures of 2006-2007
were not consolidated. Accordingly, the cash flow statement for the year ended 31
st
March 2008
representing the movement of net increase in cash and cash equivalents between 2007-2008 and
2006-2007 has not been prepared.

(xx) Figures of previous year have been regrouped, reclassified and recast, wherever considered necessary.

Additional information on regrouping, reclassification and recasting :-

1) Conversion charges incurred on tie up units which were earlier grouped and netted off under
income from tie up units under sales amounting to Rs 51.59 million in 2008-2009 and Rs 26.02
million in 2007-2008 have been regrouped under conversion charges in manufacturing and other
expenses.

2) Advance taxes aggregating to Rs 166.92 million in 2008-2009 and Rs 111.13 million in 2007-2008
which were earlier grouped under loans and advances have been netted off with provision for
taxation.





180
SCHEDULES FORMING PART OF CONSOLIDATED PROFIT AND LOSS ACCOUNT

Annexure to Schedule L


1. The Company has entered into arrangements with certain distilleries and bottling units in other states for
manufacturing and marketing of its own brands. The manufacture under the said arrangement, wherein each partys
obligations are stipulated, is carried out under Companys close supervision. The marketing is entirely the responsibility
of the Company. The Company is also required to ensure adequate finance to the distilleries, where required.
Accordingly, it is considered appropriate to disclose the following quantitative and value information for the year as
applicable to such activities.


Quantitative information and Income from operations through other distilleries / bottling units reflects the gross
contribution made by these units and is detailed as under:-


2009-2010 2008-2009

2007-2008

Quantity

Rs Million

Quantity

Rs Million

Quantity

Rs Million

Gross Sales

B.L.

34.66

5,566.39

6.90

1,115.18

19.87

1,119.96

Net Sales

B.L.

2,470.32

561.24

563.95



The Total Income reported in Schedule 'I (1) is detailed as follows :-
2009-2010

2008-2009

2007-2008

Gross Sales of Company's
brands and other sales
including sales made by
Tie-up arrangement

10,001.01

4,897.14

3,116.23

Less : Excise Duty

4,731.99

2,112.60

1,369.28

Net Sales of Company's
Brands and other sales

5,269.03

2,784.55

1,746.96

Less : Net Sales made by Tie
up units

2,470.32

561.24

563.95

Add : Net income from Tie
up arrangement

1,063.37

268.79

297.55

Total Income

3,862.07

2,492.09

1,480.56


2. Earnings in Foreign
Exchange

45.22

81.46

19.79

3. Export through Third
Parties

--- --- ---
4. Expenditure in Foreign
Exchange

9.59

2.67

0.93




181

REVIEW REPORT TO THE BOARD OF DIRECTORS OF TIlA KNAGAR INUDSTRIES LTD.

We have reviewed the accompanying statement of unaudited consolidated financial results of Tilaknagar
Industries Ltd. (the Group) for the quarter ended 30 September, 2010 except for the disclosures regarding
Public Shareholding and Promoter and Promoter Group Shareholding which have been traced from
disclosures made by the management and have not been reviewed by us, being submitted by the Company
pursuant to the requirement of Clause 41 of the Listing Agreement. This statement is the responsibility of the
Companys Management and has been approved by the Board of Directors/committee of Board of Directors.
Our responsibility is to issue a report on these financial statements based on our review.

We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, Review of
Interim Financial Information performed by the independent Auditor of the entity issued by the Institute of
Chartered Accountants of India. This standard requires that we plan and perform the review to obtain
moderate assurance as to whether the financial statement is free of material misstatement. A review is
limited primarily to inquiries of company personnel and analytical procedures applied to financial data and
thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not
express an audit opinion.

We report that the statement of unaudited consolidated quarterly financial results have been prepared by the
management of Tilaknagar Industries Ltd in accordance with the requirements of Accounting Standard (AS)
21, Consolidated Financial Statements.

Based on our review conducted as above, nothing has come to our attention that causes us to believe that the
accompanying statement of unaudited financial results prepared in accordance with recognition and
measurement principles laid down in Accounting Standard 25 Interim Financial Reporting (notified pursuant
to the Companies (Accounting Standards) Rules, 2006) and other recognised accounting practices and
policies has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing
Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement.


For BATLIBOI & PUROHIT
Chartered Accountants
Firm Reg No. 101048W



Kaushal Mehta
Place : Mumbai Partner
Dated : 22
nd
October, 2010 Membership No.111749










182

TILAKNAGAR INDUSTRIES LTD.
Consolidated Unaudited Financial Results for the Quarter & Half Year ended September 30, 2010
(Rs in lacs)
Particulars
Quarter Ended Half year ended

30.09.201
0
30.09.2009 30.09.2010 30.09.2009

Unaudited Unaudited Unaudited Unaudited
Previous
Year Ended
31/03/2010
(Audited)
1 (a) Net Sales / Income from Operations
12,708.60 7,020.33 21,100.45 13,604.36 38,620.74
(b) Other Operating Income 84.56 115.00 124.45 151.87 441.91
2 Expenditure
a
(Increase) / Decrease in Stock-in-
trade & Work-in-progress (657.16) (647.30) 336.23 (1,009.97) (1,894.12)
b Consumption of Raw Materials 5,370.73

3,902.72

8,035.33

7,882.01 17,005.55
c Purchase of Traded Goods

-

-

-

-

-
d Employees Cost 497.81 491.18 1,131.97 1,027.88 2,012.97
e Depreciation 331.39 164.36 618.39 271.64 712.69
f Other Expenditure 3,928.51 1,702.03 6,384.57 3,316.09 13,481.83
g Total 9,471.28 5,612.99 16,506.49 11,487.65 31,318.92
3
Profit from Operations before Other
Income, Interest &
Exceptional Items (1-2) 3,321.88 1,522.34 4,718.41 2,268.58 7,743.73
4 Other Income

-

-

-
5
Profit before Interest & Exceptional
items (3 + 4) 3,321.88 1,522.34 4,718.41 2,268.58 7,743.73
6 Interest 1,427.62 594.55 2,157.53 848.75 2,358.41
7
Profit after Interest but before
Exceptional items (5 - 6) 1,894.26 927.79 2,560.88 1,419.83 5,385.31
8 Exceptional Items

-

-

-

-

-
9
Profit (+) / Loss (-) from ordinary
activities before tax (7 + 8) 1,894.26 927.79 2,560.88 1,419.83 5,385.31
1
0 Tax expense 633.00 185.00 853.00 360.00 1,896.39
1
1
Net Profit (+) / Loss (-) from
ordinary activities after tax (9 - 10) 1,261.26 742.79 1,707.88 1,059.83 3,488.93
1
2
Extraordinary items (net of Tax
expenses)

-

-

-

-

-
1
3
Net Profit (+) / Loss (-) for the
period (11-12) 1,261.26 742.79 1,707.88 1,059.83 3,488.93
1
4
Paid-up Equity Share Capital(Face
value of the share Rs.10/- each) 9,695.43 3,028.52 9,695.43 3,028.52 3,231.00
Convertible Warrant

1,515.21 ---

1,515.21 --- ---

12% C.C.Preference Shares of
Rs.94/- each fully paid up ---

634.44 ---

634.44 ---
1
5
Reserves excluding Revaluation
Reserves as per Balance Sheet 9,381.35
of previous accounting year
1
6 Earnings per Share (EPS)(Rs.)

183
a
Basic and diluted EPS before extra-
ordinary items for the period,

for the year to date and for the
previous year(not annualized)
Basic

1.30

0.87

1.76

1.24

4.03
Diluted

1.26

0.87

1.71

1.24

4.00
b
Basic and diluted EPS after extra-
ordinary items for the period,

for the year to date and for the
previous year(not annualized)
Basic

1.30

0.87

1.76

1.24

4.03
Diluted

1.26

0.87

1.71

1.24

4.00

1
7 Public Shareholding
- Number of shares 38,633,325 7,797,681 38,633,325 7,797,681 12,469,675
- Percentage of Shareholding 39.85% 25.75% 39.85% 25.75% 38.59%
1
8 Promoters and promoter group
Shareholding
a) Pledged/ Encumbered --- --- ---
- Number of Shares

- Percentage of shares ( as a % of the
total

shareholding of the promoter and
promoter group )

- Percentage of shares ( as a % of the
total
share capital of the Company)

b) Non encumbered
- Number of Shares

58,320,975

22,487,523

58,320,975

22,487,523

19,840,325

- Percentage of shares ( as a % of the
total 100% 100% 100% 100% 100%

shareholding of promoter and
promoter group)

- Percentage of shares ( as a % of the
total share capital of the Company) 60.15% 74.25% 60.15% 74.25% 61.41%
Notes :
1
The Company in compliance with the provisions of Clause 41 of the Listing Agreement, has opted to publish the
consolidated financial results. The standalone financial results will, however, be made available to the Stock
Exchanges where the companys securities are listed and will also be posted on the Companys website.

2
The Consolidated Financial Statements have been prepared in accordance with Accounting Standard on
consolidated financial statements.

3
The above unaudited Financial Results reviewed by the Audit Committee have been approved and taken on record
by the Board of Directors at its meeting held on October 22, 2010

4
The Consolidated Financial results comprise the financial results of Tilaknagar Industries Ltd. and its 100%
subsidiaries Surya Organic Chemicals (P) Ltd. and Prag Distillery (P) Ltd. and have been prepared in accordance
with the AS-21 issued by the ICAI.


184
5
Standalone Information
Particulars Quarter Quarter Half Year Half Year
Previous
year
ended ended ended ended ended
30.09.2010 30.09.2009 30.09.10 30.09.09 31.03.2010
Unaudited Unaudited Unaudited Unaudited Audited
1
Net Sales/ Income from
Operations 9,154.08 6,020.85 16,152.16 11,922.87 35,172.90
2 Profit before Tax 1,120.60 555.22 1,675.25 970.73 4,996.05
3 Profit after Tax 750.60 406.22 1,122.25 691.73 3,312.26

6

The statutory auditors have carried out a "Limited Review" of the consolidated unaudited financial results of the
Company for the quarter ended September 30, 2010.

7

The Company is predominantly engaged in the business of manufacture and sale of Indian Made Foreign Liquor
(IMFL) and its related products, which constitute a single business segment.

8

The Company has franchisee arrangements in some states and in respect of such arrangements the turnover of Rs
20,211.09 lacs ( Rs 13,136.87 lacs ) during the quarter ended September 30, 2010 and Rs 38,804.18 lacs ( Rs
20,944.57 lacs) during the half year ended September 30, 2010 has not been treated as 'Sales'. However the surplus
generated out of these arrangements is included in the ' Sales/Income from Operations'. Thus the total sales of the
Companys' brand is Rs 33,818.06 lacs (Rs 22,547.27 lacs) during the quarter ended September 30, 2010 and Rs
59,450.78 lacs (Rs 40,750.40 lacs) during the half year ended September 30, 2010.

9

The Company did not have investor complaints pending on July 1, 2010. During the quarter seven investor
complaints were received and the same were resolved. There were no investor complaints pending as on
September 30, 2010

10

During the quarter ended September 30, 2010, the Company has granted 286,821 stock options under Employee
Stock Option Scheme 2008 as amended on September 20, 2010 ("ESOP Scheme") and as on September 30, 2010
5,073,363 Options were outstanding under the ESOP Scheme

11

During the quarter, the Company has allotted 64,636,200 Bonus Equity Shares of Rs. 10/ - each to the shareholders
of the Company in the ratio of two equity shares for every one equity share held by them by capitalization of free
reserves .

12
During the quarter, the Company has allotted 8,100 Equity Shares of the face value of Rs 10/- each pursuant to
ESOP Scheme 2008 to the employees of the Company on exercise of options vested to them.
13 The Company has allotted 2,767,500 Warrants convertible into Equity Shares of face value of Rs. 10/- each with in
18 months from the date of allotment at an exercise price of Rs 219/- (including Rs 209/- towards premium) on
preferential allotment basis to a Promoter group Company on September 20, 2010.

14

Employee costs for this quarter includes the provisions for Employee Retirement Benefits on pro-rata basis.


15

The Unaudited statement of assets and liabilities is as under:
(Rs Lacs)

Half Year Ended on


Particulars
30/09/2010 30/09/2009


Shareholders Funds


a) Capital
11,210.64

3,662.96

b) Employee Stock Option Outstanding
78.30

-

c) Reserves & Surplus
12,104.72

15,335.07

Loan Funds
49,793.03

26,259.19

Deferred tax liabilities
1,383.49

623.59

185

Total
74,570.18

45,880.81
Fixed Assets

38,441.08

32,981.52

Investments
28.77

3.46

Current Assets, Loans and Advances
-

-

a) Inventories
7,761.70

8,096.51

b)Sundry debtors
9,268.23

9,440.22

c)Cash and bank balances
1,802.31

1,199.98

d)Other current assets
-

-

e)Loan and advances
28,427.86

2,221.75

Less : Current liabilties and provisions
-

-

a)Liabilities
10,532.37

6,953.91

b)Provisions
627.40

1,108.72

Total
74,570.18

45,880.81



16
The previous period figures have been regrouped wherever necessary.




186
INDEPENDENT ACCOUNTANTS

M/s. Batliboi & Purohit, Chartered Accountants, have audited the consolidated financial statements
of the Company as of and for the years ended March 31, 2008, 2009 and 2010 and have reviewed the
consolidated financial statements of the Company as of and for the half year ended September 30,
2010.

187
DECLARATION
Our Company certifies that all relevant provisions of Chapter VIII read with schedule XVIII of the SEBI Regulations have been
complied with and no statement made in this Placement Document is contrary to the provisions of Chapter VIII and Schedule
XVIII of the SEBI Regulations and that all approvals and permissions required to carry on our business have been obtained, are
currently valid and have been complied with. Our Company further certifies that all the statements in this Placement
Document are true and correct.



Signed by:

S/d-
_______________________________
MR. AMIT DAHANUKAR
Chairman and Managing Director


Signed by:

S/d-
______________________________
MR. C. V. Bijlani
Non Executive Director








Date: October 29, 2010
Place: Mumbai

188
REGISTERED OFFICE OF OUR COMPANY

P.O. Tilaknagar, Taluka Shrirampur, District Ahmednagar, Maharashtra- 413720

BOOK RUNNING LEAD MANAGERS




INDIA INFOLINE LTD.
10
th
Floor, One IBC,
841, Senapati Bapat Marg, Lower Parel,
Mumbai 400 013, Maharashtra, India





SPA MERCHANT BANKERS LTD.
101-A, 10th Floor,
Mittal Court, Nariman Point
Mumbai-400021, Maharashtra, India


INTERNATIONAL LEGAL ADVISOR TO THE BOOK RUNNING LEAD MANAGERS AS TO SELLING
AND TRANSFER RESTRICTIONS

DLA Pipers Singapore Pte. Ltd.
80 Raffels Place #48-01
UOB Plaza 1 Singapore 048624


DOMESTIC LEGAL ADVISOR

J. Sagar Associates
Vakils House,
18, Sprott Road, Ballard Estate
Mumbai- 400 001
India

AUDITORS TO OUR COMPANY

M/s. Batliboi & Purohit, Chartered Accountants
National Insurance Building, 204,
Dadabhoy Naoroji Road,
Fort, Mumbai- 400 001