Sakthilof

LETTER OF OFFER
(Private & Confidential)

For Equity Shareholders of the Company Only
SAKTHI FINANCE LIMITED

(Originally incorporated as “The Pollachi Credit Society Private Limited” on 30/03/1955 under the Indian Companies Act
1913. The Company was later converted into a public limited company and the name of the company was changed to Sakthi
Finance Limited on 27/07/1967 and a fresh certificate of Incorporation was obtained)
Registered Office : 62, Dr. Nanjappa Road, Post Box No. 3745, Coimbatore 641 018.
Tel: 91-0422-2231471 – 474; Fax: 91-0422-2231915
Email: sfl@vsnl.com; Website: www.sakthifinance.com
Contact person: S A Subramanian, Company Secretary and Compliance Officer
(For details regarding changes in registered office of the Company in past please refer page no. 40)
ISSUE OF 1,00,35,660 EQUITY SHARES OF RS. 10/- EACH AT PAR (ISSUE PRICE OF RS.10/-)
AGGREGATING RS.1003.57 LACS ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS
OF THE COMPANY IN THE RATIO OF 1 (ONE) EQUITY SHARE FOR EVERY 2 (TWO) EQUITY SHARES
HELD ON 31/10/2007 (RECORD DATE). THE ISSUE PRICE IS SAME AS THE FACE VALUE
GENERAL RISKS
Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this
issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors
carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their
own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or
approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or the adequacy of
this document.
The attention of investors is drawn to the statement of Risk Factors beginning on page no. viii of this Letter of Offer.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Letter of Offer contains
all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information
contained in this Letter of Offer is true and correct in all material respects and is not misleading in any material respect,
that the opinions and intentions, expressed herein are honestly held and that there are no other facts, the omission of which
makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading
in any material respect.
LISTING
The existing Equity shares of the company are listed on Bombay Stock Exchange Limited (BSE), (the Designated Stock
Exchange) and Madras Stock Exchange Limited (MSE). The Company has received in-principle approval from BSE vide
its letter no. DCS/PREF/JA/IP-RT/510/07-08 dated 01/06/2007 and MSE vide its letter no MSE/DS/LD/738/385/07
dated 05/06/2007 for listing of the equity share being issued in terms of this Letter of Offer.
LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
KEYNOTE S.K.D.C. Consultants

Corporate Services Ltd
KEYNOTE CORPORATE SERVICES LIMITED S.K.D.C CONSULTANTS LIMITED
4th Floor, Balmer Lawrie Building No.11, Seth Narayandas Layout
5, J. N. Heredia Marg, Ballard Estate, Mumbai - 400 001 Street No.1, West Power House Road
Tel : +91 022 30266000 - 3 Coimbatore - 641 012
Fax: + 91 022 22694323 Tel.: (0422) 6549995
E-mail: mbd@keynoteindia.net Fax: (0422) 2499574
Website: www.keynoteindia.net E-mail: info@skdc-consultants.com
SEBI Regn. No.: INM 000003606 Website: www.skdc-consultants.com
AMBI Regn No: AMBI/040 SEBI Regn. No.: INR 000000775
Contact Person : Mr. Janardhan Wagle Contact Person : Mr. K.S. Ramachandran
ISSUE PROGRAMME
ISSUE OPENS ON LAST DATE FOR RECEIVING ISSUE CLOSES ON
REQUESTS FOR SPLIT FORMS
Thursday, Friday, Wednesday,
22nd November 2007 07th December 2007 26th December 2007
TABLE OF CONTENTS
SECTION CONTENTS Page Nos.

Definitions and Abbreviations iii
Certain Conventions; Use of Market Data vi
Forward Looking Statements vii
I RISK FACTORS viii
PART I
II INTRODUCTION
Summary 1
General Information 5
Capital Structure 8
Objects of the Issue 14
Basis for Issue Price 16
Statement of Tax Benefits 19
III ABOUT THE COMPANY
Industry Overview 24
Business Overview 29
Regulations and Policies 36
History 40
Management 43
Promoters 52
Promoter Group Companies 54
PART II
IV FINANCIAL INFORMATION
Auditors’ Report 61
Management’s Discussion and Analysis of Financial Condition and Result of Operations 82
V LEGAL AND OTHER INFORMATION
Outstanding Litigations and Defaults 86
Material Developments 113
Government Approvals 114
VI REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue 115
Prohibition by SEBI 115
Disclaimer Clause 115
Filing 117
Stock Market Data 121
VII OFFERING INFORMATION 124
VIII MAIN PROVISIONS OF ARTICLES OF ASSOCIATION 138
IX OTHER INFORMATION
Material Contracts and Documents for Inspection 146
PART III
Declaration 148
ii
DEFINITIONS AND ABBREVIATIONS
CONVENTIONAL / GENERAL TERMS

Term Description
Act The Companies Act, 1956 and subsequent amendments thereto
Depositories Act The Depositories Act, 1996 as amended from time to time
Depository A Depository registered with SEBI under the SEBI (Depositories &
Participant) Regulations, 1996 as amended from time to time
FY/ Financial year or Fiscal Year The twelve months ended March 31 st of a particular year
Security Certificate Equity Share Certificate
Security(ies) Equity Share(s)
SE/ Stock Exchange(s) BSE and MSE
ISSUE RELATED TERMS
Term Description
Articles Articles of Association of Sakthi Finance Ltd.
Board Board of Directors of Sakthi Finance Ltd.
BSE/Designated Stock Exchange Bombay Stock Exchange Limited
CAF Composite Application Form
Directors Directors on the Board of Sakthi Finance Ltd.
Equity Shareholders Equity Shareholders of the Company whose name appear as:
✓ Beneficial Owners as per the list furnished by the depositories in respect of
Equity Shares held in electronic form and
✓ On the Register of Members of the Company in respect of the Equity Shares
held in physical form
Equity Shares Equity Shares of the Company of Rs.10/- each
Lead Manager/ LM Lead Manager to the Issue i.e. Keynote Corporate Services Ltd.
Issue/ Rights Issue The issue of 1,00,35,660 Equity Shares of Rs.10/- each for cash at par (Issue
Price Rs.10/-) per Equity Share on rights basis to existing Equity Shareholders
of the Company in the ratio of 1 (One) Equity Share for every 2 (Two) Equity
Shares held on 31.10.2007 (Record Date) aggregating Rs.1003.57 lacs as per
this Letter of Offer.
Issue Price The price at which the equity shares will be issued by the Company under this
Letter of Offer.
Issuer/ Company/ SFL Sakthi Finance Ltd.
Letter of Offer/ LOO/ Offer Document This Letter of Offer dated 31.10.2007 circulated to the Equity Shareholders and
filed with the Stock Exchanges containing inter alia the Issue price and the number
of equity shares to be issued and other incidental information.
MSE Madras Stock Exchange Limited
Record Date Wednesday, 31/10/2007
ABBREVIATIONS
Abbreviations Full Form
AGM Annual General Meeting
CDSL Central Depository Services (India) Limited
CLB Company Law Board
DCA Department of Company Affairs
DP Depository Participant
EGM Extraordinary General Meeting
EPS Earnings Per Share
iii
Abbreviations Full Form

FCNR Account Foreign Currency Non Resident Account
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999 read with rules and regulations
thereunder and amendments thereto
FI Financial Institution
FII (s) Foreign Institutional Investors registered with SEBI under applicable laws
GIR Number General Index Registry Number
GOI Government of India
NA Not Applicable
NAV Net Asset Value
NPA Non Performing Asset
NR Non Resident
NRE Account Non Resident External Account
NRI(s) Non Resident Indians
NRO Account Non Resident Ordinary Account
NSDL National Securities Depository Limited
MOU Memorandum of Understanding
PAN Permanent Account Number
PAT Profit After Tax
PBDT Profit Before Depreciation and Tax
PBIDT Profit Before Interest Depreciation and Tax
PBT Profit Before Tax
P/E Ratio Price/Earnings Ratio
ROC Registrar of Companies
ROI Return on Investment
RBI Reserve Bank of India
SCRR Securities Contracts (Regulations) Rules, 1957 as amended from time to time.
SEBI Securities and Exchange Board of India
COMPANY/INDUSTRY RELATED TERMS

Term Description
AIFIs All-India Financial Institutions
CAMP Customer Asset Management Process
CAGR Compounded Annual Growth Rate
CAP Customer Appraisal Process
CARE Customer Acquisition and Retention
CRAR Capital to Risk-weighted Assets Ratio
CST Central Sales Tax
CV Commercial Vehicle
FIE Fellow of Institute of Engineers
GOI Government of India
HCV Heavy Commercial Vehicle
HRD Human Resource Development
ICRA ICRA Limited
KYC Know Your Customer
LCV Light Commercial Vehicle
NBFC Non Banking Financial Company
iv
Term Description
NBFI Non Banking Financial Institution
NHAI National Highways Authority of India
SCB Scheduled Commercial Banks
TERI The Energy and Resources Institute
USD U S Dollar
NOF Net Owned Funds
FIPB Foreign Investment Promotion Board
MICR Magnetic Ink Character Recognition
RTGS Real Time Gross Settlement
SICA Sick Industrial Companies Act
v
CERTAIN CONVENTIONS; USE OF MARKET DATA

In this Letter of Offer, unless the context otherwise requires, all references to one gender also refers to another gender and the
word “Lakh” or “Lac” means “one hundred thousand” and the word “million” means “ten lac” and the word “Crore” means
“ten million” and the word “One hundred crore” means “Billion”. In this Letter of Offer, any discrepancies in any table
between total and the sum of the amounts listed are due to rounding-off.
Throughout this Letter of Offer, all figures have been expressed in Lacs unless otherwise stated. All references to “India”
contained in this Letter of Offer are to the Republic of India.
For additional definitions used in this Letter of Offer, see the section “Definitions and Abbreviations” on page iii of this
Letter of Offer. Industry data used throughout this Letter of Offer has been obtained from industry publications and other
authenticated published data. Industry publications generally state that the information contained in those publications has
been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability
cannot be assured. Although the Company believes that the industry data used in this Letter of Offer is reliable, it has not
been independently verified. Similarly, internal Company reports, while believed by the Company to be reliable, have not
been verified by any independent sources.
CURRENCY OF PRESENTATION
In this Letter of Offer, all references to “Rupees” and “Rs.” are to the legal currency of India.
vi
FORWARD-LOOKING STATEMENTS
This Letter of Offer contains certain “forward-looking statements”. These forward looking statements can generally be
identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”,
“project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements
that describe the objectives, plans or goals also are forward-looking statements.
All forward looking statements are subject to risks, uncertainties and assumptions about the 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 the expectations include, among others:
♦ General economic and business conditions in India;
♦ The ability to successfully implement the strategy, growth and expansion plans and technological changes;
♦ Changes in the value of Rupee and other currency changes;
♦ Changes in the Indian and international interest rates;
♦ Allocations of funds by the Government;
♦ Changes in laws and regulations that apply to the customers of the Company;
♦ Increasing competition and the conditions of the customers of the Company and
♦ Changes in political conditions in India.
For further discussion of factors that could cause actual results to differ, please see the section titled “Risk Factors”
beginning on page no. viii of this Letter of Offer. By their nature, certain market risk disclosures are only estimates and
could be materially different from what actually occurs in the future. As a result, actual future gains or losses could
materially differ from those that have been estimated. Neither the Company, the Directors, any member of the Lead
Manager team nor any of their respective affiliates have any obligation to update or otherwise revise any statements
reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the
underlying assumptions do not come to fruition. In accordance with SEBI requirements, the Company and the Lead
Manager will ensure that investors in India are informed of material developments until such time as the grant of listing
and trading permission by the Stock Exchanges.
vii
SECTION I - RISK FACTORS

An investment in equity shares involves a high degree of risk. The investors shall carefully consider all the information
in this Letter of Offer, in evaluating the Company and its business, including the risks and uncertainties described below,
before making any investment decision. If any of the following risks actually occur, the business, financial condition and
results of operations could suffer, the trading price of the Equity Shares could decline, and the investors may lose all or
part of their investment.
Unless specified or quantified in the relevant risk factors below, the financial or other implications of any of the risks
described in this section cannot be quantified:
INTERNAL RISK FACTORS
INTERNAL RISK FACTORS AND RISKS RELATING TO COMPANY’S BUSINESS
1. Outstanding Litigations/disputes/cases pending against the Company/ Promoter / Directors and Group companies:
I. Litigations against the Company
The Company is involved in certain legal proceedings, incidental to its business and operations, which if determined
against the Company, could have an adverse impact on the results of its operations and financial condition. The
summary of the litigations is as follows:
No. of Approximate amount
Sl.
No Particulars cases / disputes involved where quantifiable
(Rs. in lacs)
1 Civil Proceedings 3 4.06
2 Statutory Disputes:
- Interest Tax 4 174.09
- Income Tax 6 379.31
3 Labour Law 1 –
For more information please refer to “Legal and other Information” commencing on page no. 86 of this Letter
of Offer.
II. Litigations pending against Group Companies
There are some litigations pending against listed companies and top five unlisted companies within the group.
For more information please refer to “Legal and other Information commencing on page no. 119 of this Letter
of Offer.
2. Contingent liabilities
The details of contingent liabilities not provided for as per the Balance Sheet for three months period ended
30/06/2007 is as follows:
Amount
Particulars (Rs. in lacs)
Guarantees and Collaterals given to banks and financial institutions
a) Pledging of Equity Shares of
- Sakthi Sugars Limited 55.28
- Sri Chamundeswari Sugars Ltd 7.00
Total 62.28
b) Future dues on sell down receivables excluding cash collaterals
- L & T Finance Ltd 949.05
- GE Capital Services India 3637.97
Less : Cash collaterals given 517.94
Total 4069.08
c) Guarantee for collection of managed business and future payable thereon
HP business done for HDFC Bank Ltd 916.34
Less : Security deposit with HDFC Bank Ltd —
Total 916.34
Grand Total 5047.70
viii
In the event such contingent liabilities materialize, it may have an adverse effect on the company’s financial condition
and future financial performance.
3. Restrictive Covenants
There are restrictive covenants in the agreement for borrowings from a Bank which among other things require the
Company to obtain prior permission from Bank for change in Management, declaring dividend and undertaking of
new project which may limit Company’s discretion in these matters.
4. The Company is currently rated MA- for its Fixed Deposit programme.
The Company is currently rated MA- for its Fixed Deposit programme. The rated instrument carries average credit
risk. With this rating, the company is unable to tap more resources from Banks.
5. Promise Versus Performance
The Company had come out with its previous Rights Issue during the year 1995. The Company had made certain
projections on the operating and financial performances based on the then prevailing situation. However, due to
various reasons, the projections could not be achieved. The details of the variations in the promises vs. performance
is detailed hereinunder: (Rs. In lacs)
As on 31.3.1996 As on 31.3.1997 As on 31.3.1998
Particulars Promise as Promise as Promise as
Actual Actual Actual
given in the given in the given in the
performance performance performance
offer offer offer
document document document
Finance Charges 4810 4299 6450 4631 8108 4468
Lease Rentals 857 893 1172 1218 1560 1219
Other Income 624 591 551 687 601 825
Total Income 6291 5783 8173 6536 10269 6512
Profit before interest 5581 4972 7418 5511 9459 5818
and depreciation
Profit before tax 701 536 1134 439 1491 110
Profit after tax 701 536 1034 383 1291 97
Equity capital 988 992 988 992 988 992
Preference capital 500 0 500 0 500 0
Free Reserves 2950 2753 3675 2794 4656 2504
EPS (Rs.) 6.38 5.40 9.75 3.86 12.35 0.98
Book Value per 39.85 37.24 47.20 37.71 57.13 34.85
share (Rs.)
6. Shortfall in the Promise vis-à-vis performance during the previous issues made by the Group Companies.
Some of the group companies made certain projections in their previous issues. However, due to various reasons, the
projections could not be achieved. For further details, please refer to page 119 of this Letter of Offer.
7. If the level of NPA in SFL’s portfolio were to increase, SFL’s business may suffer
SFL belives that its provisions for NPAs are adequate to cover known losses which may arise in its asset portfolio.
SFL expects the size of its loan Assets to continue to increase in the future as it expands its branch network in India
and offer new products and going forward, the Company may have additional NPAs. If SFL suffers from increases
in the level of final credit losses its future financial performance level could be adversely affected. The details of
the NPAs of the Company are as follows: (Rs. in lacs)
Particulars As at
30/06/2007 31/03/2007
Gross NPA (Rs. in lacs) 308.66 232.05
Net NPA to Average Net Total Assets 0.63% 0.51%
Net NPA to Total Credit 0.77% 0.57%
ix
8. Attracting and Retaining Key personnel

The success of any company depends in large part upon its management team and key personnel and the Company’s
ability to attract and retain such persons. The resignation or loss of key management personnel may have an adverse
impact on its business, future financial performance and the price of its Equity Shares
9. Losses made by Subsidiary Companies
The losses made by Sakthi Properties (Coimbatore) Ltd. during the past three years are as follows:
(Rs. in lacs)
Name of the Company 2004-05 2005-06 2006-07
Sakthi Properties (Coimbatore) Ltd. (6.07) (14.52) (19.73)
10. Loss Making Group Companies

The company is a part of the “Sakthi Group” of companies. Out of the three listed and top five unlisted companies,
the following companies have made losses during one or more of the last three financial years (as per the latest
available audited results).
(Rs. in Lacs)
Particulars 2006 2005 2004
Sakthi Sugars Limited (For the year ended 30th June) 9528.04 2701.92 (2535.32)
Sri Chamundeswari Sugars Limited (For the year ended 31st March) 1726.25 (98.35) (42.14)
Sri Bhagavathi Textiles Limited (431.68) (391.84) (30.67)
(For the year ended 31/03/2006, 30/06/2005 & 31/03/2004)
Sakthi Financial Services Limited (For the year ended 31st March) 19.70 18.67 (24.73)
11. The Company handles cash on a regular basis and are hence exposed to the risk of fraud and misappropriation
of funds
The Company handles cash on a regular basis and are hence exposed to the risk of fraud and misappropriation of
funds. Fraud and other misconduct can be difficult to fully detect and deter. Given the volume of transactions
confronted by SFL, certain cons may be compounded before they are discovered and successfully rectified.
EXTERNAL RISK FACTORS

1. Lack of independent and credible source, tends to affect the quality of information about customers
A nation wide credit bureau has only recently been established in India. Non availability of such credible source may
affect the quality of information available to the Company about the credit history of its new borrowers who are
mainly individual and small business people. Therefore as a result, the decision to extend credit is based on information,
including financial information furnished by or on behalf of customers and dealers. SFL may also rely on certain
representation as to the accuracy and completeness of that information.
2. Material changes in the regulation
NBFC in India are subject to detailed supervision and regulation by RBI. In addition the Company is subject to
changes in Indian corporate Laws as well as to the changes in the government regulations and policies and accounting
principles. Any changes in the regulatory frame work affecting NBFCs including the provisioning for NPAs or capital
adequacy requirements would adversely affect the profitability of the Company’s business, its future financial
performance and the price of its equity shares.
3. Volatility in interest rates in India could cause SFL’s gross spreads to decline and adversely affect its profitability.
SFL’s business is dependent on interest income from its operations. In the fiscal 2007, 85.11% of SFL’s
fiscal income was interest income. The Company is exposed to interest rate risk as a result of lending to
customers at fixed interest rate and in amounts and for periods which may differ from its funding sources
(bank borrowings and debt offerings). SFL seeks to match its interest rate positions to minimize interest
rate risk. Despite these efforts there can be no assurance that significant interest rate movements will not
have an effect on its results of operations.
x
4. Factors affecting Indian economy in general
SFL’s financial results are influenced by the macro economic factors determining the growth of the Indian economy
in general and continued growth of the automobile industry.The growth prospects of the Company’s business including
the quality of its asset and its ability to grow the assets portfolio and implement strategy are influenced by the growth
rate of the road transport Industry. The level of loans made, recovery of loans and demand for vehicles and infrastructure
equipment are all affected by these factors. Any slow down in the Indian economy the growth of vehicle and
infrastructure equipment sales coupled with inflationary pressures or any changes in government policy could adversely
impact its future financial performance.
5. Competition particularly from the banking sector
SFL plays an important role in providing credit to the unorganized sector and small constomers at the local level.
However, several Indian banks have over the last few years entered into retail lending in a focused manner, increasing
the competition in this segment. As the banks have access to lower cost funds, wider network and greater resources
than SFL, SFL’s performance would be dependent on its ability to maintain low cost of funds and to provide effective
and quick service to its customers. Growing competition may result in a decline in the market share of SFL, which
may reduce its revenues and margins.
6. Reduction in the value of collateral/delay in enforcing the collateral
All the loans to the customers of SFL are secured by the assets financed. Although SFL seeks to maintain a collateral
value to loan of more than 100% for its secured loans it may not be able to realize the full value of its collateral
as a result of declining price of second hand vehicle and infrastructure equipment. Further any delay in enforcing
collateral (due to delay in an enforcement proceedings before Indian courts or otherwise) could expose SFL to
potential losses. Any such losses and/or delays could adversely affect future financial performance and the price of
the Equity Shares of the Company.
7. The growth of the Company will depend on its continued ability to access funds at competitive rates.
With the growth of its business, the Company is increasingly reliant on funding from the debt capital markets and
commercial borrowings. The market for such funds are competitive, hence the ability of SFL to obtain funds at
competitive rates will depend on various factors including its ability to maintain its credit rating. Borrowing costs
have been competitive in the past due to its ability to structure innovative debt products, credit rating and the quality
of its asset portfolios. If the Company is unable to access funds at an effective cost that is comparable to or lower
than its competitors, the Company may not be able to offer competitive interest rates for its loans. This may adversely
impact SFLs business, its future financial performance and the price of its Equity shares.
8. Sensitivity to the economy and extraneous factors
The Company’s performance is highly correlated to the performance of the economy and the financial markets. The
health of the economy and the financial markets in turn depends on the domestic economic growth, state of the global
economy and business and consumer confidence, among other factors. Any event disturbing the dynamic balance of
these diverse factors would directly or indirectly affect the performance of the Company.
9. Operational risks associated with the industry
The industry is exposed to many types of operational risk, including the risk of fraud or misconduct by employees
or outsiders, unauthorized transactions by employees or operational errors, including clerical or record keeping errors
or errors resulting from faulty system.
10. Any downgrading of India’s debt rating by an international rating agency could have a negative impact on the
business of the Company
Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies
may adversely impact the ability of the Company 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 the
business and financial performance of the Company, and its ability to obtain financing for capital expenditures and
the price of our Equity Shares.
xi
11. Financial difficulties and other problems in certain Financial Institutions in India could cause the business of
the Company to suffer and the price of its Equity Shares to go down
The Company is exposed to the risks of the Indian financial system which in turn may be affected by financial
difficulties and other problems faced by certain Indian financial institutions. Certain Indian financial institutions have
experienced difficulties during recent years. Some co-operative banks have also faced serious financial and liquidity
crisis. The problems faced by individual Indian financial institutions and any instability in or difficulties faced by the
Indian financial system generally could create adverse market perception about Indian financial institutions, banks,
non-banking financial companies. This in turn could adversely affect the business, its future financial performance,
the shareholders’ funds and the price of Equity Shares of the Company.
NOTES TO RISK FACTORS

1. Pre issue Networth as on 30/06/2007 : Rs. 5571.16 lacs
Pre-issue Net Asset value per share
(as on 30/06/2007) : Rs. 27.76
Issue Size : Rights Issue of 1,00,35,660 Equity Shares of Rs. 10/- each at par
(i.e. Issue Price of Rs. 10/-) per Equity Share aggregating
Rs.1003.57 lacs.
Cost per share to the promoter : Rs. 16.45
2. There is no interest of promoters/directors/foreign collaborators/key management personnel other than reimbursement
of expenses incurred or normal remuneration or benefits.
3. For details on Related party disclosures, refer page no. 74 of this Letter of Offer
4. For details on loans and advances made by the Company, refer page no. 73 of this Letter of Offer
5. Investors are free to contact the LM for any complaints/ information/ clarification pertaining to this Issue. For contact
details of the LM, please refer to the cover page of this Offer Document.
6. All information shall be made available by the LM and the Company to the public and investors at large and no
selective or additional information would be available only to a section of the investors in any manner whatsoever.
7. Investors are advised to refer to the paragraph on “Basis for Issue Price” on page 16 of this Offer Document before
making an investment in this Issue.
8. The Lead Manager and the Company shall update this Letter of Offer and keep the shareholders/public informed of
any material changes till the listing and trading commencement.
xii
PART I
SECTION II - INTRODUCTION
The Industry information presented in this section has been extracted from publicly available documents from various
sources, including officially prepared materials and has not been prepared or independently verified by the Issuer or
the Lead Manager.
INDUSTRY SUMMARY
The Non-Banking Financial Companies (NBFCs) are a heterogeneous group of finance companies unlike the commercial
and co-operative banks. NBFCs are defined under Section 45-I(f) read with Sections 45-I© and 45-I(e) of RBI Act, 1934,
and can carry on business in one or more of these areas:
• Asset Finance Company
• Insurance Company
• Loan Company
• Investment Company
• Mutual Benefit Finance Company
• Miscellaneous Non-Banking Company
• Housing Finance Company
• Residuary Non-Banking Company
The funding to small-scale industry is mainly for plant and machinery, industrial equipment, computer system etc. 70 %
of the activities of NBFCs are in Leasing Equipment and Hire Purchase. There is some exposure in Bill Discounting and
Factoring. The main strength of NBFCs is that they can devise innovative financing schemes and tailor-made schemes
according to the specific requirement of the client. (Source: www.indianfoundry.com/Teri/finance/nbfc.html)
The NBFI sector in India comprises various types of financial institutions with each one of them having its roots at a
particular stage of development of the financial sector. All-India Financial Institutions (AIFIs), largely an offshoot of
development planning in India, were created for long-term financing with some of them having sectoral/regional focus.
Non-banking financial companies (NBFCs), on the other hand, are mostly private sector units, which have carved their
niche in the Indian financial system.
As of June 2006, there were in all 13,014 NBFCs registered with RBI of which 428 accepted deposits (Source: Economic
Survey 2006-2007). NBFCs are an integral part of the country’s financial system because of their complimentary as well
as competitive role. They act as a critical link in the overall financial system catering to a large market of niche customers.
As a result of consolidation and restructuring in the financial sector and liberalisation and globalisation of markets only
a few strong NBFCs now remain in business. However, competition continues to be intense, as the Indian and foreign
banks have entered the retail lending business in a big way, thereby exerting pressure on margins.
On the regulatory front, NBFCs are regulated by the RBI almost at par with banks. All the prudential norms for asset
classification, income recognition, provisioning requirements etc., are applicable to NBFCs.
COMPANY SUMMARY
SFL is a RBI registered NBFC engaged in financing of commercial vehicles, infrastructure equipment and personal
finance products for over 50 years. SFL was promoted in 1955 by Dr. N. Mahalingam, promoter of the Coimbatore based
Sakthi Group. SFL was formed with an objective of providing hire-purchase assistance to truck operators where it derives
certain advantages from the group’s delearship business as well as its experience in the transport sector. Currently, SFL
is an independent multi –line finance company which focuses mainly on two product lines in finance segment viz. –
Commercial Vehicles and Infrastructure equipment. SFL at present has 25 branches concentrated mainly in Southern
India. The client base of SFL predominantly consists of small vehicle operators. Customers are usually provided 75%
to 80 % of the market value of the asset.The loans are secured by hypothecation of the assets financed.
ISSUE DETAILS
Issue of 1,00,35,660 Equity Shares of Rs. 10/- each at par (Issue Price of Rs.10/-) aggregating Rs.1003.57 lacs on rights
basis to the existing Equity Shareholders of the Company in the ratio of 1 (One) Equity Share for every 2 (Two) Equity
Shares held on 31/10/2007 (Record Date). The face value of the Equity Shares is Rs. 10/- per share and the Issue Price
is same as the face value.
1
SUMMARY OF FINANCIAL DATA

Please read the following data in conjunction with the detailed Auditors’ Report commencing on page no. 61 under the
heading ‘FINANCIAL INFORMATION’
STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED
Annexure I (Rs. in lacs)
Particulars As at As at 31st March
30.06.2007 2007 2006 2005 2004 2003
Fixed Assets
Gross Block 2027.69 2024.89 1911.33 2430.98 2425.39 2576.62
Less: Accumulated Depreciation 1102.60 1083.98 1014.65 1465.10 1431.97 1507.06
Net Block 925.08 940.91 896.68 965.88 993.42 1069.56
Investments 1525.53 1531.53 1760.48 1862.88 1918.43 1844.70
Deferred Tax assets 117.73 121.94 262.76 340.62 177.50 199.24
Current Assets,
Loans and Advances
Stock on hire 20076.45 20418.08 17321.14 15639.22 14930.58 14424.12
Cash and Bank Balances 2136.89 1197.03 773.09 897.04 481.82 217.31
Other current assets 24.82 40.89 48.34 52.79 55.88 247.04
Loans and Advances 2551.17 2043.48 2344.79 2560.22 3063.12 3443.34
Total Current Assets, 24789.33 23699.47 20487.36 19149.27 18531.39 18331.80
Loans and Advances
Total 27357.67 26293.85 23407.28 22318.64 21620.74 21445.30
Liabilities and Provisions
Secured Loans 11828.09 9919.53 7955.05 6459.19 5465.42 5463.96
Unsecured Loans 7612.93 8186.11 8170.56 9453.23 10308.72 10725.54
Current Liabilities and provisions 2345.49 2797.57 2091.25 1441.77 1240.52 1389.98
Total 21786.52 20903.21 18216.86 17354.19 17014.66 17579.48
Net worth 5571.16 5390.64 5190.42 4964.45 4606.08 3865.82
Represented by:
Equity share capital 2007.13 2007.13 2007.13 2007.13 2007.13 1757.13
Share application money 1146.15 1146.15 1146.15 1161.15 1161.15 705.10
(pending allotment)
Reserves and Surplus:
Reserves 2417.89 2237.36 2037.14 1796.17 1567.47 1554.27
Less: Miscellaneous expenses 0.00 0.00 0.00 0.00 129.67 150.70
and losses
Net worth 5571.17 5390.64 5190.42 4964.44 4606.08 3865.82
Details of Reserves and Surplus
Capital Reserve 52.61 52.61 52.61 52.61 52.61 52.61
Securities Premium Account 1366.60 1366.60 1366.60 1366.60 1366.60 1366.60
General Reserve :
As per last balance sheet 0.00 0.00 0.00 0.00 0.00 191.90
Less: Transfer to Profit and 0.00 0.00 0.00 0.00 0.00 (191.90)
Loss Account
Statutory Reserve 314.35 251.08 187.31 148.26 135.06 128.31
Add: Transfer during the year 0.00 63.27 63.77 39.05 13.20 6.75
Surplus in Profit and Loss Account 684.33 503.80 366.85 189.65 0.00 0.00
Total 2417.89 2237.36 2037.14 1796.17 1567.47 1554.27
2
STATEMENT OF ADJUSTED PROFITS AND LOSSES, AS RESTATED
Annexure II (Rs. in lacs)
Quarter Years ended 31st March
Particulars ended
30.06.2007 2007 2006 2005 2004 2003
INCOME
INCOME FROM
FINANCING OPERATION
Income from Hire purchase 636.23 2499.64 2107.42 2190.86 1988.68 1605.29
operations
Income from leasing operations 0.00 0.00 0.00 0.00 12.35 35.64
Interest on loans and Other receipts 125.10 74.38 98.66 229.41 205.81 333.76
Income from Investments 24.08 127.16 140.43 159.70 170.73 187.97
OTHER INCOME AND
RECEIPTS
Profit on Sale of Investments/Assets 0.05 3.75 17.16 43.13 0.80 13.15
Income from Windmill 15.66 101.09 86.31 108.33 119.10 99.52
Miscellaneous Receipts 11.24 68.78 41.77 18.63 17.09 23.27
Bad debts written off – recovered 15.82 49.76 27.73 4.73 14.43 306.84
Income from Sell down Receivable 161.82 299.13 233.69 156.38 143.94 0.00
Total Income 990.00 3223.68 2753.17 2911.15 2672.93 2605.44
EXPENDITURE
Financial Expenses 442.23 1635.70 1606.24 1861.80 2062.03 2027.68
Personnel Expenses 109.10 410.55 279.27 251.41 214.15 209.22
Operating Expenses 153.25 509.34 392.86 355.11 329.76 299.04
Provisions and written offs 57.78 96.44 75.36 163.83 (61.92) (66.48)
Depreciation 19.15 75.72 70.92 66.78 72.91 84.21
Total Expenditure 781.50 2727.75 2424.64 2698.95 2616.92 2553.68
PROFIT BEFORE TAX AND 208.51 495.93 328.53 212.21 56.00 51.76
EXTRAORDINARY ITEMS
Less: Taxes
Current Tax 22.67 32.08 0.30 16.96 5.45 2.82
Fringe benefit tax 1.10 8.37 9.40 0.00 0.00 0.00
Deferred Tax 4.21 140.82 77.86 (163.12) 21.74 (4.57)
PROFIT BEFORE 180.53 314.66 240.98 358.37 28.82 53.51
EXTRAORDINARY ITEMS
Less: Extraordinary Items – 0.00 0.00 0.00 0.00 0.00 419.24
Unrealizable receivables w.off
PROFIT AFTER TAX AND 180.53 314.66 240.98 358.37 28.82 (365.73)
EXTRAORDINARY ITEMS
Appropriations
Transferred to Statutory Reserve - 63.27 63.77 39.05 13.20 6.75
Special Interim Dividend - 100.36 - - - -
Dividend Tax on special interim - 14.08 - - - -
dividend
Balance Carried forward to 180.53 136.95 177.21 319.32 15.62 (372.48)
Balance Sheet
3
THE ISSUE
Type of No. of Face Value Issue Price
Type of Issue Consideration
Instrument equity shares (Rs.) (Rs.)
Rights Issue Equity Shares 1,00,35,660 10/- 10/- Cash
ISSUE BREAK-UP
Particulars No. of Equity Shares
Equity Shares offered (Issue Size) 1,00,35,660 Equity Shares
Entitlement Ratio The Equity Shares are being offered on rights basis to the existing
Equity Shareholders of the Company in the ratio of 1 (One)
Equity Share for every 2 (Two) Equity Shares held as on the
Record Date.
Market Lot The market lot for the Equity Shares in dematerialised mode is
one. In case of physical certificates, the Company would issue
one certificate for the Equity Shares allotted to one folio
(“Consolidated Certificate”).
Equity shares outstanding prior to the Issue 2,00,71,321 Equity Shares
Equity shares outstanding after the issue 3,01,06,981 Equity Shares
Use of proceeds:
Please see section titled “Objects of the Issue” on page 14 of this Offer Document
ISSUE SCHEDULE
LAST DATE FOR RECEIVING
ISSUE OPENS ON ISSUE CLOSES ON
REQUESTS FOR SPLIT FORMS
Thursday, Friday, Wednesday,
22nd November 2007 07th December 2007 26th December 2007
4
GENERAL INFORMATION
Dear shareholder(s),
The Board of Directors at their meeting held on 14/08/2004 had decided to make the offer to the existing shareholders
of the Company on Rights basis. Accordingly, a resolution in respect of this rights issue was passed by the shareholders
of the Company at the Annual General Meeting of the Company held on 24/09/2004 and authorized the Board of
Directors to decide on terms of the issue and also to take steps to give effect to the said resolution. The Board of Directors
at their meeting held on 23/04/2007 have decided to make the following offer to the existing shareholders of the company:
Shares held on Record Date (31/10/2007). The face value of the Equity Shares is Rs. 10/- per share and the Issue Price
is 1 time the face value.
Name of the Company : Sakthi Finance Limited
Registered Office : No.62, Dr. Nanjappa Road, Post Box No. 3745, Coimbatore - 641 018.
Tel: 91-0422-2231471 – 474; Fax : 91-0422-2231915 Email : sfl@vsnl.com
Registration No. (CIN) : L65910TZ1955PLC000145
Contact person : S A Subramanian, Company Secretary and Compliance Officer
Registrar of Companies : “Stock Exchange Building”, Trichy Road, Coimbatore – 641 005
IMPORTANT
1. This Issue is applicable to such Equity Shareholders whose names appear as beneficial owners as per the list to be
furnished by the depositories in respect of the Equity Shares held in the electronic form and on the Register of
Members of the Company at the close of business hours on 31.10.2007 (Record Date)
2. Your attention is drawn to the section on risk factors starting from page no. viii of this Letter of Offer.
3. Please ensure that you have received the CAF with this Letter of Offer.
4. Please read the Letter of Offer and the instructions contained herein and in the CAF carefully before filling in the
CAFs. The instructions contained in the CAF are an integral part of this Letter of Offer and must be carefully
followed. An application is liable to be rejected for any non compliance of the Letter of Offer or the CAF.
5. All enquiries in connection with this Letter of Offer or CAFs should be addressed to the Registrar to the Issue,
quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned in the CAFs.
6. The Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective
or additional information would be available for a section of the Equity Shareholders in any manner whatsoever
including at presentations, in research or sales reports etc. after filing of the Letter of Offer with SEBI.
7. All the legal requirements as applicable till the filing, of the Letter of Offer with the Designated Stock Exchange have
been complied with.
BOARD OF DIRECTORS
The Board of Directors of the Company consists of:
Name of the Director Designation Status
Sri M Manickam Chairman Non - Executive and Non-Independent
Sri M Balasubramaniam Vice Chairman and Executive and Non - Independent
Managing Director
Sri M Srinivaasan Director Non Executive and Non - Independent
Sri A Shanmugasundram Director Non Executive and Non Independent
Sri S A Murali Prasad Director Non Executive and Independent
Dr A Selvakumar Director Non Executive and Independent
Sri P S Gopalakrishnan Director Non Executive and Independent
For further details of the Board of Directors of SFL, please refer to the chapter titled “Management” on page. 43 of this
Letter of Offer.
5
ISSUE MANAGEMENT TEAM

Company Secretary and Compliance Officer Legal Advisors to the Issue
S A Subramanian M/s Ramani & Shankar
Company Secretary Advocates
Sakthi Finance Limited 152, Kalidass Road,
Regd. Office : 62, Dr Nanjappa Road Ramnagar, Coimbatore – 641 009
Coimbatore – 641 018 Tel: (0422) 2231955, 2232179
Tel: (0422) 2231471 – 4 Fax No: (0422) 2233175
Fax: (0422) 2231915
E-Mail: sasubramanian@sakthifinance.com
Bankers to the Company

Vijaya Bank Canara Bank
Dr Nanjappa Road 7/100, Cross Cut Road
Coimbatore - 641 018 Gandhipuram, Coimbatore - 641 012
Tel: (0422) 223 2899 Tel: (0422) 223 6107
Fax: (0422) 223 8531 Fax : (0422) 2230174
The Lakshmi Vilas Bank Limited The South Indian Bank Limited
No.1, Head Quarters Road Cross Cut Road
First Floor, Uppilipalayam Gandhipuram, Coimbatore - 641 012
Coimbatore - 641 018 Tel: (0422) 248 2830 / 248 2831
Tel: (0422) 230 0830 Fax: (0422) 248 2830
Fax: (0422) 230 0843
Central Bank of India State Bank of Travancore
Addisons Buildings Branch Pappanaickenpalayam Branch
Mount Road, Chennai - 600 001 Avanashi Road, Coimbatore - 641 018
Tel: (044) 2852 0518 / 2852 1517 Tel: (0422) 221 6058 / 221 3257
Fax: (044) 2858 8848 Fax: (0422) 221 1302
Bank of India The Catholic Syrian Bank Limited
Bhagyalakshmi Complex Industrial Finance Branch
First Floor, 108/109, NSR Road 826, Tarapore Towers
Saibaba Colony, Coimbatore - 641 011 Mount Road, Chennai - 600 001
Tel: (0422) 244 1045 / 244 0028 Tel: (044) 2852 6397
Fax: (0422) 243 4788 Fax: (044) 2841 1809
The Karnataka Bank Limited
839, Mount Road, Chennai - 600 001
Tel: (044) 2858 6484 / 2841 4838
Fax: (044) 2841 4838
6
Lead Manager to the Issue Registrar to the Issue
KEYNOTE
Corporate Services Ltd
S.K.D.C CONSULTANTS LIMITED
KEYNOTE CORPORATE SERVICES LIMITED
No.11, Seth Narayandas Layout
4th Floor, Balmer Lawrie Building,
Street No.1, West Power House Road
5, J. N. Heredia Marg, Ballard Estate,
Coimbatore - 641 012
Mumbai - 400 001
SEBI Regn. No.: INR 000000775
SEBI Regn. No.: INM 000003606
Tel.: (0422) 6549995
Tel : +91 022 30266000 - 3
Fax: (0422) 2499574
Fax: + 91 022 22694323
E-mail: info@skdc-consultants.com
E-mail: mbd@keynoteindia.net
Website: www.skdc-consultants.com
Website: www.keynoteindia.net
Contact Person: Mr. K.S. Ramachandran
Contact Person: Mr. Janardhan Wagle
Bankers to the Issue Auditors to the Company

The Lakshmi Vilas Bank Limited M/s P N Raghavendra Rao & Co
No.1, Head Quarters Road Chartered Accountants
First Floor, Uppilipalayam 33, Desabandhu Street
Coimbatore - 641 018 Ramnagar, Coimbatore – 641 009
Tel: (0422) 230 0830
Tel: (0422) 2232440, 2236997
Fax: (0422) 230 0843
E-mail : uppilipalayam@lvb.com
E-Mail: audit@pnr-co.org
Website : www.lvbank.com
Contact Person : Mr. R. Rajagopalan
INTER SE ALLOCATION OF RESPONSIBILITIES
Not Applicable
CREDIT RATING/DEBENTURE TRUSTEE
This being Rights Issue of equity shares, no Credit Rating or appointment of Debenture Trustee is required.
MONITORING AGENCY
Not Applicable
APPRAISING ENTITY
Not Applicable
MINIMUM SUBSCRIPTION
i. If the Company does not receive minimum subscription of 90% of the issue, the entire subscription shall be refunded
to the applicants within forty two days from the date of closure of the issue.
ii. If there is delay in the refund of subscription by more than 8 days after the company becomes liable to pay the
subscription amount (i.e., forty two days after closure of the issue), the company will pay interest for the delayed
period, at prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.
IMPERSONATION
Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies
Act, 1956 which is reproduced below:
“Any person who-
(a) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein,
or
(b) otherwise induces a Company to allot or register any transfer of shares therein to him, or any other person
in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years.”
UNDERWRITING / STAND-BY SUPPORT
This issue of equity shares is not being underwritten and/or no stand-by support is being sought for the said issue.
7
CAPITAL STRUCTURE OF THE COMPANY

Aggregate
Details as on the date of Letter of Offer Nominal Value
(Rs.)
A. Authorised Capital
4,00,00,000 Equity Shares of Rs. 10/- each 40,00,00,000
5,00,000 Redeemable Cumulative Preference Shares of Rs. 100/- each 5,00,00,000
B. Issued, Subscribed and Paid-up Capital
2,00,71,321 Equity Shares of Rs. 10/- each, fully paid – up 20,07,13,210
C. Present Rights Issue
1,00,35,660 Equity shares of Rs. 10/- each for cash at par 10,03,56,600
D. Post Issue Capital
3,01,06,981 Equity shares of Rs. 10/- each, fully paid – up 30,10,69,810
E. Securities Premium Account
Before the offer 13,66,60,020
After the offer 13,66,60,020
NOTES TO CAPITAL STRUCTURE:

1. CHANGES IN THE AUTHORISED CAPITAL OF THE COMPANY
Sl.
Details of increase in authorised share capital Date
No.
1 Incorporation Rs. 5.00 Lacs divided into 500 equity shares of Rs. 1000 each 30/03/1955
2 Rs. 25.00 Lacs divided into 25,000 equity shares of Rs. 100 each 17/01/1967
3 Rs. 2.00 Crores divided into 20,00,000 equity shares of Rs. 10 each. 21/01/1984
4 Rs. 5.00 Crores divided into 40,00,000 equity shares of Rs. 10 each and
Rs .1,00,000 convertible cumulative preference shares of Rs.100 each 02/11/1985
5 Rs. 10.00 Crores divided into 75,00,000 equity share of Rs. 10 each and
2,50,000 redeemable cumulative preference shares of Rs. 100 each 19/08/1991
6 Rs. 17.50 Crores divided into 75,00,000 equity shares of Rs. 10 each and
7 Rs. 25.00 Crores divided into 1,50,00,000 equity shares of Rs. 10 each and
10,00,000 redeemable cumulative preference shares of Rs. 100 each. 30/03/1995
8
2. DETAILS OF INCREASE IN THE PAID-UP EQUITY SHARE CAPITAL ARE AS FOLLOWS:
Date of Face Issue No. of Cumulative Nature of Conside- % to Post
Allotment Value Price Shares No. of allotment ration Issue
(Rs.) (Rs.) shares Capital
30/03/1955 1000 1000 15 15 Subscription to Cash 0.00
Memorandum of
Association upon
Incorporation.
16/06/1958 1000 1000 212 227 Private placement Cash 0.00
By virtue of a resolution passed at the Extra Ordinary General Meeting held on 17.01.1967, the face value of
the shares of the Company were reduced from Rs. 1000/- each to Rs. 100/- each.
24/11/1974 100 100 5,000 10,000 Private placement Cash 0.02
By virtue of a resolution passed at the Extra Ordinary General Meeting held on 21.01.1984, the face value of
the shares of the Company were reduced from Rs. 100/- each to Rs. 10/- each.
02/11/1984 10 10 7,50,000 10,00,000 Public issue Cash 2.49
14/07/1986 10 10 5,25,000 15,25,000 Rights - Equity issue Cash 1.74
(Conversion of preference
shares into equity)
31/10/2001 10 10 76,50,000 1,75,71,321 Preferential allotment to Cash 25.41
Promoter and Promoter
Group*
05/12/2003 10 10 25,00,000 2,00,71,321 Preferential allotment to Cash 8.30
Bridgewater Investment
Corporation Limited**
TOTAL 2,00,71,321
Note:
* M/s VKS Aiyer and Coy., Chartered Accountants, then Statutory Auditors of the Company have vide their
certificate dated 08/08/2001 in respect of preferential allotment made to Promoter and Promoter Group certified
that the calculation of preferential issue price for the allotment is in accordance with the SEBI guidelines.
** M/s P.N.Raghavendra Rao & Co., Chartered Accountants and Statutory Auditors of the Company have vide their
certificate dated 22/09/2003 in respect of preferential allotment made to Bridgewater Investment Corporation Limited
certified that the calculation of preferential issue price for the allotment is in accordance with the SEBI guidelines.
3. Promoters’ Contribution and Lock-in
The present issue being a rights issue, provisions of promoters’ contribution and lock-in are not applicable.
4. Present Rights Issue
Type of Instrument Ratio Face Value No. of shares Issue Price Consideration
(Rs.) (Rs.)
Equity Shares 1:2 10/- 1,00,35,660 10/- Cash
9
Pre and Post Issue Shareholding Pattern of The Company Assuming Full Subscription in the Rights Issue is
Given Below :-
Pre-issue Post-issue
Sl. (As on 31/10/2007)
Category of Shareholder
No. Number of Number of
% %
Shares Shares
(A) Shareholding of Promoter and Promoter Group
1 Indian
(a) Individuals/ Hindu Undivided Family 7,61,027 3.79 11,41,540 3.79
(b) Central Government / State Government(s) / — — — —
Government company
(c) Bodies Corporate 117,88,370 58.73 1,76,82,555 58.73
(d) Financial Institutions/ banks — — — —
(e) Any Other (specify) — — — —
Sub- Total (A)(1) 1,25,49,397 62.52 1,88,24,095 62.52
2 Foreign
(a) Individuals (Non-Resident Individuals / — — — —
Foreign Individuals)
(b) Bodies Corporate — — — —
(c) Institutions — — — —
(d) Any other (specify) — — — —
Sub-Total (A)(2) — — — —
Total Shareholding of Promoter and
Promoter Group (A)= (A)(1)+(A)(2) 1,25,49,397 62.52 1,88,24,095 62.52
(B) Public shareholding
1 Institutions
(a) Mutual Funds/ UTI — — — —
(b) Financial Institutions/ Banks 2,200 0.01 3,300 0.01
(c) Central Government/ State Government(s) — — — —
(d) Venture Capital Funds — — — —
(e) Insurance Companies — — — —
(f) Foreign Institutional Investors — — — —
(g) Foreign Venture Capital Investors — — — —
(h) Any Other (specify)( Foreign National) — — — —
Sub-Total (B)(1) 2,200 0.01 3,300 0.01
2 Non-institutions
(a) Bodies Corporate 7,55,451 3.76 11,33,177 3.76
(b) Individuals-
i. Individual shareholders holding nominal 30,90,937 15.40 46,36,406 15.40
share capital up to Rs. 1 lakh.
ii. Individual shareholders holding nominal share 10,66,295 5.31 15,99,442 5.31
capital in excess of Rs. 1 lakh.
(c) Individuals (Non-Resident Individuals / 11,450 0.06 17,175 0.06
Foreign Individuals)
(d) Overseas Corporate Bodies 25,00,000 12.46 37,50,000 12.46
(e) Clearing Members 7,310 0.04 10,965 0.04
(f) Hindu Undivided Family 88,281 0.44 1,32,421 0.44
Sub-Total (B)(2) 75,19,724 37.47 1,12,79,586 37.47
Total public shareholding (B)= (B)(1)+(B)(2) 75,21,924 37.48 1,12,82,886 37.48
TOTAL (A)+(B) 2,00,71,321 100.00 3,01,06,981 100.00
(C) Shares held by Custodians and against which — — — —
Depository Receipts have been issued
GRAND TOTAL (A)+(B)+(C) 2,00,71,321 100.00 3,01,06,981 100.00
The total number of shareholders as on 31/10/2007 in the company is 15,155.
10
5. The shareholding pattern of the promoter group is as detailed below
Present Post-issue
Sl. No. of equity % of No. of equity % of post
Particulars
No. shares of present shares of issue
Rs. 10/- each capital Rs. 10/- each capital
a) Promoters
Dr. N Mahalingam 2,06,023 1.02 3,09,034 1.02
Mr. M Manickam 61,875 0.31 92,813 0.31
Mr. M Balasubramaniam 1,28,000 0.64 1,92,000 0.64
SUB TOTAL 3,95,898 1.97 5,93,847 1.97
b) Immediate relatives of promoters
(Spouse, Parent, Child, Brother, Sister):
Mr. M Srinivaasan 2,21,355 1.10 3,32,032 1.10
Smt. M Mariammal 36,000 0.18 54,000 0.18
Smt. Karunambal Vanavaraayar 7,500 0.04 11,250 0.04
Smt. Vinodhini Balasubramaniam 95,024 0.47 1,42,536 0.47
Mr. A Shanmugasundaram 5,250 0.03 7,875 0.03
SUB – TOTAL 3,65,129 1.82 5,47,693 1.82
c) Company in which 10% or more of the share
capital is held by the promoter/his immediate
relative, firm or HUF in which the promoter
or his immediate relative is a member.
1. ABT Ltd 87,27,400 43.48 1,30,91,100 43.48
2. Sakthi Financial Services (Cochin) Private Ltd 10,40,537 5.18 15,60,806 5.18
3. Sri Chamundeswari Sugars Ltd 16,000 0.08 24,000 0.08
4. ABT Finance Limited 24,877 0.12 37,315 0.12
5. Sakthi Financial Services Ltd. 6,430 0.03 9,645 0.03
6. Sakthi Logistic Services Ltd. 5,700 0.03 8,550 0.03
7. Sri Sakthi Textiles Ltd. 7,000 0.03 10,500 0.03
8. The Gounder and Company Auto Ltd. 500 0.00 750 0.00
SUB – TOTAL 98,28,444 48.97 1,47,42,666 48.97
d) Company in which the Company mentioned
in (c) above holds 10% or more of the
share capital
1. Sakthi Sugars Limited 10,40,000 5.18 15,60,000 5.18
2. ABT Industries Limited 9,19,926 4.58 13,79,889 4.58
SUB – TOTAL 19,59,926 9.76 29,39,889 9.76
e) HUF in which aggregate share of the promoter
and his immediate relatives is equal or more
than 10% of the total. N.A. N.A. N.A. N.A.
Persons Acting in Concert – – – –
GRAND TOTAL 1,25,49,397 62.52 1,88,24,095 62.52
The promoters/promoter group and others collectively intend to subscribe to their rights entitlement as well as the
entire undersubscribed portion from public share holders, if any, in this rights issue in full. The prmoters/promoter
groups and others have already brought in an amount of Rs. 1146.15 lacs towards share application money which
will be adjusted towards their entitlement and subscription to unsubscribed portion if any, by the public shareholders.
11
The details of the money brought in by the promoters / promoter group and others are as follows:
Sl. No. Particulas Rs. in lakhs
1 Sakthi Financial Services Ltd. 338.17
2 ABT Finance Limited 15.00
3 Sakthi Financial Services (Cochin) P. Ltd. 132.16
4 Sakthi Beverages Ltd. 100.00
5 The Gounder and Company Auto Limited 76.91
6 Sakthi Automobiles (Partnership Firm) 50.00
7 Sakthi Management Services Ltd. 50.00
8 Grahasakthi Properties Pvt. Ltd. 50.00
9 Bridgewater Investments Corporation. Ltd. 333.91
Total 1146.15
Presuming no subscription is received from other shareholders and the promoters/directors/associates/promoter group
subscribing to the entire unsubscribed portion, their shareholding shall increase to 75.02 % of the post rights issue
equity capital of the Company. As a result of this subscription and consequent allotment, the promoters/promoter
group may acquire shares over and above their entitlement in the issue which may result in their shareholding in the
company being above their current holding. This subscription and acquisition of additional equity shares by the
Promoter /promoter group if any, will not result in change of control of the management of the Company and shall
be exempt in terms of provision to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and
Takeover) Regulations, 1997.
The Promoter/Promoter Group have confirmed that in case the Rights Issue of the Company is completed with their
subscribing to equity shares over and above their entitlement and as a result, if the public shareholding in the
Company after the Issue falls below the permissible minimum level as specified in the listing condition or listing
agreement, they will make an offer for sale of their holdings so that the public shareholding is raised to the minimum
level specified in the listing agreement or in the listing conditions within a period of 3 months, as per the requirements
of sub-clause 17.2 of SEBI (Delisting of Securities) Guidelines, 2003 or as per any amendment thereto.
6. The Company has not issued any warrant, option, convertible loan, debenture or any other securities convertible at
a later date into equity, which would entitle the holders to acquire further equity shares of the Company.
7. Equity shares of the Company are being traded in compulsory dematerialized mode. The market lot of the equity
shares is 1 (one).
8. There are no transactions in the securities of the Company during preceding 6 months which were financed/undertaken
directly or indirectly by the promoters, their relatives, their group companies or associates or by the above entities
directly or indirectly through other persons except as follows:
Name of the Name of the Nature of Date Rate per No. of Consideration
Transferee Transferor transaction share(Rs.) shares
Sakthi Logistic S.P. Nallamuthu Transfer 05/11/2006 15/- 5,000 Cash
Services Limited Gounder Charity Trust
9. a) The ten largest shareholders two years prior to the date of filing of this Letter of Offer with Stock Exchanges
are as follows:
Sl. No. Name of the Shareholders No. of Equity Shares
1. ABT Ltd 87,27,400
2. Bridgewater Investment Corporation Ltd 25,00,000
3. Sakthi Financial Services (Cochin) P Ltd 10,40,537
4. Sakthi Sugars Ltd 10,40,000
5. ABT Industries Ltd 9,19,926
6. Grahasakthi Properties (P) Ltd 4,99,700
7. Mr.M.Ramanathan 3,38,951
8. Mr.M.Srinivaasan 2,21,355
9. Dr.N.Mahalingam 2,06,023
10. Mr M Balasubramaniam 1,28,000
12
b) The ten largest shareholders 10 days prior to the date of filing of the Letter of Offer with Stock Exchanges are
as follows:
1. ABT Ltd 87,27,400
c) The ten largest shareholders as on the date of filing of the Letter of Offer with Stock Exchanges are as follows:
1. ABT Ltd 87,27,400
10. The Company / Promoters / Directors / Lead Managers have not entered into buy back or similar arrangements for
purchase of securities issued by the Company.
11. The entire issue price is to be paid on application hence there will be no partly paid up shares arising out of this
issue.
12. The equity shares of the company are of face value of Rs.10/- and marketable lot is 1 (one). At any given time there
shall be only one denomination for the shares of the Company and the disclosures and accounting norms specified
by SEBI from time to time will be complied with.
13. The Company shall not make any further issue of capital whether by way of issue of bonus shares, preferential
allotment, rights issue or public issue or in any other manner during the period commencing from the submission of
the Letter of Offer to SEBI for the Rights Issue till the securities referred in the Letter of Offer have been listed or
application money refunded on account of failure of the issue.
14. Further, presently the Company does not have any proposal, intention, negotiation or consideration to alter the capital
structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or
issue of bonus or rights or public issue of Equity Shares or any other securities within a period of six months from
the date of opening of the present Issue. However, if business needs of the Company so require, the Company may
alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a
preferential basis or issue of bonus or rights or public issue of shares or any other securities whether in India or
abroad during the period of six months from the date of listing of the Equity Shares issued under this LOO or from
the date the application moneys are refunded on account of failure of the Issue, after seeking and obtaining all the
approvals which may be required for such alteration.
15. The total numbers of shareholders in the company as on 31/10/2007 is 15,155.
13
OBJECTS OF THE ISSUE

The object of the issue is to augment the capital base to meet the requirement of funds on an on going basis from time
to time by way of equity, arising out of growth of operations of the company and for meeting the expenses of the issue.
The main object clause of the Memorandum and Articles of Association of the Company enables the Company to
undertake the existing activities and the activities for which the funds are being raised through the present issue.
Cost of project (Rs. In Lacs)
Augment the capital base to meet fund requirements 953.57
Issue expenses 50.00
Total 1003.57
Means of Finance (Rs. In Lacs)

Proceeds of the Rights Issue 1003.57
Total 1003.57
WORKING CAPITAL REQUIREMENT

SFL is engaged in financing of commercial vehicles and infrastructure equipment. The proceeds from this Rights Issue
will be mainly used to augment the capital base of the company to meet the future capital requirements arising out of
growth in the business .
The detailed calculation of the working capital requirement which is partly to be funded through the proceeds of the issue
is as under:
Estimates as on
Particulars 31/03/2008
(Rs. in Lacs)
(A) Current Assets
1. Cash and Bank Balance 360.00
2. Investments (other than investments in Subsidiaries/associate concerns and those of
long term nature) 31.00
3. Stock on Hire Purchase Agreements (net of finance charges unmatured) 22,814.00
4. Other Current Assets 4,280.00
Total Current Assets (A) 27,484.00
(B) Current Liabilities
1. Deposits maturing within one year 4,049.00
2. Sundry Creditors for expenses 1,727.00
3. Instalments of term loans/deferred payment credits,debentures/preference shares due
within one year 587.00
4. Others 195.00
Total Current Liabilities (B) 6,558.00
Working Capital Gap (A) – (B) 20,927.00
Estimates as on
Particulars 31/03/2008
(Rs. in Lacs)
Financed by:
Contribution from Long term Sources 16,311.43
Bank Borrowings 3,662.00
Balance to be funded by Proceeds of the current Issue 953.57
14
The funds which were brought in by the promoter/promoter group and others have been deployed for working capital
purposes from time to time. Any deficit in respect of the working capital would be met through long term resources such
as unsecured loans and internal accruals
YEAR WISE BREAK UP OF FUNDS

Since the entire funds would be utilized to meet the working capital requirement for the Financial Year ending
31/03/2008, the year wise break up of expenditure to be incurred is not given.
INTERIM USE OF FUNDS

Pending deployment, the funds raised through the rights issue would be deployed by the company judiciously in the fixed
deposits of the Banks and other short term investment opportunities.
BASIC TERMS OF THE ISSUE

The Equity shares being offered are subject to the provisions of the Companies Act, 1956, the Memorandum and Articles
of Association of the Company, the terms of this Letter of Offer and other terms and conditions as may be incorporated
in the Allotment advice and other documents /certificates that may be executed in respect of the issue. The Equity shares
shall also be subjected to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and
listing and trading of securities issued from time to time by SEBI, GOI, RBI, ROC and /or other authorities as in force
on the date of issue and to the extent applicable.
15
BASIS FOR ISSUE PRICE

QUALITATIVE FACTORS
Part of the Coimbatore based Sakthi group of companies, which has presence in Sugar, Distillery, Soya processing,
Financial Services, Auto Components, Bus Transport, Parcel Services, Wind Mills and Sales and Services of Tata Motors
and Maruti Vehicles.
❖ Company is in the business of refinance over the past 50 years
❖ Belongs to “Sakthi Group”
❖ Support from the Group Companies
QUANTITATIVE FACTORS
(a) Earnings Per Share (EPS)
Year Ended EPS(Rs) Weights
31/03/2005 1.79 1
31/03/2006 1.20 2
31/03/2007 1.57 3
Weighted Average EPS 1.48
Note : EPS for the three month period ended 30th June 2007 is Rs. 0.90.
(b) Price Earning Ratio (PE)

Offer Price of Rs.10/- per share
P/E(based on EPS on 31/03/2007) 6.37
P/E(based weighted average EPS) 6.76
(c) Return on Networth (RONW)

Year Ended RONW(%) Weights
31/03/2005 7 1
31/03/2006 5 2
31/03/2007 6 3
Weighted Average RONW 5.83
Note : RONW for the three months period ended 30th June 2007 is 3%
(d) Minimum RONW required to maintain pre-issue weighted average EPS of Rs. 1.48 is 8.51%
(e) Net Asset Value (NAV)
Pre issue as on March 31, 2007 (Rs.) 26.86
Post Issue (Rs.) 21.84
Note: 1. NAV as on 30th June 2007 is Rs. 27.76.

2. Net Asset Value Per Share = Equity Share Capital plus Reserves & Surplus less Miscellaneous Expenditure
to the extent not written off /No. of Equity Shares
(f) Industry P/E Ratio
Highest (J M Financials) 183.90
Lowest (21st Century Management) 2.20
Average 30.90
Source: Capital Market Issue October 08- 21,2007; Segment- Finance and Investments
16
Comparison of key ratios with the companies in the same industry group
Equity Book Value Income for the EPS P/E Ratio
Company Name (Rs. in Cr.) 31/03/2007 year ended (Rs.) at the market
(Rs.) 31/03/2007 price as on
(Rs in Cr.) 28/09/2007
Sakthi Finance Limited 20.07 21.1 34.2 1.5 7.7
Bajaj Auto Finance Limited 36.60 286.1 401.8 12.4 27.7
Cholamandalam DBS Finance Ltd. 52.18 100.7 418.0 5.2 24.2
G E Capital Transportation
Finance Services Ltd. 20.26 17.9 146.0 1.0 103.0
Sundaram Finance Ltd. 27.78 316.0 691.8 36.1 11.7
M& M Fin. Services Ltd. 86.00 90.7 844.6 14.7 15.2
Shriram Trans. Fin. Co. Ltd. 184.19 57.9 1425.8 9.9 15.9
Source: Capital Market Issue October 08- 21,2007; Segment- Finance and Investments
The Companies in the above list have been selected on the basis that they are listed Companies engaged in providing
Non-Banking Financial Services. However, their performance may not be directly comparable with that of our business
as they cater to different segments of the market and therefore their business portfolio will vary.
The Issue Price of Rs. 10/- per share is the same as the Face Value of Rs.10/- per share of the Equity Shares being issued.
The market price of the shares of the Company as on 28/09/2007 is Rs. 14.00 on BSE.
Considering the above qualitative and quantitative factors, the issue price of Rs.10/- per equity share (i.e. at par) is
justified.
17
To
Board of Directors,
Sakthi Finance Limited,
62, Dr.Nanjappa Road,
Coimbatore – 641 018.
Statement of Tax Benefits available to the Company and its Shareholders.
We hereby report that the enclosed annexure states the tax benefits available to Sakthi Finance Limited (“the Company”)
and its shareholders under the tax laws presently in force in India. Several of these benefits are dependent on the
Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the
Company or its shareholders to derive the tax benefits is dependent upon them fulfilling such conditions, which based
on business imperatives the Company faces in the future, the Company may or may not choose to fulfill.
The benefits discussed in the statement are not exhaustive. This statement is only intended to provide general information
to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the
individual nature of the tax consequences, each investor is advised to consult his or her own tax consultant with respect
to the specific tax implications arising from their participation in the issue.
We do not express any opinion or provide any assurance as to whether:
(i) the Company or its shareholders will continue to obtain these benefits in future; or
(ii) the conditions prescribed for availing the benefits have been / or would be met with.
The contents of this Annexure are based on information, explanations and representations obtained from the Company
and on the basis of our understanding of the business activities and operations of the Company.
For P.N.Raghavendra Rao & Co.,

Chartered Accountants
Sd/-
P.R.Vittel
PLACE: Coimbatore Partner
DATE: 23.04.2007 Membership No. 18111
18
STATEMENT OF TAX BENEFITS
M/s P N Raghavendra Rao & Co, Chartered Accountants, by their letter dated 23/04/2007 have advised that under the
current tax laws, the following tax benefits will be available to the existing and prospective shareholders and company
under the direct tax laws.
Under the Income-Tax Act, 1961 (“the Act”):
I. Benefits available to the Company

1. Depreciation on fixed assets
As per the provisions of Section 32 of the Act, the company is eligible to claim depreciation on tangible and
specified intangible assets as explained in the said section and the relevant IT rules thereunder.
2. As per section 10(34) of the Act, any income by way of dividends referred to in Section 115-O (i.e. dividends
declared, distributed or paid on or after 1 April 2003 by domestic companies) received on the shares of any
company is exempt from tax.
3. As per section 10(35) of the Act, the following income shall be exempt in the hands of the Company
Income received in respect of the units of a Mutual Fund specified under clause (23D) of section 10; or
Income received in respect of units from the Administrator of the specified undertaking; or
Income received in respect of units from the specified company
If, this exemption does not apply to any income arising from transfer of units of the Administrator of the specified
undertaking or of the specified Company or of a mutual fund, as the case may be.
For this purpose (i) “Administrator” means the Administrator as referred to in section 2(a) of the Unit Trust of
India (Transfer of Undertaking and Repeal) Act, 2002 and (ii) “Specified Company” means a company as
referred to in section 2(h) of the said Act.
4. As per section 10(38) of the Act, long term capital gains arising to the Company from the transfer of a long term
capital asset being an equity share in a company or a unit of an equity oriented fund where such transaction is
chargeable to securities transaction tax would not be liable to tax in the hands of the Company.
For this purpose, “Equity Oriented Fund” means a fund –
(i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more
than sixty five percent of the total proceeds of such funds; and
(ii) However as per section 115JB, the Company will not be able to reduce the income to which the provisions
of section 10(38) of the Act apply while calculating “book profits” under the provisions of section 115JB
of the Act and will be required to pay Minimum Alternate Tax @ 10% (plus applicable surcharge and
education cess) of the book profits determined.
5. As per section 112 of the Act, taxable long-term capital gains, if any, on sale of listed securities or units or zero
coupon bonds (in cases not covered under section 10(38) of the Act) would be charged to tax at the rate of 20%
(plus applicable surcharge and education cess) after considering indexation benefits in accordance with and
subject to the provisions of section 48 of the Act or at 10% (plus applicable surcharge and education cess)
without indexation benefits, at the option of the Company. Under section 48 of the Act, the long term capital
gains arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed Bonds issued
by the Government) will be computed after indexing the cost of acquisition/improvement.
6. As per section 54EC of the Act and subject to the conditions and to the extent specified therein, long-term capital
gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset
will be exempt from capital gains tax if the capital gains are invested in a “long term specified asset” within a
period of 6 months after the date of such transfer. However, if the assessee transfers or converts the long term
specified asset into money within a period of three years from the date of their acquisition, the amount of capital
gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long
term specified asset is transferred or converted into money.
19
A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st day
of April 2006:
(i) by the National Highways Authority of India constituted under section 3 of the National Highways Authority
of India Act, 1988, and notified by the Central Government in the Official Gazette for the purposes of this
section; or
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies
Act, 1956, and notified by the Central Government in the Official Gazette for the purposes of this section.
7. As per section 111A of the Act, short term capital gains arising to the Company from the sale of equity share
or a unit of an equity oriented fund transacted through a recognised stock exchange in India, where such
transaction is chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge
and education cess).
II. Benefits to the Resident Shareholders of the Company under the Income-Tax Act, 1961
declared, distributed or paid on or after 1 April 2003) received on the shares of the Company is exempt from
tax.
2. As per section 10(38) of the Act, long term capital gains arising to the shareholder from the transfer of a long
term capital asset being an equity share in the Company, where such transaction is chargeable to securities
transaction tax would not be liable to tax in the hands of the shareholder.
3. As per section 88E of the Act, the securities transaction tax paid by the shareholder in respect of taxable
securities transactions entered into in the course of the business would be eligible for deduction from the amount
of income tax on the income chargeable under the head “Profits and Gains of Business or Profession” arising
from taxable securities transactions, subject to certain limits specified in the section. No deduction will be
allowed in computing the income chargeable to tax as “Capital Gains” or under the head “Profits and Gains of
Business or Profession” for such amount paid on account of securities transaction tax.
4. As per section 112 of the Act, if the shares of the Company are listed on a recognised stock exchange, taxable
long term capital gains, if any, on sale of the shares of the Company (in cases not covered under section 10(38)
of the Act) would be charged to tax at the rate of 20% (plus applicable surcharge and education cess) after
considering indexation benefits or at 10% (plus applicable surcharge and education cess) without indexation
benefits, whichever is less.
of April 2006:
section; or
6. As per section 54F of the Act, long-term capital gains (in cases not covered under section 10(38) of the Act)
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 certain conditions, if the net consideration from such shares is used for purchase
of a residential house property within a period of one year before or two year after the date on which the transfer
took place or for construction of a residential house property within a period of three years after the date of
transfer.
20
7. As per section 111A of the Act, short term capital gains arising to the shareholder from the sale of equity shares
of the Company transacted through a recognised stock exchange in India, where such transaction is chargeable
to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge and education cess).
III. Non-Resident Indians/Non Resident Shareholders (Other than FIIs and Foreign Venture Capital Investors)
tax.
2. As per section 10(38) of the Act, long term capital gains arising to the shareholder from the transfer of a long
term capital asset being an equity share in the Company, where such transaction is chargeable to securities
transaction tax would not be liable to tax in the hands of the shareholder.
3. As per section 88E of the Act, the securities transaction tax paid by the shareholder in respect of taxable
securities transactions entered into in the course of the business would be eligible for deduction from the amount
of income tax on the income chargeable under the head “Profits and Gains of Business or Profession” arising
from taxable securities transactions, subject to certain limits specified in the section. No deduction will be
allowed in computing the income chargeable to tax as “capital gains” or under the head “Profit and gains of
Business or Profession” for such amount paid on account of securities transaction tax.
of April 2006:
section; or
5. As per section 54F of the Act, long-term capital gains (in cases not covered under section 10(38) of the Act)
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 certain conditions, if the net consideration from such shares is used for purchase
of a residential house property within a period of one year before or 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.
6. Under section 115-I of the Act, the Non-Resident Indian shareholder has an option to be governed by the
provisions of Chapter XIIA of the Act viz. “Special Provisions Relating to Certain Incomes of Non-Residents”
which are as follows:
(i) As per 115E of the Act, where shares in the Company are acquired or subscribed to in convertible foreign
exchange by a Non-Resident Indian, capital gains arising to the non-resident on transfer of shares held for
a period exceeding 12 months, shall (in cases not covered under section 10 (38) of the Act) 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).
(ii) As per section 115F of the Act, long-term capital gains (in cases not covered under section 10(38) of the
Act) 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 into money within three years from the date of their acquisition.
21
(iii) As per section 115G of the Act, Non-Resident Indians are not obliged to file a return of income under
section 139(1) of the Act, if their only source of income is income from specified investments or long term
capital gains earned on transfer of such investments or both, provided tax has been deducted at source from
such income as per the provisions of Chapter XVII-B of the Act.
(iv) As per section 115H of the Act, where the Non-Resident Indian becomes assessable as a resident in India,
he may furnish a declaration in writing to the Assessing Officer, along with his return of income, for the
assessment year in which he is first assessable as a Resident, under section 139 of the Act to the effect that
the provisions of the Chapter XII-A shall continue to apply to him in relation to such investment income
derived from the specified assets for that year and subsequent assessment years until such assets are converted
into money.
The tax rates and consequent taxation mentioned above shall be further subject to any benefits available
under the Tax Treaty, if any, between India and the country in which the non-resident has fiscal domicile.
As per the provisions of section 90(2) of the Act, the provisions of the Act would prevail over the provisions
of the Tax Treaty to the extent they are more beneficial to the non-resident.
IV. Foreign Institutional Investors (FIIs)
1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e. dividends
tax.
2. As per section 10(38) of the Act, long term capital gains arising to the FIIs from the transfer of a long term
capital asset being an equity share in the Company where such transaction is chargeable to securities transaction
tax would not be liable to tax in the hands of the FIIs.
3. As per section 115AD of the Act, FIIs will be taxed on the capital gains that are not exempt under the section
10(38) of the Act at the following rates:
Nature of income Rate of tax (%)
Long term capital gains 10 %
Short term capital gains (other than referred to in section 111A) 30 %
The above tax rates have to be increased by the applicable surcharge and education cess.
4. In case of long term capital gains, (in cases not covered under section 10(38) of the Act), the tax is levied on
the capital gains computed without considering the cost indexation and without considering foreign exchange
fluctuation.
of April 2006:
section; or
The tax rates and consequent taxation mentioned above shall be further subject to any benefits available under
the Tax Treaty, if any, between India and the country in which the FII has fiscal domicile. As per the provisions
of section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the Tax Treaty to the
extent they are more beneficial to the FII.
22
V. Venture Capital Companies/Funds
1. As per section 10(23FB) of the Act, all venture capital companies/funds registered with the 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 sale of shares of the Company. However income received by a person out
of investment made in a venture capital company or in a venture capital fund shall be chargeable to tax in the
hands of such person.
VI. Mutual Funds
1. As per section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and Exchange
Board of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public sector banks or public
financial institutions and Mutual Funds authorised by the Reserve Bank of India would be exempt from income
tax, subject to such conditions as the Central Government may by notification in the Official Gazette specify in
this behalf.
Benefits to shareholders of the Company under the Wealth Tax Act, 1957
1. 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 the shares are not liable to Wealth Tax.
Benefits to shareholders of the Company under the Gift Tax Act, 1958
1. Gift made after 1st October 1998 is not liable for gift tax, and hence, gift of shares of the Company would not
be liable for gift tax.
The above Statement of Possible Direct Tax Benefits sets out the provisions of law 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 shares.
Notes:
(i) All the above benefits are as per the current tax laws.
(ii) 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 consequences of his/her investments in the shares of the company.
No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views are
based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not
assume responsibility to update the views consequent to such changes. We shall not be liable to Sakthi Finance Limited
for any claims, liabilities or expenses relating to this assignment except to the extent of fees relating to this assignment,
as finally judicially determined to have resulted primarily from bad faith or intentional misconduct. We will not be liable
to any other person in respect of this statement.
23
SECTION III - ABOUT COMPANY

The Industry information presented in this section has been extracted from publicly available documents, which have
not been prepared or independently verified by the Company, the Lead Manager or any of their respective affiliates or
advisors or the sources referred to herein.
In this Section, we have relied on and referred to information regarding the industry and competitors from market
research reports, and other publicly available sources. Although we believe that this information is reliable, we have not
independently ‘verified the accuracy and completeness of the information.
INDUSTRY OVERVIEW
Road and Road Transport
Over the last three decades, roads have emerged as the principal mover of people and goods - almost 65 per cent of
India’s freight movement and 85 per cent of India’s passenger movement (Source: www.nhai.org/roadnetwork.htm). With
a total length of approximately 3.3 million kilometers, India has the second largest road network in the world. Roads have
played a vital role in transportation and also enhancing trade. The government has taken initiatives to improve and
strengthen the network of National Highways, State Highways and roads in major districts and rural areas.
Indian road network of 33 lakh kilometers (km) is second largest in the world and consists of:
● Expressways covering 200 km
● National Highways covering about 66,590 km
● State Highways covering 1,31,899 km
● Major District Roads covering nearly 4,67,763 km
● Rural and Other Roads covering 26,50,000 km
(Source: www.nhai.org/roadnetwork.htm)
The National Highways cater to about 45% of the road transport demand in the country. The government has embarked
upon an integrated National Highways Development Programme (NHDP). A major part of NHDP is the Golden Quadrilateral
project. It entails upgrading and widening of 6,000 km of highways connecting the four major metropolitan cities of
Delhi, Mumbai, Chennai and Kolkatta.
The government is also undertaking the North-South and East-West Corridor projects. These projects comprise about
7,000 kms of highways connecting Srinagar (North) with Kanyakumari (South) and Silchar (East) with Porbandar (West).
(Source: Ministry of External affairs [http://meaindia.nic.in])
An outlay of Rs. 59,490 crore (Gross Budgetary Support – Rs. 34,790 crore) has been provided for the development of
roads in the Tenth Five Year Plan. The bulk of this outlay is meant for the development of National Highways and related
programmes. An expenditure of Rs. 20,505 crore is likely to be incurred in the first three years of the Plan Period.
The road transport sector in India has expanded manifold in fifty years after independence, both in terms of spread and
capacity. The growth in the importance of road transport within the transport sector is borne out by its growing share
in GDP. The share of road transport in GDP is presently 3.69% that accounts for a major share of all transport modes,
which contribute 5.5% to GDP. The composition of road traffic has grown from 12 per cent freight and 31.6 per cent
passenger traffic in 1950-51 to an estimated 65 per cent freight and 87 per cent passenger traffic during the Tenth Five
Year Plan period. Traffic on the roads is growing at the rate of 7-10 per cent per annum while the growth in vehicles
has been to the tune of 12 per cent per annum for the past few years.
Commercial Vehicle Industry
The fortunes of India’s automobile industry are directly linked to the growth of its road transport sector. The Indian
commercial vehicles (CV) industry has grown attractively over the last few years, driven by structural changes and
economic growth. With a continuous investment in road infrastructure, there has been a spurt in the sale of commercial
vehicles. The commercial vehicle segment clocked a growth rate of 32%. Medium and Heavy Commercial Vehicles
(M&HCV) segment has grown by 34% whereas Light Commercial Vehicles (LCV) grew by over 31% in FY’07 as
compared to FY’06. (Source: www.siamindia.com/scripts/production-trend.aspx).
Commercial vehicles have gone one step ahead, aided by the infrastructure developments and a slew of road projects.
CV sales were 391,300 units per annum in 2005-06, however, the cycle is likely to be turning slower. Expectations of
rising interest rates, higher freight rates and high crude oil prices will have its impact felt in the near to medium term,
but yet to be felt.
24
Sales and comparative Growth of Indian Commercial Vehicle:
(in ‘000s)
Capacity of Vehicle 2002-03 2003-04 2004-05 2005-06
16 Tonnes and above 109 150 180 183
% Growth 25 38 20 2
6-15 Tonnes 30 36 48 57
% Growth 25 20 33 19
5 Tonnes and below 64 91 120 151
% Growth 31 42 32 26
Total 203 277 348 391
% Growth 27 37 26 12
(Source: Eicher Motors Limited, presentation to investors 18th / 19th May 2006)
Growth Potential of the Commercial Vehicle Industry

Key positive drivers:
• Improvement of road network and other infrastructure and further investments planned.
• Growth in GDP & Industrial production.
• Enforcement of overloading restrictions and recent spurt in freight rates.
• Enforcement of safety and emission regulations.
Concerns:
• High oil prices and adverse impact on freight rates.
• Increased productivity in transportation through Railways.
• Recent increase in interest rates.
Overall growth is likely to be more than 10% per annum in medium to long term
Retail Finance Industry
Retail finance industry consists of Banks, Subsidiaries of multi-national Banks, Captive finance companies and independent
finance companies. As the Banks have realized the potential in retail financing segment, most of the banks have entered
into retail segment. They originate high volumes of hire purchase business directly or through their channel partners
mainly against new commercial vehicle, cars and other retail assets. The captive finance companies are the divisions or
subsidiaries of vehicle / equipment manufacturers. The bulk of the businesses originated by these institutions are sourced
through manufacturers dealer network. The primary business purpose of these companies is to promote and support the
sales of their parent manufacturing company’s activity. The independent finance companies can be classified into two
types viz. mono-line finance companies which are specialising in a single product financing and multi-line finance
companies which have diversified asset portfolilo.
The Non-Banking Finance Institutions (Source: RBI, www,rbidocs.rbi.org.in/rdocs/publications/PDFs)
Core financial services provided by financial intermediaries include payments and liquidity, maturity transformation, store
of value, information processing and pooling of risks. Banks have traditionally provided most of these services and are
increasingly diversifying into other areas. However, banks typically have an edge in providing payment and liquidity
related services and they usually select a portfolio mix with an overriding objective of providing a certain return. NBFIs,
on the other hand, tend to offer enhanced equity and risk-based products. NBFIs play a crucial role in broadening access
to financial services, enhancing competition and diversification of the financial sector. They are increasingly being
recognised as complementary to the banking system capable of absorbing shocks and spreading risks at times of financial
distress.
25
Mobilisation of financial resources outside the traditional banking system has witnessed tremendous growth all over the
world in recent years. The boundaries separating commercial banks and NBFIs are also getting increasingly blurred.
Rapid financial diversification has thus posed new challenges for regulators, especially in the area of devising appropriate
regulatory safeguards for the highly complex NBFI sector. Owing to their diversified nature, NBFIs may require specific
regulatory prescriptions particular to their nature of business, in addition to the general guidelines applicable for the
financial sector.
The NBFI sector in India comprises various types of financial institutions with each one of them having its roots at a
particular stage of development of the financial sector. All-India financial institutions (AIFIs), largely an offshoot of
development planning in India, were created for long-term financing with some of them having sectoral/regional focus.
NBFCs, on the other hand, are mostly private sector institutions, which have carved their niche in the Indian financial
system. The focus of regulatory initiatives in respect of FIs during 2004-05 was to strengthen the prudential guidelines
relating to asset classification, provisioning, exposure to a single/group borrower and governance norms. Business operations
of FIs expanded during 2004-05. Their financial performance also improved, resulting from an increase in net interest
income. Significant improvement was also observed in the asset quality of FIs, in general. The capital adequacy ratio of
FIs continued to remain at a high level, notwithstanding some decline during the year.
Regulatory initiatives in respect of NBFCs during the financial year 2004-05 related to issuance of guidelines on credit/
debit cards, reporting arrangements for large sized NBFCs not accepting/holding public deposits, norms for premature
withdrawal of deposits, cover for public deposits and KYC guidelines. Business operations of NBFCs, which contracted
sharply during 2003-04, reflecting mainly the impact of decline in resource mobilisation, expanded marginally during
2004-05. Profitability of NBFCs improved in 2003-04 and 2004-05 mainly on account of containment of expenditure.
While gross NPAs of NBFCs, as a group, declined during 2003-04 and 2004-05, net NPAs after declining marginally
during 2003-04, increased significantly during 2004-05. Although capital adequacy of NBFCs continued to be comfortable,
on the whole, there was increase in the number of NBFCs with CRAR less than 12 per cent and decline in NBFCs with
CRAR above 30 per cent. The business of large NBFCs not accepting public deposits, but with asset size of Rs.500 crore
and above, continued to expand. These NBFCs earned substantial profits and improved their asset quality during the year.
Industry Structure
The Non-Banking Financial Companies (NBFCs) are a heterogeneous group of finance companies unlike the commercial
and co-operative banks. NBFCs are defined under Section 45-1 (f) read with sections 45-I (c) and 45-I (e) of RBI Act,
1934, and can carry on business in one or more of these areas:
● Asset Finance Company
● Insurance Company
● Loan Company
● Investment Company
● Mutual Benefit Finance Company
● Miscellaneous Non-Banking Company
● Housing Finance Company
● Residuary Non-Banking Company
The funding to small-scale industry is mainly for plant and machinery, industrial equipment, computer system etc. 70 %
of the activities of NBFCs are in Leasing Equipment and Hire Purchase. There is some exposure in Bill Discounting and
Factoring. The main strength of NBFCs is that they can devise innovative financing schemes and tailor-made schemes
according to the specific requirement of the client. (Source: www.indianfoundry.com/Teri/finance/nbfc.html)
Regulatory policies and its implication on the industry:
The registered NBFCs are regulated by the Reserve Bank of India, principally through the following guidelines:
• Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions 1998
• Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions 1998
• Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions 1998
• Reserve Bank of India (Non-Banking Financial Companies) Returns Specification 1997
26
These Directions provide for the limit up to which a company can accept deposits and enables healthier build-up of the
assets. As a result of these regulations, the registered NBFCs have started focusing on building healthier asset portfolio.
RBI regulates NBFCs engaged in asset finance, loan and investment, RNBCs and the deposit taking activity of miscellaneous
non-banking companies (chit funds).
Reserve Bank of India (“RBI”) Act, 1934 as amended in 1997 defines the principal activity of a NBFC as that of
receiving deposits or that of a financial institution, such as, lending, investment in securities, hire purchase finance or
equipment leasing.
Some of the norms issued by RBI governing NBFCs are as under:
1. No NBFC having a net owned fund of twenty five lakh of rupees and above shall accept public deposit unless it has
obtained a minimum investment grade or other specified credit rating for fixed deposits from any one of the approved
credit rating agencies at least once in a year and a copy of the rating is sent to the RBI along with the return on
prudential norms.
2. RBI stipulates ceiling on quantum of deposits mobilised by a NBFC being categorised as asset finance Company as
under:
An Asset Finance Company may accept or renew public deposits, together with the amounts remaining outstanding in
the books of the company as on the date of the acceptance or renewal of such deposit not exceeding four times of its
NOF.
RBI has imposed the following restrictions on concentration of credit / investments
Lending To a single borrower Not exceeding 15% of owned fund

To a single group of borrowers Not exceeding 25% of the owned fund
Investment In the shares of another company Not exceeding 15% of the owned fund
In the shares of single group of companies Not exceeding 25% of the owned fund
Lending and Investment Single party Not exceeding 25% of the owned fund
Single group of parties Not exceeding 40% of the owned fund
As of June 2006, there were in all 13,014 NBFCs registered with RBI of which 428 accepted deposits [Source: Economic
Survey 2006-2007]. Non-Banking Financial Companies (NBFCs) are an integral part of the country’s financial system
because of their complementary as well as competitive role. They act as a critical link in the overall financial system
catering to a large market of niche customers. As a result of consolidation and restructuring in the financial sector and
liberalisation and globalisation of markets only a few strong NBFCs now remain in business. However, competition
continues to be intense, as the Indian and foreign banks have entered the retail lending business in a big way, thereby
exerting pressure on margins.
On the regulatory front, NBFCs are regulated by the Reserve Bank of India (RBI) almost at par with banks. All the
prudential norms for asset classification, income recognition, provisioning etc., are applicable to NBFCs.
NBFCs and SCBs have traditionally been extending credit across various parts of the country through their geographical
presence, with NBFCs being a supplier of credit to segments such as equipment leasing, hire purchase, housing finance
and consumer finance. These are areas which warrant infusion of financing due to the existing demand-supply gap.
NBFCs have been a more flexible source of financing and have been able to disburse funds to a gamut of clientele, from
the local common man to a variety of corporate clientele. NBFCs are also able to accelerate the pace of decision making
to disburse funds, customise and tailor their products according to the client needs and take on excess risks on their
portfolio. The added risk augments the higher interest rates charged by NBFCs compared to SCBs
Competition from Scheduled Commercial Banks
Scheduled Commercial Banks (SCBs) and NBFCs compete with each other for public deposits and avenues to source their
funds, if they compete in the same sections of the credit markets. SCBs offer lower interest rates on their deposits but the
deposits have increased at rates higher than those recorded by NBFCs. According to extant regulations, SCBs are not
required to pay interest on demand deposits, with interest on savings deposit capped at 3.5%. Term deposit interest rates
range between 2%-7%. The interest rates paid by NBFCs are substantially higher. [Source: ICRA]
27
Indicators of Competition between SCBs and NBFCs

At 3lst March 1999 2000 2001 2002 2003 2004 2005
Assets — Rs. Billion
SCBs 9,507 11,100 12,952 15,364 16,991 19,740 23,560
NBFCs 470 513 539 583 581 507 529
NBFCs as % of assets of SCBs 5 4.6 4.2 3.8 3.4 2.6 2.2
Deposits — Rs. Billion
SCBs 7,708 9,003 10,552 12,059 13,557 15,785 18,370
NBFCs 204 193 181 188 201 196 202
NBFCs as % of deposits of SCBs 2.7 2.1 1.7 1.6 1.5 1.2 1.1
Source: ICRA
There exist differences on the public deposits accepted for tenure of less than 1 year and the cost of funds for NBFCs
and SCBs. As on March 2005, 40.2% of total deposits of SCBs belonged to a maturity of less than 1 year. For NBFCs
the corresponding number was 31.4%. Cost of funds for SCBs declined, with interest expense as a percentage of average
assets declining from 5.79% in 2003 to 4.77% in 2004. During 2005, NBFCs witnessed finance expenditure to average
assets ratio of 5.3%. [Source: ICRA]
Percent of deposits
At March end 2000 2001 2002 2003 2004 2005
Upto 10% 0.3 1.8 6 23.3 43.9 71.4
10-12% 7.1 21.7 34.6 41.7 36.7 19.9
12-14% 44.4 42.7 39.2 23 12 5
14-16% 34.6 23.7 14 9.4 5.9 3
More than 16% 13.7 10 6.1 2.9 1.8 1.2
Total 100 100 100 100 100 100
RBI is encouraging NBFCs to decrease focus on public deposits to source their funds. Internationally, deposits are
sourced from institutions and capital markets and RBI is pushing for increased dependence on these fund sources.
The Indian consumer has also witnessed a change in attitude towards consumer credit for the purpose of retail financing.
Over the years, consumers have become more accepting towards borrowing and there is no social stigma attached to
funding purchases by means of credit. The retail finance market includes disbursements towards a gamut of segments,
such as housing, commercial vehicles and two wheelers amongst others.
Opportunities
India has a very long road network which carries 80% of the total freight traffic. Hence road sector assumes significant
importance in on-going development process. The economic development in India is happening in all parts of the country
and goods will have to move throughout the length and breadth of the country. The agricultural commodity movement
is also a major factor contributing to the development of commercial vehicles industry. The new commercial vehicles
sales will lead to more demand for finance for used vehicles as the vehicles sold now will enter into refinance market
in 3 to 5 years tenure.
Threats
The entry of new players especially NBFCs owned by multinational finance companies into refinance segment can be
perceived as a threat to existing players like Sakthi Finance Limited. But compared to the huge market potential and the
share enjoyed by Sakthi Finance Limited, the threat of entry of new players may not affect the business plans of the
company.
28
BUSINESS OVERVIEW
Sakthi Finance Limited is a Non–Banking Financial Company registered with RBI, Department of Non-Banking Supervision,
Chennai vide their certificate dated 08/05/1998 and having its registration number 07.00252. The registered office of
the company is situated at 62, Dr. Nanjappa Road, Post Box No. 3745, Coimbatore - 641 018. SFL is an independent
multi-line finance company which focuses mainly on two product lines in refinance segment viz. commercial vehicles and
infrastructure equipments. SFL has been in this line of business for the past 50 years. SFL has positioned itself between
the organised banking sector and local money lenders, offering the customers competitive, flexible and speedy lending
services.
The client base of SFL predominantly consists of small vehicle operators. Customers usually provided 75% to 80% of
the market value of the asset. The loans are secured by hypothecation of the assets financed.
Few organized players have entered into commercial vehicle refinance business wherein the age of the truck is more than
5 to 6 years. This segment requires good understanding of customer and market in which one operates. As of December
31, 2006, SFL has a presence in the states of Tamil Nadu, Kerala, Andhra Pradesh and Karnataka with a network of 25
branch offices and Customer Service Points.
For the year ended 31st March, 2007, the company disbursed Rs. 150 crores in hire purchase finance business as against
Rs 90 crores in the previous financial year. For the financial year ended March 31, 2007, the net NPA of the Company
constituted 0.57 % of the total risk weighted assets of the company.
Total exposure of Sakthi Finance Limited to its group and associate Companies is as follows:
(Rs. in lacs)
Outstanding as at
Nature of Company
30.06.2007 31.03.2007 31.03.2006 31.03.2005 31.03.2004
a. Subsidiary
Sakthi Properties (Coimbatore) Ltd 202.03 201.55 199.63 232.46 223.38
Total 202.03 201.55 199.63 232.46 223.38
b. Associates
ABT Ltd. 163.29 196.08 188.63 41.59 84.11
ABT Induststries Ltd 113.34 112.37 111.74 202.84 289.13
Sri Bhagawathi Textiles Ltd 206.84 279.67 300.20 332.14 334.09
Sakthi Financial Services Ltd 38.17 36.81 45.69 47.32 319.78
Sri Sakthi Textiles Ltd 206.84 164.24 179.99 161.28 132.13
Sakthi Financial Services (Cochin) P Ltd 82.02 82.01 0.35 – –
Sakthi Logistic Services Ltd – – – 18.86 –
Sakthi Beverages Ltd – – – 2.00 203.99
S akthi Refinery and Protein Ltd – – – – 184.19
Total 810.50 871.18 826.60 806.03 1547.42
Grand Total 1012.53 1072.73 1026.23 1038.49 1770.80
SFL from time to time to ensure growth of its activities enters into deed of assignment with some of the established finance
companies. This enables the company to have more liquidity and leverage its business activities. In the process of assignment
of debt, the company enters into deed of assignment in terms of which the loan documents of various borrowers who have
agreed to pay the assignor interest, instalments of principal and other charges etc on the respective due dates and the assets
hypothecated by the borrowers are assigned in favour of the assignee.
By virtue of the said agreement the assignor agrees to sell to the assignee, the loan assets together with the underlying
securities thereof and all the rights and obligations of the assignor under the loan documentations executed by the designated
borrower in favour of the assignee for a consideration.
SFL has entered into such deeds of assignment with GE Capital Services India Limited and L&T Finance Ltd since 2003 and
latest ones are entered into on 19/02/2007 with GE Capital Services India Limited and on 05/07/2007 with L&T Finance
Limited.
29
Power Generation :
The company is also selling power generated from its windmills to the Tamilnadu Electricity Board. It has presently
11 windmills out of which 4 windmills are located in Tirunelveli District and another 7 windmills are located in
Kanyakumari district each with a capacity of 250 KW.
PRODUCTS
SFL is engaged in providing finance for commercial vehicles and equipments.
Commercial Vehicle Finance:
Providing finance for the Commercial Vehicles forms the core business of SFL. SFL provides finance for new as well
as used commercial vehicles. The strategy of the company is to engage in niche segment of commercial vehicle refinance
business. Very few organized players have entered into commercial vehicle refinance business wherein the age of the
truck is more than 5 to 6 years. The average loan size for commercial vehicles varies from Rs. 2.00 Lakhs to Rs. 4.00
Lakhs and the tenure is from 24 Months to 36 Months.
Infrastructure Equipment Finance:
SFL has also entered in the financing of Infrastructure equipment and earth moving machines in order to diversify its
portfolio. Government has proposed incentives for industries engaged in the infrastructure development. These incentives
may give SFL an opportunity to improve in this line of business on account of the potential in equipment financing, as
there is scope for growth in this business.
The details of the business done in this segment by the company is as follows :
Particulars For the Financial Year ended
2006-07 2005-2006
Number of Accounts 253 145
Advance Amount (Rs. in Lacs) 2023.55 829.15
Average ticket size (Rs. in Lacs) 8.00 5.72
OPERATIONS
The Basic Process of the Business is explained below:
Lending and Collections
The processes involved in lending activity are enumerated below:-
1. Customer Acquisition and Retention (CARE): Marketing Officers located in potential centres identify good customers
who intend to borrow and collect their profiles. If the profile of the intended borrower matches with the policy of
the company, the executive makes a recommendation as to whether the loan to the applicant should be extended
or not.
2. Customer Appraisal Process (CAP): This process team takes care of appraising the profiles of all intended borrowers
and select the right borrowers who have the capacity and intention to repay the loan. The Appraisal process is
centralized and handled at Head Office. All the branches are linked through internet and hence the appraisal process
is carried out faster. The funds are advanced after the process of evaluation is completed and the necessary
documentations have been completed.
3. Customer and Asset Management Process (CAMP): The critical success factor of an NBFC is its ability to
manage the advance portfolio and recover the money lent on due dates. There is a team at Head Office which is
continuously monitoring the recovery and offers support to branches on exceptional accounts which pose collection
problems.
Disbursals
During the financial year 2006-07, SFLs total disbursals were to the tune of Rs. 15033.59 lacs as against Rs. 8960.60
lakhs during the previous year thereby achieving a growth of 67.77 %. The break up of SFLs disbursals across its business
operations are as given hereinunder:
2006-07 2005-06 2004-05
Disbursals Rs. In lacs % of total Rs. In lacs % of total Rs. In lacs % of total
disbursals disbursals disbursals
Commercial Vehicle Finance 1281.98 85.28 6242.57 69.67 6453.87 81.63
Equipment finance 2213.61 14.72 2718.03 30.33 1452.22 18.37
Total Disbursals 15033.59 100.00 8960.60 100.00 7906.09 100.00
30
Asset Classification
Set out below are the RBI Guidelines for asset classification:
Asset classification The RBI Guidelines
Standard Asset An asset in respect of which no default in repayment of principal or payment of interest is
perceived and which does not disclose any problem nor carry more than normal risk attached
to the business
Sub-standard Asset An asset has been an NPA for a period not exceeding 18 months or where the terms of the
agreement regarding interest and / or principal have been renegotiated or rescheduled
after commencement of operations, until the expiry of one year of satisfactory performance
under the renegotiated or rescheduled terms
Doubtful Asset An asset which remains a sub-standard asset for a period exceeding 18 months
Loss Asset An asset which has been identified as loss asset by the NBFC or its internal or external
auditor or by the RBI during the inspection of the NBFC, to the extent that it is not written
off by the NBFC; and (b) an asset which is adversely affected by a potential threat of
non-recoverability due to either erosion in the value of security or non availability of
security or due to any fraudulent act or omission on the part of the borrower
The following table sets forth data regarding the classification of the credit exposure (net of write-offs and unpaid interest
on NPAs) of SFL.
As at As at As at As at
Particulars 31st March 2005 31st March, 2006 31st March 2007 30th June 2007
Rupees % Rupees % Rupees % Rupees %
in lacs in lacs in lacs in lacs
Standard 17161.13 97.11 18531.40 98.36 21813.25 98.95 21658.95 98.56
Non-Performing assets 511.14 2.89 309.46 1.64 232.05 1.05 308.66 1.41
Of which:
Sub-standard 40.67 7.96 70.75 22.86 113.25 48.80 211.39 68.49
Doubtful assets 229.81 44.96 76.39 24.69 87.95 37.90 90.47 29.31
Loss assets 240.66 47.08 162.31 52.45 30.85 13.30 6.80 2.20
Total 511.14 100.00 309.45 100.00 232.05 100.00 308.66 100.00
Provisioning and Write-offs
For loans, advances and other credit facilities including bills purchased and discounted, the RBIs provisioning norms are
attracted once the arrears are for 6 months or more. The provisioning requirements in respect of loans, advances and other
credit facilities including bills purchased and discounted are as follows:
Asset Classification Provisioning
Standard Asset Nil
Sub standard asset A general provision of 10% of the total outstandings is required to be made
Doubtful asset a. 100% provision to the extent, which the advance is not covered by the realizable value
of the security to which the NBFC has a valid recourse, shall be made. The realizable
value is to be estimated on a realistic basis.
b. In addition to item (a) above, depending upon the period for which the asset has remained
doubtful, provision to the extent of 20% to 50% of the secured portion
(i.e. estimated realizable value of the outstanding) shall be made on the following basis:
Period for which the asset is Percentage of provision
considered doubtful
Up to one year 20
From one to three years 30
For more than three years 50
Loss Asset The entire asset shall be written off. If the assets are permitted toremain in the books for
any reason, 100% of the outstanding should be provided for.
31
For hire purchase assets, the total dues (overdue and future instalments taken together) as reduced by, the finance charges
not credited to the profit and loss account and carried forward as un-matured finance charges and; the depreciated
value of the underlying asset are to be provided for.
Explanation: For the purpose of the above, the depreciated value of the asset shall be notionally computed
as the original cost of the asset to be reduced by depreciation at the rate of 20% p.a. on a straight line method, in the case
of second hand asset, the original cost shall be the actual cost incurred for acquisition of such second hand asset.
The RBI provisioning norms that are applicable to SFL as an asset finance company are as follows:
Asset Classification Provisioning
Standard Asset Nil
Sub standard asset 10% of the net book value
Doubtful asset 40% of the net book value where any amounts of hire charges or lease rentals are overdue
for more than 24 months but up to 36 months
70% of the net book value where any amounts of hire charges or lease are overdue for
more than 36 months but up to 48 months
Loss Asset 100% of the net book value
Since SFL is classified as asset finance company, it is required to recognize NPA, where any amount of hire charges are
overdue for more than 12 months.
Statutory provisions are required to be made in respect of sub-standard, doubtful and loss assets as per RBI directives.
Based on SFLs policy its provisions as of March 31, 2007 stood at Rs. 105.51 lacs which is as per the RBI directives.
Resources
The operations of the Company have been funded through a combination of equity, deposits and debt depending
upon the prevailing cost of the debt and its forecast of future movement. SFL’s debt currently comprises various instruments
like deposits, non-convertible debentures, term loans, working capital demand loan for varying periods. The overall cost
of debt for the previous three years amounted to 9.60 %, 11.57 %, and 12.92 % respectively.
Debt
The total funds deployed and combination of the debt, deposit and equity for the last four years are as follows:
(Rs. in lacs)
Years Shareholders funds Deposits Debt Total Debt funds Debt EquityRatio
2003-04 3775.99 10308.72 5449.13 15757.85 4.17
2004-05 3946.58 9453.23 6446.80 15900.03 4.03
2005-06 4042.58 8170.56 7955.05 16125.61 3.99
2006-07 4244.50 8186.11 9919.53 18105.64 4.27
Deposits
The composition of Deposits for the last four years are as follows:
(Rs. in lacs)
Years Deposits Total Number of Depositors
2003-04 10308.72 41891
2004-05 9453.23 36262
2005-06 8170.56 29738
2006-07 8186.11 27695
Equity
The composition of shareholders funds for the last four years are as follows:
(Rs. in lacs)
Years Equity Free Reserves Total Share holders Funds
2003-04 2007.13 1768.86 3775.99
2004-05 2007.13 1939.45 3946.58
2005-06 2007.13 2035.45 4042.58
2006-07 2007.13 2237.37 4244.50
32
Capital Adequacy Ratio
(Rs. in lacs)
Particulars As at 31st March
2007 2006 2005 2004 2003
Eligible Tier I Capital 4,244.51 4,042.58 3,946.59 3,775.99 3,755.73
Eligible Tier II Capital – – – – –
Total Capital 4,244.51 4,042.58 3,946.59 3,775.99 3,755.73
Risk Assets :
Adjusted value Funded risk assets 23,481.40 20,377.91 18,774.83 18,625.50 18,843.74
Adjusted value Non-Funded risk assets 2,068.49 1,210.93 803.57 502.28 440
Total Risk weighted assets 25,549.89 21,588.84 19,578.40 19,127.78 19,283.74
Capital Adequacy Ratio (%) 16.61 18.73 20.16 19.74 19.48
Credit / Deposit ratio and interest spread in the key financial ratio (Rs. in lacs)
Particulars As at
30/06/2007 31/03/2007 31/03/2006 31/03/2005 31/03/2004 31/03/2003
Credit / Deposit ratio 2.89 2.57 2.22 1.75 1.61 1.52
Average credit exposure 21967.61 21070.08 18179.27 16570.10 16127.48 16307.05
Deposit Outstanding 7612.93 8186.11 8170.56 9452.23 10015.69 10725.54
Average interest earning assets 22177.87 20969.92 18795.31 17806.34 17637.65 17144.31
Interest Income 857.50 3000.30 2580.20 2736.35 2520.50 2154.87
(Net of lease deprn)
Avg. interest bearing liabilities 18773.33 17115.62 16012.82 15828.94 15959.71 16358.92
Total interest expenses 442.23 1635.70 1606.24 1861.80 2062.03 2027.67
Ratio of Avg. Interest earning 1.181 1.225 1.174 1.125 1.105 1.048
assets to Avg. interest bearing
liabilities. Interest expenses
apportioned to interest earning
assets
Net interest income 415.27 1364.60 973.96 874.55 458.47 127.20
Net interest margin (%) 7.49 6.51 5.18 4.91 2.60 0.74
Gross Yield (%) 15.47 14.31 13.73 15.37 14.29 12.57
Average cost of loan funds (%) 9.42 9.56 10.03 11.76 12.92 12.39
Yield Spread (%) 6.04 4.75 3.70 3.61 1.37 0.17
Return on Average Total Assets (%) 2.93 1.83 1.40 0.89 0.31 0.15
Avg. Net Worth to Avg. 20.43 21.30 22.61 22.80 21.01 17.65
Total Assets (%)
Details of Liquid Assets of the Company as against RBI norm of 15% are as follows:
SLR held as on 31.03.2007 including interest accrued as per NBS-3 Rs. 1371.01 lacs
Deposit position as on 30.09.2006 Rs. 9078.38 lacs
% of SLR held 15.10%
SLR held as on 30.06.2007 including interest accrued as per NBS-3 Rs. 1357.28 lacs
Deposit position as on 31.12.2006 Rs. 9048.19 lacs
% of SLR held 15.00%
Competition
SFL’s primary competitors are public sector banks, private banks (including foreign banks), co-operative banks, regional
rural banks and other non-banking financial companies. Competition in the Financing Industry is expected to continue.
For more details on this sector please refer to section titled “Industry Overview” at page 24 of this Offer Document.
33
Human Resources
Break-up of the present manpower in the Company:
Category No of Employees
Executives
Top Management 6
Senior Management 11
Middle Management 34
Executives 146
Non-Executives
Skilled/ Staff 28
Non Skilled 17
Total 242
Human Resource Department
Sakthi Finance Limited currently has total manpower of 242 persons. HR Process is one of the seven core processes in
the company. HR department is strengthened with qualified HR Professional and the department consists of 7 members.
HR functions at Sakthi Finance Limited takes care of:
S – Selection and Recruitment of right candidates.
T – Training and Development for existing employees and new entrants.
A – Appraisal and Retirement through compensation, career growth and separation
R – Retention and retirement through compensation, career growth and separation.
Apart from this, HR department takes care of establishment functions such as, statutory welfare functions, wages and
salary and administrative functions.
The company has a performance based appraisal and remuneration system to compensate and reward the employees.
Regular performance feedback is given to employees on their performance based on a half-yearly / yearly appraisal
process. The company has taken necessary steps to assist the employees of the Company in planning the employee’s
individual growth within the Company. The Company provides good opportunities for employees who have a track record
of high performance and potential to progress within the company.
The employee net attrition rate for the last three years is NIL
Insurance
SFL maintains an insurance coverage on all its assets located at its head office and branch premises against fire,
earthquake and related perils. The Company also maintains insurance against burglaries at SFLs head office and its
branch offices. Further the Company maintains insurance against loss by virtue of riots, strikes or terrorist activities, any
money that is in transit and money that is in safes.
MARKETING STRATEGY
For Retail Resource Mobilisation
SFL has outsourced this process of retail resource mobilizations to its associate company called Sakthi Financial Services
Limited. Sakthi Financial Services Limited has employed around 30 field staff in Tamil Nadu to market the Fixed Deposit
and Non-Convertible Debentures scheme of Sakthi Finance Limited. Potential customers are contacted and explained
about the schemes and deposit is mobilised.
For lending
The marketing activity for lending is directly handled by Sakthi Finance Limited. The company has 25 branches in Tamil
Nadu, Kerala, Andhra Pradesh, Karnataka, Pondicherry and Delhi. Each branch is in-charge of a Branch Manager.
Depending upon the potential in the territory, 4 to 6 marketing officers are attached to each branch, At present there are
75 marketing officers in the rolls of the company. These officers are located in rural centres, wherein truck population
34
is higher. Each of these officers typically covers 50 km area from his location. They are responsible for lending money
in that area and also for collecting the instalments. These officers are given required marketing support, by holding
Special Customer Meets, Campaigns etc.
SWOT ANALYSIS OF THE COMPANY
Strengths
➣ Company belongs to reputed “Sakthi Group” of companies.
➣ Company has been in this line of business for about five decades. Hence the knowledge of the market and customers
is excellent.
➣ Company has well established systems required for this line of business.
➣ Company has loyal and dedicated man power to handle the business at all levels.
Weaknesses
➣ The credit rating of the company is MA-, which means adequate safety. With this rating, the company is unable to
tap more resources from Banks.
Opportunities
➣ With the higher level of economic development, the demand for commercial vehicle and consequently the demand
for commercial vehicle finance will increase
Threats
➣ Entry of more organized players into refinancing segment will intensify the competition.
DETAILS OF COMPETITORS
The company has opted to play in niche segment of refinancing of commercial vehicles. Almost 80% of the trucks are
owned and run by independent operators. Unorganized players cater to the bulk of demand for used truck financing.
Though organized players like banks and NBFCs backed by Banks are entering this refinance business, they have largely
restricted their operations to financing trucks aged below 6 to 7 years. Even though more NBFCs and Banks are entering
into this segment, only NBFCs with good network of field staff, effective relationship management and customer evaluation
tools can succeed in this business.
Other players in the market who are close competitors of SFL are:
➣ Sundaram Finance Ltd
➣ Cholamandalam DBS Finance Ltd.
➣ Shriram Transport Finance Company Ltd
➣ Bajaj Auto Finance Ltd
➣ Mahindra & Mahindra Financial Services Ltd
LIST OF MATERIAL LAWS AFFECTING THE OPERATIONS OF THE COMPANY
1. Reserve Bank of India Act 1934:
- Non-banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions 1998
- Non-banking Financial Companies Prudential Norms (Reserve Bank) Directions 1998
- Non-banking Financial Companies Auditors’ Report (Reserve Bank) Directions 1998
- Reserve Bank of India (Non-banking Financial Companies) Returns Specifications 1997
2. Companies Act 1956
3. Tamil Nadu General Sales Tax Act and Sales Tax laws of other States
4. Central Sales Tax Act 1956
5. Service Tax under Finance Act 1994
6. Income Tax Act 1961
7. Indian Contract Act 1872
8. Arbitration and Reconciliation Act 1996
9. Securities Contracts (Regulations) Rules 1957, as amended from time to time
35
REGULATIONS AND POLICIES

SFL being an NBFC is sub-classified by RBI as an asset finance Company, which accepts deposits. SFLs business
activities are governed by the RBI regulations applicable to deposit accepting NBFCs
Following are the significant regulations that affect SFLs operations:
Regulations issued by RBI
Capital Adequacy requirements
On and from March 31, 1999, every NBFC is required to maintain a minimum capital ratio, consisting of Tier I and Tier
II capital, of twelve per cent, of its aggregate risk weighted assets and of risk adjusted value of off-balance sheet items.
Further the total of Tier II capital, at any point of time, shall not exceed one hundred per cent of Tier I capital
● Tier – I Capital means, owned fund as reduced by investment in shares of other NBFCs and in shares, debentures,
bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries
and companies in the same group exceeding, in aggregate, ten per cent of the owned fund.
● Owned Funds means, Paid up equity capital, preference shares which are compulsorily convertible into equity, free
reserves, balance in securities premium account; capital reserve representing surplus arising out of sale proceeds of
asset, excluding reserves created by revaluation of assets; as reduced by accumulated loss balance, book value of
intangible assets and deferred revenue expenditure, if any.
● Tier – II Capital to include the following a) preference shares other than those which are compulsorily convertible
into equity; b) revaluation reserves at discounted rate of fifty five per cent; c) general provisions and loss reserves
to the extent these are not attributable to actual diminution in value or identifiable potential loss in any specific asset
and are available to meet unexpected losses, to the extent of one-and-one-fourth per cent of risk weighted assets;
d) hybrid debt capital instruments; e) Subordinated debt to the extent the aggregate does not exceed Tier – I capital
● Hybrid debt means, capital instrument, which possesses certain characteristics of equity as well as of debt.
● Subordinated debt means a fully paid up capital instrument, which is unsecured and is subordinated to the claims
of other creditors and is free from restrictive clauses and is not redeemable at the instance of the holder or without
the consent of the supervisory authority of NBFC. The book value of such instrument subjected to discounting as
prescribed.
Prudential Norms for Asset Classification
The Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 (“Prudential Norms Directions”)
specify that every NBFC shall, after taking into account the degree of well defined credit weaknesses and extent of
dependence on collateral security for realization, classify its lease/ hire purchase assets, loans and advances and any other
forms of credit into the following classes, namely:
● Standard asset, i.e., the asset in respect of which no default in repayment of principal or payment of interest is
perceived and which does not disclose any problem nor carry more than normal risk attached to the business;
● Sub-standard asset, i.e., (a) an asset, which has been classified as non-performing asset for a period not exceeding
18 months; b) an asset where the terms of the agreement regarding interest and / or principal have been renegotiated
or rescheduled or restructured after commencement of operations, until the expiry of one year of satisfactory
performance under the renegotiated or rescheduled or restructured terms;
● Doubtful asset, i.e., (a) a term loan, or (b) a lease asset, or (c) a hire purchase asset, or (d) any other asset which
remain as a sub-standard asset for a period exceeding 18 months;
● Loss asset, i.e., (a) an asset which has been identified as loss asset by the NBFC or its internal or external auditor
or by the RBI during the inspection of the NBFC, to the extent it is not written off by the NBFC; and (b) an asset
which are adversely affected by a potential threat of non- recoverability due to either erosion in the value of security
or non availability of security or due to any fraudulent act or omission on the part of the borrower.
An asset is classified
as a non performing asset when:
(a) an asset, in respect of which, interest has remained overdue for a period of six months or more;
(b) a term loan inclusive of unpaid interest, when the instalment is overdue for a period of six months or more or on
which interest amount remained overdue for a period of six months or more;
36
(c) a demand or call loan, which remained overdue for a period of six months or more form the date of demand or call
or on which interest amount remained overdue for a period of six months or more;
(d) a bill which remains overdue for a period of six months or more;
(e) the interest in respect of a debt or the income on receivables, under the head ‘other current assets’ in the nature of
short term loans/ advances, which facility remained over due for a period of six months or more;
(f) any dues on account sale of assets or services rendered or reimbursement of expenses incurred, which remained
overdue for a period of six months or more;
(g) the lease rental and hire purchase instalment, which has become overdue for a period of twelve months or more;
(h) in respect of loan, advances and other credit facilities (including bills purchased and discounted), the balance
outstanding under the credit facilities (including accrued interest) made available to the same borrower/ beneficiary
when any of the above credit facilities become non performing asset;
In the case of lease and hire purchase transaction, an NBFC may classify each such account on the basis of its record
of recovery.
The Prudential Norms Directions also require every NBFC to make provisions against sub-standard assets, doubtful assets
and loss assets, after taking into account the time lag between an account becoming non-performing, its recognition as
such, the realization of the security and the erosion over time in the value of security charged. Such provisions are
required to be made as provided below:
Loans advances and other credit facilities including bills purchased and discounted
The provisioning requirement in respect of loans advances and other credit facilities including bills purchased and
discounted is as under:
• Loss asset: The entire asset is required to be written off if the assets are permitted to remain in the books for any
reason, 100 per cent of the outstandings should be provided for;
• Doubtful asset: (a) 100 per cent provision to the extent to which the advance is not covered by the realizable value
of the security to which the NBFC has a valid recourse is required to be made. The realisable value is to be made
estimated on a realistic basis; (b) In addition, to item a) above, depending on the period for which the asset has
remained doubtful, provision to the extent of 20 per cent to 50 per cent of the secured portion (i.e., estimated
realisable value of the outstanding) is required to be made as follows. Accordingly, if the asset has been considered
doubtful for upto one year, provision to the extent of 20 per cent of the secured portion is required to be made; if
the asset has been considered doubtful for one to three years, provision to the extent of 30 per cent of the secured
portion is required to be made; and if the asset has been considered doubtful for more than three years, provision
to the extent of 50 per cent of the secured portion is required to be made.
• Sub-standard asset: A general provision of 10 per cent of the total outstanding is required to be made.
Lease and hire purchase assets
In respect of hire purchase assets, the total dues (overdues and future installments taken together) as reduced by, (a) the
finance charges not credited to the profit and loss account and carried forward as unmatured finance charges; and (b) the
depreciated value of the underlying asset, is required to be provided for.
For the purpose of the above, i) the depreciated value of the asset shall be notionally computed as the original cost of
the asset to be reduced by depreciation at the rate of 20% per annum on a straight line method and ii) in the case of
second hand asset, the original cost shall be the actual cost incurred for acquisition of the second hand asset.
In addition, in respect of leased and hire purchase asset, following provisions are required to be made;
(a) where the amount of hire charges or lease rentals are overdue for up to 12 months, no provision is required to be
made;
(b) sub-standard assets: where any amounts of hire charge or lease rental are over due for more than 12 months but up
to 24 months, 10 per cent of the net book value;
(c) doubtful assets: where any amounts of hire charge or lease rental are overdue for more than 24 months but up to
36 months, 40 per cent of the net book value; and
(d) where such amounts of hire charge or lease rental are overdue for more than 36 months but up to 48 months, 70
per cent of the net book value;
37
(e) loss assets: where any amounts of hire charge or lease rental are overdue for more than 48 months, 100 per cent
of the net book value.
On expiry of a period of 12 months after the due date of the last instalment of hire purchase/ leased asset, the entire net
book value is required to be fully provided for.
Asset Liability Management

RBI has prescribed the Guidelines for Asset – Liability Management (“ALM”) System in NBFCs (“ALM Guidelines”)
that are applicable to all NBFCs meeting the criteria of asset base of Rs. 1 billion or more or holding public deposits
of Rs. 200 million or more. The ALM system rests on the functioning of ALM information systems within the NBFC,
ALM organization including Asset Liability Committee (“ALCO”) and ALM support groups, and the ALM process
including liquidity risk management, management of marketing risk, funding and capital planning, profit planning and
growth projection, and forecasting/ preparation of contingency plans. It is provided that the management committee of
the Board of Directors or any other specific committee should oversee the implementation of the system and review its
functioning periodically.
In case of structural liquidity, the negative gap (i.e. where outflows exceed inflows) in the 1 to 30/ 31 days time-bucket
should not exceed the prudential limit of 15% of outflows of each time-bucket and the cumulative gap up to one year
period should not exceed 15% of the cumulative cash outflows up to one year period. In case these limits are exceeded,
the measures proposed for bringing the gaps within the limit, should be shown by a footnote in the relevant statement.
Maintenance of liquid assets

RBI has prescribed guidelines directing every NBFC to invest and continue to invest in unencumbered approved securities
valued at the price not exceeding the current market price of such securities an amount which shall, at the close of
business on any day be not less than ten percent in approved securities and the remaining in unencumbered term deposits
in any scheduled commercial bank, and the aggregate of which shall not be less than fifteen per cent of the public deposit
outstanding at the last working day of the second preceding quarter.
Acceptance of deposits
RBI has prescribed the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions,
1998 (“Public Deposit Directions”) which regulate the acceptance of deposits by NBFCs. The Public Deposit Directions
make provisions, inter alia, in respect of the credit ratings, period, quantum and rate of interest for such public
deposits.
According to the Public Deposit Directions, an asset finance company (i) having Net Owned Fund (“NOF”) of Rs. 2.5
million or more, and (ii) complying with all the prudential norms with capital adequacy ratio of not less than 15 per cent
as per the last audited balance sheet, may accept, or renew public deposit, together with the amounts remaining outstanding
in the books of the company as on the date of acceptance or renewal of such deposit, not exceeding one and a half times
of its NOF or public deposit up to Rs. 100 million, whichever is lower. Similarly, an asset finance company (i) having
NOF of Rs. 2.5 million or more, (ii) complying with all the prudential norms, and (iii) having minimum investment grade
credit rating, may accept or renew public deposit, together with the amounts remaining outstanding in the books of the
company as on the date of acceptance or renewal of such deposits, not exceeding four times of its NOF.
The acceptance of deposit by an NBFC, in relation to its tenure and the rate of interest thereon is also regulated. The
deposit accepted or renewed cannot be repayable on demand nor the tenure of deposit be less than 12 months nor more
than 60 months. Further on and from March 2003, the rate of interest cannot exceed 11% for deposits up to three years.
Payment of brokerage by NBFC to its agents is regulated. A NBFC cannot pay to its broker on public deposit collected
by or through him, brokerage, commission, incentive or any other benefit by whatever name called, in excess of 2% of
the deposit so collected and expenses by way of reimbursement on the basis of relative bills produced by him in excess
of 0.5% of the deposit so collected.
Supervision by RBI
Under the provisions of the Reserve Bank of India (Non Banking Financial Companies) Returns Specifications 1997,
every NBFC is required to submit certain returns containing specific information to the RBI on a quarterly, half yearly
and on an annual basis, in the format prescribed by the RBI. Further under section 45N of the Reserve Bank of India
Act, 1934, the RBI may cause an inspection to be made of any NBFC if it considers it necessary or expedient.
38
KYC obligations
RBI has extended the Know Your Customer (“KYC”) guidelines to NBFCs and advised all NBFCs to adopt the same
with suitable modifications depending upon the activity undertaken by them and ensure that a proper policy framework
on KYC and Anti-Money Laundering measures are put in place. The KYC policies are required to have the following
key elements, namely, Customer acceptance policy, customer identification policy, ceiling and monitoring of cash
transactions, guidelines and monitoring procedures, internal control systems, internal audit for inspection, record keeping
and training of staff and management, adherence of KYC guidelines by the persons authorized by NBFCs including
brokers/ agents, due diligence of persons authorized by NBFCs including brokers/ agents, customer service in terms of
identifiable contact with persons authorized by NBFCs including brokers/ agents.
Applicable Foreign Direct Investment Regime
Under the guidelines prescribed by the Ministry of Finance, Government of India, foreign direct investment in the non
banking finance companies (as defined therein) such as ours, is under the automatic route subject to compliance by the
NBFC with applicable RBI guidelines. The minimum capitalization norms have been prescribed as follows:
● If foreign direct investment is less than 51 per cent, USD 0.5 million to be brought in upfront;
● If foreign direct investment is more than 51 per cent and up to 75 per cent, USD 5 million to be brought in upfront;
and
● If foreign direct investment is more than 75 per cent and up to 100 per cent, USD 50 million, of which US$ 7.5
million to be brought in upfront and the balance in 24 months.
Foreign investors can set up 100 per cent operating subsidiaries without the condition to disinvest a minimum of 25 per
cent of Indian entities, subject to bringing in USD 50 million.
Employment Related Regulations
The Company is governed by the provisions of the Employees’ State Insurance Act, 1948 and is required to make
periodic contributions under the same.
Fiscal regulations
In accordance with the Income Tax Act, 1961 any income earned by way of profits by a company incorporated in India
is subject to tax levied on it in accordance with the tax rate as declared as part of the annual Finance Act.
The Company, like other companies, avails of certain benefits available under the Income Tax Act, 1961. For details of
the tax benefits, please refer to the “Statement of Tax Benefits” on page 18 of this Letter of Offer.
Other regulations
In addition to the above, the Company is required to comply with the provisions of the Companies Act, 1956, the Foreign
Exchange Management Act, 1999, various tax related legislations and other applicable statutes.
39
HISTORY
The Company was promoted by Dr. N. Mahalingam during the year 1955 in the name of “The Pollachi Credit Society
Private Limited”. The Company was later converted into a Public Limited Company as “Sakthi Finance Limited” on 27th
July 1967. SFL is engaged in the retail finance business. The Company came out with its first public issue of equity shares
in 1984 and mobilised Rs.75 lakhs. In the year 1994 SFL obtained credit rating for Fixed Deposit Programe through
ICRA and was rated ‘MA’. Later in the Year 1995 the rating was upgraded from ‘MA’ to ‘MA+’. The grading of the
company for Fixed Deposits Programme is ‘MA-’.
Company’s business currently involves Acceptance of deposits, Non-Convertible Debentures, Hire Purchase Financing of
commercial vehicles, Machinery etc., Mortgage Financing, and other finance related activities with its main focus on the
Financing of commercial vehicles.
The total deposits mobilised by the company crossed Rs.100 crore mark in the year 1991. The company is principally
engaged in hire purchase and leasing business. The stock on hire has grown steadily over the years from Rs.203.60 lakhs
in 1984 to Rs. 20418.08 lacs in the F.Y. 2007. In compliance of the regulations, the company reduced the deposit base
to less than Rs.100 crores and the deposit as on 31st March 2007 stood at Rs. 8186 lacs. As a result of the reduction
in fund base, the stock on hire also dropped to Rs.11941.68 lakhs in 2001, but gradually increased to Rs.20418 lacs in
2006-07. At present the Company has 25 branches in Tamil Nadu, Kerala, Andhra Pradesh, Karnataka, Pondicherry and
Delhi.
Changes in Registered Office of the Company
Date of change Address Changed
from to
01/06/1961 4&4A, Goods Shed Road, 28, Nachimuthu Gounder Street,
Pollachi – 642 001. Pollachi – 642 001
09/09/1967 28, Nachimuthu Gounder Street, 225, (New No. 62), Dr. Nanjappa Road,
Pollachi – 642 001 Coimbatore – 641 018
MAIN OBJECTS OF THE COMPANY

The main objects of the company are as follows:
(As set out in the Memorandum and Articles of Association of the Company)
1. To lend and / or to advance money or grant loans on any terms that may be thought fit with or without security to
persons, firms, individuals, companies, local bodies or Government and particularly to customers and other persons
having dealings with the Company.
2. To promote, assist in promoting, finance, aid, procure aids, manage, takeover or create any undertaking whether
existing or new.
3. To act as Secretaries and financiers to enterprises.
4. To act as an issue house, Registrars and Share Transfer Agents, Financial Advisers, Technical Consultants, System
Analysts and Data Processors.
5. To purchase, sell, exchange, deal in or invest in shares, debentures, bonds, Stocks of Joint Stock Companies, firms,
local bodies or of Government.
6. To carry on the business of Underwriters, Sub-underwriters, Brokers, Managers, Advisors, Consultants to issue of
shares, debentures, bonds, fixed deposits and other securities and of syndication of loans, project finance, working
capital facilities and deferred payment facilities.
SUBSIDIARIES OF THE COMPANY

SFL has a 100% Subsidiary Company, Sakthi Properties (Coimbatore) Limited.
SHAREHOLDERS’ AGREEMENTS
There is no subsisting shareholders’ agreement.
40
OTHER AGREEMENTS
SFL has not entered into any Strategic or Financial agreement
CHANGES IN MEMORANDUM
Dates on which some of the main clauses of the Memorandum of Association of the Company have been altered
citing the details of Amendment as under:
Date of
Approval Clause Amendment
05/04/1959 7-A To carry on the busines of manufacturing, assembling, fitting, buying, selling, exchanging,
altering, hiring, letting on hire, importing, exporting and dealing in all kinds of cars,
trucks, buses, chassis, lorries, motor cycles, tractors, scooters and other conveyances of
every description and in all spares and component parts required thereto for civil,
commercial, military or agricultural purposes or otherwise and in all kinds of materials,
engines, machinery, tools, implements, accessories and appratuses for use in connection
with whether for cash or for credit or hire purchase on instalment system or in any other
mode as they may thought fit.
02/06/1984 The following clause was inserted in the Memorandum

7-B To acquire, install and rent safe deposit vaults / lockers to the business constituents of
the company and other and to carry on the business of owning and operating vaults,
lockers and other equipments for storage and safe custody of valuables and articles of
all descriptions.
07/06/1986 The following clauses were inserted in the Memorandum

3-A To act as an Issue House, Registrars and Share Transfer Agents, Financial Advisors,
Technical Consultants, System Analysts, Data Processors or in any other capacity
4-A To carry on the business of underwriters, sub-underwriters, Brokers, Managers, Advisors,
Consultants to issue of shares, debentures, bonds, fixed deposits and other securities and
of syndication of loans, Project finance, working capital facilities and deferred payment
facilities
5-A To aid, transact and carry on all kinds of agencies, contracts and business.
7-B To carry on the business of general financiers including leasing of and dealers in land,
buildings, plant & machinery, construction equipments, drilling rigs, fixtures and all
kinds of office equipments.
8-A To guarantee the payment of money unsecured or secured by or payable under or in
respect of promissory notes, bonds, debentures, instruments and securities of any company
or any authority, municipal, local or otherwise, or of any person whomsoever, whether
incorporated or not and generally to guarantee or become sureties for the performance
of any contracts or obligations.
8-B To render assistance to buy, sell, import, export, lease or otherwise deal in all kinds of
machinery, equipments, computers, computer software and computer hardware.
8-C To undertake rural development work with a view to inculcate the habit of savings in
rural population and for this purpose, formulate plans, conduct propaganda, seminars,
conferences and training courses.
8-D To publish books, magazines and periodicals connected with the subjects relevant to the
Company’s activities
9-A To avail or arrange for foreign currency loans and lines of credit for import of machinery,
equipments, capital goods and for payment of royalties, technical services and other
payments and to act as advisers in foreign exchange transactions of all kinds.
41
Date of
Approval Clause Amendment
13-A To be interested in, promote and undertake the formation and establishment of institutions,
business, companies, (industrial, agricultural, trading. Manufacturing or otherwise) as
may be considered to be conducive to the profit and interest of the Company.
07/09/1987 The following Clause were inserted
7-C To acquire immovable or movable property which the company may think fit desirable
to acquire by way of investment, or with a view to provide commercial and housing
scheme to the depositors of the Company.
8-D To guarantee the payment of money, unsecured or secured, by or payable under or in
respect of promissory notes, bonds, debentures, instruments and securities of any company
or any authority, Municipal, local or otherwise or any person whomsoever, whether
incorporate or not and generally to guarantee or become sureties for the performance of
any contract or obligations, for the business of the Company.
12-A To subsidise, assist and guarantee the payment of money or the performance of any
contract, engagement or obligation by any person, persons, firms or companies and in
particular customers of the company or any persons or companies for the business of the
Company.
16-A To carry on any scientific research or other research which may be of benefit to the
company to establish, conduct and carry on any educational or other institution and
research or other activities
18-A To insure with any person or company against losses, damages, risks and liabilities of any
kind which may affect the company either wholly or partially and if thought fit to effect
any such insurance by joining or becoming members of any mutual insurance by joining
or becoming members of any insurance protections or indemnity association, federation
or society and to accept and such insurance or any part thereof for the account of the
company. The Company will not, however do any insurance business under the Insurance
Act, 1938.
20-A To amalgamate with any other company or companies having objects altogether or in part
similar to those of this company.
25/08/1993 7-D To carry on the business of manufacturing of and be engaged in all processes involved
in the manufacture of all kinds of fibres, yarn, cloth, fabrics (including canvas, denims,
hosiery and terry towels) and apparels and as dealers, merchants, exporters, importers,
agents and distributors in any of them or in any textile goods and in all kinds of plant,
machinery, tools, appliances, ancillaries, components and chemicals used in textile industry.
15/09/1995 8-E To generate, harness, develop and accumulate Electric power by utilising Wind, Solar,
Tidal and other non-conventional sources of energy to generate power by setting up
power plants including Wind Electric, Hydro Power, Thermal Power, Diesel Power, multi
fuel power and micro-hydel power plants for captive consumption and for supply and
distribution to consumers of electric power.
42
MANAGEMENT
The details of the Board of Directors of the company are given below:
Name, Age, Designation, Date of Qualification No of Remuner- Other
Son of, Address and Appointment shares ation Directorships
Occupation (Term period) held
Mr. M. Manickam 12/12/1991 M.Sc., MBA 61,875 Nil ● Sakthi Sugars Ltd
(51 Years) (Not liable to ● Sakthi Auto Component Ltd
Chairman Retire by ● Sri Sakthi Textiles Ltd
S/o.Dr. N. Mahalingam rotation) ● ABT Ltd
No.25, Rukmani Nagar, ● ABT Industries Ltd
Ramanathapuram, ● ABT Infosystem (P) Ltd
Coimbatore-641045 ● ABT Foods Retailing
Occupation : Industrialist (India) Ltd
● Sakthi Management Services
(Coimbatore) Ltd
● Sakthi Properties
(Coimbatore) Ltd
● Sri Bhagavathi Textiles Ltd
● Sri Chamundeswari Sugars Ltd
● ABT (Madras) Private Ltd
● ABT (Madurai) Private Ltd
● ABT (Trichy) Private Ltd
● ABT Two Wheelers
Private Ltd
● ABT Transports Private Ltd
● Kovai Medical Center and
Hospital Ltd
● Nachimuthu Industrial
Association
● The Gounder and Company
Auto Ltd
● Turbotech Precision
Engineering (P) Ltd.
Mr. M. Balasubramaniam 21/08/1995 M.Com., 1,28,000 Rs. 13.73 ● Sri Bhagavathi Textiles Ltd
(49 Years) (5 years) MBA Lacs ● ABT Ltd
Vice-Chairman and (Not liable to per ● ABT industries Ltd
Managing Director Retire by annum ● ABT Finance Ltd
S/o. Dr. N. Mahalingam, rotation) ● ABT Foods Retailing
No.27&28, Rukmani Nagar (India) Ltd
Ramanathapuram • Sri Alagu Textiles Private Ltd
Coimbatore-641045 • Sakthi Management Services
Occupation: Industrialist (Coimbatore) Ltd
• Sakthi Sugars Ltd
• Sri Sakthi Textiles Ltd
• Sakthi Auto Component Ltd
• Sri Chamundeswari Sugars Ltd
• Sakthi Properties
(Coimbatore) Ltd
• The Gounder and Company
Auto Ltd
• Union Bus Service (P) Ltd
• Sakthi Automobiles,
Kozhikode (Partner).
43

Mr. M. Srinivaasan 18/04/1994 B.E., MBA 2,21,355 Nil • Sri Chamundeswari Sugars Ltd
(40 Years) (Retire by • ABT Ltd
Director, rotation) • ABT Industries Ltd
S/o.Dr. N. Mahalingam, • Advantra Carisol (P) Ltd
Nachimuthu Gounder • Chamundeswari Enterprises
Street, (P) Ltd
Pollachi - 642001 • Sakthi Management Services
Occupation: Industrialist (Coimbatore) Ltd
• Sakthi Sugars Ltd
• Sakthi Synthetic Gems Ltd
• Sri Bhagavathi Textiles Ltd
• Graynium Information
Technologies Private Ltd
Auto Ltd
• Sri Sakthi Textiles Ltd
• Sakthi Auto Component Ltd
• Sakthi Automobiles,
Kozhikode (Partner)
• Anamallais Engineering,
Pollachi (Partner)
• The Gounder and Company,
Coimbatore (Partner)
• N Mahalingam & Co,
Coimbatore (Partner)
Mr. S.A. Murali Prasad 21/01/1984 M.Com, Nil Nil • Kovai Medical Center and
(66 Years) (Retire by ACA, Hospital Ltd
Director, rotation) AICWA • Rane Brake Linings Ltd
S/o. S. A.Venkatramaiyer, • Sam Consultancy Services
No. 4, Brindavan St, Pvt. Ltd.
Mylapore,
Chennai - 600 004.
Occupation : Management
Consultant
Mr. A. Shanmugasundaram 19/09/1979 Interme- 5,250 Nil • Anamallais Engineering Pvt
(71 Years) (Retire by diate Ltd
Director rotation) • Sakthi Coffee Estates
S/o. Alagappa Gounder, Private Ltd
226, Tea Estate • ARC Retreading Company
Compound Pvt Ltd
Race Course Road, • Anamallais Bus Transport
Coimbatore-641018 Pvt. Ltd
Occupation: Business • ABT Energy Pvt Ltd
• Sri.Sakthi Textiles Ltd
• Nachimuthu Industrial
Association
• N Mahalingam & Co.,
Coimbatore
(Managing Partner)
44
(Managing Partner)
• Anamallais Farm Fresh
(Sole Proprietor)
• Anamallais Engineering
• Sakthi Automobiles-
Transport Division
(Authorised Signatory)
Dr. A. Selvakumar 30/03/2001 ME, Ph.D Nil Nil • S.A. International Ltd
(52 Years) (Retire by • Sri.Chamundeswari Sugars Ltd
Director rotation) • Sri.Sakthi Textiles Ltd;
S/o. K. Arumugam, • Smartwares (Partner)
A-109 Raheja Enclave
236, Race Course Road,
Coimbatore-641018
Occupation: Educationist
Mr. P.S. Gopalakrishnan 20/11/2004 B.Com, Nil Nil • Dharani Sugars and
(71 Years) (Retire by LLB, Chemicals Ltd
Director, rotation) AIB • Kothari Sugars and
S/o P.R. Subramania Aiyer (London) Chemicals Ltd;
B-202,”Keshav Dugar”
No.1, East Avenue
Kesavaperumal Puram,
Chennai-600 028
Occupation : Financial
Consultant
Sri M Manickam, Chairman

Sri M Manickam (51 Years), Chairman of the Company holds a Masters Degree in Statistics from Madras University and
a Masters Degree in Business Administration from Michigan State University, USA. He has experience of about 25 years
in the field of Business and industries. He plays an advisory role in SFL He is Vice Chairman and Managing Director
of Sakthi Sugars Limited. He is also Chairman and Managing Director of Sakthi Auto Component Limited. He was the
President of Indian Sugar Mills Association (1996-97). He is also a member of Temple Administration Council (Hindu
Religious and Charitable Endowments – Coimbatore District).
Sri M Balasubramaniam, Vice-Chairman and Managing Director

Sri M Balasubramaniam (49 Years), Vice-Chairman and Managing Director of the Company, holds Masters degree in
Commerce and a Masters Degree in Business Administration from Notre Dame University, USA. He joined SFL as a
Director in the year 1985 and has been associated with SFL, since then. He was the Chairman of Coimbatore Zone of
Confederation of Indian Industry and was also a member of the Management Committee of Coimbatore Management
Association.
Sri M Srinivaasan
Sri M Srinivaasan (40 Years), Director of the Company holds a Bachelor’s Degree in Engineering from Karnataka
University and a Masters Degree in Business Administration from USA. He has been the Managing Director of Sri
Chamundeswari Sugars Limited since 1996. He has experience of about 10 years in the field of Sugar Industy. He was
the President of South India Sugar Mills Association, Karnataka between 1997 and 1999.
45
Sri S A Murali Prasad

Sri S A Murali Prasad (66 Years), Director of the Company holds a Masters Degree in Commerce from Madras
University, an Associate Member of The Institute of Chartered Accountants of India and The Institute of Cost & Works
Accountants of India. Earlier he held senior positions in Chemplast Sanmar Ltd formerly known as Chemicals and
Plastics (India) Ltd. He has been practising as a Management Consultant for nearly 3 decades and is a consultant to many
reputed companies in the areas of Finance, Accounting, Information Technology etc.
Sri A Shanmugasundaram
Sri A Shanmugasundaram (71 Years), Director of the Company is an Intermediate. He has got vast experience in many
industries such as Automobiles, Tyre-retreading, Consumer Durables, Agriculture etc. He is the Managing Director of
Anamallais Retreading Company Private Limited and Managing Partner of N Mahalingam & Co.
Dr A Selvakumar
Dr A Selvakumar (52 Years), Director of the Company holds a Masters Degree in Engineering from Guindy Engineering
College, Chennai and a Doctorate in Engineering from Canada. He was working as a Project In-charge at Naval Engineering
Test Establishment in Canada. At present he is the Joint Correspondent of Kumaraguru College of Technology, Coimbatore
Sri P S Gopalakrishnan
Sri P S Gopalakrishnan (71 Years), Director of the Company holds a Graduate degree in Commerce and Law. He is also
an Associate member of the Institute of Bankers, London. He was the former Chairman of IFCI Limited, Indian Overseas
Bank and Oriental Bank of Commerce and has experience in the field of finance and banking.
RELATIONSHIP AMONG DIRECTORS

Dr. N Mahalingam is the father of Mr. M Manickam, Mr. M Balasubramaniam and Mr. M Srinivaasan.
Mr. A Shanmugasundaram is the brother-in-law of Dr.N Mahalingam. Besides this none of the directors are related.
CHANGE IN BOARD OF DIRECTORS DURING THE LAST THREE YEARS

The changes in the Board of Directors of the Company in the last three year are as under:
Sl. No Name of the Director Date of change Reason
1 V Muthuswami 20/11/2004 Resignation
2 P S Gopalakrishnan 20/11/2004 Co-opted
3 Dr N Mahalingam 24/10/2007 Retired as Chairman,
appointed as Chairman Emeritus
4 Sri M Manickam 24/10/2007 Appointed as Chairman
5 Sri M Balasubramaniam 24/10/2007 Appointed as Vice Chairman
and Managing Director
DETAILS OF BORROWING POWER

Pursuant to a resolution passed by the members in accordance with the Companies Act, the Board is authorised to borrow
sums of money for the purpose of business of the company upon such terms and conditions and with or without security
as the Board of directors may think fit, provided that the money or monies to be borrowed by the company (apart from
temporary loans obtained from the company’s bankers in the ordinary course of business) shall not exceed, at any time,
a sum of Rs 500 crores.
INTEREST OF DIRECTORS
All the Directors of the company may be deemed to be interested to the extent of fees, if any, payable to them for
attending meetings of the Board and reimbursement of expenses. All the directors may also be deemed to be interested
to the extent of equity shares, if any, already held by them and /or by their friends /relatives in the Company that may
be subscribed for or allotted to them in the present offer and also to the extent of any dividend payable to them and other
distributions in respect of the said equity shares. All the directors may also be deemed to be interested to the extent of
normal transactions, if any, with the company. The Directors may also be regarded as interested in the equity shares, if
any, held or that may be allotted to the companies, firms and trust in which they are interested as directors, members,
46
partners and or trustees. Sri M. Balasubramaniam, Vice Chairman and Managing Director, may be deemed to be interested
to the extent of remuneration paid/payable to him
CORPORATE GOVERNANCE
(Pursuant to Clause 49 of the Listing Agreement)
1. Company’s Philosophy on Corporate Governance
The company’s philosophy on corporate governance continues to aim at high levels of transparency, accountability
and equity in all areas of its operations and its dealing with members, employees, customers, lenders, regulatory and
government agencies.
2. Board of Directors
a. Composition and size of the Board
The Board of Directors consists of seven members, out of which one is a Managing Director and six are
Non-Executive Directors who bring in a wide range of skills and experience to the Board. The Board has a
Non-Executive Chairman and the number of independent directors is more than one-third of the total number of
directors. The composition of the Board is in conformity with Clause 49 of the Listing Agreement. The Board
of Directors and its Committees meet at periodic intervals. Policy formulation, setting up of goals and evaluation
of performance and control function vest with the Board. The Board has constituted four committees, namely,
Audit Committee, Remuneration Committee, Shareholders’/ Investors’ Grievance Committee and Asset Liability
Management Committee.
None of the Directors on the Company’s Board is a member of more than ten committees and Chairman of more
than five committees across all companies in which he is a Director.
b. Code of conduct
The Board of Directors, at their meeting held on 29th October 2005 adopted a Code of Conduct and Ethics (“the
Code”) to help ensure compliance with the legal requirements and standards of business conduct. The purpose
of the Code is to deter wrong doing and promote ethical conduct.
The Code applies to all Directors and members of Senior Management Team of the company. All Board Members
and personnel of the Senior Management Team of the company have affirmed compliance with the Code. The
Code has been hosted on the website of the company.
3. Committees of the Board
A. Audit Committee
The brief terms of reference of the Audit Committee are:
• Reviewing the accounting systems and policies periodically and suggest any improvements to the Board as
and when required
• Reviewing the financial statements before they are submitted to the Board of Directors
• Reviewing the internal control systems
• Any other matters that are relevant
The committee consists of 3 non-executive directors, of which 2 are independent directors.
The composition of the Audit Committee is given below:
Chairman – Sri S A Murali Prasad
Members – Dr A Selvakumar
Sri A Shanmugasundaram
The minutes of the Audit Committee are being placed before the Board of Directors at their meetings.
B. Remuneration Committee
The Remuneration Committee determines and recommends to the Board the remuneration including commission,
perquisites and allowances payable to the Managing Director. During the year, the committee held a meeting on
30th June 2005 to consider the reappointment and remuneration of Managing Director. The company has complied
with the non-mandatory requirement of Clause 49 regarding remuneration committee.
The committee consists of 3 non-executive, independent directors.
The composition of the Remuneration Committee is given below:
47
Chairman – Sri S A Murali Prasad

Members – Dr A Selvakumar
Sri P S Gopalakrishnan
Remuneration policy of the company is given below:
For Managing Director
The total remuneration, subject to members’ approval, consists of a fixed component, consisting of salary,
perquisites and allowances as per company’s Rules and a variable component, linked to the performance of the
company, consisting of commission within the limits approved by the members.
For Non-Executive Directors
Sitting fees as permitted under the Companies Act 1956 plus reimbursement of actual travelling and out-of-
pocket expenses incurred for attending such meetings. Non-executive directors are not being paid any commission.
The details of remuneration / fees paid to the executive / non-executive directors for the year 2006-07 and the
shares held by them are given below.
(Rs in lacs)
Name of Sitting No of equity
Salary Commission Perquisites Total
the Director Fees shares held
Sri M Manickam — — — 0.08 0.08 61,875
Sri M Balasubramaniam 6.00 3.81 3.92 — 13.73 1,28,000
Sri M Srinivaasan — — — 0.04 0.04 2,21,355
Sri A Shanmugasundaram — — — 0.12 0.12 5,250
Sri S A Murali Prasad — — — 0.12 0.12 Nil
Dr A Selvakumar — — — 0.08 0.08 Nil
Sri P S Gopalakrishnan — — — 0.08 0.08 Nil
Notes:
1. The appointment of Managing Director is governed by the Articles of Association of the company and the
resolutions passed by the board of directors and members of the company. These cover the terms and
conditions of such appointment. Sri M Balasubramaniam was reappointed as Managing Director of the
company for a period of 5 years with effect from 29th September 2005. He will hold office up to 28th
September 2010. The Company does not have any service contract with the Managing Director. He is
presently Vice Chairman of the Company in addition to his position as Managing Director.
2. No severance fee is payable to the Directors on termination of employment.
3. In terms of the Articles of Association, the resignation of a director becomes effective upon its acceptance
by the Board.
4. The company does not have a scheme for stock option either to its directors or employees.
5. None of the non-executive directors have any pecuniary relationship or transactions with the company.
C. Shareholders’ / Investors’ Grievance Committee

The functions of the committee are to redress the grievances of shareholders / investors and to create and review
the systems for improving the services.
Composition
The composition of the Shareholders’ and Investors’ Grievance Committee is given below:
Chairman – Sri M Manickam
Members – Sri M Balasubramaniam
Dr A Selvakumar
Mr. S A Subramanian, Company Secretary, is the Compliance Officer.
48
D. Asset Liability Management Committee
The Asset Liability Management Committee reviews the company’s fiscal and risk management policies and
practices adopted by the company.
The committee consists of the following Director / executives.
Chairman – Sri M Balasubramaniam, Vice Chairman and Managing Director
Members – Sri N Srinivasan, Vice President
Dr S Veluswamy, General Manager (Operations)
4. Subsidiary Company
The Company does not have a material non-listed Indian subsidiary company and hence, it is not required to have
an independent director of the company on the Board of such subsidiary company. The Audit Committee reviews the
financials of the subsidiary company. The minutes of subsidiary is being placed before the Board of Directors of the
company.
Auditors’ certificate on Corporate Governance
As stipulated in Clause 49 of the Listing Agreement, the Auditors’ certificate on compliance of conditions of
corporate governance is annexed to the Directors’ Report.
Compliance with Non-mandatory Requirements
The company has adopted all mandatory requirements of Clause 49 of the Listing Agreement and the status of
compliance in respect of non-mandatory requirements stipulated by the said clause is as under:
● No separate office is maintained for non-executive Chairman at the company’s expense.
The tenure of independent directors is not being restricted to a period of nine years in the aggregate since the Board
of Directors is unanimously of the opinion that the length of the tenure on the Board would not have any material
negative impact on the performance of independent directors and discharge of their duties towards the company.
● The Company has voluntarily constituted a Remuneration Committee as required under the Listing Agreement.
● The half-yearly financial results are published in leading newspapers of the country. Therefore, the results are not
being separately circulated to the shareholders.
● The company takes concrete and conscious steps in ensuring that the Auditors do not have any qualifications on the
financial statements. Queries and suggestions on financial statements, if any, are addressed by the company officials
to the satisfaction of auditors.
● The directors are kept informed of the latest developments in laws, rules and regulations, as also the various risks
to which the company is exposed and the manner in which these risks are mitigated / minimised. Therefore, the need
for formal training on these issues is not felt necessary at present.
● No separate mechanism has been formulated to evaluate the non-executive Board members.
● At present the Company does not have a documented Whistle Blower Policy in place.
COMPENSATION OF MANAGING DIRECTOR
The details of the remuneration of Mr. M. Balasubramaniam, Vice Chairman and Managing Director of SFL is as given
below:
Salary Rs 50,000 per month
Perquisites Not exceeding the annual salary as may be decided by the Board of Directors from time to time
Commission 1% on the net profits of the company, subject to a maximum ceiling specified in Section I of Part II
of Schedule XIII to the Companies Act 1956
49
50
ORGANISATION STRUCTURE
BOARD OF
DIRECTORS
➤
MANAGING
DIRECTOR
➤
➤
➤
OPERATIONS SHARED SERVICES
➤
➤
➤
➤
➤
➤
➤
ADVANCES RESOURCES F&A EDP HRD SECRETARIAL
➤
➤
➤
GENERAL MANAGER VICE PRESIDENT AND VICE PRESIDENT ASSISTANT COMPANY

ASSISTANT GENERAL GENERAL SECRETARY
MANAGER MANAGER
➤
➤
CAP
ASSISTANT GENERAL ASST. COMPANY
➤
➤
➤
➤
MANAGER AND
SECRETARY
DEPUTY MANAGER FINANCE & ACCOUNTING EDP DEVELOPMENT
CORPORATE STRATEGY MANAGER AND
MANAGER
CHIEF MANAGER MAINTENANCE
CARE AND
DEPUTY MANAGER EXECUTIVE
➤ DEPUTY GENERAL
MANAGER AND
DEPUTY MANAGER
CAMP & LEGAL

➤ MANAGER - LEGAL
AND
DEPUTY MANAGER (3)
DETAILS OF KEY MANAGERIAL PERSONNEL
The Company is managed by its Board of Directors, assisted by qualified professionals, with vast experience in the field
of production/engineering/distribution/marketing/finance and corporate laws. Following are the key functionaries in different
functions of the Company excluding the promoters/directors of the Company: -
Sl. Name & Designation Age Date of Qualifi- Number Experience Previous
No. (Years) appointment cations of shares in the Company
held Company and Total
Experience
1. Mr. N Srinivasan 58 01/04/1994 B.Sc., ACA Nil 13 years & Sri Bhagavathi
Vice President 5 months Tea Estates
Ltd.(28 years)
2. Mr. P. A. Muralidharan 55 09/09/2004 B. Sc., MBA Nil 3 years Centurian
Vice President Bank
(33 years)
3. Dr. S. Veluswamy 48 01/04/1994 M.Com., ACS Nil 13 years & Sakthi Sugars
General Manager(O) Ph.D. 5 months Ltd. (25 years)
4. Mr. K. Natesan 48 03/04/1992 M.A., LLB., 200 15 years & Tamilnadu
Assistant General MBA 5 months Telecommu-
Manager(HRD) nications Ltd.
(23 years)
5. Mr. K. Guruprasad 56 03/05/1996 B.Com. Nil 11 years State Bank
Assistant General & 4 months of India
Manager (CAP) (33 years)
6. Mr.V.Ramanathan 47 01/06/2006 B.Com. Nil 1 year & Citi Corp Finance
Dy General 3 months (India) Ltd.
Manager – CARE (24 Years)
7 Mr. S.A.Subramanian 67 31/08/2006 B.A., FICWA, Nil 1 year & Elgitread (India)
Company Secretary FCS 1 month Ltd., (40 years)
8 Mr. M.Purushothaman 48 01/02/2004 MBA, PGDC, Nil 3 years & B.K. Group
Chief Manager 7 months of Companies,
Kolkata (25 years)
All the above mentioned key managerial personnel are permanent employees of the Company. The remuneration of each
of key managerial personnel includes salary, bonus, Company’s contribution to Provident Fund, Leave Travel Allowance/
Concession, Medical Expenses and value of other facilities inclusive of accommodation as may be applicable in each
case. The Company has not offered any profit sharing plan to its Key Managerial Personnel.
CHANGES IN KEY MANAGERIAL PERSONNEL IN THE LAST THREE YEARS
Name Date of Appointment Date of resignation
Mr. P.A.Muralidharan 09/09/2004 -
Mr. G.Muniasamy - 26/03/2005
Mr. T.Sivashankaran - 31/07/2005
Mr S A Subramanian 31/08/2006
Mr. S.Anand - 10/02/2007
EMPLOYEE STOCK OPTION SCHEMES
Till date, the Company has not introduced any Employees Stock Option Scheme/Employee Stock Purchase Scheme.
PAYMENT OR BENEFIT (NON-SALARY RELATED) TO OFFICERS OF THE COMPANY
Except as stated in this Letter of Offer, no amount or benefit has been paid or given or is intended to be paid or
given during the preceding two years to any of its officers except for the normal remuneration paid to Directors,
officers or employees since the incorporation of the Company.
51
PROMOTERS
Dr.N Mahalingam
Chairman Emeritus
Dr N Mahalingam (84 Years), Chairman Emeritus is the founder of Sakthi Group of Companies.
He is the promoter of SFL. He is a graduate in Engineering and Fellow of the Institute of
Engineers. He has been the founder of many Companies in diverse fields such as Transport,
Sugar, Automobiles, Consumer Durables, Agriculture, Textiles, Synthetic Gems etc. He also has
been a founder of many educational institutes in Engineering, Arts and Science etc. He started his
business career by joining his family business in the year 1943. He has a total experience of about
six decades in various fields. Being Chairman Emeritus of the Company he has been a guiding
factor to the management. He has been awarded ‘Padmabhushan’ by the Government of India in
the month of January 2007 for his contribution towards the society in various fields.In recognition
to his contribution in various fields of development, he was awarded the ‘Degree of Doctor Of
Laws’ by Bharathiyar University, Coimbatore and has also been honoured with ‘Doctor of Science’
by Anna University and Degree of ‘Doctor of Laws’ by Madurai Kamaraj University, Madurai.
He was an MLA (Pollachi Constituency – 1952 to 1967) and was also a member of the State
Planning Commission, Tamil Nadu during 1971-74 & 1981-82. He was the President of Indian
Sugar Mills Association and a member of Temple Administration Council (Hindu Religious And
Charitable Endowments – Coimbatore District). Dr N Mahalingam was also a Honorary Consul
of the Government of Mauritius. He has been the President/ Chairman of many Industrial and
Sports Associations. He has authored 40 books in English and Tamil.
Driving Licence No. : Not Applicable
Voter ID No. : LTM1325661
PAN : AARPM7554Q
Sri. M Manickam
Chairman
Sri M Manickam (51 Years), Chairman of the Company holds a Masters Degree in Statistics from
Madras University and a Masters Degree in Business Administration from Michigan State
University, USA, He has experience of about 25 years in the field of Business and industries. He
plays an advisory role in SFL. He is Vice Chairman and Managing Director of Sakthi Sugars
Limited. He is also Chairman and Managing Director of Sakthi Auto Component Limited. He was
the President of Indian Sugar Mills Association (1996-97). He is also a member of Temple
Administration Council (Hindu Religious and Charitable Endowments – Coimbatore District)
Driving Licence No. : D/TN/038/030503/2004
Voter ID No. : Not Available
PAN : ACWPM5801F
Sri. M Balasubramaniam
Vice-Chairman and Managing Director
Sri M Balasubramaniam (49 Years), Vice-Chairman and Managing Director of the Company,
holds a Masters Degree in Commerce and a Masters Degree in Business Administration from
Notre Dame University, USA. He joined SFL as a Director in the year 1985 and has been
associated with SFL, since then. He was the Chairman of Coimbatore Zone of Confederation of
Indian Industry and was also a member of the Management Committee of Coimbatore Management
Association.
Driving Licence No. R/TN/038/011454/1998
Voter ID No. : Not Available
PAN : ABEPB2022Q
52
We confirm that the Permanent Account Number, Bank Account Numbers, Passport Number have been submitted to the
Stock Exchanges at the time of filing of the Draft Letter of Offer. Further, the Promoters have not been detained as wilful
defaulters by Reserve Bank of India or any other Government authority and there are no violations of securities laws
committed by the Promoters in the past or any such proceedings are pending against the Promoters.
COMMON PURSUITS
The Associate Companies are carrying on separate businesses and there is no conflict of interest situation except certain
related party transaction mentioned on page no. 72.
INTEREST OF PROMOTERS
All the Promoters may be deemed to be interested to the extent of Remuneration and reimbursement of expenses, if any,
payable to them. The Directors may also be deemed to be interested to the extent of the shares, if any, held by them or
by the relatives or by firms or companies of which any of them is a partner and a Director/ Member respectively and
the shares if any, out of the present Offer that may be subscribed for and allotted to them or their relatives or any
Company in which they are Directors / members or firms in which they are partners.
53
PROMOTER GROUP COMPANIES

GROUP COMPANIES
DETAILS OF LISTED COMPANIES WITHIN THE PROMOTER GROUP COMPANIES.
1. Sakthi Sugars Limited (SSL)
Sakthi Sugars Limited was incorporated on 12/05/1961 with Registrar of Companies, Madras. Registration No. of the
company is 4482 of 1961 (CIN NO. L15421TZ1961PLC000396). SSL is engaged in the manufacturing of sugar,
production of Industrial alcohol, Ethanol, Soya beans and Power Generation. SSL’s registered office is situated at
Sakthi Nagar – 638 315, Erode District, Tamil Nadu.
Board of Directors Dr. N. Mahalingam (Chairman), Sri M. Manickam (Vice Chairman & Managing Director),
Sri V K Swaminathan (Executive Director), Sri M Balasubramaniam, Sri P K Chandran,
Sri G G Gurumurthy, Sri S S Muthuvelappan, Sri M Srinivaasan, Sri N K Vijayan,
Sri K Davidson, Sri S Doreswamy, Sri B Ramakrishnan, Sri C Rangamani, Sri K V Ramaswamy
The Shareholding pattern of SSL (as on 30/06/2007) is as follows:

Sl. No. of shares of % to
Category
No. Rs10/- each held total capital
1 Promoters’ holding 12207037 38.91
2 Mutual Funds and UTI 7280 0.02
3 Banks, Financial Institutions, Insurance Companies 79850 0.25
4 Central Government/ State Government(s) 919099 2.93
5 Insurance Companies 165593 0.53
6 Foreign Institutional Investors (FIIs) 4384701 13.98
7 Private Corporate Bodies 2645173 8.43
8 Individuals 10353986 33.01
9 Clearing Members 359599 1.15
10 Market Maker 87516 0.28
11 Foreign nationals 600 0.00
12 Non Resident Indians 151832 0.48
13 Overseas Corporate Bodies 9800 0.03
14 Others 1000 0.00
Grand Total 3,13,73,066 100.00
Financials
(Rs. in Lacs)
Particulars (As at 30th June) 2004-2005 2005-2006 2006-2007
Equity Share Capital 3,137.31 3,137.31 3,137.31
Reserves and Surplus (free reserves)* 11,153.12 16,944.75 18,537.70
Total Income 62,474.85 88,204.47 78,638.28
Profit After Tax 2,701.92 9,528.04 3,011.23
Earnings per share (EPS) ( Rs.) 8.63 28.19 9.46
Book Value (Face value of Rs. 10/- per share)(Rs.) 45.55 64.01 69.09
(* net of revaluation reserves and miscellaneous expenses not written off)
54
SSL is listed on the Coimbatore Stock Exchange Limited, Bombay Stock Exchange Ltd (BSE), National Stock Exchange
of India Ltd (NSE) and Madras Stock Exchange Limited. The company has also issued Foreign Currency Convertible
Bonds (FCCB’s) which are listed on the Singapore Stock Exchange Limited. Quotations for last six months at BSE and
NSE are as follows:
BSE NSE
Month
High (Rs) Low (Rs) High (Rs) Low (Rs)
April 2007 104.50 88.50 104.70 88.55
May 2007 104.10 85.95 103.65 86.00
June 2007 93.35 78.35 93.35 78.40
July 2007 86.70 80.40 87.00 80.20
August 2007 79.95 59.90 79.70 60.05
September 2007 92.70 73.55 92.80 73.65
Stock Market Data

High/ Low price in the last 6 months (Rs) BSE : Rs.104.50/59.90
NSE : Rs. 104.70/60.05
Market price as on 30/10/2007 (Rs) BSE : Rs. 76.05
NSE : Rs. 75.64
SSL has not made any rights / public issue during last three years. SSL is not a Sick Industrial Company within the
meaning of the SICA.
2. Sri Chamundeswari Sugars Limited (SCSL)
Sri Chamundeswari Sugars Limited was incorporated on 14/12/1970 with Registrar of Companies, Bangalore. Registration
No. of the company is 1974. SCSL is engaged in the manufacturing of sugar. SCSL’s registered office is situated at
76, Ulsoor Road, Bangalore – 560 042.
Board of Directors Dr. N Mahalingam (Chairman), Sri M Srinivaasan (Managing Director), Sri M Manickam,
Sri M Balasubramaniam, Sri K N V Ramani, Sri V K Swaminathan, Dr. A Selvakumar,
Sri K Prakash, Sri K Kalyana Sundaram (Nominee of IFCI), Sri A Arjunaraj, Sri S Srinivasan
The Shareholding pattern of SCSL (as on 31/03/2007) is as follows:
Category
No. Rs10/- each held total Capital
1 Promoter and Associates 68,59,508 87.44
2 Banks/FI/Public Sector undertakings, Mutual Funds 1,00,300 1.28
3 Non Resident Indians 700 0.01
4 Private Corporate Bodies 2,16,252 2.76
5 Public 6,68,613 8.51
Grand Total 78,45,373 100.00
Financials (Rs. in Lacs)
Particulars (As at 31st March) 2004-2005 2005-2006 2006-2007

Equity Share Capital 784.54 784.54 784.54
Reserves and Surplus* 1,297.51 3,022.04 4,613.39
Total Income 7,934.86 11,689.68 14,794.87
Profit After Tax (98.35) 1,726.25 1,535.96
Earnings per share (EPS) ( Rs.) (1.25) 21.82 18.13
55
The shares are listed on Bangalore Stock Exchange Ltd. and Madras Stock Exchange Ltd. and are not actively traded.
SCSL has not made any capital issue during last three years. SCSL is not a Sick Industrial Company within the meaning
of the SICA.
3. Sri Bhagavathi Textiles Limited (SBTL)
Shri Bhagavathi Textiles Limited was incorporated on 28.12.1963 with Registrar of Companies, Kerala State , Registration
No. of the company is 09-2011. SBTL is engaged in Manufacturing of Yarn. SBTL’s registered office is situated at Mill
Premises, Chittur – Vannamadai Road, Chittur, Palakkad District, Kerala – 678 101.
Board of Directors Dr. N. Mahalingam (Chairman), Sri M Balasubramaniam (Executive Vice Chairman),
Sri B.K.Krishnaraj Vanavarayar, Sri M. Manickam, Sri M Srinivaasan, Sri T.Rajkumar,
Dr.S Murugaiyan, Sri B.Kanagasabapathy, Sri M.S.Shanmugasundaram, Sri P.Natarajan,
Sri P.Sarguna Sabapathy
The Shareholding pattern of SBTL (as on 28/09/2007) is as follows:

Category
No. Rs10/- each held total Capital
1 Director 11,778 22.65
2 Relatives of Director 2,437 4.69
3 Financial Institutions 7,462 14.35
4 Corporate Bodies - Group 8,437 16.23
5 Corporate Bodies - Others 275 0.53
6 Others - Public 21,611 41.56
Total 52,000 100.00
Financials
(Rs. in Lacs)
Particulars Year Ended Year Ended Year Ended
31.3.2004 30.6.2005 31.3.2006
(15 months) (9 months)
Reserves and Surplus* 32.18 (359.65) (791.33)
Total Income 793.44 218.10 96.46
Profit After Tax (30.67) (391.84) (431.68)
Earning per share (EPS) ( Rs.) (58.98) (753.54) (830.15)
Book Value (Face value of Rs. 100/- per share) (Rs.) 161.88 (591.63) (1421.79)
The shares are listed on Madras Stock Exchange Limited. The shares of the company were not traded on MSE during
last 6 months.
SBTL has not made any capital issue during last three years. SBTL is not a Sick Industrial Company within the meaning
of the SICA.
DETAILS OF THE FIVE LARGEST UNLISTED COMPANIES WITHIN THE PROMOTER GROUP
COMPANIES (CHOSEN ON THE BASIS OF INCOME FROM OPERATIONS AS ON 31/03/2006)
1. ABT Industries Limited (ABTIL)
ABTIL was incorporated on 05/04/1950 with Registrar of Companies, Tamilnadu. Registration No. of the company is
18-790. ABT Industries Limited is engaged in the manufacturing and marketing of dairy products such as milk, ghee,
sterilized flavoured milk under the brand name ‘SAKTHI” and wind mill operations. The Auto Division of the company
focusses on sales of commercial vehicle, spares and workshop income
Board of Directors Dr. N Mahalingam (Chairman), Sri M Manickam, Sri M Balasubramaniam, Sri M Srinivaasan,
Sri M Chenniappan, Sri V L Govindarajan.
56
The Shareholding pattern of ABTIL as on date is as follows:
Category
No. Rs10/- each held total share capital
1 Directors 93,045 7.22
2 Relatives of the Directors 69,330 5.38
3 Corporate Bodies/ Firms 8,29,910 64.38
4 Other individuals 2,96,795 23.02
Grand Total 12,89,080 100.00
Financials
(Rs. in Lacs)
Particulars (As on 31st March) 2004-2005 2005-2006 2006-2007
Reserves and Surplus* 978.02 1,051.86 1136.94
Total Income 29,782.78 41,505.99 48957.54
Profit After Tax 21.01 73.84 85.08
ABTIL has not made any capital issue during last three years. ABTIL is not a Sick Industrial Company within the
2. ABT Limited (ABTL)
ABT Limited was incorporated on 28/08/1931 with Registrar of Companies, Tamilnadu Registration No. of the company
is 181-6. ABT Limited is engaged in Passenger Service, Parcel Service, Express Courier, Maruti Dealership & Service,
Omni Bus Service and Wind mill operations.
Board of Directors Dr. N Mahalingam (Chairman), Smt M Mariammal (Vice Chairman) , Sri M Manickam,
Sri M Balasubramaniam, Sri M Srinivaasan, Sri C Sanjeevi, Dr. S Murugaian, Sri M Chenniappan.
The Shareholding pattern of ABTL as on date is as follows:

Category
1 Promoters holding 1,39,726 93.10
2 Private Corporate Bodies 10 0.00
3 Individuals 10,264 6.90
Grand Total 1,50,000 100.00
Financials
(Rs. in Lacs)
Reserves and Surplus 10,970.21 11,654.74 1,24,589.97
Total Income 14,251.36 15,111.90 16,720.85
Profit After Tax 345.42 940.75 1,203.23
Book Value (Face value of Rs. 100/- per share)(Rs.) 7,413.47 7,869.83 8,374.34
ABTL has not made any capital issue during the last three years. ABTL is not a Sick Industrial Company within the
57
3. Sakthi Financial Services Limited (SFSL)

SFS Limited was incorporated on 10/03/1988 with Registrar of Companies, Coimbatore Tamil Nadu, Registration No.
of the company is 18-15460. SFSL is engaged in business of letting out safety lockers
Board of Directors Mr. M. Balasubramaniam, Mr. K. Shankar Vanavarayar, Mr. N. Srinivasan, Mr. N. V. Ravi,
Mr. V. P. Mohankumar
The Shareholding pattern of SFSL as on date is as follows

Category
1 Directors 50 0.10
2 Relatives of the Directors 46,153 92.31
3 Other individuals 3,797 7.59
Grand Total 50,000 100.00
Financials
(Rs. in Lacs)
Reserves and Surplus* (113.70) (94.18) (81.01)
Total Income 117.56 191.69 228.05
Book Value (Face value of Rs. 10/- per share)(Rs.) (217.40) (178.34) (152.02)
SFSL has not made any capital issue during last three years. SFSL is not a Sick Industrial Company within the meaning of the SICA.
4. Sri Sakthi Textiles Limited (STL)

Sri Sakthi Textiles Limited was incorporated on 07/07/1955 with Registrar of Companies, Tamilnadu Registration No.
of the company is 000199. STL is engaged in the manufacturing of yarn.
Board of Directors Dr. B. K. Krishanaraj Vanavarayar, Sri M. Manickam, Sri. M. Balasubramaniam,
Sri. M. Srinivaasan, Sri T. Kanahavel, Sri. T. Rajkumar, Sri. B. Velusamy,
Sri A. Shanmuga Sundaram, Dr. A. Selvakumar.
The Shareholding pattern of STL as on date is as follows:

Category
No. Rs 10/- each held total share capital
1 Directors 1,56,811 25.10
2 Relatives to Directors 96,784 15.40
3 Bodies Corporate 2,24,000 35.85
4 Others 1,47,205 23.56
Grand Total 6,24,800 100.00
58
Financials
(Rs. in Lacs)
Particulars 01.10.2004
to 2005-2006 2006-2007
31.03.2005
Reserves and Surplus* 495.57 511.46 530.49
Total Income 1,571.07 3,043.21 3,437.70

STL has not made any capital issue during last three years. STL is not a Sick Industrial Company within the meaning
of the SICA.
5. Anamallais Engineering Private Limited (AEPL)

AEPL was incorporated on 12/09/1991 with Registrar of Companies, Coimbatore. Registration number of the company
is 181-3444. The Company is involved in the automobile body building for various automobile companies.
Board of Directors Mr. A. Shanmugasundaram, Smt. M. Mariammal, Mr. S.Chandrasekhar
The Shareholding pattern of AEPL as on date is as follows:
Sl. No. of shares held % of total

Category
No. Equity shares Equity share
(F.V. Rs10/-) Capital
1 Directors 47,500 17.43
2 Relatives of the Directors 2,00,000 73.40
3 Others 25,000 9.17
Grand Total 2,72,500 100.00
Financials
(Rs. in Lacs)
Equity Share Capital (fully paid up) 27.25 27.25 27.25
Reserves and Surplus (11.47) (2.69) 6.15
Total Income 234.71 469.12 710.30
Book Value (Face value of Rs. 10/- per equity share) (Rs.) 5.26 8.19 11.13
AEPL has not made any capital issue during last three years. AEPL is not a Sick Industrial Company within the meaning
of the SICA.
59
SUBSIDIARY OF THE COMPANY

SFL has a 100% Subsidiary Company, Sakthi Properties (Coimbatore) Limited.
The details are as follows :
Sakthi Properties (Coimbatore) Limited (SPCL)
SPCL was incorporated on 2001 with Registrar of Companies, Tamilnadu Registration No. of the Company is
U07010TZ2001PLC009699. SPCL is engaged in the business of property development.
Board of Directors Sri. M. Manickam, Sri. M. Balasubramaniam, and Sri. S.Chandrasekhar
The Shareholding pattern of SPCL as on date is as follows:
Sl. No. of shares held % of total
Category
No. of Rs. 10/- each share capital
1 Promoters’ holding 30,000 60.00
2 Private Corporate Bodies – –
3 Individuals 20,000 40.00
Grand Total 50,000 100.00
Financials
(Rs. in Lacs)
Equity Share Capital (fully paid up) 5.00 5.00 5.00
Reserves and Surplus (80.86) (104.41) (124.15)
Miscellaneous expenditure 0.07 – –
Total Income 30.16 29.27 33.27
Profit / (loss) After Tax (23.26) (23.55) (19.73)
Earnings per share (EPS) ( Rs.) (46.52) (47.10) (39.46)
Book Value (Face value of Rs. 10/- per equity share) (Rs.) (151.86) (198.82) (238.30)
SPCL has not made any capital issue during last three years. The accumulated losses of the company at the end of the
year is more than fifty percent of its networth and the company has incurred cash loss during this year and in the
preceding financial year also.
Litigation
For details on outstanding litigations against Group Companies please refer page no. 86 of the Letter of Offer
COMPANY/FIRM FROM WHICH THE PROMOTERS HAVE DISASSOCIATED THEMSELVES DURING
PRECEDING THREE YEARS
The promoters have not disassociated themselves from any of the companies during three preceding years.
RELATED PARTY TRANSACTIONS
For details of Related Party Transaction please refer to details given under the section titled “Related Party Transactions”
on page 74 of this Letter of Offer.
DIVIDEND POLICY
The declaration and payment of Dividends will be recommended by the Board of Directors and shall be approved by
the shareholders at their discretion and will depend on a number of factors including but not limited to profits, capital
requirement and overall financial condition. The Board may also from time to time declare and pay interim dividends.
As regards past record of Dividend policy the Company has had an unbroken track record of paying more than 25% of
the profit before tax as dividend on equity capital during the period from 1984-85 to 1996-97. Subsequently, with a view
to conserve its resources and build up a sizable net worth so as to meet the business exigencies, the company has been
adopting a prudent policy during the lean period when profits were lower than the expectations. So, from the financial
year 1997-98 onwards, the company refrained from declaring any dividend. However, the Board of Directors of the
company at its meeting held on 19/02/2007 declared a special interim dividend of 5% (Re. 0.50 per share) on the equity
share capital of the Company for the year ended March 31, 2007.
60
PART II
SECTION IV - FINANCIAL INFORMATION
AUDITORS’ REPORT
Auditors’ Report as required by Part II of Schedule II of the Companies Act, 1956
Board of Directors,
Sakthi Finance Limited,
62, Dr.Nanjappa Road,
Coimbatore – 641 018.
Sub: Your Proposed Rights Offer
Dear Sirs,
We have examined the financial information of Sakthi Finance Limited annexed to this report which has been prepared in
accordance with the requirements of:
i) paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 (the Act), and the amendments thereof;
ii) the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 (the Guidelines)
issued by the Securities and Exchange Board of India (SEBI) and amendments made thereto from time to time in
pursuance of section 11 of the Securities and Exchange Board of India Act, 1992; and
iii) the instruction received from the company requesting us to examine the financial information referred to above and
proposed to be included in the Letter of Offer of the company in connection with its proposed Rights Offer of Equity
Shares.
Financial Information of the Company
1. We have examined the attached statement of restated Summary Statement of Assets and Liabilities of the company as at
31st March 2003, 2004, 2005, 2006, 2007 and as at 30th June 2007 (Annexure - I) and accompanying statement of
restated summary statement of Profit and Loss of the company for the financial year(s) / period ended 31st March 2003,
2004, 2005, 2006, 2007 and 30th June 2007 (Annexure – II) as prepared by the company and approved by the Board of
Directors. These statements reflect the assets and liabilities and Profit and Losses for each of the relevant years as
extracted from the balance sheet and profit and loss account for those years audited by us. These statements have been
made after making such adjustments, regroupings as in our opinion are appropriate and more fully described in the Notes
appearing in Annexure III to this report.
2. Based on our examination of these summary statements, we confirm that:
● The impact of extra-ordinary items has been separately disclosed in the attached summary statement.
● The impact arising on account of changes in significant accounting policies, if any, (as disclosed in Annexure IV to
this report) adopted by the company has been adjusted with retrospective effect in the attached summary statements.
● There are no qualifications in the auditors’ reports, which require any adjustments to the summary statements.
3. We confirm that the company has not declared any interim or final dividend on equity shares in respect of the financial
years ended March 31, 2003, 2004, 2005, 2006 and the company has declared a special interim dividend of 5% on
equity shares in respect of the year ended March 31 2007. We confirm that the Company has no other class of issued and
paid-up shares during those years.
4. Other Financial Information
We have examined the following financial information relating to the company prepared by the Company and approved
by the Board of Directors for the purpose of inclusion in the Offer document:
i. Accounting Ratios as appearing in Annexure V to this report.
ii. Details of other Income as appearing in Annexure VI to this report.
iii. Capitalization Statement as appearing in Annexure VII to this report.
iv. Statement of Tax Shelters as appearing in Annexure VIII to this report.
61
v. Statement of Secured Loans as appearing in Annexure IX to this report.

vi. Statement of Unsecured Loans as appearing in Annexure X to this report.
vii. Details of Investments as appearing in Annexure XI to this report.
viii. Details of Loans & Advances as appearing in Annexure XII to this report.
ix. Details of Contingent Liabilities as appearing in Annexure XIII to this report.
x. Details of Related Party and Transactions with related parties as appearing in Annexure XIV to this report.
xi. Cash Flow Statement as restated as appearing in Annexure XV to this report.
5. We have examined the attached restated consolidated summary statements of Assets and Liabilities of the Company and
its Subsidiary as at 31st March 2003, 2004, 2005, 2006, 2007 and as at 30th June 2007 (Annexure XVI) and accompanying
Consolidated summary statements of restated Profit and loss of ‘the Company’ and its Subsidiary for the year(s) / period
ended 31st March 2003, 2004, 2005, 2006, 2007 and 30th June 2007 (Annexure XVII) as prepared by the Company.
These statements have been made after making such adjustment and regroupings as in our opinion are appropriate and
more fully described in the Notes appearing in Annexure XVIII to this report.
In our opinion the above financial information of the company, read with Significant Accounting Policies and notes on
accounts attached in Annexure IV to this report, after making adjustments and regrouping as considered appropriate,
has been prepared in accordance with Part II of the Schedule II of the Act and the SEBI Guidelines.
This report should not in any way be construed as a reissuance or redating of any of the previous audit reports issued by
us nor should this report be construed as a new opinion on any of the financial statements referred therein.
This report is intended solely for your information and for inclusion in the Offer document in connection with the
proposed Rights Offer of Equity shares of the Company and is not to be used, referred to or distributed for any other
purpose without our prior written consent.
For P.N.Raghavendra Rao & Co.,
Chartered Accountants
Sd/-
P.R.Vittel
Partner
Membership No. 18111
Place: Coimbatore
Date: 15.10.2007
62
Annexure I
Summary of Statement of Assets and Liabilities, as restated (Rs. in lacs)
As at As at 31st March
Particulars
30.06.2007 2007 2006 2005 2004 2003
Fixed Assets
Gross Block 2027.69 2024.89 1911.33 2430.98 2425.39 2576.62
Net Block 925.08 940.91 896.68 965.88 993.42 1069.56
Investments 1525.53 1531.53 1760.48 1862.88 1918.43 1844.70
Current Assets, Loans and Advances
Stock on hire 20076.45 20418.08 17321.14 15639.22 14930.58 14424.12
Loans and Advances
Total 27357.67 26293.85 23407.28 22318.64 21620.74 21445.30
Secured Loans 11828.09 9919.53 7955.05 6459.19 5465.42 5463.96
Unsecured Loans 7612.93 8186.11 8170.56 9453.23 10308.72 10725.54
Total 21786.52 20903.21 18216.86 17354.19 17014.66 17579.48
Net worth 5571.16 5390.64 5190.42 4964.45 4606.08 3865.82
Represented by:
pending allotment
Reserves 2417.89 2237.36 2037.14 1796.17 1567.47 1554.27
and losses
Net worth 5571.17 5390.64 5190.42 4964.44 4606.08 3865.82
Details of Reserves and Surplus
Capital Reserve 52.61 52.61 52.61 52.61 52.61 52.61
Securities Premium Account 1366.60 1366.60 1366.60 1366.60 1366.60 1366.60
General Reserve as per last balance sheet 0.00 0.00 0.00 0.00 0.00 191.90
Less: Transfer to Profit and Loss 0.00 0.00 0.00 0.00 0.00 (191.90)
Account
Statutory Reserve 314.35 251.08 187.31 148.26 135.06 128.31
Add: Transfer during the year 0.00 63.27 63.77 39.05 13.20 6.75
Surplus in Profit and Loss Account 684.33 503.80 366.85 189.65 0.00 0.00
Total 2417.89 2237.36 2037.14 1796.17 1567.47 1554.27
63
Annexure II
Summary Statement of Profit and Losses, as restated (Rs. in lacs)

Particulars ended
30.06.2007 2007 2006 2005 2004 2003
INCOME
INCOME FROM FINANCING
OPERATION
Income from Hire purchase operations 636.23 2499.64 2107.42 2190.86 1988.68 1605.29
OTHER INCOME AND RECEIPTS
Profit on Sale of Investments/ Assets 0.05 3.75 17.16 43.13 0.80 13.15
Bad debts written off - recovered 15.82 49.76 27.73 4.73 14.43 306.84
Total Income 990.00 3223.68 2753.17 2911.15 2672.93 2605.44
EXPENDITURE
Provisions and written offs 57.78 96.44 75.36 163.83 (61.92) (66.48)
Depreciation 19.15 75.72 70.92 66.78 72.91 84.21
EXTRAORDINARY ITEMS
Less: Taxes
Current Tax 22.67 32.08 0.30 16.96 5.45 2.82
Deferred Tax 4.21 140.82 77.86 (163.12) 21.74 (4.57)
PROFIT BEFORE 180.53 314.66 240.98 358.37 28.82 53.51
EXTRAORDINARY ITEMS
Less: Extraordinary Items - 0.00 0.00 0.00 0.00 0.00 419.24
Unrealisable receivables w.off
EXTRAORDINARY ITEMS
Appropriations
Transferred to Statutory Reserve – 63.27 63.77 39.05 13.20 6.75
Special Interim Dividend – 100.36 – – – –
Dividend Tax on – 14.08 – – – –
Special Interim Dividend
Balance Carried forward 180.53 136.95 177.21 319.32 15.62 (372.48)
to Balance Sheet
64
Annexure III
NOTES TO ADJUSTMENTS CARRIED OUT IN RESTATED FINANCIAL STATEMENTS
Following adjustments have been given effect in restated financial statements:
a) In the financial year 2004, an amount of Rs.15.33 Lakhs had been credited to the Profit and Loss account as
withdrawal of excess depreciation provided in financial year 2003. In the restated financials, the above adjustment
has been given effect in the relevant financial year 2003.
b) In the financial year 2005 and 2006, Rs.367.28 Lakhs and Rs.144.97 Lakhs respectively had been debited to the
Profit and Loss account as Provision for Income Tax – Earlier years, which are pertaining to the financial years prior
to the financial year 2002. Also in the financial year 2007, Rs.1.70 Lakhs had been credited to the Profit and Loss
Account on account of withdrawal of earlier year income tax provision, which is pertaining to financial years prior
to financial year 2002. In the restated financials, the above adjustments have been given effect in the opening balance
of the Profit and Loss account of financial year 2003.
c) In the financial year 2005, Rs.179.51 Lakhs had been credited to the Profit and Loss Account as Provision for
Deferred Tax Asset, which is calculated on Provision for nonperforming assets and deferment of income on non-
performing assets pertaining to earlier years. In the restated financials, the adjustments for the above have been given
effect in each of the respective year and also in the opening balance of the Profit and Loss account of financial year
2003.
(Rs. in lakhs)
Reconciliation on adjustments made on Profit & Loss A/c Balance as at 01.04.2002 for restatement
Balance in Profit and Loss Account as at 01.04.2002 as per audited financial statements 27.35
Increase / (Decrease) in accumulated profits as at 01.04.2002 as a result of adjustments for
Income tax expenses relating to earlier years (510.57)
Deferred Tax Assets relating to earlier year 318.52
Balance in Profit and Loss Account as at 01.04.2002 as per restated financial statements 35.30
Adjustments made in the Profit and Loss account for restatement during the FY 2003 to FY 2007
Details Years ended 31st March
2007 2006 2005 2004 2003
Net Profit after tax and Extra-ordinary
items as per audited financials 316.36 96.00 170.59 141.48 (339.40)
Excess Depreciation claimed - - - (15.33) 15.33
Earlier year income tax expenses reversed (1.70) 144.97 367.28 - -
Deferred Tax Reversed - - (179.51) (97.35) (41.66)
Net Profit after tax and Extra-ordinary
items as per restated financials 314.66 240.98 358.37 28.82 (365.73)
65
Annexure IV
SIGNIFICANT ACCOUNTING POLICIES
1. INCOME RECOGNITION
The prudential norms for income recognition and provisioning of Non-performing assets as prescribed by the
Reserve Bank of India for Non Banking Finance companies have been followed. Accordingly, revenue recognition
has been considered in the accounts on accrual basis only on those assets classified as standard asset as stated below:
a) Income from hire purchase operations is accounted for by adopting Internal Rate of Return method.
b) Interest on advances by way of loans are accounted for, to the extent accrued during the year.
c) Income from Investments by way of dividend is accounted on receipt basis. Income by way of interest on
Government securities is accounted for, by adopting the contracted rate.
d) In respect of sell-down receivables, the difference between the book value of the assets and the sale consideration
after netting of incidental expenses incurred is recognized as revenue.
e) Income from lease operations are accounted for, to the extent accrued during the Financial Years 2002 to 2004.
2. FIXED ASSETS
Fixed assets are stated at historical cost less accumulated depreciation.
3. DEPRECIATION
a) The Company provides Depreciation on assets leased by spreading the cost over the primary period of lease.
Lease equalization is created for excess/shortfall in capital recovery using the Internal Rate of Return in the lease
and adjusted in lease rental. There are no leased assets as on or after 31.03.2004.
b) Depreciation on assets on own use had been provided for, on straight line method by adopting the rates as
prescribed under Schedule XIV to the Companies Act 1956 for the full one year irrespective of the period of
use.
c) For assets under own use acquired during the current year costing Rs. 5,000 each or below, full depreciation
has been provided for, irrespective of the period of use.
4. VALUATION OF INVESTMENTS
Long term investments are carried at cost; provision for diminution in value other than temporary, has been made
wherever necessary. Current investments are valued at lower of cost or market value.
5. STOCK ON HIRE
Stock on hire under Hire purchase agreements are stated at agreement value less instalments received.
6. RETIREMENT BENEFITS TO EMPLOYEES
a) In respect of gratuity, contributions by way of premium are paid to Life Insurance Corporation of India through
an independent Trust.
b) Leave Encashment entitlement has been provided in accordance with the policies of the company.
7. PROVISION AS PER RBI NORMS
Provision for non-performing assets, doubtful debts, loans and advances have been made as per the Non-Banking
Financial Companies Prudential Norms (Reserve Bank of India) Directions, 1998.
8. SEGMENT REPORTING
The company is principally engaged in hire purchase financing of commercial vehicles. Accordingly, there is no
reportable segment as per Accounting Standard 17 issued by the Institute of Chartered Accountants of India on
Segment Reporting.
NOTES ON ACCOUNTS
1. INCOME TAX ASSESSMENTS
The income tax assessments for the assessment years 1996-97 to 2002-03, IT department’s appeals are pending for
disposal before ITAT. For the assessment years 1987-88 to 1990-91 and 1993-94, the company has made an appeal
66
before the Supreme Court. Company’s and IT department’s appeals for the assessment years 1999-2000 and 2000-
2001 are pending for disposal before ITAT.
2. INTEREST TAX ASSESSMENTS
For the assessment years 1992-93 to 1998-99, the company’s appeals are pending before the CIT(A) and for the
assessment years 1999-2000 and 2000-2001 IT department’s appeals are pending before ITAT.
3. SERVICE TAX
The levy of service tax on hire purchase transactions introduced with effect from 16.07.2001 has been challenged
by Trade Associations (in which the company is a member) before the Madras High Court and a stay has been
obtained and is pending for disposal.
Annexure V
ACCOUNTING RATIOS (RESTATED)
3 months Years ended 31st March
Details ended
30/06/2007 2007 2006 2005 2004 2003
(i) Basic EPS (After Restated) (Rs.) 0.90 1.57 1.20 1.79 0.16 0.30
(On Net Profit after taxes and
before extraordinary items)
(ii) Basic EPS (After Restated) (Rs.) 0.90 1.57 1.20 1.79 0.16 (2.08)
extraordinary items)
(iii) Diluted EPS (After Restated) (Rs.) 0.57 0.99 0.76 1.13 0.10 0.22
before extraordinary items)
(iv) Diluted EPS (After Restated) (Rs.) 0.57 0.99 0.76 1.13 0.10 (1.49)
extraordinary items)
(v) Net Asset Value per share (Rs.) 27.76 26.86 25.86 24.73 22.95 22.00
(vi) Return on Net Worth (%) 3% 6% 5% 7% 1% 1%
No. of outstanding Equity Shares

3 months Years ended 31st March
Details ended
30/06/2007 2007 2006 2005 2004 2003
Weighted average No. of equity 20071321 20071321 20071321 20071321 18377331 17571321
shares outstanding during the year /
period
Effect of dilutive potential equity 11461467 11461467 11461467 11611467 11611467 7051000
share equivalents
Weighted average No. of equity 31532788 31532788 31532788 31682788 29988798 24622321
shares outstanding during the year /
period (Inclusive of diluted equity
shares)
No. of equity shares outstanding at 20071321 20071321 20071321 20071321 20071321 17571321
the year end
67
Formulae:
Net profit, as restated, as appearing in the summary statement of profit and losses has been considered for the purpose
of computing the above ratios.
Net worth is computed after including share application money.
Earnings per share (Rs.) Net profit after tax –Restated
Weighted average No. of equity shares outstanding during the year / period
Earnings per share (Rs.) (Diluted) Net profit after tax –Restated
Weighted average No. of equity shares outstanding during the year / period
including the dilutive potential equity shares
Net Asset Value per share Net worth at the end of the fiscal year
No. of equity shares at the end of the fiscal year
Return on net worth is arrived at by dividing Profit after tax by net worth at the end of the fiscal year.
Annexure – VI
Details of other income (Rs. in lakhs)
3 months Year ended 31st March

Particulars ended
30/06/2007 2007 2006 2005 2004 2003

Profit on Sale of Investments - 3.03 - 6.34 - -
Profit on Sale of Assets 0.05 0.72 17.16 36.79 0.80 13.15
Commission Receipts 39.28 51.12 22.90
Rent Receipts 11.93 17.41 17.88 17.81 16.93 18.70
other sundry incomes 0.20 0.24 0.99 0.30 0.17 4.57
Insurance claims / others 0.98 - - 0.52 - -
Income from Sell down receivables 161.82 299.13 233.69 156.38 143.94 -
Total 204.59 522.50 406.66 331.19 295.36 442.78
Details of recurring or non-recurring nature of other income and related to business

OTHER INCOME AND Whether Recurring or Whether related
RECEIPTS non-recurring to business
Profit on Sale of Investments Recurring Related
Profit on Sale of Assets Recurring Related
Income from Windmill Recurring Related
Commission Receipts Recurring Related
Rent Receipts Recurring Not Related
Other sundry incomes Recurring Related
Insurance claims / others Non-Recurring Related
Bad debts written off - recovered Non-Recurring Related
Income from Sell down receivables Recurring Related
68
Annexure - VII
Capitalization Statement
(Rs. in lacs)
Details Pre-issue as at 30.06.2007 Post Issue
Borrowings:
Short-Term Debt 7,787.22 7,787.22
(Refer Note 1 below)
Long-Term Debt (A) 11,653.75 11,653.75
Total Debt 19,440.97 19,440.97
Shareholders’ Funds:
Share Capital 2,007.13 3,010.70
Reserves 2,417.89 2,417.89
Total Shareholders’ Funds (B) 4,425.02 5,428.59
Total Capitalisation 23,866.00 24,869.56
Long Term Debt / Equity Ratio (A) / (B) 2.63 2.15
Notes
1. Short Term Debts are debts repayable within one year from the date of the above statement.
69
Annexure - VIII
Statement of Tax shelters (Rs. in lacs)
3 months Year ended 31st March
Particulars ended
30-06-2007 2007 2006 2005 2004 2003
Profit before Current and Deferred tax 208.51 495.93 328.53 212.21 56.00 51.76
Applicable Income Tax rate % 33.99% 33.66% 33.66% 36.59% 35.88% 36.75%
Tax at Normal Income Tax Rates 70.87 166.93 110.58 77.65 20.09 19.02
Adjustments:
Timing difference
Difference between tax depreciation
and book depreciation 11.68 33.53 42.11 18.09 3.20 (8.21)
Expenses disallowed in one assessment - (0.04) - (2.05) 4.99 1.84
year & allowed in subsequent or
earlier assessment years
Provision for NPA net of withdrawn (24.20) (120.15) (309.83) (2.87) (240.33) (498.02)
Provision for investments not - (20.00) (5.80) - (4.62) (0.56)
considered as expenses
Total A (12.52) (106.66) (273.52) 13.17 (236.76) (504.95)
Permanent differences
Exempted Income net of expenses - (8.99) (0.43) (0.11) (0.45) (0.45)
Profit / Loss on sale of assets / (0.05) 10.75 (3.86) (37.57) 12.29 (7.71)
investment
Donation 0.08 - 0.43 0.38 - -
Expenses not deductible under - - 0.10 - 2.21 2.23
Income tax and others
Total B 0.03 1.76 (3.76) (37.30) 14.05 (5.93)
Net Adjustments A+B (12.49) (104.90) (277.28) (24.13) (222.71) (510.88)
Tax savings on above (4.25) (35.31) (93.33) (8.83) (79.91) (187.75)
Total adjusted income 196.02 391.03 51.25 188.08 (166.71) (459.12)
Less: Carried over loss Adjusted - 303.89 51.25 188.08 - -
Gross taxable income 196.02 87.14 - - (166.71) (459.12)
C – Tax liability after 66.63 29.33 NA NA NA NA
considering above
Taxable income (Book profit) 208.51 495.93 328.53 212.21 56.00 51.76
as per MAT
Tax rate under 115JB 11.33% 11.22% 8.42% 7.84% 7.69% 7.88%
Notional Tax liability as per MAT
Less:
Exempted Income net of expenses - (8.99) (0.43) (0.11) (0.45) (0.45)
Fringe benefit tax (1.10) (8.37) (9.40) - - -
Provision for NPA net of withdrawn (24.20) (140.15) (315.63) (2.87) - (419.24)
Total adjustments 25.30 (157.51) (325.46) (2.98) (0.45) (419.69)
Taxable income (Book profit) 183.21 338.42 3.07 209.23 55.55 (367.93)
as per MAT
Notional Tax liability as per MAT 20.76 37.97 0.26 16.40 4.27 -
D - Total Tax liability as per MAT 20.76 37.97 0.26 16.40 4.27 -
E - Tax liability being higher of C or D 66.63 37.97 0.26 16.40 4.27 -
Total tax expenses as per 22.67 32.08 0.30 16.96 5.45 2.82
profit and loss account
Excess / (Short) Provision of (43.96) (5.89) 0.04 0.56 1.18 2.82
Income Tax
In the restated profit and loss account, taxation provision as per the audited accounts of the company has been considered.
For the Quarter ended 30th June 2007, tax provision under MAT calculations has been accounted, due to tax planning
made by the company.
70
Annexure - IX
DETAILS OF SECURED LOAN (Rs. in Lacs)
Details As at As at Rate of Security
30.06.2007 31.03.2007 Interest offered
From Banks - Cash Credits
Canara Bank 395.07 381.16 14.50%
Vijaya Bank 25.94 25.43 14.00%
State Bank of Travancore 201.34 259.98 14.00%
Bank of India 81.66 112.11 14.75%
The Karnataka Bank Ltd. 335.85 379.02 14.00%
Central Bank of India 141.60 116.27 14.50%
The Catholic Syrian Bank Ltd. 197.41 171.39 13.00% Refer Note
1 below
The South Indian Bank Ltd. 149.56 148.20 14.50%
The Lakshmi Vilas Bank Ltd. 89.84 76.52 14.00%
Syndicate Bank 195.25 195.86 13.25%
Indian Overseas Bank 489.40 473.23 14.25%
Interest accrued and due on above 17.20 14.37
From Financial Institutions
Small Industries Development 282.06 320.52 9.50% Refer Note
Bank of India - Term Loan 2 below
Non-Convertible Debentures 9,225.86 7,245.47 7.50% Refer Note
to 10% 3 below
Total 11,828.04 9,919.53
Note 1. Secured by hypothecation of specified hire purchase assets, the related book debts and by personal guarantee
of directors.
Note 2. Term Loan from Small Industries Development Bank of India is secured by hypothecation of specified hire
purchase assets and by collateral security of a building and further guaranteed by two directors of the company.
Note 3. 309 Secured Redeemable Non-Convertible Debentures of the face value of Rs.1000 each and 72,42,38,385
Secured Redeemable Non-Convertible Debentures of the value of Re.1 each issued and redeemable at par are
secured by specified hire purchase receivables and immovable properties; the earliest date of redemption is
reckoned at 12 to 36 months from the date of first allotment of each series.
Annexure X
DETAILS OF UNSECURED LOAN (Rs. in Lacs)
Details
30-06-2007 2007 2006 2005 2004 2003
Fixed Deposits from Public 7,487.93 8,186.11 8,170.56 9,453.23 10,308.72 10,725.54
Other unsecured loans 125.00 - - - - -
Total 7,612.93 8,186.11 8,170.56 9,453.23 10,308.72 10,725.54
Rate of Interest, per annum, varies from 7% to 12.50%
Repayment term range from 12 months to 60 months. However option for pre-closure is available as per RBI - NBFC
Regulations.
71
Annexure XI
Details of Investments (Rs. in lacs)
Numbers As at As at 31st March
INVESTMENTS (At Cost)
30-06-2007 2007 2006 2005 2004 2003
Government Securities – Quoted
Central Govt Stock and
State Govt. Loans 1,234.77 1,240.77 1,449.72 1,539.13 1,579.00 1,505.27
Equity Shares Fully Paid – Quoted
Ambuja Cement Eastern Ltd 75 - - - - 0.09 0.09
Bannari Amman Sugars Ltd 10,000 7.60 7.60 7.60 7.60 7.60 7.60
Baroda Power Transmission Ltd 300 0.03 0.03 0.03 0.03 0.03 0.03
Bharat Earth Movers Ltd 1,000 - - - - 1.73 1.73
Chokhani International Ltd 100 0.02 0.02 0.02 0.02 0.02 0.02
DCM Daewoo Motors Ltd 50 0.02 0.02 0.02 0.02 0.02 0.02
Dynamatic Forgings (India) Ltd 500,000 - - 20.00 20.00 20.00 20.00
Gujarat Ambuja Cements Ltd 2,117 - - - - 1.34 1.34
IDBI Ltd. 14,240 - - - - 11.57 11.57
JK Corp Ltd 7 - - - - 0.01 0.01
Kongarar Textiles Ltd 600 0.27 0.27 0.27 0.27 0.27 0.27
Kothari Petro Chemicals Ltd 128,000 - - - 12.80 12.80 12.80
K.R. Steel Union Ltd 100 0.01 0.01 0.01 0.01 0.01 0.01
Kovai Medical Center and
Hospital Ltd 100 - - - - 0.01 0.01
NCL Industries Ltd 100 - - - - 0.02 0.02
Punjab Communications Ltd 100 - - - - 0.25 0.25
Sakthi Sugars Ltd 552,833 226.10 226.10 226.10 226.10 226.10 226.10
Sri Bhagavathi Textiles Ltd 5 0.04 0.04 0.04 0.04 0.04 0.04
Sri Chamundeswari Sugars Ltd 70,000 7.83 7.83 7.83 7.83 7.83 7.83
Stiles India Ltd 100 0.02 0.02 0.02 0.02 0.02 0.02
Surya Roshni Ltd 105 - - - - 0.04 0.04
The Associated Cements
Companies Ltd 110 - - - - 0.18 0.18
The India Cements Ltd 100 - - - - 0.14 0.14
Tata Motors Ltd 160 - - - - 0.32 0.32
The Andhra Cements Ltd 175 - - - 0.20 0.20 0.20
Debentures Fully Paid Up- Quoted
Surya Roshni Ltd 10 0.00 0.00 0.00 0.00 0.00 0.00
Government Securities – Unquoted
National Savings Certificates - 0.07 0.07 0.07 0.06 0.04 0.04
Equity Shares Fully
Paid-up Unquoted
ABT Co-operative Stores Ltd 500 0.05 0.05 0.05 0.05 0.05 0.05
ABT Industries Ltd 150,000 15.00 15.00 15.00 15.00 15.00 15.00
PSTS Heavy Equipments Ltd 30,000 3.00 3.00 3.00 3.00 3.00 3.00
Sakthi Beverages Ltd 125,000 12.50 12.50 12.50 12.50 12.50 12.50
Sakthi Soft Drinks Ltd 30,000 3.00 3.00 3.00 3.00 3.00 3.00
Tamil Nadu Industries Captive
Power Co Ltd 102,000 10.20 10.20 10.20 10.20 10.20 10.20
Investment In Subsidiary Company
Sakthi Properties (Coimbatore)Ltd 50,000 5.00 5.00 5.00 5.00 5.00 5.00
Total 1,525.53 1,531.53 1,760.48 1,862.88 1,918.43 1,844.70
72
Annexure - XII
DETAILS OF LOANS AND ADVANCES (Rs. in lacs)
Details
30-06-2007 2007 2006 2005 2004 2003
Loans and Advances in the nature
of loans 733.65 652.00 858.13 930.88 1,141.46 1,694.89
Other advances and Deposits
recoverable in cash or kind 1,619.33 1,203.96 1,317.94 1,481.91 1,836.68 1,666.49
Advance payment (net) - Income tax,
Wealth tax, Fringe benefit tax and
Interest tax. 198.19 187.52 167.02 145.72 83.28 80.26
Total 2,551.17 2,043.48 2,343.09 2,558.51 3,061.42 3,441.64
Out of the above
Loans considered good, fully secured 225.02 386.91 234.63 273.71 156.31 354.85
Loans considered good, unsecured but
personally guaranteed 433.63 190.09 511.11 518.40 536.97 1,055.52
Loans considered bad and doubtful 75.00 75.00 112.39 138.77 448.18 284.52
Total 733.65 652.00 858.13 930.88 1,141.46 1,694.89
Amount due from wholly owned
subsidiary 202.03 201.55 199.63 232.46 223.38 505.80
Annexure - XIII
DETAILS OF CONTINGENT LIABILITIES Rs. in Lacs
Details
30-06-2007 2007 2006 2005 2004 2003
Guarantees and collaterals given to
banks / financial institutions 55.28 55.28 62.28 62.28 502.28 502.28
Future dues on sell down receivables
excluding cash collateral 4,069.08 3,038.10 1,997.78 1,482.58 1,073.90 -
Guarantee for collection of managed
business and future payable thereon 916.34 988.32 299.52 - - -
Total 5,040.70 4,081.70 2,359.58 1,544.86 1,576.18 502.28
73
Annexure – XIV
DETAILS OF RELATED PARTIES AND RELATIONSHIPS
RELATIONSHIP NAME OF THE RELATED PARTY
Subsidiary Company Sakthi Properties (Coimbatore) Ltd.
Key Management Personnel Mr. M. Balasubramaniam
Dr. N. Mahalingam
Relatives of Key Management Personnel Mrs. M. Mariammal
Mr. M. Manickam
Mr. M. Srinivaasan
Mrs. Vinodhini Balasubramaniam
Ms. Samyukta
Ms. Subhasree
Mr. Amrit Vishnu
Mrs. Karunambal Vanavarayar
Other related parties ABT Limited
ABT Finance Limited
ABT Industries Limited
Sakthi Beverages Limited
Sakthi Financial Services Limited
Sakthi Logistic Services Limited
Sakthi Refinery and Protein Limited
Sakthi Sugars Limited
Sri Bhagavathi Textiles Limited
Sri Chamundeswari Sugars Limited
Sri Sakthi Textiles Limited
The Gounder and Company Auto Limited
N. Mahalingam & Co.,
Disclosures of transactions with related parties: (Rs. in Lacs)

Key Other
Management Related
Period Particulars Subsidiary Personnel & Parties Total
Relatives
Transactions Rendering of services 0.48 0.48
for the Quarter Purchase of fuel 3.66 3.66
ended June 2007 Repairing of vehicles 0.35 0.35
Rent Received 3.88 3.88
Rent Paid 0.88 0.88
Finance charges & interest 22.07 22.07
Resource Mobilization Charges 22.90 22.90
Collaterals given
(Balance at the end of the period) 55.28 55.28
Managerial Remuneration 2.28 2.28
Sitting Fees 0.34 0.34
74
Key Other Total
Management Related
Period Particulars Subsidiary Personnel & Parties
Relatives
Transactions for Rendering of services 1.92 1.92
the year Ended Purchase of fuel 9.05 9.05
March 2007 Repairing of vehicles 0.61 0.61
Rent Paid 3.51 3.51
Resource Mobilization Charges 79.42 79.42
Collaterals given (Balance at the
end of the period) 55.28 55.28
Commission 3.81 3.81
Sitting fees 0.18 0.18
the year ended Purchase of fuel 12.06 12.06
Rent Paid 0.64 0.64
Collaterals given (Balance at the
end of the year) 62.28 62.28
Commission - -
Rent Paid 0.60 0.60
Collaterals given
(Balance at the end of the year) 62.28 62.28
Commission 1.78 1.78
Rent Paid 1.08 1.08
75
Key Other Total

Management Related
Period Particulars Subsidiary Personnel & Parties
Relatives
Guarantees / Collaterals given
Commission - -
Rent Paid 1.08 1.08
Guarantees / Collaterals given
Interest paid 1.18 1.18
Deposits/NCD repaid 39.78 39.78
76
Annexure XV
Summary Statement of Cash flows, as restated (Rs. in lakhs)

Particulars ended
30-06-2007 2007 2006 2005 2004 2003
I Cash flows from operating activities

Net Profit as restated 208.50 495.93 328.53 211.21 56.00 51.76
Adjustments for:
Depreciation 19.15 75.72 70.92 66.78 72.91 84.21
Interest/ Dividend Income (149.18) (201.54) (239.09) (389.11) (376.54) (521.73)
Interest Expenses 442.23 1635.70 1606.24 1861.80 2062.03 2027.68
Provision for NPA / investments 25.40 (127.88) (229.98) (2.87) (244.95) (79.34)
Provision for Income Tax (23.77) (38.75) (9.69) (16.96) (5.45) (2.82)
Share issue expenses 0.00 0.00 0.00 0.00 5.41 6.54
Extraordinary Items - 0.00 0.00 0.00 0.00 0.00 (419.24)
Unrecoverable w.off
Profit/ loss on assets & Investments 32.88 10.75 (3.86) (37.56) 13.29 (18.87)
Operating Profit before working 346.70 1354.00 1194.53 1482.08 1526.70 1076.43
capital changes
Movement in working capital: 555.20 1849.93 1523.06 1693.29 1582.70 1128.19
Decrease/(Increase) in Stock on Hire 341.63 (3096.94) (1681.92) (708.64) (506.46) (1206.42)
Decrease/(Increase) in sundry debtors (412.57) 130.36 164.43 379.95 28.03 1241.39
Decrease/(Increase) in loans (94.26) 41.89 123.03 208.22 549.47 (80.88)
and advances
Increase / (Decrease) in current (460.80) 803.45 885.72 193.60 92.87 (186.21)
liabilities
Interest Expenses (442.23) (1635.70) (1606.24) (1861.80) (2062.03) (2027.68)
Direct taxes paid (net of refunds) (3.56) (28.37) (22.58) (69.46) (2.82) (2.60)
Net cash flow used in (516.59) (1935.38) (614.50) (164.84) (318.25) (1134.20)
Operating activities - (A)
II Cash flows from Investing activities
Purchase of Fixed Assets (3.32) (211.94) (18.47) (117.15) (1.13) (36.06)
Sale of Fixed Assets 0.05 92.32 32.58 111.41 1.07 30.74
Purchase of Investments (333.23) 0.00 (151.95) (32.06) (335.56) (135.22)
Sale of Investments 306.30 217.88 242.38 91.66 250.00 415.02
Interest received 149.18 192.55 238.64 388.75 375.84 521.04
Dividend received 0.00 8.99 0.45 0.36 0.70 0.69
Net cash flow from 118.99 299.79 343.63 442.99 290.92 796.21
investing activities - (B)
III Cash flows from financing activities
Proceeds from share 0.00 0.00 (15.00) 0.00 706.05 705.10
application money
Increase (Decrease) in bank (71.82) 497.01 482.62 (202.60) (152.40) (540.26)
borrowings
Increase in Secured 1980.38 1467.47 1013.24 1196.37 153.86 (58.17)
Non-convertible debentures
77

Particulars ended
30-06-2007 2007 2006 2005 2004 2003
Increase (Decrease) in (573.18) 15.55 (1282.67) (855.49) (416.83) 178.84

Fixed deposits
Dividend paid including - (114.43) - - - -
corporate dividend tax
Net cash flow from 1335.38 1865.60 198.19 138.29 290.68 285.51
financing activities - (C)
Net increase / (Decrease) in cash 937.78 230.01 (72.68) 416.43 263.35 (52.48)
and cash equivalents (A+B+C)
Cash and cash equivalents at the 968.92 738.92 812.59 396.86 132.51 184.99
beginning of the period / year
Cash and cash equivalents at the 1906.71 968.92 738.92 812.59 396.86 132.51
end of the period / year
Components of Cash and
cash equivalents
Cash on hand 127.53 182.19 78.39 74.84 40.24 38.10
With scheduled banks
On current accounts 1779.18 786.74 660.52 737.76 356.62 94.41
Total 1906.71 968.92 738.92 812.59 396.86 132.51
78
Annexure XVI
Summary Statement of Consolidated Assets and Liabilities, as restated (Rs. in lakhs)
Particulars
30/06/2007 2007 2006 2005 2004 2003
Fixed Assets
Gross Block 3075.47 3097.67 3015.12 3534.76 3529.17 3680.40
Net Block 1873.93 1916.36 1917.22 2003.61 2048.34 2141.66
Capital work in progress 363.36 363.36 230.24 120.74 58.14 0.00
Investments 1520.53 1526.53 1755.48 1857.88 1913.43 1839.70
Current Assets, Loans and Advances
Stock on hire 20076.45 20418.08 17321.14 15639.22 14930.58 14424.12
Loans and Advances
Total 28628.80 27585.96 24610.67 23340.12 22594.03 22054.14
Secured Loans 12520.96 10665.37 9069.57 7301.31 6053.52 5896.00
Unsecured Loans 7612.93 8186.11 8170.56 9453.23 10308.72 10725.54
Total 23225.21 22320.50 19525.70 18457.63 18046.69 18223.79
Net worth 5403.59 5265.46 5084.97 4882.49 4547.33 3830.35
Represented by:
pending allotment
Reserves 2250.30 2112.18 1931.70 1714.21 1567.47 1554.27
and losses
Net worth 5403.58 5265.46 5084.98 4882.49 4547.34 3830.35
79
Annexure XVII
Summary Statement of Consolidated Profit and Losses, as restated (Rs. in lakhs)

Particulars ended
30/06/2007 2007 2006 2005 2004 2003
INCOME
INCOME FROM
FINANCING OPERATION
Income from Hire purchase operations 636.23 2499.64 2107.42 2190.86 1988.68 1605.29
Profit on Sale of Investments/ Assets 0.05 3.75 17.16 43.13 0.80 13.15
Total Income 999.85 3256.96 2782.44 2941.32 2702.41 2635.30
EXPENDITURE
Provisions and write offs 57.78 96.44 75.36 163.83 (61.92) (66.48)
Depreciation 23.21 92.39 88.11 83.97 90.10 101.40
EXTRAORDINARY ITEMS
Less: Taxes
Current Tax 22.67 32.08 0.30 16.96 5.45 2.82
Deferred Tax 4.21 140.82 77.86 (163.12) 21.74 (4.57)
PROFIT BEFORE 138.12 294.93 217.43 335.10 6.49 20.01
EXTRAORDINARY ITEMS
Less: Extraordinary Items - 0.00 0.00 0.00 0.00 0.00 419.24
Unrealisable receivables w.off
EXTRAORDINARY ITEMS
80
Annexure XVIII
NOTES TO ADJUSTMENTS CARRIED OUT IN RESTATED CONSOLIDATED FINANCIAL STATEMENTS
OF PARENT COMPANY
NOTES TO ADJUSTMENTS CARRIED OUT IN RESTATED FINANCIAL STATEMENTS
Following adjustments have been given effect in restated financial statements:
a) In the financial year 2004, an amount of Rs.15.33 Lacs had been credited to the Profit and Loss account as withdrawal
of excess depreciation provided in financial year 2003. In the restated financials, the above adjustment has been given
effect in the relevant financial year 2003.
b) In the financial year 2005 and 2006, Rs.367.28 Lacs and Rs.144.97 Lacs respectively had been debited to the Profit and
Loss account as Provision for Income Tax – Earlier years, which are pertaining to the financial years prior to the
financial year 2002. Also in the financial year 2007, Rs.1.70 Lakhs had been credited to the Profit and Loss Account on
account of withdrawal of earlier year income tax provision, which is pertaining to financial years prior to financial year
2002. In the restated financials, the above adjustments have been given effect in the opening balance of the Profit and
Loss account of financial year 2003.
c) In the financial year 2005, Rs.179.51 Lakhs had been credited to the Profit and Loss Account as Provision for Deferred
Tax Asset, which is calculated on Provision for non-performing assets and deferment of income on non-performing
assets pertaining earlier years. In the restated financials, the adjustments for the above have been given effect in the each
respective year and also in the opening balance of the Profit and Loss account of financial year 2003.
Basis of Presentation of consolidated financials
The Accounting policies of the company used in the preparation of consolidated financial statements are in conformity with
the generally accepted accounting principles in India and Accounting Standard 21 on Consolidated Financial Statements
issued by The Institute of Chartered Accountants of India.
Basis of Consolidation of consolidated financials
The consolidated financial statements include the financial statements of Sakthi Finance Limited and its subsidiary Company,
namely, Sakthi Properties (Coimbatore) Limited.
The Consolidated financial statements have been prepared on the following basis:
The financial statements of the Parent Company and its Subsidiary Companies have been consolidated on a line by line basis
by adding together the book value of like items of assets, liabilities, income and expenses after fully eliminating intra – group
balance and intra-group transactions resulting in unrealized profit or losses.
The consolidated financial statements are prepared by adopting uniform accounting policies.
General
By Inadvertence, the fixed assets of subsidiary company were classified under current assets, during the year(s) ended
31.03.2003 to 31.03.2006. With the correct classifications, the subsidiary company’s accounts were redrawn for the above
years and got the approval of the members at the Extra-ordinary General Meeting of Subsidiary Company held on
18th June 2007.
CHANGES IN ACCOUNTING POLICIES

There has been no change in accounting policies since past three years except for those mentioned in Annexure IV of the
Auditors Report given on page 66.
81
MANAGEMENT’S DISCUSSION AND ANALYSIS

Management’s Discussion and Analysis of Financial Position and Results of operations of Sakthi Finance Ltd in
accordance with unconsolidated Indian GAAP
Introduction
You should read the following discussion of the financial position and results of operations together with the audited/
examined unconsolidated restated financial statements under Indian GAAP including the schedules, annexures and notes
thereto and the reports thereon which appears on page 61 of this letter of offer. You should also read the section titled
“Risk Factors” beginning on page viii of this letter of offer, which discusses a number of factors and contingencies that
could impact the financial position, results of operations and cash flows of the Company. The following discussion relates
to Sakthi Finance Ltd on a stand alone basis. SFL’s financial statements have been prepared in accordance with Indian
GAAP the accounting standards referred to in Section 211 (3C) of the Companies Act, and other applicable provisions
of the Companies Act. The following discussion is also based on internally prepared statistical information and publicly
available information. Unless otherwise stated, the financial information used in this section is derived from the audited
unconsolidated financial statements under Indian GAAP as restated. SFL’s fiscal 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.
SFL was incorporated in the year 1955 as “The Pollachi Credit Society Private Ltd” under the Indian companies Act 1913
which was later converted into a Public Limited Company and the name was changed to Sakthi Finance Ltd in the year
1967. The Company is registered with RBI, Department of Non Banking Supervision, Chennai and engaged in the Hire
Purchase and Leasing Business as an independent multiline finance company focusing mainly on two product lines in
refinance segment viz – Commercial Vehicles and infrastructure equipment. The key strengths of SFL are – (1) being a
leading player in this line of business for over five decades and (2) belonging to the reputed “Sakthi Group” of companies
in Coimbatore.
Industry Structure and Development
Industry comprises subsidiaries of banks, subsidiaries of financial institutions, subsidiaries of foreign banks, associates
of commercial vehicle/equipment manufacturers and stand-alone NBFCs. They extend their service mainly in retail
finance segment which comprises truck finance, infrastructure equipment finance, auto loans, two wheeler loans, tractor
finance and personal loans. The truck finance segment can be classified into New vehicle finance segment and used
vehicle finance segment. New vehicle finance segment is dominated by larger players floated by manufacturers and banks.
The used vehicle finance segment is dominated by numerous small local financiers and few organized players. With the
sharp fall in yields in New vehicle financing, the larger players are also increasing their focus now on the Used vehicle
finance. Sakthi Finance Ltd. is focusing on used commercial vehicle financing.
Opportunities
With the overall development of the economy, and with thrust for the infrastructure developments like laying roads, the
requirements for commercial vehicles will increase. Due to the major road projects like Golden Quadrilateral, the Hub
and Spoke system of transportation is emerging. Therefore, the demand for multi axle vehicles and smaller commercial
vehicles will increase. Hence the requirements for finance for new trucks as well as used trucks is expected to grow
further. NBFCs with strong origination and collection skills will be able to play a major role in used truck finance
segment.
Threats
With the entry of banks and NBFCs floated by Banks and MNCs into retail finance segment and in particular into
commercial vehicle refinance business, the competition is likely to increase further. The fuel price hike and upward trend
in interest rates may affect the growth rate in commercial vehicle sales.
Business Outlook
With the economy remaining buoyant, the demand for financial assistance will be at higher level. Therefore, the business
outlook for NBFCs which have established systems and strong presence is good.
Risks and Concerns
The Company is susceptible to normal industry risks like interest rate risk, credit risk and market risk. These risks are
mitigated by having a very conservative finance profile and by following prudent business and risk management policies.
The risk management policies are also periodically reviewed by the Audit Committee to modify them to suit the company’s
needs.
82
FACTORS THAT MAY AFFECT RESULTS OF OPERATIONS
Unusual or infrequent events or transactions
There are no events that may be described as unusual or infrequent events and transactions.
Significant economic changes
There are no significant economic / regulatory changes that materially affect or are likely to affect the income from
continuing operations.
Known trends and uncertainties
There are no known trends or uncertainties that may have material adverse impact on the income, costs and profits of
the company from continuing operations.
Future changes in relationship between costs and revenues
There are no known factors which will have a material adverse impact on the operation and finances of the Company.
Dependence of revenue on sales volume
Increase in revenues are largely linked to increase in volume of business activity carried out by the company.
Total revenue from various segments in which the Company operates
The company is engaged primarily in the business of financing and accordingly there are no separate reportable segments
as per Accounting Standard-17 on Segment Reporting.
New product or business segment
There are no new business segments or material new products planned by the company.
Seasonality of the business
The business of the Company is not seasonal.
Dependence on single or few suppliers / customers
The company’s revenue is not dependent on single or few customers.
Competitive conditions
SFL faces competition in all its principal areas of business from Indian banks and finance companies. For more information
please refer “Business Over View Competition” on page 33
Discussions on Results of operations:
You should read the following discussion of our financial condition and results of operation together with our financial
statements, as restated, for each of the fiscal years ended March 31, 2004, 2005, 2006 and 2007 including the notes
thereto and the reports, schedules and annexures thereon, which appear in the Auditors’ Report included elsewhere in the
Offer Document. These financial statements are prepared in accordance with Indian GAAP and the Companies Act and
are restated in accordance with SEBI Guidelines.
83
(Rs. in lacs)
For the year ended
Particulars 31/03/2007 31/03/2006 31/03/2005 31/03/2004
Net Income 3000.30 2580.20 2736.35 2521.51
Other Income 223.38 172.97 174.81 151.42
Gross Income 3223.68 2753.17 2911.15 2672.93
Total Expenditure 2727.75 2424.64 2698.95 2616.92
Depreciation 75.72 70.92 66.78 72.91
Depreciation as % of Net Income 2.52 2.75 2.44 2.89
Finance Cost 1635.70 1606.24 1861.80 2062.03
Finance Cost as % of Net Income 54.52 62.25 68.04 81.77
Profit / (loss) before Tax 495.93 328.53 212.21 56.00
Profit / (loss) before Tax as % of Net Income 16.53 12.73 7.76 2.22
Provision for Taxation 40.45 9.69 16.96 5.45
Deferred Tax 140.82 77.86 (163.12) 21.74
Profit Before Extra Ordinary Items 314.66 240.98 358.37 28.82
Less:Extraordinary Items – - - - -
Unrealizable receivables w.off
Profit / (loss) After Tax 314.66 240.98 358.37 28.82
Note: Figures have been regrouped wherever necessary to make the data comparable
Comparison of Financial Results of 31.03.2006 and 31.03.2007

Revenue
Total income for the year ended 31st March 2007 increased by from Rs. 2753.20 lacs to Rs.3223.68 lacs i.e; by around
17%, compared to the previous year. This is due to the increase in hire purchase financing activities undertaken by the
Company.
Total Expenditure
Total expenses incurred during the year was Rs.2727.75 lacs against Rs.2424.64 lacs in the year 2005-06 registering an
increase of Rs. 303.11 lacs about 12.50% which is mainly due to increase in staff salaries and benefits and other operating
expenses.
Profit
Profit before tax for the year ended 31st March 2007 was Rs.495.93 lacs compared to Rs.328.53 lacs for the year ended
31st March 2006 – an increase of about 50.95% which can be attributed to an increase in total income and also a
reduction in the finance cost. The profit after tax was Rs.314.66 lacs as against Rs.240.98 lacs of the previous year
registering an increase of 30.58%.
Comparison of Financial Results of 31/03/2005 and 31/03/2006
Revenue
The income of the Company from the financial operations and others during 31.03.2005 was Rs. 2911.15 lacs and that
of 31/03/2006 was Rs. 2753.17 lacs, a marginal drop of about 5.43%. This is on account of a decline in lending rates
due to competitive pressures.
Total Expenses
Total expenses incurred during year ended 31/03/2006 was Rs. 2424.64 lacs in comparison to Rs. 2698.95 lacs during
the year ended 31/03/2005 resulting in a decrease of 10.16% which was mainly due to lower provision and write offs.
The drop was despite the increase in personnel costs owing to increase in the number of employees and other operating
expenses by 11.1% and 10.6% respectively.
84
Profit
Profit before tax for the year ended 31/03/2006 was Rs. 328.5 lacs as against Rs. 212.2 lacs for the year ended
31/03/2005, representing a steep increase of 54.8%. The Profit after Tax for the year ended 31/03/2006 showed a
decrease of Rs. 117.39 lacs, from Rs. 358.37 lacs to Rs. 240.98 lacs, on account of provision for deferred tax liability.
Comparison of Financial Results of 31.03.2004 and 31.03.2005
Revenue
The income of SFL from the financial operations and others increased by 8.61% from Rs. 2672.93 lacs in 31/03/2004
to Rs. 2911.15 lacs for the financial year ended 31/03/2005.
The general growth in income from loans was due to certain factors including positive growth of Automobile Industry
and also due to the marketing efforts put in by the Company with additional manpower.
Other expenses/provisions, write offs
Total expenses incurred during year ended 31/03/2005 was Rs. 2698.95 lacs in comparison to Rs. 2616.92 lacs during
the year ended 31/03/2004 resulting in a marginal increase of 3.13% which was due to increase in staff costs and others.
This was despite the decrease in financial costs by Rs. 200.23 lacs.
Profits
The profit before tax was Rs. 212.21 lacs for the financial year ended 31/03/2005 as against Rs. 56.00 lacs in the financial
year ended 31/03/2004, which represents an increase of almost 279%. Also the Profit after Tax showed a steep increase
to Rs. 358.37 lacs for the year ended 31/03/2005 from Rs. 28.82 lacs, on account of Deferred Tax to the tune of Rs.
163.12 lacs being added back to the profit for the year.
Working Results
Information relating to the Company sales, gross profit etc., as required by the Ministry of Finance Circular No.F2/5/SE/
76 dated February 5, 1977 read with the amendments of even no. dated March 8, 1977 is as under:
The working results of the Company for the period from 01/04/2007 to 30/09/2007 are given hereunder:
(Rs. in Lakhs)
Particulars For the six month

period ended 30th Sept. 2007
Sales / Income from operations 1726.51
Other Income 163.72
Total Income 1890.23
Total Expenditure 536.52
Interest 991.47
Depreciation 38.29
Profit Before Tax 323.95
Provision for taxation 103.19
Net Profit 220.76
Paid-up Equity Share Capital 2007.13
EPS (Rs.) 1.10
85
SECTION V - LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATIONS AND DEFAULTS

Save as stated hereunder, the Company have not defaulted in meeting any of its statutory or institutional dues and have
made all payments/refunds on fixed deposits or no proceedings have been initiated against the Company, for any of the
offences specified in paragraph 1 of Part I of Schedule XIII of the Companies Act, 1956. Further, there are no disputes/
litigations towards tax liabilities or criminal prosecutions against the Company and its Directors for any offence, economic
or otherwise civil litigations against the Company and its Directors, there are no material disputes/legal actions other than
those disclosed below.
There are no pending proceedings initiated for economic offences against the Company. No disciplinary action/ investigation
have been taken by the SEBI against the Company, its group companies. The promoters, their relatives, Sakthi Finance
Ltd., group companies, associate companies are not detained as wilful defaulters by RBI/Government authorities and
there are no violations of securities laws committed by them in part or pending against them.
I. CONTINGENT LIABILITIES OF THE COMPANY

The details of Contingent Liabilities not provided for as per the Balance Sheet for three month period ended
30/06/2007 is as follows:
(Rs. in lacs)
Amount
Particulars (Rs. in lacs)
Guarantees and Collaterals given to banks and financial institutions
a) Pledging of Equity Shares of
- Sakthi Sugars Limited 55.28
- Sri Chamundeswari Sugars Ltd 7.00
Total 62.28
b) Future dues on sell down receivables excluding cash collaterals
- L & T Finance Ltd 949.05
- GE Capital Services India 3637.97
Less : Cash collaterals given 517.94
Total 4069.08
c) Guarantee for collection of managed business and future payable thereon
HP business done for HDFC Bank Ltd 916.34
Less : Security deposit with HDFC Bank Ltd —
Total 916.34
Grand Total 5047.70
PENDING LITIGATIONS AGAINST THE COMPANY
Outstanding Litigation and Material Developments

Cases filed against the Company
Save and except as stated below, there are no outstanding litigations, disputes, penalties against company, including
tax liabilities, economic offences, criminal or civil prosecutions launched against the company, for any offence
irrespective of whether or not specified in Paragraph 1 of Part I of Schedule XIII of the Companies Act, 1956.
1. Litigation involving criminal cases
No criminal case is pending against the company.
86
2. Litigation involving civil cases
Sl. Case Current Amount
No Parties Court Reasons No. status involved
(Rs. In lacs)
1 Mr. Kalyanamurugan District Suit filed by the O.S.No. Recovery proceedings 4.06
Munsiff party against the 189/98 initiated. Case is
Court repossession pending
(DMC) of vehicles.
Attur The vehicles
were repossessed
and sold.
2 Mr.Velayudhan Supreme For repossession Civil Appeal The party had NIL
Court of vehicle O.S.No. made an appeal
SFL 5905/2004 in the High
Court which held that
Financier had no
right to repossess
the vehicle and
directed SFL to
return the vehicle.
SFL have returned the
vehicle and preferred
SLP to Supreme
Court.Supreme Court
has admitted SFL’s
SLP and is pending.
3 Mr.K.L.Lukose District Repossession of O.S.No. Matter is pending NIL
Munsiff vehicle, suit for 585/2001
Court declaration and
Ernakulam injunction
3. Litigations involving Consumer Case:

No Consumer Cases are pending against the company.
4. Litigations involving Suits or Writs:-

No Civil Suit is pending against the company.
87
5. Litigation involving Statutory Disputes

Details of pending Income Tax cases
Sl. Assessment Tax Amount Latest
No year Nature of Disputes involved position
(Rs. In lacs)
Interest Tax
1. 1992-93 to The Assessing Officer added the 23.63 Pending with Commissioner
1998-99 following as Income; Interest on loan of Income Tax
on deposit, Refinance charges, Written
off accounts and additional hire charges
2 1999-2000 to Commissioner of Income Tax confirmed 1.66 The Income Tax
2000-2001 the addition of interest on loan on Appellate Tribunal has
deposit. The company filed an appeal in Remanded back to
Income Tax Appellate Tribunal. The case Assessing Officer
has been remanded back to Assessing
Officer by Income Tax Appellate Tribunal
3. 1992-93 to The Company has filed a waiver 66.98 Matter is pending with
1998-99 petition before Chief Commissioner Chief Commissioner
of Income Tax for waiver of of Income Tax
interest under section 12A and 12B
4. 1992-93 to The Company has filed a waiver 81.82 Matter is pending with
1998-99 petition before Chief Commissioner Chief Commissioner
of Income Tax for waiver of interest of Income Tax
under section 220(2)
Income Tax
1 2002 - 2003 Commissioner of Income Tax (appeals) 143.16 Pending with Income Tax
confirmed the disallowance of the Appellate Tribunal
provisions made towards NPA – appeal
preferred before Income Tax
Appellate Tribunal
2 1996-97 to Commissioner of Income Tax (Appeals) 92.10 Pending with Income Tax
2002-03 has allowed the interest accrued on Appellate Tribunal
NPA assets against which the department
preferred an appeal with Income Tax
Appellate Tribunal
3 2000-01 Commissioner of Income Tax (Appeals) 0.41 Pending with Income
confirmed the disallowance of the Tax Appellate Tribunal
provisions made towards NPA – appeal
preferred before Income Tax Appellate
Tribunal
4 1987-88 to Contingent deposits : The Assessing 103.32 Pending with High Court
1993-94 Officer has disallowed the contingent
deposit received from the lessees. over
and above the lease rents. The amounts
were collected to meet the sales tax.
In the appeal the Commissioner of
Income Tax upheld the disallowance.
Further appeal to Income Tax Appellate
Tribunal and reference application has
been made by Income Tax Appellate
88
Sl. Assessment Tax Amount Latest
No year Nature of Disputes involved position
(Rs. In lacs)
Tribunal in the High Court, which is
pending
5 2001-2002 Assessing Officer added lease equalization 15.48 Pending before Commissioner
charges and provision for NPA, Appeal of Income Tax (Appeals)
preferred before Commissioner of
Income Tax (appeals)
6 1987-88 The Company has filed a waiver petition 24.84 Matter is pending with
before Chief Commissioner of Income Tax Chief Commissioner
for waiver of interest under of Income Tax
section 220(2)
6. Litigations involving Labour Laws
An ex-employee has filed a case before Labour Court Madurai against retrenchment. Matter is pending.
7. Defaults
The company has not defaulted in the payment of interest and repayment of principal to other Companies, Financial
Institutions, deposit holders etc. The company has not defaulted in meeting statutory dues, institutional dues and dues
towards instrument holders like debentures, fixed deposits, and other arrears.
Other than the above there are no disputes /litigation towards tax liabilities or any criminal or civil prosecutions
against the company for any offence, economic or otherwise.
Cases filed by SFL
1. Litigation involving criminal cases
Sl. Case Current Amount
No Parties Court Reasons No. status involved
(Rs. In lacs)
1 Rana Projects Metro- Breach of Trust CC 445/2000 Matter is under NIL
International Limited politan investigation
Magistrate,
(MM)
Court,
New Delhi
2 Mr.Dhanaraj and Rames- Transferring MP No. Matter is under NIL
Mr.Ganesa Devar waram possession of the 4151/2004 investigation of
vehicle without Police, Rameswaram
knowledge and
consent of the
Company.
3 Mr.Fiyaz Babulal Judicial Availing HP – Matter is pending NIL
Inamdar Magistrate, arrangement on for further orders
Pune the basis of
fabricated RC
4 Various parties Various Cheque dishonour – Matter is pending –
(6 numbers) Courts cases filed under
Section 138 of
N.I. Act for the
recovery of
defaulted Hire
Purchase
instalments
89
2. Litigations involving civil cases

Sl. Parties Reasons Current Amount
No status involved
(Rupees)
1 Various Parties Recovery suits filed by SFL for recovery Cases are pending 21.01
(715 Numbers) of dues in respect of HP/Lease Crores
transactions
2 K.P.Viswanath Writ Petition before High Court of Case pending 6.25
Karnataka, Bangalore against levy Lacs
of road tax in respect of repossessed
and sold vehicle
3 Express Malayalam Writ Petition before High Court of Case pending 14.98
Pvt.Ltd., Kerala seeking permission to sue Lacs
against the party which is under
liquidation
Against the Directors / Promoters

There are no outstanding litigations towards tax liabilities or any criminal/ civil prosecution for any offences (irrespective
of whether they are specified under paragraph (i) of Part 1 of Schedule XIII of the Companies Act, 1956), disputes,
defaults, non-payment of statutory dues, proceedings initiated for economic offences or securities related or other offences
against the Directors/Promoters of the Company.
OUTSTANDING LITIGATIONS AGAINST GROUP COMPANIES
1. Outstanding litigations/ disputes against listed group companies
Sakthi Sugars Limited
A) Cases/Suits (including consumer disputes) filed against the Company:
Sl. Name of the Plaintiff / Forum Value of Brief Note Status
No. Petitioner & the Suit
Case number (Rs. in
lacs)
1 A. Somasundaram District Magistrate 0.08 Claiming interest Case Pending
No.56/2006 Court, for belated cane
Gobichettipalayam payment
2 Bomma Naicker, Court of – Petition filed against Case Pending
Rama Naicker Subordinate Judge, carrying on bio-earth
Mara Naicker & Ramakkal Bhavani Processing by the
(O.S.No.28 of 1999) Company in Punnam
O.S.398/2004 Court – II, Village
ADM)
3 M R Palanisamy Labour Court – Petition filed for Case Pending
I D 562/2000 Salem reinstatement of
Employment
4 M Vimal Raj District Magistrate 2.5 Appeal against the Counter
Majeed Road Court, Sivagangai decree of declaration statement to
Sivagangai of title and recovery be filed
(O.S.No.158 / 2002) of possession
5 V. Murugan R D O Court, 0.13 Petition filed by the Written
Village Assistant (Mathur) Sivagangai legal heirs for claiming argument to
P.Velankulam ownership of the be filed
(No.4149/2003) property even after its
transfer to the Company
90
Case number (Rs. in
lacs)
6 S.Krishnan Motor Accident 5.17 Petition filed for Argument
(MACOP No.257/2005) Claim Tribunal claiming compensation stage
Court, Sivagangai due to road accident
7 Indian Bank, Okkur District Munsiff 0.10 Suit for recovery Counter
(S.C.No.6/2005 Court,Sivagangai of crop loan granted statement to
to the cane grower on be filed
the undertaking given
by the Company
8 V. Muthurakku Dy. Commissioner 4.00 Petition filed by the Counter
W/o Late Veerasingam of Labour, Madurai legal heirs of the statement to
V.Irulayee, V.Anjalai and contract labour be filed
Minor Nagaraj claiming compensation
on the death of the
labour due to snake bite
9 Laxmidhar Sahoo State CDR 0.63 Appeal against the Hearing
Commission, Order of the District pending
Cuttack Forum Claiming
compensation for
loss on account of
supply of defective
seeds by the Company
10 Maheswar Das State CDR 1.05 Appeal against the Hearing
CDA Case No. 355/99 Commission, Order of the District pending
Cuttack Forum for not
awarding any
compensation and
the cost
11 Girija Prasad Patnaik State CDR 1.00 Appeal against the Hearing
CDA Case No. 356/98 Commission, Order of the District pending
Cuttack Forum for not
awarding any
compensation and
the cost
12 Gyanaranjan Nanda State CDR 7.00 Appeal for Hearing
CD Case No. 34/99 Commission, Compensation for pending
Cuttack loss including the
cost of sugar cane
and rent for the land
13 Bhagaban Nanda State CDR 6.00 Appeal for Hearing
CD Case No.39/99 Commission, Compensation for loss pending
Cuttack including the cost
of sugar cane and
rent for the land
14 Krushna Ch. Pradhan Dist.CDRF, 0.73 Appeal for Hearing
CD Case No.167/2000 Kendrapara compensation by way pending
of deduction from the
sale proceeds of
sugar cane sold
91

Case number (Rs. in
lacs)
15 Iswar Ch. Apart State CDR 5.56 Appeal for Written
CD Case No.96/2002 Commission, compensation for loss Statements to
Cuttack including the cost of be filed
sugar cane and rent
for the land
16 Bibeknanda Singh ARCS, 0.42 Appeal for recovery Counter
DC 251/1998-99 Kendrapara of loan granted to the statement
cane grower on the to be filed
recommendation
given by the Company
17 Pratap Kishore Das Co-op. Tribunal 0.51 Appeal against the Hearing
Tribunal Appeal 58/04 Bhubaneswar Order of Arbitrator Pending
for not awarding any
compensation and
the cost
18 Ranjeet Ku. Mohanty Co-op. Tribunal 0.07 Appeal for recovery Hearing
Tribunal Appeal 9/04 Bhubaneswar of loan granted to the Pending
cane grower on the
recommendation given
by the Company
19 Makbul Khan Civil Judge 3.62 Appeal against the Written
C.S.No.37/2006 (Sr. Division) Order of the District statement to
Second Court, Forum for not be filed
Cuttack awarding any
compensation and
the cost
20 Gayadhar Barik Civil Judge 0.55 Petition for Hearing
M.S.No.7/2000 (Sr. Division) compensation for loss Pending
Second Court, including the cost of
Cuttack sugar cane
21 Smt H Prusty & other ACJSD, 0.45 Petition filed by the To produce
T.S.No.27/94 Dhenkanal legal heirs for claiming evidence
ownership of the
property even after
its transfer to the
Company
22 Himanshu Ku. Pradhan CJSD, Dhenkanal 0.31 Petition for Hearing
C.S.No184/2004 compensation by way pending
of deduction from the
sale proceeds of sugar
cane sold
23 H H Nayak CJSD, 3.90 Appeal for Hearing
C.S.13/2005 Deogarh compensation in pending
respect of loss to
the sugarcane crop
24 B B Mangaraj JMFC(Rural), – Petition filed against Order
ICC 43/99 Cuttack the harassment by awaited
the officials of the
Company
92
Case number (Rs. in
lacs)
25 B B Mangaraj JMFC, – Application for bail Hearing
GR-941/98 Cuttack on the order of the pending
Hon’ble High Court
26 Bhakta Batsal Mangaraj Labour Court, – Petition filed for –
ID 67/2000 BBSR reinstatement of
employment
27 Girish Ch.Sahoo Labour Court, – Petition filed for –
ID 8/2002 BBSR reinstatement of
employment
28 Prafukka Ku. Khatua Labour Court, – Petition filed for Document to
I D 22/2003 BBSR reinstatement of be filed by
employment workman
29 GMR Industries CJSD, Dhenkanal 8.67 Suit for the recovery Suit Decreed
EP.111/2005 And And Sr. Civil towards compensation against the
GMR Industries Judge, Rajam, A.P. for non-lifting of the Company.
OS No.3/2004 contracted quantity of The High
molasses Court of
Judicature of
Andhra
Pradesh,
Hyderabad
has granted
stay of the
proceedings
pending
before the
The
Dhenkanal
& Rajam
Courts.
30 Yudhistir Prusty High Court 0.32 Appeal against the Written
OJC 2039/2001 of Orissa Order of the statement to
Asst. Registrar, be filed
Co-op.Societies,
Dhenkanal against
repayment of loan
availed from a
Co-op.Bank
31 Zulfikar Ali CJSD, 1.18 Petition filed for Written
CS.No.15/2003 Jagatsingpur non-payment of dues statements
against the cane to be filed
supply made to the
Company
93

Case number (Rs. in
lacs)
Writ petitions (Appeal)
32 State of Tamil Nadu Supreme Court 515.89 The High Court of The appeal is
(SLP No.8743–8752 of India Madras quashed the pending
of 2004 Order of the Govt. before the
of Tamil Nadu and Supreme
the Govt. has preferred Court.
an appeal before the
Supreme Court of India.
The Supreme Court
vide its Order dated
4.5.2004 clarified that
the State Govt. shall
charge the fee at
the rate of 0.50 paise
only per litre from
6.5.2004.
B) Litigations involving Income Tax

No. Petitioner& the Suit
(Rs. in
lacs)
1 Commissioner of Income Tax, Supreme Court 5.29 Claiming of deduction Pending
Coimbatore in respect of molasses
storage reserve in
computing total
income for the
Asst.year 1981-82
2 Commissioner of Income Tax, Supreme Court 3.34 Claiming of deduction Pending
Coimbatore in respect of molasses
storage reserve in
computing total
income for the
Asst.year 1982-83
3 Commissioner of Income Tax, High Court 4.04 Brought forward claim Re-opening
Coimbatore U/s 80J- Unabsorbed of assessment
investment allowances Pending
for earlier year
4 Deputy Commissioner of Income Tax 11.44 Computation of book Pending
Income Tax, Coimbatore Appellate Tribunal profit U/s 115JA-
Prior Year expenses –
appeal against the
order of DC(IT) U/s
5 Commissioner of Income Tax, High Court 42.33 Appeal against the Pending
Coimbatore order of CIT for
claiming depreciation
for New Sivaganga
Sugar Unit for the
Asst.year 1989-90
94
(Rs. in
lacs)
6 Commissioner of Income Tax, Supreme Court 132.88 Appeal against the Pending
Coimbatore order of the High Court
of Madras with regard
to incentive sugar
sales from Sivganga
sugar unit, closing
stock valuation in
respect of sugar stock
for Unit-II for the
A.Y. 1990-91
7 Deputy Commissioner of High Court 533.01 Appeal against the Pending
Income Tax, Coimbatore order of DC of I.T
with regard to
allowances under
Rule 6B on
presentation of
articles, incentive
sugar sales from
Sivaganga Sugar Unit,
Closing stock valuation
in respect of sugar
stock for Unit-II and
expenses incurred in
setting up new sugar
factories at Dhenkanal,
Baramba Units for the
Asst.year 1992-93
8 Deputy Commissioner of High Court 572.15 Appeal against the Pending
Income Tax, Coimbatore order of DC of I.T
with regard to incentive
sugar sales from
Sivaganga Sugar Unit,
Closing stock valuation
in respect of sugar
stock for Unit-II and
expenses incurred on
setting up new sugar
factory at Dhenkanal for
the Asst.year 1993-94
95
C) Litigations involving Sales Tax

(Rs. in
lacs)
1 Deputy Commissioner – CT Tamil Nadu 7.12 Assessing to tax as Pending
(Appeals), Cbe Taxation Spl. turnover, the freight
Asst. year 1975-76) Tribunal, Chennai charges on purchase
of sugar cane for
Asst.year 1975-76
2 Deputy Commissioner – CT Tamil Nadu 6.03 Assessing to tax as Pending
(Appeals), Cbe Taxation Spl. turnover, the freight
Asst.year 1976-77) Tribunal, Chennai charges on purchase
of sugar cane for
Asst.year 1976-77
3 Deputy Commissioner – CT Sales Tax Appellate 1.04 Export of soya Pending
(Appeals), Cbe Tribunal, Cbe. products against
Asst.year 1991-92) Form H
4 Deputy Commissioner – CT Sales Tax Appellate 2.05 Rough casting treated Pending
(Appeals), Cbe Tribunal, Cbe. as machined
Asst.year 1986-87) components
7 Deputy Commissioner – CT Sales Tax Appellate 42.36 Rough casting Pending
(Appeals), Cbe Tribunal, Cbe. treated as machined
10 Deputy Commissioner – CT Sales Tax Appellate 69.11 Claiming exemption Pending
(Appeals), Cbe Tribunal, Cbe. towards charges
Asst.year 1994-95) received for the
erection of effluent
treatment plant
11 Deputy Commissioner – CT Sales Tax Appellate 168.53 Claiming exemption Pending
(Appeals), Cbe Tribunal, Cbe. towards transport
Asst.year 1995-96) charges for purchase
of cane
12 Deputy Commissioner – CT Sales Tax Appellate 3.93 Non-filing of Pending
(Appeals), Cbe Tribunal, Cbe. statutory forms upto
Asst.year 1995-96) 31.3.96
96
D) Arbitration Proceedings initiated against the Company:
Sl. Claimant Nature of Claim Counter claim Status
No the claim amount by the
(Rs. in lacs) Claimant, If any
1 Baramba Co-op. Minimum rent, royalty, value of 3017.40 2388.63 Pending
Sugar Industry, stores and raw materials
Baramba, Orissa
Cases/Suits filed by the Company
Sl. Particulars No. of cases / Amounts involved
No Disputes (where Quantifiable)
(Rs. In lacs)
1 Civil Cases & Consumer Disputes 6 5.60
2 Writ petition 3 453.04
3 Income Tax 2 125.18
4 Sales Tax 2 895.99
5 Central Excise 5 519.57
6 Arbitration Proceedings 1 2388.63
Cases/Suits filed against Sakthi Auto Component Limited (subsidiary of Sakthi Sugars Limited)

(Rs. In lacs)
1 Income Tax 1 9.70
2 Sales Tax 2 539.26
3 Central Excise 2 72.09
97
Sri Chamundeswari Sugars Limited

Cases filed against the company
Sl. Case Reference Filed by Brief subject matter Status at present
No (Petitioner) as on date
1. WP No.32943/ B. Raju The Company terminated the services The writ Petition
1999(L) of B.Raju on 28.4.1990 since he had filed by Shri. B. Raju
made wrongful gains. The employee has been dismissed.
filed a writ petition at the High Court
for reinstatement.
2. WP No.32173/ SCS Ltd., Staff SCS Ltd., Staff and Workers Association The Case has been
2000(L) and Workers by its letter dated 24.4.2000 requested dismissed.
Association the Management to consider 6 employees
as Protected Workmen which was refused.
Aggrieved by this the Association
approached the ALC Mysore to consider
6 employees as Protected Workmen.
After hearing both the parties the ALC
by his order dated 4.9.2000 refused to
give the status of Protected Workmen
to certain employees.
3. WP NO.13529/ N.L. Neelakantaiah During March 2001 NL Neelakantaiah KSPCB has not filed
2001 GM PIL M.C. Siddegowda and another filed a Public Interest its objections so far.
Litigation before the High Court of The Case is Pending.
Karnataka praying to issue a mandamus
to 1st and 2nd respondents (DC, KSPCB)
for compliance of the environmental laws
to prevent the 3rd respondent
(SCS Limited) from causing the
environmental pollution and also to see
that the 3rd respondent installs necessary
safeguard devices to take care of air,
water and environmental pollution.
4. WP No.26834/2001 G.Krishnamurthy Mr. G.Krishnamurthy was dismissed from The Company has
the service of the company on certain filed an appeal before
charges which was upheld by the labour the divisional bench
court.He had preferred an appeal before in the High Court of
the Honorable High Court of Karnataka. Karnataka.
The High Court has disposed off the Pending disposal.
petition directing, reinstatement with 50%
back wages & recovery of Rs. 20,000
and two instalments shall be stopped
with cumulative effect for the negligence.
5. SLP(Civil) M/s Capchem The Company has filed a original suit The Supreme Court
No.3455/2006 Industries Ltd., against M/s Capchem Industries Ltd., for has disposed of the
before the recovery of deposit of Rs.1crore paid by SLP directing
Supreme Court the Company towards lease of Distillery M/s Capchem
before the second Additional Civil Judge, Industries Ltd., to
Mysore in OS No266/96 and obtained deposit Rs. 61 lacs
award for Rs.76 lacs with 18% interest with the High Court
against Capchem. They have filed an of Karnataka. This
appeal before the Honorable High Court amount has been
of Karnataka which has directed deposited as per the
M/s Capchem Industries Ltd., to deposit directions of the
98
Rs.70 Lakhs. Against this order they Supreme Court. Now
have approached Honorable Supereme the High Court has to
court in SLP (Civil) No 3455/2006. take up hearing of the
appeal.
6. OS.9478/2005 Smt. Nagamma & Sri. Yellappa Reddy and Brothers have The Company has
Smt. Muniyamma sold property in Survey No.48/2 filed objections and
Tuberhally village. The petitioners are the the matter is being
sisters of the above sellers, they have defended. Case is in
filed Civil suit against the sellers seeking progress.
a share in the property and the Company
has been impleded as party.
7. C Misc – 602 – State Government Commercial Tax Department have filed Cases are in progress,
609606-610/2005 by Commissioner cases for recovery of arrears of deferred Company has paid
C Misc – 18/2006 of Commercial Purchase Tax of Rs.8,45,79,219/-. Rs. 2,41,82,839/-
C Misc – 46/2006 taxes. through the court.
C Misc – 48/2006 Balance pending for
sum of Rs.6,03,96,330/-
8. Ref. 135/01 A.T. Krishna & A.T. Krishna and other 7 daily wagers The matter has been
7 others who were working from the year 1991 to posted for cross
1996 intermittently under different examination on
contractors, when their names were not 09/11/2007.
figured in the list of casuals under the
head Annexure – I, II & III which was
prepared and signed under 12(3) of I.D.
Act before the Conciliation Officer,
Mandya District, Mandya, dt.5.2.96, got
annoyed and raised dispute before the
Asst. Labour Commissioner / Conciliation
Officer, Mysore Division and several
sittings were taken place and finally a
failure report was forwarded to the
Department of Labour, Karnataka Govt.,
Bangalore. The Department of Labour
after perusing the remarks of the
conciliation officer, referred the matter to
the Industrial Tribunal at Mysore.
9. Ref.134/01 Thimmaiah, The above said daily wagers service was Arguments are over
Puttegowda & engaged by a contractor who was given and reserved for
Swamy a work to carryout during overhauling judgments.
season. When the contract work was
over automatically the contractor left the
place with his all men and material. But,
the said workers raised dispute before
the Conciliation Officer, Mandya district,
Mandya taking untenable stand that they
have put in continuous service of more
than 240 days. The management through
its advocate contended that they were no
more on the rolls of the company and
they could not be considered as the
employees of the organization.
99

10. Ref.182/01 Shankariah, The petitioners were the President, Revision Appeal has
Gopalan & Vice President & Secretary of the been filed and same
Revanna erstwhile union respectively. They were is pending.
indulging in unfair labour practice and Matter has been
the embarrassing situation was surfaced posted for filing
to the management on number of affidavit of the
occasions. Since the relationship of the enquiry officer on
master and servant was ceased, he had 21/09/2007.
no right to stay in the company quarters,
instead he continued stay in the quarters
despite the actions initiated by the
management. Ultimately, the management
without any alternative, filed a case
against the terminated employee in the file
aforesaid. The case has been dismissed.
11. WCA/101/96 R. Thammanna R.Thammanna met with an accident when The advocate for the
he was working in the Boiler station as petitioner has filed an
Attendant Boiler and suffered multiple application to appoint
injuries and became disable to carryout a Court Commissioner
the normal work in his original workspot. since the petitioner is
Therefore, a light work by posting to bed ridden. The matter
security department has been given and is posted for
he is attending the work at present. In evidence on
the process, claiming Rs. 7.5 lakhs 12/09/2007.
compensation, he has filed an application
before the aforesaid authority.
The II party filed an objection.
12. Ref.104/97 Kempaiah Kempaiah was charged with accepting Arguments have been
bribe for siphoning of unregistered cane completed and final
through registered cane cutting order and order is awaited.
enquiry was held appointing an outside
agency. The enquiry officer out of two
charges had given benefit of doubt in
respect of the bribe and found him guilty
with regard to other charge of siphoning
unregistered cane for which, the
management demoted him as Attender.
13. IID 20/2001 H.K. Shivanna H.K.Shivanna, Clerk, Cane yard was Challenging the action
charged with fictitious recording of cane of the management he
weighment, for which domestic enquiry has raised an
was held and against the proven Industrial Dispute and
misconduct he was terminated from the the matter has been
services of the company. posted for argument
on the validity of the
domestic enquiry and
posted for cross
examination on
25/09/2007.
14. WCA 195/2003 Smt. Sakamma The petitioner suffered injuries while on The party is deceased
duty and has claimed compensation of and the case has been
Rs.5 lakhs and raised a dispute impleding dismissed on the
the company as III Respondent before the ground of non tracing
100
Asst. Commissioner for Compensation of her legal heirs.
and Labour officer, Mandya.
15. Ref.44/2000 R. Kempegowda R. Kempegowda was removed from The case is posted
services on charges of misconduct. for hearing of the
He has filed a case against the memo on 30/09/2007.
Company.
16. 53,54,55/2001 Channappa, The above petitioners had been charged The matter has been
Murugan, of misconduct in the year 1999 and posted for evidence
Kempaiah their services were terminated. They and cross
have raised a dispute challenging the examination on
action of management. 19/09/2007.
17. IID 87/2004 Thimmappaji The said petitioner was terminated from Posted for arguments
the services of the company for certain on domestic enquiry
acts of misconduct. The said person on 19/10/2007.
challenging the action of the management
raised a dispute in the file mentioned
above. The company has filed an
objection in this regard.
18. Ref. 3/2006 Doddegowda Sri. Doddegowda, terminated employee Case has been posted
filed a fresh application under section for applicant’s
33C(2) of the ID Act for the settlement evidence on
of his claims. 16/11/2007.
19. AS No.34/2004 Apple Credit The company had entered into lease The amount has been
Corporation agreement with M/s. Apple Credit settled and the case
Corporation for leasing boilers to the stands disposed off
factory. M/s. Apple Credit Corporation accordingly.
have filed arbitration petition against the
Company for recovery of the lease
instalments. The arbitrator has passed an
award for Rs.1,81,33,473/- with over due
interest at 36% from 1/9/2002. The award
has been challenged by the company
before the Principal City Civil Judge and
the case is pending for disposal.
20. Cases filed against – Total amount covered Rs. 24.78 lacs
cane growers
towards crop loan
Cases/Suits filed by the Company

(Rs. In lacs)
1 Labour Court 5 -
2 Recovery Cases 3 38.59
3 Civil Cases 2 -
4 Pertaining to taxation 1 -
101
Sri Bhagavathi Textiles Ltd.

Cases filed by the Company:
Sl. Year Against whom Name of Nature of Amount Present
No. the case filed the Forum Case (Rs. in lacs) Position
1 1998-1999 Sales Tax Officer, The Sales Tax Disputed 2.11 Pending
Chittur, Palakkad. Appellate Tribunal, Turnover (CST)
Palakkad
2 2000-2001 Sales Tax Officer, The Appellate Disallowance 1.03 Pending
Chittur, Palakkad. Assistant of C Forms (CST)
Commisioner,
Palakkad
3 2004-2005 Sales Tax Officer, The Appellate Disallowance of 0.80 Pending
Chittur, Palakkad. Assistant sales return (CST)
Commissioner,
Palakkad
Income Tax Cases
Sl. Year Against whom Name of Nature of Amount Present
No. the case filed the Forum Case (Rs. in lacs) Position
1 AY–2000-01 Dy. Commissioner The Deputy Disallowance of 25.72 Pending
of Income Tax, Commissioner expenses u/s 43B
Palakkad. (Appeals), Kochi.
2 AY–2001-02 Dy. Commissioner The Deputy Disallowance of 36.80 Pending
of Income Tax, Commissioner expenses u/s 43B
Palakkad. (Appeals), Kochi.
2. Outstanding litigations/ disputes against top five Unlisted Group Companies

ABT Limited
Details of Legal Cases pending against ABT Ltd.
Sl. Court/Forum & Parties Case Summary Status
No. Case Number
1 M.A.C.T–III Mr. A. Anand VS Motor Accident claim for Ex party evidence

Court Chennai ABT Ltd. & The New Rs. 19,00,000/- on 11/09/2007
O.P.No.4398/ India Assurance Co.
2004
2 Madras High ABT Ltd. VS Secretary Writ petition filed against the order After interim orders
Court Revenue Dept. & of Special Commissioner, Land dated 07/01/2005 by
(ULTANo.4/93) Commissioner Land Reforms in connection with Urban Court, ABT paid
Reforms & other Land Tax payment for ABT Madras 65% ULT Tax and
Pvt. Ltd Guindy Land. filed fresh petition
on 31/01/2007 for
clarification.
Clarification not yet
received.
ABT Parcel Division
3 Dist. Munsif Recovery of dues and refusal to hand Case won by
Court, over Company properties against the Company.
Coimbatore Ex-Agent, Kollengode on 03/01/2002 Judgement copy
O.S.517/2003 and to pay the ULT amount received directing the
defendant to pay
102
No. Case Number
Rs. 5,600 + Rs. 1,227
being the cost of the
suit and handling over
movable properties
like weighing scale
etc. Notice given on
26/08/2007 but no
response.
4 Civil Court, – Proof of delivery demanded by Party. Posted to 27/10/2007.
Thane Next date not yet
RCS 642 received.
5 Civil Court – Case filed by Ex-agent Vasai Posted to 20/10/2007
Vasai177/2006 (BWDV) claiming settlement
of Rs. 12,968
DETAILS OF LEGAL CASES PENDING FOR ABT MARUTI

Sl.
Case Number Parties Case Summary Status
No.
1 1480-2005 ABT Maruti customer Works carried out one Vehicle Hearing on
Dt:30.12.2005 Mr. Karthikeyan No. TN 55G 6, payment Pending - 31/08/2007.
total bill Rs. 73,741/- paid Rs.20,000/-
cheque Bounced for Rs.60,000/-
2 O.S.No.2414/ ABT Maruti vs Repco Non-collection of Accident vehicles Case ordered in
2001 Bank & Manoharan Since 12.07.97 Company’s favour on
12.02.07. Judgement
Copy received. No
appeal from the party
3 O.P.No.26/2005 Mrs. Girija - vs - Motor Accident Claim Case posted to
ABT Maruti amount. Rs. 30,000/- 26/09/2007. Hearing
and oral argument.
Cases/Suits filed by ABT Parcel Division

(Rs. In lacs)
1 Criminal 3 1.47
2 Civil Cases 4 6.36
Cases/Suits filed against subsidiaries of ABT Limited :

ABT (Madras) Private Ltd.

(Rs. In lacs)
1 Criminal case 1 0.38
2 Consumer Court cases 5 1.83
3 Urban land Tribunal 1 -
103
ABT (Madurai) Private Limited

(Rs. In lacs)
1 Consumer Court 5 -
ABT (Trichy) Private Limited

(Rs. In lacs)
There are no cases pending against the Company
ABT Textiles Private Limited

(Rs. In lacs)
There are no cases pending against the Company
ABT INDUSTRIES LIMITED

Particulars Amount (Rs. In lacs)
Claims against the company in respect of the disputed interest and damages not 84.78
acknowledged as debts for which the Company has defending cases/appeals or has
filed appeals before the various appeal authorities
A demand was raised by Kerala sales tax department for assessment year 1997-98, 291.32
1998-99 and 1999-2000 towards sales tax and interest amounting to Rs. 615.98 lacs.
The demand was contested before the appellate authorities and the Hon’ble High Court
of Kerala confirming the levy of sales tax and directed the company to approach the sales
tax department for waiver of interest. Subsequently, the sales tax department waived the
entire interest amounting to Rs. 324.66 lacs. The company has filed a Special Leave
Petition before the Hon’ble Supreme Court of India in respect of the Tax portion
of Rs. 291.32 lacs. Supreme Court has stayed the recovery proceedings
Sakthi Financial Services Limited

There are no pending litigations against the Company
Sri Sakthi Textiles Limited

Cases filed by the Company

(Rs. In lacs)
1 Criminal case 6 63.89
2 Civil case 2 23.54
104
3. Outstanding litigations/ disputes against promoter group companies, other than those mentioned above
ABT TWO WHEELER PRIVATE LIMIED

No. Case Number
1 O.S. No. Mohankrishnan Injunction expected for use of passage Posted date not
3648/2005 in front of showroom mentioned.
ANAMALLAIS BUS TRANSPORT PRIVATE LIMITED

The Company has confirmed that
1. They do not have any pending litigations with any Financial Institutions / Banks.
2. They have not defaulted any payments to any Financial Institutions / Banks.
3. There is no pending proceedings initiated against them for economic offences and non- payment of statutory dues.
4. Following are the details of pending litigations filed by them and against them.

No. Case Number
1 O.S. No. 2645/ Dhanraj N Kochar -Vs- Egmore showroom to pay rent amount Posted to 29/09/2006
2004 Hotel Tristar Asia & to Mr. Dhanraj N. Kochar towards for trial Pending
4 Others (ABT Maruti, settlement claim for deficiency
Egmore) in services
2 O.P. No. 312/ A. Ravichandran – Vs – Seeking claim for deficiency in Notice from customer
05 ABT Automobiles service for undue delay in delivery forum received on
of new vehicle, claim amount 18/07/2005, case
Rs. 2,13,000 (Vehicle alloted to posted to 18/08/2006
customer and Bank loan rejected) for written arguments
of both the parties.
3 M.A.C.T. No. Meyyappan – Vs – Seeking claim for Rs. 1,09,230/- Dismissed EP 968
1180/1998 The Annamallais Bus towards Motor Accident. and filed new EP No.
IN EP. No. Transport Pvt. Ltd. and the 436/19.07.07 and
968/2007 United India Ins. Co. Ltd. settled the amount.
THE ANAMALLAIS RETRADING CORPORATION

No. Case Number
1 Urban Land A.R.C vs A.C.(ULT) Appeal filed before ULT Tribunal and Further appeal before
Tax Tribunal, T.Nagar the appeal was dismissed on Spl. Commissioner
Chepauk 03.01.2002 And to pay the ULT Land reforms was
ULTA.No.5/93 amount filed.
105
SAKTHI AUTO COMPONENT LIMITED, COIMBATORE

Sl. Name of the Forum Value of the
No. Defendant Suit (Rs.in lakhs) Status
Income Tax
1 Union of India, High court of 9.70 The levy of fringe benefit tax under the
Ministry of Law, Justice Madras income tax has been challenged by a
and Company Affairs writ petition before the Hon’ble High
Court of Madras through the Indian
Chamber of Commerce and Industry,
Coimbatore. The Hon’ble High Court
has admited the writ petition and the
same is pending before the said court
for disposal.
Sales Tax Disputes
1 Assistant Commissioner High Court of 454.14 Petition against the Order of the Asst.
(CT)Zone I, Madras Commissioner regarding the
Coimbatore (W.P.No.6859 cancellation of deferral benefits availed.
of 2004) Pending
2 Deputy Commercial Appellate 85.12 Appeal against the order of the DCTO
Tax Officer, Coimbatore Assistant assessing the turnover both under
Commissioner, TNGST & CST @ 12% instead of
Cbe @ 4% and also not allowing the claim
for deduction from the turnover in
respect of cash discount. Pending
Central Excise Disputes
1 Assistant Commissioner 7.25 Dispute with regard to service tax
of Central Excise, Erode payable on the Goods Transport Agency
Services – (Foundry Unit) Pending
Adjudication
2 Assistant Commissioner 2.66 Dispute with regard to payment of
of Central Excise, Erode Service tax on the Royalty and
Consultancy charges paid to overseas
Collaborators. Pending Adjudication
A R C Retreading Company Private Limited.

No. Case Number
1 High Court N. Raju, Ex-Agent, Ooty Dismissed in JM – II CBE, Appeal in Pending
Chennai High Court, Chennai.Suit Value –
CA 130/03 Rs.160719.07
2 Civil Suit N. Raju Ex-Agent, Ooty Civil suit-filed against agent after Defendant witness
O.S.1523/03 the dismisal of the Company’s evidence closed
criminal case JM – II – CBE. Arguments to be
Suit Value – Rs.233478.57 continued.
3 IIIrd Additional N. Nagarajan V.Nataraj Tyre Retreading Charges Compromise,
Subordinate Kannapiran Tpts., Tiruppur O.S.1263/04 – Rs.32,748.50 account settled
Judge CBE Civil O.S.2295/04 – Rs.32,014.55 for Rs. 90,000.
SuitO.S.1263/
04As E.P.96
O.S.2295/04
As E.P.97
106
Sl. Court/Forum &
Parties Case Summary Status
No. Case Number
4 Ist Additional Premier Tea Industry, Suit Value – Rs.6,906.78 Filed counter
Munsif Court, Kotagiri Tyre Retreading Charges statement.
CBE.O.S.1716/
1999
5 Dist. Munsif Mohammedsinan, Principal Value – Rs.11,567.81 Decreed amount
Court, CBE. Transit Bus Service. EP Filed Rs.28,463.31 Rs.19,409.81 Filed
O.S.1143/98 Kannur, Kerala. petition to attach the
E.P.146/2001 bus owned by J D
6 II,ASJ,CBE. Mohammedsinan, Principal – Rs.24,401.93 Decreed amount
EP Filed at Transpeed Bus Service, EP Filed Rs.69,867.65 Rs.40,816.00
Munsif Kannur, Kerala. The court released
Kannur. the bus on executing
O.S.822/98 bond for Rs. One
EP.147/2001 lakh
7 Dist.Munsif R. Balasubramaniam, Principal Rs.28,949.03 Decreed amount
Court. CBE Karur EP Rs.69,363.63 Rs.66,690.63
O.S.2183/96 Payment received
EP.141/2000 Rs.2,975.00 by
cheque.
8 Dist.Munsif R.T. Raphel, Coonoor Principal Rs.3,036.00 Amount remitted by
Court. CBE EP Rs.12,011.27 J D, so far Rs.2050/-
O.S.1453/96
EP.50/1999
9 IIIrd G. Subash, Ex. Sales Rep., Suit Value Rs. 2,68,152.16 Arguments to be
Subordinate Tirunelvei continued.
Court. (Civil)
O.S.450/04
10 Labour Court G. Subash, Ex Sales Rep., Petition Filed Pending
Kollam Tirunelvei,
D 9 / 2004
11 I st ADM R. Nagarajan, Ex. Agent, Principal Rs.75,277.11 Case filed and
Court, CBE. Erode numbered in 1st
O.S.712/06 Additional District
Munsif Court, CBE
and next hearing on
26-07-2006
12 J M No-II, N.Rajan, Principal Rs.21,404.00 Filed vakalath and
CBE Criminal Suit complaint petition
and waiting for the
return
13 Subordinate T. Bharanidharan, Principal Rs.1,60,737.00 Got a decree on
Judge, CBE Ex Sales Rep., CBE 24.02.06.
O.S.607/05
Tirunelveli Branch (Recovery Cases)
14 584/98 M.Ganesan Principal Amount: 9,641.05 Execution Petition
M/S.Annai Chellam Tpt., Suit Amount: 9,641.05 (E.P.) Filed on
Sankarankovil Decree Amount: 11,484.96 22.03.2001/ Party
absconded Last
107

No. Case Number
hearing held on
24/04/2001
15 849/1990 P. Rathinasamy Principal Amount: 3,835.59 Processing
S/o.Ponnumani Nadar, Suit Amount: 6,367.35
Decree Amount: 8,059.13
16 178/2003 M. Balashunmugam Principal Amount: 5,39,801.42 Party Expired
Suit Amount: 5,39,801.42 Processing Last
Decree Amount: 7,04,879.17 hearing held on
04.07.2006
17 450/2004 G. Subash Principal Amount: 2,04,205.10 Processing
Suit Amount: 2,04,205.10
Decree Amount: 3,11,848.80
29.12.2004
18 268/2006 O. Subramaniam Principal Amount: 36,375.00 Processing
Suit Amount: 36,375.00
Decree Amount: Nil
19 269/2006 K.Ramachandran Principal Amount: 56,026.75 Processing
20 267/2006 Mr, Udhayakumar Principal Amount: 23,664.00 Processing
21 266/2006 M.Rengasamy Principal Amount: 19,271.00 Processing
M/s. Selvakumar Suit Amount: 19,271.00
ANAMALLAIS ENGINEERING (P) LTD., POLLACHI. (AEPL)

The company has filed appeals in connection with the sales tax matters which are pending before AAC Pollachi / High
Court.
Cases pending before High Court, Chennai
Sl. Case No. Gist of the case Filed Against Pending Present Status
No. by whom before
1 WP 19271/ Exemption Claimed under AEPL CTO/AAC High Posted for final
1998WP 19272/ Rule 5(3) of CST Act. Court, hearing
1998 Sales Tax assessment for Chennai
the years 1995-96 and
1996-97
2 INCOME TAX
1 ITA No.2723/ Bonus provision of AEPL ITA Assessing Appellate Tribunal
Mds1996 Rs.3,61,365/- made and Tribunal Officer, set aside the order
(Asst.yr 1993-94) paid within the due date Chennai Coimbatore of the CIT(A) and
A.O. opinion – settlement restore the matter to
dt.6.11.93 – Expenditure the A.O. to examine
could not have occurred the case.
on 31-3-93. Disallowance
was improper.
2 Shortage in accounting of IT dept AEPL ITA Pending
purchases during Acct. yr Coimb- Tribunal
95-96 (Asst.yr 96-97) to atore Chennai
the tune of Rs. 42,08,824/-
108
Cases pending before the Appellate Assistant Commissioner, Pollachi
SALES TAX
Case No. Gist of the case Filed Against Pending Present Status
by whom before
CST 23/2003 Exemption claimed under AE CTO, Poy AAC, Appeared on

CST 22/2003 Rule 5 (3) of CST Act. Sales Firm Poy 27/02/2007. Pending
CST 21/2003 Tax assessment for the years
CST 14/2005 1990-91, 1992-93 to 1994-95,
CST 65/2002 1999-2000 to 2003-04
CST 71/2003
CST 34/2004
CST 14/2004
CST/24/2004
CST 15/2005
CST 3/2005
SALES TAX -Pending before High Court, Chennai
No. by whom before
1 WP 11467/2000 Exemption Claimed AE CTO High Court, The department took

WP 10019/2002 under Rule 5 (3) of CST firm CTO time to file their case.
WP 19475/2003 Act. Sales Tax TN Govt Chennai In the meantime
WP 19476/2003 assessment for The year TC Govt TVS Sundram
1988-89 Industries also made
a party and issued
notice by the
department. Pending in
High Court.
2 TCMP 488/06 Lease rent on ST dept AE Firm High Court, Vakalath filed.
IN TCSR Machineries – Chennai
No.9537/06 Asst.Yr 94-95 – collected
3% Instead of 8%.
Difference tax paid
subsequently, but dept
levied penalty of
Rs.43,988/-
109
CENTRAL EXCISE
No. by whom before
1 Appeal No. The bodies built on Central AE Appeal filed Pending before
E/540/04 (473/3) 407/31 TATA chassis as Excise before the CESTAT
Ambulance, classified dept. CESTAT, Chennai.
as “fuel efficient light Chennai.
commericial motor vehicle
and that cleared duly
paying 15% duty. Based
on fuel efficiency
certificate, TELCO paid
only 10%. Hence refund
claim of Rs.27,233/- made
with the Central Excise dept.
2 Appeal No. Central Excise department AE Asst. Appeal The Company’s
E/541/04 demanded Rs.2,47,787/- Comm filed appeal dismissed on
as duty for the Ambulance Pollachi. before the 10-8-05. file sent back
vehicles cleared duly CESTAT, to Commissioner
paying 10% duty instead Chennai. Coimbatore for further
of 15% duty. disposal.
N.MAHALINGAM AND COMPANY, COIMBATORE.

Cases Filed Against N.Mahalingam And Company
SL. Case No. / Year Party Name Nature of Case Amount Present Position
No & Court (Rs.)
1 Ernakulam Sales Tax appeal Tax difference in 23,47,046 Case went in favour of
High Court stay N.M&Co, sale of engine Sales Tax Department.
Petition S.T Rev. Trivandrum 1994-95, 1995-96 & Pending in appellate
No. 203, 215, 1996-97 forum.
16/2003
2 Op.no.21/2003 Mr. Muneswara Consumer Case 16,629 Pending
Moorthy,
Muniswara illam
Manthandikunnu,
Wayanad
3 Labour Court Mr. Santhoshkumar Termination of 2,51,865 Judgement against
C.P. 33/06 employment management. appealed at
W.P. 22563/06 High court, Kerala.
4 I.D.23/04 Mr. Udyakumar Terminal benefits Back Pending
wages &
Compen-
sation
5 C.D.R.C.613/2000 Mr. Sidharthan Consumer Case 20,202 Appeal is pending
Kerala state
consumer
Disputes Redressal
Commission
110
No & Court (Rs.)
6 C.D.R.C.1275/2000 Mr. Chandrababu Consumer Case 55,000 Appeal is pending.

Kerala state
consumer
Disputes Redressal
Commission
7 O.P.183/04 Mr. T.V. Sakariah Consumer Case for 43,000 Judgement in favour of
Consumer Excise Duty Rebate the Company.
Disputes Redressal
Forum,
Pathanamthitta
8 C.A. 133/2006 Case filed by the Fuel supplied from 37,688 Judgement in favour
Management against Petrol Bunk of the Company. Party
K.N.R (Cheque Dis- filed appeal against the
honoured) judgement.
SALES TAX CASES

No & Court (Rs.)
1 TNGST No: M/s. Commercial Interest Levied for 7,33,257 Pending

304639/93-94 Tax Officer, the period from
Ramnagar Circle, 20/09/93 to 31/03/95
Combatore
2 TNGST No: M/s. Commercial Rs. 98570 (Credit 64,109 Pending
304639/93-94 Tax Officer, balance has been
Ramnagar Circle, adjusted twice) hence
Combatore excess balance
adjusted to be
payable (98570-34461
= 64109)
3 TNGST No: M/s. Commercial Dispute Turnover of 34,714 Under Process
1980024/02/03 Tax Officer, Form 37-A STDS
Ramnagar Circle, Certificate Relief not
Combatore given
There are 7 civil cases filed by the management of N. Mahalingam & company pending before various courts wherein
the amount involved wherever ascertainable is Rs. 9.29 lacs. 1 case for cheque dishonour has been filed for an amount
of Rs. 2,80,000. Judgement in favour of the party. Appeal against Judgement.
A B T FINANCE LIMITED
THE GOUNDER AND COMPANY AUTO LTD
SAKTHI BEVERAGES LTD
SAKTHI AUTOMOBILES (FIRM)
There are no pending litigations against the Firm
111
ABT ENERGY PRIVATE LIMITED

ABT INFOSYSTEMS PRIVATE LIMITED

ABT TRANSPORTS LIMITED

CHAMUNDESWARI ENTERPRISES PRIVATE LIMITED

NACHIMUTHU INDUSTRIAL ASSOCIATION

SAKTHI COFFEE ESTATES P. LIMITED

SAKTHI LOGISTIC SERVICES LIMITED

SAKTHI MANAGEMENT SERVICES LTD

SAKTHI SOFT DRINKS LIMITED

SAKTHI SYNTHETIC GEMS LTD.

Cases Filed by the Company
Sl. Amount
No. Initiated by Forum Status
(Rs. in lakhs)
1 Chennai Port Trust Asst. City Civil Court 3.02 Matter Pending
Chennai
2 Indian Drugs & Arbitration 172.30 Yet to be referred to
Pharmaceuticals Limited Arbitration as per Supreme
Court of India
Cases Filed by the Company

Sl. Amount
No. Against Forum Status
(Rs. in lakhs)
1 Smt. Hemalatha, Judicial Magistrate 3.00 Matter Pending
Proprietrix, Hema Court, Mettupalayam
Cutting Works, Trichy
SAKTHI REFINERY AND PROTEIN LIMITED

112
MATERIAL DEVELOPMENTS AFTER THE DATE OF THE LAST BALANCE SHEET
There are no material developments after the date of the latest balance sheet, that are likely to materially affect the
performance and the prospects of the company. The company has not discontinued any of its existing business nor
commenced any new business during past year.
ADVERSE EVENTS
There are no adverse events affecting the operations of the Company occurring within one year prior to the date of filing
of the Letter of Offer with the Stock Exchanges.
113
GOVERNMENT APPROVALS
On the basis of the indicative list of approvals below, the Company is permitted to carry on business activities and no
further approvals from any Government authorities / RBI are required by the Company to undertake the business of the
Company.
(i) Investment approvals
No approval of the FIPB / RBI is required for the rights issue. However, the company will be taking the approval
of RBI for allotment of shares to Non-resident Indian shareholders.
(ii) Government Approvals
No consent of the Government of India is required for the present issue. The company has all the necessary
approvals from the Government authorities / RBI as required to carry on the present business. The company has
complied with all the applicable guidelines / directions issued by RBI from time to time. The company does not
propose to enter new activities through this rights issue of equity shares for which any further approvals are required
to be obtained.
No letter of intent / industrial license is required to carry on the business by the company. The Company has been
registered with RBI as a non-banking financial company and its registration number is 07.00252. The company is
categorized as a Asset Finance company as per the current RBI norms.
(iii) Technical approval:
No technical approval is required for the present issue.
(iv) Declaration of the RBI about non-responsibility for the financial soundness or correctness of statements
The Company is having a valid certificate of Registration No.07.00252 dated 17th April 2007 (in lieu of Certificate
of Registration dated 8th May 1998) issued by Reserve Bank of India under Section 45-1A of Reserve Bank of India
Act 1934. However, Reserve Bank of India does not accept any responsibility or guarantee about the present position
as to the financial soundness of the Company or for the correctness of any of the statements or representations made
or opinions expressed by the Company and for repayment of deposits / discharge of liabilities by the Company.
114
SECTION VI - REGULATORY AND STATUTORY DISCLOSURES
AUTHORITY FOR THE PRESENT ISSUE
The Board of Directors at their meeting held on 14/08/2004 have approved the rights issue of equity shares of the
Company of Rs 10/- each to the existing holders of equity shares in the ratio of One equity share for every Two equity
shares held by them on a date to be announced by the Board (Record Date) for a total amount of Rs. 1003.57 lacs. The
Special resolution was passed at the Annual General Meeting of the shareholders of the Company held on 24/09/2004
authorising the Board of the Company to raise capital up to Rs 1003.57 lacs. The Board of Directors at their meeting
held on 23/04/2007 have decided to make the following offer to the existing shareholders of the company:
Shares held on Record Date (31/10/2007). The face value of the Equity Share is Rs. 10/- per share and the Issue Price
is 1 time the face value. The Board of Directors of the Company has approved the Letter of Offer in the board meeting
held on 31/10/2007.
PROHIBITION BY SEBI
The Company, its Promoters, Directors or any of the Company’s associates or group companies with which the Directors
of the Company are associated as Directors or Promoters have not been prohibited from accessing the capital market
under any order or direction passed by SEBI.
ELIGIBILITY FOR THE ISSUE

Sakthi Finance Limited is an existing listed Company. It is eligible to offer this Rights Issue in terms of Clause 2.4.1(iv)
of the SEBI (DIP) Guidelines, 2000.
The promoters, their relatives, SFL, group companies are not detained as wilful defaulters by RBI/Government authorities
and there are no violations of securities laws committed by them in the past or pending against them.
DISCLAIMER CLAUSE
AS REQUIRED A COPY OF THIS OFFER DOCUMENT HAS BEEN SUBMITTED TO SEBI. IT IS TO BE
DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THIS OFFER DOCUMENT TO SEBI SHOULD
NOT, IN ANY WAY, BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED
BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF
ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE
CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE OFFER DOCUMENT.
LEAD MANAGER KEYNOTE CORPORATE SERVICES LIMITED HAS CERTIFIED THAT THE
DISCLOSURES MADE IN THE OFFER DOCUMENT ARE GENERALLY ADEQUATE AND ARE IN
CONFORMITY WITH SEBI GUIDELINES FOR DISCLOSURES AND INVESTOR PROTECTION IN FORCE
FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED
DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY
RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT
INFORMATION IN THE OFFER DOCUMENT, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE
DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN
THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER, KEYNOTE CORPORATE
SERVICES LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 23/04/2007 IN
ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS 1992 WHICH READS AS FOLLOWS:
(i) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION
LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND
OTHER MATERIALS IN CONNECTION WITH THE FINALISATION OF THE OFFER DOCUMENT
PERTAINING TO THE SAID RIGHTS ISSUE.
(ii) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS
DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE
STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE
115
JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE

AND OTHER PAPERS FURNISHED BY THE COMPANY.
WE CONFIRM THAT:
(a) THE OFFER DOCUMENT FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS,
MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
(b) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS ALSO THE
GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANOTHER
COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND
(c) THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE TRUE, FAIR AND ADEQUATE TO
ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT
IN THE PROPOSED ISSUE.
(d) BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE OFFER DOCUMENT ARE
REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID.
THE FILING OF THE OFFER DOCUMENT DOES NOT, HOWEVER ABSOLVE THE COMPANY
FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT, 1956,
OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES
AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED RIGHTS ISSUE. SEBI FURTHER
RESERVES THE RIGHT TO TAKE UP AT ANY POINT OF TIME, WITH THE LEAD MANAGER
FOR ANY IRREGULARITIES OR LAPSES IN THE OFFER DOCUMENT.
CAUTION STATEMENT / DISCLAIMER CLAUSE OF THE ISSUER AND THE LEAD MANAGER
The Issuer Company and the Lead Manager accept no responsibility for statements made otherwise than in this Offer
Document or in the advertisement or in any other material issued by or at the instance of the Company and the Lead
Manager and any one placing reliance on any other source of information would be doing so at his/her/their own risks.
DISCLAIMER IN RESPECT OF JURISDICTION
This offer is being made in India to persons resident in India (including Indian nationals resident in India who are majors,
Hindu Undivided Families, companies, corporate bodies and societies registered under the applicable laws in India and
authorised to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks,
regional rural banks, co-operative banks (subject to RBI permission), Trusts registered under the Societies Registration
Act, 1860, or any other Trust law and who are authorised under their constitution to hold and invest in shares), Foreign
Collaborators and to NRIs, OCBs and FIIs as defined under the Indian laws. This Offer Document does not, however,
constitute an offer to sell or an invitation to subscribe to securities issued hereby in any jurisdiction other than India. Any
person into whose possession this Offer Document comes is required to inform himself about and to observe any such
restrictions. Any dispute arising out of this Offer will be subject to the jurisdiction of appropriate court(s) in Coimbatore,
State of Tamilnadu, India only.
No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for
that purpose, except that this Offer Document has been submitted to the SEBI. Accordingly, the equity shares represented
thereby may not be offered or sold, directly or indirectly, and this Offer Document may not be distributed, in any
jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of Offer
Document nor any sale hereunder shall, under any circumstances, create any implication that there has been no change
in the affairs of the Sakthi Finance Ltd. since the date hereof or that the information contained herein is correct as of
any time subsequent to this date.
LISTING
Presently the Equity shares of SFL are listed on Bombay Stock Exchange Limited (BSE) (Designated Stock Exchange)
and Madras Stock Exchange of India Ltd. (MSE)
The Company has received in-principle approval from BSE vide its letter no. DCS/PREF/JA/IP-RT/510/07-08 dated
01/06/2007 and MSE vide its letter no. MSE/DS/LD/738/385/07 dated 05/06/2007 for listing of the equity share being
issued in terms of this Letter of Offer.
If the permissions to deal in and for an official quotation of the equity shares are not granted by the stock exchange, the
Company shall forthwith repay, without interest, all monies received from the applicants. In case of delay interest shall
be paid in accordance with the provisions of Section 73 of the Act.
116
DISCLAIMER CLAUSE OF THE BOMBAY STOCK EXCHANGE LIMITED (BSE), THE DESIGNATED STOCK
EXCHANGE
Bombay Stock Exchange Limited (the Exchange) has given vide its letter dated 01/06/2007, permission to this Company
to use the Exchange’s name in this Letter of Offer as one of the Stock Exchanges on which this Company’s securities
are proposed to be listed. The Exchange has scrutinized this letter of offer for its limited internal purpose of deciding
on the matter of granting the aforesaid permission to the Company. The Exchange does not in any manner:
(i) Warrant, certify or endorse the correctness or completeness of any of the contents of this letter of offer; or
(ii) Warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or
(iii) Take any responsibility for the financial or other soundness of this Company, its promoters, its management or any
scheme or project of this Company;
And it should not for any reason be deemed or construed that this letter of offer has been cleared or approved by the
Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so
pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange 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 for any other reason whatsoever.
DISCLAIMER CLAUSE OF THE MADRAS STOCK EXCHANGE LTD. (MSE)

Madras Stock Exchange Limited (MSE), has, vide their letter dated 05/06/2007 given permission to the Issuer to use the
name of the Exchange in this Letter of Offer as one of the Stock Exchanges on which this Issuer’s securities are proposed
to be listed. MSE has scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting
the aforesaid permission to the Issuer. MSE does not in any manner warrant, certify or endorse the correctness or
completeness of any of the contents of this Letter of Offer; or warrant that this Issuer’s securities will be listed or will
continue to be listed on the Exchange; or take any responsibility for the financial or other soundness of this Issuer, its
Promoters, its Management or any scheme or project of this Issuer; and it should not for any reason be deemed or
construed that this Letter of Offer has been cleared or approved by MSE. Every person who desires to apply for or
otherwise acquires any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and
shall not have any claim against MSE, 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 in the Letter of
Offer or any other reason whatsoever.
FILING
A copy of this Letter of Offer has been filed with SEBI, 3rd Floor, D’Monte Building, 32 D’Monte Colony, TTK Road,
Alwarpet, Chennai - 600 018, Bombay Stock Exchange Ltd., (BSE) (Designated Stock Exchange) Phiroze Jeejeebhoy
Towers, Dalal Street, Fort, Mumbai (BSE) and with Madras Stock Exchange Ltd. 11 Second Line Beach, Post Box No.
183, Chennai - 600 001
IMPERSONATION
Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies
Act, 1956 which is reproduced below:
“Any person who-
(a) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein,
or
(b) otherwise induces a Company to allot or register any transfer of shares therein to him, or any other person
in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years.”
CONSENTS
Consents in writing of: (a) the Directors, the Company Secretary and Compliance Officer, the Auditors, Bankers to the
Company and Bankers to this Issue; and (b) Lead Manager to this Issue, Registrar to this Issue and legal advisors to the
Issue to act in their respective capacities have been obtained and filed with Stock Exchanges at the time of filing this
Letter of Offer and such consents have not been withdrawn up to the time of delivery of the Letter of Offer for registration
with the stock exchanges.
117
The Auditors of the Company have given their written consent for the inclusion of their Report in the form and content
as appearing in this Offer Document and also the tax benefits accruing to the Company and its members and such consents
and reports have not been withdrawn up to the time of delivery of the Letter of Offer for registration with the Stock
Exchanges.
EXPERT OPINION
Except as stated elsewhere in this Offer Document, the Company has not obtained any expert opinions.
EXPENSES OF THE ISSUE

The total expenses of the issue are estimated to be around Rs. 50.00 Lacs. All expenses with respect to the issue would
be met out of the proceeds of the issue. The split of issue expenses is as under: -
(Rs. in lakhs)
Activity Estimated % of total % of total
Expense issue expenses issue size
Fees to the intermediaries 30.00 60.00 2.99
Printing & Stationery and Postage expenses 10.00 20.00 1.00
Advertisement 5.00 10.00 0.50
Miscellaneous Expenses 5.00 10.00 0.50
Total estimated Issue expenses 50.00 100.00 4.98
Fees payable to Lead Manager

The total fees payable to the Lead Manager will be as per the Memorandum of Understanding signed amongst the
company and the Lead Manager, a copy of which is available for inspection at the Registered office of SFL.
Fees payable to Registrar to the Issue
The total fees payable to the Registrar to the issue will be as per the Memorandum of Understanding signed amongst
the company and the Registrar to the issue, a copy of which is available for inspection at the registered office of SFL.
UNDERWRITING COMMISSION, BROKERAGE AND SELLING COMMISSION

No Underwriting, Brokerage and selling Commission will be payable for this issue.
PREVIOUS ISSUE DETAILS

The company has not made any public/rights issue of its equity shares during the last five years.
ISSUES OTHERWISE THAN FOR CASH

The Company has not made any issue otherwise than for cash.
COMMISSION AND BROKERAGE ON PREVIOUS ISSUES

The Company has not made any Public / Rights Issue during last five years, hence no commission or brokerage has been
paid.
118
PROMISE VIS-À-VIS PERFORMANCE
a) Of the Company :
Rights Issue - 1995
The Company came out with a Issue of 37,05,984 equity shares of Rs.10/- each on rights basis to the existing equity
share holders of SFL for cash at a premium of Rs. 20/-per share in the ratio of three shares for every five shares
held aggregating to Rs. 11,11,79,520 through the Letter of Offer dated 15/09/1995. The Issue was made with the
object to part finance the increased requirement of funds due to increased volume of business.
The promise Vs performance in respect of the rights issue is as under:
(Rs. in Lacs)
Projection as indicated in the
Particulars Actual performance During
Letter of Offer Dated 15/9/1995
1995-96 1996-97 1997-98 1995-96 1996-97 1997-98
Finance Charges 4810 6450 8108 4299.21 4631.20 4467.52
Lease Rentals 857 1172 1560 892.93 1217.56 1219.20
Other Income 624 551 601 590.60 686.87 824.93
Total income 6291 8173 10269 5783 6535.63 6512
Profit before tax 701 1134 1491 536 439 110
Profit after tax 701 1034 1291 536 382 97
Equity capital 988 988 988 992 992 992
Preference Capital 500 500 500 0 0 0
Free Reserves 2950 3675 4656 2753 2794 2504
EPS (Rs.) 6.38 9.75 12.35 5.40 3.86 0.98
Book Value per share (Rs) 39.85 47.20 57.13 37.24 37.71 34.85
Reasons for shortfall: There was a slow down of economic activity owing to tight money market conditions and the
attendant resource crunch. Consequently there was steep increase in cost of funds. Further the recessionary conditions
prevailing in some major industries affected the transport industry leading to poor off take of trucks and transport vehicles
thereby affecting the Company’s business which had an impact on the profitability of the Company. Further, the write-
off of Non-Performing assets also contributed to the reduction in profits. These conditions prevailed over the period
1995-98 and hence, Company could not achieve the projected financial performance.
Rights Issue - 1993

The Company came out with a Rights Issue of 32,10,520 equity shares of Rs.10/- each for cash at a premium of Rs. 20/
-per share aggregating to Rs. 9,63,15,600 through the Letter of Offer dated 19/03/1993 as detailed hereunder:
● 30,88,320 equity shares of Rs, 10/- each for cash at a Premium of Rs 20/- per share to the shareholders of the
company on Rights basis aggregating Rs. 9,26,49,600
● 1,22,200 equity shares of Rs, 10/- each for cash at a Premium of Rs 20/- per share to the employees of the company
(including Indian working Directors/Workers) on an Equitable basis under the Employees Stock Option Scheme
aggregating Rs. 36,66,000
The main object of the issue was to augment the Company’s funds for deployment in hire- purchase activities.
119
The promise Vs performance in respect of the rights issue was as under:

(Rs. in Lacs)
Projection as indicated in the
Particulars Actual performance During
Letter of Offer Dated 19/3/1993
1993 1994 1995 1993 1994 1995
Finance Charges 1945.92 2252.84 2705.61 2215.24 2273.62 2968.44
Lease Rentals 475.47 976.21 1603.94 304.43 600.98 1017.54
Other income 773.47 857.21 940.20 494.72 848.37 965.55
Total income 3194.86 4086.26 5249.75 3014.39 3722.97 4951.53
Gross Profit before 2716.26 3518.97 4573.91 2552.43 3050.97 4072.89
interest and depreciation
Profit before tax 328.90 564.50 889.77 301.37 400.06 507.94
Profit after tax 313.43 534.44 572.89 301.37 400.06 507.94
EPS (RS) 10.15 8.49 9.10 9.75 6.48 6.54
Equity capital 308.83 629.88 629.88 308.83 617.66 617.66
Free Reserves 1638.19 2672.45 3093.40 1558.23 1571.32 1824.68
Book Value per share (Rs) 63.01 52.43 59.11 60.46 35.44 39.54
Networth 1945.77 3302.30 3723.28 1867.06 2190.23 3343.59
Reasons for shortfall: Even though the estimates for the three year were not off the mark as far as top line is concerned
profits were affected during the three year period 1992-1995. The main reason being the economy had suffered a drag
from an extended contraction on account of lower demand and rising costs such as interest, wages and other operational
expenses. Owing to the competitive pressure such increase on cost could not be transferred to customers by way of
increase in price. The reduction in profit was also due to writing off of non-performing assets.
Rights Issue –1988

The company came out with a Rights Issue of 10,38,320 equity shares for cash at par during 1988
b) Listed Ventures of Promoters :
Sakthi Sugars Ltd,
Rights Issue - 1992
The Company came out with a Issue of 44,95,025 equity shares of Rs.10/- each on rights basis to the existing equity
share holders of Sakthi Sugar for cash at a premium of Rs. 35/-per share aggregating to Rs. 20,22,76,125 through the
Letter of Offer dated 30/09/1992. The main object of the issue was to part finance the cost of project of the Company’s
new sugar unit at Orissa.
The promise Vs performance in respect of the rights issue is as under:
(Rs. in lacs)
Particulars As on 31.3.1993 As on 31.3.1994 As on 31.3.1995
Promise as Actual Promise as Actual Promise as Actual
given in the performance given in the performance given in the performance
offer offer offer
document document document
Total Income 13850 11713 14617 18299 15777 22882
Gross Profit before 2900 2088 3310 3525 3783 4791
interest and Depreciation
Net Profit 938 615 868 1032 1036 1077
Equity capital 1061 1049 1061 1213 1061 1213
Book Value per share (Rs.) 46.24 49.92 62.28 50.39 70.19 58.72
Earnings per share (Rs.) 8.66 5.86 8.00 8.22 9.58 8.23
Networth 5901 5283 6608 7322 7447 7609
120
Reasons for shortfall:
1. Total Income:
In the Financial Year ended 31/03/1993 the actual income amounted to Rs. 11713 lacs as against the promised total
income of Rs. 13,850 lacs made in the Rights issue offer document. It was mentioned in the Offer Document that the
trial run of the new project in Orissa would be completed in December 1992 and commercial production of the same
shall commence by the end of January 1993. But due to some unforeseen circumstances, there was some delay in
conducting trial run and thereby the commencement of commercial production that took place only in the early part of
1993-94. Hence, as a result of lower production as compared to the expected, there was a shortfall in the income,
consequently the profit was also lower.
Outstanding Debentures or Bonds

As on the date of filing of this Letter of Offer, SFL does not have any Bond Issue. However the company has secured
loans in the form of Non-Convertible Debentures to the extent of Rs. 6,403.41 lacs as on 31/12/2006.
Outstanding Preference Shares

As on the date of filing of this Letter of Offer, the Company does not have any outstanding preference shares.
STOCK MARKET DATA FOR SHARES OF THE COMPANY

The equity shares of the company are listed on Bombay Stock Exchange Ltd. (BSE) and Madras Stock Exchange Ltd.
(MSE).
The equity shares of SFL have not been traded on Madras Stock Exchange Ltd. (MSE) for the past six months.
The stock market data for the equity shares on the BSE are as follows:
High Low
Volume Volume Total
on date on date Average Volume
Particulars High Date of high Low Date of Low Price (no. of
(Rs) (no of (Rs) (no of (Rs.) shares)
shares) shares)
2004 9.25 15/12/2004 5,050 2.35 23/03/2004 1,000 4.49 36,70,44

2005 14.73 19/07/2005 38,769 6.00 31/01/2005 4,355 9.77 11,61,463
2006 22.08 25/01/2006 45,172 8.63 27/07/2006 1,001 13.54 9,59,447
April 2007 15.26 09/04/2007 8,157 11.08 16/04/2007 342 12.83 43,206
May 2007 14.15 28/05/2007 882 10.92 09/05/2007 102 11.96 24,808
June 2007 15.70 27/06/2007 6,600 10.81 07/06/2007 75 12.60 6,600
July 2007 15.50 10/07/2007 12,310 11.80 27/07/2007 700 13.36 68,487
August 2007 16.01 21/08/2007 16,242 12.20 03/08/2007 2,361 13.52 60,409
September 2007 16.50 19/09/2007 7,312 12.10 17/09/2007 363 13.89 78,793
121
Week end price of equity Shares of SFL on the BSE.

Week ended Price (Rs)
26/10/2007 14.45
19/10/2007 14.56
12/10/2007 13.50
05/10/2007 14.05
The market price of the equity shares of the company at BSE as on 23/04/2007, the date on which the Board of
Directors decided to make the current Offer is Rs. 12.58/-.
❊ The equity shares of the company were in no delivery period from to 24/10/2007 to 30/10/2007
❊ The cum-rights closing price of the shares of the company as on 23/10/2007 was Rs. 14.45 on BSE.
❊ The ex-rights closing price of the shares of the company as on 24/10/2007 was Rs. 14.97 on BSE.
INVESTOR GRIEVANCE REDRESSAL SYSTEM

Sakthi Finance Limited
The investor grievances against the Company will be handled by the Registrars and Transfer Agent in consultation with
the secretarial department of the Company. To handle the grievances received, the Company has appointed Mr. S A
Subramanian, as the Compliance Officer. He will supervise redressal of complaints received from the investors at the
office of the Company as well as the Registrars to the Rights Issue and ensure timely settlement.
All grievances related to the offer may be addressed to the Registrar to the Rights Issue quoting the application No.
(Including prefix), Number of equity shares applied for, amount paid on application, date, Bank and branch/ Collection
center where application was submitted.
The normal time taken by SFL for redressal of investor grievance is given below:-
Sl. Normal Time Taken

Type of Request
No (No of Days)
1 Issue of Duplicate Share Certificate 10
2 Transfer of shares 7
3 Transmission of shares 7
4 Demat/remat of shares 4
5 Non receipt of dividend 3
6 Non receipt of Annual Report 3
7 Change of residential address/ Bank mandate 3
8 Consolidation/split of share certificates 4
There are no pending investor complaint against the Company.
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For Group Companies
The normal time taken by SSL, SCSL & SBTL for redressal of investor grievance is given below:-
Sl. Normal Time Taken Normal Time Taken Normal Time Taken
Type of Request
No (No of Days) (No of Days) (No of Days)
(SSL) (SCSL) SBTL
1 Issue of Duplicate Share Certificate 30 15 35
2 Transfer of shares 15 15 20
3 Transmission of shares 15 15 20
4 Demat/remat of shares 7 -10 7 N.A.
5 Non receipt of dividend 7 7 10
6 Non receipt of Annual Report 7 5 15
7 Change of residential address/ 7 5 10
Bank mandate
8 Consolidation/split of share certificates 15 15 20
CHANGE IN AUDITORS
There has been no change in the Auditors of the company during the past three years.
CAPITALISATION OF RESERVES OR PROFITS
The company has not capitalized its reserves or profit during the last five years.
REVALUATION OF ASSETS
The company has not revalued its asset during the last five years.
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SECTION VII - OFFERING INFORMATION

A. TERMS OF THE ISSUE
The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of this Letter
of Offer, the CAF, the Memorandum and Articles of Association of the Company, the approvals from the Government
of India, FIPB and RBI, if applicable, the provisions of the Act, guidelines issued by SEBI, guidelines, notifications and
regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities
and bodies from time to time, Listing Agreements entered into by the Company with Stock Exchanges, terms and
conditions as stipulated in the allotment advice or letter of allotment or Security Certificate and rules as may be applicable
and introduced from time to time, the FEMA and the Letters of Allotment/Equity Shares to be issued. Over and above
such terms and conditions, the Equity Shares shall also be subject to applicable laws, guidelines, notifications and
regulations relating to issue of capital and listing of securities issued from time to time by SEBI, the Government of India,
RBI and or other authorities.
Ranking of equity shares

The new Equity Shares proposed to be issued shall rank in all respects pari-passu with existing fully paid up Equity
Shares.
Mode of payment of dividend

The dividend is paid to all the eligible shareholders as per the provisions of Companies Act.
Face value & issue price

The Face Value of Equity Shares of the company is Rs.10/-. The Equity Shares of Rs. 10/- each are being issued at par
i.e. at a price of Rs. 10/- per share in the present rights issue.
Rights of equity shareholders

The Shareholders are entitled to receive dividend, as and when declared and bonus and rights shares, as and when issued.
Further, the rights of the above and other holders of shares are subject to the provisions of the Companies Act, 1956,
the Memorandum and the Articles of Association of the Company, the terms of this Letter of Offer and other laws as
applicable from time to time.
Market lot
The market lot for the Equity Shares held in the demat mode is one share. In case of physical certificate, the Company
would issue one certificate for the Equity Shares allotted to one person (“Consolidated Certificate”). In respect of
consolidated certificate, the Company will, only upon request from the equity shareholder, split and return such consolidated
certificate into smaller denomination within 7 days time in conformity with the Clause 3 of the Listing Agreement. No
fee would be charged by the Company for splitting the consolidated certificate.
Nomination
In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate
any person by filling the relevant details in the CAF in the space provided for this purpose.
The sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders (being individual(s)
may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may
be, shall become entitled to the Equity Shares. Person(s), being a nominee, becoming entitled to the Equity Shares by
reason of the death of the original Equity Shareholder(s), shall be entitled to the same rights to which he would be entitled
if he/she were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may
also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in
the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the
sale/disposal of the Equity Share by the person nominating. A buyer will be entitled to make a fresh nomination in the
manner prescribed. When two or more persons hold the Equity Share(s), the nominee shall become entitled to receive
the shares only on the demise of all the holders.
Fresh nominations can be made only in the prescribed form available on request at the office of the Company located
at Sakthi Finance Limited New No.62, Dr. Nanjappa Road, Post Box No. 3745, Coimbatore - 641 018 or such other place
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at such addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant
portion in the CAF. Only one nomination would be applicable for one folio. Hence, in case the shareholder(s) has (have)
already registered the nomination with the Company, no further nomination need to be made for Equity Shares to be
allotted in this Issue under the same folio.
In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination
for the Equity Shares to be allotted in this Issue. Nominations registered with respective Depository Participant
of the applicant would prevail. If the applicant requires to change the nomination, they are requested to inform
their respective Depository Participant.
Minimum subscription
i) If the Company does not receive minimum subscription of 90% of the issue including devolvement of underwriters,
the entire subscription shall be refunded to the applicants within forty two days from the date of closure of the issue.
ii) If there is delay in the refund of subscription by more than 8 days after the company becomes liable to pay the
subscription amount (i.e., forty two days after closure of the issue), the company will pay interest for the delayed
period, at prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.
Disposal of odd lots

The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this Issue. The
Company will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity
Shareholder.
Restrictions on transfer and transmission of shares and on their consolidation/ splitting

There are no restrictions on transfer and transmission and on their consolidation/splitting of shares issued pursuant to this
issue.
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B. ISSUE PROCEDURE
BASIS OF THE OFFER
The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear
as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the electronic
form and on the Register of Members of the Company in respect of Equity Shares held in the physical form at the close
of business hours on the Record Date. The Company has in consultation with the Designated Stock Exchange fixed the
Record Date for determining the shareholders who are entitled to receive this offer for Equity Shares on a rights basis.
The Equity Shares are being offered for subscription in the ratio of One Equity Shares for every Two Equity Shares held
by the Equity Shareholders. The shareholders whose names appear as beneficial owners as per the list furnished by the
depositories in respect of the Equity Shares held in electronic form and on the register of members of the Company in
respect of the shares held in physical form on 31/10/2007 at the close of business hours shall be entitled to the Equity
Shares on the Rights basis in the ratio of One equity shares for every Two Equity Shares held by them.
OPTION TO SUBSCRIBE
Applicants to the Equity Shares of the Company issued through this Rights Issue shall be allotted the securities in
dematerialized (electronic) form at the option of the applicant. The Company has signed a tripartite agreement with
National Securities Depository Limited (NSDL) and S.K.D.C Consultants Ltd. on 13/10/2001 and with Central Depository
Services (India) Limited (CDSL) and S.K.D.C Consultants Ltd. on 26/09/2001, which enables the Investors to hold and
trade in securities in a dematerialised form, instead of holding the securities in the form of physical certificates.
RIGHTS ENTITLEMENT
As your name appears as beneficial owner in respect of the shares held in the electronic form or appears in the register
of members as an equity shareholder of the Company on the Record Date, you are entitled to this Rights Offer. The
number of Equity Shares to which you are entitled is shown in Block I of Part A of the enclosed CAF and as shown
in Part A of the enclosed CAF.
FRACTIONAL ENTITLEMENT
On applying the rights ratio the rights entitlement may lead to fractional entitlement to some of the shareholders. In such
an event the fractional entitlement will be rounded off to the next higher integer. The additional entitlement shall be made
available out of the entitlement of one of the promoters. The adjustment will be made in the composite application form
so as to ensure the allocation is made within the issue size.
JOINT-HOLDERS
Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed (so far as the
company is concerned) to hold the same as joint-holders with benefits of survivorship subject to provisions contained
in the Articles.
OFFER TO NON-RESIDENT EQUITY SHAREHOLDERS/APPLICANTS
Presently 25,11,450 Equity Shares aggregating to 12.51% of the present issued capital are held by NRIs/FIIs on repatriation
basis. Applications received from NRIs and other NR shareholders for allotment of Equity Shares shall be, inter alia,
subject to the conditions imposed from time to time by the RBI under the FEMA in the matter of refund of application
moneys, allotment of Equity Shares, issue of Letter of Allotment / share certificates, payment of interest, dividends, etc.
General permission has been granted to any person resident outside India to apply shares offered on rights basis by an
Indian Company in terms of FEMA and the rules and regulations thereunder. Vide notification dated June 18, 2003,
bearing number FEMA 94/2003, RBI has granted general permission to Indian companies to issue rights/bonus shares
to existing non-resident shareholders. The existing non-resident shareholders may apply for issue of additional shares and
the Company may allot the same subject to the condition that the overall issue of shares to non-residents in the total paid
up capital does not exceed the sectoral cap. In other words, non-residents may subscribe for additional shares over and
above shares offered on rights basis by the company and renounce the shares offered in full or part thereof in favour of
a person named by them. Residents may subscribe for additional shares over and above the shares offered on rights basis
by the Company and also renounce the shares offered either in full or part thereof in favour of a person named by them.
The Equity Shares issued under the Rights Issue and purchased by NR shall be subject to the same conditions including
restrictions in regard to the repatriability as are applicable to the previously held Equity Shares against which Equity
Shares under the Rights Issue are issued.
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However, as per the provisions of AP DIR circular No. 14 dated September 16, 2003 (issued by the RBI), such
shareholders who have been allotted the Equity Shares as OCBs would not be permitted to participate in the Rights Issue.
Accordingly, shareholders/ applicants who are OCBs and wishing to participate in the Rights Issue would be required to
submit approvals in relation thereto from the FIPB and the RBI. The Board of Directors may at its absolute discretion,
agree to such terms and conditions as may be stipulated by RBI while approving the allotment of Equity Shares, payment
of dividend etc. to the Equity Shareholders who are NR.
NOTICES
All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English national
daily with wide circulation, one Hindi national daily with wide circulation and/or, will be sent by ordinary post to the
registered holders of the Equity Share(s) from time to time.
ISSUE OF DUPLICATE EQUITY SHARE CERTIFICATE

If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity Shares are
fully utilized, the Company against the surrender of such Certificate(s) may replace the same, provided that the same will
be replaced as aforesaid only if the Certificate numbers and the Distinctive numbers are legible.
If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the
satisfaction of the Company and upon furnishing such indemnity/ surety and/or such other documents as the Company
may deem adequate, duplicate Equity Share Certificate(s) shall be issued.
OPTIONS AVAILABLE TO THE EQUITY SHAREHOLDERS

The Equity Shareholders will be having the following five options:
● Apply for his entitlement in part
● Apply for his entitlement in part and renounce the other part
● Renounce his entire entitlement
● Apply for his entitlement in full
● Apply for his entitlement in full and apply for additional Equity Shares
HOW TO APPLY
For Resident Indian Shareholders
Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed
in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead
Managers or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications as
per instructions given in the Letter of Offer. Payment should be made in cash (not more than Rs.20,000/-) or by cheque/
bank draft/ drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member
of the bankers clearing house located at the centre where the CAF is submitted and which is participating in the clearing
at the time of submission of the application. Outstation cheques/money orders/postal orders will not be accepted and
CAFs accompanied by such cheques/money orders/postal orders are liable to be rejected.
For Non-Resident Shareholders

Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, be
subject to the conditions as may be imposed from time to time by the RBI, in the matter of refund of application moneys,
allotment of Equity Shares, issue of letters of allotment/certificates/ payment of dividends etc. Letter of Offer and CAF
shall be dispatched to non-resident Equity Shareholders in India only.
For applicants residing at places other than designated Bank collecting branches.
Applicants residing at places other than the cities where the Bank collection centres have been opened should send their
completed CAF by registered post/speed post to the Registrars to the Issue, S.K.D.C Consultants Ltd. along with demand
drafts, net of demand draft and postal charges, payable at Coimbatore in favour of “SFL - Rights Issue” crossed
“A/c Payee only” so that the same are received on or before closure of the Issue i.e 26/12/2007.
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The Company will not be liable for any postal delays and applications received through mail after the closure of the Issue
are liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other manner
except as mentioned below.
All application forms duly completed together with cash/cheque/demand draft for the application money must be
submitted before the close of the subscription list to the Bankers to the Issue named herein or to any of its
branches mentioned on the reverse of the CAF. The CAF along with application money must not be sent to the
Company or the Lead Manager to the Issue or the Registrar to the Issue except as mentioned above. The
applications are required to strictly adhere to these instructions. Failure to do so could result in the application
being liable to be rejected by the Company, the Lead Manager and the Registrar not having any liabilities to such
applicants.
The CAF consists of four parts:

Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares
Part B: Form for renunciation
Part C: Form for application for renouncees
Part D: Form for request for split application forms
You may exercise any one of the following options with regard to the Equity Shares offered to you, using the enclosed
CAF:
Sl. No Options available Action Required
1. Accept whole or part of the Equity Shares offered Fill in and sign Part A indicating in Block III
to you without renouncing the balance of Part A the number of Equity Shares accepted. If
you accept all the equity share offered in Block II
of Part A you may apply for additional Equity
Shares. Indicate in Block IV the additional Equity
Shares applied for.
2. Renounce all the Equity Shares offered to you to Fill in and sign Part B indicating the number of
one person (joint renouncees are deemed as one Equity Shares renounced in Block VII and handover
person) without your applying for any of the the ENTIRE FORM to the renouncee. The
Equity Shares offered to you. renouncee/ joint renouncee(s) must fill in and sign
Part C of CAF.
3. Accept a part of your entitlement and renounce Fill in and sign Part D for the Split Form and send
the balance or part of it to one or more the ENTIRE CAF to the Registrar to the Issue.
Renouncee(s).
OR On receipt of Split Forms :
4. Renounce your entitlement or part of it to one or a For the Equity Shares you are accepting, fill in
more persons (joint renouncees are deemed as and sign Part A.
one person). b For the Equity Shares you are renouncing fill in
and sign Part B indicating the number of Equity
Shares renounced in Block VII. Each of the
renouncees should fill in and sign Part C.
Note: If application is made jointly with any other person(s) who is/are not already joint holders or change in the
sequence of names of joint holders, it will amount to renunciation and the procedure mentioned in (2) above will have
to be followed.
Acceptance of Offer
You may accept the Offer and apply for the Equity Shares offered, either in full or in part by filling Block III of Part
A of the enclosed CAF and submit the same along with the application money payable to the bankers to the Issue or any
of the branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue
Closing Date or such extended time as may be specified by the Board thereof in this regard. Applicants at centers not
covered by the branches of collecting banks can send their CAF together with the demand draft, net of demand draft and
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postal charges, payable at Coimbatore to the Registrar to the Issue by registered post. Such applications sent to anyone
other than the Registrar to the Issue are liable to be rejected.
You may apply for the Equity Shares offered wholly or in part by filling in the enclosed CAF and submitting the same
along with the application money to the Bankers to the Issue or its designated branches on or before the closure of the
subscription list. The CAF should be complete in all respects, as explained in the INSTRUCTIONS indicated in the CAF.
The CAF should not be detached under any circumstances, otherwise the application(s) will be rejected forthwith.
APPLICATION FOR ADDITIONAL EQUITY SHARES

You are also eligible to apply for additional Equity Shares over and above the number of Equity Shares offered to you
provided you have applied for all the shares offered to you without renouncing them in full or in part. However, the
additional Equity Shares cannot be renounced in full or in part, in favour of any other person(s).
If you desire to apply for additional Equity Shares, you may fill in the number of additional Equity Shares in Part A of
the CAF. The allotment of additional Equity Shares will be at the sole discretion of the Board on an equitable basis with
reference to the number of Equity Shares held by you on the Record Date in consultation with the Designated Stock
Exchange. In the case of requests for additional Equity Shares by Non Residents, the allotment will be subject to the
approval of Reserve Bank of India. The Board may reject any application for additional Equity Shares without assigning
any reasons thereof. The renouncees can also make an application for additional shares.
Renunciation
You may renounce all or any of the Equity Shares, you are entitled to in favour of any individual, limited companies,
or statutory corporations / institutions. However renunciation in favour of more than three persons as joint holders, trust
or society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable trust laws and
is authorised under its constitution to hold shares in a company), OCBs, minors (unless acting through natural or legal
guardians), Partnership Firms, or their nominees, or any of them will not be accepted.
Any renunciation from Resident(s) to Non- Resident(s) is subject to the renouncer(s)/ renouncee(s) obtaining requisite
approval(s) of the Reserve Bank of India (RBI) and the said permission must be attached to the CAF.
Procedure for renunciation

(i) To Renounce in WHOLE
If you wish to renounce this offer in whole, please complete PART ‘B’ of the CAF enclosed with the Letter of Offer
for the number of Equity Shares renounced and deliver the CAF duly signed to the person(s) in whose favour the
Equity Shares are so renounced. All joint holders must sign as per specimen signatures recorded with the Company
at the place provided for the purpose and in the same order.
The person(s), in whose favour the offer has been renounced (renouncees) should complete and sign PART C of the
CAF. In case of joint renouncees, all joint renouncees must sign.
(ii) To Renounce in PART
If you wish to either accept this offer in part and renounce the balance of this offer the CAF must first be split into
the requisite number of forms, by applying to the Registrar to the Issue. Please indicate your requirement of split
forms in the space provided for this purpose in PART D of the CAF and return the entire CAF to the Registrar to
the Issue so as to reach them latest by the close of business hours on or before the last date for receiving requests
for split forms i.e. 07/12/2007.
If you wish to apply for Equity Shares jointly with any person(s) who is/are not already joint holder(s) with you, then
it would amount to renunciation and the procedure of renunciation as mentioned above shall have to be followed. Even
a change in the sequence of the name of joint holders shall amount to renunciation and the procedure as stated above
shall have to be followed.
Further, this right of renunciation is subject to the express condition that the Board shall be entitled in its absolute and
unqualified discretion to reject any such request for allotment of Equity Shares from renouncee(s) without assigning any
reason thereof save where the Equity Shares have been renounced in favour of a person who is already a member of the
Company.
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Please note that:

a) Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made.
If used, this will render the application invalid.
b) Only the person to whom this Letter of Offer has been addressed and NOT the renouncees shall be entitled to split
forms. Forms once split cannot be resplit.
Request for spilt forms:

● Request for Split Forms should be addressed to the Registrar to the Issue so as to reach them on or before the last
date for receiving of request for split forms by filling in PART D of the CAF.
● Requests for Split Forms will be entertained only once.
Availability of duplicate CAF
In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate
CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID number and his/
her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the
Registrar to the Issue within 15 days from the Issue Opening Date. Please note that those who are making the application
in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/
found subsequently. If the applicant violates any of these requirements, he / she shall face the risk of rejection of both
the applications as well as forfeiture of amounts remitted along with the applications.
Application on Plain Paper
An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may
make an application to subscribe to the Rights Issue on plain paper, along with a Demand Draft payable at Coimbatore
which should be drawn in favour of ”SFL- Rights Issue” crossed A/c Payee Only and send the same by registered post
directly to the Registrar to the Issue.
The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen
recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date i.e
26/12/2007 and should contain the following particulars:
● Name of Issuer, being Sakthi Finance Limited.
● Name and address of the Equity Shareholder including joint holders
● Registered Folio Number/ DP and Client ID no.
● Number of shares held as on 31/10/2007 (Record Date).
● Certificate numbers and distinctive numbers, if held in physical form
● Number of Rights Equity Shares entitled
● Number of Rights Equity Shares applied for out of entitlement
● Number of additional Equity Shares applied for, if any
● Total number of Equity Shares applied for
● Total amount paid at the rate of Rs. 10/-per Equity Share
● Particulars of cheque/draft
● Savings/Current Account Number and name and address of the Bank where the Equity Shareholder will be depositing
the refund order
● PAN number allotted under the Income-Tax Act, 1961 and also submit a photo copy of the PAN card(s) or a
communication from the Income Tax authority indicating allotment of PAN (“PAN communication”) along with the
application for the purpose of verification of the number. Applicants who do not have PAN are required to provide
a declaration in Form 60 / Form 61 prescribed under the I.T. Act along with the application. Applications without
this photocopy / PAN communication / declaration will be considered incomplete and are liable to be rejected.
● In case of Non-Resident shareholders, NRE/FCNR/NRO Account No., name and address of the bank and branch.
● Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the
Company
● Payment in such cases, should be through a demand draft, net of demand draft and postal charges, payable at
Coimbatore be drawn in favour of “SFL - Rights Issue” crossed “A/c Payee only”.
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Please note that those who are making the application on plain paper shall not be entitled to renounce their rights and
should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the
applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications as well as
forfeiture of amounts remitted along with the applications. The Company shall refund such application amount to the
applicant without any interest thereon.
Quoting of PAN/GIR no. in the application forms
The Shareholder, or in the case of a application in joint names, each of Shareholder, should mention his/her Permanent
Account Number (PAN) allotted under the I.T. Act. SEBI has issued a circular no. MRD/DoP/Cir-05/2007 DATED April
27, 2007 requiring that with effect from July 2, 2007, the PAN would be the sole identification number for participants
transacting in the securities market, irrespective of the amount of transaction. In case the PAN has not been allotted,
mention “Applied for” or “Not Applicable” in the appropriate places and submit Form 60 or Form 61 as the case may
be together with permissible documents as proof of address. Applications without this information and documents will
be considered incomplete and are liable to be rejected. It is to be specifically noted that Applicant should not submit
the GIR number instead of the PAN, as the application is liable to be rejected on this ground. In case the sole/First
Applicant and joint Applicant(s) is/are not required to obtain PAN, each of the Applicant(s) shall mention “Not Applicable”
and in the event that the sole Applicant and/or the joint applicant(s) have applied for PAN which has not yet been allotted
each of the Applicant(s) should mention “Applied for” in the CAF. Further, where the Applicant(s) has mentioned
“Applied for” or “Not Applicable”, the Sole/First Applicant and each of the Joint Applicant(s), as the case may be, would
be required to submit Form 60 (form of declaration to be filed by a person who does not have a permanent account
number and who enters into any transaction specified in Rule 114B of the Income Tax Rules, 1962), or, Form 61 (form
of declaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeable
to income-tax in respect of transactions specified in Rule 114B of the Income Tax Rules, 1962), as may be applicable,
duly filled along with a copy of any one of the following documents in support of the address: (a) Ration Card (b)
Passport (c) Driving License (d) Identity Card issued by any institution (e) Copy of the electricity bill or telephone bill
showing residential address (f) Any document or communication issued by any authority of the Central Government, State
Government or local bodies showing residential address and (g) Any other documentary evidence in support of address
given in the declaration. It may be noted that Form 60 and Form 61 have been amended vide a notification issued
on December 1, 2004 by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. All
Applicants are requested to furnish, where applicable, the revised Form 60 or Form 61 as the case may be.
Last date for submission of CAF
The last date for receipt of CAF by the Bankers to the Issue together with the amount payable on application is
26/12/2007. If the relevant CAF together with amount payable thereunder is not received by the Bankers/Registrar to the
Issue on or before the close of banking hours on the aforesaid last date the offer contained in this Letter of Offer shall
be deemed to have been declined and the Board shall be at liberty to dispose of the Equity Shares hereby offered as
provided under “Basis of Allotment”.
Incomplete application
CAFs which are not complete or are not accompanied with the application money payable are liable to be rejected.
TERMS OF PAYMENT
The entire amount of Rs. 10/- per share is payable on application by all shareholders/applicants.
MODE OF PAYMENT
For Resident Shareholders/Applicants
Payment(s) must be made by cheque/demand draft and drawn on any bank (including a co-operative bank) which is
situated at and is a member or a sub-member of the Bankers’ Clearing House located at the centre where the CAF is
submitted. A separate cheque/draft must accompany each CAF. Only one mode of payment should be used. Money
orders, postal orders and outstation cheques will not be accepted and applications accompanied by any such instruments
will be rejected.
Shareholders/Applicants residing at places other than those mentioned in the CAF and applicants who wish to send their
applications but not having collection centres should send their application by Registered Post, ONLY to the Registrar
to the Issue enclosing a demand draft drawn on a clearing Bank and payable at Coimbatore ONLY net of bank charges
and postal charges, before the closure of the issue.
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Such cheque/drafts should be payable to “SFL - Rights Issue”. All cheques/ drafts must be crossed ‘A/c Payee only’.
No receipt will be issued for the application money received. However, the Collection Centre receiving the application
will acknowledge receipt of the application by stamping and returning the acknowledgement slip at the bottom of each
CAF. The Company is not responsible for any postal delay/ loss in transit on this account.
For Non-Resident Shareholders/Applicants
As regards the application by non-resident equity shareholders, the following further conditions shall apply:
Application with repatriation benefits
Payment by NRIs/ FIIs/ foreign investors must be made by demand draft/cheque payable at Coimbatore or funds remitted
from abroad in any of the following ways:
● By Indian Rupee drafts purchased from abroad and payable at Coimbatore or funds remitted from abroad (submitted
along with Foreign Inward Remittance Certificate); or
● By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Coimbatore; or
● By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable in Coimbatore; or
● FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.
All cheques/drafts submitted by non-residents applying on repatriable basis should be drawn in favour of “SFL - Rights
Issue - NR” payable at Coimbatore and crossed ‘A/c Payee only’ for the amount payable.
A separate cheque or bank draft must accompany each application form. Applicants may note that where payment is made
by drafts purchased from NRE/FCNR accounts as the case may be, an Account Debit Certificate from the bank issuing
the draft confirming that the draft has been issued by debiting the NRE/FCNR account should be enclosed with the CAF.
In the absence of the above the application shall be considered incomplete and is liable to be rejected.
In the case of NRIs who remit their application money from funds held in FCNR/NRE Accounts, refunds and other
disbursements, if any shall be credited to such account details of which should be furnished in the appropriate columns
in the CAF. In the case of NRIs who remit their application money through Indian Rupee Drafts from abroad, refunds
and other disbursements, if any will be made in US Dollars at the rate of exchange prevailing at such time subject to
the permission of RBI. The Company will not be liable for any loss on account of exchange rate fluctuation for converting
the Rupee amount into US Dollars or for collection charges charged by the applicant’s Bankers.
Application without repatriation benefits
As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above,
payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Coimbatore or
Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Coimbatore. In such cases,
the allotment of Equity Shares will be on non-repatriation basis.
All cheques/drafts submitted by non-residents applying on non-repatriation basis should be drawn in favour of “SFL -
Rights Issue” payable at Coimbatore and must be crossed ‘A/c Payee only’ for the amount payable. The CAF duly
completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the
reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank
draft must accompany each CAF.
If the payment is made by a draft purchased from an NRO account, an Account Debit Certificate from the bank issuing
the draft, confirming that the draft has been issued by debiting the NRO account, should be enclosed with the CAF. In
the absence of the above, the application shall be considered incomplete and is liable to be rejected.
New demat account shall be opened for holders who have had a change in status from resident Indian to NRI.
Note:
● In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in
Equity Shares can be remitted outside India, subject to tax, as applicable according to Income Tax Act, 1961.
● In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares
cannot be remitted outside India.
● The CAF duly completed together with the amount payable on application must be deposited with the Collecting
Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date.
A separate cheque or bank draft must accompany each CAF.
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● In case of an application received from non-residents, allotment, refunds and other distribution, if any, will be made
in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment,
remittance and subject to necessary approvals.
Payment by Stockinvest
In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003- 04 dated November 5, 2003, the Stockinvest Scheme
has been withdrawn with immediate effect. Hence, payment through Stockinvest would not be accepted in this Issue.
Application will not be accepted by the Lead Manager or by the Company.

Note on cash payment (Section 269SS)
Having regard to the provisions of Section 269 SS of the Income Tax Act, 1961, subscriptions against applications for
securities should not be effected in cash and must be effected only by ‘Account Payee’ cheques or ‘Account Payee’ bank
drafts, if the amount payable is Rs. 20,000/- or more. In case payment is effected in contravention of this provision, the
application is liable to be rejected.
FORFEITURE
The allotment shall be made only on receipt of full application money as mentioned in “Terms of Payment”. As such
there will be no partly paid-up shares emerging from this issue and hence no requirement of any forfeiture.
APPLICATION UNDER POWER OF ATTORNEY

In case of applications under Power of Attorney or by Limited Companies or Bodies Corporate or Societies registered
under the applicable laws, a certified copy of the Power of Attorney or the relevant authority, as the case may be, along
with the certified copy of the Memorandum and Articles of Association or Bye-laws, as the case may be, must be lodged
separately by registered post at the office of the Registrar to the Issue simultaneously with the submission of the CAF,
indicating the serial number of the CAF and the name of the bank and the branch office where the application is submitted
within 10 days of closure of the offer, failing which the application is liable to be rejected. In case the Power of Attorney
is already registered with the Company, then the same need not be furnished again. However, the serial number of the
Registration under which the Power of Attorney has been registered with the Company must be mentioned below the
signature of the Applicant.
BANK DETAILS OF THE APPLICANT

The applicant must fill in the relevant column in the CAF giving particulars of Savings Bank/Current Account Number
and the name of the Bank with whom such accounts is held, to enable the Registrar to the Issue to print the said details
in the Refund Orders, if any, after the name of the payees. Please note that provision of Bank Account details has
now been made mandatory and applications not containing such details are liable to be rejected.
APPLICATION NUMBER ON THE CHEQUE/DEMAND DRAFT
To avoid any misuse of instruments, the applicants are advised to write the application number and name of the first
applicant on the reverse of the cheque / demand draft.
GROUNDS FOR TECHNICAL REJECTIONS

Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following:
☞ Amount paid does not tally with the amount payable for;
☞ In case of physical shareholders, bank account details (for refund) are not given;
☞ Age of first applicant not given in case of renouncee(s);
☞ PAN photocopy/ PAN Communication/ Form 60 / Form 61 declaration not given.
☞ Cash applications for an amount exceeding Rs.20,000/-;
☞ In case of Application under power of attorney or by limited companies, corporate, trust, etc., relevant documents
are not submitted;
☞ If the signature of the existing shareholder does not match with the one given on the Application Form and for
renouncees if the signature does not match with the records available with their depositories;
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☞ If the Applicant desires to have shares in electronic form, but the CAF does not have the Applicant’s depository
account details;
☞ CAFs are not submitted by the Applicants within the time prescribed as per the CAF and the Letter of Offer;
☞ Applications not duly signed by the sole/joint Applicants;
☞ Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to invest in the
Issue;
☞ In case no corresponding record is available with the Depositories that matches three parameters, namely, names of
the Applicants (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the
beneficiary’s identity;
☞ Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local
laws) and where last available address in India has not been provided;
☞ Multiple applications.
GENERAL
(a) All applications should be made on the printed CAF provided by the Company and should be complete in all
respects. Applications which are not complete in all respects or are made otherwise than as herein provided or not
accompanied by proper application money in respect thereof will be refunded without interest.
(b) Please read the instructions in the enclosed CAF carefully.
(c) ALL COMMUNICATIONS IN CONNECTION WITH YOUR APPLICATION FOR THE EQUITY SHARES
INCLUDING ANY CHANGE IN YOUR REGISTERED ADDRESS SHOULD BE ADDRESSED TO THE
REGISTRAR TO THE ISSUE.
(d) Application Forms must be filled in ENGLISH in BLOCK LETTERS.
(e) Signatures should be either in English or Hindi or the languages specified in the Eighth Schedule to the Constitution
of India. Signatures other than in the aforementioned languages or thumb impressions must be attested by a Notary
Public or a Special Executive Magistrate under his/her official seal.
(f) In case of Joint Holders, all joint holders must sign the relevant parts of the Application Form in the same order
and as per the specimen signatures recorded with the Company.
(g) In case of joint applicants, refunds and all payments will be made to the person whose name appears first on the
application form and all communications will be addressed to him/her. To prevent any fraudulent encashment of
refund orders by third parties, the Sole/First Applicant must indicate Saving / Current Account number and the name
of the bank and its branch with whom such account is held in the space provided in the CAF for the purpose so
that Refund Orders are printed with these details after the name. Applications without this information are liable to
be rejected.
(h) The Application Form should be presented to the Bank in its entirety. If any of the Part(s) A,B,C and D of the
Application Form(s) is /are detached or separated, such application will forthwith be rejected.
(i) All shareholders must submit the CAF along with remittance only to the Bankers to the Issue mentioned elsewhere
in this Letter of Offer and not to the Company, the Registrar or the Lead Manager.
(j) Any dispute or suit action or proceedings arising out of or in relation to this Letter of Offer or in respect of any
matter or thing herein contained and claimed by either party against the other shall be instituted or adjudicated upon
or decided solely by the appropriate Court where Registered Office of the Company is situated.
(k) The last date for receipt of CAF along with the amount payable is 26/12/2007. However, the Board will have the
right to extend the same for such period as it may determine from time to time, but not exceeding 60 days from the
date of opening of the subscription list. If the CAF together with the amount payable thereunder is not received by
the bankers to the issue on or before the closure of the banking hours on the aforesaid date, or such date as may
be extended by the Board, the offer contained in this Letter of Offer shall be deemed to have been declined and the
Board shall be at liberty to dispose of the Rights hereby offered.
For further instructions please read CAF carefully.
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DEMATERIALISATION
As per the provisions of the Depositories Act, 1996, the shares of a body corporate may be held in dematerialized form
i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through electronic
mode. The equity shares of SFL are traded in the demat segment The Company has entered into a tripartite agreement
dated 13/09/2001 with the National Securities Depository Ltd. (NSDL) and S.K.D.C Consultants Ltd for dematerialisation
of the equity shares of the Company. The Company has also entered into a tripartite agreement dated 26/09/2001 with
the Central Depository Services Limited (CDSL) and S.K.D.C Consultants Ltd for dematerialisation of the equity shares
of the Company. The ISIN No. granted to the equity shares of the Company is INE302E01014.
An applicant has the option to seek allotment in physical or demat mode. An applicant who seeks allotment in demat
mode must have atleast one Beneficiary Account with any of the Depository Participants (DP) of NSDL or CDSL
registered with SEBI, prior to the application. Such applicants must necessarily fill in the details (including the Beneficiary
Account Number and Depository Participant’s ID Number) appearing under the head “Request for shares in electronic
form” in the CAF.
Applicant must indicate in the CAF, the number of shares they wish to receive in electronic form out of the total number
of equity shares applied for. In case of partial allotment, shares will first be allotted in electronic form and the balance,
if any, will be allotted in physical form.
Names in the CAF should be identical to those appearing in the account details in the Depository. In case of joint holders,
the name should necessarily be in the same sequence as they appear in the account details in the Depository.
No separate application for demat and physical shares is to be made. If such applications are made the application for
physical shares will be treated as multiple applications and rejected accordingly. It may be noted that electronic shares
can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL.
Non-transferable allotment letters/ refund orders will be directly sent to the applicant by the Registrar to the Issue.
The applicant is responsible for the correctness of the applicants demographic details given in the share application form
vis-à-vis those with his/her DP. Equity shares allotted in demat mode will be credited directly to the respective Beneficiary
Account.
DISPOSAL OF APPLICATION AND APPLICATION MONEY
The Board reserves the right to reject applications in case the application concerned is not made in terms of this Letter
of Offer. In case an application is rejected in full the whole of the application money received will be refunded to the
first named applicant and where an application is rejected in part, the excess application money will be refunded to the
first named applicant within 6 weeks from the date of closure of the subscription list in accordance with Section 73 of
the Act. If there is delay of refund of application money by more than 8 days after the Company becomes liable to pay
(i.e. forty-two days after the closure of Issue), the Company will pay interest for the delayed period at the rate prescribed
under sub-Section (2) and (2A) of Section 73 of the Act.
The subscription monies received in respect of this Issue will be kept in a separate bank account and the Company will
not have access to nor appropriate the funds until it has satisfied the Stock Exchange with suitable documentary evidence
that minimum subscription of 90% of the application money for the Issue has been received.
No acknowledgment will be issued for the application monies received by the Company. However, the Bankers to the
Issue at its collection branches to the Issue receiving the CAF as applicable as per the terms of this Letter of Offer, will
acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. Except for the
reasons stated under “Grounds for Technical Rejections” on page 133 of this Letter of Offer and subject to valid
application, acknowledgement of receipt of application money given by the collection agent shall be valid and binding
on issuer and other persons connected with the Issue.
BASIS OF ALLOTMENT
In the event of the issue being oversubscribed, the basis of allotment will be made only within the overall size of the
Rights Issue, as stated in the Letter of Offer and the Board will proceed to allot the Equity Shares in consultation with
the designated stock exchange in the following order of priority:
1. Full allotment to the Shareholders who have applied for their Rights entitlement, either in full or in part and also
the renouncee(s) who have applied for Equity Shares renounced in their favour either in full or in part (subject to
the other provisions contained under the paragraph titled “Renunciation”).
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2. Allotment to the shareholders who have applied for additional Equity Shares provided that they have applied for all
the Equity Shares offered to them, provided there is a surplus after making full allotment under (1) above. The
allotment of such additional Equity Shares will be made as far as possible on the basis of the Equity Shares held
as on the Record Date.
3. Allotment to the renouncees who have applied for all the Equity Shares renounced in their favour and have applied
for additional Equity Shares, as the Board may in its absolute discretion deem fit, provided there is a surplus after
making full allotment (1) and (2) above.
4. Allotment to any other person as the Board may in their absolute discretion deem fit, provided there is a surplus
after making full allotment under (1), (2), (3) above.
The issue will become undersubscribed after considering the number of shares applied as per the entitlement plus
additional shares. The undersubscribed portion can be applied for only after the close of the Issue.
The promoters/directors/associates/promoter group intend to subscribe to their rights entitlement as well as the entire
undersubscribed portion from public and/or foreign collaborator, if any, in this rights issue in full. Presuming no subscription
is received from other shareholders and the promoters/directors/associates/promoter group subscribing to the entire
unsubscribed portion, their shareholding shall increase to 75.02 % of the post rights issue equity capital of the Company.
As a result of this subscription and consequent allotment, the promoters/ directors/ associates may acquire shares over
and above their entitlement in the issue which may result in their shareholding in the company being above their current
holding This subscription and acquisition of additional equity shares by the Promoter/Directors/Associates, if any, will
not result in change of control of the management of the Company and shall be exempt in terms of provision to
Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.
The Promoter/Directors/Associates have confirmed that in case the Rights Issue of the Company is completed with their
subscribing to equity shares over and above their entitlement and as a result, if the public shareholding in the Company
after the Issue falls below the permissible minimum level as specified in the listing condition or listing agreement, they
will make an offer for sale of their holdings so that the public shareholding is raised to the minimum level specified in
the listing agreement or in the listing conditions within a period of 3 months, as per the requirements of sub-clause 17.2
of SEBI (Delisting of Securities) Guidelines, 2003 or as per any amendment thereto
LETTERS OF ALLOTMENT OR REFUND ORDERS
Company shall ensure despatch of refund orders, if any, by under the Certificate of Posting or registered post or speed
post or through modes as mentioned in section, Terms of the Issue clause “Mode of Payment” as stated below, as
applicable, only at the sole or First Applicant’s sole risk within 42 days of closure of the Rights Issue, and adequate funds
for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to
the Issue by the issuer.
In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialized form by
electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately.
Allotment of Equity Shares to non-residents and the issue of letters of allotment/share certificates to non residents shall
be subject to the approval received from RBI.
For Non-Resident Applicants, refunds, if any, will be made as under:
☞ Where applications are accompanied by Indian Rupee Drafts purchased abroad and payable at Coimbatore, India,
refunds will be made in convertible foreign exchange equivalent to Indian Rupees to be refunded. Indian Rupees
will be converted into foreign exchange at the rate of exchange, which is prevailing on the date of refund. The
exchange rate risk on such refunds shall be borne by the applicant concerned and the Company shall not bear any
part of the risk.
☞ Where the applications made are accompanied by NRE/FCNR/NRO cheques, refunds will be credited to NRE/
FCNR/NRO accounts respectively, on which such cheques are drawn and details of which are provided in the CAF.
MODE OF PAYMENT OF REFUND

Applicants should note that on the basis of name of the applicants, Depository Participant’s name, Depository Participant-
Identification number and Beneficiary Account Number provided by them in the Composite Application Form, the
Registrar to the Issue will obtain from the Depositories, the applicant’s bank account details including nine digit MICR
code. Hence, applicants are advised to immediately update their bank account details as appearing on the records
of the depository participant. Please note that failure to do so could result in delays in credit of refunds to applicants
at the applicant’s sole risk and neither the Lead Manager nor the Company shall have any responsibility and undertake
any liability for the same.
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The payment of refund, if any, would be done through various modes in the following order of preference:
I. Direct Credit – For investors having their Bank Account with the Collecting Bankers, the refund amount would be
credited directly to their Bank Account with the Collecting Bankers.
II. RTGS – Investors desirous of taking direct credit of refund through RTGS, will have to provide the IFSC code in
the Composite Application Form
III. ECS - Payment of refund would be done through ECS for applicants residing at one of the 9 centres, namely
Ahmedabad, Bangalore, Kolkata, Chennai, Hyderabad, Mumbai, Nagpur, New Delhi and Thiruvananthapuram,
where clearing houses for ECS are managed by Reserve Bank of India. This would be subject to availability of
complete Bank Account details including MICR code from the depositories.
For all the other applicants except for whom payment of refund is possible through I, II and III, the refund orders would
be despatched under the Certificate of Posting for refund orders less than Rs. 1,500/- and through Registered Post or
Speed Post for refund orders exceeding Rs. 1,500/-. These refund orders will be drawn on the Collection Bank(s) and
payable at par at the places where applications are accepted. Bank charges, if any, for encashing such cheques or pay
orders will be borne by the Applicants.
INTEREST IN CASE OF DELAY IN ALLOTMENT / DESPATCH
The Company will issue and dispatch letters of allotment/ share certificates and/ or letters of regret along with refund order
or credit the allotted securities to the respective beneficiary accounts, if any within a period of six weeks from the date of
closure of the Issue. If such money is not repaid within 8 days from the day the Company becomes liable to pay it, the
Company shall pay that money with interest at the rate of 15% per annum as stipulated under Section 73 of the Act.
UNDERTAKING
The Company undertakes that:
i) that the complaints received in respect of the Issue shall be attended to by the issuer company expeditiously and
satisfactorily.
ii) that all steps for completion of the necessary formalities for listing and commencement of trading at all stock
exchanges where the securities are to be listed are taken within seven working days of finalization of basis of
allotment.
iii) that funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made
available to the Registrar to the issue by the issuer.
iv) where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant
within 42 days of closure of the issue, as the case may be, giving details of the bank where refunds shall be credited
along with amount and expected date of electronic credit of refund.
v) that the certificates of the securities/ refund orders to the non-resident Indians shall be despatched within specified time.
vi) that no further issue of securities shall be made till the securities offered through this Letter of Offer are listed or
till the application moneys are refunded on account of non-listing, undersubscription, etc.
The Issuer and Lead Manager shall update the Letter of Offer and keep the investors informed of any material changes
till the listing and trading commences.
UTILISATION OF ISSUE PROCEEDS
The Board of Directors declares that:
i. The funds received against this Issue will be transferred to a separate Bank Account other than the Bank Account
referred to sub-section (3) of Section 73 of the Act.
ii. Details of all moneys utilised out of the Issue shall be disclosed under an appropriate separate head in the Balance
Sheet of the Company indicating the purpose for which such moneys has been utilised.
iii. Details of all such unutilised moneys out of the Issue, if any, shall be disclosed under an appropriate separate head
in the Balance Sheet of the Company indicating the form in which such unutilised moneys have been invested.
The funds received against this Issue will be kept in a separate Bank Account and the Company will not have any access
to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum
subscription of 90% of the Issue has been received by the Company.
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SECTION VIII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

SHARES
3. The Share Capital of the Company is Rs 45,00,00,00 (Rupees Forty Five Crores only) divided into 4,00,00,000
Equity Shares of Rs 10 each and 5,00,000 Redeemable Cumulative Preference Shares of Rs 100 each subject to
be increased, decreased, consolidated, sub-divided or otherwise dealt with in accordance with the provisions of the
Companies Act 1956 and the statutory regulations for the time being in force in this regard.
4. The Shares of the Company shall be under the control and discretion of the Board who may allot or otherwise
dispose of the same or any of them to such person or persons (whether a Member of the Company or not) for the
consideration, in such proportion and on such terms and conditions and at such time or times as the Board may,
in their absolute discretion think fit and such shares may be issued either at a premium or at par or at discount as
per the provisions of the Companies Act 1956, in particular, the Board may issue and allot shares towards payment
or adjustment made.
i) For the properties or goods or machinery bought by the Company; or
ii) For the discharge of loans or other liabilities of the Company; or
iii) For the service rendered to the Company; or
iv) For the amounts spent for the purpose of the Company or for the conduct of the business of the company.
Any such shares may be issued and allotted as fully paid up shares, as the case may be, provided the option or right
to call of shares shall not be given to any person or persons without the sanction of the Company in General
Meeting.
5. The Company shall have power to issue Preference Shares, including Convertible Cumulative Preference Shares,
liable to be redeemed in any manner permissible under the Companies Act 1956 and the Directors may subject to
the provisions of the Act, exercise such power in any manner they think fit and provide for the redemption of such
shares on such terms, including the right to redeem at a premium or otherwise, as they think fit.
6. The Board, may, subject to the provisions of the Act, at any time, pay a commission to any person in consideration
of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in or debentures of
the Company or his procuring or agreeing to procure subscriptions, whether absolute or conditional for any shares
in or debentures of the Company. The Company may also on any issue of shares or debentures pay such brokerage
as may be lawful and reasonable.
7. Any application signed by any applicant or by any other person on his behalf for shares in the Company or where
the power of attorney or other authority under which such application is signed, a notarially certified copy of that
power of attorney or authority is deposited at the Registered Office of the Company. Any application signed on
behalf of such person, followed by an allotment of any share therein, shall be acceptable of shares within the
meaning of these Articles and every person who thus or otherwise accepts any shares or whose name is in the
Register shall, for the purpose of these Articles, be a Member of the Company.
8. Shares may be registered in the name of person, Company, Registered Society or other Body Corporate. Not more
than four persons shall be registered as jointholders of any shares.
9. Where two or more persons are registered as jointholders of any share, they shall be deemed to hold the same as
joint tenants with benefits of survivorship, subject to the following conditions.
a. The person whose name stands first in the Register in respect of such shares, shall alone be entitled to delivery
of the certificate thereof as also dividend on such shares;
b. The jointholders shall, severally as well as jointly, be liable for the payment of all instalments and calls due
in respect of such shares;
c. In case of death of any one or more such jointholders, the survivor(s) shall be the only person(s) recognised
by the Company as having any title or interest in such share, but the Directors may require such evidence of
death as they may deem fit and nothing herein contained shall be taken to release the estate of deceased
jointholder from any liability on the shares held by him jointly with any other person;
d. All notices directed to be given to the members shall be given to whichever of such person is named first in
the register and notice so given shall be sufficient notice for all the jointholder of such shares.
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10. Every shareholder or his executor, administrator or legal representative, having in his control or at his disposal
assets of the deceased shareholder, shall pay to the Company the proportion of the capital which may for the time
being remain unpaid thereon at such time and in such manner as the Board shall think fit.
11. Every person whose name is entered as a member in the Register of Members shall be entitled to receive within
three months after allotment (or within such other period as the conditions of issue shall provide) or one month after
the application for the registration of transfer, a certificate under the Common Seal of the Company specifying the
share or shares held by him and the amount paid up thereon, provided that in respect of share or shares held jointly
by several persons, the Company shall not be bound to issue more than one share certificate and delivery of a
certificate for a share to such person whose name stand first in the Register of Members, shall be sufficient delivery
to all such holders. Share certificates shall be issued in market lots without payment of any fees. Where share
certificates are issued for either more or less than marketable lots, sub-division/ consolidation into market lots shall
be done free of cost.
12. If any certificate be worn out or defaced, then upon production thereof to the Company, the Company, in cancellation
of the old certificate, shall issue a new certificate in lieu thereof. If any member requires the certificate pertaining
to more than one share to be split into two or more certificates pertaining to one or more shares, the Company may
cancel the old certificates and issue new certificate. If any certificate be lost or destroyed, then, upon proof thereof
to the satisfaction of the Directors and on such indemnity as the Directors deem adequate being given and on the
payment of out of pocket expenses incurred by the Company in investigating evidence a new certificate in lieu
thereof shall be given to the registered holder of the shares to which such lost or destroyed certificate shall relate.
13. For every certificate issued under the last preceding clause, there shall be paid to the Company the sum of Rupees
two or such smaller sums as the Directors may determine, provided that no fee shall be charged for issue of new
certificates in replacement of which are old, decrepit or worn out or cut or where the cages on the reverse for
recording transfers have been fully utilised.
14. Every endorsement on the certificate incorporating transfer of shares mentioned therein shall bear the signature of
a Directors or such other person as shall from to time be authorised by the Directors for the purpose.
15. The Board may, from time to time, subject to the terms on which any shares may have been issued and subject to
the provisions of Section 91 of the Act, make such calls as the Board thinks fit upon the members in respect of
all moneys unpaid on the shares held by them respectively and each member shall pay the amount of every call so
made on him at the time and place appointed by the Board. A call may be made payable by instalments shall be
deemed to have been made when the resolution of the Board authorising such call was passed.
16. The Board, may from time to time, by resolution passed at a meeting of the Board and not by circular resolution,
make such calls as they think fit, upon the members in respect of all moneys unpaid on the shares held by them
respectively (whether on account of nominal value of shares or by way of premium) and not by the conditions of
allotment thereof, made payable at fixed times and each member shall pay the amount of every call so made on
him to the Company, at the time or times and place or places so specified, the amount called on his shares. A call
be revoked or postponed at the discretion of the Board.
17. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment
thereof, the holder for the time being in respect of the share for which the call shall have been made or the
instalment shall be due shall pay interest for the same at such rate as may, from to time, be fixed by the Board from
the day appointed for the payment thereof to the time of the actual payment. The Board shall be at liberty to waive
payment of any such interest either wholly or in part.
18. If by the terms of issue any share or otherwise, any amount is made payable upon allotment or at any fixed time
or by instalments at fixed times, whether on account of the amount of the share or by way of premium, every such
amount or instalment shall be payable as if it were a call duly made by the Board and of which due notice had been
given and all the provisions herein contained in respect of calls shall relate to such amount or instalment accordingly.
19. The Board may, if it thinks fit, receive from any member willing to advance the same, all or any part of the amount
remaining unpaid on any shares held by him and upon the money so paid in advance or so much thereof as exceeds
the amount of the calls then made upon the share in respect of which such advance has been made, the Company
may pay interest at such rate as may be fixed by the Board. Money so paid in excess of the amount of calls shall
not rank for dividends or confer a right to participate in profits or for the purpose of voting. The Board may at any
time repay the amount so advanced upon giving to such member not less than fifteen days’ notice in writing.
139
20. On the trial or hearing of any action or suit brought by the Company against any member or his representatives for
the recovery of any money claimed to be due to the Company in respect of his shares, it shall be sufficient to prove
that the name of the member in respect of whose shares the money is sought to be recovered is or was when the
claim arose, on the Register of Members of the Company as the holder of one or more shares at or subsequent to
the date on which the money sought to be recovered is alleged to have become due; that the resolution making the
call is duly recorded in the Minutes Book of the Board and the notice of such call was duly given to the member
or his representatives in pursuance of these Articles.
21. The money, if any, which the Board shall, on allotment of any shares being made by it require or direct to be paid
by way of deposit, premium, call or otherwise in respect of any shares allotted by it shall immediately on the
inscription of the name of the allottee in the Register of Members become a debt due to and recoverable by the
Company from the allottee thereof and shall be paid by him accordingly.
22. Save as herein otherwise expressly provided, the Company shall be entitled to treat the registered holder of any
share as the absolute owner thereof and accordingly shall not be bound, except as ordered by a Court of competent
jurisdiction or as by statute required, to recognise any trusts whatsoever or any mortgage or charge thereon or any
contingent, equitable future, partial or any other claim to or interest in such share on the part of any person other
than the registered holder, his executor or administrators or other legal representatives and other than such rights
upon transmission as hereinafter provided.
23. If any member fails to pay any call or instalment of a call on or before the day appointed for the payment of the
same, the Board may, at any time thereafter during such time as the call or instalment remains unpaid, serve a notice
on such member requiring him to pay the same, together with any interest that may have accrued and all expenses
that may have been incurred by the Company by reason for such non-payment.
24. The notice shall name a day (not being less that fourteen days from the date of the notice) and a place or places
on and at which such call or instalment and such interest and expenses as aforesaid are to be paid. the notice shall
also state that in the event of non-payment at or before the time and at the place appointed, the shares in respect
of which such call was made or instalment is payable will be liable to be forfeited.
25. If the requirements of any such notice as aforesaid be not complied with any shares in respect of which such notice
has been given may, at any time thereafter, before payment of all calls or instalments, interest and expenses due
in respect thereof, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends
declared in respect of the forfeited shares and not actually paid before the forfeiture.
26. When any share shall have been so forfeited, notice of the resolution shall be given to the member in whose name
it stood immediately prior to the forfeiture, and an entry of the forfeiture with the date thereof shall forthwith be
made in the Register, but no forfeiture shall be in any manner invalidated by any omission to give such notice or
to make such entry as aforesaid.
27. Any share so forfeited shall be deemed to be the property of the Company, and the Board may sell, reallot or
otherwise dispose of the same upon such terms and in such manner as the Board shall think fit.
28. The Board may, at any time before any share so forfeited shall have been sold, reallotted or otherwise disposed of,
annul the forfeiture thereof upon such conditions as it thinks fit or they may assign a smaller number of shares in
respect of the paid up value of forfeited shares.
29. A person whose share has been forfeited shall cease to be a member in respect of that share, but shall, notwithstanding
remain liable to pay and shall forthwith pay to the Company, all calls or instalments, interest and expenses, owing
upon or in respect of such share, at the time of the forfeiture together with interest thereon, from the time of
forfeiture until payment at such rate as may be fixed by the Board and the Board may enforce the payment thereof
or any part thereof without any deduction or allowance for the value of the shares at the time of forfeiture, but shall
not be under any obligation to do so. However, the liability of such a person shall cease if and when the Company
shall have received payment in full of all such moneys in respect of the shares.
30. The forfeiture of a share shall involve the extinction of all interest in and all claims and demands against the
Company in respect of the share and all other rights incidental to the share, except only such of those rights as by
these Articles are expressly saved.
31. Upon any sale after forfeiture or surrender or for enforcing a lien purported to have been exercised by virtue of
the powers given, the Board may cause the purchaser’s name to be entered in the Register of Members in respect
140
of the shares sold. A duly verified declaration in writing that the declarant is a Director, Secretary or Manager of
the Company, and that certain shares in the Company have been duly forfeited on a date stated in the declaration
shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares
and such declaration and the receipt of the Company for the consideration, if any, given for the shares on the sale
or disposition thereof shall constitute a good title to such shares and the person to whom any such share is sold
shall be registered as the holder of such share and shall not be bound to see to the application of the purchase
money, nor shall his title to such share be affected by any irregularity or invalidity in the proceedings in reference
to such forfeiture, sale or disposition.
32. The provisions of these Articles as to the forfeiture shall apply in the case of non-payment of any sum which by
the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of a share
or by way of premium, as if the same had been payable by virtue of a call duly made and notified.
33. The Company shall have a first and paramount lien upon all the shares (other than fully paid-up share) registered
in the name of each member (whether solely or jointly with others) for all moneys called or payable at a fixed time
in respect of such shares. Any such lien shall extend to all dividends and bonus from time to time declared in respect
of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the
Company’s lien, if any, on such shares. The Directors may at any time declare any shares to be wholly or in part
to be exempt from the provisions of this Article.
34. For the purpose of enforcing such lien, the Board of Directors may sell the shares subject thereto in such manner
as it thinks fit but no sale shall be made unless a sum in respect of which the lien exists is presently payable and
until notice in writing of the intention to sell shall have been served on such member, his executors or administrators
or other legal representatives as the case may be and default shall have been made by him or them in the payment
of the sum payable as aforesaid for seven days after the date of such notice.
35. To give effect to any such sale, the Board may authorise some person to transfer the shares sold to be purchaser
thereof and the purchaser shall be registered as the holder of the shares comprised in any such transfer. Upon any
such sale as aforesaid, the certificate in respect of shares sold shall stand cancelled and become null and void and
of no effect, and the Directors shall be entitled to issue a new certificate or certificates in lieu thereof to the
purchaser or purchasers concerned.
36. The net proceeds of the sale shall be received by the Company and after payment of the cost of such sale shall be
applied in or towards payment of such part of the amount in respect of which the lien exists as is presently payable
and the residue, if any, shall be paid to such member, his executors, or administrators or assigns or other legal
representatives as the case may be.
TRANSFER AND TRANSMISSION OF SHARES

37. Shares in the Company shall be transferred in accordance with the relevant provisions of the Act. The instrument
of transfer shall be in writing and in such form as shall from time to time be prescribed under the relevant provisions
of the Act.
38. Save as provided in Section 108 of the Act, the Company shall not register a transfer of shares unless proper
instrument of transfer duly stamped and executed by or on behalf of the transferor or all the transferors in the case
of joint holders, as well as the transferee has been delivered to the Company, along with the certificate relating to
the shares. Each signature to such transfer shall be duly attested by one witness who shall add his address.
39. The Directors in their absolute and uncontrolled discretion may, subject to the right of appeal conferred by the Act,
refuse to register any proposed transfer of shares whether the proposed transferee is a member of the Company or
not, and shall not be bound to give any reason for such refusal. However, the registration of transfer shall not be
refused on the grounds of the transferor being either alone or jointly with any other person(s) indebted to the
Company on any account whatsoever.
40. 1) An application for the registration of transfer of the shares in the Company may be made either by the
transferor or the transferee.
2) Where the application is made by the transferor and relates to partly paid shares, the transfer shall not be
registered unless the Company gives notice of the application to the transferee and the transferee makes ‘no
objection’ to the transfer within two weeks from the receipt of the notice.
141
3) For the purpose of sub-clause (2) above, notice to the transferee shall be deemed to have been duly given if
it is despatched by pre-paid registered post to the transferee at the address given in the instrument of transfer
and shall be deemed to have been duly delivered at the time at which it would have been delivered in the
ordinary course of post.
41. No transfer shall be made to an insolvent or a person of unsound mind or a partnership in the name of the firm
and provided in the case of partly paid shares no transfer shall be made in the name of a minor.
42. Every instrument of transfer shall be signed by or on behalf of both the transferor and the transferee and the
transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the
Register of Members in respect thereof.
43. Every instrument of transfer shall be left at the office for registration accompanied by the Certificate of the shares
to be transferred, and such other evidence as the Directors may require to prove the title of the transferor of his
right to transfer the shares, the transferee shall (subject to the Board’s right to decline to Register as herein before
mentioned) be registered as a member in respect of such shares. The Directors may waive the production of any
certificate upon evidence satisfactory to them of its loss or destruction and on executing an indemnity bond to that
effect by the transferor.
44. In no case, shall the Board be bound to inquire into the validity, legal effect or genuineness of any instrument of
transfer produced by a person claiming transfer of any share in accordance with these Articles and whether they
abstain from so inquiring, or do so inquire, or are misled, the transferor shall have no claim whatsoever upon the
Company in respect of the share except for the dividends previously declared in respect thereof and not paid, but
his claim, if any, shall be against the transferee only.
45. All instruments of transfer which shall be registered shall be retained by the Company, but any instrument of transfer
which the directors may decline to register shall be returned to the person depositing the same.
46. No fees shall be charged for registration of transfers or for effecting transmission or for registering any letters of
probate, letters of administration and similar other documents. When a shareholder changes his name or who being
a female, marries, may give notice to the Company of the change of name or of the marriage so that the same may
be registered with the Company.
47A The executors or administrators of a deceased member, (not being a joint holder) shall be the only persons
recognised by the Company as having any title of the shares registered in the name of such member and the
Company shall not be bound to recognise such executors or administrators, unless they have first obtained probate
or letter of administration as the case may be, from a competent court in India, provided that in any case where
the Directors, in their absolute discretion think fit, they may dispense with the production of probate or letters of
administration.
47B. The Company shall incur no liability or responsibility whatever in consequence of its registering or giving effect
to any transfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing
in the Register of Members) to the prejudice of persons having or claiming any equitable right, title of interest in
the same shares notwithstanding that the Company may have had notice of such equitable right, title or interest or
notice prohibiting registration of such transfer and may have entered such notice referred thereto in any book of
the Company and the Company shall not be bound or required to regard or attend or give effect to any notice which
may be given to it in this behalf or be under any liability whatsoever for refusing or neglecting to do so though
it may have been entered or referred to in some book of the Company, but the Company shall nevertheless be at
liberty to regard and attend to any such notice and give effect thereto.
47C. 1) If the person becoming entitled to any share consequent to the death or lunacy or insolvency of a member elects
to be registered as holder of the share himself, he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
2) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing an instrument
of transfer of the share.
3) All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration
of instruments of transfer of a share shall be applicable to any such notice of transfer as aforesaid as if the
death, lunacy or insolvency of the member had not occurred and the notice of transfer were a transfer signed
by that member.
142
4) A person so becoming entitled on transmission to a share by reason of the death, lunacy or insolvency of the
holder shall subject to the provisions of these Articles and of Section 206 of the Act, be entitled to the same
dividends and other advantages as he would be entitled to if he were the registered holder of the share.
48. All the provisions herein contained as to the transfer and transmission of shares shall apply mutatis mutandis to the
transfer and transmission of the debentures of the Company.
48A. Notwithstanding anything contained in these Articles, as and when the Company gets its shares or other securities
admitted as an eligible Security in the Depository system in accordance with the provisions of the Depositories Act,
1996, the prevailing Rules, Regulations and Bye Laws of the Depository and other applicable laws, if any, the said
shares and securities of the Company may be held in dematerialised fungible form and it shall be governed by the
provisions of Depositories Act, 1996 as amended from time to time or any rule framed thereunder.
SEAL
102. The Directors shall provide a Common Seal for the purpose of the Company and shall have power from time to
time to destroy the same and substitute a new seal in lieu thereof and the Directors shall provide for the safe custody
of the seal for the time being, and the seal shall never be used, except by or under authority of the Directors or
a Committee of Directors, previously given and in the presence of one Director at the least, who shall sign every
instrument to which the seal is affixed and every such instrument shall be countersigned by the Company Secretary
or such other officer or person, as the Directors may from time to time resolve provided that in the case of any
Certificate of title to any shares of the Company, the Common Seal shall be affixed thereto as provided herein above
and in accordance with the Companies (Issue of Share Certificates) Rules 1960.
DIVIDENDS
103. The Board may, from time to time, pay to the members such interim dividends as appear to the Board to be justified
by the profits of the Company.
104. The Board may deduct from any dividend payable to any member all sums of money, if any, presently payable by
him to the Company on account of calls or otherwise in relation to the shares of the Company.
105. On the declaration of dividend by the General Meetings it shall be paid to the shareholders in proportion to the
amount paid up or credited as paid up on each share.
106. A transfer of shares shall not pass the rights to any dividend thereon before the registration of the transfer by the
Company.
107. a) Unless otherwise directed any dividend may be paid by cheque or warrant or by a pay slip of receipt having
the force of cheque or warrant sent through the post to the registered address of the member or person entitled
or in case of joint holders to that one of them first named in the Register in respect of joint – holding. Every
such cheque or warrant shall be made payable to the order of the person to whom it is sent. The Company shall
not be responsible for the loss of any cheque, dividend warrant or postal money order sent by post in respect
of dividends the registered address at or addresses communicated to the Office beforehand by the member, or
for any dividend lost to the member or person entitled thereto by the forged endorsement of any cheque or
warrant or fraudulent encashment thereof by any other means.
b) No unclaimed dividend shall be forfeited by the Board and the Company shall comply with the provisions of
Section 205A of the Companies Act, 1956.
CAPITALISATION OF PROFITS AND RESERVES
108. 1) The Company in General Meeting may, upon the recommendation of the Board, resolve:
a) that it is desirable to capitalise any part of the amount for the time being standing to the credit of any of
the Company’s reserve accounts or to the credit of any of the Profit and Loss Account, or otherwise
available for distribution; and
b) that such sum be accordingly set free for distribution in the manner specified in clause (2) amongst the
members, who would have been entitled thereto, if distributed by way of dividend and in the same
proportion.
2) The sum aforesaid shall not be paid in cash, but shall be applied subject to the provisions contained in clause
(3), either in or towards:
a) paying up any amounts for the time being unpaid on any shares held by such members respectively;
143
b) paying up in full, unissued shares of the Company to be allotted and distributed, credited as fully paid up,
to and amongst such members in the proportion aforesaid; or partly in the way specified in sub – clause
(a) and partly in that specified in sub – clause (b).
3) For the purpose of this Article, a Share Premium Account and a Capital Redemption Reserve fund may be
applied only in paying up unissued shares to be issued to the members of the Company as fully paid bonus
shares.
4) The Board shall give effect to the resolution passed by the Company in pursuance of this Article.
A) 1) Whenever such a resolution as aforesaid shall have been passed, the Board shall,
a) make all appropriations and applications of the undivided profits resolved to be capitalized thereby, and
all allotments and issues of fully paid shares and generally do all acts and things required to give effect
thereto.
2) The Board shall have full power:
a) to make such provision by the issue of fractional certificates or by payment in cash by realising such
fractional certificates or otherwise as it thinks fit, in the case of shares becoming distributable in fractions
and also
b) to authorise any person to enter, on behalf of all members entitled thereto, into an agreement with the
Company providing for the allotment to them respectively, credited as fully paid up, of any further shares
to which they may be entitled upon such capitalisation or (as the case may require) for the payment by
the Company on their behalf, by the application thereto respective proportions of the profits resolved to
be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares.
3) Any agreement made under such authority shall be effective and binding on all such members.
B) If the Company shall have redeemed any redeemable preference shares, all or any part of any Capital
Redemption Fund arising from the redemption of such shares may, by resolution of the Company, be
applied in paying up in full or in part any new shares or any shares then remaining unissued, to be issued
to such members of the Company or other persons as the Directors may resolve up to an amount equal
to the nominal amount of the shares so issued.
109. Every Balance Sheet and Profit and Loss Account of the Company when admitted and adopted by the Company
in General Meetings shall be conclusive. If any error is discovered therein after the adoption thereof, such error shall
be corrected in the accounts of the Company for the subsequent years.
SECRECY
112. Every Director, Secretary, Manager, Auditor, Trustee for the Company, its members or debentureholders, member
of Committee, Officer, Servant, Agent, Accountant or other person employed in or about the business of the
Company shall, if so required by the Board, before entering upon his duties, sign a declaration pledging himself
to observe a strict secrecy respecting all transactions of the Company with its customers and the state of accounts
with individuals and in matters relating thereto, and shall by such declaration pledge himself not to reveal any of
the matters which may come to his knowledge in the discharge of his duties except when required so to do by the
Board or by any General Meeting or by a Court of law and except so far as may be necessary in order to comply
with any of the provisions contained in these Articles.
113. No shareholder or other person, not being a Director, shall be entitled to enter into or upon the premises or the
property of the company, or to inspect the Company’s premises or properties or the books or the accounts of the
Company except to the extent allowed by the Act and subject to such reasonable restrictions as the Company in
General Meeting or the Board may impose in this behalf from time to time without the permission of the Board
or of the Executive Chairman/Managing Director for the time being, or require the discovery of or any information
respecting any detail of the Company’s trading or any matter which is or may be in the nature of a trade secret,
mystery of trade or secret process or of any matter whatsoever which may relate to the conduct of the business of
the Company, and which, in the opinion of the Board / Chairman / Executive Chairman or of the Managing Director
will be inexpedient, in the interest of the members of the Company, to communicate.
144
WINDING UP
114. If the Company shall be wound up and the assets available for distribution among the members as such shall be
insufficient to repay the whole of the paid up capital such assets shall be distributed so that as nearly as may be
the losses shall be borne by the members in proportion to the Capital paid up or which ought to have been paid
up at the commencement of the winding up on the shares held by them respectively and if in a winding up the assets
available for distribution among the members shall be more than sufficient to repay the whole of the capital paid
up at the commencement of the winding up the excess shall be distributed amongst the members in proportion to
the capital paid up or which ought to have been paid up on the shares held by them respectively at the commencement
of the winding up.
115. If the Company shall be wound up, whether voluntarily or otherwise the liquidator may, with the sanction of a
special resolution, divide among the contributories, in specie or kind, any part of the assets of the Company and
may, with the like sanction, vest any part of the assets of the Company in trustees for the benefit of the contributories,
or any of them, as the liquidator, with the like sanction, shall think fit.
INDEMNITY
116. Every Director, Secretary or Officer of the Company or any person (whether an Officer of the Company or not)
employed by the Company and any person appointed as Auditor shall be indemnified out of the funds of the
Company against all liability incurred by him as such Director, Secretary, Officer, employee or Auditor in defending
any proceedings, whether civil or criminal in which judgement is given in his favour or in which he is acquitted,
or in connection with any application under Section 633 of the Act, in which relief is granted to him by the Court
(nothing herein contained shall apply to a constituted attorney of the company, unless such attorney is, or is deemed
be, to an officer of the Company).
145
SECTION IX - OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS
The Contracts referred to in para (A) below (not being contracts entered into in the ordinary course of the business carried
on by the Company or entered into more than two years before the date of this Letter of Offer) which are or may be
deemed material, have been entered into by the Company.
The contracts together with the documents referred to in paragraph (B) below, copies of all of which have been attached
to the copy of this Letter of Offer may be inspected at the Registered Office of the Company between 11.00 a.m. - 4.00
p.m. on any working day from the date of this Letter of Offer until the closing of the subscription list.
A. MATERIAL CONTRACTS
1. Copy of Memorandum of Understanding dated 29/03/2007 between SFL and Keynote Corporate Services
Limited, Lead Manager to the Issue.
2. Copy of Memorandum of Understanding dated 28/08/2006 between SFL and S.K.D.C Consultants Ltd., Registrar
to the Issue.
3. Copy of tripartite agreement dated 13/10/2001 between SFL, National Securities Depository Limited (NSDL)
and S.K.D.C Consultants Ltd.
4. Copy of tripartite agreement dated 26/09/2001 between SFL, Central Depository Services (India) Limited
(CDSL) and S.K.D.C Consultants Ltd.
B. DOCUMENTS FOR INSPECTION

1. Copy of Memorandum of Articles and Articles of Association of SFL.
2. Copy of Certificate of Registration dated 08/05/1998 issued by the Reserve Bank of India, Department of Non-
Banking Supervision, Regional Office – Chennai.
3. Copy of Certificate of Registration dated 17.04.2007 issued by Reserve Bank of India, Department of Non-Banking
Supervision, Regional Office, Chennai in lieu of earlier Certificate of Registration dated 08/05/1998 issued by the
Reserve Bank of India, Department of Non-Banking Supervision, Regional Office – Chennai.
4. Copies of Annual report of SFL for the year ended, 31/03/2002, 31/03/2003, 31/03/2004, 31/03/2005, 31/03/2006
and 31/03/2007.
5. Memorandum and Articles of Association and copies of Annual Report for the year ended, 31/03/2005,
31/03/2006 and 31/03/2007 of the following Group companies:
❍ Sri Chamundeswari Sugars Limited (SCSL)
❍ ABT Limited (ABTL)
❍ ABT Industries Ltd (ABTIL)
❍ Sakthi Financial Services Limited (SFSL)
❍ Sri Sakthi Textiles Limited (STL)
Memorandum and Articles of Association and copies of Annual Report for the year ended 31/03/2004,
31/03/2005 and 31/03/2006 of Sri Bhagavathi Textiles Limited (SBTL) and Anamallais Engineering Private Limited
(AEPL), which are Group Companies.
6. Memorandum and Articles of Association and copies of Annual Report for the year ended 30/06/2005,
30/06/2006 and 30/06/2007 of Sakthi Sugars Limited (SSL) which is a Group Company.
7. Copy of Special Resolution under section 81, and other relevant provisions of Companies Act, 1956 dated 24/09/
2004 passed at the Annual General Meeting of the company authorizing present issue of equity shares & Copy of
the Board resolution dated 23/04/2007 recommending the rights issue of the company.
146
8. Copy of certificate dated 15/10/2007 issued by M/s. P. N Raghavendra Rao & Co. Chartered Accountants &
Statutory Auditors of the Company reporting financials of the company in terms of Part II Schedule II of the
Companies Act, 1956 and including capitalization statement, taxation statement, accounting ratios.
9. Copy of letter dated 23/04/2007 received from M/s. P. N Raghavendra Rao & Co., Chartered Accountant, regarding
tax benefits accruing to the company and its shareholders.
10. Copy of Letters of Offer dated 19/03/1993 & 15/09/1995 in respect of the Rights Issues made by SFL
11. Copies of undertakings from SFL.
12. Copies of Consents from the Directors of the Company, Auditors of the Company, Registrar to the Issue, Lead
Mangers to the Issue, Banker to the Company and Bankers to the Issue
13. Due diligence certificate dated 14/05/2007 to SEBI from Keynote Corporate Services Limited;
14. Copies of in-principle approval received from BSE vide letter no. DCS/PREF/JA/IP-RT/510/07-08 dated
01/06/2007 and MSE vide letter no MSE/DS/LD/738/385/07 dated 05/06/2007.
15. Copy of SEBI observation letter No. SRO/PMD/IMID/EIF/2007/1/2054 dated 18/09/2007 and compliance thereof.
147
PART III
DECLARATION
No statement made in this Letter of Offer shall contravene any of the provisions of the Companies Act, 1956 and the
rules made thereunder. All the legal requirements connected with the said issue as also the guidelines, instructions etc.
issued by SEBI, Government and any other competent authority in this behalf have been duly complied with. We further
certify that all the disclosures made in the Letter of Offer are true and correct.
On behalf of the Board of Directors

For Sakthi Finance Limited
Sd/-
Mr M Manickam
Chairman
Sd/-
Mr M Balasubramaniam
Vice-Chairman and Managing Director
Sd/-
Mr M Srinivaasan
Director
Sd/-
Mr A Shanmugasundaram
Director
Sd/-
Mr S A Murali Prasad
Director
Sd/-
Dr A Selvakumar
Director
Sd/-
Mr P S Gopalakrishnan
Director
Place : Coimbatore
Date : 31.10.2007
148

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LETTER OF OFFER

(Private & Confidential)

SAKTHI FINANCE LIMITED

KEYNOTE S.K.D.C. Consultants

SECTION CONTENTS Page Nos.

CONVENTIONAL / GENERAL TERMS

Abbreviations Full Form

COMPANY/INDUSTRY RELATED TERMS

CERTAIN CONVENTIONS; USE OF MARKET DATA

SECTION I - RISK FACTORS

8. Attracting and Retaining Key personnel

10. Loss Making Group Companies

EXTERNAL RISK FACTORS

NOTES TO RISK FACTORS

SUMMARY OF FINANCIAL DATA

ISSUE MANAGEMENT TEAM

Bankers to the Company

Bankers to the Issue Auditors to the Company

CAPITAL STRUCTURE OF THE COMPANY

NOTES TO CAPITAL STRUCTURE:

OBJECTS OF THE ISSUE

Means of Finance (Rs. In Lacs)

WORKING CAPITAL REQUIREMENT

YEAR WISE BREAK UP OF FUNDS

INTERIM USE OF FUNDS

BASIC TERMS OF THE ISSUE

BASIS FOR ISSUE PRICE

(b) Price Earning Ratio (PE)

(c) Return on Networth (RONW)

Note: 1. NAV as on 30th June 2007 is Rs. 27.76.

Statement of Tax Benefits available to the Company and its Shareholders.

We do not express any opinion or provide any assurance as to whether:

For P.N.Raghavendra Rao & Co.,

I. Benefits available to the Company

SECTION III - ABOUT COMPANY

Growth Potential of the Commercial Vehicle Industry

Lending To a single borrower Not exceeding 15% of owned fund

Indicators of Competition between SCBs and NBFCs

REGULATIONS AND POLICIES

Asset Liability Management

Maintenance of liquid assets

MAIN OBJECTS OF THE COMPANY

SUBSIDIARIES OF THE COMPANY

02/06/1984 The following clause was inserted in the Memorandum

07/06/1986 The following clauses were inserted in the Memorandum

Name, Age, Designation, Date of Qualification No of Remuner- Other

Sri M Manickam, Chairman

Sri M Balasubramaniam, Vice-Chairman and Managing Director

Sri S A Murali Prasad

RELATIONSHIP AMONG DIRECTORS

CHANGE IN BOARD OF DIRECTORS DURING THE LAST THREE YEARS

DETAILS OF BORROWING POWER

Chairman – Sri S A Murali Prasad

C. Shareholders’ / Investors’ Grievance Committee

OPERATIONS SHARED SERVICES

GENERAL MANAGER VICE PRESIDENT AND VICE PRESIDENT ASSISTANT COMPANY

CAMP & LEGAL

PROMOTER GROUP COMPANIES

The Shareholding pattern of SSL (as on 30/06/2007) is as follows:

(* net of revaluation reserves and miscellaneous expenses not written off)

Stock Market Data

Particulars (As at 31st March) 2004-2005 2005-2006 2006-2007