Dated March 30, 2011 Please read Section 60B of the Companies Act, 1956 (This Draft Red

Herring Prospectus will be updated upon filing with the RoC) Book Building Issue

DRAFT RED HERRING PROSPECTUS

Our Company was originally incorporated as a private limited company under the Companies Act, 1956 in the name of Gandhinagar Hospitality Private Limited at Ahmedabad vide Certificate of Incorporation dated November 27, 1998 bearing Corporate Identity Number U55110GJ1998PLC035044. The name of our Company was changed to Neesa Leisure Private Limited on January 13, 2004 and a Fresh Certificate of Incorporation dated January 21, 2004 was issued by the RoC, Gujarat, Dadra & Nagar Haveli. Our Company was subsequently converted into a public limited company pursuant to a resolution passed at a shareholders meeting held on November 15, 2005 and the RoC issued a Fresh Certificate of Incorporation dated December 15, 2005. Registered Office: X-22,23 & 24, G.I.D.C Electronic Estate, Sector 25, Gandhinagar 382 044, Gujarat, India. For details of changes in the registered office, please refer to the section titled History and Certain Corporate matters beginning on page 161 of this Draft Red Herring Prospectus. Telephone: + 91 079 3984 1111 Facsimile: +91 079 3984 1100 Contact Person: Mr. Kamlendra Joshi, Compliance Officer; E-mail: ipo@neesaleisure.com; Website: www.neesaleisure.com

NEESA LEISURE LIMITED

PROMOTERS OF THE COMPANY: MR.SANJAY GUPTA AND MS. NEELU GUPTA PUBLIC ISSUE OF EQUITY SHARES OF FACE VALUE `10 EACH (EQUITY SHARES) OF NEESA LEISURE LIMITED (COMPANY/ISSUER) FOR CASH AT A PRICE OF `[] PER EQUITY SHARE (THE ISSUE PRICE), INCLUDING A SHARE PREMIUM OF ` [] PER EQUITY SHARE, AGGREGATING UPTO ` [] LAKHS, COMPRISING A FRESH ISSUE OF UPTO [] EQUITY SHARES BY NEESA LEISURE LIMITED AGGREGATING UPTO `20,000 LAKHS (THE FRESH ISSUE) AND OFFER FOR SALE OF UPTO [] EQUITY SHARES BY AXIS INFRASTRUCTURE FUND I (AIF) OF UPTO `5,000 LAKHS AND 1,03,746 EQUITY SHARES BY HT MEDIA LIMITED (HTML) (THE SELLING SHAREHOLDERS) OF ` [] LAKHS (THE OFFER FOR SALE). THE FRESH ISSUE AND THE OFFER FOR SALE ARE TOGETHER REFERRED TO HEREIN AS THE ISSUE. FURTHER UPTO 2,00,000 EQUITY SHARES WILL BE RESERVED IN THE ISSUE FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (THE EMPLOYEE RESERVATION PORTION) SUBJECT TO VALID BIDS BEING RECEIVED AT OR ABOVE THE ISSUE PRICE PROVIDED THAT THE VALUE OF ALLOTMENT TO A SINGLE ELIGIBLE EMPLOYEE DOES NOT EXCEED `2,00,000. THE ISSUE LESS THE EMPLOYEE RESERVATION PORTION IS HEREINAFTER REFERRED TO AS THE NET ISSUE. THE ISSUE AND THE NET ISSUE WILL CONSTITUTE AT LEAST []% AND []%, RESPECTIVELY, OF THE POST-ISSUE PAID UP EQUITY SHARE CAPITAL OF OUR COMPANY. Our Company and AIF are considering a Pre-IPO Placement of upto 35,00,000 Equity Shares aggregating upto `6,500 lakhs to certain investors prior to the Issue The issue of such Equity Shares pursuant to the Pre-IPO Placement, if any, will be completed prior to filing the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is successfully completed, the Issue size will be reduced to the extent of such Pre-IPO placement, subject to the Net Issue being at least 25% of the post-Issue paid-up Equity Share Capital of our Company. THE FACE VALUE OF THE EQUITY SHARES IS `10 EACH. THE PRICE BAND AND THE MINIMUM BID LOT SIZE WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDERS IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND WILL BE ADVERTISED AT LEAST TWO WORKING DAYS PRIOR TO THE BID/ ISSUE OPENING DATE. In case of revision in the Price Band, the Bidding/Issue Period shall be extended for atleast three (3) additional Working Days after such revision, subject to the Bidding/Issue Period not exceeding ten (10) Working Days. Any revision in the Price Band, and the revised Bidding/Issue Period, if applicable, shall be widely disseminated by notification to the Bombay Stock Exchange Limited (the BSE) and the National Stock Exchange of India Limited (the NSE), SCSBs, by issuing a press release and also by indicating the change on the website of the Book Running Lead Managers (BRLMs) and at the terminals of the Syndicate Members. The Issue is being made through the Book Building Process with Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957, as amended (SCRR) read with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. This Issue is being made through the Book Building Process wherein upto 50% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (the QIB Portion) provided that our Company and the Selling Shareholders in consultation with the BRLMs may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the Anchor Investor Portion). For further details, please refer to section titled Issue Procedure beginning on page 392 of this Draft Red Herring Prospectus. Further 5% of QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to domestic Mutual Funds and the remaining QIB portion shall be available for allocation on proportionate basis to all QIBs, including domestic Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Any Bidder (other than Anchor Investor) may participate in this Issue through the Application Supported by Blocked Amount (ASBA) process by providing the details of their ASBA Accounts in which the corresponding Bid amounts will be blocked by Self Certified Syndicate Banks (SCSBs). For details in this regard, please refer to section titled Issue Procedure beginning on page 392 of this Draft Red Herring Prospectus. RISKS IN RELATION TO THE FIRST ISSUE This being the first public issue of Equity Shares of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is `10 each. The Floor Price is [] times of the face value and the Cap Price is [] times of the face value. The Issue Price (as determined by our Company and the Selling Shareholders, in consultation with the BRLMs, on the basis of the assessment of market demand for the Equity Shares by way of the Book Building Process) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares of our Company or regarding the price at which the Equity Shares will be traded after listing. GENERAL RISK Investments 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 our Company and the Issue, including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India ("SEBI"), nor does SEBI guarantee the accuracy or adequacy of the contents of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the statements in the section "Risk Factors" beginning on page 15 of this Draft Red Herring Prospectus. COMPANYS AND SELLING SHAREHOLDERS ABSOLUTE RESPONSIBILITY Our Company and, to the extend applicable, the Selling Shareholders, having made all reasonable inquiries, accept responsibility for and confirm that this Draft Red Herring Prospectus contains all information with regard to our Company, the Selling Shareholders and the Issue that is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. IPO GRADING This Issue has been graded by [] and has been assigned the "IPO Grade []" indicating [], through its letter dated []. The IPO grading is assigned on a five point scale from 1 to 5 with an "IPO Grade 5" indicating strong fundamentals and an "IPO Grade 1" indicating poor fundamentals. For details regarding the grading of the Issue, see the section titled "General Information" beginning on page 57 of this Draft Red Herring Prospectus. LISTING The Equity Shares offered through the Draft Red Herring Prospectus are proposed to be listed on the BSE and the NSE. Our Company has received in-principle approvals from the BSE and the NSE for the listing of the Equity Shares pursuant to letters dated [] and [], respectively. For the purposes of the Issue, [] shall be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE

CENTRUM CAPITAL LIMITED

BID/ISSUE PROGRAM BID/ISSUE OPENS ON* [] BID/ISSUE CLOSES ON** [] *Our Company and Selling Shareholders, in consultation with the BRLMs may consider participation by Anchor Investor. The Anchor Investor Bid/Issue Period shall be one (1) Working Day prior to the Bid/Issue Opening Date. **Our Company and the Selling Shareholders, in consultation with the BRLMs, may consider closing the Bid/Issue Period for QIBs one (1) Working Day prior to the Bid/Issue Closing Date. #In compliance with the proviso to Regulation 21A(1) and explanation (i) to Regulation 21A(1) of SEBI (Merchant Bankers) Regulations, 1992, read with Regulation 110 and Schedule XX of the SEBI (ICDR) Regulations, Axis Bank Limited would be involved only in the marketing of the Issue.

Centrum House, Vidyanagari Marg CST Road, Kalina, Santacruz (East) Mumbai 400 098, India Telephone: +91 22 4215 9000 Facsimile: +91 22 4215 9707 Email: neesa.ipo@centrum.co.in Investor Grievance Email: igmbd@centrum.co.in Contact Person: Ms.Hema Lalwani Wagle/ Ms. Rachna Nawhal Website: www.centrum.co.in SEBI registration number: INM000010445

AXIS BANK LIMITED#

Axis House, Bombay Dyeing Mills Compound Pandurang Budhkar Marg, Worli Mumbai 400 025, India Telephone: +91 22 2425 5708 Facsimile: +91 22 2425 7100 Email: neesa.ipo@axisbank.com Investor Grievance Email: axbmbd@axisbank.com Contact Person: Mr. Dinkar Rai Website: www.axisbank.com SEBI registration number: INM000006104

LINK INTIME INDIA PRIVATE LIMITED

C-13, Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (West) Mumbai 400 078, India. Telephone: +91 22 2596 3838 Facsimile: +91 22 2594 6969 Email: neesa.ipo@linkintime.co.in Contact Person: Mr. Chetan Shinde Website: www.linkintime.co.in SEBI registration number: INR000004058

TABLE OF CONTENTS PARTICULARS SECTION I: GENERAL DEFINITIONS AND ABBREVIATIONS CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION & MARKET DATA AND CURRENCY OF PRESENTATION FORWARD LOOKING STATEMENTS SECTION II: RISK FACTORS RISK FACTORS SECTION III: INTRODUCTION SUMMARY OF INDUSTRY SUMMARY OF OUR BUSINESS SUMMARY OF FINANCIAL INFORMATION THE ISSUE GENERAL INFORMATION CAPITAL STRUCTURE OBJECTS OF THE ISSUE BASIS FOR ISSUE PRICE STATEMENT OF TAX BENEFITS SECTION IV: ABOUT OUR COMPANY AND OUR INDUSTRY OUR INDUSTRY OUR BUSINESS REGULATIONS AND POLICIES HISTORY AND CERTAIN CORPORATE MATTERS OUR MANAGEMENT OUR PROMOTERS AND PROMOTER GROUP OUR GROUP ENTITIES RELATED PARTY TRANSACTION DIVIDEND POLICY SECTION V: FINANCIAL INFORMATION FINANCIAL STATEMENTS MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS FINANCIAL INDEBTEDNESS SECTION VI: LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS GOVERNMENT AND OTHER APPROVALS OTHER REGULATORY AND STATUTORY DISCLOSURES SECTION VII: ISSUE INFORMATION TERMS OF THE ISSUE ISSUE STRUCTURE ISSUE PROCEDURE RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES SECTION VIII: MAIN PROVISIONS OF ARTICLES OF ASSOCIATION MAIN PROVISIONS OF ARTICLES OF ASSOCIATION SECTION IX: OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION DECLARATION PAGE NO. 1 11 13 15 41 44 49 55 57 68 86 100 105 115 133 157 161 171 189 192 206 207 208 304 326 336 349 367 381 385 392 441 443 527 530

SECTION I: GENERAL DEFINITIONS AND ABBREVIATIONS Unless the context otherwise indicates/implies, the terms and abbreviations stated hereunder shall have the meanings as assigned therewith. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments and modifications notified thereto. Company Related Terms Term "NLL", "Neesa Leisure Limited" or "our Company" or "Issuer" "We" or "us" and "our" AOA/Articles/ Articles of Association Audit Committee Description Neesa Leisure Limited, a public limited company incorporated under the provisions of the Companies Act, 1956.

Unless the context otherwise require, refers to Neesa Leisure Limited and our Subsidiaries. The Articles of Association of our Company

Board of Directors / Board/ Directors Bankers to our Company Corporate & Registered Office Equity Shares

A Committee re-constituted in accordance with the Section 292A of the Companies Act, and Clause 49 of the Listing Agreement in the meeting of our Board of Directors held on May 12, 2010. The audit committee presently consists of Mr. M. Narayanan, Mr. Sanjay Gupta and Mr. Mehar Karan Singh. The Board of Directors of our Company

Axis Bank Limited, State Bank of India, ICICI Bank Limited and Development Credit Bank Limited 'Cambay Square', X-22, 23 & 24, G.I.D.C Electronic Estate, Sector 25, Near Harvard Academy, Gandhinagar 382 044, India. Equity Shares of our Company of face value of `10 each unless otherwise specified in the context thereof Group Companies/ Group companies shall mean companies, firms, ventures, etc promoted by the Entities Promoters of our Company irrespective of whether such entities are covered under Section 370(1)(B) of the Companies Act, 1956 being i)Neesa Infrastructure Limited; ii) Neesa Agritech and Foods Limited; iii) Orient Spa Limited; iv) Neesa Technologies Private Limited; v) Neesa Financial Services Limited; vi) Neesa Township and Properties Limited; vii) Cambay SEZ Hotels Private Limited; viii) Neesa Education Private Limited; ix) Cambay Hotels & Holidays Limited; x) Gujarat Syscom Technologies Private Limited; xi) Neesa Energy Private Limited; xii) Technodot Engineers Limited; xiii) Neesa Sales Private Limited and xiv) Neesa Biotech Private Limited Lenders of our Axis Bank Limited, State Bank of India, United Bank of India, Bank of India, Company Oriental Bank of Commerce, Corporation Bank, Syndicate Bank, ICICI Bank Limited, Development Credit Bank Limited, L&T Infrastructure Finance Company Limited, Industrial Finance Corporation of India, The Rajasthan State Industrial Development & Investment Corporation Limited and Infrastructure Development Finance Company Limited. MOA/ Memorandum of Association of our Company Memorandum/ Memorandum of Association Promoters Shall mean promoters of our Company i.e. Mr. Sanjay Gupta and Ms. Neelu Gupta

Term Promoter Group Companies

Subsidiary of Company/Our Subsidiary Statutory Auditor/ Auditor

Description Persons and entities covered under Regulation 2(zb) of the SEBI (ICDR) Regulations as enlisted in the section titled "Our Promoters and Promoter Group" beginning on page 189 of this Draft Red Herring Prospectus. our Palm Lagoon Backwater Resorts Private Limited

The statutory auditor of Accountants, Ahmedabad

our Company being ISK & Associates, Chartered

Issue Related Terms Term Allot/ Allotment/ Allotment of Equity Shares Allottee Allotment Advice Description Unless the context otherwise requires, issue/allotment of Equity Shares pursuant to the Fresh Issue and the transfer of the Equity Shares under the Offer for Sale Portion to successful Bidders. The successful bidder to whom the Equity Shares are being / have been issued /allotted. In relation to Bidders other than Anchor Investors, the note or advice or intimation of Allotment of the Equity Shares, sent to each successful Bidder who have been or are to be Allotted Equity Shares after discovery of the Issue Price, including any revision thereof. A Qualified Institutional Buyer, applying under the Anchor Investor Portion, who has Bid for Equity Shares amounting to at least `1,000 lakhs. The price at which Equity Shares will be allocated in terms of the Red Herring Prospectus and Prospectus to the Anchor Investors, which will be decided by our Company and the Selling Shareholders in consultation with the BRLMs prior to the Bid/Issue Opening Date. One (1) Working Day prior to the Bid/Issue Opening Date, on which Bids by Anchor Investors shall be submitted and allocation to Anchor Investors shall be completed. The final price at which Equity Shares will be issued and Allotted to Anchor Investors in terms of the Red Herring Prospectus and the Prospectus, which price will be equal to or higher than the Issue Price but not higher than the Cap Price. The Issue Price will be decided by our Company and the Selling Shareholders in consultation with the BRLMs Up to 30% of the QIB Portion which may be allocated by our Company and the Selling Shareholders in consultation with the BRLMs to Anchor Investors on a discretionary basis. One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to other Anchor Investors. An application, whether physical or electronic, used by all Bidders other than the Anchor Investors to make a Bid authorizing a SCSB to block the Bid Amount in the ASBA Account maintained with the SCSB. Account maintained by an ASBA Bidder with a SCSB which will be blocked by such SCSB to the extent of the Bid Amount of the ASBA Bidder. Prospective investor other than Anchor Investor in the Issue who Bid/apply through ASBA through blocking of funds in a bank account with an SCSBs. The application form, whether physical or electronic, used by the ASBA Bidder to make a Bid and which contains an authorization to block the Bid Amount in an ASBA Account, which will be considered as an application for the Allotment for the purposes of the Red Herring Prospectus and the Prospectus. The application form shall be available on the websites of the Stock Exchanges, link to which

Anchor Investor Anchor Investor Allocation Price

Anchor Investor Bid/ Issue Period Anchor Investor Issue Price

Anchor Portion

Investor

Application Supported by Blocked Amount / ASBA ASBA Account ASBA Investors/ Bidder ASBA Bid-cumApplication Form or ASBA BCAF

Term

ASBA Revision Form

Basis of Allotment

Bid

Bid Amount Bid/ Issue Closing Date

Bid/ Issue Opening Date

Bid-cum-Application Form

Bidder

Bidding / Issue Period

Book Building Process/ Method BRLMs / Book Running Lead Managers CAN or Confirmation of Allocation Note

Description shall also be available on the websites of the BRLMs and SCSBs atleast one (1) day before the Bid/Issue Opening Date. The form used by ASBA Bidders to modify the number of Equity Shares or the Bid Price in any of their ASBA Bid-cum-Application Forms or any previous ASBA Revision Form(s). The basis on which the Equity Shares will be allotted as described in the section titled "Issue Procedure-Basis of Allotment" beginning on page 393 of this Draft Red Herring Prospectus. An indication to make an offer during the Bid/Issue Period by a Bidder (other than an Anchor Investor) or on the Anchor Investor Bidding Period by an Anchor Investor, pursuant to submission of a Bid-cum-Application Form to subscribe to the Equity Shares at a price within the Price Band, including all revisions and modifications thereto. The highest value of the optional Bids indicated in the Bid-cum-Application Form and payable by the Bidders on submission of the Bid for this Issue. Except in relation to Anchor Investors, the date after which the Members of the Syndicate and the SCSBs will not accept any Bids for this Issue, which shall be notified in a English national newspaper, Hindi national newspaper and a Gujarati regional newspaper each with wide circulation and in case of any revision, the extended Bid/Issue Closing Date also to be notified on the website and terminals of the Syndicate and SCSBs, as required under the SEBI (ICDR) Regulations. Further, the Bidding by QIBs may close one (1) Working Day prior to the Bid/Issue Closing Date. Except in relation to Anchor Investors, the date on which the Members of the Syndicate and the SCSBs shall start accepting Bids for this Issue, which shall be the date notified in an English national newspaper, Hindi national newspaper and a Gujarati regional newspaper each with wide circulation as required under the SEBI (ICDR) Regulations. The form in terms of which the Bidder (including the format of such application form used by the ASBA Bidder that can be either physical or electronic) shall make an offer to subscribe to the Equity Shares of our Company and which will be considered as the application for allotment in terms of the Red Herring Prospectus and Prospectus. Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid-cum-Application Form, including the ASBA Bidders and the Anchor Investor. The period between the Bid / Issue Opening Date and the Bid/Issue Closing Date inclusive of both days and during which prospective Bidders (excluding Anchor Investors) can submit their Bids, inclusive of any revisions thereof. Book building mechanism as provided under Schedule XI of the SEBI (ICDR) Regulations, in terms of which this Issue is made. The Book Running Lead Managers for the Issue being Centrum Capital Limited and Axis Bank Limited.

In relation to Anchor Investors, the note or advice or intimation including any revisions thereof, sent to each successful Anchor Investors indicating the Equity Shares allocated after discovery of the Anchor Investor Issue Price. Cap Price The upper end of the Price Band, above which the Issue Price will not be finalised and above which no Bids will be accepted. Controlling Branches Such branches of the SCSBs which co-ordinate Bids under this Issue made by the ASBA Bidders with the BRLMs, the Registrar to the Issue and the Stock Exchanges, a list of which is provided on http://www.sebi.gov.in Cut-Off / Cut-Off Price The Issue Price finalised by our Company and the Selling Shareholders in

Term

Description consultation with the BRLMs and it shall be any price within the Price Band. Only Retail Individual Bidders and Eligible Employees whose Bid Amount does not exceed `2,00,000 are entitled to Bid at the Cut-off Price. QIBs including Anchor Investors and Non-Institutional Bidders are not entitled to Bid at the Cutoff Price. Depositories NSDL and CDSL Depository Participant A depository participant as defined under the Depositories Act. Designated Branches Such branches of the SCSBs which shall collect the ASBA Bid-cum-Application Form from the ASBA Bidders and a list of which is available on http://www.sebi.gov.in. Designated Date The date on which the Escrow Collection Banks and the SCSBs transfer the funds from the Escrow Accounts and the ASBA Accounts, respectively, to the Public Issue Account, or the Refund Account, as appropriate, in terms of the Red Herring Prospectus. Designated Stock [] Exchange Draft Red Herring This Draft Red Herring Prospectus issued in accordance with Section 60B of the Prospectus Companies Act, which does not have complete particulars on the price at which the Equity Shares are offered and size of this Issue. Eligible NRI NRIs from such jurisdiction outside India where it is not unlawful to make an offer or invitation under the Issue and in relation to whom the Red Herring Prospectus constitutes an invitation to Bid on the basis of the terms thereof. Eligible Employees Permanent and full-time employees of the Issuer, working in India or abroad or of the holding company or subsidiary company or of that material associate(s) of the issuer whose financial statements are consolidated with the issuers financial statements as per Accounting Standard 21, or a director of the Issuer, whether whole time or part time and does not include promoters and an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of the person or of the spouse) on the date of submission of the Bid-cumApplication form. Employee Reservation The Portion of Issue being upto 2,00,000 Equity Shares available for allocation to Portion Eligible Employees. Equity Shares Equity Shares of our Company of face value of `10 each unless otherwise specified in the context thereof. Escrow Account(s) Account(s) opened with Escrow Collection Bank(s) for the Issue and in whose favour the Bidder (including Anchor Investor and excluding the ASBA Bidders) will issue cheques or drafts in respect of the Bid Amount when submitting a Bid. Escrow Agreement Agreement to be entered into amongst our Company, the Selling Shareholders, the Registrar to this Issue, the Escrow Collection Banks, the Members of Syndicate in relation to the collection of the Bid Amounts and dispatch of the refunds (excluding the ASBA Bidders) of the amounts collected, to the Bidders. Escrow Collection The bank(s), which are clearing members and are registered with SEBI as Banker Bank(s)/Bankers to the (s) to the Issue at which the Escrow Account for the Issue will be opened, in this Issue case being []. First Bidder The Bidder whose name appears first in the Bid-cum-Application Form or the ASBA Bid-cum-Application Form or Revision Form. Fresh Issue The issue of [] Equity Shares for cash at a price of `[] per Equity Share including a share premium of `[] per equity share aggregating up to `20,000 lakhs by our Company offered for subscription pursuant to the terms of the Red Herring Prospectus. Floor Price The lower end of the Price Band, below which the Issue Price will not be finalised and below which no Bids will be accepted. Issue Agreement The agreement entered into on March 30, 2011 between our Company, the

Term

Issue

Issue Price

IPO Grading Agency

Description Selling Shareholders and BRLMs pursuant to which certain arrangements are agreed in relation to the Issue. Public Issue of equity shares of face value `10 each ("Equity Shares") of Neesa Leisure Limited for cash at a price of ` [] per Equity Share (the "Issue Price"), including a share premium of `[] per equity share aggregating upto ` [] lakhs constituting Fresh Issue and Offer for Sale by the Selling Shareholders. The final price at which Equity Shares will be issued and allotted in terms of the Red Herring Prospectus. The Issue Price will be decided by our Company and the Selling Shareholders in consultation with the BRLMs on the Pricing Date. []

Members of the BRLMs and the Syndicate Members Syndicate/ Syndicate Mutual Funds Mutual funds registered with SEBI pursuant to the SEBI (Mutual Funds) Regulations, 1996, as amended. Mutual Fund Portion 5% of the QIB portion (excluding the Anchor Investor Portion) or [] Equity Shares available for allocation to domestic Mutual Fund only. Net Issue The Issue of Equity Shares other than the Employee Reservation Portion i.e. upto 2,00,000 Equity Shares of `10 each available for allotment pursuant to the Issue. Net Proceeds The Issue Proceeds received from the Fresh Issue excluding Issue related expenses. For further information on the use of Issue Proceeds and Issue expenses, please refer to the section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus. Net QIB Portion The portion of the QIB Portion less the number of Equity Shares Allotted to the Anchor Investors on a discretionary basis. Non Institutional All Bidders that are not Qualified Institutional Buyers or Retail Individual Bidders Bidders and who have Bid for Equity Shares for an amount more than `2,00,000. Non Institutional The portion of this Issue being not less than 15% of the Net Issue consisting of Portion [] Equity Shares aggregating `[] lakhs, available for allocation to Non Institutional Bidders. Offer for Sale/ Offer The offer for sale by Axis Infrastructure Fund I of [] Equity Shares of `10 each for Sale Portion aggregating upto `5,000 Lakhs and offer for sale by HT Media Limited of 1,03,746 Equity Shares aggregating ` [] Lakhs, pursuant to the terms of the Red Herring Prospectus. Pay-in-Date With respect to Anchor Investors, the date no later than two days after the Bid/Issue Closing Date on which date the Anchor Investors would be required to provide such additional amount as may be required in the event the Issue Price is higher than the Anchor Investor Allocation Price Pre-IPO Placement Placement of upto 35,00,000 Equity Shares aggregating upto `6,500 lakhs to certain investors prior to the Issue by our Company and the Selling Shareholders. The issue of such Equity Shares pursuant to the Pre-IPO Placement, if any, will be completed prior to filing the Red Herring Prospectus with the RoC. If the Placement is successfully completed, the Issue size will be reduced to the extent of such Pre-IPO placement, subject to the Net Issue being at least 25% of the post-Issue paid-up Equity Share Capital of our Company.. Price Band Price Band of a minimum price of ` [] (Floor Price) and the maximum price of ` [] (Cap Price) and include revisions thereof. The Price Band and the minimum Bid Lot size for the Issue will be decided by our Company and the Selling Shareholders in consultation with the BRLMsand advertised, at least two working days prior to the Bid/Issue Opening Date, in all editions of English national daily [], all editions of Hindi national daily [] and [] Gujarati daily with wide circulation . Pricing Date The date on which our Company and the Selling Shareholders in consultation with the BRLMs finalize the Issue Price.

Term Prospectus

Description The Prospectus, to be filed with the RoC in accordance with the provisions of the Companies Act containing, inter alia, the Issue Price that is determined at the end of the Book Building Process, the size of this Issue and certain other information. Public Issue Account The Bank Account opened with the Banker(s) to this Issue by our Company under Section 73, Sections 56, 60 and 60B of the Companies Act, 1956 and SEBI (ICDR) Regulations to receive monies from the Escrow Account for this Issue on the Designated Date and where the funds shall be transferred by SCSBs from the ASBA Accounts. QIB Portion The portion of the Issue being not more than 50% of the Issue shall be available for allocation to QIB Bidders. Red Herring The Red Herring Prospectus issued in accordance with Section 60B of the Prospectus or RHP Companies Act, which does not have complete particulars on the price at which the Equity Shares are offered and size of the Offer. The Red Herring Prospectus will be filed with the RoC at least three (3) days before the opening of the Issue. Refund Account The account opened with Escrow Collection Bank(s), from which refunds, if any, of the whole or part of the Bid Amount (excluding to the ASBA Bidders) shall be made to the Bidders. Refund Bankers The bank(s) which is a/ are clearing member(s) and registered with the SEBI as Bankers to the Issue, at which the Refund Accounts will be opened, in this case being []. Refunds through Refunds through NECS, NEFT, Direct Credit, RTGS, as applicable. electronic transfer of funds Registrar/ Registrar to Link Intime India Private Limited. this Issue RoC / Registrar of Registrar of Companies, Gujarat, Dadra & Nagar Haveli Companies Retail Individual Individual Bidders (including HUFs in the name of Karta and Eligible NRIs) who Bidders have Bid for an amount less than or equal to `2,00,000 in any of the bidding options in this Issue. Retail Portion Consists of [] Equity Shares aggregating ` [] lakhs, being not less than 35% of the Net Issue, available for allocation to Retail Individual Bidder(s). Revised Anchor Notice or intimation of Equity Shares sent to Anchor Investors who have been Investor Allocation allocated Equity Shares after discovery of the Issue Price if the Issue Price is Notice higher than the Anchor Investor Issue Price. Revision Form The form used by the Bidders to modify the quantity of Equity Shares or the Bid price in any of their Bid-cum-Application Forms or any previous Revision Form(s). Self Certified A Bank which is registered with SEBI under SEBI (Bankers to an Issue) Syndicate Bank or Regulations, 1994 and offers services of ASBA and a list of which is available on SCSB http://www.sebi.gov.in/pmd/scsb.pdf Selling Shareholders Axis Infrastructure Fund I and HT Media Limited Stock Exchanges Bombay Stock Exchange Limited and the National Stock Exchange of India Limited Syndicate Agreement The agreement to be entered into between our Company, the Selling Shareholders and the Members of the Syndicate, in relation to the collection of Bids in this Issue (excluding Bids from ASBA Bidders). Syndicate Members Intermediaries registered with SEBI and eligible to act as underwriters. Syndicate Members are appointed by the BRLMs and in this case, being []. TRS or Transaction The slip or document issued by the members of the Syndicate or the SCSBs, as Registration Slip the case maybe, upon demand to a Bidder as proof of registration of the Bid. Underwriters The BRLMs and the Syndicate Members. Underwriting The Agreement among the Underwriters and our Company and the Selling

Term Agreement Working Days

Description Shareholders to be entered into on or after the Pricing Date. All days except Sunday and any public holiday (except in relation to the Bid/ Issue Period where a working day means all days other than a Saturday, Sunday or a public holiday), on which commercial banks in Mumbai are open for business.

Conventional and General Terms Term Companies Act Depositories Act FEMA FII / Foreign Institutional Investors Financial Year/ Fiscal/ F.Y. FVCI Indian GAAP I. T. Act I. T. Rules NIF Non Resident NRI/ Non-Resident Indian Overseas Corporate Body / OCB Description The Companies Act, 1956, as amended The Depositories Act, 1996, as amended Foreign Exchange Management Act, 1999 and the rules and regulations issued thereunder, as amended. Foreign Institutional Investor (as defined under SEBI (Foreign Institutional Investors) Regulations, 1995, as amended) registered with SEBI under applicable laws in India. The period of twelve (12) months ended on March 31 of that particular year. Foreign Venture Capital Investors registered with SEBI under the SEBI (Foreign Venture Capital Investor) Regulations, 2000. Generally Accepted Accounting Principles in India The Income Tax Act, 1961, as amended. The Income Tax Rules, 1962, as amended, except as stated otherwise. National Investment Fund set up by resolution F. No. 2/3/2005-DD-II dated November 23, 2005 of Government of India published in the Gazette of India. A person who is not resident in India except NRIs and FIIs. A person resident outside India, as defined under FEMA and who is a citizen of India or a person of Indian origin, each such term as defined under the FEMA (Deposit) Regulations, 2000, as amended. OCB/Overseas Corporate Body Overseas Corporate Body means and includes an entity defined in clause (xi) of Regulation 2 of the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs) Regulations 2003 and which was in existence on the date of the commencement of these Regulations and immediately prior to such commencement was eligible to undertake transactions pursuant to the general permission granted under the Regulations. OCBs are not allowed to invest in this Issue. Any individual, sole proprietorship, unincorporated association, unincorporated organization, body corporate, corporation, company, partnership, limited liability company, joint venture, or trust or any other entity or organization validly constituted and/or incorporated in the jurisdiction in which it exists and operates, as the context requires. A Mutual Fund, Venture Capital Fund and Foreign Venture Capital investor registered with the Board, a foreign institutional investor and sub-account (other than a sub-account which is a foreign corporate or foreign individual), registered with the Board; a public financial institution as defined in section 4A of the Companies Act, 1956; a scheduled commercial bank; a multilateral and bilateral development financial institution; a state industrial development corporation; an insurance company registered with the Insurance Regulatory and Development Authority; a provident fund with minimum corpus of twenty five crore rupees; a pension fund with minimum corpus of twenty five crore rupees; National Investment Fund set up by resolution No. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazette of India, insurance funds set up and managed by army, navy or air force of the Union of India and

Person(s)

Qualified Institutional Buyers or QIBs

Term

Description insurance funds set up and managed by the Department of Posts, India. SCRR Securities Contracts Regulations Rules, 1957 SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992. SEBI Act Securities and Exchange Board of India Act, 1992. SEBI (ICDR) SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as Regulations amended. SEBI Takeover Securities and Exchange Board of India (Substantial Acquisition of Shares and Regulations Takeover) Regulations, 1997, as amended. SEBI Insider The SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended, including Trading Regulations instructions and clarifications issued by SEBI from time to time. Technical and Industry Terms Term Acre Are ARR AIF Axis Bank Consortium BETL Share Subscription Agreement / BETL SSA DVCF F&B FHRAI FICCI HRACC HTML/ HT Media HTML Share Subscription Agreement / HTML SSA HVS IFCI Share Subscription Agreement/ IFCI SSA MICE Mid-Market property Occupancy Rate RevPAR Description One Acre equals to 4046.86 Sq. Mtrs. One Are equals 100 sq. mtrs. Average Room Rental calculated by dividing the total room revenue by the number of rooms occupied. Axis Infrastructure Fund I Axis Bank Limited, Bank of India, Syndicate Bank, Corporation Bank, L&T Infrastructure Finance Co. Limited, Oriental Bank of Commerce and IFCI Limited Share Subscription Agreement dated October 30, 2009 entered into between our Company, our Promoters and Brand Equity Treaties Limited

Domestic Venture Capital Fund Food and Beverage Federation of Hotel and Restaurant Associations of India Federation of Indian Chambers of Commerce and Industry Hotel Restaurant Approval and Classification Committee HT Media Limited Share Subscription Agreement dated June 17, 2009 entered into between our Company, our Promoters and HT Media Limited

HVS is a leading consulting and services organization focused on the hotel, restaurant, shared ownership, gaming, and leisure industries. Share Subscription Agreement dated August 24, 2010 entered into between our Company, our Promoters and IFCI Limited

Meetings, Incentives, Conventions and Exhibitions Properties providing three (3) / four (4) star facilities Total number of room days occupied divided by the total number of room days available Revenue Per Available Room which means a performance metric in the hotel industry, which is calculated by dividing total revenue by available rooms. Axis Infrastructure Fund I

Selling Shareholder I Selling Shareholder HT Media Limited II

Term Shareholders Agreement /AIF SHA Share Subscription Agreement/ AIF SSA Sq. ft. Sq. Mtrs. Upscale property WPL Share Subscription Agreement / WPL SSA WTTC Abbreviations Term A/c AGM AHLA AS A.Y. ASBA BETL BSE CAGR CCPS CDSL CHHPL CIHM CTH DIN DIPP DoT DP DSA ECS EBIDTA EGM EPS ESIC FCNR Account FIPB FIs F.Y. G.I.D.C GIR Number GoI/Government HTML HUF

Description Shareholders Agreement dated March 28, 2008 entered into between our Company, Our Promoters and Axis Infrastructure Fund I Share Subscription Agreement dated March 28, 2008 entered into between our Company, our Promoters and Axis Infrastructure Fund I Square Feet Square Metres Properties providing five (5) star facilities Share Subscription Agreement dated October 3, 2008 entered into between our Company, our Promoters and Writers & Publishers Limited

World Travel and Tourism Council

Description Account Annual General Meeting American Hotel & Lodging Association Accounting Standards issued by the Institute of Chartered Accountants of India. Assessment Year Application Supported by Blocked Amount Brand Equity Treaties Limited Bombay Stock Exchange Limited Compounded Annual Growth Rate Compulsory Convertible Preference Shares Central Depository Services (India) Limited Cambay Hotels and Holidays Limited Cambay Institute of Hospitality Management Confederation of Tourism & Hospitality Director Indentification Number Department of Industrial Policy & Promotion Department of Tourism Depository Participant Domestic Sales Agent Electronic Clearing System Earnings before Interest, Depreciation,Tax and Amortisation Extraordinary General Meeting of the shareholders Earnings Per Share Employees State Insurance Corporation Foreign Currency Non Resident Account Foreign Investment Promotion Board Financial Institutions Financial Year Gujarat Industrial Development Corporation General Index Registry Number Government of India HT Media Limited Hindu Undivided Family

Term ICAI IDFC IFCI IGNOU IPO IT Authorities IT MIS MoF MoT MoU NCD/NCDs NAV NoC NPV NRIs NRE Account NRO Account NSDL NSE P.A., p.a. PAN PAT P/E Ratio PSA PSU QIB RBI RCI RIICO ROE RoC RONW SBI SEZ TFCI UBI U.S. GAAP USD/US$ VAT w.e.f WPL YoY

Description Institute of Chartered Accountant of India Infrastructure Development Finance Company Limited Industrial Finance Corporation of India Indira Gandhi National Open University Initial Public Offering Income Tax Authorities Information Technology Management Information System Ministry of Finance, Government of India Ministry of Tourism Memorandum of Understanding Non Convertible Debenture(s) Net Asset Value No Objection Certificate Net Present Value Non Resident Indians Non-Resident (External) Account Non-Resident (Ordinary) Account National Securities Depository Limited The National Stock Exchange of India Limited Per annum Permanent Account Number Profit After Tax Price/Earnings Ratio Preferred Selling Agents Public Sector Undertaking Qualified Instutional Buyer Reserve Bank of India Group Resort Condominiums International The Rajasthan State Industrial Development & Investment Corporation Limited Return on Equity Registrar of Companies Return on Net Worth State Bank of India Special Economic Zone Tourism Finance Corporation of India Limited United Bank of India Generally Accepted Accounting Principles in the United States of America United States Dollar Value added tax With effect from Writers & Publishers Limited Year on Year

10

CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION & MARKET DATA AND CURRENCY OF PRESENTATION Certain Conventions Unless otherwise specified or the context otherwise requires, all references to "India" in this Draft Red Herring Prospectus are to the Republic of India, together with its territories and possessions and all references to the "US", the "USA", the "United States" or the "U.S." are to the United States of America, together with its territories and possessions. Financial Data Unless stated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our restated standalone financial statement for the F.Y. 2006, 2007, 2008, 2009, 2010 and six (6) months period ended September 30, 2010. The section titled "Financial Information" beginning on page 208 also mentions our restated consolidated financial statement for the F.Y. 2010 and six (6) months period ended September 30, 2010. Our restated standalone and consolidated financial statements are based on our audited standalone and consolidated financial statements respectively prepared in accordance with Indian GAAP, the Accounting Standards and other applicable provisions of the Companies Act and are restated in accordance with the SEBI (ICDR) Regulations. Our fiscal year commences on April 1 and ends on March 31 of the next year, so all references to a particular fiscal year are to the twelve-month (12) period ended March 31 of that year. In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off. All the numbers in this Draft Red Herring Prospectus have been presented in lakhs or in whole numbers where the numbers have been too small to present in lakhs. There are significant differences between Indian GAAP, U.S. GAAP and the International Financial Reporting Standards (IFRS). Accordingly, the degree to which the Indian GAAP restated financial information included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the readers level of familiarity with Indian accounting practices. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. We have not attempted to explain those differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data. Any percentage amounts, as set forth in the sections titled "Risk Factors", "Our Business", "Managements Discussion and Analysis of Financial Condition and Results of Operations" beginning on pages 15, 133 and 304 respectively of this Draft Red Herring Prospectus, unless otherwise indicated, have been calculated on the basis of our restated standalone financial information prepared in accordance with Indian GAAP. For definitions, see the section titled "Definitions and Abbreviations" beginning on page 1 of this Draft Red Herring Prospectus. In the section entitled "Main Provisions of the Articles of Association" beginning on page 444 of this Draft Red Herring Prospectus, defined terms have the meaning given to such terms in the Articles. Use of Industry and Market data The section titled "Industry Overview" beginning on page 115 has been derived from a report titled "Indian Hotel Industry, March 2011" that the Company has commissioned Credit Analysis & Research Limited ("CARE") to prepare a report (the "Report"). CARE has obtained the information set forth in the Report from its databases and other sources available in the public domain identified in the Report. CAREs methodologies for collecting information and data, and therefore the information discussed in the "Industry Overview" section, may differ from those of other sources, and does not reflect all or even necessarily a

11

comprehensive set of the actual transactions occurring in the industry. The "Industry Overview" section also includes certain projections and estimates that are based on certain assumptions regarding contingencies and other matters that are not within the control of the Company, the BRLMs, CARE or any other person. These assumptions are inherently subject to significant uncertainties and actual results may differ, perhaps materially, from those projected. CARE has given and has not withdrawn its written consent to the issue of this Draft Red Herring Prospectus with the inclusion herein of its name and all references thereto and to the inclusion of the Report, including extracts of the Report, in this Draft Red Herring Prospectus, in the form and context in which it appears in this Draft Red Herring Prospectus. While the Company has taken reasonable actions to ensure that the Report and the market share and industry data and forecasts have been extracted accurately and in their proper context, neither the Company nor the BRLMs have independently verified any of the data and forecasts from CARE or from third party sources or ascertained the underlying assumptions relied upon. As a result, you are cautioned against placing undue reliance on such information. Accordingly, no investment decision should be made based on such information. Although we believe that industry data used in this Draft Red Herring Prospectus is reliable, it has not been independently verified. Additionally, the extent to which the market and industry data presented in this Draft Red Herring Prospectus is meaningful depends on the readers familiarity with and understanding of the methodologies used in compiling such data. There are no standard data gathering methodologies in the industry in which we conduct our business and methodologies and assumptions may vary widely among different industry sources. Currency of Presentation All references to "Rupees" or "`" or "INR" are to Indian Rupees, the official currency of the Republic of India. Throughout this Draft Red Herring Prospectus all figures have been expressed in Lakhs, Million and Crores. The word "Lakhs" or "Lakh" or "Lakhs" means "One hundred thousand", "Millon" means "Ten Lakhs" and "Crores" means "Ten Million". Any percentage amounts, as set forth in "Risk Factors", "Business", "Management's Discussion and Analysis of Financial Conditions and Results of Operation" in this Draft Red Herring Prospectus, unless otherwise indicated, have been calculated based on our restated standalone and consolidated financial statement prepared in accordance with Indian GAAP.

12

FORWARD LOOKING STATEMENTS All statements contained in this Draft Red Herring Prospectus that are not statements of historical fact constitute forward-looking statements. All statements regarding our expected financial condition and results of operations, business, plans and prospects are forward-looking statements. We have included statements in this Draft Red Herring Prospectus which contain words or phrases such as "will", "aim", "is likely to result", "believe", "expect", "will continue", "anticipate", "estimate", "intend", "plan", "contemplate", "seek to", "future", "objective", "goal", "project", "should", "will pursue" and similar expressions or variations of such expressions, that are "forward-looking statements". All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. These statements are based on our managements beliefs and assumptions, which in turn are based on currently available information. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking statements based on these assumptions could be incorrect. Important factors that could cause actual results to differ materially from our expectations include but are not limited to: 1. 2. 3. 4. 5. 6. Increased competition or other factors in the hospitality industry; Our ability to meet our capital expenditure requirements and/or increase in capital expenditure; Market fluctuations and industry dynamics beyond our control; Our ability to successfully implement strategy, growth and expansion plans; Our dependence on key managerial personnels; Increase in cost of operations due to several factors including increase in cost of power & fuel, employee remuneration and food inflation; Government approvals for existing and new projects; Our ability to comply with the terms and conditions and other covenants of our borrowings; General economic and business conditions in India and other geographies; Changes in the regulatory framework governing us; and Any downgrading of Indias debt rating by international rating agencies.

7. 8. 9. 10. 11.

For a further discussion of factors that could cause our actual results to differ from our expectations, see the sections "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" beginning on pages 15, 133 and 304 respectively, of this Draft Red Herring Prospectus. 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. Forward looking statements speak only as of the date of this Draft Red Herring Prospectus. Neither our Company, the Selling Shareholders, our Directors and officers, the Underwriters, nor any of our respective affiliates or associates has 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

13

underlying assumptions do not come to fruition. In accordance with SEBI requirements, our Company, the Selling Shareholders and the BRLMs will ensure that investors in India are informed of material developments until the final listing and commencement of trading of the Equity Shares allotted pursuant to the Issue on the Stock Exchanges.

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SECTION II: RISK FACTORS An investment in equity shares involves high degree of risk. The risks and uncertainties described below, together with the other information contained in this Draft Red Herring Prospectus, should be carefully considered before making an investment decision in our Equity Shares. These risks are not the only ones relevant to our Company and our business, but also include risk relevant to the industry and geographic regions in which we operate. Additional risks, not presently known to us or that we currently deem immaterial may also impair our business and operations. To obtain a complete understanding of our Company and prior to making an investment decision, prospective investors should read this section in conjunction with the sections titled "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" beginning on pages 133 and 304 respectively, as well as the other financial and statistical information contained in this Draft Red Herring Prospectus. If any of the risks described below actually occur, our business prospects, financial condition and results of operations could be materially affected, the trading price of our Equity Shares could decline, and investors could lose all or part of their investment. Prospective investors should pay particular attention to the fact that we are incorporated under the laws of India and are subject to a legal and regulatory environment that differs in certain respects from that of other countries. Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial or other implication of any of the risks described in this section. Unless otherwise stated, the financial information used in this section is derived from and should be read in conjunction with restated standalone financial statements of our Company as of and for the F.Y. 2006, 2007, 2008, 2009, 2010 and as of and for the six (6) months period ended September 30, 2010, in each case prepared in accordance with Indian GAAP, including the schedules, annexures and notes thereto. Internal Risk Factors 1. The Income Tax Authorities have carried out search and seizure operations at our registered office, various locations where the properties of our Company are situated and the residential premises of our Promoters. In addition, survey proceedings were initiated at the offices of some of our Group Entities. In the event of any demand raised by the IT Authorities may adversely affect the financial condition and results of operation of our Company. In September 2010, the Income Tax Department carried out search and seizure operations under Section 132(1) of the Income Tax Act, 1961 ("IT Act") at twenty four (24) business premises of our Company, residential premises of our Promoters and on various group companies of our Company. During the course of the search and seizure operations, the IT Authorities have impounded certain materials & documents and seized `3.80 lakhs in cash and 1,100 gms of gold and have recorded statements under Section 132(4)/131 of the IT Act of certain officials of our Company including the Promoters, their relatives and Directors of our Company. Further, during the course of survey proceedings carried out under Section 133A of the IT Act, the IT Department has issued impounding orders under Section 133A(3)(ia) wherein certain books, loose papers, diaries, registers and other documents as well as electronic storage devices in the form of hard disc, CDs, pen drive etc. have been impounded for further investigation in the matter. The Deputy Director of Income Tax ("DDIT") has also issued summons under Section 131(1A) to our Company, our Promoter(s), their relatives, group companies of our Company and certain other Company officials requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein. The DDIT has further issued notice under Section 133(6) of the IT Act against Axis Private Equity Limited calling upon them to furnish information and details in relation to our Company. Further, HTML has been issued summons under Section 131 requiring them (either personally or through

15

their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein notice. HTML filed its reply dated January 4, 2011 to the summons. Our Company had filed a Special Civil Application (13498/2010) ("SCA") before the High Court of Gujarat, Ahmedabad against the Union of India, the Director General of Income Tax (Investigation), Director (Investigation) and the Deputy Director of Income Tax. Our Company had further filed a Civil Application (15767/2010) in the above SCA for disclosure of the contents of the satisfaction note which lead the Department to consider conducting a search and seizure operation of our Company. The High Court of Gujarat, Ahmedabad by its order dated March 4, 2011 has dismissed the aforementioned Petition of our Company since the High Court of Gujarat, Ahmedabad is of the view that (i) the condition precedent for exercise of powers under Section 132(1) has been duly satisfied prior to issuance of warrant of authorisation under Section 132(1) of the IT Act and (ii) that there were sufficient reasons for the concerned officer to call upon the required information as stated in the notices served under Section 133(6) of the IT Act. Further, the Assistant Commissioner of Income Tax, Central Circle 2(2), Ahmedabad ("ACIT") has served Notices under Section 153A(1)(a) of the IT Act upon our Company and our Promoters requiring them to furnish the Return of Income for the last six (6) years i.e. A.Y.2005-2006 to A.Y.20102011 for the purposes of assessment/re-assessment. For further details of the above litigation, please refer to the section titled "Outstanding Litigation and Material Developments" beginning on page 336 of this Draft Red Herring Prospectus. 2. Our Company, Promoters, Directors, Group Entities and our Subsidiary are involved in certain litigations, the outcome of which could adversely affect our business prospects, financial condition and results of operations. We set out below the summary of litigation by and against our Company, Promoters, Directors, Subsidiary and Group Entities: No. Particulars No. of cases / disputes Amount involved where quantifiable (` in Lakhs) `

LITIGATION BY AND AGAINST OUR COMPANY Litigation against our Company 1. Civil Cases 2. Criminal proceedings 3. Labour Cases 4. Consumer Cases Revenue Proceedings filed against our Company 1. Commercial tax Proceedings 2. Income tax Proceeding Notices issued against our company 1. Notices issued by various parties Litigation filed by our Company 1. Civil cases 2. Criminal proceeding 3. Motor Accident claim LITIGATION BY AND AGAINST OUR PROMOTERS, OUR COMPANIES Cases filed against our Promoters and Directors 1. Cases filed against our Promoters and Directors 2. Income Tax Proceedings against our Promoters Cases filed against our Group Entities

4 3 1 7 1 1 20

134.04 Not Ascertainable Not Ascertainable 16.45 Not Ascertainable Not Ascertainable 87.60

5 14.41 5 36.77 1 22.00 DIRECTORS & GROUP

3 1

Not Ascertainable Not Ascertainable

16

No.

Particulars

No. of cases / disputes 1 1 3 1 1 1 1 1 2 2 1 1

1. 2. 3. 4. 5. 6. 7.

Civil cases filed against Neesa Infrastructure Limited Summons issued to Neesa Infrastructure Limited Labour cases filed against Neesa Leisure Limited Summons issued to Neesa Agritech and Foods Limited Summons issued to Neesa Energy Private Limited Summons issued to Neesa Technologies Private Limited Summons issued to Gujarat Syscom Technologies Private Limited 8. Summons issued to Neesa Biotech Private Limited Cases filed by our Group Entities 9. Notices issued by Neesa Infrastructure Limited 10. Criminal Proceedings filed by Neesa Infrastructure Limited 11. Winding-up proceedings filed by Neesa Infrastructure Limited Cases filed against our Subsidiary Company 1. Cases filed against our Subsidiary Company

Amount involved where quantifiable (` in Lakhs) ` 6.48 -3.49 -----19.19 10.00 ---

For further details of the above litigation, please refer to the section titled "Outstanding Litigation and Material Developments" beginning on page 336 of this Draft Red Herring Prospectus.

3.

Our Subsidiary, Palm Lagoon Backwater Resorts Private Limited, is disputing the claim of the Government of Kerala over a part of the open land portion of its property in Kerala. In the event, an unfavourable order is passed, our Subsidiary may have to vacate this part of the property which may reduce the occupancy rate and the average revenue per room thereby affecting our financials and results of operations. Our Company acquired Palm Lagoon Backwater Resorts Private Limited ("Palm Lagoon") in the year 2009 which owns a piece of land admeasuring 1 Hectare 46 Ares 62 Sq. Mtrs. (the "Land") over which our 'Cambay Palm Lagoon' resort is situated including Block No.12 of Village Perinad, Resurvey No.1 admeasuring 62.45 Ares (the "Disputed Open Land"). One Dr. V. Harikumar, had been in possession of the Land for a period of over thirty (30) years. Dr. V. Harikumar had purchased the Land including the Disputed Open Land from various parties in the year 1964 which was then conveyed in favour of Palm Lagoon by way of a Sale Deed dated January 8, 2003. The Government of Kerala ("Government") by an order dated November 19, 2009 ("Order") passed in terms of Kerala Conservancy Act, 1957, held that the Disputed Open Land is owned by and belonged to the Government and that the same has been encroached upon by Palm Lagoon. The Additional Tehsildar has imposed a penalty of `2 Lakhs (`2,00,000) and has further ordered Palm Lagoon to hand over the possession of the Disputed Open Land to the Government failing which the Government will initiate eviction proceedings against Palm Lagoon in respect of the Disputed Open Land. Palm Lagoon has preferred an appeal under the provisions of Section 16 of Kerala Conservancy Act, 1957 along with a stay petition before the Revenue Divisional Officer, Kollam against the Order. In the event, an unfavourable order is passed after exhausting all judicial remedies, our Subsidiary may have to vacate this Disputed Open Land forming part of its property.

17

4.

Certain Equity Shares held by our Promoters, have been pledged in favour of our lenders to secure repayment of the loans availed by our Company. Default in repayment of the loans by our Company may lead to invocation of the pledge on these Equity Shares, which may result in dilution of our Promoters holding in our Company. As on the date of this Draft Red Herring Prospectus, our Promoters hold 2,03,69,648 Equity Shares of our Company constituting 78.92% of the total pre-Issue paid-up share capital of our Company. Out of the above, 1,95,60,909 Equity Shares held by our Promoters constituting 75.79% of our paid-up capital have been pledged as on the date of this Draft Red Herring Prospectus. Default in repayment of the loans by our Company may lead to invocation of the pledge on these Equity Shares, which may result in dilution of our Promoters holding in our Company resulting in loss of control of our Company. For further details on pledge of Equity Shares, please refer to section titled "Capital Structure" beginning on page 68 of this Draft Red Herring Prospectus.

5.

Most of Equity Shares held by our Promoters are pledged with various lenders of our Company which may include the Equity Shares required for minimum Promoters contribution. As on the date of this Draft Red Herring Prospectus, our Promoters hold 2,03,69,648 Equity Shares of our Company constituting 78.92% of the total pre-Issue paid-up share capital of our Company. Out of the above, 1,95,60,909 Equity Shares held by our Promoters constituting 75.79% of our paid-up capital and 96.02% of their total shareholding have been pledged as on the date of this Draft Red Herring Prospectus. For further details, please refer to the paragraph titled "Pledge of Equity Shares" in the section titled "Capital Structure" on page 68 of this Draft Red Herring Prospectus. Our Company and our Promoters shall before the filing of the Red Herring Prospectus, if required, request the lenders with whom the Equity Shares held by the Promoters are pledged, to de-pledge / release [] Equity Shares for a limited period of three (3) years from the date of allotment of Equity Shares under the Issue to enable us to comply with the requirements of the SEBI (ICDR) Regulations. Our Company has already obtained a letter dated August 9, 2010 from Axis Bank Limited (the lead bank of the Axis Bank Consortium) agreeing to de-pledge 40,00,000 Equity Shares of our Promoters before filing of the Red Herring Prospectus with the RoC till the conclusion of lock-in period to be in compliance with the requirements of Regulation 33(1)(d) of the SEBI (ICDR) Regulations. For the aforementioned de-pledge/release of the Equity Shares the lenders may impose certain conditions which our Promoters may be required to fulfill. The Equity Shares so de-pledged / released will be re-pledged with the lenders after the lock-in period of three (3) years from the date of allotment of Equity Shares in the Issue.

6.

Axis Infrastructure Fund I, currently has and upon completion of the Issue may continue to have, a significant shareholding in our Company which may adversely affect the interest of the minority shareholders of our Company. In addition to the above, Axis Infrastructure Fund I, also has a right under the Shareholders Agreement to appoint directors on our Board proportionate to its shareholding in our Company. Our Company and Promoters have entered into a Share Subscription Agreement dated March 28, 2008 ("SSA") with Axis Private Equity Limited ("Axis PE") in relation to the investment of an aggregate sum of `7,500 Lakhs ("Investment Amount") by Axis PE in our Company. As per the terms of SSA, Axis PE subscribed to (i) 34,65,347 Equity Shares of `10 each at a price of `101 per Equity Share ("Investor Shares") and (ii) 4,00,000 Compulsory Convertible Preference Shares ("CCPS") of `1,000 each. Pursuant to the above SSA, our Company, our Promoters and Axis PE have entered into a Shareholders Agreement dated March 28, 2008 ("SHA") to set out to their

18

relationship in relation to the ownership and management of our Company. Subsequent to the execution of the above SHA, Axis PE transferred the Investor Shares and the CCPS to Axis Infrastructure Fund I ("AIF/Investor"), and all rights and obligations under the SHA have since been transferred onto AIF pursuant to a Transfer Agreement dated June 30, 2008. For further details, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. AIF is offering a part of its shareholding in our Company to the public by way of Offer for Sale in this Issue. AIF holds 34,65,347 Equity Shares as on the date of this Draft Red Herring Prospectus. Further, AIF will be allotted [] Equity Shares pursuant to the conversion of CCPS before filing the Red Herring Prospectus with the RoC. Taking the Offer for Sale portion into consideration, AIF will hold an aggregate of [] Equity Shares upon the completion of the Issue. As per the SHA, as long as AIF owns upto thirty three percent (33%) or more of its initial investment in our Company, AIF will have a right to appoint a nominee director in proportion to its shareholding on the Board. All other rights of the investor under the SHA will terminate on the listing of the Equity Shares of our Company on the Stock Exchange. However, upon the completion of the Issue, as a holder of more than [] of our shareholding, AIFs vote may have a major bearing over the outcome of shareholder resolutions that require a three-fourth majority. The interests of AIF may be different from our interests or the interests of our other shareholders or investors. As a result, AIF may take actions with respect to our business that may not be in our or our other shareholders best interests. By exercising its powers, AIF could delay, defer or cause a change of control or change in our capital structure, delay, defer or cause a merger, consolidation, takeover or other business combination involving us, discourage or encourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which may be in our best interest, or in the best interest of our other shareholders. Further, any sale of Equity Shares by AIF in the future, or the perception that such sales will occur, may adversely impact the price of the Equity Shares trading in the market. 7. Requirement to transfer specified percentage of profits to the Debenture Redemption Reserve (DRR) before declaration of dividend to the shareholders of our Company as per the Companies Act, 1956 and Companies (Transfer of Profits to Reserves) Rules, 1975 may lead to reduction of distributable profits available to the shareholders. Our Company has issued Secured Redeemable Non-Convertible Debentures ("NCDs") to Axis Bank in October 2008 of face value `10,00,000 each aggregating to `25,00,00,000. In terms of Section 117C of the Companies Act, 1956, our Company is required to create a debenture redemtion reserve ("DRR") for redemption of the NCDs. Further, as per the Companies (Transfer of Profits to Reserves) Rules, 1975 ("Rules") in the event of a company declaring dividends, specified percentage of profits shall be required to be transferred to the DRR until such debentures are redeemed. Till these NCDs are redeemed by our Company, specified percentage of profits will have to be transferred to the DRR which may lead to a reduction in the amount of distributable profits to the shareholders. 8. Reduction or less than anticipated stay by guests or members at our properties may result in a loss of revenue generation opportunities and adversely impact our revenues. In the event of reduction or less than anticipated stay by our guests or members at our properties at any given time, may lead to a large number of unused apartments and other facilities. This could also lead to a loss of revenue generation opportunities from other activities offered along with stay such as spa, sports and entertainment facilities. Our revenues from such additional facilities may get affected due to reduction or non-use of our properties which may adversely impact result of our operations.

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9.

Increase in supply of quality hotels and resorts in Tier II cities by our competitors may have a material adverse effect on our business and operations. Our existing properties are situated at Ahmedabad, Gandhinagar, Jaipur, Udaipur, Bangalore, Kerala, Neemrana and Goa. We propose to develop properties at Lucknow, Raipur and Nasik from the Proceeds of the Issue. Most of our existing and proposed properties are located in Tier II cities which have been rapidly growing in the recent past attracting our competitors to enter these markets. Various hotel companies are developing properties in these Tier II locations which may in the near future increase the supply of rooms considerably leading to competition and consequent reduction of occupancy and room rates. We compete not only against other national and international chain of hotels and resort, but also single property owners. We may in the future experience increased competition from existing or new companies entering the Indian hospitality industry. Due to increased competition, we could experience downward pressure on our room rates, lower demand for our club and vacation ownership memberships, reduced margins. In this environment, if we are unable to compete with the new and existing competitors with respect to the rates, services and amenities offered by them, it may have an adverse impact on our business and results of operations.

10.

The properties taken by us on short term lease or management contract basis may not be available for a longer period of time, which may limit our growth prospects and adversely affect our business. Our properties situated at Goa and Bangalore are available to us on a short term lease & management contract basis respectively from third parties for a period of five (5) years. If the lessors or owners of these properties do not renew the lease agreements or management contracts with us or on terms acceptable to us or if we are unable to enter into agreements with other lessors or owners of other properties, our room inventory may be affected. This would limit our growth prospects and adversely affect our revenues accruing from these locations.

11.

Lessor of our Goa property has invoked arbitration against our Company for non-payment of lease rentals since December, 2010. Mr. Jose Augustine Fernandes, the lessor our Goa property i.e. Cambay Beach Resort has filed a Civil Misc. Application (30/2011) under Section 9 of the Arbitration and Conciliation Act, 1996 before the Court of Principal District Judge, North Goa, at Panaji for (i) an injunction against our Company from damaging the property or removing the furniture, fixtures and (ii) for payment of monthly rentals from the month of December 2010. The lessor has alleged that our Company has delayed and neglected the payment of rent since December 2010. Our Company is in the process of preparing and filing a reply to the above application.

12.

We are exposed to risks related to in-house development of our properties. Our in-house team of engineers and managers develop our properties. Our property at Cambay Sapphire, Neemrana is partially operational with 60 rooms and our Company is in the process of increasing the room inventory by further development of 50 rooms which shall be operational by F.Y. 2012. Our Company also intends to develop our proposed properties at Lucknow, Raipur and Nasik to be funded from the proceeds of the Issue. As a part of our activities, we have developed most of our own properties through an in-house team of engineers with the help of civil and labour contractors. The compliance of these civil and labour contractors with our construction schedules and budgets are not fully under our control. Our development activities are also subject to risks relating to: the inability to obtain, or delays in obtaining, all necessary zoning, land-use, building, occupancy, sales and other required governmental and local regulatory permits and authorizations;

20

construction costs or delays at a property may exceed original estimates which could make the development uneconomical or unprofitable; the possibility of fines and penalties being imposed on us due to non-compliance with statutory requirements by the contractor; and the ability to obtain adequate financing to complete the acquisition, construction or renovation work at our properties. Any of the above risks, should they occur, could have an adverse effect on our business, results of operation and financial condition. 13. Downgrading of our credit ratings would increase our cost of borrowing funds and make our ability to raise additional funds in the future or renew maturing debt more difficult. Our non-convertible debentures are rated LBBB+ in September 2010 by ICRA Rating Services. Downgrading of our NCD credit rating may not only increase our cost of raising funds but also affect our ability to renew maturing debt at a competitive rate. A downgrade in our credit ratings and an inability to renew maturing debt at a competitive rate may also adversely affect the perception of our financial stability. For further details on our NCDs, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.. 14. Our indebtedness and the conditions and restrictions imposed by our financing arrangements could adversely affect our ability to conduct our business and operations. The agreements entered with banks and financial institutions by our Company contain certain restrictive covenants and shall require the prior written approval from lenders for matters such as: undertaking any new projects modernize, expand; enter into borrowing arrangement either secured or unsecured with any other banks, financial institution, company or otherwise; conveying, selling, leasing or otherwise disposing of or mortgaging or otherwise creating a charge on all or any part of our Companys assets; create any further charge, lien or encumbrance over the assets and properties of our Company; issuing any debentures; declaring dividends; accepting deposits from public; changing the capital structure; undertaking any drastic change in management; undertaking any scheme of amalgamation or restructuring; lending funds or investing in group companies, undertaking guarantee obligations on behalf of any other firm/company including group companies; entering into any contractual obligation of a long-term nature or affecting our Company financially to a significant extent; changing any practice regarding the remuneration of directors by means of ordinary remuneration or commission, scale of sitting fees etc.; Pay guarantee commission to the guarantors whose guarantees have been stipulated/ furnished for the credit limits sanctioned; undertaking any trading activity other than the sale of products arising out of our own operations; permitting any transfer of controlling interest; repaying monies brought in by promoters/principal shareholders/directors/ and their friends and relatives by way of deposits, loans and advances; and Repayment of unsecured loans/ deposits raised by our Company for financing a project.

21

While our Company has obtained the No Objection Certificate from its lenders, there can be no assurance that we will be able to comply with the above covenants or that we will be able to obtain the consents necessary to take the actions we believe are required to operate and grow our business. Repayment of certain loans may be demanded at any time by our lenders pursuant to terms of the agreements. An event of default under any of these loan arrangements, if not cured or waived, could have a material adverse effect on us. 15. Our Company has availed unsecured loans from other entities which are payable on demand. Any short notice for repayment may have an impact on financials of our Company. As on February 28, 2011, our Company has availed unsecured loans including fixed deposits aggregating to `1,159.99 Lakhs from various entities. These loans/ deposits maybe recalled any time by these entities. In the event that these loans are required to be re-paid at short notice, our Company may have to arrange for additional funds at higher costs which may have an impact on financials of our Company. 16. Disruptions in the operations of our properties, services & facilities could affect our business and results of operations. Our business involves providing services, amenities and facilities such as food items, consumables or other utilities & services to our customers and guests. Maintaining an inventory of such particular requirements demands significant logistical effort. A failure in our operational and delivery systems, shortages or interruption in the supply of essentials (caused by weather or otherwise) and a resultant failure to maintain the frequency of deliveries to our properties or the quality of the deliverables may impact the ability of our properties to service our customers, thus affecting our reputation and sales. Failure to provide the deliverables could also be impacted by reasons beyond our control, such as a strike by freight and transport operators. Furthermore, any unavailability or breakdown of equipment, such as refrigerators, boilers, air-conditioners, laundry equipments installed in our properties may hamper the timely delivery and sales of our rooms and other facilities which may have an adverse effect on our business operations. 17. Our business is seasonal in nature. Revenues in the hotel industry are generally higher during the second half (October to March) of each fiscal year as compared to the first half (April to September) of the fiscal year. The impact of such seasonality is mitigated to some degree by attracting corporate customers who are less sensitive to seasonal variations than tourists. Further, any disturbances or disruptions caused due to extreme climatic conditions in a particular season may lead to a drop in the number of corporate customers thereby leading to a reduction in our revenues and can have a material adverse impact on our financial performance. As a result of this, the quarter on quarter comparison of historical results may not be accurate or a meaningful indicator of our future performance. 18. We may be unable to identify, acquire and new develop properties, which would have a material adverse effect on our growth prospects. In order to grow our business, it is important to identify suitable land at strategic locations and successfully negotiate and finalise the terms on which the land is proposed to be acquired. Our growth may be adversely affected by other factors, some of which may be beyond our control, including the following: the availability and cost of acquisition of land or property; our ability to compete successfully for acquisition of land or property; the availability of adequate financing; development and management costs; and securing required governmental or local authority permits and approval;.

22

19.

In addition, while we may have undertaken the required due diligence of the land prior to acquiring it, there can be no assurance that we may not have inherited a defective title to the land. Any such factors or other factors affecting our ability to acquire the desired land, will affect our business and our ability to develop new properties, resulting in an adverse effect on our revenues and results of operations. Instances of food-borne diseases, as well as widespread negative publicity regarding food quality or other health concerns may affect our business and operations in general and our food and beverages sales in particular. Negative publicity, real or perceived, about food quality or other health concerns or similar issues could materially adversely affect us, regardless of whether they pertain to our own properties or operated by others. We cannot guarantee that our operational controls and employee training will be effective in preventing food-borne illnesses, adulteration and other food safety issues that may affect our properties. Food-borne illness or adulteration incidents could be caused by customers, employees or food suppliers and transporters and, therefore, could be outside of our control. Any publicity or advisory issued by regulatory authority relating to health concerns or the perceived or specific outbreaks of food-borne diseases, adulteration or other food safety issues attributed to one or more of our properties could result in a significant decrease in sales of our food & beverages and could have a material adverse effect on our business and results of operations.

20.

Our operating results depend on the effectiveness of our marketing and advertising programs. Our revenues to a great extent depend upon brand building through marketing and advertising. Our marketing and advertising programs may not be successful and we may fail to attract new customers and retain existing customers. If our marketing and advertising programs are unsuccessful, financial and human resources deployed for this purpose would not be fruitful and our results of operations could be adversely affected.

21.

The hotel industry is subject to significant regulations. Failure on our part to adhere to these regulations may attract penalties or other directives from the regulators. We are subject to numerous laws and regulations in the jurisdictions in which we operate, including those relating to the preparation and sale of food & beverages and health & liquor licensing laws. Our properties are also subject to laws and regulations governing relationships with employees in such areas as minimum wage and maximum working hours, overtime, working conditions, hiring and terminating of employees and work permits. Furthermore, the success of our strategy to expand our existing properties, acquire new properties or to develop new properties is contingent upon, amongst other things, receipt of all required licenses, permits and authorizations, including local land development and use permits, building and zoning permits, environmental, health and safety permits and liquor licenses. Changes or concessions required by regulatory authorities could also involve significant costs and delay or prevent completion of the construction or opening of a project or could result in the loss of an existing license. Failure on our part to comply with such regulations may adversely affect our business and results of our operations.

22.

The hospitality industry is affected by consumer preferences and perceptions. Changes in these preferences and perceptions may affect the demand for our properties and adversely affect our operations. Hospitality industry is affected by changes in consumer preferences, national, regional and local economic conditions and demographic trends. Market perception of our properties and services may change which could impact our continued business success and future profitability. If we are unable to adapt our services successfully, meet changes in consumer demands and trends, our business and financial condition may be adversely affected.

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23.

We are required to comply with various standards as prescribed by the RCI from time to time. Failure to adhere to such requirements may result in the declassification or downgrading of our properties and consequently, adversely affect our business. In order to obtain and maintain the star category for our properties, we are required to fulfil and continually comply with certain standards as prescribed by the HRACC and RCI affliation. Such standards may relate to the number of rooms, quality of facilities and services to be provided for classified hotels and resorts. Similarly, most of our properties are affiliated with RCI. Any failure to adhere to the requirements prescribed by the HRACC and RCI may result in the declassification or downgrading of our properties and consequently may adversely affect our business and results of operations.

24.

Our costs of compliance with health, safety and environmental laws are expected to be significant, and failure to comply with existing and new health, safety and environmental laws could adversely affect our results of operations. Our business is subject to national, state and municipal laws and regulations, which govern the handling and storage of food products, as well as the discharge, emission, storage, handling and disposal of a variety of substances that may be used in or result from our operations. Health, safety and environmental regulation in India may become more stringent, and the scope and extent of new regulations, including their effect on our operations, cannot be predicted with any certainty. In case of any change in health, safety or environmental regulations, we may be required to incur significant costs on, amongst other things, health, safety and environmental audits and monitoring, pollution control equipment and emissions management. We could also be subject to substantial civil and criminal liability and other regulatory consequences in the event that a health or environmental hazard occurs at any of our properties, or if any of our operations results in contamination of the environment, including the spread of any infection or disease. If such incidences are determined against us leading to civil and criminal liability and other regulatory consequences, our business and operations may be adversely affected.

25.

We are subject to operating and other risks common to the leisure and hospitality industry. Our financial results are affected by room rentals and occupancy achieved by our hotels, our ability to control cost of developing and running rooms and the success of our food & beverage operations. Further, our operating margins would be adversely affected by increase in electricity, insurance and environmental compliance expenses. Our properties would have to be renovated periodically to keep up with the changing trends and such renovation may involve significant development and maintenance costs. In addition, our business is subject to risk relating to change in preferences of our guests and members and increase in costs due to inflation that may not be fully offset by price and membership fee increase for our products and services. Our inability to manage the above risks would have a negative impact on our profitability and financial position.

26.

Disruptions or lack of basic infrastructure such as our electricity supply and water supply could adversely affect our operations. The hotel business being a part of the service industry is dependent on customer satisfaction for sales and growth. Although, we have provided diesel generators for electric supply and borewell connections for continuous water supply as a back-up support to these essential utilities, any major disruption in the basic infrastructure could affect the operations of our properties and services to our guests which may have an adverse effect on our business, results of operations and financial condition.

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27.

Any failure to adhere to our standard operating procedures and have effective quality control systems at our properties without which our business, reputation, results of operations or financial condition will be adversely affected. The performance and quality of our services at our properties are critical to the success of our business. These factors depend significantly on the effectiveness of our quality control systems and standard operating procedures which in turn, depend on the skills and experience of the hospitality personnel, the quality training program, and our ability to ensure that such personnel adhere to our policies and guidelines. Any failure or deterioration of our quality control systems could have an adverse effect on our business, reputation, results of operations and financial condition.

28.

We may undertake management contracts, acquisitions, investments, divestitures or strategic relationships in the future which may pose management and other challenges. We may execute management contracts and undertake acquisitions, investments, divestitures or strategic relationships in the future as part of our growth strategy. We may be unable to identify suitable target that complement our business, and even if we are able to identify suitable acquisition targets or properties for management contracts, we may not be able to acquire targets on commercially reasonable terms. In addition, these management contracts, acquisitions, investments, divestitures or strategic relationships, may not necessarily contribute to our profitability, may divert the attention of our management or require us to assume high levels of debt or contingent liabilities, as part of such transactions. Additionally, we could experience difficulty in combining operations and cultures, and may not realize the anticipated synergies or efficiencies from such transactions. Our ability to successfully implement management contracts or integrate acquisitions will depend on a number of factors, including our ability to market and sell our properties and our ability to manage acquired properties in a manner that results in customer satisfaction. There is no assurance that we will be successful with respect to any of these factors. These difficulties could disrupt our ongoing business, distract our management and employees and increase our expenses.

29.

Any inability to manage our growth or implementing our business strategies effectively could disrupt our growth prospects, business and reduce our profitability. We have experienced good growth in recent years and expect our business to continue to grow significantly. Although we plan to continue to expand our scale of operations through organic growth and investments in other entities, we may not grow at a rate comparable to our growth rate in the past, either in terms of income or profit. We expect our future growth to place significant demands on our management and operations, and require us to continuously evolve and improve our financial, operation and other internal controls across the organization. In particular, continued expansion increases the risks discussed in this section as well as other risks. As part of our growth strategy, we have diversified into the education space and other verticals or services in the hospitality sector. However, such new business initiatives may not be successful. This could hamper our growth prospects and may also damage our reputation. The success of our business will depend greatly on our ability to implement our business and strategies effectively. For further details, please refer to section titled "Our Business" beginning on page 133 of this Draft Red Herring Prospectus. Even if we have successfully executed our business strategies in the past, there can be no assurance that we will be able to execute our strategies on time and within the available financial resources, or that we will meet the expectations of our targeted clients. Our inability to manage our business and strategies could have an adverse effect on our business, financial condition and profitability.

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30.

The success of our hospitality education business carried out under CIHM depends on the number of student enrolments. Our inability to attract students to enroll for our courses offered at our various CIHM centers may decline our revenues from hospitality education business. Our Company has set up CIHM centers at Gandhinagar, Jaipur and Udaipur for training students intending to make a career in the hospitality industry. Our Company further intends to launch a CIHM center at Neemrana, Rajasthan within F.Y. 2012. The success of our CIHM centers primarily depends on the number of student enrollments for our courses. Our ability to attract students to enroll for our courses depends on several factors such as our ability to offer new courses, enhancing existing courses in response to changing industry needs, students demands, faculties, expanding our geographic reach, effectively marketing our courses to a broader base of prospective students. Our CIHM centers had enrolled 748 students till date for its various education courses. While we believe that number of students enrolling for the various courses offered at our CIHM centers will continue to grow, however there is no assurance of similar growth in years to come and any slowdown in enrollments may lead to a decline in our revenues from the education services segment.

31.

The success of our CIHM centers depends on experienced and capable team of faculty members. If we are unable to hire, train and retain qualified faculty members across our CIHM centers, our hospitality education business may be adversely affected and our recognition by accrediting universities and institutions may be withdrawn. We believe that our faculty members including visiting faculties contribute to our overall performance by providing good quality training to the students and thus enable us to maintain our brand and reputation. Failure to attract/retain qualified faculty members who have the necessary domain expertise or failure to provide continuous training to our faculty members with the changing student expectations, examination pattern and other key trends that are necessary to effectively deliver the training may affect the pace of our growth and teaching quality across all our CIHM centers in different locations. Also, non-availability of qualified faculty in one or more of our locations may affect the hospitality education business of our Company. In the event we are not able to adhere to the standards of imparting hospitality education and training to students as per our arrangement with universities and institutions which have recognized us for their courses, we may lose our recognition or the same may be withdrawn by these institutions.

32.

The success of our education programmes which are affliated to universities and institutions depends on preferences of students to obtain qualifications from these universities and institutions. Our Company has various education programmes for hospitality education which are affliated with universities and institutions viz. Indira Gandhi National Open University (IGNOU), American Hotel & Lodging Education Institute (AHLA) and Punjab Technical University (PTU). While we believe, we may be in a position to provide necessary infrastructure, experienced faculty members, quality content, we may not be in a position to influence the preferences of students in choosing our education programmes affiliated with these universities and institutions over those provided by other institutes and universities.

33.

Our inability to manage the timing of vacation requests of our vacation ownership members could lead to member dissatisfaction and result in loss of business. Our members have the flexibility to choose the time (within certain seasonal limitations) and location for their vacations. If more than anticipated numbers of members apply for a vacation at the same resort on the same dates, we may not be in a position to satisfy their vacation requests. Declining members the usage of their requested period and location may lead to member

26

dissatisfaction, which could have an adverse effect on our reputation, growth and results of operations. 34. Our vacation ownership members could be dissatisfied and our future sales for such service offerings could be affected if our properties do not qualify for participation in an exchange network or if we lose our affiliation with RCI. The attractiveness of vacation ownership interest is enhanced by the availability of exchange networks that allow our members to exchange their occupancy rights in a participating network resort. Five (5) of our properties are affiliated with RCI. Under our agreements with RCI, we are required to maintain certain standards at our RCI affiliated properties and our inability to maintain such standards would result in the affiliation being withdrawn by RCI. We cannot be certain that we will be able to continue to qualify our Resorts or any future properties for participation in the RCI network or any other exchange network. If such exchange networks cease to function effectively or if RCI withdraws their affiliation with us, our members could be dissatisfied and the sales of vacation ownership packages could decline, which may adversely affect our business and results of operations. 35. Once we enrol a member for our vacation ownership package, we have a long term commitment to service such member. Our inability to maintain and operate our properties to service such members may have an adverse effect on our reputation, revenues and results of operations. Upon enrolment of a member to our vacation ownership packages, we have an obligation to service our members for a period of 5 years, 10 years, 15 years, 25 years as the case may be. Servicing of our members requires us to maintain our properties at certain specified standards for such number of years. There can be no assurance that we will be in a position to service our members for the entire tenure at their level of expectation and at reasonable costs that may provide suitable returns during the membership period. Our inability to maintain and operate our properties may have an adverse effect on our reputation, revenues and results of operations. 36. Our operations are subject to hazard and other risks, and could expose us to liabilities, loss in income and increased expenses. Our hospitality business operations are subject to risks inherent in our services, such as theft, vandalism including hazards such as work accidents, fire or explosion that may cause injury and loss of life, severe loss, damage and destruction of our property and environment. Some of such incidents which may or may not be caused as a result of negligence or fault of ours could also result in imposition of civil or criminal penalties on us. In addition, such events could affect our business, reputation, financial condition or results of operations. 37. Our insurance coverage may prove inadequate to satisfy claims against us, and we may be subject to losses that might not be covered in whole or in part by existing insurance coverage. We maintain insurance for various risks, including risks relating to fire, construction, accidents and other similar risks. However, in some cases, we may not have obtained the required insurance coverage or such insurance policies may have lapsed. We also do not carry any key-man insurance. Our properties may be subject to damage resulting from earthquakes and other natural disasters additionally some of our properties are situated in areas that are subject to cyclones. Should an uninsured loss or a loss in excess of insured limits occur, or our insurers decline to fully compensate us for our losses, we could incur liabilities, lose capital invested in that property or lose the anticipated future income to be derived from that property, while remaining obligated for any indebtedness or other financial obligations related to our business. Any such loss could result in an adverse effect to our financial condition.

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38.

Disruptions and other impairment of our information technologies and systems could adversely affect our business. Any disruption or other impairment in our information technology capabilities could harm our business. Our business depends upon the use of sophisticated information technologies and systems for reservation systems, property management, communications, procurement, member record databases, call centers and administrative systems. We cannot assure you that we will be able to continue to operate effectively and maintain such information technologies and systems. In addition, our information technologies and systems are vulnerable to damage or interruption from various causes, including power losses, computer systems failures, internet and telecommunications or data network failures, computer viruses, hacking and similar events. We maintain certain disaster recovery capabilities for critical functions in our business. However, we cannot assure you that these capabilities will successfully prevent a disruption to or an adverse effect on our business or operations in the event of a disaster or other business interruption. Any extended interruption in our technologies or systems could significantly curtail our ability to conduct our business and generate revenue.

39.

Our inability to maintain our relationships with our franchisee sales agents may affect our sales operations. We conduct our sales through various channels, including through franchisee sales agents. If our franchisee sales agents terminate or do not renew their agreements with us, our franchisee network may be reduced, which may affect our sales operations. In addition, while we have certain minimum standards required to be maintained by our franchisee sales agents, absence of adequate monitoring of these sales agents by us or our inability to maintain effective relationships may also affect our sales operations and results of operations.

40.

We are dependent upon the adequate and timely delivery of various quality ingredients by our suppliers and distributors, the failure of which could have an adverse effect on our business and results of operations. Our operations are dependent on adequate and timely deliveries of quality ingredients, including fresh produce. We depend substantially on third-party distributors and suppliers for such deliveries and they may be unable to provide us with a sufficient quantity of quality ingredients to meet our customer demands. If our food quality declines due to the inferior quality of ingredients or due to interruptions in the flow of ingredients and similar factors, customer footfalls may decline and negatively affect our results.

41.

Our Company may face certain liabilities due to inadequately stamped title documents or nonregistration of the title deeds pertaining to certain properties. The title deeds to some of our properties owned/leased by us may not be adequately stamped or registered with the concerned authorities. The potential consequence of this is that the said title documents will not be admissible as evidence in a court of law, until the relevant stamp duties and penalties are paid and the title deeds are registered. Any levies or penalties for such failure may adversely affect our financial position.

42.

We have entered into certain related party transactions and may continue to do so. We have entered into related party transactions with our Promoters, Group Entities, Directors and related entities. While we believe that all such transactions have been conducted on the arms length basis, it is difficult to ascertain whether more favorable terms would have been achieved had such transactions been entered with unrelated parties. Furthermore, it is likely that we will enter into related party transactions in the future. For further details of related party transactions,

28

please refer to Annexure 18 titled "Restated Standalone Statement of Related Party Transactions" in the section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus. 43. Our business is dependent on a continuing relationship with our clients/customers. Our business mainly envisages running of resorts and hotels. Our business is therefore significantly dependent on developing and maintaining relationships with various individuals and corporate customers. Our inability to meet the expectations of our customers in terms of their preferences and offering attractive packages at competitive prices leading to loss of our clients/ customers may adversely affect our business operations. 44. Our success will depend on our ability to attract and retain our key managerial personnel and the loss of team members may adversely affect our business operations. Our future success depends on the continued service and performance of the members of our senior management team and other key personnel in our business for implementation, management and running of our daily operations, and the planning and execution of our business strategy. There is intense competition for experienced senior management and other key personnel with technical and industry expertise in the hospitality business and if we lose the services of any of these or other key individuals and are unable to find suitable replacements in a timely manner, our ability to realize our objectives could be impaired. Our performance also depends on our ability to attract skilled personnel. If we are unable to do so, it may adversely affect our business and results of operations. 45. Failure to keep abreast with the latest trends in technology may adversely affect our cost competitiveness and may affect our financial condition adversely. Our Company cannot assure that it would successfully implement new technologies effectively or adapt to emerging industry standards. While most of our existing properties are currently equipped with modern technology such as Wi-Fi connections, video conferencing etc we may have to upgrade the same to more advanced technology that may be developed in the future. The cost to upgrade such advanced technology could be significant and could adversely affect our results of operations and financial position. 46. Our lenders have charge over our movable and immovable assets in respect of the financial facilities availed from them. We had been sanctioned term loans (including debentures) to the tune of ` 39,530 Lakhs and working capital loans to the tune of ` 1,400 Lakhs by various banks and financial institutions as on February 28, 2011. Our lenders have a charge over our movable and immovable assets to secure the repayment of loans and other facilities granted to us by them. In the event of any default in repayment of the loans and any interest thereof availed by our Company, the lenders may take the possession of our assets, both movable and immovable charged by our Company in favour of these lenders. For further information on the financing and loan agreements please refer to section titled "Financial Statements" beginning on page 208 of this Draft Red Herring Prospectus. 47. One of our Promoter, Mr. Sanjay Gupta has acquired/sold certain Equity Shares of our Company in the past one (1) year preceeding the filing of this Draft Red Herring Prospectus, at a price which may be less than the Issue price. The details of Equity Shares acquired/sold by our Promoter in past one (1) year preceeding the filing of this Draft Red Herring Prospectus are set out below:

29

Date of Purchase

Name of the Tranferor/ Transferee Mr. Sanjay Gupta Mr. Sanjay Gupta Mr. Sanjay Gupta Mr. Sanjay Gupta

Consideration

March 31, 2010 May 7, 2010 July 19, 2010 November 14, 2010 48.

Cash Cash Cash Cash

No. of Equity Shares acquired/ (transferred) 3,02,050 (3,02,050) 1,94,358 2,03,078

Face Value (`) 10 10 10 10

Purchase/ Transfer Price (`) 195 195 195 195

There is no standard valuation methodology or accounting practices in the hospitality and other industries in which we operate. The financials of our Company are not comparable with other players in the industry. There is no standard valuation methodology or accounting practices in the hospitality and other industries. The financials of one company may not be comparable with the other players in the industry. Valuation in the hospitality and other industries in which we operate may presently be high and may not be sustained in the future and also may not be reflective of future valuations of the industry.

49.

Accidents at our properties may lead to negative publicity and public liability consequences. Further, the value of our brand, and our revenue could be diminished if we are associated with negative publicity. Our business is dependent on the trust our customers have in the quality of our service. Any negative publicity regarding our properties, including those arising from a drop in quality of service at our properties and mishaps or any other unforeseen events could adversely affect our reputation and our results from operations. We believe that, we have in place a system of effective safety regulations and disaster management in case of any fire outbreaks or other accidents at all our premises. However, in the event of any accident, we, our directors and key managerial employees may be exposed to civil, criminal and tortuous liabilities.

50.

Our Company and its management are vulnerable to proceedings from customers and regulatory authorities in the event of any consumer dissatisfaction or violation/non-compliance of regulations. Considering the nature of our business, our Company and its management are vulnerable to consumer dissatisfaction and grievances, which may at times lead to legal proceedings filed by the consumer for deficiency in service or for any other cause. In addition to the above, in the event of any violation or non-compliance of regulations, such as the Prevention of Food Adulteration Act and Rules, Standards of Weights and Measures Act and Rules and such other legislations, by our Company and its management, civil and criminal proceedings may be initiated by the concerned authorities against our Company and our management. These proceedings may lead to the payment of heavy fines or penalties on our Company and our management and other consequences. Any such occurrence may affect the reputation of our Company and our management and consequently have an adverse impact on our business and financial condition.

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51.

Our Subsidiary Palm Lagoon Backwater Resorts Private Limited has incurred losses in the preceding two (2) financial years and half year ended September 30, 2010. The following statement shows losses incurred by them during the preceeding two (2) financial years and half year ended September 30, 2010: Particulars March 31, 2010 (` in Lakhs) (23.22) March 31, 2009 (` in Lakhs) (7.12)

September 30, 2010 (` in Lakhs) Palm Lagoon Backwater Resorts Private Limited Profit After Tax (1.01)

Palm Lagoon has become our Subsidiary with effect from March 10, 2009. For further details, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.

52.

Our Group Entities, Cambay Hotels and Holidays Limited and Technodot Engineers Limited have incurred losses in the previous years. The following statement showing losses incurred by them during the preceding financial years: The statement showing the losses incurred by our Group Entities in the previous financial years are set out below: Particulars March 31, 2009 (` in Lakhs) (4.76) (0.19) March 31, 2008 (` in Lakhs) -(0.28)

Cambay Hotels and Holidays Limited Profit After Tax Technodot Engineers Limited Profit After Tax

For further details, please refer to section titled "Our Group Entities" beginning on page 192 of this Draft Red Herring Prospectus.

53.

Our auditors, for the respective financial years, have identified certain matters in their auditors report on statutory audited financial statements as qualification /emphasis under Companies ( Auditors Report ) Order,2003 ( CARO ) which do not require any adjustments to the restated financial information of the Company The Auditors have stated certain matters as qualification/emphasis in their auditors report on statutory audited financial statements of the Company that did not require adjustments in the restated financial information presented herein. The matters related primarily to few cases of delay in payment of statutory dues with regulatory authorities. Works Contract Tax amounting to `1.42 lakhs was outstanding as on March 31, 2010 for a period exceeding six (6) months from the date it became payable. Our Company is in the process of compiling data for updating the fixed assets register and records showing full particulars including quantitative details and situation of Fixed Assets. Since the fixed assets records are not maintained, no comparison with the book records have been made. Funds raised on short-term basis have been used during the year for long-term investment. In addition, the Statutory Auditor in the report for the financial year ended March 31, 2007, has noted that the statutory liabilities including Fringe Benefit Tax amounting to `1.13 lakhs for the period from April 2006 to September 2006 were outstanding as on March 31, 2007 for a period of more than six (6) months from the date they became payable. For further information, please refer to Note C of Annexure IV to our Restated Standalone Financial Statements under the section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus.

54.

Contingent liabilities, if it materializes, could adversely affect the financial condition of our Company since there is no provision made in the books of accounts of our Company. Our contingent liabilities as on September 30, 2010 were as follows:

31

Nature of Liability Guarantees given by banks on behalf of our Company Corporate Guarantee given by our Company Total

Amount (` in Lakhs) 109.30 169.00 278.30

If any of these contingent liabilities materialise, fully or partly, the financial condition of our Company could be adversely affected. For more information regarding our contingent liabilities, please refer to the section titled "Financial Statements" beginning on page 208 of this Draft Red Herring Prospectus. 55. Our Company has accepted fixed deposits from the public. In the event of any default in repayment of fixed deposit or any interest thereof may lead to legal consequences under Section 58A of the Companies Act. Our Company has been accepting fixed deposits from the public under its Fixed Deposit Scheme and has complied with the provisions of Section 58A of the Companies Act read with the Companies (Acceptance of Deposits) Rules, 1975. As on February 28, 2011, our Company had accepted fixed deposits to the tune of `1,126.21 Lakhs. The legal implications or consequences on our Company and its directors could be severe in the event of any default in the repayment of the fixed deposit or any interest thereof. 56. We may be subject to strikes, work stoppages and increased labour costs. In the event of any strikes or work stoppages or increase labour cost may materially and adversely impact our operations and financial condition. As at February 28, 2011, our Company had 605 full time employees. While we believe that we maintain good relationships with our employees there can be no assurance that we will not experience future disruptions to our operations due to disputes or other problems with our work force, which may materially and adversely affect our business and results of operations. 57. We may be unable to obtain, renew or maintain our statutory and regulatory permits and approvals required to operate our business. Any delay / failure in obtaining the required permits or approvals may result in the interruption of our operations. We require certain statutory and regulatory permits and approvals for our business. Some activities related to our properties may be subject to granting of licenses or permits. In the future, we will be required to renew such permits and approvals and obtain new permits and approvals for any proposed operations. There can be no assurance that the relevant authorities will issue any of such permits or approvals in the time-frame anticipated by us or at all. Failure by us to renew, maintain or obtain the required permits or approvals may result in the interruption of our operations and may have a material adverse effect on our business, financial condition and results of operations. Some of our approvals have expired and some of our licenses shall expire on March 31, 2011, which our Company is in the process of getting the same renewed. For further information, please refer to the section titled "Government and other Approvals" beginning on page 350 of this Draft Red Herring Prospectus. 58. We may not be able to secure additional funding in the future. In the event our Company is unable to obtain sufficient funding, it may delay our growth plans and have a material adverse effect on our business and financial results. From time to time, our plans may change due to changing circumstances, new business developments, new business or investment opportunities or unforeseen contingencies. If our plans do change, we may need to obtain additional external financing to meet capital expenditure plans,

32

which may include commercial bank borrowings or issue further equity shares or other securities. If we raise additional funds through the incurrence of debt, our interest and debt repayment obligations will increase, and we may be subject to additional covenants, which could limit our ability to access cash flow from operations and/or other means of financing. We cannot assure that we will be able to raise adequate financing to fund future capital requirements on acceptable terms, in time. In addition, any adverse credit ratings by the debt rating agencies for the debt availed by our Company may adversely impact our Companys ability to raise further financing. Any failure to obtain sufficient funding could result in the delay or abandonment of our growth plans and have a material adverse effect on our business and financial results. 59. Our Company has made an application for registration of certain trademarks under the Trade Marks Act, 1999. Failure to obtain registrations of these trademarks, and pending their registration, we may not have a strong recourse to legal proceedings to protect our trademarks which could have an adverse effect on our business. We have filed applications with the Trade Marks Registry for registration of certain of our Companys trademarks under the relevant provisions of the Trade Marks Act, 1999, which are pending as on date of this Draft Red Herring Prospectus. Our applications may not be allowed or third parties may challenge the validity or scope of this application or the trademarks if the application is approved. If we fail to successfully obtain registration of such trademarks, we may have to consider alternative trademarks or brand names. Failure to obtain registrations of these trademarks, and pending registration of these trademarks, we may not have a strong recourse to legal proceedings to protect our trademarks, which could have an adverse effect on our business. For further details on intellectual property rights, please refer to section titled "Our Business" beginning on page 133 of this Draft Red Herring Prospectus. Risk Factors in relation to Objects of the Issue 60. We require government approvals and sanctions to develop properties forming a part of the Objects of the Issue. We intend to develop properties at the Lucknow, Raipur and Nasik to be funded from the proceeds of the Issue. The development of these properties will require approval in relation to construction and other approvals from other governmental authorities and for the operation of these properties. We shall apply for such approvals at an appropriate time. For further details, please refer to the section titled "Government & Other Approvals" beginning on page 350 of this Draft Red Herring Prospectus. In the event, that we do not receive these approvals in a timely manner or at all or subject to conditions, it may affect the proposed development of these properties and consequently the deployment of the Net Proceeds may be delayed. 61. Our Company has not yet identified land for the proposed development of properties at Lucknow, Raipur and Nasik which form part of our Objects of the Issue We intend to develop properties at Lucknow, Raipur and Nasik. We are yet to identify the land for our proposed properties at Lucknow, Raipur and Nasik and are considering various sites for acquisition. We may not be able to acquire suitable land in this area if favorable terms are not offered to us by land-owners. Any delay in identifying the land will result in delay in developing these properties. For further details, please refer to the section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus.

33

62.

There is no monitoring agency appointed by our Company and our funding requirements are based on management estimates and have not been independently appraised, though it shall be monitored by the Audit Committee. As per the SEBI (ICDR) Regulations, appointment of monitoring agency is required only for Issue size above `50,000 Lakhs. Hence, we have not appointed a monitoring agency to monitor the utilization of Issue proceeds. However, the Audit Committee of our Company, will monitor the utilization of Issue proceeds. Further, our Company shall inform about material deviations in the utilization of issue proceeds to the Stock Exchanges and shall also simultaneously make the material deviations / adverse comments of the Audit Committee public through advertisement in newspapers. Further, our funding requirements are based on management estimates and have not been appraised by any bank or financial institution. In view of the competitive nature of the industry in which we operate, we may have to revise our management estimates from time to time and, consequently, our funding requirements may also change. This may result in the rescheduling of our expenditure programs and an increase or decrease in our proposed expenditure for a particular matter.

63.

We have not entered into any definitive agreements to use the Net Proceeds of the Issue. The Net Proceeds are expected to be used as set forth under the section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus. We have not entered into any definitive agreements for utilisation of the Net Proceeds of the Issue for development of new properties. There can be no assurance that we will be able to enter into such agreements on terms favourable to us or at all. Accordingly, investors in this Issue will need to rely upon the judgment of our management, who will have considerable discretion, with respect to the use of proceeds. However, we confirm that the use of the Net Proceeds will be at our discretion subject to the Issue proceeds being utilized for the purposes disclosed in the Objects of the Issue.

64.

Developing properties at new locations involves increased risks due to unfamiliarity with the geographical area, demographics and customer preferences. Our new hotel properties are proposed to be developed at Lucknow, Raipur and Nasik. Further, our Company has recently signed an Memorandum of Understanding (MoU) dated January 12, 2011 with Cambay SEZ Hotels Private Limited to first develop the Dahej SEZ property and thenafter operate and manage the same for a period of ten (10) years with an automatic renewal of further period of ten (10) years. These are areas where we have little or no presence or experience. These areas may have different competitive conditions, consumer tastes and discretionary spending patterns than our existing locations, which may cause our new properties to be less successful than our existing properties or incur losses. Developing and operating properties in areas in which we have little or no operating experience and in which potential customers may not be aware of our brand and services may include costs related to the opening, operation and promotion of these properties which may be substantially greater than those incurred in other areas. While we may incur substantial additional costs with respect to these properties, we may not be able to attract customers as compared to our existing properties which may affect our business and results of operations.

34

External Risk Factors 65. Global economic downturn and adverse market conditions could cause our business to suffer. A slowdown in economic growth in India could cause our business to suffer The developed economies of the world viz. U.S., Europe, Japan and others are in midst of a downturn affecting their economic condition and markets general business and consumer sentiment has been adversely affected due to the global slowdown and there can be no assurance whether the developed economies or the emerging market economies will see good economic growth in the near future. Consequently, this has also affected the global stock and commodity markets. Our performance and growth is directly related to the performance of the Indian economy. The performance of the Indian economy is dependent among other things on the interest rate, political and regulatory actions, liberalization policies, commodity and energy prices etc. A change in any of the factors would affect the growth prospects of the Indian economy, which may in turn adversely impact our results of operations, and consequently the price of our Equity Shares. 66. The Indian economy has sustained varying levels of inflation in the recent past which lead to increased costs which shall have an adverse effect on our profitability and financial condition. India has experienced very high levels of inflation during the period between 2008 and 2009, with inflation peaking at 12.91% in August 2008. The inflation rate was 8.31% in February 2011. In the event of a high rate of inflation, our costs, such as salaries, price of transportation, wages, raw materials or any other of our expenses may increase. In addition to the above, food inflation may increase the cost of our F&B products which may lead to a reduction in our margins. However, we may not be able to adjust our costs or pass our costs which have been fixed during periods of lower inflation to our customers. Accordingly, high rates of inflation in India could increase our costs, could have an adverse effect on our profitability and, if significant, on our financial condition. 67. Our revenues are highly dependent on the travel industry and declines in or disruptions to the travel industry, such as those caused by terrorism, war, natural disasters, epidemics, financial instability or a downturn in economic growth, may adversely affect our financial condition and results of operation. Declines in or disruptions to the travel industry may adversely affect our financial condition and results of operations. Our revenues and profits, and in turn our financial condition, may be adversely affected by events that adversely affect the travel industry. Such events include terrorist incidents and threats (and heightened travel security measures instituted in response to such incidents and threats), natural disasters (such as earthquakes, hurricanes, fires, floods and other natural disasters), war, bird flu, H1N1 virus and other epidemics and pandemics, the financial instability of air carriers, airline job actions and strikes, increases in gas and other fuel prices and a downturn in economic growth. Public places like hotels and resorts have in the past been targets for terrorist attacks, the latest being the November 26, 2008 terror attacks on hotels in Mumbai. Any violence in public places could cause damage to life and property, and also impact customer sentiment and their willingness to visit such places, which would have a material adverse effect on our results of operations. The occurrence or worsening of any of these types of events could result in a decrease in overall travel and consequently in a decrease in travel by non-local visitors to our resorts. India has experienced natural calamities such as earthquakes, Tsunami, floods and droughts in the past few years. The extent and severity of these natural disasters determines their impact on the Indian economy. Unforeseen circumstances, such as prolonged spells of below normal rainfall and other natural calamities, could have a negative impact on the Indian economy, which could

35

adversely affect our business, financial condition, results of operation and the price of our Equity Shares. 68. Any downgrading of Indias debt rating by an independent agency may have a material impact on our operations. Any adverse revisions to Indias credit ratings for domestic and international debt by international rating agencies may adversely impact our ability to raise additional financing, and the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on our business and future financial performance, our ability to obtain financing for capital expenditures, and the price of our Equity Shares. 69. Future sales of our Equity Shares may negatively affect our Equity Share price. Future sales of substantial amounts of our Equity Shares in the public market, or even the potential for such sales, could adversely affect the price of our Equity Shares and could impair our ability to raise capital. All of the shares sold in this offering, will be freely tradable without restriction. The Equity Shares owned by our Promoters and other shareholders are subject to lock-in as detailed under the section titled "Capital Structure" beginning on page 68 of this Draft Red Herring Prospectus. We cannot assure you that they will retain ownership of our Equity Shares after the lock-in period following this offering. Sales or distributions by our Promoters or other shareholders of substantial amounts of our Equity Shares in the public market could adversely affect prevailing market prices for our Equity Shares. 70. Central and State Governments of India have introduced various schemes to boost tourism. Any withdrawal of such schemes may affect our business. There are certain incentives and concessions granted or provided by the Government of India ("GoI") or the applicable State Governments that are currently being enjoyed by the tourism industry. There is no guarantee that such incentives or concessions will continue or will not be withdrawn by the GoI or the applicable State Governments in the future. 71. Our performance is linked to the stability of Government policies and the political situation in India. The role of the Indian central and State governments in the Indian economy with repect to producers, consumers and regulators has remained significant over the years. Since 1991, the Government of India has pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector. The current Government in India, has continued policies and taken initiatives that support the continued economic liberalization policies that had been pursued by the previous governments. We cannot assure you that these liberalization policies will continue in the future. The rate of economic liberalization could change, and specific laws and policies affecting hotels, foreign investment, currency exchange rates and other matters affecting investment in our securities could change as well. A significant change in Indias economic liberalization and deregulation policies could disrupt business and economic conditions in India and thereby affect our business. Risk Factors in relation to an Investment in our Equity Shares 72. Upon completion of the Issue, our Promoters/Promoter Group may continue to retain significant control over us, which will allow them to influence the out come of matters submitted to the shareholders for approval. Upon completion of this Issue, our Promoters/Promoter Group will continue to own majority of our Equity Shares on a fully diluted basis. As a result, our Promoters/Promoter Group will have

36

the ability to exercise significant influence over all matters requiring shareholder approval, including the election of directors and approvals of significant corporate transactions. Our Promoters/Promoter Group will also be in a position to influence any shareholder action or approval requiring a majority vote, except where it is required by applicable laws or where they abstain from voting. Such a concentration of ownership may also have the effect of delaying or deterring a change in control. 73. Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares. The Indian securities markets are relatively smaller than securities markets in more developed economies. Indian stock exchanges in the past have experienced substantial fluctuations in the prices of listed securities. These stock exchanges have also experienced problems that have affected the market price and liquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading, limited price movements and restricted margin requirements. Further, disputes have occurred on occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. If similar problems occur in the future, the market price and liquidity of the Equity Shares could be adversely affected. 74. After this Issue, the Equity Shares may experience price and volume fluctuations or an active trading market for the Equity Shares may not develop. The price of the Equity Shares may fluctuate after this Issue as a result of several factors, including volatility in the Indian and global securities markets, the results of our Companys operations, the performance of our Companys competitors, developments in the hospitality sector and changing perceptions in the market about investments in the hospitality sector, adverse media reports on our Company or the hospitality sector, changes in the estimates of our Companys performance or recommendations by financial analysts, significant developments in Indias economic liberalisation and deregulation policies, and significant developments in Indias fiscal regulations. In addition, no assurance can be given that an active trading market for the Equity Shares will develop or as to the liquidity or sustainability of any such market, the ability of holders of the Equity Shares. If an active market for the Equity Shares fails to develop or be sustained, the trading price of the Equity Shares could fall. 75. Investors will not be able to sell immediately on an Indian stock exchange any of the Equity Shares investors purchase in the Issue. The Equity Shares will be listed on BSE and NSE. Under Indian laws, certain actions are required to be completed before the listing and trading of Equity Shares on the Stock Exchanges. Upon receipt of final approval from the Designated Stock Exchange, trading in the Equity Shares is expected to commence within twelve (12) Working Days of the Bid/Issue Closing Date. Our Company cannot assure that the Equity Shares will be credited to investors demat accounts, or that trading in the Equity Shares will commence, within the time periods specified above. 76. We will require final listing and trading approvals from BSE and NSE before trading commences. Our Equity Shares currently have no trading market. We require in-principle, final and trading approvals from the Stock Exchanges before trading can commence. We will apply for such final listing and trading approvals at different stages of the Issue. There can be no assurance that we will receive such approvals on time or at all.

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77.

Our ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows, capital expenditures and restrictive covenants in our financing arrangements. Our ability to pay dividends in the future will depend on our earnings, financial condition and capital requirements. Dividends distributed by us will attract dividend distribution tax at rates applicable from time to time. We cannot assure you that we will generate sufficient income to cover our operating expenses and pay dividends to our shareholders, or at all. Our ability to pay dividends could also be restricted under certain financing arrangements that we may enter into. We may be unable to pay dividends in the near or medium term, and our future dividend policy will depend on our capital requirements, financial condition and results of operations.

78.

Any future issuance of Equity Shares may dilute the shareholding of the Investor and sales of our Equity Shares by our Promoter or other major shareholders and dilution in net tangible book value may adversely affect the trading price of Equity Shares. Any future issuance of our Equity Shares by our Company could dilute the shareholding of the investor. Any such future issuance of our Equity Shares or sales of our Equity Shares by any of our significant shareholders may also adversely affect the trading price of our Equity Shares, and could impact our ability to raise capital through an offering of our securities. While the entire postIssue paid-up capital held by our Promoters and other shareholders will be locked-in for a period of one (1) year and 20% of our post-Issue paid-up capital held by our Promoter will be locked-in for a period of three (3) years from the date of allotment of Equity Shares in the Issue, Axis Infrastructure Fund I, being a DVCF, is not subject to lock-in and is free to sell the Equity Shares immediately upon listing of our Equity Shares on the Stock Exchanges. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of our Equity Shares. For further information relating to such Equity Shares that will be locked-in, please refer to the sub-section titled "Notes to the Capital Structure" under the section titled "Capital Structure" beginning on page 68 of this Draft Red Herring Prospectus.

Prominent Notes to Risk Factors 1. Public Issue of equity shares of face value `10 each ("Equity Shares") of Neesa Leisure Limited ("Company/Issuer") for cash at a price of ` [] per Equity Share (the "Issue Price"), including a share premium of ` [] per Equity Share, aggregating upto ` [] lakhs, comprising a fresh issue of upto [] Equity Shares by Neesa Leisure Limited aggregating upto `20,000 lakhs (the "Fresh Issue") and offer for sale of upto [] equity shares by Axis Infrastructure Fund I ("AIF") of upto `5,000 lakhs and 1,03,746 Equity Shares by HT Media Limited ("HTML") (the "Selling Shareholders")of ` [] lakhs (the "Offer for Sale"). The Fresh Issue and the Offer for Sale are together referred to herein as the "Issue". Further upto 2,00,000 Equity Shares will be reserved in the issue for subscription by eligible employees (the "Employee Reservation Portion") subject to valid bids being received at or above the Issue Price provided that the value of Allotment to a single Eligible Employee does not exceed `2,00,000. The Issue less the Employee Reservation Portion is hereinafter referred to as the "Net Issue". The Issue and the Net Issue will constitute at least []% and []%, respectively, of the post-issue paid up equity share capital of our Company. The net worth of our Company as per our restated consolidated financial statements and restated standalone financial statements as on September 30, 2010 `24,619.12 lakhs and `24,632.85 lakhs. The book value of each Equity Share is `70.37 and `70.43 as on September 30, 2010 as per our restated consolidated financial statements and restated standalone financial statements respectively. For details, please refer to section titled "Financial Statements" beginning on page 208 of this Draft Red Herring Prospectus. The average cost of acquisition of the Equity Shares by our Promoters, Mr. Sanjay Gupta and Ms. Neelu Gupta is `50.98 and `16.13 per Equity Share respectively. The average cost of acquisition of Equity Shares by our Promoters have been calculated by taking the simple average of the price

2.

3.

38

paid by them to acquire the Equity Shares issued by our Company. For details, please refer to section titled "Capital Structure" beginning on page 68 of this Draft Red Herring Prospectus. 4. For further details regarding our related party transactions and business interest, please refer to Annexure 18 titled "Restated Standalone Statement of Related Party Transactions" in the section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus. Our Company has not issued any Equity Shares for consideration other than cash. For details of transactions in the securities of our Company by our Promoters, our Promoter Group and Directors in the last six (6) months, please refer the section titled "Capital Structure-Notes to the Capital Structure" beginning on page 68 of this Draft Red Herring Prospectus. For information on changes in our Companys name, registered office and objects clause of the Memorandum of Association of our Company, please refer to the section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. Except as disclosed in the sections titled "Capital Structure", "Our Promoters", "Group Entities" and "Our Management" beginning on pages 68, 189, 192 and 171 respectively, of this Draft Red Herring Prospectus, none of our Promoters, Directors or Key Managerial Personnel have any interest in our Company. The Issue is being made through the Book Building Process with Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957, as amended ("SCRR") read with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. This Issue is being made through the Book Building Process wherein upto 50% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (the "QIB Portion") provided that our Company and the Selling Shareholders in consultation with the BRLMs may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the "Anchor Investor Portion"). For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. Further 5% of QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to domestic Mutual Funds and the remaining QIB portion shall be available for allocation on proportionate basis to all QIBs, including domestic Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue to the Public shall be available for allocation on a proportionate basis to NonInstitutional Bidders and not less than 35% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price Under-subscription, if any, in the Qualified Institutional, Non-Institutional and Retail categories would be allowed to be met with spill-over from any other category or combination of categories at the sole discretion of our Company and the Selling Shareholders, in consultation with the BRLMs and the Designated Stock Exchange. Such inter-se spill over, if any, would be effected in accordance with applicable laws, rules, regulations and guidelines. For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. Investors may note that in case of over-subscription in the Issue, allotment to Qualified Institutional Bidders, Non-Institutional Bidders, Retail Individual Bidders and Eligible Employees shall be on a proportionate basis. For details, please refer to the section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. Investors may contact the BRLMs for any clarification, complaints or information relating to the Issue, which shall be made available by the BRLMs to the investors at large. No selective or additional information will be available for a section of investors in any manner whatsoever.

5. 6.

7.

8.

9.

10.

11.

12.

39

13.

Investors are advised to refer to the section titled "Basis for Issue Price" beginning on page 100 of this Draft Red Herring Prospectus. Trading in Equity Shares for all investors shall be in dematerialized form only. There has been no financing arrangement whereby our Promoter Group, Directors of our Company and their relatives have financed the purchase by any other person of securities of our Company other than in the normal course of business of the financing entity during the period of six (6) months immediately preceeding the date of filing of this Draft Red Herring Prospectus with SEBI.

14. 15.

40

SECTION III: INTRODUCTION SUMMARY OF INDUSTRY Industry Overview The section titled "Industry Overview" beginning on page 115 has been derived from a report titled Indian Hotel Industry, March 2011 that the Company has commissioned Credit Analysis & Research Limited ("CARE") to prepare a report (the "Report"). CARE has obtained the information set forth in the Report from its databases and other sources available in the public domain identified in the Report. CAREs methodologies for collecting information and data, and therefore the information discussed in the "Industry Overview" section, may differ from those of other sources, and does not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the industry. This information has not been independently verified by us, the Book Running Lead Managers, or their respective legal, financial or other advisors, and no representation is made as to the accuracy of this information. The "Industry Overview" section also includes certain projections and estimates that are based on certain assumptions regarding contingencies and other matters that are not within the control of the Company, the BRLMs, CARE or any other person. These assumptions are inherently subject to significant uncertainties and actual results may differ, perhaps materially, from those projected. CARE has given and has not withdrawn its written consent to the issue of this Draft Red Herring Prospectus with the inclusion herein of its name and all references thereto and to the inclusion of the Report, including extracts of the Report, in this Draft Red Herring Prospectus, in the form and context in which it appears in this Draft Red Herring Prospectus. While the Company has taken reasonable actions to ensure that the Report and the market share and industry data and forecasts have been extracted accurately and in their proper context, neither the Company nor the BRLMs have independently verified any of the data and forecasts from CARE or from third party sources or ascertained the underlying assumptions relied upon. As a result, you are cautioned against placing undue reliance on such information. Disclaimer of CARE This report is prepared by CARE Research, a division of CARE. CARE Research has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Research operates independently of ratings division and this report does not contain any confidential information obtained by ratings division, which they may have obtained in the regular course of operations. The opinion expressed in this report cannot be compared to the rating assigned to the company within this industry by the ratings division. The opinion expressed is also not a recommendation to buy, sell or hold an instrument. CARE Research is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE (including all divisions) has no financial liability whatsoever to the user of this product. This report is for the information of the intended recipients only and no part of this report may be published or reproduced in any form or manner without prior written permission of CARE Research. Overview of the Indian Tourism Sector The World Travel and Tourism Council (WTTC) have identified India as one of its growth centres in the world. India also ranks first on a relative scale amongst the countries expected to grow their Travel and Tourism (T&T) demand rapidly between CY2008 and CY2018 and ranks second on employment scale, amongst the countries to generate largest employment in absolute terms, according to World Travel & Tourism Council 2008/09. Tourism industry is expected to contribute about 6.7% of Indias GDP and provide employment to approximately 49 million people in CY2010. The foreign exchange earnings from

41

tourism in India rose substantially from Rs 330 billion in CY2005 to Rs 550 bn in CY2009 (Ministry of Tourism). Consequently, the share of India in world tourism receipts increased from 1.1% in CY2005 to 1.24% in CY2009. Inspite of the increasing share, Indias share in world tourism receipts is relatively low. Indias T&T industry size is estimated at Rs.4,322 billion in CY2010 (Ministry of Tourism). Personal travel and tourism dominated with 86% share in total T&T industry size. The size of the Indian Travel & Tourism industry has been growing consistently over last five years. The revenue from the Personal Travel and Tourism has increased at a 5-year Compounded Annual Growth Rate (CAGR) of 11.97% whereas Business Travel & Tourism has increased at a CAGR of 7.22% during the same period (WTTC). Indian Hotel Industry The Indian hotel industry has enjoyed phenomenal growth in the last decade due to liberalization of the Indian economy, growing business opportunities and stable political environment. Increase in domestic travel due to higher income, concept of week-end holidays, leisure and business trips have also propelled growth. This has also led to higher demand of mid-market and upscale hotels by leisure travels and business travel CARE Research estimates the hotel market size in India at Rs. 126 billion in FY10. Historically, hotel industry has been consistently growing along with the GDP growth. Despite the slowdown in the overall economy in FY08 and FY09, the hotel industry has been nominally impacted majorly due to the reduction in the leisure travel as an obvious result of the slowdown; however the overall industry fundamentals remain intact. The hotel industry can be broadly classified into three broad categories Starred hotels, Approved hotels and Licensed hotels based on general features like Number of rooms, number of restaurants, presence of facilities like spa, swimming pool, shopping mall etc. The Department of Tourism further reclassifies them into 5-D, 5-Star, 4-Star category, while the state governments are responsible for the classification of 3Star, 2-Star and 1-Star hotels. The classification is based on the facilities offered and is done with the aim to provide comfort to the customer. According to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government of India, the government has allowed 100 per cent foreign investment under the automatic route in the hotel and tourism related industry. Vacation Ownership Industry The growing popularity of the leisure industry in the country today has facilitated alternative hotel product offerings to strengthen their foothold in the market, particularly those with an ownership model that strongly focus on making 'holidaying' a habit. Amongst these include the traditional timeshare and fractional ownership. These are popular holiday models internationally, along with the condo hotels and private residence clubs products. These alternative models, in particular the timeshare product, provides a degree of insulation to key stakeholders (including developers, operators and consumers) compared to the pure hotel product. However, while the risk associated with the timeshare product is lesser compared to the pure hotel product, the ability for the product to maximise returns (from a developer's and operator's perspective) is relatively lower than the hotel product. Timeshare found a place in the tourism policy of India in the year 2001 and the Ministry of Tourism, in the year 2006 introduced a scheme for classification of Timeshare Resorts. Meeting Incentive Conference and Exhibition (MICE) Segment MICE is the new form of business tourism on which Indian hospitality players are increasingly focusing on. It caters to business meetings, international conferences and conventions, events and exhibitions. After the popular spots for MICE such as Hong Kong, Malaysia and Dubai, India is fast gaining its pace in the competition to become an ideal MICE destination. Need for MICE facilities in India are accelerating with

42

notable growth momentum in domestic and international travels. MICE target customers are India Inc. and global business giants. MICE segment not only adds to the banquet revenues, but also leads higher room demand and therefore room revenues. Tourism & Hotel Management Education: Tourism & Hotel Management education have become key concern as the number of travellers increases and markets become more sophisticated in most countries. The World Travel & Tourism Council (WTTC) estimates a boost in the total amount of travel & tourism activity in the next decade. If India is to realize its immense potential in tourism & hospitality sector it must provide international level products matched with technically qualified workforce. The Government of India has been taking initiatives to promote and develop Hospitality & Tourism both in terms of physical infrastructure & services by paying attention on uplifting physical products as well as manpower. As per the WTTCs projections the Indian hospitality industry direct employment is expected to grow from 18.6 million jobs in 2010 to 20.9 million jobs in 2020. This clearly indicates that there would be a huge demand for skilled and trained manpower in the industry. The major challenge ahead before the tourism industry in India is to bridge the gap between the demand-supply of skilled workforce through attracting and retaining the talented skill to serve the industry. The number of institutes imparting Hotel Management course has been increasing leading to overall increase in intake capacity to meet the demand for manpower in Hospitality sector.

43

SUMMARY OF OUR BUSINESS Business Overview We are the flagship company of Gujarat based, Neesa Group which has presence in various industry segments such as hospitality & leisure, construction & development of hotel properties, education, metal casting, information technology, agri biotechnology and food processing. We are an integrated hospitality company in the business of owning, operating and managing hotels & resorts, providing club & vacation ownership services and hospitality education. We recognise ourselves as a 'full service provider' in the hospitality and leisure space offering products and services to a cross section of society i.e. from the middle class segment to the upper class segment, in addition to corporate customers and Foreign Individual Travellers (FIT). We offer our services under the brand 'Cambay'. We are an emerging player in hospitality and leisure business with properties at or near key business and leisure destinations. We have a significant geographical spread of hotels & resorts with presence in Ahmedabad, Bangalore, Gandhinagar, Jaipur, Udaipur, Neemrana, Kerala and Goa. As on February 28, 2011, we have ten (10) operational properties spread across India with an aggregate inventory of 947 rooms. Out of the above six (6) properties are Upscale properties providing five star facilities and four (4) properties are Mid-Market properties providing three to four star facilities. The strategic location of our properties being close to cities, provide us an added advantage of offering 'Business cum Leisure' services to MICE customers and FIT. With significant presence in key business and leisure destinations in Gujarat and Rajasthan we now intend to establish our presence in other emerging business destinations. We further propose to develop new properties at Lucknow, Raipur and Nasik to be funded from the proceeds of this Issue. In the year 2007, we forayed into the business of providing club membership under the brand 'Cambay Club' and in the year 2008 we forayed into the business of the providing vacation ownership under the brand 'Cambay Family Holidays Club'. We provide various facilities to our club members such as golf, lawn tennis, table tennis, squash and other indoor and outdoor games along with additional access and benefits related to Spa and beauty salon, multi-cuisine restaurants, swimming pool & well designed rooms and cottages. As on February 28, 2011, we had 2,920 club members and we had 5,667 vacation ownership members. We have added a new stream of revenue to our business model by setting up education institutes under the brand 'Cambay Institute of Hospitality Management' ("CIHM") at Gandhinagar, Jaipur (Kukas) and Udaipur with necessary infrastructure for training students intending to make a career in the hospitality industry. We shall also be launching a CIHM center at our property at Cambay Sapphire, Neemrana. Our CIHM centers had enrolled 748 students till date for its various courses. For the half year ended September 30, 2010, based on standalone restated financials, we had total income of `7,009.27 lakhs and net profit after tax of `786.87 lakhs. For the year ended March 31, 2010, we had standalone total income of `10,638.10 lakhs and net profit after tax of `1,195.31 lakhs as compared to total income of `5,317.66 lakhs and net profit after tax of `498.19 lakhs for the year ended March 31, 2009. Our Strengths: 1. Strategic location of our properties attracts leisure as well as business travellers. We have a significant geographical spread of hotels & resorts in India with properties which are strategically located at or near key business and leisure destinations viz. Ahmedabad, Bangalore, Gandhinagar, Goa, Jaipur, Neemrana, Kerala and Udaipur. Being situated in or close to these cities, we have the advantage of combining business with leisure for our customers. MICE at such

44

locations convert business meetings and conferences into a memorable event for the delegates and attendees. Our hotels and resorts are therefore a blend of 'Business cum Leisure' for our business and corporate customers. Further, MICE tourism safeguards our business from risk related to seasonality. Our new properties at Lucknow, Raipur and Nasik to be funded from the proceeds of the Issue shall be developed considering corporates and business travellers as our target customer. 2. Unique and diversified business model. We are an integrated hospitality company in the business of owning, operating and managing hotels & resorts, providing club & vacation ownership services and hospitality education. Our Company has presence in most of the verticals or segments of hospitality. Our hotel business formed approximately 93%, 63%, 54% and 79% of our standalone total income in the F.Y. 2008, F.Y. 2009, F.Y. 2010 and half year ended September 30, 2010 respectively, whereas club and vacation ownership business formed 2%, 20%, 32% and 17% of our standalone total income in the F.Y. 2008, F.Y. 2009, F.Y. 2010 and half year ended September 30, 2010 respectively. 3. Our presence in the vacation ownership and club membership business safeguards us against the threats of seasonality and economic downturn. As of February 28, 2011, we had 5,667 vacation ownership members and 2,920 club members. Once registered these vacation ownership members and club members are committed to our Company for a long period of time spanning 5 to 25 years thereby ensuring a steady source of revenues from staggered membership fee payments, maintenance fees and use of our paid facilities, especially during the off-season or an economic downturn. In addition, our affiliation with RCI provides the members of RCI access to our properties thereby optimum utilisation of our properties throughout the year. 4. In-house project development capabilities. Quick turnaround time in development of properties is critical to our business. Our in-house teams have technical expertise to develop properties starting from land acquisition, designing, master planning, project management etc enabling a timely and cost effective development of our properties. We have developed seven (7) out of our ten (10) existing properties. In this process, our Company has gained valuable knowledge and experience in developing properties in-house and has built a Project Management Cell (PMC) consisting of engineers who supervise such projects and execute it with the help of civil and labour contractors. Our in-house project development team enables us to control costs, quality of construction and time schedules. 5. Customer centric operations and quality services. Most of our properties are equipped with modern amenities and upscale facilities, such as restaurants, spa, health club, club facilities and a variety of holiday activities. In addition, we also have conference rooms, convention & business centres, banquet halls, WiFi, amphitheatres and other facilities for recreation and games in most of our properties. Advanced technology and facilities at our properties along with warm hospitality and personalized services makes the stay of our guests and customers a memorable experience. All our properties have been certified as ISO 9001:2008 in relation to quality management services. With a view to maximise customer satisfaction, we have deployed CRM i.e. Customer Relationship Management solutions, amongst others, focuses on the needs, preferences of our customers, streamlining of our investments, operational processes and functions in accordance with their expectations. 6. Established brand name 'Cambay'. Over the last few years, we have invested resources in building our umbrella brand 'Cambay'. We have successfully promoted the brand 'Cambay' so as to be known as a symbol of quality

45

hospitality for both the business and leisure segments of the industry. We run high impact campaigns to create awareness, recognition and high recall of our brand. We promote our brand through different modes of communication like corporate presentations, websites, corporate brochures, e-mailers, mass messaging, sales kits, airport kiosks, mobile caller-tunes, celebrity campaigns, trade shows, strategic co-branding tie-ups, mass media campaigns through both print and electronic media. 7. Strong marketing team and channels, including online marketing and IT systems. Through our dedicated sales and marketing team we reach-out to our target customers. Annual marketing and sales strategy is worked out, pertaining to each vertical based on budgets and needs. Branding perspectives are also considered for creating brand value for each vertical. Neesa Sales Private Limited, one of our group companies caters to marketing and sales of segments such as corporate, MICE, FIT, vacation ownership customers & potential club members through various promotional mediums. We advertise and promote our services and products through hoardings at prominent places, advertisements in magazines & local newspapers, travel and hospitality magazines, kiosks at airports, organizing and participating in local and international event. 8. Experienced management team. Most of our senior managerial team have substantial experience in hotel operations, vacation ownership and the hospitality industry in general. We believe our management team has long-term vision and provides stability and continuity to our business. We also believe that the strength of our management team in our business divisions, such as food and beverages, sales and marketing, and their understanding of the hospitality industry will enable our business to grow in a focused and constructive manner. We have a distinct management culture that stresses creativity, loyalty and entrepreneurship. As of February 28 2011, 251 of our employees held specific qualifications in respect of the hospitality industry which enable us to operate our resorts in an efficient and professional manner. Our Strategies 1. Increasing number of rooms by developing /acquiring and managing new properties in strategic locations. With the growth in the Indian economy, there has been a substantial increase in business activities from both domestic and international organizations. Our next stage of growth involves the development and management of business properties at strategic business destinations. We will continue to maintain primary focus on providing business class hotels both for domestic and foreign corporate travellers. Currently, we have a total of ten (10) properties across India with an aggregate inventory of 947 rooms. Our property at Cambay Sapphire, Neemrana is partially operational with 60 rooms and in the process of increasing the room inventory by further development of 50 rooms which shall be operational by F.Y. 2012. Our Company has entered into a Memorandum of Understanding (MoU) dated January 12, 2011 with Cambay SEZ Hotels Private Limited ("Cambay SEZ") to develop and thereafter manage and operate a hotel at Dahej SEZ consisting of seventy five (75) rooms. We also propose to develop properties at new destinations like Lucknow, Raipur and Nasik from the proceeds of the Issue thereby increasing our room inventory from the present 947 rooms to 1,332 rooms by the year F.Y.2013. We intend to further increase the number of our properties in India through management and acquisition of third party resorts.

46

2.

Optimum utilization of assets by providing various facilities in the same property. We have developed our properties to provide various services and facilities like sports zone, golf course and club facilities, spa, restaurants, conference rooms, convention and business centres, banquet halls, amphitheatres and other facilities for recreation and games. These facilities are profit centres by themselves and optimum utilisation of these facilities may lead to enhanced revenues with increased margins. Further, we intend to supplement our asset base by providing various services related verticals such as vacation ownership, hospitality education, hotel management services, tours and travels solutions in an effort to integrate our business and leverage our brand, assets and services for growth and expansion.

3.

Expanding our sales and marketing network. We intend to increase our sale and marketing network to cover various other locations through a mix of branch sales offices, franchised sales shops, Franchisee and Domestic Sales Agents (DSAs). Further, we intend to exploit the overseas markets through a network of Franchisee and Preferred Selling Agents (PSAs) to enhance our global presence and broaden our channels by enrolling new agents and representatives. We intend to increase the visibility of our brand 'Cambay' and our properties and services through various marketing channels such as print media, television, direct mail, e-commerce and on-ground market promotions backed by outbound telemarketing.

4.

Intensifying MICE business. We see a lot of potential in MICE business and intend to further exploit the advantage of having properties at strategic locations being close to cities. Due to the high and diverse economic growth in the country over the past few years, Tier II cities in India are rapidly turning into MICE destinations. MICE at such locations convert business meetings and conferences into a memorable experience for the delegates and attendees. We intend to intensely market our properties for MICE business facilitating both domestic and international business meetings and conferences.

5.

Continue to strengthen our brand 'Cambay'. All our existing businesses viz. hospitality, club membership, vacation ownership and hospitality education are operated under the umbrella brand 'Cambay'. We intend to maintain high standards of quality for our guest facilities and services with regular renovation and refurbishment of our existing properties. We intend to project 'Cambay Sapphire' to be identified as a business hotel brand of our Company. Similarly, we intend to project 'Cambay Grand' to be identified as premium business hotel brand of our Company. We shall be investing substantial monetory and non-monetory resources towards the building of these brands so as to achieve the objective of leveraging our brand for growth and expansion through various models like management contracts and acquisitions.

6.

Leverage our expertise and experience in managing properties and the brand 'Cambay' for increasing the number of managed properties. Our management includes hospitality professionals who have substantial experience in hotel operations. We presently have ten (10) operational properties having an aggregate inventory of 947 rooms. Out of above one (1) of the hotel at Bangalore is on a management contract basis comprising of 48 rooms. Our Company has recently signed an Memorandum of Understanding (MoU) dated January 12, 2011 with Cambay SEZ Hotels Private Limited to first develop the Dahej SEZ property and thenafter operate and manage the same for a period of ten (10) years with an automatic renewal of further period of ten (10) years. We intend to further leverage on our

47

strong brand and our expertise and experience in the hotel industry by increasing the number of hotels being managed on a management contract basis. 7. To achieve business synergy by establishing hospitality education services in India at our properties. Our Company forayed into hospitality management education by setting up institutes and allied infrastructure under the brand "Cambay Institute of Hospitality Management" (CIHM) at Jaipur, Gandhinagar and Udaipur which are a part of our properties. We shall also be launching a CIHM center at our property at Cambay Sapphire, Neemrana. CIHM is affiliated with IGNOU, AHLA, CTH and PTU for its academic programmes. Our CIHM centres have enrolled 748 students till date for its various education courses provided by it.

48

SUMMARY OF FINANCIAL INFORMATION RESTATED STANDALONE STATEMENT OF ASSETS & LIABILITIES No. Particulars As at Sept. 30, 2010 54,021.86 3,383.98 50,637.88 4,011.57 46,626.31 As at March 31, 2010 47,019.09 2,349.68 44,669.41 4,011.57 40,657.84 As at March 31, 2009 26,540.79 935.95 25,604.83 4,011.57 21,593.26 As at March 31, 2008 13,260.34 320.96 12,939.38 4,011.57 8,927.81 As at March 31, 2007 (` in Lakhs) ` As at March 31, 2006 1,094.41 30.69 1,063.73 40.77 1,022.96

Fixed Assets : Gross Block Less : Depreciation Net Block Less : Revaluation Reserve Net Block after adjustment of Revaluation Reserve Add: Capital Work in Progress Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and bank balances Loans and Advances Total Liabilities and Provisions Secured Loans Unsecured Loans Current Liabilities and Provisions Total Deferred Tax Liability Net worth (A+B+CD-E) Net worth Represented by : Equity Share Capital Preference Share Capital Share Premium Share Application Money Reserves & Surplus Less: Revaluation Reserve Net Reserves & Surplus Net worth

9,189.03 99.29 9,089.74 4,011.57 5,078.17

11,042.63 57,668.94 816.41

11,710.44 2,368.28 566.30

18,884.28 40,477.54 1.41

12,724.57 21,652.38 0.10

1,680.58 6,758.75 -

871.78 1,894.74 -

B C

169.72 5,234.63 554.92 5,947.48 11,906.76

166.54 4,383.71 1,076.29 4,166.33 9,792.87

65.33 1,573.46 1,524.11 2,256.36 5,419.27

64.03 394.22 2,725.58 2,777.74 5,961.56

21.09 105.95 259.98 1,742.04 2,129.06

5.76 56.80 257.32 276.86 596.74

34,986.79 758.72 8,562.86 44,308.37 1,450.89 24,632.85

34,332.95 159.82 6,685.08 41,177.85 1,078.38 20,471.22

24,788.16 57.77 4,095.12 28,941.04 525.12 16,432.06

16,172.45 30.01 1,570.70 17,773.16 207.00 9,633.88

4,544.50 160.94 634.18 5,339.63 85.96 3,462.22

1,125.60 154.48 1,280.08 31.35 1,180.05

2,560.51 6,600.00 11,860.57 396.00 7,227.33 4,011.57 3,215.76 24,632.85

2,541.08 4,000.00 11,501.01 6440.69 4,011.57 2429.13 20,471.22

2,305.09 4,000.00 7,192.40 1,800.00 5,146.13 4,011.57 1,134.56 16,432.06

2,282.05 6,715.44 4,647.95 4,011.57 636.38 9,633.87

1,516.31 950.26 808.68 4,198.54 4,011.57 186.97 3,462.22

599.29 545.56 75.96 40.77 35.19 1,180.04

49

The accompanying significant accounting policies and notes (Annexure 4) are an integral part of this statement. For further details, please refer to section titled "Financial Information" beginning page 208 of this Draft Red Herring Prospectus.

50

RESTATED STANDALONE STATEMENT OF PROFIT & LOSS Particulars Half Year ended Sept. 30, 2010 6,872.13 142.40 (5.26) 7,009.27 Year ended March 31, 2010 Year ended March 31, 2009 Year ended March 31, 2008 (` in Lakhs) ` Year Year ended ended March March 31, 2007 31, 2006 1,092.68 6.22 14.48 1,113.38 312.80 16.04 2.54 331.38

INCOME Income from Operation Other Income Increase /( Decrease) in Inventories Total Income EXPENDITURE F& B Consumed Personnel Expenses Operating & Administrative Expenses Selling and Distribution Expenses Profit Before Interest, Depreciation & Tax Depreciation / Amortization Interest & Finance Charge Profit before Tax Provision for Tax - Current Tax - MAT Credit entitlement - Deferred tax - Fringe Benefit Tax Profit After Tax Add : Balance brought forward from previous year Balance available for Appropriation APPROPRIATIONS Less : Transfer to Debenture Redemption Reserve Capitalized for Bonus Issue Transfer to general reserve Proposed dividend

10,304.21 255.74 78.14 10,638.10

5,233.66 85.42 (1.42) 5,317.66

2,646.24 116.95 29.33 2,792.52

312.32 617.80 1,425.51 376.17 4,277.46 1,034.30 2,046.17 1,196.99 (245.61) 207.99 (372.52) 786.86 2,169.44 2,956.30

428.96 1,301.16 2,590.08 577.11 5,740.79 1,496.97 2,310.40 1,933.42 (358.87) 174.02 (553.26) 1,195.31 1,080.54 2,275.85

221.25 742.10 1,800.84 238.10 2,315.37 638.79 745.59 930.99 (106.22) 11.04 (318.12) (19.50) 498.19 626.38 1,124.57

178.97 350.35 651.42 86.86 1,524.91 227.46 581.34 716.11 (136.92) (121.04) (8.75) 449.41 176.97 626.38

103.49 155.57 362.07 20.12 472.12 74.39 158.33 239.40 (30.47) (54.62) (2.54) 151.77 25.20 176.97

49.34 45.17 96.49 5.24 135.13 26.72 18.07 90.35 (0.81) (30.33) (0.92) 58.29 1.69 59.98

52.83 0.20

105.66 0.64

44.02 -

34.79

Tax on proposed dividend 0.03 0.11 Balance carried to Balance sheet 2,903.23 2,169.44 1,080.54 626.38 176.97 25.20 The accompanying significant accounting policies and notes (Annexure 4) are an integral part of this statement. For further details, please refer to section titled "Financial Information" beginning page 208 of this Draft Red Herring Prospectus.

51

RESTATED STANDALONE STATEMENT OF CASH FLOW (` in Lakhs) Year ended March 31, 2006

No.

Particulars

Half Year ended Sept 30, 2010

Year ended March 31, 2010

Year ended March 31, 2009

Year ended March 31, 2008

Year ended March 31, 2007

A]

Cash Flow from Operating Activities Net Profit Before Tax Adjustments: Depreciation / Amortization Interest Income Lease and Rental Income Interest & financial charges

1,196.99

1,933.42

930.99

716.11

239.40

90.35

1,034.30 (12.66) (91.87) 2,046.17 2,975.93

1,413.72 (21.86) (174.47) 2,310.40 3,527.79 5,461.21

615.00 (11.92) (14.50) 745.59 1,334.17 2,265.16

221.67 (1.51) (110.55) 581.34 690.95 1,407.07

68.60 (0.21) (5.52) 158.33 221.20 460.60

25.87 (14.20) 18.07 29.74 120.08

Operating Profit before working capital changes Adjustments for (Increase)/Decrease in Inventories (Increase)/Decrease in Trade Receivable (Increase)/Decrease in Loans and Advances Increase/(Decrease) in Current Liabilities Cash Generated from operations Taxes Paid Net cash Generated from operating activities (A) B] Cash flow from Investing Activities Purchase of fixed assets Purchase of Investments (Net)

4,172.92

(3.18) (850.93)

(101.22) (2,810.25)

(1.30) (1179.24)

(42.94) (288.27)

(15.33) (49.15)

(2.56) (51.66)

(1573.16)

(1,735.94)

532.41

(1,035.70)

(1465.17)

(256.11)

1,652.08

2,382.43

2,564.04

886.18

456.59

(47.16)

3,397.73 (19.51) 3,378.22

3,196.24 (152.08) 3,044.16

4,181.07 (165.37) 4,015.70

926.34 (95.32) 831.02

(612.47) (9.90) (622.37)

(237.41) (1.09) (238.50)

(6,334.96) (250.11)

(13,304.46) (564.89)

(19,440.16) (1.31)

(15,115.30) (0.10)

(4,932.61) -

(1,324.78) -

52

No.

Particulars

Interest Income Lease and Rental Income Net cash used in Investing Activities (B) C] Cash flow from Financing Activities Proceeds from issue of Equity Share Capital (including premium) Proceeds from Preference Share Capital Increase/(Decrease) in Share Application Money Proceeds from borrowings (net) Proceed from Capital Subsidy Preference Dividend Paid Interest & financial charges Net cash generated from Financing Activities (C) Net Increase in Cash and Cash equivalents ( A+B+C) Cash and Cash equivalents (Refer Note 3 ) at the beginning of the year at the end of the year Net Increase in Cash and Cash equivalents

Half Year ended Sept 30, 2010 12.66 91.87

Year ended March 31, 2010 21.86 174.47

Year ended March 31, 2009 11.92 14.50

Year ended March 31, 2008 1.51 110.55

Year ended March 31, 2007 0.21 5.52

Year ended March 31, 2006 14.20

(6,480.53)

(13,673.03)

(19,415.05)

(15,003.35)

(4,926.88)

(1,310.58)

378.99

4,544.60

500.00

6,530.93

1,867.28

409.50

1,100.00

4,000.00

396.00

(1,800.00)

1,800.00

(808.68)

263.12

455.48

2,752.74

9,646.85

8,643.47

11,497.01

3,579.85

944.15

(0.63) (2,046.17) 2,580.94

100.00

10.00

(2,310.40) 10,181.05

(745.59) 14,197.88

(581.34) 16,637.92

(158.33) 5,551.92

(18.07) 1,801.06

(521.37)

(447.81)

(1,201.46)

2,465.59

2.66

251.97

1,076.29 554.92 (521.37)

1,524.11 1,076.29 (447.82)

2,725.58 1,524.11 (1,201.46)

259.98 2,725.58 2,465.59

257.32 259.98 2.66

5.26 257.32 252.06

53

The accompanying significant accounting policies and notes (Annexure 4) are an integral part of this statement. For further details, please refer to section titled "Financial Information" beginning page 208 of this Draft Red Herring Prospectus.

54

THE ISSUE A. Issue 1 [] Equity Shares

Of which: B. Fresh Issue C. Offer for Sale 2 Offer for Sale by AIF Offer for Sale by HTML The Issue comprises of: D. Reservation for Eligible Employees 3

[] Equity Shares [] Equity Shares [] Equity Shares [] Equity Shares Upto 2,00,000 Equity Shares (Reserved for Eligible competitive basis) Employees on a

E.

Net Issue to the Public

[] Equity Shares

Of which: F. QIB Portion 4 of which: Anchor Investor Portion Mutual Fund Portion (5% of the QIB Portion (excluding the Anchor Investor Portion)) Balance for all QIBs including domestic Mutual Funds Non-Institutional Portion 5 Retail Portion 6

Upto [] Equity Shares

[] Equity Shares [] Equity Shares

[] Equity Shares Not less than [] Equity Shares available for allocation. Not less than [] Equity Shares available for allocation. 2,58,08,196 Equity Shares of `10 each.

G.

H.

Equity Shares outstanding as on the date of this Draft Red Herring Prospectus Equity Shares outstanding prior to the Issue (after the conversion of CCPS into Equity Shares) 7 Equity Shares outstanding after the Issue Objects of the Issue

[] Equity Shares of `10 each

[] Equity Shares of `10 each Please refer to the section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus.

Allocation to all categories (including the Employee Reservation Portion), except the Anchor Investor Portion, if any, shall be made on a proportionate basis.

55

(1)

Our Company and AIF are considering a Pre-IPO Placement of upto 35,00,000 Equity Shares aggregating upto `6,500 lakhs to certain investors prior to the Issue. The issue of such Equity Shares pursuant to the Pre-IPO Placement, if any, will be completed prior to filing the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is successfully completed, the Issue size will be reduced to the extent of such Pre-IPO placement, subject to the Net Issue being at least 25% of the post-Issue paid-up Equity Share Capital of our Company. The Selling Shareholders viz. Axis Infrastructure Fund I is offering []Equity Shares for a consideration aggregating upto ` 5,000 Lakhs and HT Media Limited is offering 1,03,746 Equity Shares for a consideration aggregating to ` [] Lakhs, which have been held by them for a period of at least one (1) year as on the filing of this Draft Red Herring Prospectus. The un-subscribed portion, if any, in the Employee Reservation Portion will be added back to the Net Issue to the Public and will be considered for allotment on a proportionate basis. Our Company and the Selling Shareholders may consider participation by Anchor Investors for upto [] Equity Shares in accordance with applicable SEBI (ICDR) Regulations. One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to other Anchor Investors. For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus.

(2)

(3)

(4)

(5)

Under subscription, if any, in QIB, Retail and Non-Institutional Category would be met with spillover from other categories or a combination of categories. Under subscription, if any in the Employees Reservation Portion will be added back to the Net Issue to the Public. In case of under subscription in the Net Issue, spill-over to the extent of under subscription shall be permitted from the Employees Reservation Portion. Such inter-se spill over, if any, will be at the discretion of our Company and the Selling Shareholders in consultation with the BRLMs and the Designated Stock Exchange. The requirement for minimum subscription is not applicable to the Offer for Sale. In the event of under-subscription in the Issue, the Equity Shares under the Fresh Issue will be issued prior to the sale of Equity Shares under the Offer for Sale portion. However, upon the receipt of minimum subscription of 90% of the Fresh Issue, the balance subscription shall be first satisfied from the sale of Equity Shares under the Offer for Sale portion in proportion to the Equity Shares offered by Selling Shareholder I and Selling Shareholder II. Investors may note that in case of over-subscription in the Issue, allotment to Qualified Institutional Bidders, Non-Institutional Bidders, Retail Individual Bidders and Eligible Employees shall be on a proportionate basis. For details, please refer to the section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. As on the date of this Draft Red Herring Prospectus, IFCI holds 2,60,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the IFCI Share Subscription Agreement. For further details on IFCI Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.

(6)

(7)

56

GENERAL INFORMATION Our Company was originally incorporated as a private limited company under the Companies Act, 1956 in the name of Gandhinagar Hospitality Private Limited at Ahmedabad vide Certificate of Incorporation dated November 27, 1998 bearing Corporate Identity Number U55110GJ1998PLC035044. The name of our Company was changed to Neesa Leisure Private Limited on January 13, 2004 and a Fresh Certificate of Incorporation dated January 21, 2004 was issued by the RoC, Gujarat, Dadra & Nagar Haveli. Our Company was subsequently converted to a public limited company pursuant to a resolution passed at a shareholders meeting held on November 15, 2005 and the RoC issued a Fresh Certificate of Incorporation dated December 15, 2005. Registered Office of our Company X-22, 23 & 24, G.I.D.C Electronic Estate Sector 25, Gandhinagar 382 044, India. Telephone: + 91 079 3984 1111 Facsimile: +91 079 3984 1100 E-mail: ipo@neesaleisure.com Website: www.neesaleisure.com Corporate Identity Number: U55110GJ1998PLC035044 Registrar of Companies Our Company is registered at the Registrar of Companies, Gujarat, Dadra & Nagar Haveli, having its address at ROC Bhavan, Opp. Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad 380 013, India. Board of Directors Our Companys board comprises of the following Directors: Name, Nature of Directorship and DIN Mr. Sanjay Gupta Non-Executive Chairman DIN: 00006361 Mr. Manoj Singhal Managing Director DIN: 01830419 Ms. Neelu Gupta Non-Independent & Non-Executive Director DIN: 00064415 Mr. Arun Prakash Korati Nominee Director (Axis Infrastructure Fund I) DIN: 00027783 Mr. V.Anish Babu Nominee Director (IFCI Limited) DIN: 02830575 Mr. Shailesh Modi Non-Independent & Non-Executive Director DIN: 00341722 Mr. Pankaj Mudholkar Independent & Non-Executive Director DIN: 00076276 Mr. Yogesh Joshi Independent & Non-Executive Director Age 47 years Residential Address B/202, Dhananjay Tower, Nr. Shayamal Cross Road - III, Satellite, Ahmedabad 380 015, India. A-2/202, La Habitat Apartment, Thaltej, Ahmedabad, Gujarat, India. B/202, Dhananjay Tower, Nr. Shayamal Cross Road III, Satellite, Ahmedabad 380 015, India 302, Vishal Villa, Plot No. 167, Road No.5, Shivaji Park, Dadar (West), Mumbai 400 016, India. 1-2-234/45, B-32, New SBH Colony, Domalguda, Hyderabad 500 029, India. No.10, Bhikubhai Bunglow, Satellite Road, Ahmedabad 380 015, India. 2/103, Goyal Intercity, Drive-in-Road, Taltej, Ahmedabad 380 054, India. 12-B, Nehru Park Society, Near Malhar Point, Off. Old Padra Road, Vadodara 390

35 years

45 years

44 years

32 years

58 years

47 years

55 years

57

Name, Nature of Directorship and DIN DIN: 00118454 Mr. Mehar Karan Singh Independent & Non-Executive Director DIN: 00041178 Mr.M.Narayanan Independent & Non-Executive Director DIN: 00159288 Mr.Jasvinder Singh Rana Independent & Non-Executive Director DIN: 01749361

Age 54 years

Residential Address 007, India. 607, Olympus Apartments, Altamount Road, Mumbai 400 026, India. K.G. Palmlands, Flat No. 2C, House No. 21/10, Lynwood Avenue, Mahalingapuram, Chennai 34, India. B-1004, Asavari Towers, Behind Fun Republic, Ahmedabad 380 015, India.

65 years

59 years

For further details of our Board of Directors, please refer to the section titled "Our Management" beginning on page 171 of this Draft Red Herring Prospectus. Compliance Officer Mr. Kamlendra Joshi, Vice President (Finance & Accounts) Neesa Leisure Limited X-22,23 & 24, G.I.D.C Electronic Estate Sector 25, Gandhinagar 382 044, India. Telephone: + 91 079 3984 1111 Facsimile: +91 079 3984 1100 E-mail: ipo@neesaleisure.com Investors can contact the Compliance Officer or the Registrar to the Issue in case of any pre-Issue or postIssue related problems such as non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary accounts and refund orders. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the SCSBs, giving full details such as name, address of the applicant, number of Equity Shares applied for, Bid Amount blocked, ASBA Account number and the Designated Branch of the SCSBs where the ASBA Bid-cum-Application Form was submitted by the ASBA Bidders. For all Issue related queries and for redressal of complaints, investors may also write to the BRLMs. All complaints, queries or comments received by SEBI shall be forwarded to the BRLMs, who shall respond to the same. Book Running Lead Manager Centrum Capital Limited Centrum House, Vidyanagari Marg CST Road, Kalina, Santacruz (East) Mumbai 400 098, India Telephone: +91 22 4215 9000 Facsimile: +91 22 4215 9707 Email: neesa.ipo@centrum.co.in Investor Grievance Email: igmbd@centrum.co.in Contact Person: Ms.Hema Lalwani Wagle/ Ms. Rachna Nawhal Website: www.centrum.co.in SEBI registration number: INM000010445 Legal Counsel to the Issue Book Running Lead Manager Axis Bank Limited Axis House, Bombay Dyeing Mills Compound Pandurang Budhkar Marg, Worli Mumbai 400 025, India Telephone: +91 22 2425 5708 Facsimile: +91 22 2425 7100 Email: neesa.ipo@axisbank.com Investor Grievance Email: axbmbd@axisbank.com Contact Person: Mr. Dinkar Rai Website: www.axisbank.com SEBI registration number: INM000006104 Registrar to the Issue

58

Rajani Associates Advocates & Solicitors 204-207 Krishna Chambers 59, New Marine Lines Mumbai 400020, India Telephone: +91 22 4096 1000 Facsimile: +91 22 4096 1010 Email: info@rajaniassociates.net

Link Intime India Private Limited C-13, Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (West) Mumbai 400 078, India Telephone: +91 22 2596 3838 Facsimile: +91 22 2594 6969 Email: neesa.ipo@linkintime.co.in Contact Person: Mr. Chetan Shinde Website: www.linkintime.co.in SEBI registration number: INR000004058 Syndicate Members The Syndicate Member(s) will be appointed prior to filing the Red Herring Prospectus with ROC.

Statutory Auditors M/s. ISK & Associates, Chartered Accountants 5, Laxmi Society, Behind Sasuji Dining Hall Off C.G. Road Ahmedabad 380 006, India Telephone: +91 79 2640 3765 Facsimile: +91 79 2646 5738 Email: iskca@iskca.com Contact Person: Mr. I. S. Kadri Peer Review Certificate No.: FRN 115764W valid upto January 4, 2015 Bankers to the Issue and Escrow Collection Banks

The Banker(s) to the Issue and Escrow Collection Banks will be appointed prior to filing the Red Herring Prospectus with ROC. Self Certified Syndicate Banks The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on www.sebi.gov.in/pmd/scsb.pdf. For details on designated branches of SCSBs collecting the ASBA Bidcum-Application Form, please refer the above mentioned SEBI website. Refund Bankers The Refund Bankers will be appointed prior to filing the Red Herring Prospectus with RoC. Bankers to our Company Axis Bank Limited "TRISHUL" Opp. Samartheshwar Temple Law Garden, Ellisbridge Ahmedabad (Gujarat), India Telephone: +91 79 6630 6102 Facsimile: +91 79 6630 6109 Email: shalin.gandhi@axisbank.com Contact Person: Mr. Shalin Gandhi ICICI Bank Limited Zonal House 9th Floor, JMC House Opp. Parimal Garden State Bank of India Industrial Finance Branch Gujarat Bhavan, Opp. M.J. Library Ellisbridge Ahmedabad (Gujarat), India Telephone: +91 79 2658 3253 Facsimile: +91 79 2658 3453 Email: sbi@sbi.co.in Contact Person: Mr. Pravin Murabia Development Credit Bank Limited Ground Floor, "Prerna Arcade" Opp. Doctor House, Near Parimal Garden Ahmedabad 380 006

59

Ambawadi, Ahmedabad 380 006 Telephone: +91 79 6652 3775 Facsimile: +91 79 6652 3779 Email: manan.shah@icicibank.com Contact Person: Mr. Manan Shah

Telephone: +91 79 6614 3261 Facsimile: +91 79 2640 2606 Email: binishs@dcbi.com Contact Person: Mr. Binish Shah

Statement of inter-se allocation of responsibilities for the Issue The following table sets forth the inter se allocation of responsibilities for various activities in relation to this Issue among the BRLMs: No. Activities Responsibilities Designated Coordinating BRLM Centrum Centrum

1. 2.

3. 4.

5. 6. 7. 8.

9.

10.

11.

12.

Capital structuring with relative components and formalities etc. Due diligence of our Companys operations/ management/business plans/legal etc. Drafting and design of the Draft Red Herring Prospectus, Red Herring Prospectus and Prospectus. The BRLMs shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges, RoC and SEBI including finalisation of Prospectus and RoC filing of the same. Drafting and approval of all statutory advertisements. Drafting and approval of all publicity material other than statutory advertisement as mentioned in (3) above including corporate advertisement, brochure, etc. Preparation and finalization of the road-show presentation Appointment of Printer(s) and Banker(s) to the Issue. Appointment of Registrar(s) and Advertising Agency to the Issue Domestic institutional marketing including banks/ mutual funds, allocation of investors for meetings and finalizing road show schedules. International institutional marketing including; allocation of investors for meetings and finalizing road show schedules. Non-Institutional & Retail Marketing of the Issue, which will cover, inter alia: Formulating marketing strategies, preparation of publicity budget; Finalising Media and PR strategy; Finalising centres for holding conferences for brokers etc; Finalising collection centres; and Follow-up on distribution of publicity and Issue material including form, prospectus and deciding on the quantum of the Issue Material. Pricing and managing the book, coordination with Stock-Exchanges for book building software, bidding terminals etc. Post-Issue activities, which shall involve essential

Centrum Centrum, Axis*

Centrum Centrum

Centrum Centrum

Centrum / Axis* Centrum Centrum Centrum, Axis*

Axis* Centrum Centrum Centrum

Centrum, Axis*

Axis*

Centrum, Axis*

Axis*

Centrum

Centrum

Centrum

Centrum

60

No.

Activities

Responsibilities

Designated Coordinating BRLM

follow-up steps including follow-up with bankers to the issue and SCSBs to get quick estimates of collection and advising the issuer about the closure of the Issue, based on correct figures, finalisation of the basis of allotment or weeding out of multiple applications, listing of instruments, despatch of certificates or demat credit and refunds and coordination with various agencies connected with the post-Issue activity such as registrars to the issue, bankers to the issue, SCSBs, etc.
* See the note below: Axis Infrastructure Fund I, a trust registered under the Indian Trust Act, 1882, also one of the Selling Shareholders in the Issue, is holding 34,65,347 Equity Shares (a stake of 13.43%) as on the date of this Draft Red Herring Prospectus. Further, as on the date of this Draft Red Herring Prospectus, Axis Infrastructure Fund I also holds 4,00,000 CCPS, which shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. Axis Private Equity Limited, who is an associate of one of our BRLMs, Axis Bank Limited, is acting as the investment management advisor to Axis Infrastructure Fund I. Accordingly, Axis Bank Limited is an associate of Axis Infrastructure Fund I in accordance with applicable SEBI regulations. Axis Bank Limited has signed the due diligence certificate and accordingly has been disclosed as a Book Running Lead Manager. Further, in compliance with the proviso to Regulation 21A(1) and explanation (i) to regulation 21A(1) of SEBI (Merchant Bankers) Regulations, 1992, read with Regulation 110 and Schedule XX of the SEBI (ICDR) Regulations, Axis Bank Limited would only be involved in the marketing of the Issue.

Even if any of these activities are being handled by other intermediaries, the BRLMs shall be responsible for ensuring that these agencies fulfil their functions and enable it to discharge this responsibility through suitable agreements with our Company. Monitoring Agency In terms of Regulation 16(1) of the SEBI (ICDR) Regulations, we are not required to appoint a monitoring agency for the purposes of this Issue as the Issue size shall not exceed `50,000 Lakhs. As required under the listing agreements with the Stock Exchanges, the Audit Committee appointed by our Board of Directors will monitor the utilization of the Net proceeds. We will disclose the utilization of the proceeds of the Issue, including interim use, under a separate head in our quarterly financial disclosures and annual audited financial statements until the Net proceeds remain unutilized, to the extent required under the applicable law and regulation. IPO Grading Agency [] [], India Telephone: +91 [] Facsimile: +91 [] Email: [] Contact Person: []

61

IPO Grading This Issue has been graded by [], a SEBI registered credit rating agency, and has been assigned the "IPO Grade []" indicating [] by its letter dated [], which is valid for a period of [] months. The IPO grading is assigned on a five point scale from 1 to 5 wherein an "IPO Grade 5" indicates strong fundamentals and "IPO Grade 1" indicates poor fundamentals. The rationale furnished by the grading agency for its grading will be updated at the time of filing of the Red Herring Prospectus with the RoC/ Designated Stock Exchange. A copy of the report provided by [], furnishing the rationale for its grading will be annexed to the Red Herring Prospectus and will be made available for inspection at our Registered and Corporate Office from 10.00 a.m. to 4.00 p.m. on Working Days from the date of the Red Herring Prospectus until the Bid/Issue Closing Date. For details of summary of rationale for the grading assigned by the IPO Grading Agency, please refer the section titled "Other Regulatory and Statutory Disclosures" beginning on page 368 of this Draft Red Herring Prospectus. Credit Rating As the Issue comprises only of Equity Shares, credit rating is not required. Brokers to the Issue All members of the recognized Stock Exchanges would be eligible to act as Brokers to the Issue. Trustees As the Issue is of Equity Shares, the appointment of trustees is not required. Appraising Entity The Objects of the Issue have not been appraised by any entity. The Objects of the Issue and Means of Finance therefore are based on estimates of our management. Experts Except for the report of [] in respect of the IPO Grading of this Issue (a copy of which will be annexed to the Red Herring Prospectus as Annexure I), furnishing the rationale for its grading which will be provided to the Designated Stock Exchange, to be included in the Red Herring Prospectus, our Company has not obtained any expert opinions. Book Building Process Book Building refers to the process of collection of Bids from investors on the basis of the Red Herring Prospectus. The Issue Price will be determined by our Company and the Selling Shareholders in consultation with the BRLMs, after the Bid/Issue Closing Date. The principal parties involved in the Book Building Process are: i. ii. iii. iv. Our Company; The Selling Shareholders; The BRLMs; The Syndicate Members;

62

v. vi. vii.

The Registrar to the Issue; Escrow Collection Bank(s); and The SCSBs.

The Issue is being made through the Book Building Process with Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957, as amended ("SCRR") read with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. This Issue is being made through the Book Building Process wherein upto 50% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (the "QIB Portion") provided that our Company and the Selling Shareholders in consultation with the BRLMs may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the "Anchor Investor Portion"). For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. Further 5% of QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to domestic Mutual Funds and the remaining QIB portion shall be available for allocation on proportionate basis to all QIBs, including domestic Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Our Company and the Selling Shareholders shall comply with the SEBI (ICDR) Regulations issued by SEBI for this Issue. In this regard, our Company and the Selling Shareholders have appointed the BRLMs to manage the Issue and to procure subscription to the Issue. Our Company and AIF are considering a Pre-IPO Placement of upto 35,00,000 Equity Shares aggregating upto `6,500 lakhs to certain investors prior to the Issue. The issue of such Equity Shares pursuant to the Pre-IPO Placement, if any, will be completed prior to filing the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is successfully completed, the Issue size will be reduced to the extent of such PreIPO placement, subject to the Net Issue being at least 25% of the post-Issue paid-up Equity Share Capital of our Company. QIBs are not allowed to withdraw their Bid(s) after the Bid/Issue Closing Date. In addition, QIBs are required to pay Bid Amount upon submission of their Bid and allotment to QIBs will be on a proportionate basis. For further details, please refer to the section titled "Terms of the Issue" beginning on page 382 of this Draft Red Herring Prospectus. The process of Book Building under the SEBI (ICDR) Regulations is subject to change. Investors are advised to make their own judgment about an investment through this process prior to submitting a Bid in the Issue. Steps to be taken by the Bidders for bidding: Check eligibility for making a Bid. Please refer to the section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus; Ensure that you have a demat account and the demat account details are correctly mentioned in the Bid-cum-Application Form and the ASBA Bid-cum-Application Form; Except for Bids (i) on behalf of the Central or State Governments and the officials appointed by the courts, who, in terms of a SEBI circular dated June 30, 2008, may be exempt from specifying their PAN for transacting in the securities market, and (ii) Bids by persons resident in the state of Sikkim, who, in terms of a SEBI circular dated July 20, 2006, may be exempted from specifying their PAN for transacting in the securities market, for Bids of all values, ensure that you have

63

mentioned your PAN allotted under the IT Act in the Bid-cum-Application Form or the ASBA Bid-cum-Application Form. In accordance with the SEBI (ICDR) Regulations, the PAN would be the sole identification number for participants transacting in the securities market, irrespective of the amount of transaction. For details, please refer to the section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus; Ensure that the Bid-cum-Application Form and the ASBA Bid-cum-Application Form is duly completed as per the instructions given in the Red Herring Prospectus and in the Bid-cumApplication Form or the ASBA Bid-cum-Application Form; Ensure the correctness of your demographic details (as defined in the "Issue Procedure - Bidders Depository Account Details" beginning on page 393) given in the Bid-cum-Application Form and the ASBA Bid-cum-Application Form, with the details recorded with your Depository Participant; Bids by QIBs shall be submitted only to the BRLMs, other than Bids by QIBs who Bid through the ASBA process, who shall submit the Bids to the Designated Branch of the SCSBs; and Bids by ASBA Bidders will have to be submitted to the Designated Branches of the SCSBs. ASBA Bidders should ensure that their bank accounts have adequate credit balance at the time of submission to the SCSB to ensure that the ASBA Bid-cum-Application Form is not rejected. Illustration of Book Building and the Price Discovery Process (Investors should note that the following is solely for the purpose of illustration and is not specific to the Issue) Bidders can bid at any price within the price band. For instance, assuming a price band of `20 to `24 per equity share, an issue size of 3,000 equity shares and receipt of five bids from bidders, details of which are shown in the table below, the illustrative book would be as given below. A graphical representation of the consolidated demand and price would be made available at the bidding centers during the Bidding/Issue Period. The illustrative book as shown below indicates the demand for the equity shares of our Company at various prices and is collated from bids from various investors. Bid Quantity 500 1,000 1,500 2,000 2,500 Bid Price (`) 24 23 22 21 20 Cumulative equity shares Bid for 500 1,500 3,000 5,000 7,500 Subscription (%) 16.67 50.00 100.00 166.67 250.00

The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issue the desired number of shares is the price at which the book cuts off, i.e., `22 in the above example. The Issuer and the Selling Shareholers, in consultation with the book running lead manager(s), will finalize the issue price at or below such cut off, i.e., at or below `22. All bids at or above this issue price and cut-off bids are valid bids and are considered for allocation in the respective categories. Withdrawal of the Issue Our Company and the Selling Shareholders in consultation with the BRLMs, reserves the right not to proceed with the Issue anytime after the Bid/Issue Opening Date but before the allotment of Equity Shares. In such an event, a public notice would be issued in the newspapers, in which the pre-issue advertisements were published, within two (2) days of such withdrawal in English national newspaper, Hindi national newspaper and a Gujarati regional newspaper each with wide circulation. The BRLMs through the Registrar to the Issue, shall notify the SCSBs to unblock the bank account of the ASBA Bidders within one

64

day from the day of receipt of such notification and the Stock Exchanges shall be informed promptly. Further, in the event of withdrawal of the Issue and subsequently, plans of an Initial Public Offering by our Company, a fresh offer document will be submitted again for observations of SEBI. Notwithstanding the foregoing, this Issue is also subject to obtaining (i) the final listing and trading approvals of the Stock Exchanges, which our Company shall apply for only after Allotment and (ii) the final RoC approval of the Prospectus after it is filed with the RoC. In the event of withdrawal of the Issue anytime after the Bid/Issue Opening Date but before the allotment of Equity Shares, our Company and the Selling Shareholders will forthwith repay, without interest, all monies received from the applicants in pursuance of the Red Herring Prospectus. If such money is not repaid within eight (8) Working Days after our Company and the Selling Shareholders become liable to repay it, i.e. from the date of withdrawal, then our Company, the Selling Shareholders and every Director of our Company who is an officer in default shall, on and from such expiry of eight (8) Working Days, be liable to repay the money, with interest at the rate of 15% per annum on application money, in proportion to the Equity Shares offered under the Issue, as prescribed under Section 73 of the Companies Act. In terms of the SEBI (ICDR) Regulations, QIB Bidders shall not be allowed to withdraw their Bid after the Bid/Issue Closing Date. Bid/Issue Program BID/ISSUE OPENS ON BID/ISSUE CLOSES ON* [] []

*Our Company and the Selling Shareholders, in consultation with the BRLMs may consider closing QIB Book a day before the Bid/Issue Closing Date.

Our Company and Selling Shareholders, in consultation with the BRLMs may consider participation by Anchor Investor. The Anchor Investor Bid/Issue Period shall be one Working Day prior to the Bid/Issue Opening Date. Our Company and the Selling Shareholders, in consultation with the BRLMs, may allocate upto 30% of the QIB Portion, i.e. [] Equity Shares, to Anchor Investors on a discretionary basis in accordance with the SEBI (ICDR) Regulations on the Anchor Investor Bid/Issue Date. For details, please refer to the section titled "Issue Procedure - Anchor Investor Portion" beginning on page 393 of this Draft Red Herring Prospectus. Except in relation to the Bids received from the Anchor Investors, Bids and any revision in Bids shall be accepted only between 10.00 a.m. and 5.00 p.m. (Indian Standard Time) during the Bid/Issue Period as mentioned above at the bidding centres mentioned on the Bid-cum-Application Form except that on the Bid/Issue Closing Date, Bids shall be accepted only between 10.00 a.m. and 3.00 p.m. (Indian Standard Time) (excluding ASBA Bidders) (10.00 a.m. and 1.00 p.m. (IST) if Bids are open only for the Retail Individual Bidders on the Bid/Issue Closing Date) and shall be uploaded until (i) 4.00 p.m. (Indian Standard Time) in case of Bids by QIB Bidders and Non-Institutional Bidders where the Bid Amount is in excess of `2,00,000 and (ii) until 5:00 p.m. (Indian Standard Time), in case of Bids by Retail Individual Bidders, where the Bid Amount is up to `2,00,000 which may be extended up to such time as deemed fit by the Stock Exchanges after taking into account the total number of applications received up to the closure of timings and reported by BRLMs to the Stock Exchanges within half an hour of such closure. Due to limitation of time available for uploading the Bids on the Bid Closing Date, the Bidders are advised to submit their Bids one (1) Working Day prior to the Bid/ Issue Closing Date and, in any case, no later than 1.00 p.m. (Indian Standard Time) on the Bid/Issue Closing Date. Bidders are cautioned that in the event a large number of Bids are received on the Bid/Issue Closing Date, as is typically experienced in initial public offers, which may lead to some Bids not being uploaded due to lack of sufficient time to upload, such Bids that cannot be uploaded will not be considered for allocation in the Issue. If such Bids are not uploaded, our Company, the Selling Shareholders, the Syndicate, BRLMs and the SCSBs shall not be responsible. Bids will be accepted only on Working Days, i.e., Monday to Friday (excluding any public

65

holiday). Bids by ASBA Bidders shall be uploaded by the SCSBs in the electronic system to be provided by the Stock Exchanges. It is clarified that Bids not uploaded in the book, would be rejected. Bids by ASBA Bidders shall be uploaded by the SCSBs in the electronic system to be provided by the BSE and NSE. In order that the data captured by the brokers in the electronic book is accurate, the members of the Syndicate and the SCSBs may be permitted one additional day, post the Bid/Issue Closing Date, to amend some of the data fields entered by them in the electronic bidding system. In case of discrepancy in the data entered in the electronic book vis--vis the data contained in the physical Bid form, for a particular bidder, the details as per physical application form of that Bidder may be taken as the final data for the purpose of allotment. In case of discrepancy in the data entered in the electronic book vis--vis the data contained in the physical or electronic Bid-cum-Application Form, for a particular ASBA Bidder, the Registrar to the Issue shall ask for rectified data from the SCSBs. On the Bid/Issue Closing Date, extension of time will be granted by the Stock Exchanges only for uploading the Bids received by Retail Bidders after taking into account the total number of Bids received upto the closure of the time period for acceptance of Bid-cum-Application Forms as stated herein and reported by the BRLMs to the Stock Exchanges within half an hour of such closure. Our Company and the Selling Shareholders, in consultation witht the BRLMs, reserves the right to revise the Price Band during the Bid/Issue Period in accordance with the SEBI (ICDR) Regulations provided that the Cap Price is less than or equal to 120% of the Floor Price. In case of revision of the Price Band, the Issue Period will be extended for three (3) additional Working Days after revision of the Price Band subject to the total Bid /Issue Period not exceeding ten (10) Working Days. Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a press release and also by indicating the changes on the web sites of the BRLMs, at the terminals of the Members of Syndicate and informing SCSBs. Underwriting Agreement After the determination of the Issue Price but prior to filing of the Prospectus with the RoC, our Company and the Selling Shareholders intend to enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be issued and sold in the Issue. Pursuant to the terms of the Underwriting Agreement, the BRLMs shall be responsible for bringing in the amount devolved in the event that the Syndicate Members do not fulfill their underwriting obligations. Pursuant to the terms of the Underwriting Agreement, the obligations of the Underwriters are several and are subject to certain conditions to closing, as specified therein. The Underwriters have indicated their intention to underwrite the following number of Equity Shares: (This portion has been intentionally left blank and will be filled in before filing of the Prospectus) Name and Address of the Underwriters Indicative Number of Indicative Amount Equity Shares to be Underwritten Underwritten (` in Lakhs) [] [] []

The amounts mentioned above are indicative and this would be finalised after determination of Issue Price and actual allocation of the Equity Shares. The Underwriting Agreement is dated [] and has been approved by the Board of Directors on [].

66

In the opinion of our Board (based on a certificate given to them by BRLMs and the Syndicate Members), the resources of the Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. All the above-mentioned Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered as brokers with the stock exchanges. Allocation among the Underwriters may not necessarily be in proportion to their underwriting commitments. Notwithstanding the above table, the Underwriters shall be severally responsible for ensuring payment with respect to the Equity Shares allocated to investors procured by them. In the event of any default, the respective Underwriter in addition to other obligations to be defined in the Underwriting Agreement, will also be required to procure/ subscribe to the extent of the defaulted amount in accordance with the Underwriting Agreement.

67

CAPITAL STRUCTURE Our Companys share capital, as of the date of filing this Draft Red Herring Prospectus with SEBI, before and after the proposed Issue, is set forth below: No. Particulars Aggregate Nominal Value (` In Lakhs) 5,300.00 8,200.00 Aggregate Value at Issue Price (` In Lakhs)

A)

Authorised Share Capital: 5,30,00,000 Equity Shares of `10 each 8,20,000 Preference Shares of `1,000 each Issued, Subscribed and Paid-Up Equity Share Capital as on the date of this Draft Red Herring Prospectus: 2,58,08,196 Equity Shares of `10 each

B)

2,580.81

C)

Issued, Subscribed and Paid-Up Preference Share Capital as on the date of this Draft Red Herring Prospectus: 4,00,000 CCPS of `1,000 each issued to Axis Infrastructure Fund I 2,60,000 CCPS of of `1,000 each issued to IFCI Issued, Subscribed and Paid-up Capital before the Issue (after conversion of CCPS into Equity Shares)*: [] Equity Shares of ` 10 each Present Issue to the public in terms of this Draft Red Herring Prospectus out of which: Fresh Issue of Equity Shares: []Equity Shares of `10 each Offer for Sale by the Selling Shareholders: []Equity Shares of `10 each Reservation for Eligible Employees: Upto 2,00,000 Equity Shares of `10 each Net Issue to the Public: []Equity Shares of `10 each

4,000.00 2,600.00

D)

[]

[]

E)

[]

[]

[]

[]

[]

[]

[] [] []

[] [] []

F)

Issued, Subscribed and Paid-up Capital after the Issue: [] Equity Shares of ` 10 each Share Premium Account As on the date of this Draft Red Herring Prospectus

G)

12,236.26

[]

68

No.

Particulars

Before the Issue and after Conversion of CCPS into Equity Shares After the Issue**

Aggregate Nominal Value (` In Lakhs) [] []

Aggregate Value at Issue Price (` In Lakhs) [] []

*As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. As on the date of this Draft Red Herring Prospectus, IFCI holds 2,60,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the IFCI Share Subscription Agreement. For further details on IFCI Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. **The share premium account shall be determined after the Book-building process.

1. No. 1. 2. 3. 4. 5.

Details of changes in Authorised Share Capital Date of Shareholders approval On Incorporation December 30, 2003 May 3, 2004 April 11, 2005 September 9, 2005 Details of change Incorporated with an Authorised Share Capital of `10,00,000 comprising of 1,00,000 Equity Shares of `10 each. Increase in Authorised Share Capital from `10,00,000 to `50,00,000 comprising of 5,00,000 Equity Shares of `10 each. Increase in Authorised Share Capital from `50,00,000 to `1,30,00,000 comprising of 13,00,000 Equity Shares of `10 each. Increase in Authorised Share Capital from `1,30,00,000 to `2,50,00,000 comprising of 25,00,000 Equity Shares of `10 each. Increase in Authorised Share Capital from `2,50,00,000 to `10,00,00,000 comprising of 1,00,00,000 Equity Shares of `10 each. Increase in Authorised Share Capital from `10,00,00,000 to `32,00,00,000 comprising of 3,20,00,000 Equity Shares of `10 each. Increase in Authorised Share Capital from `32,00,00,000 to `82,00,00,000 comprising of 3,20,00,000 Equity Shares of `10 each and 5,00,000 Preference Shares of `1,000 each. Increase in Authorised Share Capital from `82,00,00,000 to `90,00,00,000 comprising of 4,00,00,000 Equity Shares of `10 each and 5,00,000 Preference Shares of `1,000 each. Increase in Authorised Share Capital from `90,00,00,000 to `1,35,00,00,000 comprising of 5,30,00,000 Equity Shares of `10 each and 8,20,000 Preference Shares of `1,000 each.

6.

January 17, 2006

7.

March 29, 2008

8.

June 25, 2009

9.

July 21, 2010

Notes to the Capital Structure 2. (a) Share Capital History of our Company Equity Share capital history The following is the history of the Equity Share capital of our Company:

69

Date of Allotment

No. of Equity Shares 30

Face Value (`) 10

November 27, 1998

February 20, 1999 June 12, 2004

46,126

10

3,88,000

10

June 16, 2004

2,82,950

10

December 9, 2004 April 15, 2005 June 15, 2005 September 27, 2005 November 28, 2005 December 8, 2005 December 31, 2005 March 27, 2006 April 21, 2006 May 22,

5,50,000

10

4,50,000

10

6,00,000 8,60,000

10 10

Issue Consideration Nature of Cumulative Cumulative (Cash or Price Allotment/ no. of shares Paid-Up Other than Name of Equity Capital (`) Cash) Allottees (`) 10 Cash Subscription 30 300 to Memorandum of Association 10 Cash Beena Modi 46,156 4,61,560 and Pankaj Mudholkar 10 Cash Neelu Gupta, 4,34,156 43,41,560 Sanjay Gupta and Gujarat Syscom Technologies Private Limited 20 Cash Arbindo Roy, 7,17,106 71,71,060 Pankaj Mudholkar, Sunshreya Associates, Sandeep Gupta, Sanjay C. Agrawal, Anil Amin, Shanta Amin, Teamvision Tradelink Limited and Sunshreya Infrastructure Private Limited 10 Cash Sanjay Gupta 12,67,106 1,26,71,060 and Neelu Gupta 10 Cash Sanjay Gupta 17,17,106 1,71,71,060 and Neelu Gupta 10 Cash Sanjay Gupta 23,17,106 2,31,71,060 10 Cash Sanjay Gupta and Neelu Gupta Sanjay Gupta Sanjay Gupta and Neelu Gupta Sanjay Gupta and Neelu Gupta Bonus Issue (2:17)* Sanjay Gupta and Neelu Gupta Abhinav 31,77,106 3,17,71,060

Cumulative Share Premium (`) Nil

Nil

Nil

28,29,500

28,29,500

28,29,500

28,29,500 28,29,500

6,35,000 5,50,000

10 10

10 10

Cash Cash

38,12,106 43,62,106

3,81,21,060 4,36,21,060

28,29,500 28,29,500

10,00,000

10

10

Cash

53,62,106

5,36,21,060

28,29,500

6,30,836 34,83,971

10 10

N.A. 10

Bonus Cash

59,92,942 9,476,913

5,99,29,420 94,769,130

Nil Nil

7,00,000

10

35

Cash

1,01,76,913

10,17,69,130

1,75,00,000

70

Date of Allotment

No. of Equity Shares

Face Value (`)

Issue Consideration (Cash or Price Other than (`) Cash)

2006 May 2006 May 2006 June 2006 July 2006 23, 24, 1, 25,000 6,70,587 12,19,534 10 10 10 40 10 10 Cash Cash Cash

Nature of Cumulative Cumulative Allotment/ no. of shares Paid-Up Name of Equity Capital Allottees (`) Mittal and Aditi Mittal Gunjan Goel 1,02,01,913 10,20,19,130 Sanjay Gupta Sanjay Gupta and Neelu Gupta Sanjay Gupta and Neelu Gupta Sanjay Gupta and Neelu Gupta Sanjay Gupta Sanjay Gupta and Neelu Gupta Dakshesh Parikh Sanjay Gupta, Neelu Gupta and Impress Netal Marketing Services Private Limited Axis Private Equity Limited Writers & Publishers Limited Sanjay Gupta H.T. Media Limited Sanjay Gupta Brand Equities Treaties Limited Sanjay Gupta Sanjay Gupta 1,08,72,500 1,20,92,034 10,87,25,000 12,09,20,340

Cumulative Share Premium (`)

1,82,50,000 1,82,50,000 1,82,50,000

5,

7,68,257

10

35

Cash

1,28,60,291

12,86,02,910

3,74,56,425

August 30, 2006 February 15, 2007 June 30, 2007 October, 31, 2007 December 28, 2007

4,85,714

10

35

Cash

1,33,46,005

13,34,60,050

4,95,99,275

18,17,058 33,11,578

10 10

35 65

Cash Cash

1,51,63,063 1,84,74,641

15,16,30,630 18,47,46,410

9,50,25,725 27,71,62,515

52,500 8,28,003

10 10

96 100

Cash Cash

1,85,27,141 1,93,55,144

18,52,71,410 19,35,51,440

28,16,77,515 35,61,97,785

March 31, 2008 October 13, 2008 June 25, 2009 July 14, 2009 December 16, 2009 December 16, 2009

34,65,347

10

101

Cash

2,28,20,491

22,82,04,910

67,15,44,362

2,30,415

10

217

Cash

2,30,50,906

23,05,09,060

71,92,40,267

11,28,205 1,03,746 4,66,153 3,59,700

10 10 10 10

195 173.50 195 185.32

Cash Cash Cash Cash

2,41,79,111 2,42,82,857 2,47,49,010 2,51,08,710

24,17,91,110 24,28,28,570 24,74,90,100 25,10,87,100

92,79,58,192 94,49,20,663 1,03,11,58,968 1,09,42,21,572

March 31, 2010 July 19, 2010 November 14, 2010 []

3,02,050 1,94,358

10 10

195 195

Cash Cash

25,410,760 2,56,05,118

25,41,07,600 25,60,51,180

1,15,01,00,822 1,18,60,57,052

2,03,078 []

10 10

195 []

Cash []

Sanjay Gupta Axis Infrastructure Fund I

2,58,08,196 []

25,80,81,960 []

1,22,36,26,482 []

71

Date of Allotment

No. of Equity Shares

Face Value (`)

Issue Consideration (Cash or Price Other than (`) Cash)

[]

[]

10

[]

[]

Nature of Allotment/ Name of Allottees Pursuant to the Conversion of CCPS into Equity Shares** IFCI Pursuant to the Conversion of CCPS into Equity Shares***

Cumulative Cumulative no. of shares Paid-Up Equity Capital (`)

Cumulative Share Premium (`)

[]

[]

[]

Total [] *The bonus issue is out of general reserve and share premium account. **As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. ***As on the date of this Draft Red Herring Prospectus, IFCI holds 2,60,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the IFCI Share Subscription Agreement. For further details on IFCI Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.

(b)

Preference share capital history The following is the history of the Preference Share capital of our Company:

Allotment to 40,00,00,000 Axis Private Equity Limited* September 1, 2,60,000 1,000 1,000 Cash Allotment to 26,00,00,000 2010 IFCI *These CCPS were transferred by Axis Private Equity Limited to Axis Infrastructure Fund I on December 3, 2008. **As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. As on the date of this Draft Red Herring Prospectus, IFCI holds 2,60,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with RoC as per the terms of the IFCI Share Subscription Agreement. For further details on IFCI Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.

Date of Allotment/ Transfer August 28, 2008

No. of Preference Shares** 4,00,000*

Face Value (`) 1,000

Issue Price (`) 1,000

Consideration (Cash or Other than Cash) Cash

Nature of Allotment

Paid-Up Preference Capital (`)

72

3.

Promoter Capital Build -up

Consideration Number of Equity Shares Face Value (`) Issue/Acquisition Price (`) Nature of Transaction % of preIssue share capital (after conversion of CCPS) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] % of postIssue share capital % of Pledged Shares

Date of Allotment/ Acquisition

Mr. Sanjay Gupta June 12, Cash 2004 December 9, Cash 2004 April 15, Cash 2005 June 15, Cash 2005 September Cash 27, 2005 November Cash 28, 2005 December 8, Cash 2005 December Cash 31, 2005 March 27, NA 2006 April 21, Cash 2006 May 24, Cash 2006 June 1, 2006 Cash July 5, 2006 Cash August 30, Cash 2006 February Cash 15, 2007 February 15, Cash 2007 June 30, Cash 2007 December Cash 28, 2007 June 25, Cash 2009 December Cash 16, 2009 February Cash 19, 2010 March 31, Cash 2010 May 7, Cash 2010 July 19, Cash 2010 November Cash 14, 2010 Total

2,00,000 4,50,000 4,20,000 6,00,000 90,000 6,35,000 2,50,000 6,50,000 3,87,647 26,83,971 6,70,587 7,52,534 6,98,257 3,37,143 1,00,253 18,17,058 31,34,656 4,04,003 11,28,205 4,66,153 4,00,000 3,02,050 (3,02,050) 1,94,358 2,03,078 1,66,72,903

10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

10 10 10 10 10 10 10 10 N.A. 10 10 10 35 35 35 35 65 100 195 195 100 195 195 195 195

Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Bonus Shares Allotment Allotment Allotment Allotment Allotment Transfer Allotment Allotment Allotment Allotment Allotment Transfer Allotment (Transfer) Allotment Allotment

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

73

Date of Allotment/ Acquisition

Consideration

Number of Equity Shares

Face Value (`)

Issue/Acquisition Price (`)

Nature of Transaction

% of preIssue share capital (after conversion of CCPS) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

% of postIssue share capital

% of Pledged Shares

Ms. Neelu Gupta Cash October 21, 2002 January 15, Cash 2004 Cash March 25, 2004 June 12, Cash 2004 December 9, Cash 2004 April 15, Cash 2005 August 25, Cash 2005 September Cash 27, 2005 December 8, Cash 2005 December Cash 31, 2005 March 27, NA 2006 April 21, Cash 2006 June 1, 2006 Cash July 5, 2006 Cash August 30, Cash 2006 June 30, Cash 2007 December Cash 28, 2007 Total

46,146 (15,000) 15,000 1,20,000 1,00,000 30,000 82,500 7,70,000 3,00,000 3,50,000 2,11,606 8,00,000 4,67,000 70,000 1,48,571 1,76,922 24,000 36,96,745

10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

10 10 10 10 10 10 10 10 10 10 NA 10 10 35 35 65 100

Transfer Transfer Transfer Allotment Allotment Allotment Transfer Allotment Allotment Allotment Bonus Allotment Allotment Allotment Allotment Allotment Allotment

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

4.

Details of acquisition and sale/transfer of Equity Shares by our Promoters in last one (1) year: Allotment/ Transfer Allotment (Transfer) Allotment Allotment Name of the Allotee/ Tranferor Mr. Sanjay Gupta Mr. Sanjay Gupta Mr. Sanjay Gupta Mr. Sanjay Gupta Consideration No. of Equity Shares 3,02,050 (3,02,050) 1,94,358 2,03,078 Face Value (`) 10 10 10 10 Purchase/ Transfer Price (`) 195 195 195 195

Date of Allotment/ Transfer March 31, 2010 May 7, 2010 July 19, 2010 November 14, 2010

Cash Cash Cash Cash

74

5.

The aggregate shareholding of our Promoters & Promoter Group as of the date of filing this Draft Red Herring Prospectus

Particulars Promoters Mr. Sanjay Gupta Ms. Neelu Gupta Total (A) Promoter Group Gujarat Syscom Technologies Private Limited Mr. Sandeep Gupta Total (B) Total (A+B) 6. Promoters Contribution and Lock-in

Number of Shares 1,66,72,903 36,96,745 2,03,69,648 76,000 46,952 1,22,952 2,04,92,600

Percentage (%) holding 64.60 14.32 78.92 0.29 0.18 0.48 79.40

The Equity Shares that are being locked-in are eligible for computation of Promoters contribution under Regulation 33(1) of the SEBI (ICDR) Regulations and are being locked-in under Regulation 36 of the SEBI (ICDR) Regulations. However, in order to comply with Regulation 33(1)(d) of the SEBI (ICDR) Regulations, our Promoters shall de-pledge the Equity Shares pledged with the secured lenders before the filing of the Red Herring Prospectus with RoC. a) Pledge of Equity Shares: []Equity Shares held by our Promoters, equivalent to 20% of the post Issue paid-up equity share capital of our Company, constitute our Promoters Contribution ("Promoter Contribution Shares") in terms of Regulation 32(1) of the SEBI (ICDR) Regulations. As on the date of this Draft Red Herring Prospectus, our Promoters hold 2,03,69,648 Equity Shares of our Company constituting 78.92% of the total pre-Issue paid-up share capital of our Company ("Promoter Shares"). Out of the above, 1,95,60,909 Equity Shares constituting 75.79% of the total pre-Issue paid-up Equity Share Capital of our Company have been pledged as on the date of this Draft Red Herring Prospectus ("Pledged Shares"). We set out below the table providing details in relation to Equity Shares held by our Promoters pledged with various lenders as on the date of this Draft Red Herring Prospectus: Name of the Lender Equity Shares pledged of Mr. Sanjay Gupta Number (%) of paid up equity share capital 55,68,283 21.58 87,12,826 33.76 Equity Shares pledged of Ms. Neelu Gupta Number (%) of paid up equity share capital 15,09,571 5.85 21,87,174 8.47 Total Pledged Equity Shares of our Promoters Number (%) of paid up equity share capital 70,77,854 27.43 1,09,00,000 42.23

TFCI, SBI & UBI (1) IDFC along with Axis Bank Consortium
(2)

IFCI (3) SBI (4) Total

13,83,055 2,00,000 1,58,64,164

5.36 0.77 61.47

--36,96,745

--14.32

13,83,055# 2,00,000 1,95,60,909

5.36 0.77 75.79

75

Pledged Equity Shares (1) Exclusive charge in favour of TFCI, SBI and UBI. (2) Pledged with IDFC on pari passu basis with the consortium of bankers lead by Axis Bank viz. Bank of India, Syndicate Bank, Corporation Bank, L&T Infrastructure Finance Co. Limited, Oriental Bank of Commerce and IFCI Limited ("Axis Bank Consortium"). (3) Exclusively pledged in favour of IFCI pursuant to the IFCI SSA. (4) Exclusive charge in favour of SBI. # As per the terms of IFCI SSA, Mr. Sanjay Gupta is required to create a charge over 8,00,000 Equity Shares held by him in favour of IFCI within a period of nine (9) months from the date of subscription of CCPS by IFCI. ICICI Bank Limited ("ICICI Bank") by its letter dated December 20, 2010 sanctioned a Rupee Term Loan facility of `14,000 lakhs to our Company towards re-financing certain existing term loan facilities availed from IDFC, TFCI, SBI, CBI and UBI to the extent of `10,800 lakhs and the balance of `3,200 lakhs towards the capital expenditure. As agreed between our Company and ICICI Bank, ICICI Bank will hold a pari passu charge over 1,11,70,791 Equity Shares out of the Pledged Shares along with the Axis Bank Consortium. In addition, ICICI Bank will also hold an exclusive charge over 25,00,000 Equity Shares out of the Promoter Shares as collateral security for the term loan facility provided by ICICI Bank. As on date of this Draft Red Herring Prospectus pledge of the Promoter Shares have not been created in favour of ICICI Bank. Pursuant to the disbursal by ICICI Bank of `14,000 lakhs and the execution of the facility agreement, the existing term loans of IDFC, TFCI, SBI, CBI and UBI have been repaid, except for `142.24 Lakhs which is yet to be repaid to IDFC. The process for de-pledge of 70,77,854 Promoter Shares pledged with TFCI, SBI and UBI has been initiated and appropriate documents are under preparation for filing with the relevant authorities. On completion of this process, the above mentioned shares will be available for meeting the requirements under Regulation 33(1)(d) of the SEBI (ICDR) Regulations. In addition to above, our Company has obtained a letter dated August 9, 2010 from Axis Bank Limited (the lead bank of the Axis Bank Consortium) agreeing to de-pledge 40,00,000 Equity Shares of our Promoters before filing of the Red Herring Prospectus with the RoC till the conclusion of lock-in period to be in compliance with the requirements of Regulation 33(1)(d) of the SEBI (ICDR) Regulations. Axis Bank Limited has agreed to de-pledge the aforementioned Equity Shares of our Promoters on the following terms and conditions: "The objects of the IPO shall include repayment of existing debt and the company shall use the proceeds of the IPO to prepay existing secured term loans to the extent of atleast `30.00 crores on pro-rata basis. (In addition, IDFC has also stipulated repayment of its term loan of `20.00 crores). The total debt reduction would be therefore, be `50.00 crores. At the time of filing of DRHP, only an in-principle approval for release of pledge of shares shall be issued. The actual release of shares shall only be at the time of filing of the Red Herring Prospectus for the IPO. The Company and the promoters shall undertake to repledge the shares if IPO does not happen within 180 days of the release of the shares. The above waiver shall be subject to other banks according similar approval." We shall ensure that such number of Equity Shares as required for complying with Regulation 33(1)(d) of the SEBI (ICDR) Regulations will be available at the time of filing of the Red Herring Prospectus with the RoC.

76

b)

Details of Promoters Contribution locked-in for three (3) years: Pursuant to Regulation 32(1)(a), an aggregate of 20% of the Post-Issue capital shall be contributed by our Promoters. Pursuant to Regulation 36(a) the SEBI (ICDR) Regulations, an aggregate of 20% of the post-Issue shareholding of the Promoters shall be locked-in for a period of three (3) years from the date of Allotment in the Issue. Further our Promoters have given their written consent for including these Equity Shares as a part of Promoters Contribution, details of which are set out below:

Details of Promoters Contribution* Date on Date when Consideration which the made fully Equity Shares paid up were Allotted/ Acquired Mr. Sanjay Gupta [] [] [] [] [] [] [] [] []

Number of Equity Shares

Face Value (`)

Issue Price (`)

% of postIssue share capital [] [] []

Period of Lockin

[] [] []

[] [] []

[] [] []

3 years from the date of allotment 3 years from the date of allotment

Ms. Neelu Gupta [] [] [] [] [] []

[] [] []

[] [] []

[] [] []

[] [] []

[] [] []

Total

[]

20.00

*Details of Promoter Contribution Shares shall be determined after finalizing the basis of allotment.

Note: The lock-in period shall commence from the date of Allotment of Equity Shares in the Issue. (a) The Equity Shares that are being locked-in are not in-eligible for computation of Promoters contribution under Regulation 33 of the SEBI (ICDR) Regulations. In this connection, we confirm the following: (i) The Equity Shares offered for minimum 20% Promoters contribution have not been acquired in the last three (3) years for consideration other than cash and revaluation of assets or capitalization of intangible assets or bonus shares out of revaluation reserves, or unrealised profits of our Company or from a bonus issue against Equity Shares which are otherwise ineligible for computation of Promoters contribution; The Equity Shares offered for minimum 20% Promoters contribution do not include any Equity Shares acquired during the preceding one (1) year at a price lower than the price at which the Equity Shares are being offered to the public in the Issue; The Equity Shares offered for minimum 20% Promoters contribution were not issued to the Promoter upon conversion of a partnership firm; The Equity Shares offered for minimum 20% Promoters contribution are under pledge. However, our Promoters shall de-pledge the Equity Shares pledged with our lenders before the filing of the Red Herring Prospectus with RoC; and

(ii)

(iii)

(iv)

77

(v)

In terms of undertaking executed by our Promoter, Equity Shares forming part of Promoters contribution subject to lock in will not be disposed/ sold/ transferred by our Promoter during the period starting from the date of filing of the Draft Red Herring Prospectus with SEBI till the date of commencement of lock-in period as stated in the Draft Red Herring Prospectus.

(b)

The minimum Promoters contribution has been brought to the extent of not less than the specified minimum lot and from persons defined as Promoter under the SEBI (ICDR) Regulations. Our Company has obtained a consent dated [] from our Promoter for the lock-in of [] Equity Shares, held by him, for a period of three (3) years from the date of Allotment and for lock-in of the balance pre-Issue Equity Share capital of our Company, held by them, for a period of one (1) year from the date of Allotment. Details of Equity Shares locked-in for one (1) year: In terms of Regulation 36(b) and 37 of the SEBI (ICDR) Regulations, in addition to the Equity Shares proposed to be locked-in as part of the Promoters Contribution as stated above, the balance pre-Issue Equity Share capital of our Company (including those Equity Shares held by our Promoters and the Equity Shares allotted pursuant to the Pre-IPO Placement, if any) constituting [] Equity Shares will be locked-in for a period of one (1) year from the date of Allotment in the Issue, other than [] Equity Shares held by Axis Infrastructure Fund I. Axis Infrastructure Fund I holds 34,65,347 Equity Shares of our Company constituting 13.53% of the paid-up equity share capital of our Company as on the date of filing this Draft Red Herring Prospectus. Out of the above, [] Equity Shares are being offered under this Issue by way of Offer for Sale for an aggregate of upto `5,000 Lakhs at the Issue Price. HTML holds 1,03,746 Equity Shares of our Company constituting 0.40% of the paid-up equity share capital of our Company as on the date of filing this Draft Red Herring Prospectus which are being offered under this Issue by way of Offer for Sale for an aggregate of ` [] Lakhs at the Issue Price. Pursuant to Regulation 37(b) of the SEBI (ICDR) Regulations, since Axis Infrastructure Fund I is a SEBI registered Domestic Venture Capital Fund (DVCF) and has held Equity Shares for more than one (1) year prior to filing this Draft Red Herring Prospectus with SEBI, the balance Equity Shares after the Offer for Sale portion will not be subject to any lock-in. Axis Infrastructure Fund I also holds 4,00,000 CCPS of our Company as on the date of filing this Draft Red Herring Prospectus with SEBI. These CCPS shall be converted into [] Equity Shares before the filing of the Red Herring Prospectus with the RoC at a price as per the terms of the Share Subscription Agreement. Since the CCPS have been held by Axis Infrastructure Fund I, a SEBI registered DVCF, for more than one (1) year prior to filing this Draft Red Herring Prospectus with SEBI, the resultant Equity Shares pursuant to conversion of these CCPS will not be subject to any lock-in pursuant to Regulation 37(b) of the SEBI (ICDR) Regulations. IFCI holds 2,60,000 CCPS of our Company as on the date of filing this Draft Red Herring Prospectus with SEBI. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC at a price which shall ensure an IRR of twenty percent (20%) from the date of subscription of the CCPS as per the terms of the Share Subscription Agreement. Further, Equity Shares issued to IFCI pursuant to conversion of the CCPS, shall be subject lock-in for a period of one (1) year.

c)

d)

Other requirements in respect of Lock-in of Equity Shares: In terms of Regulation 39 of the SEBI (ICDR) Regulations, Equity Shares held by promoters and locked-in may be pledged with any scheduled commercial bank or public financial institution as collateral security for loan granted by such bank or institution, subject to the following:

78

(a)

if the Equity Shares are locked-in in terms of clause (a) of Regulation 36, the loan has been granted by such bank or institution for the purpose of financing one or more of the Objects of the Issue and pledge of Equity Shares is one of the terms of sanction of the loan; if the Equity Shares are locked-in in terms of clause (b) of Regulation 36 and the pledge of specified securities is one of the terms of sanction of the loan.

(b)

Further, pursuant to Regulation 40 of the SEBI (ICDR) Regulations, Equity Shares held by shareholders other than the Promoters may be transferred to any other person holding shares which are locked-in as per Regulation 36 of the SEBI (ICDR) Regulations, subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with the Takeover Code, as applicable. Pursuant to Regulation 40 of the SEBI (ICDR) Regulations, Equity Shares held by the Promoters may be transferred to and among the Promoters or the Promoter Group or to a new promoter or persons in control of our Company subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with the Takeover Code, as applicable. e) Lock-in of Equity Shares to be issued, if any, to Anchor Investor: Any Equity Shares allotted to Anchor Investors shall be locked-in for a period of thirty (30) days from the date of allotment of Equity Shares in the Issue. 7. Shareholding Pattern of our Company as on the date of the Draft Red Herring Prospectus*
Category of shareholder Number of shareholder s Total number of shares Number of Total shareholding Shares Pledged or shares held as a percentage of otherwise in total number of encumbered demateriali shares zed form % of % of No. of % (A+B) (A+B+C) shares

(A) Promoter and Promoter Group (1) Indian (a) Individuals/ Hindu Undivided Family (b) Central Government/ State Government(s) (c) Bodies Corporate (d) Financial Institutions/ Banks (e) Any Other (specify) Sub-Total (A)(1) (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

2,04,16,600

1,31,89,149

79.11

79.11

1,95,60,90 75.79 9 ---------

-1 --4

-76,000 --2,04,92,600

----1,31,89,149

-0.29 --79.40

-0.29 --79.40

1,95,60,90 75.79 9 ---

--

--

--

--

--

----4

----2,04,92,600

----1,31,89,149

----79.39

----79.39

--------1,95,60,90 75.79 9

79

Category of shareholder

Number of shareholder s

Total number of shares

Number of Total shareholding Shares Pledged or shares held as a percentage of otherwise in total number of encumbered demateriali shares zed form % of % of No. of % (A+B) (A+B+C) shares

(B) (1) (a) (b) (c) (d) (e) (f) (g) (h) (2) (a) (b)

(c)

(c)

75.79 1,95,60,90 9 As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. As on the date of this Draft Red Herring Prospectus, IFCI holds 2,60,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the IFCI Share Subscription Agreement. For further details on IFCI Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. * Our Company and AIF are considering a Pre-IPO Placement of upto 35,00,000 Equity Shares aggregating upto `6,500 lakhs to certain investors prior to the Issue The issue of such Equity Shares pursuant to the Pre-IPO Placement, if any, will be completed prior to filing the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is successfully completed, the Issue size will be reduced to the extent of such Pre-IPO placement, subject to the Net Issue being at least 25% of the post-Issue paid-up Equity Share Capital of our Company.

Group (A)= (A)(1)+(A)(2) Public shareholding Institutions Mutual Funds/UTI Financial Institutions/ Banks Central Government/ State Government(s) Venture Capital Funds Insurance Companies Foreign Institutional Investors Foreign Venture Capital Investors Any Other (specify) Sub-Total (B)(1) Non-institutions Bodies Corporate Individuals i. Individual shareholders holding nominal share capital up to ` 1 lakh. ii. Individual shareholders holding nominal share capital in excess of ` 1 lakh. Any Other (specify) Sub-Total (B)(2) Total Public Shareholding (B)= (B)(1)+(B)(2) TOTAL (A)+(B) Shares held by Custodians and against which Depository Receipts have been issued GRAND TOTAL (A)+(B)+(C)

---1 ----1 7 4

---34,65,347 ----34,65,347 16,95,911 1,54,338

---34,65,347 ----34,65,347 ---

---13.43 ----13.43 6.57 0.60

---13.43 ----13.43 6.57 0.60

------------

------------

-11 12 16 --

-18,50,249 53,15,596 2,58,08,196 --

--34,65,347 1,66,54,496 --

-7.17 20.60 100 --

-7.17 20.60 100 --

------

------

16

2,58,08,196

1,66,54,496

100

100

80

8.

The shareholding pattern of our Company before and after the Issue is set forth below:
Particulars Pre-Issue (before the Conversion of CCPS) Number of Shareholding shares (%) Pre-Issue (after conversion of CCPS) Number of shares Shareholding (%) Post-Issue

Number of shares

Shareholding (%)

Promoters Mr. Sanjay Gupta 1,66,72,903 64.60 [] [] [] [] Ms. Neelu Gupta 36,96,745 14.32 [] [] [] [] Sub-Total (A) 2,03,69,648 78.92 [] [] [] [] Promoter Group Gujarat Syscom 76,000 0.29 [] [] [] [] Technologies Private Limited Mr. Sandeep Gupta 46,952 0.18 [] [] [] [] Sub-Total (B) 1,22,952 0.47 ----Total Holding of 2,04,92,600 79.40 [] [] [] [] Promoter & Promoter Group (A+B) C. Non-Promoters Axis Infrastructure 34,65,347 13.43 [] [] [] [] Fund I* Brand Equity Treaties 3,59,700 1.39 [] [] [] [] Limited A.K. Services Private 3,50,000 1.36 [] [] [] [] Limited Technodot Engineers 3,02,050 1.17 [] [] [] [] Limited A.K. Capital Markets 2,50,000 0.97 [] [] [] [] Limited Writers & Publishers 2,30,415 0.89 [] [] [] [] Limited H.T. Media Limited 1,03,746 0.40 [] [] [] [] Second Leasing 1,00,000 0.39 [] [] [] [] Private Limited Mr. Arvind Gupta 72,647 0.28 [] [] [] [] Mr. Dakshesh Parikh 52,500 0.20 [] [] [] [] Ms. Gunjan Goel 25,000 0.10 [] [] [] [] Mr. Pankaj 4,191 0.02 [] [] [] [] Mudholkar Sub-Total(C) 53,15,596 20.60 [] [] [] [] Equity Shares --[] [] [] [] Offered through the Issue Total (A+ B+C) = 2,58,08,196 100.00 [] [] [] [] (D) *As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. As on the date of this Draft Red Herring Prospectus, IFCI holds 2,60,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the IFCI Share Subscription Agreement. For further details on IFCI Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.

9.

Except as disclosed below, none of our Directors or Key Managerial Personnel hold Equity Shares in our Company:

81

Name of the Director Mr. Sanjay Gupta Ms. Neelu Gupta Mr. Pankaj Mudholkar 10.

Number of Equity Shares held 1,66,72,903 36,96,745 4,191

Shareholding (%) 64.60 14.32 0.02

Our Company, the Selling Shareholders, the Directors and the BRLMs have not entered into any buy-back and/or standby arrangements for purchase of Equity Shares from any person. Top Ten Shareholders of our Company The top ten (10) shareholders of our Company as of the date of the filing of the Draft Red Herring Prospectus with SEBI are as follows: Name of the Shareholder Mr. Sanjay Gupta Ms. Neelu Gupta Axis Infrastructure Fund I* Brand Equity Treaties Limited A.K. Services Private Limited Technodot Engineers Limited A.K. Capital Markets Limited Writers & Publishers Limited H.T. Media Limited Second Leasing Private Limited Number of Equity Shares 1,66,72,903 36,96,745 34,65,347 3,59,700 3,50,000 3,02,050 2,50,000 2,30,415 1,03,746 1,00,000 Shareholding (%) 64.60 14.32 13.43 1.39 1.36 1.17 0.97 0.89 0.40 0.39

11. a.

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

*As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.

b.

The top ten (10) shareholders of our Company as of ten (10) days prior to the filing of the Draft Red Herring Prospectus with SEBI are as follows: Name of the Shareholder Mr. Sanjay Gupta Ms. Neelu Gupta Axis Infrastructure Fund I* Brand Equity Treaties Limited A.K. Services Private Limited Technodot Engineers Limited A.K. Capital Markets Limited Writers & Publishers Limited H.T. Media Limited Second Leasing Private Limited Number of Equity Shares 1,66,72,903 36,96,745 34,65,347 3,59,700 3,50,000 3,02,050 2,50,000 2,30,415 1,03,746 1,00,000 Shareholding (%) 64.60 14.32 13.43 1.39 1.36 1.17 0.97 0.89 0.40 0.39

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

*As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into [] Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.

c.

The top ten (10) shareholders of our Company as of two (2) years prior to the filing of the Draft Red Herring Prospectus with SEBI are as follows:

82

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Name of the Shareholder Mr. Sanjay Gupta Ms. Neelu Gupta Axis Private Equity Limited* Impress Netal Marketing Services Private Limited Mr. Abhinav Mittal Ms. Aditi Mittal Gujarat Syscom Technologies Private Limited Mr. Arvind Gupta Mr. Dakshesh Parikh Mr. Sandeep Gupta

Number of Equity Shares 1,42,81,109 36,96,745 34,65,347 4,00,000 3,50,000 3,50,000 76,000 72,647 52,500 46,952

Shareholding (%) 62.58 16.20 15.19 1.75 1.53 1.53 0.33 0.32 0.23 0.21

*As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.

12.

Except the CCPS held by Axis Infrastructure Fund I and IFCI Limited, details of which are set out below, there are no outstanding warrants, options or rights to convert debentures, loans or other instruments into Equity Shares:
No. of Preference Shares** 4,00,000* Face Value (`) 1,000 Issue Price (`) 1,000 Consideration (Cash or Other than Cash) Cash Nature of Allotment Paid-Up Preference Capital (`)

Allotment to 40,00,00,000 Axis Private Equity Limited* September 1, 2,60,000 1,000 1,000 Cash Allotment to 26,00,00,000 2010 IFCI *These CCPS were transferred by Axis Private Equity Limited to Axis Infrastructure Fund I on December 3, 2008. **As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I holds 4,00,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement. For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. As on the date of this Draft Red Herring Prospectus, IFCI holds 2,60,000 CCPS. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the IFCI Share Subscription Agreement. For further details on IFCI Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus.

Date of Allotment/ Transfer August 28, 2008

13.

The Equity Shares are fully paid up and there are no partly paid-up Equity Shares as on the date of filing of this Draft Red Herring Prospectus. Our Company does not have any ESOP/ESOS Scheme as of the date of filing of this Draft Red Herring Prospectus. Our Company has not issued Equity Shares out of revaluation reserves. Further, our Company has not issued any Equity Shares for consideration other than cash. Our Company had issued 6,30,836 Equity Shares as bonus shares on March 27, 2006 to the existing shareholders of our Company out of the general reserve and share premium account as is disclosed under this Section. The Equity Shares issued pursuant to this Issue shall be fully paid-up. There have been no transfers of Equity Shares by our Directors, Promoters and Promoter Group entities within the last six (6) months preceeding the date of this Draft Red Herring Prospectus

14.

15.

16. 17.

83

filed with SEBI except for the Equity Shares acquired by one of our Promoter, Mr. Sanjay Gupta, details of which is set out below: Date of Purchase November 14, 2010 18. Consideration Cash No. of Equity Shares acquired 2,03,078 Face Value (`) 10 Purchase Price (`) 195

Except the CCPS issued to Axis Infrastructure Fund I and IFCI Limited which shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC, there will be no further issue of Equity Shares (subject to Pre-IPO Placement) whether by way of issue of bonus shares, preferential allotment, and rights issue or in any other manner during the period commencing from submission of this Draft Red Herring Prospectus with SEBI until the Equity Shares have been listed. Our Company presently does not have any intention or proposal to alter its capital structure for a period of six (6) months from the Bid/Issue Opening Date, by way of split/consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly or indirectly, for the Equity Shares) whether preferential or otherwise, except if our Company plans to enter into acquisitions, mergers, joint ventures or strategic alliances, subject to necessary approvals, our Company may issue Equity Shares or securities linked to Equity Shares to finance such acquisition, merger, joint venture or strategic alliance or as consideration for such acquisition, merger, joint venture or strategic alliance or for regulatory compliance or entering into any other scheme of arrangement if determined by the Board to be in the best interests of our Company. A Bidder cannot make a Bid for more than the number of Equity Shares offered in the Issue, subject to the maximum limit of investment prescribed under relevant laws applicable to each category of investor. Our Company has not made any public issue since its incorporation. Our Company undertakes that there shall be only one (1) denomination for the Equity Shares of our Company, unless otherwise permitted by law. As of the date of filing this Draft Red Herring Prospectus, our Company has sixteen (16) shareholders. Our Company has not raised any bridge loan against the proceeds of this Issue. No person connected with the Issue has offered any incentive, whether direct or indirect, in any manner, whether in cash or kind or services or otherwise to any person for making an application for allotment of specified securities other than any fees or commission for services rendered in relation to the Issue. An oversubscription to the extent of 10% of the Issue can be retained for purposes of rounding off while finalizing the basis of allotment. Consequently, the Allotment may increase by a maximum of 10% of this Issue, as a result of which the post-Issue paid-up capital would also increase by the excess amount of Allotment so made. In such an event, the Equity Shares to be locked-in towards the Promoters Contribution shall be suitably increased, so as to ensure that 20% of the post-Issue paid-up capital is locked in. The Issue is being made through the Book Building Process with Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957, as amended ("SCRR") read with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,

19.

20.

21. 22.

23.

24. 25.

26.

27.

84

2009, as amended. This Issue is being made through the book building process wherein upto 50% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (the "QIB Portion") provided that our Company may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the "Anchor Investor Portion"). Further 5% of QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to domestic Mutual Funds and the remaining QIB portion shall be available for allocation on proportionate basis to all QIBs, including domestic Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue to the Public shall be available for allocation on a proportionate basis to NonInstitutional Bidders and not less than 35% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, upto 2,00,000 Equity Shares shall be made available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received at or above the Issue Price. For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. 28. A total of upto 2,00,000 Equity Shares, have been reserved for allocation to Eligible Employees, subject to valid Bids being received at or above the Issue Price. Only Eligible Employees would be eligible to apply in this Issue under Reservation for Eligible Employees. Separate Bid Applications can be made by Employees under the Net Issue to Public category as well and such Bids will not be treated as multiple bids. Under subscription, if any, in QIB, Retail and Non-Institutional Category would be met with spillover from other categories or a combination of categories. Under subscription, if any in the Employees Reservation Portion will be added back to the Net Issue to the Public. Such inter-se spill over, if any, will be at the discretion of our Company and the Selling Shareholders in consultation with the BRLMs. In the event of undersubscription, Equity Shares in the Fresh Issue portion will be issued prior to the sale of Equity Shares under the Offer for Sale portion. However, upon the receipt of minimum subscription of 90% of the Fresh Issue, the balance subscription shall be first satisfied from the sale of Equity Shares under the Offer for Sale portion in proportion to the Equity Shares offered by Selling Shareholder I and Selling Shareholder II. Centrum Capital Limited, one of our BRLMs, or any of its associates do not hold any Equity Shares of our Company as on the date of filing of the Draft Red Herring Prospectus with SEBI. Axis Infrastructure Fund I, a trust registered under the Indian Trust Act, 1882 is holding Equity Shares and CCPS of our Company. Axis Private Equity Limited, who is an associate of one of our BRLMs, Axis Bank Limited, is acting as the investment management advisor to Axis Infrastructure Fund I. Our Promoters and members of Promoter Group will not participate in this Issue.

29.

30.

31.

85

OBJECTS OF THE ISSUE The Issue comprises a Fresh Issue of Equity Shares by our Company and an Offer for Sale by the Selling Shareholders. Offer for Sale Our Company will not receive any proceeds of the Offer for Sale by the Selling Shareholders and the same will not form part of the Net Proceeds. Fresh Issue The Net Proceeds from the Fresh Issue are estimated to be approximately ` [] Lakhs. The Net Proceeds of the Issue are proposed to be utilised by our Company for the following activities: 1. 2. 3. Developing new properties at Lucknow, Raipur and Nasik; Repayment of a part of the term loan availed from L&T and Axis Bank Consortium; and General Corporate Purposes

Further, we believe that the listing of our Equity Shares will enhance our visibility and brand name among existing and potential customers. The Offer for Sale Our Company will not receive any proceeds of the Offer for Sale by the Selling Shareholders. Net Proceeds of the Fresh Issue The details of the Net Proceeds of the Fresh Issue are set out in the following table: No. (i) Gross Proceeds of the Fresh Issue (ii) Issue related expenses* (iii) Net Proceeds of the Issue
* To be finalized upon determination of Issue price. # The Funds from the Offer for Sale shall not be received by our Company.

Particulars

Amount (` in Lakhs) 20,000 [] []

Requirement of Funds The main objects as set out in our Memorandum of Association enable us to undertake our existing activities and the activities for which funds are being raised by us through this Issue. The fund requirements described below are based on management estimates and our Companys current business plan and have not been appraised by any bank or financial institution. These are based on current conditions and are subject to a number of variables, including possible cost overruns, construction/development delays, receipt of governmental approvals and changes in managements views on current plans. In view of the nature of the hospitality sector and specifically that of our diversified business which is evolving and increasingly competitive, we may have to revise our expenditure and fund requirements as a result of variations in cost estimates and external factors which may not be within the control of our management. This may entail rescheduling and revising the planned expenditures and fund requirements

86

and increasing or decreasing expenditures for a particular purpose at the discretion of our management, within the Objects. We intend to utilize the Net Proceeds of ` [] Lakhs for financing the Objects as set out below: (` in Lakhs) Estimated schedule of deployment of Net Proceeds

No.

Objects of the Issue

Total Amount estimated to be cost financed from Net Proceeds

Dec- 11 1.

2.

3.

4.

Developing new 13,202.00 13,202.00 properties at Lucknow, Raipur and Nasik Repayment the [] [] [] term loan availed from L&T Repayment of a 3,000.00 3,000.00 3,000.00 part of the term loan availed from Axis Bank Consortium General Corporate [] [] [] Purposes*

F.Y. 2013 Sep-12 Dec- Mar12 13 3287.00 1487.25 4461.75 2478.75 991.5 495.75 Jun-12

F.Y. 2012 Mar-12

* To be finalized upon determination of Issue price

Note: Our Company has not deployed any funds towards the Objects of the Issue as on the date of this Draft Red Herring Prospectus. In the event of variations in the actual utilisation of funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other purposes for which funds are being raised in the Issue. If surplus funds are unavailable, the required financing will be done through internal accruals through cash flow from our operations and debt, as required. Surplus, if any, from the Net Proceeds remaining unutilized for specific purposes shall be used for General Corporate Purposes. Any funds deployed by our Company after filing of the Draft Red Herring Prospectus towards the Objects of the Issue from internal accruals/debt raised shall be recouped from the Net Proceeds of the Issue. Means of Finance The entire requirement of funds set forth above will be met from the proceeds of the Issue. Hence, no amount is required to be raised through means other than this Issue for financing the Objects. Accordingly, the requirement of firm arrangements of finance through verifiable means for 75% of the stated means of finance excluding the Net Proceeds does not arise. Details of the Objects of the Issue: 1. Developing new properties at Lucknow, Raipur and Nasik.

87

As a part of our growth strategy, we propose to establish our presence in various locations with potential demand for business hotels and to increase the number of our properties. With this objective, we intend to utilize a part of the Net Proceeds to fund the development of new 'business cum leisure' properties at Lucknow, Raipur and Nasik. 1.1. Developing a new property at Lucknow, Uttar Pradesh Our Company intends to invest in developing a new Mid-Market property at Lucknow, the capital of Uttar Pradesh and a major market and trading centre in Northern India. Our Company intends to invest an amount of `4,155 Lakhs of the Net Proceeds as per the estimate provided by Savan Saxena, Architect dated March 28, 2011. Our Company proposes to develop this business hotel with 80 rooms including with facilities like restaurants, fitness centre and spa. This property will also have meeting rooms and banquet halls. The hotel is proposed to be marketed under the brand name "Cambay Sapphire". The approximate cost of developing this hotel at Lucknow, as per the estimate provided by Savan Saxena, Architect dated March 28, 2011, is as follows: Particulars Land Site Development, Civil Work, Electrical and Plumbing Interiors, furniture & fittings Equipment & Machinery Preliminary and Pre-Operative Expenses Contingency and Escalation Total The details of the above expenses are as mentioned under: Land We propose to acquire land admeasuring approximately 4,000 to 6,000 Sq. Mtrs. for the purpose of developing a business hotel at a budgeted cost of `1,073 Lakhs. We are yet to identify the land and are considering various sites for acquisition. Cost of Construction No. 1. 2. Description / Item of works Land Cost Site Development: Inclusive of all kind of work relating to site clearance, leveling and filling work, construction of compound wall and internal roads and street lights related complete work Civil Work : Inclusive of all kind of civil works like necessary foundation work, Frame structure work, Concrete work, Brick Masanary work, RCC work, Cement Plaster work inside and out side, water supply work internal and external, Drainage work, infrastructure work, water proofing work, Electrical Qty Rate (`) --Unit Amount (`in lakhs) 1,073.00 119.00 Estimated Cost (` in Lakhs) 1,073.00 919.00 1,440.00 430.00 100.00 193.00 4,155.00

Lump sum

3.

80,000.00

1,000.00

Sq. Ft.

800.00

88

No.

Description / Item of works Coduit, Operning window work, steel fabrication work with painting, anti Termite work, Earth filling with compaction, required civil work for land scapping work. Under Ground & Over Head water tank with pump installation & Inlet outlet etc.. All inclusive of all kind of civil work exclusive of flooring work & painting work / wall finishing work Interior Works: Inclusive of all kind of interior work like plumbing & sanitation fittings vessels, false celling work, Gypsum celing, sound insulation work. High grade rich finishing flooring work/like Granite/Granamite/ mirror polish work/superior white marble/ Italian marble finish etc. Wall finish work like plastic emulsion paint/Texture work with finishing Duco paint/Golden tint paint / pul paint etc. Glass work like Glass cladding /Mirror work/Glass partition work/Glass furniture work etc. Immovable & movable wooden furniture with vinear finish with melamine wooden & polish work & S S fittings & fixtures work etc. all completed in interior work. Mechanical Equipment & Machinery Air Conditioner inclusive of Ducting , cabling, fitting concelled, conduilt and installation Mechanical equipment for particularly kitchen purpose like dish washer, sterization unit, Mixer Grinder, Cutter machine, electrical chimney etc. Equipment for particularly Health Club or Gymnasium room like weight lifting unit in different capacity, cycle, trade mille, walker etc.. Fire Fighting System Equipment for Laundry purpose/ Drier/ House keeping equipment etc. Elevators Electrical equipment & machinery like Projectors for Conference, Communication system like computer network printing unit Internet Wi Fi system Telephone/intercom system with installation and operation Equipment for smoke detector and alarm system installation and operation. Preliminary & Pre-Operative Expenditure :

Qty

Rate (`)

Unit

Amount (`in lakhs)

4.

80,000.00

1,800.00

Sq. Ft.

1,440.00

5.

80,000.00

150.00

Sq. Ft

120.00

--

--

Lump sum

50.00

--

--

Lump sum

15.00

80,000.00 -4 --

25.00 -25,00,000.00 --

Sq. Ft. Lump sum Unit Lump sum

20.00 50.00 100.00 35.00

----

----

6.

Lump sum Lump sum Lump sum

15.00 25.00 100.00

89

No.

Description / Item of works P & P expenses mainly related to salary of staff during construction period, establishment expenditure and initial marketing expenses and market survey report for new property to establish and understand the market. Contingency: for unavoidable circumstances expenses / market rate fluctuation / unexpected changes in government policies /scarcity of required finishing or structured material, hidden expenses etc. on the basis of 4 to 5 % of total projected cost estimate Total Project Cost Schedule of Implementation

Qty

Rate (`)

Unit

Amount (`in lakhs)

7.

--

--

--

193.00

4155.00

Activity Acquisition/ Lease of Land Construction of the hotel Expected period of commercial operation 1.2.

Expected Commencement Expected Completion October 2011 December 2011 January 2012 March 2013 March 2013

Developing a new property at Raipur, Chattisgarh Our Company intends to invest in developing a Mid-Market property at Raipur, the capital city of the State of Chattisgarh, a fast developing industrial centre. Our Company intends to invest an amount of `4,190.91 Lakhs of the Net Proceeds as per the estimate provided by Savan Saxena, Architect dated March 28, 2011. Our Company proposes to develop this business hotel with 80 rooms and facilities such as restaurants, fitness centre and spa. This hotel will also have meeting rooms and banquet halls. The hotel is proposed to be marketed under the brand name "Cambay Sapphire". The approximate cost for developing this new hotel at Raipur, as per the estimate provided by Savan Saxena, Architect dated March 28, 2011, is as follows: Particulars Estimated cost (` in Lakhs) 1,107.00 919.00 1,440.00 430.00 100.00 195.00 4,191.00

Land Site Development & Civil Work, Electrical and Plumbing Interiors, furniture & fittings Equipment & Machinery Preliminary and Pre-Operative Expenses Contingency and Escalation Total The details of the above expenses are as mentioned under: Land

We propose to acquire land admeasuring approximately 4,000 to 6,000 Sq. Mtrs. for the purpose of developing a business hotel at a budgeted cost of `1,107 Lakhs. We are yet to identify the land and are considering various sites for acquisition.

90

Cost of Construction No. 1. 2. Description / Item of works Land Cost Site Development: Inclusive of all kind of work relating to site clearance, leveling and filling work, construction of compound wall and internal roads and street lights related complete work Civil Work: Inclusive of all kind of civil works like necessary foundation work, Frame structure work, Concrete work, Brick Masanary work, RCC work, Cement Plaster work inside and out side, water supply work internal and external, Drainage work, infrastructure work, water proofing work, Electrical Coduit, Opening window work, steel fabrication work with painting, anti Termite work, Earth filling with compaction, required civil work for land scapping work. Under Ground & Over Head water tank with pump installation & Inlet outlet etc. All inclusive of all kind of civil work exclusive of flooring work & painting work/wall finishing work Interior Works: Inclusive of all kind of interior work like plumbing & sanitation fittings vessels, false celling work, Gypsum celing, sound insulation work. High grade rich finishing flooring work/like Granite/Granamite/mirror polish work/ superior white marble/Italian marble finish etc. Wall finish work like plastic emulsion paint/Texture work with finishing Duco paint/Golden tint paint/pul paint etc. Glass work like Glass cladding/Mirror work/Glass partition work/Glass furniture work etc. Immovable & movable wooden furniture with vinear finish with melamine wooden & polish work & S S fittings & fixtures work etc. all completed in interior work. Mechanical Equipment & Machinery Air Conditioner inclusive of Ducting, Qty Rate (`) --Unit Amount (`in lakhs) 1,107.00 119.00

Lump sum

3.

80,000.00

1,000.00

Sq. Ft.

800.00

4.

80,000.00

1,800.00

Sq. Ft.

1,440.00

5.

80,000.00

150.00

Sq. ft

120.00

91

No.

Description / Item of works cabling , fitting concelled, conduilt and installation Mechanical equipment for particularly kitchen purpose like dish washer, sterization unit, Mixer Grinder, Cutter machine, electrical chimney etc. Equipment for particularly Health Club or Gymnasium room like weight lifting unit in different capacity, cycle, trade mille, walker etc. Fire Fighting System Equipment for Laundry purpose / Drier / House keeping equipment etc. Elevators Electrical equipment & machinery like Projectors for Conference, Communication system like computer network printing unit internet wi fi system Telephone/intercom system with installation and operation Equipment for smoke detector and alarm system installation and operation. Preliminary & Pre Operative Expenditure: P & P expenses mainly related to salary of staff during construction period, establishment expenditure and initial marketing expenses and market survey report for new property to establish and understand the market. Contingency: for unavoidable circumstances expenses/market rate fluctuation /unexpected changes in government policies /scarcity of required finishing or structured material, hidden expenses etc. on the basis of 4 to 5% of total projected cost estimate Total Project Cost Schedule of Implementation

Qty

Rate (`)

Unit

Amount (`in lakhs)

--

--

Lump sum

50.00

--

--

Lump sum

15.00

80,000.00 -4 --

25.00 -25,00,000.00 --

Sq. Ft. Lump sum Unit Lump sum

20.00 50.00 100.00 35.00

----

----

6.

Lump sum Lump sum Lump sum

15.00 25.00 100.00

7.

--

--

--

195.00

4,191.00

Activity Acquisition/ Lease of Land Construction of the hotel Expected period of commercial operation

Expected Commencement Expected Completion October 2011 December 2011 January 2012 March 2013 March 2013

92

1.3.

Developing a new property at Nasik, Maharashtra Our Company intends to invest in developing a new Mid-Market property at Nasik, Maharashtra. Our Company intends to invest an amount of `4,856 Lakhs of the Net Proceeds as per the estimate provided by Savan Saxena, Architect dated March 28, 2011. Nasik is a major tourist destination chiefly for pilgrims since Kumbmela is held in this holy city once in 12 years. Nasik is today counted among fastest growing tier-II cities of India and home to aircraft & other major automobile industries, IT Parks, government run industries, data centers and malls & multiplexes. Besides industrial advancements, Nasik is also considered as the educational hub of North Maharashtra. Our Company proposes to develop this business hotel with 100 rooms including with facilities like restaurants, fitness centre and spa. This property will also have meeting rooms and banquet halls. The hotel is proposed to be marketed under the brand name "Cambay Sapphire". The estimated cost of development of the property at the Nasik, as per the estimate provided by Savan Saxena, Architect dated March 28, 2011, is as follows: Particulars Estimated Cost (` in Lakhs) 1,107.00 1,119.00 1,800.00 465.00 140.00 225.00 4,856.00

Land Civil Work, Electrical and Plumbing Interior, furniture & fittings Equipment & Machinery Preliminary and Pre-Operative Expenses Contingency and Escalation Total The details of the above expenses are as mentioned under: Land

We propose to acquire land admeasuring approximately 4,000 to 6,000 Sq. Mtrs. for the purpose of developing a business hotel at a budgeted cost of `1,107 Lakhs. We are yet to identify the land and are considering various sites for acquisition. Cost of Construction No. 1. 2. Description / Item of works Land Cost Site Development: Inclusive of all kind of work relating to site clearance, leveling and filling work, construction of compound wall and internal roads and street lights related complete work Civil Work: Inclusive of all kind of civil works like necessary foundation work, Frame structure work, Concrete work, Brick Masanary work, RCC work, Cement Plaster work inside and out side, water Qty Rate (`) Unit Amount (`in lakhs) 1,107.00 119.00

Lump sum

3.

1,00,000.00

1,000.00

Sq. Ft.

1,000.00

93

No.

Description / Item of works supply work internal and external, Drainage work, infrastructure work, water proofing work, Electrical Coduit, Operning window work, steel fabrication work with painting, anti Termite work, Earth filling with compaction, required civil work for land scapping work. Under Ground & Over Head water tank with pump installation & Inlet outlet etc. All inclusive of all kind of civil work exclusive of flooring work & painting work / wall finishing work Interior Works: Inclusive of all kind of interior work like plumbing & sanitation fittings vessels, false celling work, Gypsum celing, sound insulation work. High grade rich finishing flooring work/like Granite/Granamite/ mirror polish work / superior white marble/Italian marble finish etc. Wall finish work like plastic emulsion paint/Texture work with finishing Duco paint/Golden tint paint / pul paint etc. Glass work like Glass cladding/Mirror work/Glass partition work/Glass furniture work etc. Immovable & movable wooden furniture with vinear finish with melamine wooden & polish work & S S fittings & fixtures work etc. all completed in interior work. Mechanical Equipment & Machinery Air Conditioner inclusive of Ducting , cabling , fitting concelled, conduilt and installation Mechanical equipment for particularly kitchen purpose like dish washer, sterization unit, Mixer Grinder, Cutter machine, electrical chimney etc. Equipment for particularly Health Club or Gymnasium room like weight lifting unit in different capacity, cycle, trade mille, walker etc. Fire Fighting System Equipment for Laundry purpose/Drier/ House keeping , equipment etc. Elevators Electrical equipment & machinery like Projectors for Conference, Communication system like computer network printing unit internet Wi Fi

Qty

Rate (`)

Unit

Amount (`in lakhs)

4.

1,00,000.00

1,800.00

Sq. Ft.

1,800.00

8.

1,00,000.00

150.00

Sq. Ft

150.00

--

--

Lump sum

50.00

--

--

Lump sum

15.00

1,00,000.00 -4 --

25.00 -25,00,000.00 --

Sq. Ft. Lump sum Unit Lump sum

25.00 50.00 100.00 35.00

94

No.

Description / Item of works system Telephone/intercom system with installation and operation Equipment for smoke detector and alarm system installation and operation. Preliminary & Pre Operative Expenditure: P & P expenses mainly related to salary of staff during construction period, establishment expenditure and initial marketing expenses and market survey report for new property to establish and understand the market. Contingency: for unavoidable circumstances expenses/market rate fluctuation /unexpected changes in government policies /scarcity of required finishing or structured material, hidden expenses etc. on the basis of 4 to 5% of total projected cost estimate Total Project Cost Schedule of Implementation

Qty

Rate (`) -------

Unit

Amount (`in lakhs) 15.00 25.00 140.00

9.

Lump sum Lump sum Lump sum

10.

--

--

--

225.00

4,856.00

Activity Acquisition/ Lease of Land Construction of the hotel Expected period of commercial operation 2.

Expected Commencement Expected Completion October 2011 December 2011 January 2012 March 2013 March 2013

Repayment of the Term Loan availed from L&T Infrastructure Finance Company Limited and Axis Bank Limited L&T Infrastructure Finance Company Limited We have availed Term Loan aggregating `4,000 Lakhs from L&T Infrastructure Finance Company Limited ("L&T") in the year 2008 for funding our projects in Rajasthan. On the request of our Company, by way of a letter dated September 28, 2010, L&T revised the repayment schedule for the first two (2) installments of `200 Lakhs each (aggregating to `400 Lakhs) in view of certain procedural delays in the completion of development of these projects with a condition to repay from the proceeds of the Issue `400 Lakhs of the Term Loan along with the balance outstanding out of the re-scheduled amount i.e. `400 Lakhs at the time of such repayment. We present below further details of the Term Loan availed from L&T:

Particulars Nature of the Loan Object of the Loan Date of Sanction Date of the Loan Agreement

Loan details Term loan from L & T Infrastructure Finance Company Limited To part finance the hotel project in Jaipur (Two properties), Neemrana (NCR), Udaipur July 30, 2008 Common Loan Agreement dated December 18, 2008

95

Particulars Date of Disbursement Nature of Interest Charge Rate of Interest on the Loan Security

Repayment Schedule Amount Outstanding (As on February 28, 2011) Last date of repayment of the loan Axis Bank Consortium

Loan details Various Tranches in the month of September 2008 to February 2010 Floating rate of interest L & T PLR 0.75% i. Equitable Mortgage of land & property at Ahmedabad, Udaipur, Jaipur (two properties) & Neemrana ii. 1stcharge on all the present and futute immovable and movable fixed assets of our Company iii. Pledge of shares of our Company held by the promoter; iv. Personal guarantee of Promoters, Directors of our Company; and v. Corporate Gurantee of Neesa Agritech Private Limited Four (4) quarterly installments of `300 lakhs commencing from April 2011 and fourteen (14) quarterly installments of `200 lakhs `4,000 Lakhs July 1, 2015

Our Company has availed term loan facility aggregating to `21,500 Lakhs from the Axis Bank Consortium consisting of Axis Bank Limited, Bank of India, Syndicate Bank, Corporation Bank, L&T Infrastructure Finance Co. Limited, Oriental Bank of Commerce and IFCI Limited ("Axis Bank Consortium"). Our Promoters have pledged certain Equity Shares held by them as a security towards the Term Loan availed by our Company. One of the conditions for release of such Equity Shares required for the purposes of Promoter Contribution as set out by Axis Bank in its letter dated August 9, 2010, is repayment of an amount of `3,000 Lakhs to the Axis Bank Consortium out of the proceeds of the Issue. We therefore intend to utilize `3,000 Lakhs out of the Net Proceeds of the Issue towards part repayment of this Term Loan. We present below further details of the Term Loan availed from the Axis Bank Consortium: Particulars Nature of the Loan Object of the Loan Date of the Loan Agreement Nature of Interest Charge Rate of Interest on the Loan Security Loan details Term loan from Axis Bank Limited as Lead Banker of Rajasthan Project Consortium Finance To part finance the hotel project in Jaipur (Two properties), Neemrana (NCR), Udaipur Common Loan Agreement dated December 18, 2008 Floating rate of interest N.A. i. Equitable Mortgage of land & property at Ahmedabad, Udaipur, Jaipur (two properties) & Neemrana ii. 1st charge on all the present and future immovable and movable fixed assets of our Company iii. Pledge of shares of our Company held by our Promoter. And iv. Personal guarantee of Promoters, Directors of our Company v. Corporate Gurantee of Neesa Agritech Private Limited

Schedule of Implementation The aforementioned loans of L&T Infrastructure Finance Company Limited and Axis Bank Consortium shall be re-paid on receipt of the Net Proceeds.

96

3.

General Corporate Purposes To grow, we continuously explore opportunities to own, develop, operate and manage resorts and hotels. Further, increasing size of our operations would require us to fund additional working capital on an ongoing basis. In addition to the above mentioned Objects, we also intend to use part of the Net Proceeds for General Corporate Purposes which may include but not limited to our working capital requirements, investments in new business opportunities, brand building, strengthening our sales & marketing network and investment in information technology upgradation, meeting exigencies etc. Our management, in accordance with the policies of the Board, will have the flexibility in utilizing the sum earmarked for general corporate purposes and any surplus amounts from the Net Proceeds.

Issue related expenses The total expenses of the Issue are estimated to be approximately ` [] lakhs, which is []% of the Issue size. The expenses of this Issue include, among others, underwriting and management fees, selling commissions, SCSBs commissions/fees, printing and distribution expenses, legal fees, statutory advertisement expenses, registrar and depository fees, stamp duty and listing fees. The Issue consists of a Fresh Issue of Equity Shares and an Offer for Sale of Equity Shares by the Selling Shareholders. We will not receive any proceeds from the Offer for Sale. In terms of the shareholders agreement with AIF and HTML, all the expenses related to the Issue will be borne by our Company. Activity Expenses* (` in Lakhs) [] [] [] [] [] [] Percentage of Issue Expenses* [] [] [] [] [] [] Percentage of the Issue Size* [] [] [] [] [] []

Fee payable to BRLMs, underwriting commission and SCSBs commission SCSB Commission Printing, Stationery and distribution expenses Advertising and Marketing expenses Others (IPO grading, registrars fees, legal advisors fee, regulatory fees listing fees etc.) Total estimated issue expenses
*will be incorporated after finalization of Issue price

Appraisal of the Objects None of the Objects for which the Net Proceeds will be utilised have been financially appraised. The estimates of the costs of Objects mentioned above are based on internal management estimates. Funds Deployed As on the date of this Draft Red Herring Prospectus, our Company has not deployed any funds towards the Objects of the Issue to be funded by the Net Proceeds. Any funds deployed by our Company after filing of the Draft Red Herring Prospectus towards the Objects of the Issue from internal accruals/debt raised shall be recouped from the Net Proceeds of the Issue.

97

Deployment of Funds (` in Lakhs) Total

Particulars

Developing a new property at Lucknow Developing a new property at Raipur Developing a new property at Nasik Repayment of Term Loan availed from L&T Repayment of a part of Term Loan availed from Axis Bank Consortium General Corporate Purposes Issue Expenses Bridge loans

Proposed Deployment (` in Lakhs) F.Y. 2012 F.Y. 2013 Dec- 11 MarJun-12 Sep-12 Dec-12 12 1073.00 462.30 1386.90 770.50 308.2 1107.00 1107.00 [] 3,000.00 462.60 562.35 1387.80 1687.05 --771.00 987.25 308.4 374.90 ---

Mar13 154.1 154.20 187.45

4,155.00 4,191.00 4,856.00 [] 3,000.00

[] []

[] []

[] []

[] []

We have not raised any bridge loans against the Net Proceeds. Interim Use of the Net Proceeds We, in accordance with the policies established by our Board, will have flexibility in deploying the Net Proceeds received by us from the Issue. The particular composition, timing and schedule of deployment of the proceeds will be determined by us based upon the development of the projects. Pending utilization for the purposes described above, we intend to temporarily invest the funds from the Issue in high quality interest bearing liquid instruments including deposits with banks and investments in mutual funds and other financial products, such as principal protected funds, other fixed and variable return instruments, listed debt instruments and rated debentures. Our Company confirms that pending utilization of the Net Proceeds of the Issue it shall not use the funds for any investments in the equity markets. Monitoring of Utilisation of Issue Proceeds In terms of Regulation 16(1) of the SEBI (ICDR) Regulations, we are not required to appoint a monitoring agency for the purposes of this Issue since the Issue size is not more than `50,000 lakhs. As required under the listing agreements with the Stock Exchanges, the Audit Committee appointed by our Board will monitor the utilization of the Issue proceeds. We will disclose the utilization of the proceeds of the Issue, including interim use, under a separate head in our quarterly financial disclosures and annual audited financial statements until the Issue Proceeds remain unutilized, to the extent required under the applicable law and regulation. Our Company shall be required to inform material deviations in the utilisation of Net Proceeds of the Issue to the Stock Exchanges and shall also be required to simultaneously make the material deviations/adverse comments of the Audit Committee, if any, public through a disclosure in the newspapers. In the event we are unable to utilize the Net Proceeds for the Objects, we shall with the approval of the shareholders of our Company deploy the funds for other business purposes.

98

No part of the Proceeds from the Issue will be paid by us as consideration to our Promoters, Promoter Group, our Directors, Group Entities or Key Managerial Personnels, except in the normal course of our business. For risks associated with our "Objects of the Issue", please refer to the section titled "Risk Factors" beginning on page 15 of this Draft Red Herring Prospectus.

99

BASIS FOR ISSUE PRICE The Issue Price will be determined by us and the Selling Shareholder in consultation with the BRLMs on the basis of assessment of market demand and on the basis of the following qualitative and quantitative factors for the Equity Shares offered by the Book Building Process. The price band of the Issue is ` [] to ` [] per Equity Share. The face value of the Equity Share is `10 and the Issue Price is [] times the face value at the lower end of the price band and [] times the face value at the higher end of the price band. Qualitative Factors We believe that following are our primary strengths which form the basis for computing the issue price: 1. Strategic location of our properties attracts leisure as well as business travelers. 2. Unique and diversified business model. 3. Our presence in the Vacation Ownership and club membership business safeguards us from the threats of seasonality and economic downturn. 4. In-house project development capabilities. 5. Customer centric operations and quality services. 6. Established brand name "Cambay". 7. Strong marketing team and channels, including online marketing and IT systems. 8. Strong management team. For a detailed discussion on the qualitative factors, which form the basis for computing the price, please refer to the sections titled "Our Business" and "Risk Factors" beginning on pages 44 and 15 respectively of this Draft Red Herring Prospectus. Quantitative Factors Information presented in this section is derived from our restated standalone and consolidated financial statements prepared in accordance with Indian GAAP and SEBI (ICDR) Regulations. Some of quantitative factors, which form the basis for computing the price, are as follows: 1. Weighted Average Earnings per share(EPS): Restated Earning per Equity Share (EPS) of Face Value of `10 each On Standalone Basis Year Basic EPS (`) 2.51 2.08 4.93 3.58 3.09 Diluted EPS (`) 2.51 []* []* []* []* Weight On Consolidated Basis Basic EPS (`) N.A. N.A. 4.84 4.84 3.12 Diluted EPS (`) N.A. N.A. []* []* []* Weight

F.Y. 2008 F.Y. 2009 F.Y. 2010 Weighted Average September 30, 2010(1)

1 2 3

* As the conversion price of outstanding CCPS is not presently known, the Diluted EPS cannot be calculated, the same shall be updated before filing of the RHP with ROC

Note: 1. The EPS has been computed on the basis of restated profits and losses of the representative years.

100

2.

3. 2.

The denominator considered for the purpose of calculating earnings per share is the restated weighted average number of Equity Shares outstanding during the year as per AS 20 "Earnings per Share" issued by the ICAI. The face value of each Equity Share is `10. Price/Earning Ratio (P/E) in relation to Issue Price is []** On Standalone basis: Particulars P/E at the Floor Price (No. of times) [] P/E at the Cap Price (No. of times) []

Based on year ended March 31, 2010 restated Standalone Basic EPS of ` 4.93 Based on year ended September 30, 2010 restated Standalone Basic EPS of ` 3.09 Based on year ended March 31, 2010 restated Standalone Diluted EPS of ` [] Based on year ended September 30, 2010 restated Standalone Diluted EPS of ` [] On Consolidated basis: Particulars Based on year ended March 31, 2010 restated Consolidated Basic EPS of `4.84 Based on year ended September 30, 2010 restated Consolidated Basic EPS of `3.12 Based on year ended March 31, 2010 restated Consolidated Diluted EPS of ` [] Based on year ended September 30, 2010 restated Consolidated Diluted EPS of ` [] P/E at the Floor Price (No. of times)

[]

[]

[]

[]

[]

[]

P/E at the Cap Price (No. of times) [] []

[]

[]

[]

[]

[]

[]

** The Issue Price will be determined on the conclusion of the Book Building Process.

3.

Industry peer P/E Particulars P/E Ratio 101.24 15.99 44.68 Face Value of the Equity Shares (`) 10 2 Name of the Company Kamat Hotels India Limited Taj GVK Hotels & Resorts Limited

Highest Lowest Industry Composite*

Note: The industry high and low has been considered from the industry peer set provided below. The industry composite has been calculated as the simple arithmetic average P/E of the industry peer set provided below. For further details please see Comparison of Accounting Ratios with Industry Peers below.

101

4.

Weighted Average Return on Net worth (RONW) On Standalone Basis RONW (%) Weight 4.66 3.03 5.84 4.71 3.19 On Consolidated Basis RONW (%) Weight N.A. N.A. 5.73 5.73 3.23

Year F.Y. 2008 F.Y. 2009 F.Y. 2010 Weighted Average September 30, 2010 (1)

1 2 3

--1

RONW has been calculated by dividing net profit after tax, as restated, by the net worth as restated at the end of the period.
(1)

Not Annualized

5.

Minimum Return on Increased Net Worth after the Issue required to maintain pre-issue earning per share for the year ended March 31, 2010: Based on Basic EPS: 1. [] and [] based on our restated Standalone and Consolidated financial statements, respectively.

Based on Diluted EPS: 2. [] and [] based on restated Standalone and Consolidated financial statements, respectively.

6.

Net Asset Value (NAV) per share (`) On Standalone Basis (a) (b) (c) (d) (e) (f) NAV as at March 31, 2010: ` 64.82 NAV as at September 30, 2010: ` 70.43 NAV per Equity Share after the Issue, based on Cap Price (` [] per Equity Share) is ` [] NAV per Equity Share after the Issue, based on Floor Price (` [] per Equity Share) is ` [] NAV after the Issue is ` [] Issue price per Equity Share is ` []

NAV per Equity Share has been calculated as networth divided by number of Equity Shares outstanding at the end of the period. On Consolidated Basis (a) (b) (c) (d) (e) (f) NAV as at March 31, 2010: ` 64.73 NAV as at September 30, 2010: ` 70.37 NAV per Equity Share after the Issue, based on Cap Price (` [] per Equity Share) is Rs[] NAV per Equity Share after the Issue, based on Floor Price (` [] per Equity Share) is ` [] NAV after the Issue is ` [] Issue price per Equity Share is ` []

102

NAV per Equity Share has been calculated as networth divided by number of Equity Shares outstanding at the end of the period. 7. Comparison of Accounting Ratios with Industry Peers We believe we are not strictly comparable to any of the listed companies in India due to our diversified business model. Our business lines include Hospitality, Vacation Ownership and Hospitality Education. Given below are the indicative sets of listed companies, which we believe are our peers: Name of the company Standalone/ Consolidated Total Income for F.Y. 2010 (` in Lakhs) 10,638.1 Face Value (`) EPS (`) P/E Ratio RONW for F.Y. 2010 (%) NAV for F.Y. 2010 (`) 64.73

Neesa Leisure Limited Neesa Leisure Limited Peers Indian Hotels Co. Limited EIH Limited Hotel Leela Venture Limited Taj GVK Hotels & Resorts Limited Royal Orchid Kamat Hotels India Limited

Consolidated

10

4.84

--

5.73

Standalone

10,638.1

10

4.93

--

5.84

64.82

Standalone

156,635.00

1.00

2.12

38.44

5.69%

37.17

Standalone Standalone

90,727.30 46,302.49

2.00 2.00

1.46 1.09

55.99 34.68

4.04% 2.00%

36.06 54.37

Standalone

22,925.03

2.00

5.78

15.99

12.39%

46.68

Standalone Standalone

7,897.62 11,364.03

10.00 10.00

3.04 1.05

21.71 101.24

4.16% 0.84%

73.03 125.13

Note1: The Total Income, EPS, RONW and NAV figures for Neesa Leisure Limited are based on the restated financial information for the year ended March 31, 2010. The Total Income, EPS, RONW and NAV figures for the Peer Group are based on the standalone audited results from their respective Annual Reports for the year ended March 31, 2010. Note 2: Basic EPS refers to the basic EPS sourced from the annual reports of the companies Note3: RoNW is computed as net profit after tax divided by closing net worth. Net worth has been computed as sum of share capital and reserves. Note 4: NAV is computed as the closing net worth divided by the closing outstanding number of equity shares adjusted for partly paidup shares as on March 31, 2010 in the Annual Reports Note5: P/E Ratio has been computed based on the closing market price of equity shares on the BSE as on March 25, 2011, divided by the basic EPS provided under Note 2.

The BRLMs believe that the Issue Price of ` [] per Equity Share is justified in view of the above qualitative and quantitative parameters. Prospective investors should also review the entire Draft Red Herring Prospectus, including, in particular the sections titled "Risk Factors", "Our Business" and "Financial Statements" beginning on pages 15, 44 and 208 respectively, to have a more informed view. The

103

face value of the Equity Shares is `10 each and the Issue Price is [] times the face value of the Equity Shares.

104

STATEMENT OF TAX BENEFITS The Board of Directors Neesa Leisure Limited Plot No. X-22, 23 & 24 GIDC Electronic Estate Sector 25 Gandhinagar 382 044 Gujarat, India Dear Sirs, We hereby report that the enclosed annexure states the possible direct tax benefits available to Neesa Leisure Limited (the "Company") and its shareholders under the current 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 fulfilling such conditions, which is based on business imperatives the Company faces in the future, the Company may or may not choose to fulfil. The benefits discussed in the enclosed annexure 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 and the changing tax laws and the fact that the Company will not distinguish between the shares offered for subscription and the shares offered for sale by the selling shareholders, each investor is advised to consult their own tax consultant with respect to the specific tax implications arising out of their participation in the issue. While all reasonable care has been taken in the preparation of this statement, we accept no responsibility for any errors or omissions therein or for any loss sustained by any person who relies on it. We do not express any opinion or provide any assurance as to whether: the Company or its shareholders will continue to obtain these benefits in future; or the conditions prescribed for availing the benefits, where applicable have been/would be met with.

The contents of the enclosed 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. This statement is intended solely for information and for inclusion in the offer document in connection with the proposed issue of equity shares of the company in accordance with SEBI Regulations and is not to be circulated or referred to for any other purpose without our prior written consent. For ISK & ASSOCIATES CHARTERED ACCOUNTANTS Firm Registration No. 115764W

(I.S.KADRI) PARTNER M. No.33991 Place: Ahmedabad Date: March 29, 2011

105

TATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS (A) Benefits to the Company under the Income-Tax Act, 1961 (the "Income Tax Act"): General Tax Benefits 1. Under section 10(34) of the Income Tax 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. Under section 10(35) of the Income Tax Act, any income received from units of a Mutual Fund specified under section 10(23D) of the Income Tax Act, is exempt from tax. Under section 10(38) of the Income Tax Act, any long-term capital gains arising to a shareholder from transfer of long-term capital asset, being equity shares in a company or a unit of an equity oriented fund (i.e. if the shares or units are held for more than twelve months) would not be liable to tax in the hands of the shareholder, if the following conditions are satisfied: a) b) The transaction of sale of such equity share or unit is entered into on or after October 1, 2004; The transaction is chargeable to securities transaction tax.

2.

3.

However, the expenditure and income relating to the provisions of section 10(38) of the Income Tax Act would not be adjusted for the purpose of computing book profits under section 115JB of the Income Tax Act. 4. Section 14A of the Income Tax Act restricts claim for deduction of expenses incurred in relation to income which does not form part of the total income under the Income Tax Act viz income received under sections 10(34), 10(35), etc. Thus, any expenditure incurred to earn the said income is not a tax-deductible expenditure. Under Section 32 of the Income Tax Act, the Company can claim depreciation allowance at the prescribed rates on tangible assets such as building, plant and machinery, furniture and fixtures, etc. and intangible assets such as patent, trademark, copyright, know-how, licenses, etc. if acquired after 31st March 1998. As per the provisions of section 32(2) of the Income Tax Act, where full allowance cannot be given to the depreciation allowance in any year, the same can be carried forward and claimed in the subsequent years. Further, as per the provisions of section 72 of the Income Tax Act, unabsorbed business losses which are not set off in any previous year can be carried forward and set off against the business profits of the subsequent assessment years, subject to a maximum of eight assessment years. However, the carry forward and set off of business losses is subject to provisions of section 79 of the Income Tax Act dealing with carry forward and set off of losses in case of companies in which a change in shareholding has taken place and section 80 of the Income Tax Act dealing with submission of returns for losses. Under section 35D of the Income Tax Act, the Company will be entitled to a deduction equal to one-fifth of the expenditure incurred of the nature specified in the said section, including expenditure incurred on present issue, such as under writing commission, brokerage and other charges, as specified in the provision, for a period of five successive years subject to the limits provided and conditions specified therein.

5.

6.

7.

106

8.

Under section 35AD of the Income Tax Act, the Company will be entitled to a deduction in respect of the whole of any expenditure of capital nature incurred wholly and exclusively for the purpose of building and operating a new hotel of two star or above category as classified by the Central Government, which commences operations on or after 1st day of April, 2010. Under section 48 of the Income Tax Act, if the investments in shares are sold after being held for not less than twelve months, the gains, if any (in case not covered under section 10(38) of the Income Tax Act), will be treated as long-term capital gains and the gains will be calculated by deducting from the gross consideration, i) expenditure incurred wholly and exclusively for such transfer and ii) the indexed cost of acquisition. The indexed cost of acquisition/ improvement means an amount which bears to the cost of acquisition/ improvement the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost inflation index for the first year in which the asset was held/ for the year in which the improvement to the asset took place. Under Section 54EC of the Income Tax Act, capital gain arising from transfer of longterm capital assets (other than those exempt under section 10(38) of the Income Tax Act) is exempt from tax, if the capital gains are invested in certain notified bonds within a period of six months from the date of transfer, up to a maximum limit of Rs. 5 million during any financial year for a period of three years. For investments made on or after 1 April 2007, the notified bonds are: (a) National Highways Authority of India ("NHAI") constituted under section 3 of National Highways Authority of India Act, 1988 and notified by the Central Government in the Official Gazette for the purpose of this section; or Rural Electrification Corporation Limited ("RECL"), a company formed and registered under the Companies Act and notified by the Central Government in the Official Gazette for the purpose of this section;

9.

10.

(b)

If only part of the capital gain is invested, the exemption will be proportionately reduced. However, if the new bonds are transferred or converted into money within three years from the date of their acquisition, the amount so exempted will be chargeable to tax. 11. The Company is entitled to a deduction under section 80G of the Income Tax Act in respect of amounts contributed as donations to various charitable institutions and funds covered under that section, subject to fulfillment of conditions therein. Under section 111A of the Income Tax Act, short-term capital gains (i.e., if the shares are held for a period not exceeding twelve months), arising on sale of listed equity shares are taxed at the rate of 15% (plus applicable surcharge and cess) in cases where securities transaction tax has been levied. Further, if the gross total income of the Company includes any short term capital gains referred to above, deduction under Chapter VI-A of the Income Tax Act shall be allowed from the gross total income as reduced by such short term capital gains. Under section 112 of the Income Tax Act, long-term capital gains are subject to tax at a rate of 20% (plus applicable surcharge and cess) after indexation, as provided in the second proviso to section 48 of the Income Tax Act. However, in case of listed securities or units, the amount of such tax could be limited to 10% (plus applicable surcharge and cess), without indexation benefit, at the option of the Company in cases where securities transaction tax is not levied. Under section 115JAA(1A) of the Income Tax Act, credit is allowed in respect of any

12.

13.

14.

107

Minimum Alternate Tax ("MAT") paid under section 115JB of the Income Tax Act for any assessment year commencing on or after 1 April 2006. Tax credit eligible to be carried forward will be the difference between MAT paid and the tax computed as per the normal provisions of the Income Tax Act for that assessment year. Such MAT credit is allowed to be carried forward for set off purposes for up to 10 years succeeding the year in which the MAT credit is first allowed. Special Tax Benefits 15. The Company is eligible for deduction under section 80-ID(2) of the Income Tax Act, in case of business of hotel located in specified district having a World Heritage Site. The deduction is equivalent to 100% of profits derived from such business for five consequetive assessment years beginning from the initial assessment year, if such hotel is constructed and has started its operations at any time during the period beginning on the 1st day of April 2008 and ending on 31st March 2013, subject to fulfillment of specified conditions.

(B)

Benefits to the Company under the Wealth Tax Act, 1957: General Tax Benefits 1. As per the provisions of section 2(m) of the Wealth tax Act, 1957, the Company is entitled to reduce debts owed in relation to the assets which are chargeable to wealth tax in computing the net taxable wealth

Special Tax Benefits There are no special tax benefits available under the Wealth Tax Act to the Company. (C) Benefits to the Resident Shareholders of the Company under the Income-Tax Act: General Tax Benefits 1. Under section 10(32) of the Income Tax Act, any income of minor children clubbed in the total income of the parent under section 64(1A) of the Income Tax Act, will be exempt from tax to the extent of Rs 1,500 per minor child. Under section 10(34) of the Income Tax 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) received on the shares of the Company, is exempt from tax. Under section 10(38) of the Income Tax Act, any long term capital gains arising to a shareholder from transfer of long term capital asset being an equity share in a company will not be liable to tax in the hands of the shareholder if the following conditions are satisfied: a) b) 4. The transaction of sale of such equity share is entered into on or after October 1, 2004; and The transaction is chargeable to securities transaction tax.

2.

3.

Section 14A of the Income Tax Act restricts claim for deduction of expenses incurred in relation to income which does not form part of the total income under the Income Tax Act viz income received under sections 10(34), 10(35), etc. Thus, any expenditure incurred to earn the said income is not a tax-deductible expenditure.

108

5.

Under section 36(1)(xv) of the Income Tax Act, securities transaction tax paid by a shareholder in respect of the taxable securities transactions entered into in the course of his business, would be allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head "Profit and gains of business or profession". Where such deduction is claimed, no further deduction in respect of the said amount will be allowed in computing the income chargeable to tax as capital gains. Under section 48 of the Income Tax Act, if the Companys shares are sold after being held for not less than twelve months, the gains (in case not covered under section 10(38) of the Income Tax Act), if any, will be treated as long term capital gains and the gains shall be calculated by deducting from the gross consideration, i) expenditure incurred wholly and exclusively for such transfer and ii) the indexed cost of acquisition. The indexed cost of acquisition/ improvement means an amount which bears to the cost of acquisition/ improvement the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost inflation index for the first year in which the asset was held/ for the year in which the improvement to the asset took place. Under Section 54EC of the Income Tax Act, capital gain arising from transfer of longterm capital assets (other than those exempt under section 10(38) of the Income Tax Act) is exempt from tax, if the capital gains are invested in certain notified bonds within a period of six months from the date of transfer, up to a maximum limit of Rs. 5 million during any financial year for a period of three years. For investments made on or after 1 April 2007, the notified bonds are: (a) NHAI, constituted under section 3 of National Highways Authority of India Act, 1988 and notified by the Central Government in the Official Gazette for the purpose of this section; or RECL, a company formed and registered under the Companies Act and notified by the Central Government in the Official Gazette for the purpose of this section;

6.

7.

(b)

If only part of the capital gain is invested, the exemption will be proportionately reduced. However, if the new bonds are transferred or converted into money within three years from the date of their acquisition the amount so exempted will be chargeable to tax. 8. Under section 54F of the Income Tax Act, long-term capital gains (in case not covered under section 10(38) of the Income Tax Act), arising to an individual or Hindu Undivided Family ("HUF") on transfer of shares of the Company will be exempt from tax, if the net consideration from such shares are used for purchase of 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. If only a part of the net consideration is so reinvested, the exemption shall be proportionately reduced. Under section 111A of the Income Tax Act, short-term capital gains (i.e. if shares are held for a period not exceeding twelve months), arising on transfer of an equity share, are taxed at the rate of 15% (plus applicable surcharge & cess) in cases where securities transaction tax has been levied. Further, if the gross total income of the shareholder includes any short term capital gains referred to above, deduction under Chapter VI-A of the Income Tax Act shall be allowed from the gross total income as reduced by such short term capital gains. Under section 112 of the Income Tax Act, long-term capital gains are subject to tax at a rate of 20% (plus applicable surcharge and cess) after indexation as provided in the

9.

10.

109

second proviso to section 48. However, in case of listed securities or units the amount of such tax could be limited to 10% (plus applicable surcharge and cess) without indexation benefit, at the option of the shareholder, in cases where securities transaction tax is not levied. Special Tax Benefits 11. (D) There are no special tax benefits available to the resident shareholders.

Benefits to Non-Resident Indians/Non Resident Shareholders (Other than Foreign Institutional Investors) under the Income Tax Act: General Tax Benefits 1. Under section 10(34) of the Income Tax 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) received by a non-resident Indian shareholder (i.e. an individual being a citizen of India or Person of Indian origin who is not a 'resident') on the shares of the Company, is exempt from tax. Under section 10(38) of the Income Tax Act, any long term capital gains arising to a shareholder from transfer of long term capital asset being an equity share in a Company or a unit of an equity oriented fund would not be liable to tax in the hands of the shareholder if the following conditions are satisfied: (a) (b) 3. The transaction of sale of such equity share is entered into on or after October 1, 2004; and The transaction is chargeable to securities transaction tax.

2.

Section 14A of the Income Tax Act restricts claim for deduction of expenses incurred in relation to income which does not form part of the total income under the Income Tax Act viz income received under sections 10(34), 10(35), etc. Thus, any expenditure incurred to earn the said income is not a tax-deductible expenditure. Under section 36(1)(xv) of the Income Tax Act, securities transaction tax paid by a shareholder in respect of the taxable securities transactions entered into in the course of his business, would be allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head "Profit and gains of business or profession". As such, no deduction in respect of amount paid on account of securities transaction tax will be allowed in computing the income chargeable to tax as capital gains. Section 48 of the Income Tax Act contains special provisions in relation to computation of long term capital gain on transfer of an Indian companys shares by non-residents. The Computed long term capital gain arising on transfer of shares in case of non residents has to be done in the original foreign currency, which was used to acquire the shares. The capital gain computed in original foreign currency is then converted into Indian rupees at the prevailing rate of exchange. However, indexation benefit cannot be availed by non residents in computing the capital gains as prescribed above. Under Section 54EC of the Income Tax Act, capital gain arising from transfer of longterm capital assets (other than those exempt under section 10(38) of the Income Tax Act) is exempt from tax, if the capital gains are invested in certain notified bonds within a period of six months from the date of transfer, up to a maximum limit of Rs. 5 million during any financial year for a period of three years. For investments made on or after 1

4.

5.

6.

110

April 2007, the notified bonds are: (a) NHAI, constituted under section 3 of National Highways Authority of India Act, 1988 and notified by the Central Government in the Official Gazette for the purpose of this section; or RECL, a company formed and registered under the Companies Act and notified by the Central Government in the Official Gazette for the purpose of this section;

(b)

If only part of the capital gain is invested, the exemption will be proportionately reduced. However, if the new bonds are transferred or converted into money within three years from the date of their acquisition the amount so exempted will be chargeable to tax. 7. Under section 54F of the Income Tax Act, long-term capital gains (in case not covered under section 10(38) of the Income Tax Act), arising to an individual or HUF on transfer of shares of the Company will be exempt from tax, subject to fulfillment of certain conditions, if the net consideration from such shares is used for purchase of residential house property within a period of one year before and two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. If only a part of the net consideration is so reinvested, the exemption shall be proportionately reduced. Under section 111A of the Income Tax Act, short-term capital gains (i.e. if the shares are held for a period not exceeding twelve months), arising on sale of listed equity shares are taxed at the rate of 15% (plus applicable surcharge & cess) in cases where securities transaction tax has been levied. Further, if the gross total income of the shareholder includes any short term capital gains referred to above, deduction under Chapter VI-A of the Income Tax Act shall be allowed from the gross total income as reduced by such short term capital gains. Under section 112 of the Income Tax Act, long-term capital gains (i.e. if shares are held for a period exceeding twelve months), arising on transfer of shares in the Company, shall be taxed at a rate of 20% (plus applicable surcharge and cess). However, in case of listed securities or units, the amount of such tax could be limited to 10% (plus applicable surcharge and cess), without indexation benefit, at the option of the shareholder, in cases where securities transaction tax is not levied. Under section 115-I of the Income Tax Act, a non-resident Indian shareholder (as defined therein) has an option to be governed by the provisions of Chapter XII-A of the Income Tax Act, viz. Special Provisions Relating to Certain Incomes of Non-Residents which are as follows: a) Under section 115E of the Income Tax 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 twelve months, shall be concessionally taxed at the flat rate of 10% (plus applicable surcharge and cess), without indexation benefit. Under section 115F of the Income Tax Act, long-term capital gains arising to a Non-Resident Indian from the transfer of shares of the Company subscribed to in convertible Foreign Exchange shall be exempt from Income-tax, if the net consideration is reinvested in specified asset or in any savings certificate as defined by section 10(4B) of the Income Tax Act, 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.

8.

9.

10.

b)

111

c)

d)

Under section 115G of the Income Tax Act, Non-Resident Indians are not required to file a return of income under Section 139(1) of the Income Tax Act, if their only income is income from foreign exchange asset investments or longterm capital gains in respect of those assets or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Income Tax Act. Under Section 115H of the Income Tax 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 that year under Section 139 of the Income Tax 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.

11.

Under section 90(2) of the Income Tax Act, the provisions of the Income Tax Act would prevail over the provisions of the double tax avoidance agreement ("tax treaty") entered between India and the country of fiscal domicile of the non-resident, if any, to the extent they are more beneficial to the non-resident. Thus, a non-resident (including NRIs) can opt to be governed by the provisions of the Income Tax Act or the applicable tax treaty, whichever is more beneficial.

Special Tax Benefits There are no special tax benefits available to the non-resident shareholders. (E) Benefits to Foreign Institutional Investors (FIIs) under the Income Tax Act: General Tax Benefits 1. In terms of section 10(34) of the Income Tax 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) received on the shares of the Company is exempt from tax. In terms of section 10(38) of the Income Tax Act, any long-term capital gains arising to an investor from transfer of long-term capital asset being an equity share in a company or a unit of an equity oriented fund would not be liable to tax in the hands of the investor if the following conditions are satisfied: (a) (b) 3. The transaction of sale of such equity share is entered into on or after October 1,2004; The transaction is chargeable to securities transaction tax as explained below.

2.

Section 14A of the Income Tax Act restricts claim for deduction of expenses incurred in relation to income which does not form part of the total income under the Income Tax Act viz income received under sections 10(34), 10(35), etc. Thus, any expenditure incurred to earn the said income is not a tax-deductible expenditure. Under section 36(1)(xv) of the Income Tax Act, securities transaction tax paid by a shareholder in respect of the taxable securities transactions entered into in the course of his business, would be allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head Profit and gains of business or profession. As such, no deduction in respect of amount paid on account of securities transaction tax will be allowed in computing the income chargeable to tax as capital gains.

4.

112

5.

The income by way of short-term capital gains/ long-term capital gains realized by FIIs on sale of shares in the Company would be taxed at 30%/ 10% respectively, as per section 115AD of the Income Tax Act. However, in respect of short term capital gains referred to in section 111A the tax rate applicable will be 15% (plus applicable surcharge and cess). The benefit of indexation and foreign currency fluctuation protection as provided by section 48 of the Income Tax Act are not applicable to FIIs. Further, if the gross total income of the FII includes any short term capital gains referred to above, deduction under Chapter VI-A of the Income Tax Act shall be allowed from the gross total income as reduced by such short term capital gains. Under Section 54EC of the Income Tax Act, capital gain arising from transfer of longterm capital assets (other than those exempt under section 10(38) of the Income Tax Act) is exempt from tax, if the capital gains are invested in certain notified bonds within a period of six months from the date of transfer, up to a maximum limit of Rs. 5 million during any financial year for a period of three years. For investments made on or after 1 April 2007, the notified bonds are (i) NHAI, constituted under section 3 of National Highways Authority of India Act, 1988 and notified by the Central Government in the Official Gazette for the purpose of this section; or RECL, a company formed and registered under the Companies Act and notified by the Central Government in the Official Gazette for the purpose of this section;

6.

(ii)

If only part of the capital gain is invested, the exemption will be proportionately reduced. However, if the new bonds are transferred or converted into money within three years from the date of their acquisition the amount so exempted will be chargeable to tax. 7. Under section 196D(2) of the Act, no deduction of tax at source will be made in respect of income by way of capital gain arising from the transfer of securities referred to in section 115AD. Under section 90(2) of the Income Tax Act, the provisions of the Income Tax Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the non-resident. Thus, a non-resident can opt to be governed by the provisions of the Income Tax Act or the applicable tax treaty, whichever is more beneficial.

8.

Special Tax Benefits There are no special tax benefits available to the FIIs. (F) Benefits to the Mutual funds under the Income Tax Act: General Tax Benefits 1. Under section 10(23D) of the Income Tax Act, any income of Mutual Funds set up by Public Sector Banks or Public Financial Institutions or Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or regulations made thereunder or Mutual Funds authorised by the Reserve Bank of India, subject to the conditions specified, would be exempt from income tax.

Special Tax Benefits There are no special tax benefits available to the mutual funds.

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(G)

Benefits to the Venture Capital funds under the Income Tax Act: As per the provisions of Section 10(23FB) of the Act, income of 1. Venture Capital Company which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992 and notified as such in the Official Gazette; and Venture Capital Fund, operating under a registered trust deed or a venture capital scheme made by Unit Trust of India, which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992 and notified as such in the Official Gazette set up for raising funds for investment in a Venture Capital Undertaking are eligible for exemption from income tax on all their income, including dividend from and income from sale of shares of the company..

2.

(H)

Benefits to shareholders of the Company under the Wealth Tax Act, 1957 Shares of the Company held by the shareholder will not be treated as an asset within the meaning of section 2(ea) of Wealth Tax Act, 1957. Hence, shares are not liable to wealth tax.

Notes: 1. 2. All the above benefits are as per the current tax law as amended by the Finance Act 2010. The above Statement of possible tax benefits sets out the provisions of law in a summary manner only and is not a complete analysis or list of all potential tax consequences. The stated benefits will be available only to the sole/ first named holder in case the shares are held by joint holders. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the Double Taxation Avoidance Agreements, if any, between India and the country in which the non-resident has fiscal domicile. This statement is intended only to provide general information to the investors and is neither designed nor intended to be substituted for professional tax advice. 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 participation in the scheme. 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 changes from time to time. We do not assume responsibility to update the views consequent to such changes.

3.

4.

5.

6.

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SECTION IV: ABOUT OUR COMPANY AND THE INDUSTRY INDUSTRY OVERVIEW The section titled "Industry Overview" beginning on page 115 has been derived from a report titled Indian Hotel Industry, March 2011 that the Company has commissioned Credit Analysis & Research Limited ("CARE") to prepare a report (the "Report"). CARE has obtained the information set forth in the Report from its databases and other sources available in the public domain identified in the Report. CAREs methodologies for collecting information and data, and therefore the information discussed in the "Industry Overview" section, may differ from those of other sources, and does not reflect all or even necessarily a comprehensive set of the actual transactions occurring in the industry. This information has not been independently verified by us, the Book Running Lead Managers, or their respective legal, financial or other advisors, and no representation is made as to the accuracy of this information. The "Industry Overview" section also includes certain projections and estimates that are based on certain assumptions regarding contingencies and other matters that are not within the control of the Company, the BRLMs, CARE or any other person. These assumptions are inherently subject to significant uncertainties and actual results may differ, perhaps materially, from those projected. CARE has given and has not withdrawn its written consent to the issue of this Draft Red Herring Prospectus with the inclusion herein of its name and all references thereto and to the inclusion of the Report, including extracts of the Report, in this Draft Red Herring Prospectus, in the form and context in which it appears in this Draft Red Herring Prospectus. While the Company has taken reasonable actions to ensure that the Report and the market share and industry data and forecasts have been extracted accurately and in their proper context, neither the Company nor the BRLMs have independently verified any of the data and forecasts from CARE or from third party sources or ascertained the underlying assumptions relied upon. As a result, you are cautioned against placing undue reliance on such information. Disclaimer of CARE This report is prepared by CARE Research, a division of Credit Analysis & Research Limited [CARE]. CARE Research has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Research operates independently of ratings division and this report does not contain any confidential information obtained by ratings division, which they may have obtained in the regular course of operations. The opinion expressed in this report cannot be compared to the rating assigned to the company within this industry by the ratings division. The opinion expressed is also not a recommendation to buy, sell or hold an instrument. CARE Research is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE (including all divisions) has no financial liability whatsoever to the user of this product. This report is for the information of the intended recipients only and no part of this report may be published or reproduced in any form or manner without prior written permission of CARE. Outlook on Indian economy India, the worlds largest democracy in terms of population had a Gross Domestic Product (GDP) on purchasing power parity basis at approximately US$3,561 bn in 2009 with Indias GDP at 7.4% for FY10 (Source Central Intelligence Agency Factbook 2009 & RBI). This makes it the fourth-largest economy in the world after USA, China and Japan. During the pre-liberalisation period, India was always considered an agrarian economy adhering to socialist policies with more than 70% of the GDP being contributed by agriculture growth. In 1991, the Government of India (GoI) initiated a series of economic reforms to promote industrial growth to bring in economic stability and growth. The new policies (liberal) included opening of international trade and investment, privatisation, tax reforms etc to transform the economy from

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socialism to capitalism. Due to this, the low annual growth rate of the economy of India which stagnated at about 3.5% from 1950s to 1980s has increased to above 8% average GDP growth from 2004-2009. This makes India one of the fastest growing emerging economies in the world. CARE Research expects the overall GDP to touch the double digit figure by 2015 at 10% led by higher domestic consumption and growth in exports. FY GDP Agriculture Services 2007 9.71 3.68 10.17 2008 9.22 4.73 10.51 2009 6.72 1.58 9.75 2010 7.44 0.22 8.53 2011(E) 8.50 4.00 10.00 8.50 2012(E) 9.00 3.00 11.00 9.00 2013(E) 9.00 3.00 11.00 9.50 2014(E) 9.50 3.00 11.50 10.00 2015(E) 10.00 4.00 11.50 10.50

12.75 9.49 3.87 9.27 Industry Source: RBI & CARE Research (Economics Cell)

The Index of Industrial Production (IIP), a barometer of the manufacturing activity in the country, has shown a growth of 11.6% in the first quarter of FY11 as against the growth of 3.9% in the same quarter of the FY10. The strong performance of IIP in last few months and the improving business sentiment underscores that the Indian economy is firmly on the recovery path. The recuperating demand conditions on the back of the government stimulus package, improving employment situation, resumption in foreign capital inflows, recovering financial markets and stabilising export demand have supported growth momentum of the Indian economy. GDP growth of 7.4% during FY10 has been one of the highest achieved globally during the difficult times. According to CARE Ratings Economic Research team, Indias GDP growth is expected to accelerate to about 8.5% in FY11 and further increase to 9% in FY12. Robust recovery seen in the last quarter of FY10 is likely to continue the momentum, driven by buoyant performance of the industrial sector, a better performance of the monsoon relative to last year, and sustained resilience of services sector. Indian Hotels and Vacation Ownership Industry Overview of the Indian Tourism Sector Tourism is driven by a wide array of interests like entertainment, sports, religion, culture, adventure, education, health and business. With the advancement of transport, communication and improvement in general economic conditions, the demand for tourism has increased substantially. Tourism is one of the highest foreign exchange earners and employment generating sectors. The World Travel and Tourism Council (WTTC) have identified India as one of its growth centres in the world. India also ranks first on a relative scale amongst the countries expected to grow their Travel and Tourism (T&T) demand rapidly between CY2008 and CY2018 and ranks second on employment scale, amongst the countries to generate largest employment in absolute terms, according to World Travel & Tourism Council 2008/09. Tourism industry is expected to contribute about 6.7% of Indias GDP and provide employment to approximately 49 million people in CY2010. The foreign exchange earnings from tourism in India rose substantially from Rs 330 billion in CY2005 to Rs 550 bn in CY2009 (Ministry of Tourism). Consequently, the share of India in world tourism receipts increased from 1.1% in CY2005 to 1.24% in CY2009. Inspite of the increasing share, Indias share in world tourism receipts is relatively low. Indias T&T industry size is estimated at Rs.4,322 billion in CY2010 (Ministry of Tourism). Personal travel and tourism dominated with 86% share in total T&T industry size.

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Indias Travel & Tourism Market Size (Rs. Billion)

(Source: WTTC) The size of the Indian Travel & Tourism industry has been growing consistently over last five years. The revenue from the Personal Travel and Tourism has increased at a 5-year Compounded Annual Growth Rate (CAGR) of 11.97% whereas Business Travel & Tourism has increased at a CAGR of 7.22% during the same period (WTTC). Andhra Pradesh, Uttar Pradesh and Tamil Nadu together contributed approximately 63 % (Ministry of Tourism) to the overall domestic tourist arrivals in India in 2009. However, the highest growth in the number of tourist arrivals was experienced by the state of Madhya Pradesh and Tamil Nadu during the 2005-09 period. Top 10 states attracting domestic tourist arrivals (in Millions) 2005 2006 2007 2008 93.5 95.4 43.2 30.5 18.8 14.3 7.1 14.2 13.6 9.5 111.7 105.5 58.3 36.2 23.5 16.9 11.1 16.7 15.8 11.9 127.9 116.2 70.3 37.8 25.9 19.2 13.9 19.8 18.6 13.5 132.7 124.8 98.3 12.8 28.4 20.6 22.1 20.5 19.3 15.5

CY Andhra Pradesh Uttar Pradesh Tamil Nadu Karnataka Rajasthan Maharashtra Madhya Pradesh Uttarakhand West Bengal Gujarat

2009 157.5 134.8 115.8 32.7 25.6 23.7 23.1 21.9 20.5 15.9

(Source: Ministry of Tourism) Foreign Tourist arrivals (FTA) and Foreign Exchange earnings (FEE) Rise in global economy witnessed continuous growth at a 5-year Compounded Annual Growth Rate (CAGR) of 6.9% in foreign tourist arrivals in India. CY2009 saw a steep decline in foreign tourist arrivals

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due to global financial crisis and Mumbai terror attacks. Earnings from foreign tourist arrivals too increased at a 5-year CAGR of 11% to reach USD 11, 394 million in CY2009. According to WTCC, the Indian tourism demand is estimated to grow at an average of 9.2% between CY2010 and CY2020 making India a fast growing tourist market. Foreign tourists prefer to stay in luxury hotels. FTA (in Million) and FEE (in USD and INR) FTA(in Millions) FEE (in USD Million) 3.92 4.45 5.08 5.28 5.11 2.63 7,493 8,634 10,729 11,747 11,394 6,842

CY 2005 2006 2007 2008 2009 2010(Jan- June) (Source: Ministry of Tourism) Domestic Tourists

FEE (in INR Billion) 331.2 390.3 443.6 507.3 549.6 313.7

Domestic tourists play a pivotal role in the tourism industry of India. With increasing job opportunities, higher purchasing power, & rising young population more & more Indians are going for vacations. Domestic tourists grew at a CAGR of 13.5% during the period FY05 to FY09 and are expected to increase by 14.9% p.a. over the next five years (CARE Research Indian Hotel Industry Report 2010). The Indian tourism industry experienced substantial increase in domestic tourists due to increase in disposable income and emergence of urban middle class population eager to spend on travel and tourism. As per the ministry of tourism, domestic tourist visits increased by 6.9% and 15.5% in FY2008 and FY2009, respectively. Social travel to meet friends, attend marriage, birth and death and trips for religious purpose, business and leisure were the main reasons for domestic travel.

Domestic Tourist Arrivals (in Millions) FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY09 (Source: India Tourism Stats 2009) Indian Hotel Industry 236.47 269.59 309.04 366.26 391.94 462.31 526.64 562.92 650.04

Y-O-Y Growth (%) 7.4% 14.0% 14.6% 18.5% 7.0% 18.0% 13.9% 6.9% 15.5%

The Indian hotel industry has enjoyed phenomenal growth in the last decade due to liberalization of the Indian economy, growing business opportunities and stable political environment. Increase in domestic travel due to higher income, concept of week-end holidays, leisure and business trips have also propelled growth. This has also led to higher demand of mid-market and upscale hotels by leisure travels and business travel CARE Research estimates the hotel market size in India at Rs. 126 billion in FY10.

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Historically, hotel industry has been consistently growing along with the GDP growth. Despite the slowdown in the overall economy in FY08 and FY09, the hotel industry has been nominally impacted majorly due to the reduction in the leisure travel as an obvious result of the slowdown; however the overall industry fundamentals remain intact. Hotel Market Size (in Rs. Billion) Vs. Gross Domestic Product (in Rs. Trillion)

(Source: CARE Research) The hotel industry can be broadly classified into three broad categories Starred hotels, Approved hotels and Licensed hotels based on general features like Number of rooms, number of restaurants, presence of facilities like spa, swimming pool, shopping mall etc. The Department of Tourism further reclassifies them into 5-D, 5-Star, 4-Star category, while the state governments are responsible for the classification of 3Star, 2-Star and 1-Star hotels. The classification is based on the facilities offered and is done with the aim to provide comfort to the customer.

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Hotel Industry in India

Starred Hotels

Approved (Awaiting Classification) Hotels

Licensed Hotels

Heritage Hotel

Star Hotels 1-Star

Heritage Heritage Classic Heritage Grand

2-Star 3-Star

Budget

Midmarket

4-Star 5-Star 5-Star Deluxe

(Source: CARE Research) Key characteristics of each segment of hotels: Category 5-Star D and 5-Star Target Customer Premium hotels targeted towards senior business executives, foreign business and leisure travellers. Mid segment hotels catering to middle level management and leisure travel. Budget hotels targeted towards domestic travellers Mainly, foreign leisure travellers Preferred Location Metro locations Rates Highest rates
Upscale

Luxury

3-Star and 4-Star

Major cities and tourist destinations

Higher rates but lower than premium segment.

1-Star and 2-Star

Tourist destinations

Rates even lower than mid segment hotels Rates slightly lower than premium segment.

Heritage (Source: CARE Research)

Tourist destinations like Jaipur, Mysore etc

According to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government of India, the government has allowed 100 per cent foreign investment under the automatic route in the hotel and tourism related industry.

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Demand Drivers for the Hotel Industry Key factors like stable socio-political environment, good connectivity, tourism promotion, visa availability, ample presence of tour and travel agents etc are the major attractions for foreign tourists. The demand for hotel accommodation primarily emanates from Leisure tourist, both domestic and foreign Business tourist, both domestic and foreign. The primary business destinations in India are Mumbai, Delhi, Bangalore, Hyderabad, Chennai and Pune and primary leisure destinations are Kerala, Goa, Jaipur, Agra, and Kolkata etc. Due to this most of the premium hotels and hotel chains have presence in these locations. 1. Good economic growth - The tourist arrivals are primarily dependent on rising economy and thereby rising disposable income. Also, in a period of good economic growth, there is a rise in business tourists as companies do not resort to cost cutting in those times. Mega Sports Events Sports events like World Cup Cricket, Asian Games etc leads to arrival of domestic and foreign tourists and hence higher occupancy rates for hotels in those locations. Medical Tourism India is now a preferred destination for medical tourism due to availability of specialty medical services at affordable costs. Rise in medical tourism will drive up demand for the hotel industry. Changing demographics Young India is more eager to spend on discretionary items and Indias share of wallet towards discretionary spending is expected to shift from 52% in 2005 to 70% by 2025. India has also seen an increase in personal final consumption expenditure on hotels and restaurant from Rs.245 billion in CY01 to Rs.990 billion in CY09. State propagandas Recently, the state governments have started to advertise the state tourism through various campaigns. Some of the states involved in the state tourism propagandas are Kerala, Maharashtra, Tamil Nadu, Goa etc., Upcoming Tier II and Tier III cities: With the rising land prices in the Metros and Tier 1 cities, the companies are moving towards the Tier II and Tier III companies to expand their operations. With the development of the companies in these cities, they will experience a surge in the business travelers thereby, driving growth in the hotel industry in these cities. Government Initiatives: (a) Incredible India Campaign: It is the first marketing initiative of its kind. It was conceptualized in 2002 with the primary objective of creating a distinctive identity for the country. The campaign has over the years successfully established India as a high-end tourist destination. At the same time 'Atithi Devo Bhavah Program' was introduced to create awareness among the people about the effects of tourism and sensitize people about the preservations of our cultural heritage and keep the surroundings clean. Announcement of open skies policy for peak season travel: Open skies is an international policy concept which calls for the liberalization of rules and regulations on international aviation industry most specially commercial aviation - opening a free market for the airline industry. Its primary objectives are: (i) To liberalize the rules for international aviation markets and minimizes government intervention the provisions apply to passenger, all-cargo and combination air transportation and encompass both scheduled and charter services; or

2.

3.

4.

5.

6.

7.

(b)

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(ii)

(c)

To adjust the regime under which military and other state-based flights may be permitted. India has entered into the open skies policy with USA and ASEAN, thereby driving growth in the number of tourists flocking in and flocking out from these countries Upgradation of key airports/ construction of new airports: Upgradation of the existing airports and construction of airports in the smaller cities will bring about a boost in the air travel thereby driving demand for the hotel industry in India.

Increasing aspirers and middle class Population Break-up 2006 Population Break-up 2010

(Source: CARE Research) ARR, Occupancy Rate (OR) and tariff structure The robust growth experienced in tourist arrivals has stimulated considerable growth in the Indian hospitality industry, particularly in relation to ARR and OR. ARR across the industry grew at a CAGR of 10.7% during the 5-year period FY05 to FY10 (FHRAI). Due to sub-prime crisis in second half of FY09 coupled with terror attack in November 2008, the hotel industry witnessed recessionary conditions leading to a sharp decline in ARR & OR in FY 09 compared to FY08. Sharp correction in occupancy rates was seen in Mumbai, Chennai, NCR, Goa & Ahmedabad. Cities like Pune & Bangalore too witnessed lower occupancy levels as many of the IT/ ITES companies started making hotel accommodations within their own campuses. All India Average Room Rates and Occupancy Level ARR (Rs) FY 06 FY 07 FY 08 FY 09 FY 10 (Source: FHRAI) 3,227 3,741 4,556 4,487 4,842

OR % 64.1 66.8 69.3 63.1 61.3

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Category-wise trend 5-Star Deluxe 5-Star

4-Star

3-Star

(Source: FHRAI) City-wise Average Occupancy Levels (Per Cent) FY06 FY07 FY08 Agra Ahmedabad Aurangabad Bengaluru Bhopal Chandigarh Chennai Coimbatore Darjeeling Goa Hyderabad Indore Jaipur Jodhpur 60.7 68.9 43.2 71.7 65.8 88.7 78.0 79.7 50.1 66.7 80.2 64.9 60.2 45.1 58.9 69.6 52.9 67.9 74.7 88.7 78.7 72.9 56.3 71.3 71.6 69.8 69.2 50.7 62.8 74.9 NA 73.1 70.3 79.6 77.4 77.8 57.8 70.1 63.7 72.9 63.0 53.6

FY09 54.8 63.7 56.5 56.5 72.2 79.6 64.6 72.1 NA 61.7 56.3 68.7 61.4 51

FY10 57.0 65.7 57.9 52.6 66.1 69.1 65.6 75.5 47.2 63.1 58.8 65.2 57.7 43.2

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Kochi Kolkata Kullu-Manali Lucknow Mount Abu Mumbai Mussorie Mysore Nagpur NCR Pune Raipur Shimla Trivunathanthapuram Ootacamund Udaipur Vadodara Visakhapatnam (Source: FHRAI) Note: NA Not Available

65.9 65.0 48.0 75.0 52.7 75.8 55.0 60.9 71.0 74.8 77.3 74.1 45.2 57.6 50.3 55.3 70.0 77.2

75.4 75.6 46.9 70.8 56.6 79.2 50.9 46.4 69.4 82.2 80.7 74.1 52.2 62.4 48.5 57.8 71.9 71.4

75.2 72.5 48.1 71.6 57.0 80.1 NA 66.3 NA 78.0 76.5 52.7 64.6 65.1 58.3 58.2 NA 75.9

67.4 69.6 50.9 63 69.4 71.2 48 67.7 NA 64.8 65.5 64.3 52.7 57.9 58.1 51.6 77.9 69.0

64.4 64.5 NA 58.7 67.5 67.2 45.9 67.7 61.5 64.6 53.2 39.0 48.0 55.3 NA 47.0 65.6 62.1

Agra Ahmedabad Aurangabad Bengaluru Bhopal Chandigarh Chennai Coimbatore Darjeeling Goa Hyderabad Indore Jaipur Jodhpur Kochi Kolkata Kullu-Manali Lucknow Mount Abu Mumbai

City-wise Average Room Rates (Rs.) FY06 FY07 FY08 2,389 2,361 3,307 2,572 2,108 4,138 1,837 2,160 NA 6,534 8,519 9,679 1,604 2,028 2,547 1,103 1,103 4,057 3,080 3,340 3,076 2,311 2,322 2,634 2,090 1,719 1,912 3,994 4,515 4,368 4,305 4,660 5,643 773 992 1,486 2,220 2,743 5,460 1,679 4,066 5,468 1,247 1,237 1,486 2,668 3,567 5,138 1,585 2,334 1,688 2,060 1,988 2,208 1,338 1,558 1,825 4,996 6,665 4,615

FY09 4,211 4,039 2,289 9,757 2,639 3,716 4,678 3,255 NA 5,378 4,730 1,933 4,472 3,964 2,062 5,342 3,716 2,491 1,823 6,822

FY10 2,482 3,367 2,850 6,766 3,110 4,780 4,083 3,236 3,193 4,757 5,137 1,814 4,059 4,552 2,806 4,880 NA 5,109 2,159 5,833

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Mussorie Mysore Nagpur NCR Pune Raipur Shimla Trivunathanthapuram Ootacamund Udaipur Vadodara Visakhapatnam (Source: FHRAI) Note: NA Not Available Key Destinations

656 1,249 1,307 6,699 2,621 2,550 813 1,665 1,690 3,580 2,085 1,686

1,454 3,300 1,144 7,459 3,232 2,550 1,554 3,959 1,527 3,700 1,730 2,495

NA 1,254 NA 9,728 4,927 1,055 1,033 2,221 1,258 6,320 NA 3,169

4,099 2,340 NA 6,087 4,951 1,087 1,766 1,570 1,956 7,319 2,779 3,687

6,078 2,637 3,132 6,985 3,921 1,521 1,790 1,422 NA 3,543 4,360 2,809

Ahmedabad - a fast growing business destination Ahmedabad, the financial capital of Gujarat is the seventh-largest metropolitan city in India. It is predominantly a business destination. Historically Ahmedabad has enjoyed the reputation of being a major centre for trade and commerce. It is a growing centre for education, information technology and scientific industries. The city has a thriving textiles, chemicals, pharmaceuticals and petrochemicals industry. The growing population of the city has led to a boom in the retail industry. The city of Ahmedabad is a wellestablished business destination with almost 85 per cent of the hotel clientele comprising business travellers. Domestic travelers account for 63 per cent of guests while the remaining 37 per cent are foreign nationals (CARE Research Indian Hotel Industry Report 2010). Due to its proximity and connectivity with Mumbai a large chunk of domestic travelers come from Mumbai. The foreign travelers mostly comprise travelers from UK and US. Ahmedabad is the house for some of the prestigious institutions like Indian Institute of Management, National Institute of Design etc., which generates a lot of business for the hotel industry during the placement season (November December). Ahmedabad has a total room inventory size of 861 rooms in the upscale category as of CY2010 (CARE Research Indian Hotel Industry Report 2010). An addition of 590 rooms is expected over the next 3-4 years. The maximum room inventory coming up is along the Sarkhej-Gandhinagar Highway. Huge investments made under the Vibrant Gujarat, will drive growth in the tourism industry in Gujarat, as it will attract more business tourists. This is due to the upcoming IT/ITeS and pharmaceuticals industry coming up along the SG Highway. Crown Plaza, Ista and Aloft are some of the upscale category brands coming up with a hotel on SG Highway The average room rates in Ahmedabad grew at a CAGR of 7 per cent from Rs.2, 572 in FY06 to Rs.3, 367 in FY10 (FHRAI). The highest growth in average room rates was witnessed in 2007-08 when the room rates almost grew by 100 per cent. This kind of growth can be attributed to boom in the economy and increased business travel. The occupancy levels peaked out in 2007-08 to 74.9 per cent. A steep fall in occupancy levels was experienced in 2008-09 (FHRAI). This fall can be attributed to the fall in business travel due to the global economic slowdown. With a lot of supply coming up in the next 2-3 years the occupancy rates are expected to fall thereby leading to a rationalization of average room rates. The players will have to decrease their room rates in order to maintain the occupancy levels thereby leading to a correction in average room rates. The correction is expected to be upto a tune of 8-10 per cent.

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Goa, an established tourist destination Goa which is located on Indias west coast in the Konkan region is the most popular tourist attraction in India. It is also known as Pearl of the Orient. It attracts approximately 1.5 million tourists every year. It accounts for approximately 12 per cent of the foreign tourist arrivals in the country. Goa is known for its coastline and beaches. Goa is visited by a large number of international and domestic tourists each year. Domestic tourists constitute almost 60 per cent of total tourist arrivals. Goa has a coast line of about 105 km and inland water ways up to 250 km, resulting in active fishing and shipping industries which are the major contributors to the state economy. Its Mormugao sea port is largest port exporting iron ore. During the off season (May-September), MICE and domestic tourists are the key revenue generators for the hotel industry. The hotels offer attractive discount packages to woo the customers during the off season eventhough, Goa is becoming a 365 day tourist destination due to the increase in the discretionary income of the younger age group increasing culture for weekend vacation as well as establishment of casinos. Foreign tourists mostly visit Goa during the peak season (October- April). Charter tourists form an important sub-segment of international visitors. A significant number of these tourists prefer to stay in midscale accommodation. However, there is a small but fast growing trend of upscale charter arrivals particularly from Russia and the UK. Goa has a total room inventory size of 3,310 rooms (CARE Research Indian Hotel Industry Report 2010) in the upscale category as of CY2010. An addition of approximately 1,120 rooms is expected over the next 3-4 years. Owing to the largest coastline and rich cultural heritage Goa enjoys the position of being a key tourist destination, both domestically and internationally. During the peak season the proportion of business and leisure travelers is around 10:90, whereas, during the off season the hotel thrives on MICE and domestic travelers. Apart from leisure, the shipping industry also attracts tourists to Goa. The average room rates in Goa grew at a CAGR of 4.5 per cent from Rs.3, 994 in 2005-06 to Rs.4, 757 in 2009-10 (FHRAI). The ARRs dipped by a sharp 12 per cent in 2009-10. The occupancy levels fell from 66.7 per cent in 2005-06 to 63.1 per cent in 2009-10 (FHRAI). The fall can be attributed to the terrorist attacks in Mumbai in November 2008. Due to the terrorist attacks foreign countries issued negative travel advisories leading to mass cancellations in Goa. The hotels have cut their ARR by 10-15 per cent in 200910 to woo the customers (Industry Interactions). Going forward a revival is expected in the Goa tourism industry as it is an attractive tourist destination in India. The room rates are expected to rise by 5-10 per cent in 2010-11 and the occupancy levels would grow by 5-6 per cent. (CARE Research Indian Hotel Industry Report 2010) Jaipur, a princely tourist destination Jaipur, popularly known as the Pink city is the busy capital of desert land, Rajasthan. The very structure of Jaipur resembles the taste of the Rajputs and the Royal family. It is a major national and international tourist destination. In a recent international survey Jaipur was ranked the seventh best place to visit in Asia. In another poll it was ranked third among 12 major Indian cities. During the peak season (October-February) the city has a typical travel mixes of 35:65 of business and leisure class respectively. During off-season (MarchSeptember), MICE activity is the key business driver. Jaipur lies at a distance of 260 kilometers from Delhi, the capital of India and the city is well-connected with other major cities of India. Every year, People across the globe come to experience this royal capital city of Rajasthan. In present time Jaipur is fast transforming into a major business centre for the natives of Rajasthan having all requisites of a metropolitan city. Economic growth has led to expansion of urban space in the region. The growing IT/ITeS industry has led the growth for the 5-star hotels in the city. Jaipur is also famous as a marriage destination.

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Jaipur has a total room inventory size of 1,888 rooms in the upscale category as of CY2010 (CARE Research Indian Hotel Industry Report 2010). An addition of approximately 910 rooms is expected over the next 3-4 years. Owing to the proximity to the airport. Tonk Road enjoys the maximum inventory. During the peak season the proportion of business and leisure travelers is around 40:60, whereas, it gets MICE and business travelers during the off-season. The key industries which have bought the thrust in the hotel industry in Jaipur are Gems and jewellery, IT/ITeS, auto and auto components, textiles etc., The average room rates in Jaipur grew at a CAGR of 16.3 per cent from Rs.2, 220 in 2005-06 to Rs.4, 059 in 2009-10 (FHRAI). The highest growth in average room rates was witnessed in 2007-08 when the room rates almost grew by 100 per cent (FHRAI). This kind of a growth can be attributed to boom in the economy and rising income levels leading to the increased levels of business and leisure travel. The blasts in Jaipur in 2006-07 and exorbitant hike in room rates led to a steep fall in occupancy levels in 2007-08. The situation was worsened by the recession setting in. The recession in the west led to a fall in foreign tourist arrivals. The situation is expected to see a revival in 2010-11 onwards. The occupancy rates would see a revival upto a tune of 5-6 per cent in 2010-11(CARE Research Indian Hotel Industry Report 2010). The room rates would see a slight revival in 2010-11. The incremental room supply is likely to result in some ARR and OR consolidation but the cities strong exposure to the domestic and international market is likely to facilitate demand for the increased room inventory. Lucknow, a developing tourist destination Lucknow, popularly known as the city of nawabs, is the capital city of the state of Uttar Pradesh. Lucknow has always been a multicultural city, and flourished as a cultural and artistic capital of North India in the 18th & 19th centuries. Courtly manners, beautiful gardens, poetry, music, and fine cuisine patronized by the Persian-loving Shia Nawabs of the city are well known amongst Indians and students of South Asian culture and history. Lucknow is placed among the fastest growing cities of India and is rapidly emerging as a manufacturing, commercial and retailing hub. This unique combination of rich cultural traditions and brisk economic growth provides Lucknow with an aura that refuses to fade away. Lucknow has developed as a metro city of Uttar Pradesh. The hotel luxury segment in Lucknow, currently comprise three 5-star hotels, The Piccadilly, The Clarks Avadh and The Taj. The hotels expected to come up in the luxury segment are Radisson Sahara City Homes and Mall-cum-Hotel Parsvnath Planet Plaza which will be managed by the Fortune Park Hotels Limited. The average room rates in Lucknow grew at a robust CAGR of 25.5 per cent from Rs.2, 060 in FY06 to Rs.5, 109 in FY10. However, the occupancy levels declined sharply from 75 per cent in FY06 to 58.7 per cent in FY10. The decline can be attributed to the steep rise in the average room rates. Outlook and Concerns for the Hotel Industry Outlook The long-term prospects of the tourism industry in India including the hotel industry looks bright with stable political government and India being one of the fastest growing economies in the world. The strong domestic demand has partially helped India to emerge strongly from the global economic recession. CARE Research estimates the hotel industry in India to grow at a compounded annual growth rate of 11.8 per cent over in the next five years (CARE Research Indian Hotel Industry Report 2010). Buoyancy in economy, rising discretionary income, growing culture of weekend vacation and increased business travel are likely to propel growth in the hotel industry. Domestic leisure tourists will continue to dominate the domestic demand for hotel rooms in the low, economy and medium segment. Whereas, the rise in foreign tourist arrivals and business travelers will drive the demand in the upscale and luxury segment. CARE Research expects the FTAs to grow at a CAGR of 6.9 per cent (FY09-FY15) (CARE Research Indian Hotel Industry Report 2010). The tourist arrivals from United Kingdom (UK), United States of

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America (USA) and Bangladesh will continue to dominate the flow of foreign tourist arrivals in India. Tamil Nadu, Maharashtra, Delhi and Uttar Pradesh are the states which will top the list of states attracting the foreign tourist arrivals in India. CARE Research estimates DTAs to grow at a CAGR of 14.9 per cent from FY09 to FY15 (CARE Research Indian Hotel Industry Report 2010). The domestic tourist arrivals will be the main growth driver for the hotel industry in India. Strong recovery in the manufacturing and service sector after a slump in FY08 and FY09 injected growth in the Indian economy. The growth in the economy translated into a higher personal discretionary income leading to a higher spending power amongst the consumers. The economy is expected to remain buoyant over the next five years, thereby giving a boost to consumer spending and thus driving the demand for the hotel rooms. Gross Domestic Product (in Rs. Billion) Vs. Domestic Tourist Arrivals (in Millions)

Source: CARE Research CARE Research estimates the hotel room inventory to grow at a CAGR of 4 per cent (CARE Research Indian Hotel Industry Report 2010), from the level of 177,173 rooms in FY09 to 224,000 rooms in FY15. About 60 per cent of the rooms expected to come up would be in the mid-market and economy segment across metros, tier I and tier II cities, whereas the balance 40 per cent would be in the upscale segment at key locations. The key brands coming up are Westin, Novotel, Radisson, Hyatt, Lalit, Orchid, Ista, Aloft, JW Marriott, Dusit D2, Sofitel, and Shangri-la Concerns The Indian hospitality industry holds immense potential for growth. It can provide impetus to other industries through backward and forward linkages and can generate huge revenue earnings for the country. Even though, the hotel industry in India continues to remain the neglected part of the Indian economy. The main roadblocks besieging the hospitality sector in India are procedural delays, inadequate infrastructure and shortage of quality manpower. The critical challenges which are negatively dictating and adversely affecting the competitiveness of Indian hotel industry are as follows: 1) 2) 3) Acute shortfall of quality hotels Shortage of skilled labour Retaining quality workforce

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4) 5) 6) 7) 8) 9) 10) 11)

Poor on-ground infrastructure Lack of infrastructure status to the hotel industry High levels of taxation and multiplicity of the same Acute lack of value for money proposition Growing uncertainty about safety & security Unhygienic conditions in many tourist places Low FDI in the hotel sector Opaque licensing process

Vacation Ownership Industry The growing popularity of the leisure industry in the country today has facilitated alternative hotel product offerings to strengthen their foothold in the market, particularly those with an ownership model that strongly focus on making 'holidaying' a habit. Amongst these include the traditional timeshare and fractional ownership. These are popular holiday models internationally, along with the condo hotels and private residence clubs products. These alternative models, in particular the timeshare product, provides a degree of insulation to key stakeholders (including developers, operators and consumers) compared to the pure hotel product. However, while the risk associated with the timeshare product is lesser compared to the pure hotel product, the ability for the product to maximise returns (from a developer's and operator's perspective) is relatively lower than the hotel product. Timeshare found a place in the tourism policy of India in the year 2001 and the Ministry of Tourism, in the year 2006 introduced a scheme for classification of Timeshare Resorts. Meaning & Product Range Vacation Ownership is also popularly referred as Timeshare. A time-share is a form of ownership or right to the use of a property, or the term used to describe such properties. Timeshare properties are typically resort condominium units, in which multiple parties hold rights to use the property, and each sharer is allotted a period of time (typically one week, and almost always the same time every year) in which they may use the property. Timeshares may be on a part-ownership or lease/"right to use" basis, in which the sharer holds no claim to ownership of the property. Product range of the industry is as follows: Deeded ownership The Vacation Ownership owner acquires ownership interest in the immovable property. Time-share ownership, undivided interests, co-operatives and fractional interests are some of the forms of deeded ownership. Right to use It allows Vacation Ownership owner to avail accommodation during a specified week, season or time interval for a specified number of years. Some of the formats are club memberships and holiday licences. Other variations available are fixed period, floating period, rotating week and split weeks. The majority of vacation ownership resorts offer apartments with full or partial kitchenettes and limited services. They have strong self help features and most add-ons such as linen change and house-keeping are additional paid-for services. Vacation Ownership industry in India Timeshare first made its entry into India a little over twenty years ago, bringing in the never-before concept of long-term vacation ownership. Initial formats were just a roof over your head, in a holiday setting the attraction those days was a one-time purchase that gave you free holidays, year after year after year. Today, theres more to it than a long term calendar. The timeshare space is fast changing colour with a spectrum of offerings exotic locations, modern amenities, theme cuisines and professional sport and fitness gurus as holiday evangelists. One can even have locations that offer golf and extreme sport as part of the package. The industry is still in its growth phase with

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4,640 Vacation Ownership units 1,46,450 members accounting for 2,41,330 Vacation Ownership weeks

With entry of global hotel chains in Asia, India and China are expected to be potential targets for vacation ownership developers in the long-term. The domestic industry grew at 25% in 2008 against the last five year CAGR of 18% according to Group Resort Condominiums International (RCI). According to AIRDA, young upwardly mobile consumers are getting onto the bandwagon with the resources to make Vacation Ownership purchases early in life. They are also committed to annual holidays, for welcome breaks from highly stressed work environments. Typical profile of Vacation Ownership consumers in India Average age 42 years Average house hold size 4 people Typical children count Between 1 and 2 Membership gender 89.8% male (Source: AIRDA) The Vacation Ownership industry in India is tilted towards West India in cities like Mumbai, Pune, Ahmedabad, Surat, etc followed by Southern region. Vacation Ownership can also be credited with opening up of new destinations like Coorg and Munnar to tourists across India which was earlier familiar only to region specific tourists. With younger profiles, the timeshare experience now includes fishing, water sports, scuba diving, skiing, rock climbing and trekking. Extended in-house facilities could include health clubs, games rooms, playparks for children, upgraded laundry and dining options. Some resorts even have a compact course for the golf-inclined. Over the years, the industry has seen stability, resilience and flexibility allowing travelers to choose plans, swap locations and trade calendar bookings with considerable ease. The convenience of the pre-paid model further adds the reassurance of being inflation proof. Spa Industry and MICE Segment Spa Industry - A "Spa" facility typically encompasses therapies, treatments, diets and lifestyles and aims at enhancing the wellness of mind and body. The industry in India is still at a nascent stage compared to US and Europe. However, with economic growth, stressed life and increasing foreign tourists the industry has a bright future in the coming years. Northern India has shown the biggest increase in spa development due to steady economic growth. Mumbai, the land of Bollywood is another destination for spa operators due to presence of film stars and big industrial houses. Kerala region, a well known destination for Ayurveda is also witnessing growth. Besides resort spas, other types of spas such as day spas, salon spas, destination spas, club spas, medical spas, cruise ship spas, mineral spring spas and airport spas are also gaining popularity. Spa treatments in India have also a great number of massages including Indian and exotic massages done with herbal and aromatic oils. Sensing the opportunity many international players like MSpa International from Thailand, Aman Resorts from Singapore, XpresSpa from the US and South America-based Acqua Hotels are all set to enter India. Meeting Incentive Conference and Exhibition (MICE) Segment a fast growing hospitality product in India MICE is the new form of business tourism on which Indian hospitality players are increasingly focusing on. It caters to business meetings, international conferences and conventions, events and exhibitions. After the popular spots for MICE such as Hong Kong, Malaysia and Dubai, India is fast gaining its pace in the competition to become an ideal MICE destination. Need for MICE facilities in

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India are accelerating with notable growth momentum in domestic and international travels. MICE target customers are India Inc. and global business giants. MICE segment not only adds to the banquet revenues, but also leads higher room demand and therefore room revenues. MICE at a nascent stage in India, but potential is huge Even though the inbound MICE segment has been growing at 15% to 20% annually in the past three-four years, it is still at a nascent stage in India. As per industry data, the total world market for MICE tourism was in excess of US$ 280 Bn. Of this, the share of the Asia-Pacific region alone was US$ 60 bn. India accounted for US$ 4.8 bn, which was less than 2% of the world market, highlighting the huge untapped potential in the segment. In terms of the number of meetings, India's share is 1% and in terms of delegate arrivals the share is 0.7% and It ranks 27th in the global meetings market. Indian hospitality is aggressively targeting MICE \In order to tap the high potential, Indian hospitality sector is aggressively targeting MICE tourism. Although MICE facilities in India currently do not match with international standards, hotels across India are in a continual process of upgrading their MICE facilities to cater to this growing segment. India is currently at an inflexion point as far as the conferences and conventions business is concerned. With the advanced technology and facilities, personalised services coupled with immense natural beauty and rich cultural heritage, it has all the necessary ingredients for the success of MICE. New Delhi, Mumbai, Agra, Bangalore, Chennai, Cochin, Goa, Hyderabad, Jaipur Ahmedabad and Kolkata are emerging as important MICE venues in the country. Industry Potential 1. 2. Favorable demographics and rapid economic growth point to a long-term secular uptrend in the domestic demand for hotels for business and leisure International inbound traffic is expected to grow rapidly with increasing investment and trade activity WTTC has identified India as one of the fastest growing countries in terms of tourism demand India has benefited from an aggressive promotion campaign and an out-performing economy The growth momentum in domestic and international travel is expected to receive a further boost with more budget airlines/lower air-fares, open sky policies and expected improvements in travel infrastructure (roads, airports, railways) There are opportunities in all price and value chain segments due to the shortage of hotel stock; plans are on to increase quality accommodation to 200,000 rooms by next three years Need for hotel-asset construction and ownership Low penetration of brands provides opportunities for management contracts and franchising with local hotel owners/developers Need for world-class MICE infrastructure in major Indian cities (Source: Investment commission of India- Tourism overview (www.investmentcommission.in)

3.

4.

Tourism & Hotel Management Education: Tourism & Hotel Management education have become key concern as the number of travellers increases and markets become more sophisticated in most countries. The World Travel & Tourism Council (WTTC) estimates a boost in the total amount of travel & tourism activity in the next decade. If India is to realize its immense potential in tourism & hospitality sector it must provide international level products matched with technically qualified workforce. The Government of India has been taking initiatives to promote and develop Hospitality & Tourism both in terms of physical infrastructure & services by paying attention on uplifting physical products as well as manpower.

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CARE Research estimates the hotel industry in India to grow at a CAGR of 11.8 per cent. With the exodus of service providers from the Hospitality sector to supposedly more lucrative industries of business process outsourcing, information technology, retailing, airlines and other areas requiring people with relatively higher customer service orientation and the opening up of the Indian market and a number of hotels on the rise, the market is expected to become an employees market with sufficient alternatives to choose from. The growth of the Indian hotel skyline is also expected to send employee salaries northward. As per the WTTCs projections the Indian hospitality industry direct employment is expected to grow from 18.6 million jobs in 2010 to 20.9 million jobs in 2020. This clearly indicates that there would be a huge demand for skilled and trained manpower in the industry. The major challenge ahead before the tourism industry in India is to bridge the gap between the demand-supply of skilled workforce through attracting and retaining the talented skill to serve the industry. The rampant development of hotels in Tier I and II cities has also ensured that executives and hotel employees have sufficient employment opportunities. The phased and sustained development is expected to allow employees to get employment in their preferred cities as well as in preferred hotels and brands. The development of Tier II cities as extensions of metropolitans across India, such as Pune along with Mumbai and Faridabad and Ghaziabad along with Delhi, would see an outflow of manpower from the more expensive metros to these satellite towns with a relatively lower cost of living. All these aspects definitely shine a bright path ahead for hoteliers across the board and hold the promise of a more satisfying and rewarding career ahead. The quality of the courses in the tourism management being offered by the universities and institutes need to be improved, the courses offered are very theoretical in nature and do not full fill the industrial requirement, the curriculam needs to be revised and should be designed in consultation with the industry, the courseware should be revised frequently to meet the continuously changing requirements of the industry. The number of institutes imparting Hotel Management course has been increasing leading to overall increase in intake capacity to meet the demand for manpower in Hospitality sector. AICTE Approved Hotel Institutes

The number of intakes has increased by 21.15% from August 2007 to June 2009. (Source: MHRD Annual Report 2007-08, 2008-09 and 2009-10)

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OUR BUSINESS Overview We are the flagship company of Gujarat based, Neesa Group which has presence in various industry segments such as hospitality & leisure, construction & development of hotel properties, education, metal casting, information technology, agri biotechnology and food processing. We are an integrated hospitality company in the business of owning, operating and managing hotels & resorts, providing club & vacation ownership services and hospitality education. We recognise ourselves as a 'full service provider' in the hospitality and leisure space offering products and services to a cross section of society i.e. from the middle class segment to the upper class segment, in addition to corporate customers and Foreign Individual Travellers (FIT). We offer our services under the brand 'Cambay'. We are an emerging player in hospitality and leisure business with properties at or near key business and leisure destinations. We have a significant geographical spread of hotels & resorts with presence in Ahmedabad, Bangalore, Gandhinagar, Jaipur, Udaipur, Neemrana, Kerala and Goa. As on February 28, 2011, we have ten (10) operational properties spread across India with an aggregate inventory of 947 rooms. Out of the above six (6) properties are Upscale properties providing five star facilities and four (4) properties are Mid-Market properties providing three to four star facilities. The strategic location of our properties being close to cities, provide us an added advantage of offering 'Business cum Leisure' services to MICE customers and FIT. Most of our properties are equipped with modern amenities and upscale facilities, such as restaurants, spa, banquet & conference, club & games and a variety of holiday activities. Our properties at Gandhinagar and Jaipur (Jamdoli) also have a 9 hole golf course. With significant presence in key business and leisure destinations in Gujarat and Rajasthan we now intend to establish our presence in other emerging business destinations. We further propose to develop new properties at Lucknow, Raipur and Nasik to be funded from the proceeds of this Issue. For further details please refer to the section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus. In the year 2007, we forayed into the business of providing club membership under the brand 'Cambay Club' and in the year 2008 we forayed into the business of the providing vacation ownership under the brand 'Cambay Family Holidays Club'. We provide various facilities to our club members such as golf, lawn tennis, table tennis, squash and other indoor and outdoor games along with additional access and benefits related to Spa and beauty salon, multi-cuisine restaurants, swimming pool & well designed rooms and cottages. As on February 28, 2011, we had 2,920 club members. Our vacation ownership business offers a range of holiday destinations for a pre-determined number of days in a year for a fixed number of years to our vacation ownership members. As on February 28, 2011, we had 5,667 vacation ownership members. Apart from holidaying at any of our resorts and hotels, our affiliation with RCI facilitiates our vacation ownership members an access to over 6,500 RCI affiliated resorts in more than 100 countries and more than 80 resorts in India. Five (5) of our resorts i.e. Gandhinagar, Jaipur (Jamdoli and Kukas), Kerala and Udaipur are affiliated with RCI. Considering a shortage of trained and qualified manpower in the hospitality industry and in order to create a sustained talent pool to drive our growth, we forayed into the hospitality management education space in the year 2008. We have added a new stream of revenue to our business model by setting up education institutes under the brand 'Cambay Institute of Hospitality Management' ("CIHM") at Gandhinagar, Jaipur (Kukas) and Udaipur with necessary infrastructure for training students intending to make a career in the hospitality industry. The three (3) CIHM centres form a part of our properties facilitating a first hand experience to our students of the hospitality industry. Our CIHM centres are affiliated with Indira Gandhi National Open University (IGNOU), American Hotel & Lodging Association (AHLA) and Punjab Technical University (PTU) for its academic programmes in the hospitality education. We shall also be

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launching a CIHM center at our property at Cambay Sapphire, Neemrana. Our CIHM centers had enrolled 748 students till date for its various courses. Our Brand Portfolio We set out below our brand portfolio: Our Hotel & Resort Brands:

Our Club & Vacation Ownership Brands:

Our Restaurant & Food Outlet Brands:

Our existing business segments or revenue verticals include hospitality services, club membership and vacation ownership and hospitality education. Our income from hospitality business formed approximately 93%, 63%, 54% and 79% of our total income in the F.Y. 2008, F.Y. 2009, F.Y. 2010 and half year ended September 30, 2010 respectively, whereas income from club membership and vacation ownership business formed 2%, 20%, 32% and 17% of our total income in the F.Y. 2008, F.Y. 2009, F.Y. 2010 and half year ended September 30, 2010 respectively.

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For half year ended September 30, 2010, we had a total income of `7,009.27 lakhs and net profit after tax of `786.87 lakhs. For the year ended March 31, 2010, we had a total income of `10,638.10 lakhs and net profit after tax of `1,195.31 lakhs as compared to total income of `5,317.66 lakhs and net profit after tax of `498.19 lakhs for the year ended March 31, 2009. Our Strengths: 1. Strategic location of our properties attracts leisure as well as business travellers. We have a significant geographical spread of hotels & resorts in India with properties which are strategically located at or near key business and leisure destinations viz. Ahmedabad, Bangalore, Gandhinagar, Goa, Jaipur, Neemrana, Kerala and Udaipur. Being situated in or close to these cities, we have the advantage of combining business with leisure for our customers. We have successfully marketed our properties like Cambay Golf Resort (Jaipur), Cambay Golf & Spa Resort (Gandhinagar), Cambay Grand (Ahmedabad) and Cambay Sapphire (Ahmedabad) for MICE Tourism facilitating both domestic and international meetings and conferences, conventions, events and exhibitions. The advanced technology and facilities, warm hospitality and other personalized services coupled with immense natural beauty and rich cultural heritage surrounding our properties add to the locational advantage which our properties enjoy. MICE at such locations convert business meetings and conferences into a memorable event for the delegates and attendees. Our hotels and resorts are therefore a blend of 'Business cum Leisure' for our business and corporate customers. Further, MICE Tourism safeguards our business from risk related to seasonality. With significant presence in key business and leisure destinations in Gujarat and Rajasthan we now intend to establish our presence in other emerging business destinations. Our new properties at Lucknow, Raipur and Nasik to be funded from the proceeds of the Issue shall be developed considering corporates and business travellers as our target customer. For further details, please refer to section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus. 2. Unique and diversified business model. We are an integrated hospitality company in the business of owning, operating and managing hotels & resorts, providing club & vacation ownership services and hospitality education. Our Company has presence in most of the verticals or segments of hospitality. Our hotel business formed approximately 93%, 63%, 54% and 79% of our standalone total income in the F.Y. 2008, F.Y. 2009, F.Y. 2010 and half year ended September 30, 2010 respectively, whereas club and vacation ownership business formed 2%, 20%, 32% and 17% of our standalone total income in the F.Y. 2008, F.Y. 2009, F.Y. 2010 and half year ended September 30, 2010 respectively. Our hospitality education business has also begun contributing to our revenues. Each element of our integrated business model is critical to our value chain. Our integrated business model reduces our cost of operations, safeguards us from risks related to seasonality, allows us to smoothly implement changes across the entire value chain, and helps us to continuously improve our services in response to customer feedback and changing trends. 3. Our presence in the vacation ownership and club membership business safeguards us against the threats of seasonality and economic downturn. As of February 28, 2011, we had 5,667 vacation ownership members and 2,920 club members. Once registered these vacation ownership members and club members are committed to our Company for a long period of time spanning 5 to 25 years thereby ensuring a steady source of revenues from staggered membership fee payments, maintenance fees and use of our paid facilities, especially during the off-season or an economic downturn. In addition, our affiliation with RCI provides the members of RCI access to our properties thereby optimum utilisation of our properties throughout the year.

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4.

In-house project development capabilities. Quick turnaround time in development of properties is critical to our business. The availability of sufficient room inventory enables us to generate revenues and ensure customer satisfaction. Our in-house teams have technical expertise to develop properties starting from land acquisition, designing, master planning, project management etc enabling a timely and cost effective developmento of our properties. We have developed seven (7) out of our ten (10) existing properties. In this process, our Company has gained valuable knowledge and experience in developing properties in-house and has built a Project Management Cell (PMC) consisting of engineers who supervise such projects and execute it with the help of civil and labour contractors. Our in-house project development team enables us to control costs, quality of construction and time schedules. We have technical expertise right from the architectural & design conceptualization stage to systems integration & operations stage, thereby ensuring maximum asset utilization, quality infrastructure along with better cost and quality control. Our Company has recently signed an Memorandum of Understanding (MoU) dated January 12, 2011 with Cambay SEZ Hotels Private Limited to firstly develop the property and thereafter operate and manage the same for a period of ten (10) years with an automatic renewal of further period of ten (10) years. Further, we are also developing additional 50 rooms for our next phase of the Neemrana property which shall be operational by F.Y. 2012. Our property at Neemrana is partially operational with 60 rooms. We also intend to develop our new properties at Lucknow, Raipur and Nasik to be funded from the proceeds of the Issue. For further details, please refer to section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus.

5.

Customer centric operations and quality services. Most of our properties are equipped with modern amenities and upscale facilities, such as restaurants, spa, health club, club facilities and a variety of holiday activities. In addition, we also have conference rooms, convention & business centres, banquet halls, WiFi, amphitheatres and other facilities for recreation and games in most of our properties. Advanced technology and facilities at our properties along with warm hospitality and personalized services makes the stay of our guests and customers a memorable experience. We strive to provide our guests with high quality services on a consistent basis. We also organise events such as golf tournaments at our golf resorts in Gandhinagar and Jaipur known as the 'Cambay Grandeur Cup' a match play knockout challenge and 'Junior Golf Talent Cup'. The Times of India initiated 'Times Food Award' has in April 2010 adjudged our restaurant "Golden Cilantro" at Cambay Grand, Ahmedabad as the Best Multi-cuisine restaurant. All our properties have been certified as ISO 9001:2008 in relation to quality management services. Further, in September 2010, our properties at Cambay Spa & Resort, Jaipur (Kukas) and Cambay Palm Lagoon, Kerala (Kollam) have been awarded Gold Crown and Silver Crown award respectively by the RCI for the year 2010-2011. With a view to maximise customer satisfaction, we have deployed CRM i.e. Customer Relationship Management solutions, amongst others, focuses on the needs, preferences of our customers, streamlining of our investments, operational processes and functions in accordance with their expectations. CRM solutions help store customer data in an organized easy-to-access manner. By analyzing this data we determine individual customer behaviour, analyze preferences and provide personalised services to maximize customer satisfaction. We continually seek to identify and develop services which we believe will enhance value to our customers and develop strategies to enable us to allocate resources efficiently. Such customer centric approach helps to augment customer loyalty and reputation to our Company.

6.

Established brand name 'Cambay'. Over the last few years, we have invested resources in building our umbrella brand 'Cambay'. We have successfully promoted the brand 'Cambay' so as to be known as a symbol of quality

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hospitality for both the business and leisure segments of the industry. We run high impact campaigns to create awareness, recognition and high recall of our brand. We promote our brand through different modes of communication like corporate presentations, websites, corporate brochures, e-mailers, mass messaging, sales kits, airport kiosks, mobile caller-tunes, celebrity campaigns, trade shows, strategic co-branding tie-ups, mass media campaigns through both print and electronic media. The brand accords us an opportunity to successfully launch new properties and service offerings. We leverage our brand by naming our properties and services under the brand 'Cambay' viz. Cambay Hotels & Resorts, Cambay Spa & Resort, Cambay Golf Resort, Cambay Sapphire, Cambay Grand, Cambay Beach Resort, Cambay Palm Lagoon, Cambay Family Holidays Club, Cambay Tours, Cambay Club, Cambay Institute of Hospitality Management, Cambay Bakery, Cambay Caf, Cambay Golf, Cambay Golf Club, Cambay (House of Cambay) and others. 7. Strong marketing team and channels, including online marketing and IT systems. Through our dedicated sales and marketing team we reach-out to our target customers. Annual marketing and sales strategy is worked out, pertaining to each vertical based on budgets and needs. Branding perspectives are also considered for creating brand value for each vertical. Neesa Sales Private Limited, one of our group companies caters to marketing and sales of segments such as corporate, MICE, FIT, vacation ownership customers & potential club members through various promotional mediums. Other verticals are also being catered through the same sales channel, however with a more industry specific approach. We advertise and promote our services and products through hoardings at prominent places, advertisements in magazines & local newspapers, travel and hospitality magazines, kiosks at airports, organizing and participating in local and international event. We have tie ups with Hindustan Times and Times Group for regular advertisements in national dailies and TV Channels. These tie-ups help our Company in brand building at a national level. Apart from marketing our services through traditional means, we also market our services and products over the internet by various methods such as Search Engine Optimization (SEO), social media (visibility on social networking websites such as linkedin, facebook, twitter, ibibo etc.), online brand management, banner promotions on various popular websites, mass mailing (e-mails), SMS marketing, lead processing etc. We also have tie-ups with various Online Travel Agents (OTA) such as makemytrip.com, cleartrip.com, yatra.com, stayzilla.com, dhitrax.com etc. to offer special rates & packages and real time hotel availability, traveller reviews, maps and various other information. We also use global distribution systems to process reservations at our properties by having tie-ups with Amadeus, Galileo, Sabre and World Span. We also have a strong backend tele-marketing team which generates leads for our hospitality and club membership & vacation ownership business. We also sell our offerings through our direct sales team, franchisees, direct sales consultants as well as through presentations to corporate clients. We have an extensive network of over 7 DSAs and Franchisees covering major towns and cities of India. We have presence in Bangalore, Chandigarh, Dehradun, Kolkatta, Ahmedabad, Gandhinagr and Pune through a mix of branch sales offices, franchised sales shops. 8. Experienced management team. Most of our senior managerial team have substantial experience in hotel operations, vacation ownership and the hospitality industry in general. We believe our management team has long-term vision and provides stability and continuity to our business. We also believe that the strength of our management team in our business divisions, such as food and beverages, sales and marketing, and their understanding of the hospitality industry will enable our business to grow in a focused and constructive manner. We have a distinct management culture that stresses creativity, loyalty and entrepreneurship. As of February 28 2011, 251 of our employees held specific qualifications in respect of the hospitality industry which enable us to operate our resorts in an efficient and professional manner.

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Our Strategies 1. Increasing number of rooms by developing /acquiring and managing new properties in strategic locations. With the growth in the Indian economy, there has been a substantial increase in business activities from both domestic and international organizations. Our next stage of growth involves the development and management of business properties at strategic business destinations. We will continue to maintain primary focus on providing business class hotels both for domestic and foreign corporate travellers. Currently, we have a total of ten (10) properties across India with an aggregate inventory of 947 rooms. Our property at Cambay Sapphire, Neemrana is partially operational with 60 rooms and in the process of increasing the room inventory by further development of 50 rooms which shall be operational by F.Y. 2012. Our Company has entered into a Memorandum of Understanding (MoU) dated January 12, 2011 with Cambay SEZ Hotels Private Limited ("Cambay SEZ") to develop and thereafter manage and operate a hotel at Dahej SEZ consisting of seventy five (75) rooms. We also propose to develop properties at new destinations like Lucknow, Raipur and Nasik from the proceeds of the Issue thereby increasing our room inventory from the present 947 rooms to 1,332 rooms by the year F.Y.2013. We intend to further increase the number of our properties in India through management and acquisition of third party resorts. We may from time to time selectively acquire properties on a long-term lease basis and also acquire management contracts of certain properties to add to our room inventory and increase our geographic presence. An increase in our properties and a varied choice of travel destinations will enable us to increase our customers. We will continue to focus on developing and acquiring new properties close to the cities and are open to strategic tie-ups and joint ventures subject to mutually beneficial considerations considering the location, demand-supply factors and possible returns on investment. 2. Optimum utilization of assets by providing various facilities in the same property. We have developed our properties to provide various services and facilities like sports zone, golf course and club facilities, spa, restaurants, conference rooms, convention and business centres, banquet halls, amphitheatres and other facilities for recreation and games. These facilities are profit centres by themselves and optimum utilisation of these facilities may lead to enhanced revenues with increased margins. Further, we intend to supplement our asset base by providing various services related verticals such as vacation ownership, hospitality education, hotel management services, tours and travels solutions in an effort to integrate our business and leverage our brand, assets and services for growth and expansion. 3. Expanding our sales and marketing network. We intend to increase our sale and marketing network to cover various other locations through a mix of branch sales offices, franchised sales shops, Franchisee and Domestic Sales Agents (DSAs). Further, we intend to exploit the overseas markets through a network of Franchisee and PSAs to enhance our global presence and broaden our channels by enrolling new agents and representatives. We intend to increase the visibility of our brand 'Cambay' and our properties and services through various marketing channels such as print media, television, direct mail, ecommerce and on-ground market promotions backed by outbound telemarketing. We believe that we can accelerate our sales and turnover by increasing our distribution network in cities under coverage and add to the number of cities to be covered. We believe that a wide marketing network will facilitate in the identification of our target customers to sell our service offerings.

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4.

Intensifying MICE business. We see a lot of potential in MICE business and intend to further exploit the advantage of having properties at strategic locations being close to cities. Due to the high and diverse economic growth in the country over the past few years, Tier II cities in India are rapidly turning into MICE destinations. MICE at such locations convert business meetings and conferences into a memorable experience for the delegates and attendees. We intend to intensely market our properties for MICE business facilitating both domestic and international business meetings and conferences. The advanced technology and facilities available at these properties, warm hospitality and personalized services coupled with immense natural beauty and rich cultural heritage surrounding them adds to the locational advantage which these properties enjoy. We intend to continue our focus on developing the MICE segment at both our existing and proposed properties.

5.

Continue to strengthen our brand 'Cambay'. All our existing businesses viz. hospitality, club membership, vacation ownership and hospitality education are operated under the umbrella brand 'Cambay'. Our vision is to further strengthen and build a reputation in providing premium services thereby creating brand loyalty. We intend to maintain high standards of quality for our guest facilities and services with regular renovation and refurbishment of our existing properties. We intend to project 'Cambay Sapphire' to be identified as a business hotel brand of our Company. Similarly, we intend to project 'Cambay Grand' to be identified as premium business hotel brand of our Company. We shall be investing substantial monetory and non-monetory resources towards the building of these brands so as to achieve the objective of leveraging our brand for growth and expansion through various models like management contracts and acquisitions. We intend to continue aggressively market our brand to our target customers through advertisements in print and electronic media, as well as direct marketing to customers. We believe that our brand building exercise has enabled us to create brand 'Cambay' which has contributed to our growth. We intend to invest resources in strengthening our brand further to make it one of the leading brand in the hospitality industry in India.

6.

Leverage our expertise and experience in managing properties and the brand 'Cambay' for increasing the number of managed properties. Our management includes hospitality professionals who have substantial experience in hotel operations. We presently have ten (10) operational properties having an aggregate inventory of 947 rooms. Out of above one (1) of the hotel at Bangalore is on a management contract basis comprising of 48 rooms. Our Company has recently signed an Memorandum of Understanding (MoU) dated January 12, 2011 with Cambay SEZ Hotels Private Limited to firstly develop the property and thenafter operate and manage the same for a period of ten (10) years with an automatic renewal of further period of ten (10) years. We intend to further leverage on our strong brand and our expertise and experience in the hotel industry by increasing the number of hotels being managed on a management contract basis. We believe this will enable us to create a panIndia presence and a quick foothold in a short span of time. Further, we believe that entering into such management contracts shall enable us to reduce the capital cost involved thus enhancing the return on capital employed. Under such a management contract model, we are also entitled to receive a certain percentage share in the profits as per the terms of the agreement.

7.

To achieve business synergy by establishing hospitality education services in India at our properties. We understand that there is a shortage of trained and qualified manpower in the hospitality industry. Our Company forayed into hospitality management education by setting up institutes and

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allied infrastructure under the brand "Cambay Institute of Hospitality Management" (CIHM) at Jaipur, Gandhinagar and Udaipur which are a part of our properties. Our Company launched its first CIHM center in August 2008 at Jaipur followed by CIHM centres at Gandhinagar and Udaipur in June 2009. We shall also be launching a CIHM center at our property at Cambay Sapphire, Neemrana. CIHM is affiliated with IGNOU, AHLA, CTH and PTU for its academic programmes. We have created quality content for our hospitality education courses offered by CIHM. Our CIHM centres have enrolled 748 students till date for its various education courses provided by it. We believe that CIHM shall create a sustained talent pool to drive our growth and also add to our revenues. Our Business Hospitality: We are an emerging player in hospitality and leisure business with properties at or near key business and leisure destinations. We have a significant geographical spread of hotels & resorts with presence in Ahmedabad, Bangalore, Gandhinagar, Jaipur, Udaipur, Neemrana, Kerala and Goa. We recognise ourselves as a 'full service provider' in the hospitality and leisure space offering products and services to a cross section of society i.e. from the middle class segment to the upper class segment, in addition to corporate customers and Foreign Individual Travellers (FIT). Most of our properties are equipped with modern amenities and upscale facilities, such as restaurants, spa, banquet & conference, club & games and a variety of holiday activities. Our properties at Gandhinagar and Jaipur (Jamdoli) also have a 9 hole golf course. Our Properties: As on February 28 2011, we are operating ten (10) properties out of which six (6) properties are Upscale properties providing five star facilities and four (4) properties are Mid-Market properties providing three to four star facilities spread across the country with an aggregate inventory of 947 rooms. Our property at Neemrana is partially operational with 60 rooms and in the process of increasing the room inventory by further development of 50 rooms which shall be operational by F.Y. 2012. We also propose to develop properties at Lucknow, Raipur and Nasik from the proceeds of the Issue. We set out below the details of our properties:
Properties Existing Properties Cambay Spa & Resort Cambay Golf Resort Cambay Golf Resort Cambay Spa Resort Cambay Palm Lagoon Location Nature of property Upscale property with 5 star facilities Mid market property with 3 star facilities Upscale property with 5 star facilities Mid market property with 3 star facilities Upscale property with 5 star facilities Mid market property with 3 star facilities Mid market No. of Rooms 199 210 101 26 Ownership/Lease/ Under Management Owned Owned Owned Owned

Gandhinagar Jamdoli, Jaipur Kukas, Jaipur Kollam, Kerala

Cambay Spa & Resort

Udaipur

60

Owned

Cambay Sapphire

Ahmedabad

53

Owned

Cambay Grand

Ahmedabad

168

Owned

Cambay Beach Resort

Goa

22

Leased

CRN-Cambay Sapphire

Bangalore

48

Under

Management

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Properties

Location

Cambay Sapphire Operational)

(Partly

Neemrana

Nature of property property with 3 star facilities Upscale property with 5 star facilities

No. of Rooms

Ownership/Lease/ Under Management Contract Owned

60

Total Room Inventory as on February 28, 2011 Upcoming & Proposed Properties Cambay Sapphire (Partly Neemrana under-development)

947 50 Owned

Upscale property with 5 star facilities Not yet named Dahej SEZ Mid market property with 4 star facilities Cambay Sapphire (Proposed) Lucknow Mid market property with 4 star facilities Cambay Sapphire (Proposed) Raipur Mid market property with 4 star facilities Cambay Sapphire (Proposed) Nasik Mid market property with 4 star facilities Total Room Inventory from upcoming & proposed properties Expected Room Inventory by F.Y. 2013

75

Under Contract

Management

80

To be developed

80

To be developed

100

To be developed

385 1,332

We set out below the area of the land of our existing, upcoming and proposed properties along with their built up area:
Location Land Area (in Sq.Mtrs.) Built-up Area/Proposed Built-up Area (in Sq. Mtrs.) 21420 21216 14474 8514 10981 5188 28485 N.A. N.A. 12000

Existing Properties Cambay Spa & Resort & Cambay 78746 Golf Resort, Gandhinagar Cambay Golf Resort, Jamdoli, Jaipur 161869 Cambay Spa Resort, Kukas, Jaipur 13036 Cambay Palm Lagoon, Kollam, 15672 Kerala Cambay Spa & Resort, Udaipur 11407 Cambay Sapphire, Ahmedabad 1771 Cambay Grand, Ahmedabad 6973 Cambay Beach Resort, Goa 1574 CRN-Cambay Sapphire, Bangalore N.A. Cambay Sapphire, Neemrana 5740 (Partially Operational) Upcoming & Proposed Hotels & Resorts Cambay Sapphire, Neemrana -(Partialy Operational) Cambay Sapphire, Lucknow To be developed Cambay Sapphire, Raipur To be developed Cambay Sapphire, Nasik To be developed

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Our Resorts Cambay Spa & Resort and Cambay Golf Resort, Gandhinagar This resort is an Upscale property offering 5 Star facilities spread over an area of 78746 Sq. Mtrs. located at Gandhinagar, the capital of the State of Gujarat. This resort has 199 rooms along with facilities such as restaurants, conference rooms, convention centre, banquet halls, amphitheatre and other facilities for recreation and games such as gymnasium, billiards and gaming zone. The resort has food and beverage outlets and banquet & convention halls with capacity for up to 400 persons. This resort is RCI affiliated resort offering international and ayurvedic spa therapies. This resort houses our CIHM centre. One of the unique features of this resort is the nine (9) hole golf course. It also has two levels and sixteen (16) driving stations with a driving range is 240 metre long and 40 metre wide. The golf course also has a segment for virtual golfing which involves a high technology simulation golfing. We have established a golf training academy at this resort to provide professional training to members and non-members. Professional golf tournaments are held at this resort. Cambay Golf Resort, Jamdoli, Jaipur Located at Jamdoli near Jaipur, Cambay Golf Resort is an Upscale property offering 5 Star facilities spread over an area of 161869 Sq. Mtrs. with immense natural beauty surrounding this resort adds to the location advantage. This resort has been partly operational since May 2009 with 140 rooms including cottages and villas. This resort, since March 2010, is fully operational with total of 210 rooms. This resort further provides a range of facilities to its guests and members, which include a business centre, spa, swimming pool and fitness centre. The resort has multicuisine restaurants and food and beverage outlets. This resort also has meeting rooms and banquet halls with capacity for up to 1,500 persons. This resort is an RCI Affiliated resort. This resort also has a nine (9) hole golf course made on the lines of our Cambay Spa & Resort, Gandhinagar by providing similar services including virtual golfing and golf academy.

Cambay Spa Resort, Kukas, Jaipur The Cambay Spa Resort is an Upscale property located at Kukas, Jaipur offering 5 Star facilities spread over an area of 13036 Sq. Mtrs. This resort is in operation since September 2008 with 101 rooms including suites. This resort further provides a range of facilities to its guests and members, including a business centre, broadband wireless internet connectivity in all rooms, spa, swimming pool, fitness centre, beauty salon and AV hall. The resort has multi-cuisine restaurants and food & beverage outlets. The resort also has meeting rooms and banquet halls with capacity of up to 300 persons. This resort is an RCI Affiliated resort. This spa facility at this property is built over an area of 2787.09 Sq. Mtrs. and we believe is one of the largest such facility in the State of Rajasthan. The CIHM centre is also located within the premises of this resort.

Cambay Palm Lagoon, Kollam, Kerala The Cambay Palm Lagoon is offers 3 Star facilities spread over an area of 15672 Sq. Mtrs. in a coconut palm forest on the banks of the Ashtamudi Lake. This resort offers twenty six (26) cottage rooms, including house boats and floating cottages. In addition, it provides a range of facilities

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which include restaurants, floating conference facility, spa, yoga centre, swimming pool, fishing and boating. This resort is the property of our wholly owned subsidiary Palm Lagoon Backwater Resorts Private Limited. This resort is an RCI Affiliated resort.

Cambay Spa & Resort, Udaipur The Cambay Spa & Resort is an Upscale business-cum-leisure resort situated at Udaipur, Rajasthan offering 5 Star facilities and is spread over an area of 11407 Sq. Mtrs. This resort is 3 hours drive from Ahmedabad and is a gateway to places like Nathdwara, Chittorgarh etc. The resorts design is inspired by the citys unique architectural eminence set against a scenic back drop of hills. With an inventory of 60 rooms, this resort provides a range of facilities which include restaurants, spa, swimming pool and fitness centre. The resort has meeting rooms and banquet halls with capacity for up to 500 persons. This resort is also an RCI Affiliated resort. This resort houses our CIHM center.

Cambay Beach Resort, Goa The Cambay Beach Resort is offering 3 Star facilities spread over an area of 1574 Sq. Mtrs. This resort, a leased property, has been taken by our Company for a period of five (5) years beginning from September 1, 2009. Situated in close proximity to the Calungute beach set amidst palmfringed landscaped gardens, this resort offers 22 rooms including suites. This resort further provides a range of facilities to its guests and members which include spa & beauty salon, swimming pool and fitness centre. The resort has multi-cuisine restaurants and food & beverage outlets. Our Hotels

Cambay Sapphire, Ahmedabad Located in the heart of Ahmedabad, Cambay Sapphire is an elegant business hotel spread over an area of 1771 Sq. Mtrs. and offering 3 Star facilities with 53 rooms including suites. It provides a range of facilities to its guests and members which include a well-equipped business centre, spa, gymnasium and a beauty salon. The resort has multi-cuisine restaurants and food & beverage outlets. The resort also has meeting rooms & banquet halls with capacity for up to 300 persons.

Cambay Grand, Ahmedabad The Cambay Grand is an Upscale five (5) Star category hotel spread with a built up area of 28485 Sq. Mtrs. This hotel is located near the Sarkhej-Gandhinagar Highway with close proximity to citys business areas. This hotel has been operational since November 2009 with 168 rooms including suites. It provides a range of facilities to its guest including business centre, spa, swimming pool, fitness centre, discotheque and a beauty salon. The hotel has multi-cuisine restaurants and food & beverage outlets. The hotel also has meeting rooms & banquet halls with capacity for up to 1,500 persons. This hotel is RCI affiliated.

CRN-Cambay Sapphire, Bangalore CRN-Cambay Sapphire, based in Bangalore, is located in the centre of Bangalore city. This property offers 3 Star facilities and consists of 48 rooms. This property provides a range of

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facilities which includes a multi-cuisine restaurant & a shopping arcade. Our Company recently signed an agreement dated June 14, 2010 with CRN Developers ("CRN"), the owner of this property, to manage and operate the property at Bangalore. As per the arrangement with CRN, our Company will manage and operate this property excluding the restaurant operations which shall be operated by CRN. Our Company will operate and manage this property for a period of five (5) years beginning from July 1, 2010 with an automatic renewal of further period of five (5) years. This property will be marketed by our Company under the brand name of 'Cambay-CRN Sapphire'.

Cambay Sapphire, Neemrana Our Company is developing an Upscale property which shall offer 5 Star facilities at Neemrana, Rajasthan. This property is partially operational with 60 rooms and in the process of increasing the room inventory by further development of 50 rooms which shall be operational by F.Y. 2012. This resort shall be spread over an area of 5740 Sq. Mtrs. with an aggregate room inventory of 110 rooms including cottages. Located 95 km from Gurgaon, Neemrana is already a well-known tourist destination, and is also in the midst of rapid industrial development. This resort shall provide a range of facilities to its guests and members, such as restaurants, spa, swimming pool and fitness centre. The resort shall also have meeting rooms and banquet halls with capacity for up to 2,000 persons. With this property, our Company will have the first mover advantage to project and market this property as a conference and resort destination. Our Upcoming & Proposed Hotel & Resorts

Cambay Sapphire, Lucknow We propose to develop a hotel offering 4 Star facilities at Lucknow, the capital city of Uttar Pradesh and a major market and trading city in Northern India. The estimated cost of development of this property would be `4,154.91 Lakhs and shall be funded from the proceeds of the Issue. This property will have 80 rooms with facilities like restaurants, fitness centre and spa along with meeting rooms and banquet halls thereby targeting business & leisure customers. For further details please refer to section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus.

Cambay Sapphire, Raipur Our Company proposes to develop a business hotel at Raipur, the capital city of the State of Chattisgarh, a fast developing industrial centre. The estimated cost of development of this property would be `4,190.91 Lakhs which shall be funded from the proceeds of the Issue. This property will have 80 rooms with facilities like restaurants, fitness centre and spa along with meeting rooms and banquet halls thereby targeting business & leisure customers. For further details please refer to section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus.

Cambay Sapphire, Nasik Our Company proposed to develop a business hotel at Nasik, a major tourist destination chiefly for pilgrims since Kumbmela is held in this holy city once in 12 years. Nasik is today counted among fastest growing tier-II cities of India and home to aircraft & other major automobile industries, IT Parks, government run industries, data centers and malls & multiplexes. Besides

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industrial advancements, Nasik is also considered as the educational hub of North Maharashtra. The estimated cost of development of this property would be `4,856 Lakhs which shall be funded from the proceeds of the Issue. Our Company proposes to develop this business hotel with 100 rooms including with facilities like restaurants, fitness centre and spa. This property will also have meeting rooms and banquet halls. The hotel is proposed to be marketed under the brand name "Cambay Sapphire". For further details please refer to section titled "Objects of the Issue" beginning on page 86 of this Draft Red Herring Prospectus.

Spa facilities at our properties Most of our properties offer spa facilities at their premises under the brand name 'Orient Spa'. Orient Spa offers an ultimate exuberance in spa therapy and reflects the expression 'wellness, fitness and makeover,' as its core element. Orient Spa is designed and built to relax the mind, body and soul by providing a wide range of ayurvedic and aromatic massages in luxurious settings and expert techniques with full spa facilities and necessary amenities. These spa facilities are run by our Group Entity Orient Spa Private Limited (now known as Orient Spa Limited). Our Company has executed Lease Deed with Orient Spa Limited ("OSL") for lease of a portion of its premises of its properties, details of which are set out below: a) Our Company has executed Lease Deed dated November 1, 2009 with OSL wherein our Company has leased a portion of its properties located at Ahmedabad (Thaltej), Jaipur (Jamdoli) and Udaipur (Kaladwas) to utilize the same for providing spa facilities for a period of ten (10) years commencing from November 1, 2009. Our Company has executed Lease Deed dated July 22, 2009 with OSL wherein our Company has leased a portion of properties located at Gandhinagar, Ahmedabad (Vejalpur), Jaipur (Kukas) and Kerala (Kollam) to utilize the same for providing spa facilities for a period of ten (10) years commencing from April 1, 2009.

b)

F&B Outlets at our Properties Most of our properties have speciality or multicuisine restaurants and fast food centers. We operate our restaurants and outlets under brands like Marcopolo, Indus, The Curry, Cambey Bakery and Cambay Caf. Our Project Management Cell We have diversified into Project management services and have a Project Management Cell (PMC) consisting of engineers to supervise such projects and execute it with the help of civil and labour contractors. We have technical expertise right from the architectural & design conceptualization stage to systems integration & operations thereby ensuring maximum asset utilization, quality infrastructure along with better cost and quality control. We have developed seven (7) out of our ten (10) existing properties. In this process, our Company has gained valuable knowledge and experience in developing properties inhouse. Our property at Cambay Sapphire, Neemrana is partially operational with 60 rooms and in the process of increasing the room inventory by further development of 50 rooms which shall be operational by F.Y. 2012. Our Company has recently signed an Memorandum of Understanding (MoU) dated January 12, 2011 with Cambay SEZ Hotels Private Limited to firstly develop the property and thenafter operate and manage the same for a period of ten (10) years with an automatic renewal of further period of ten (10) years. We also intend to develop properties at Lucknow, Raipur and Nasik to be funded from the proceeds of the Issue. Our Property Management Services We also undertake management of hotel properties which involves undertaking of hotel properties owned by third parties on a management or franchise basis whereby our brand 'Cambay' is leveraged to market the property in addition to having a complete control over the operations of the managed property. The

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revenues accrued by such arrangement are shared between the owner of the property and our Company in terms of the arrangement mutually entered between the parties. Our Company has signed an agreement dated June 14, 2010 with CRN Developers ("CRN") to manage and operate a hotel at Bangalore offering 3 Star facilities. As per the arrangement with CRN, our Company will manage and operate this property excluding the restaurant operations which shall be operated by CRN. Our Company will operate and manage this property for a period of five (5) years beginning from July 1, 2010 with an automatic renewal of further period of five (5) years. This property consists of 48 rooms and is being marketed under the brand name of 'Cambay-CRN Sapphire'. Our Company has further signed an Memorandum of Understanding (MoU) dated January 12, 2011 with Cambay SEZ Hotels Private Limited ("Cambay SEZ") to develop and thereafter manage and operate a hotel at Dahej SEZ. As per the arrangement with Cambay SEZ, on development of the property, our Company will manage and operate this property for a period of ten (10) years with an automatic renewal of further period of ten (10) years. This property shall consists of seventy five (75) rooms. Further, our Company has executed a MoU dated June 29, 2010 with Neesa Infrastructure Limited ("NIL") for management and operation of property located at Abu Road, Rajasthan. As per the MoU, NIL shall develop the property within a period of twenty four (24) months from the date of the MoU subject to requisite permissions being received from government authorities. Our Company will operate and manage this property for a period of ten (10) years beginning from the date of execution of a definitive agreement for the property or the date of commencement of the hotel operations, whichever is later with an automatic renewal of further period of ten (10) years. Our Club & Vacation Ownership Business

Club Membership: Our Company, in the year 2007, forayed into the businesses of club membership under the brand Cambay Club. We provide club memberships for a period ranging from 1 to 25 years which entitle our club members to use facilities such as golf, lawn tennis, table tennis, squash and other indoor and outdoor games along with additional access and benefits to spa and beauty salon, multi-cuisine restaurants, swimming pool & well designed rooms and cottages. We also offer our club membership to corporates. The club membership fees are paid at the time of enrolment. The fee depends on the period for which the member intends to use our club facilities. The club members are required to pay separately for using other facilities and services such as food & beverages and other recreation facilities. One of the major attractions of our club membership is our golf facilities. We have built a 9 hole golf course at our properties situated at Gandhinagar and Jaipur (Jamdoli). Our golf memberships/ facilities are marketed under the brand 'Cambay Golf'. We also organise events such as golf tournaments in Gandhinagar and Jaipur known as the "Cambay Grandeur Cup" a Match Play Knockout Challenge and "Junior Golf Talent Cup". As of February 28, 2011 we had 2,920 club members.

Vacation Ownership: Our Company, in the year 2008, forayed into the businesses of vacation ownership membership under the brand 'Cambay Family Holidays Club'. Our revenues from our vacation ownership business mainly accrue from various packages offered to our customers and membership fees and other charges received from our members. Apart from holidaying at any of our resorts and hotels, due to our affiliation with RCI,

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our vacation ownership members also have an access to over 6,500 RCI affiliated resorts in more than 100 countries and more than 80 resorts in India. As of February 28, 2011, we had 5,667 vacation ownership members. We set out below some of our vacation ownership packages: i) Cambay Family Holidays Club We market our vacation ownership business under the brand 'Cambay Family Holidays Club' (CFH). Our vacation ownership business provides for a range of holiday destinations for a predetermined number of days in a year for a fixed number of years to our vacation ownership members. Our vacation ownership members are entitled to their choice of holidaying at any of our resorts and hotels, for seven (7) days each year, in a season (Red, White and Blue) and apartment type of their choice, depending upon the duration of membership availed by them. On payment of an annual consolidated maintenance fee, entitles our vacation ownership members with the chosen apartment and season occupation without any further payment. Set out below are the categories of memberships offered by our Company: Cambay Family Holidays 25 Years Membership Cambay Family Holidays 15 Years Membership Cambay Family Holidays 10 Years Membership Cambay Family Holidays 5 Years Membership Our vacation ownership members availing the 15 years membership have an access only to our properties as against other packages which provide with a choice to holiday at our properties along with RCI affiliated properties on an exchange basis. Set out below are the categories of time slots offered to our vacation ownership members: Red: This season provides for seven (7) days time slot during the peak seasons to our vacation ownership members for which a member pays higher fees. However, the seven (7) days time slot can also be exchanged with other slots in the year viz. Others Red, White or Blue time slots as mentioned below. White: This season provides for seven (7) days time slot before and after the peak seasons for which our vacation ownership members are charged moderately. Our members under this season can exchange the seven (7) days time slot with other White and Blue time slots. Blue: This season provides for seven (7) days time slot during the off seasons. Our members under this season can exchange the seven (7) days time slot only with other Blue time slots. ii) GenX Our Company has recently launched a vacation ownership product named 'GenX' targeting the youth with membership duration of five (5) years. Under this product, our vacation ownership members are entitled to occupy a studio or 1 bed room unit for seven (7) days at anytime during a year in any of the properties of our Company. Although, this product is not affiliated to RCI, members of this vacation ownership product can access RCI affiliated properties by paying the applicable bonus exchange fees and complying with certain terms of RCI.

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RCI Exchange RCI, a part of Cendant Group, is the global leader in vacation exchange. RCI affiliation provides our vacation ownership members access to more than 6,500 vacation properties in approximately 100 countries. RCI Point System Our Company is the first in India to launch a unique RCI Points System under the name 'Cambay Family Holiday Club Points' which assures the vacation ownership members, vacation flexibility, variety and complete utilisation by upgrading the traditional "week" into "points" which can then be spent or redeemed for an exchanged vacation. These points can also be used by our vacation ownership members towards car hire, theme park tickets etc. through various point partners associated with RCI.

Our Education Business Hospitality Education: Considering a shortage of trained and qualified manpower in hospitality industry and in order to create a sustained talent pool to drive our growth and also to supplement our revenues, we forayed into the hospitality management education space in the year 2008. We have set up institutes under the brand 'Cambay Institute of Hospitality Management' ("CIHM") at Gandhinagar, Jaipur and Udaipur with necessary infrastructure such as class rooms, library, bulk training kitchen, house keeping laboratories, computer laboratories, faculty rooms for training students intending to make a career in the hospitality industry. The three (3) CIHM centers form a part of our resorts facilitating a first hand experience to students of the hospitality industry. Our CIHM is affiliated with IGNOU, AHLA, CTH and PTU for its academic programmes. We have created quality content for our hospitality education courses offered by CIHM. Our CIHM centres have enrolled 748 students till date for its various education courses provided by it. Academic Programmes: The courses offered are as follows: 3 year degree course 'Bachelor of Arts- International Hospitality Administration from IGNOU /Punjab Technical University. 2-year Diploma in Hospitality Management from American Hotel & Lodging Association (AHLA). 1-year specialization courses of AHLA in Food & Beverage Management, Rooms Division management and Marketing & Sales Management. Certificate courses in Bakery & Confectionery, Food Production and Bartending from CIHM. Value added Certificate courses in Spa Management and Golf Management by CIHM. CIHM also offers its courses through its e-learning platform i.e. "e-CIHM". This e-learning platform helps working professionals to enhance their skill sets by choosing a customized course curriculum with flexible time lines. The course is conducted by way of internet and video conferencing by experienced faculties of CIHM. Infrastructure Facilities: All our CIHMs are located at the close proximity of our hotels and resorts at Gandhinagar, Jaipur (Kukas) and Udaipur with necessary infrastructure. Infrastructure at our CIHM centers is in accordance with the functionality, adequacy and current trends. Other than having exclusive training labs, kitchens, restaurants etc., our CIHM centers have an added advantage of using the attached properties to provide students with a

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first hand experience of the hospitality industry. We propose to set up another CIHM center at Neemrana after the completion of construction of the property. Faculty & Staffs: All the CIHM centers have their own academic and non-academic staff. The faculty has rich experience in the hospitality industry, including academics. Apart from having a full time faculty at our CIHM centers, faculties with sound knowledge in relation to the hospitality industry also visit these CIHM centers as a visiting faculty.

Our Tours & Travel Business In order to compliment our hospitality services, we ventured into the tours and travel business in the year 2007 under the brand 'Cambay Tours'. Our online network has tie ups with over 3,000 domestic and 7,000 international business and luxury hotels and resorts which enable us to offer local and global customer specific tour solutions for managing the customers travel needs. This global network allows us to provide destination management services customized to suit the global and domestic travel programs of our customers. Our tour and travel services include promotional tours, sports tours, family tours, honeymoon tours, international tours, pilgrimage tours, short breaks, wildlife tours, cruise vacations, theme based holidays, heritage tours, cultural tours, adventure tours, art tours, culinary tours, flight tickets, hotels and customized tours in India and international locations. We have a web portal named 'www.cambaytours.com' which provides complete travel solution and focuses on hotel, car, bus and railway reservations and also have a secured payment gateway. The portal also provides information, pricing, availability and booking facility for hotels, buses and car rentals across the globe. This portal has a robust search engine with latest Java based technology and Web 2.0 technique having minimum turn around time in replying 'within maximum 4 hours' for any tailor-made queries posted by the visitor. Our Tours & Travels division operates through retail offices at thirteen (13) cities in India namely Ahmedabad, Alwar, Anand, Dahanu, Himmatnagar, Jaipur, Jodhpur, Kanpur, Lucknow, Surat, Udaipur, Vapi and Vadodara. We also have a Cambay Tours - 247 customer care toll-free call facility to facilitate and respond to queries. Our inbound tours division has tie-ups with overseas tour operators located in USA and South Africa to service their customers in India and vice versa. Sales & Marketing Through our dedicated sales and marketing team we reach-out to our target customers. Since we market our products to a cross section of the society through various means and modes, we prepare our marketing and sales strategies depending upon the requirements and preferences of our customers. Annual marketing and sales strategy is worked out, pertaining to each vertical based on budgets and needs. Branding perspectives are also considered for creating brand value for each vertical. Neesa Sales Private Limited, one of our group companies caters to marketing and sales of segments such as corporate, MICE, FIT, vacation ownership customers & potential club members through various promotional mediums. Other verticals are also being catered through the same sales channel, however with a more industry specific approach. We advertise and promote our services and products through hoardings at prominent places, advertisements in magazines & local newspapers, travel and hospitality magazines, kiosks at airports, organizing and participating in local and international event. We have tie ups with Hindustan Times and Times Group for regular advertisements in national dailies and TV Channels. These tie-ups help our Company in brand building at a national level. Apart from marketing our services through traditional

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means, we also market our services and products over the internet by various methods such as Search Engine Optimization (SEO), Social Media (online visibility on social networking websites such as linkedin, facebook, twitter, ibibo etc.), online brand management, banner promotions on various popular websites, mass mailing (e-mails), sms marketing, lead processing etc. We also have tie-ups with various online travel agents (OTA) such as makemytrip.com, cleartrip.com, yatra.com, stayzilla.com, dhitrax.com etc. to offer special rates & packages and real time hotel availability, traveller reviews, maps and various other information. We also use global distribution systems to process reservations at our properties by having tieups with Amadeus, Galileo, Sabre and World Span. We also have a strong backend tele-marketing team which generates leads for our hospitality and club & vacation ownership business. We also sell our offerings through our direct sales team, franchisees, direct sales consultants as well as through presentations to corporate clients. We have presence in Bangalore, Chandigarh, Dehradun, Kolkatta, Ahmedabad, Gandhinagr and Pune through a mix of branch sales offices, franchised sales shops. We have an extensive network of over 7 DSAs and Franchisees covering major towns and cities of India. Overview of our Operations At each of our properties, our operations are organised and streamlined by dividing them into various departments like food & beverage, housekeeping, maintenance, engineering, front office, accounts, administration and sales and marketing. Each property is supervised under our resident manager (RM) with various departmental managers. We have a Vice President, Operations who overseas and heads the overall operations of all our properties. Our Standard Operating Procedures Our Company has prepared standard operating procedures (SOPs) based on international standards of services pertaining to all major functions of hospitality, club and vacation ownership and education businesses. These procedures are aimed to provide direction, improve communication, reduce training time, and improve work consistency. Standard operating procedures used in combination with planned training and regular performance feedback lead to an effective and motivated workforce. Our IT Systems Our Company has deployed the state-of-the-art information technology systems and software to achieve better efficiency in our business verticals. We have a dedicated team to implement, monitor and maintain our IT systems. Some of our IT systems are explained below: 1. Hotel Management Systems (HMS): Our HMS is a stand-alone system installed at each and every location for managing the activities in the property. It is mainly used to keep track of all the activities in individual departments. HMS application takes care of all features & modules for front office, maintenance, restaurants, golf, banquet and housekeeping activities. The package is also capable of maintaining the billing of the services provided to customers. Human Resource Management Systems (HRMS): The HRMS incorporates and automates the tasks involved to manage human resources, such as manpower management, recruitment, payroll, pension benefits, event management, reminders, account settlements of an employee etc. The system provides easy, compact and comprehensive solution, which helps to monitor entire HR process along with interactive reports for better MIS to prompt corrective measures. The Human Resource Management system emphasizes on personal, administration, leave and payroll accounting, pension benefits. Material Management System (MMS): Our Material Management System helps us incorporate and automate all the processes related to the management of inventory and materials in our daily operations. Intuitive and aesthetic Graphical User Interface (GUI) optimizes response time while online dealing with the clients. Inventory Management has various modules such as

2.

3.

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administration, general masters, stores masters, purchase master, transaction and reports are generated thereby facilitating an improvement in operational efficiency. 4. Central Reservation Management System (CRS): CRS features global operations to meet the hotel reservation system requirements. The CRS software tools enables in building a database about customers, facilitates the sales team to match customer needs with product plans and offerings, remind customers of service requirements, check payment histories and so on. Key information such as the property, room types and packages for one property or for multiple properties and setting up rate structures for individual properties, groups of properties and chains can be managed with the help of CRS including cancellation and changes in reservation for different properties or dates of room booking. The CRS systems property information displays are comprehensive, with details of transportation services, restaurants and amenities etc. Area maps and images of the property are displayed for more convenience. Institute Management System (IMS): IMS creates a complete solution for education institutes catering to all the needs of the institute with features ranging from basic attendance records to complex reports. A comprehensive set of features provide complete automation of the key tasks for the academic institute. The system also helps the faculty to keep a track of the financials pertaining to the operations of this segment, student attendance, management reports and reminders. Customer Relationship Management System (CRM): CRM is a broadly defined computer application for operating, managing and supporting a companys relations with its clients. It includes details on how to organize, automate and synchronize business functions. By integrating all data about sales leads, current customers, associated companies, and employees throughout the various departments, CRM software enables enterprises to seamlessly handle marketing, sales, and customer services as a single package.

5.

6.

Quality Policy We are committed to deliver quality hospitality, club & vacation ownership and hospitality education offerings and services for achieving total customer satisfaction. As a part of our continuous effort to improve operational efficiency, we review our processes/procedures with focus on design gaps and potential for automation and then improvise in the areas of operations, revenue management, finance & accounts, procurement & inventory, human resources & payroll, information technology, tours & travels and vacation ownership. Environmental and Health Safety Policy We have adopted safety monitoring procedures. Our Company conducts safety training on the induction of new employees, as well as periodic refresher training. Our Company has a good record on safety. We endeavor that our properties are in compliance with the health and safety standards of the jurisdictions in which we operate. In addition to the basic compliance requirements, our Company ensures that each of its properties are well equipped with smoke detectors, sprinklers, reverse osmosis water purification and such other equipment. We maintain a supply of standby equipment for critical items in the event a major piece of equipment becomes in-operational. All major equipment is backed with standby power. Revenue/Commercial Policy We have designed a revenue policy to ensure control on discounting, rate parity and clarity on room reservations across all channels. The policy has been prepared considering the present market trend, competition and organizational requirements. The implementation of the process and control over the process is undertaken by our revenue management team.

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Competition The Indian hospitality industry is highly competitive. Most of our existing and proposed properties are located in Tier II cities which have been rapidly growing in the recent past attracting our competitors to enter these markets. Various hotel companies are developing properties in these Tier II locations which may in the near future increase the supply of rooms considerably leading to competition and consequent reduction of occupancy and room rates. The primary competitive factors consist of the location of the property, room rates quoted by competing properties and the facilities offered to the customer. To stay ahead of our competitors, we regularly update and revise our room rates, offer innovative packages, offer latest facilities & services and seek to expand our presence in areas with demand potential. We also invest resources in marketing our brand 'Cambay' and increase our product offerings to increase our customers and members and maintain a high level of involvement across our sales and marketing network to sell our products and services. We aim to attract and retain key personnel on whom we rely for the smooth running of our Company and attempt to keep our costs low to maintain our competitive advantage and profit margins. We see ourselves competing with hospitality companies, both national and international in respect of properties and products offered by us. Human Resource As of February 28, 2011, we had 605 full-time employees in India. Out of this number, 251 employees hold hospitality related experience and qualifications, 11 were post graduates and 343 were graduates. We have not hired any contract labour as on February 28, 2011. The average age of our senior management team members is approximately 37 years and the average age of our employees is approximately 31 years. Our employees are not currently unionized, and there have been no work disruptions, strikes or other employee unrest to date. Our Company believes that it has maintained considerable relations with its employees. Power and Water A majority of the power that we use for our properties is obtained from the State Electricity Board. Alternatively, we also have made arrangement of Gensets for power supply at our properties. We procure water for our properties from government agencies and borewells. Insurance We maintain adequate insurance policies for our operational properties as well as for the properties which are under construction. We have obtained marine open policy, fire & special perils policy, hotel package policy, public liability insurance, burglary & housebreaking policy, all risk policy (fire, breakdown, money, fidelity, earthquate, terrorism etc.), special contingency policy etc. for our properties. In addition, our Company has also availed contractors all risk policy for its property under construction situated at Nemrana. Our Company also maintains vehicle insurance policies. We generally maintain insurance covering our assets and operations at levels that we believe to be appropriate. Our Properties Our Immovable Properties: Our immovable properties comprises of our Hotels and Resorts. The details of the properties, both owned and leased, are set out herein below:

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Place and Description of Property Property I: Cambay Spa & Resort, Gandhinagar* Plot no. X-22, X-23, X-24 & X-27 District Gandhinagar, Gujarat. Property II: Hotel Cambay Grand, Thaltej (Ahmedabad) Final Plot no. 8, T.P. Scheme No-1, Mouje, Thaltej, Ahmedabad, Gujarat. Property III: Hotel Cambay Sapphire, Vejalpur (Ahemdabad) Final Plot no. 136, B/S Thakor Chatralay, opposite Binori corner, Jivrajpark, Vejalpur, Ahmedabad, Gujarat. Property IV: Cambay SPA and Resorts, Kukas (Jaipur) Plot No. SP-36(B), Industrial area Kukas (RIICO), Jaipur, Rajasthan. Property V: Cambay Golf Resort, Jamdoli Khasra no. 165 Mtr to 448 Mtr, Jaipur Agra road, Jamdoli, Jaipur, Rajasthan. Property VI: Cambay SPA and Resort, Kaladvas (Udaipur) Plot No. F-439 to F442, RIICO, Bhamasa, Kaladvas, Udaipur Property VII: Cambay Sapphire (Neemrana) Plot No. CC-11, Industrial Area Phase 1, Neemrana,

Vendor/ Lessor Gujarat Industrial Development Corporation (G.I.D.C)

Date and Instrument/Document executed July 5, 2003 August 25, 2005 January 31, 2006 Lease Deed

Term of the Lease & Area 99 years from November 5, 1999 78746 Sq. Mtrs.

Ahmedabad Urban Development Authority (AUDA)

January 17, 2007 Lease Deed

99 years from January 17, 2007 6973 Sq. Mtrs.

Ahmedabad Urban Development Authority (AUDA)

August 5, 2006 Lease Deed

99 years from August 5, 2006 1771 Sq. Mtrs.

Rajasthan State Industrial Development and Investment Corporation Limited (RIICO)

January 6, 2007 Lease Deed

99 years from May 25, 2006 13036 Sq. Mtrs.

Jaipur Vikas Pradhikaran (JVP)

Letter of Allotment August 9, 2007*

dated

99 years 161869 Sq. Mtrs.

Rajasthan State Industrial Development and Investment Corporation Limited (RIICO) **Rajasthan State Industrial Development and Investment Corporation Limited (RIICO)

June 12, 2008 Lease Agreement

99 years from November 17, 2006 11407 Sq. Mtrs.

June 21, 2008 Lease Agreement

99 years from July 11, 2007 5740 Sq. Mtrs.

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Place and Description of Property Rajasthan. Property VIII: Cambay Beach Resort (Goa) Survey No.138/2-5 & 137/3 of Village Calungute, Taluka Bardez, Goa

Vendor/ Lessor

Date and Instrument/Document executed

Term of the Lease & Area

Mr. Jose Augustine Fernandes Proprietor of Kristal Sands Beach Resort

August 19, 2009 Lease Deed

5 years from September 1, 2009 1573.78 Sq. Mtrs.

Property IX: CRN-Cambay Sapphire (Bangalore) is being operated under a management contract. Hence, the property is in the name of the owner of the property. Other properties of our Company Governor of August 8, 2008 99 years from Jodhpur Rajasthan Near Lahariya Resort, Rajasthan through February 25, 2008 Village Chokha Urban Improvement Lease Deed Trust, Jodhpur 3785.05 Sq. Mtrs. March 28, 2006 855.2 Sq. Mtrs. Gurgaon Haryana (1) Technology Plot No. H-34/13, DLF Services Private City, village Limited Sale Deed Sikanderpur Ghosi, Gurgaon, Haryana. Property owned by our Subsidiary Property X: Cambay Mr. Dr. V. Palm Lagoon, Kollam, Harikumar Kerala Re-Survey nos. 529/1, 529/2, 529/3, 529/4, 529/5, 529/6, 529/7, 529/8, 529/11, 529/12, 530/1, 530/2, 530/3, 530/4,530/18 Perinad Village, Kollam, Kerala. Re-Survey No. 530/6, Block No.13, Perinad Village, Kollam, Kerala Mr. Sreeja.S

January 8, 2003 Sale Deed

1 Hectare 46 Ares and 62 Sq. Mts. i.e. 14662 Sq. Mtrs.

September 19, 2008 Sale Deed

10.10 Ares i.e. 1010 Sq. Mtrs.

*Our Company has executed a Lease agreement dated December 14, 2010 with Oilex Limited whereby our Company has given the 2nd floor of the said premises on lease basis for a period of thirty six (36) months. **Our Company has obtained a Letter of Allotment dated August 9, 2007 issued by RIICO (formerly known as Jaipur Vikas Development Authority). Our Company shall execute a Lease Deed with RIICO in due course of time.

Note: (1) Pursuant to an Agreement for Sale dated April 27, 2010 executed between our Company and M/s ECPL, our Company had agreed to sell its hotel/service apartment property known as 'Cambay Boutique' situated at i.e Plot No. H-34/13, DLF City, village Sikanderpur Ghosi, Gurgaon, Haryana admeasuring 855.20 Sq. Mtrs., for a consideration of Rs.650 Lakhs. Further, our Company had also agreed to transfer all movables including furniture & fixtures attached to the

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above property for a total consideration of Rs.425 Lakhs including the outstanding amount of mortgage loan of Indiabulls Housing Finance Limited of Rs.380 Lakhs. However, ECPL has not honoured the terms of the ECPL Agreement and our Company has by a letter dated January 31, 2011 forfeited an amount of Rs.150 Lakhs from the advance received from ECPL against the proposed sale of the property. Our Company intends to dispose of this property in the near future on a as is where is basis. Since this property is not into operations, the total rooms available at this property have not been taken into consideration while calculating the aggregate room inventory available to our Company as on the date of this Draft Red Herring Prospectus. Other Premises In addition to our Hotel and Resort properties, our Company has taken on short term lease/ leave and license basis certain premises in Chandigarh, Chennai, New Delhi, Gurgaon, Kanpur, Kolkatta, Lucknow, Pune and Surat for its sales and marketing offices/activities. Intellectual Property Rights I. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. II. No. 1. 2. 3. 4. 5. 6. 7. Registered trademarks of our Company Trademark Cambay Spa n Resort (Label) Cambay Golf (Label) Orient Spa (Label) Cambay Family Holiday (Label) The Curry (Device) Cambay (Label) Cambay Tours (Device) Neesa Leisure Limited Creating Luxury (with logo) Cambay Caf (Label) Cambay Bakery Cambay Caf Registration No. 1415461 1559985 1539782 1673487 1664499 1664501 1664497 1664498 1664500 1612578 1664500 Class 42 41 42 42 42 42 39 41 42 42 42 Registration Date January 20, 2006 May 21, 2007 March 14, 2007 April 8, 2008 March 13, 2008 March 13, 2008 March 13, 2008 March 13, 2008 March 13, 2008 October 18, 2007 March 13, 2008 Validity January 19, 2016 May 20, 2017 March 13, 2017 April 7, 2018 March 12, 2018 March 12, 2018 March 12, 2018 March 12, 2018 March 12, 2018 October 17, 2017 March 12, 2018

Trademarks applied by our Company Trademark Cambay Golf Club Cambay Institute of Hospitality Management (CIHM) Cambay Sapphire (Label)* Cambay Palm Lagoon Neesa Leisure Limited Neesa Ronal Calypso Application No. 1728651 1728652 1612579 1707208 1760011 1853877 1871627 Class 41 41 42 41 41 42 42 Application Date September 4, 2008 September 4, 2008 October 18, 2007 July 7, 2008 December 4, 2008 August 24, 2009 October 9, 2009 Validity Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration

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No. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26.

Trademark Table4Two Royal Jonquil Royal Tulip Baropar Caf Winter Garden Golden Cilantro Bar-Code Cambay (House of Cambay) Cambay (Grand) Neesa Family Holidays Club Cambay Golf Resort Cambay Club Palm Lagoon Cambay Hotels & Resorts Cambay Tours Neesa Travels Coral by Cambay Neesa Golf Residency Jaano Duniya

Application No. 1871628 1871629 1871630 1871631 1871632 1871633 1887299 1831454 1831453 2014412 2014413 2014414 2014415 2014416 2014417 2014418 2026127 2026128 2026129

Class 42 42 42 42 42 42 41 42 42 43 41 41 43 43 39 39 43 36 39

Application Date October 9, 2009 October 9, 2009 October 9, 2009 October 9, 2009 October 9, 2009 October 9, 2009 November 23, 2009 June 22, 2009 June 22, 2009 August 26, 2010 August 26, 2010 August 26, 2010 August 26, 2010 August 26, 2010 August 26, 2010 August 26, 2010 September 21, 2010 September 21, 2010 September 21, 2010

Validity Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration Pending Registration

*A Settlement Agreement dated April 28, 2009 has been entered by our Company with Bacardi & Company Limited ("Bacardi") in relation to the objection raised by Bacardi for the registration of the mark under class 42 by our Company. Our Company has agreed not to offer or market any alcoholic beverages under the said mark.

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REGULATIONS AND POLICIES The following description is a summary of the relevant regulations and policies as prescribed by the Government of India. The regulations set below are not exhaustive, and is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional legal advice. We set forth below are certain significant legislations and regulations which generally govern the hospitality industry in India: Legislations related to the hospitality industry: 1. Public Performance License The Copyright Act, 1957 specifies that for the purposes of public performance of Indian or international music a public performance license must be obtained else it will invite criminal action. All those who play pre-recorded music in the form of gramophone records, music cassettes or compact discs in public places have to obtain permission for sound recordings. In India, Phonographic Performance Limited ("PPL") is the sole authority to administer the broadcasting, telecasting and public performance rights on behalf of the music industry. PPL, which is registered with the Government of India, has among its members almost all major music publishing companies in India. These companies have assigned their performing rights in sound recordings to PPL by virtue of which it is the sole designated authority to issue public-performance licenses in the country. 2. Luxury Tax Under the provisions of the state luxury tax legislations, luxury tax is applicable to service providers of luxury goods. Luxury tax levied by the state government forms part of the "room charges" as the customer is required to pay these taxes to the hotel. State luxury tax legislations provide for registration of the service provider under its provisions, and require monthly returns to be filed for such tax with relevant authorities. They also regulate the computation of taxes due to the state, the mechanism of collection of taxes and penalties for not paying the luxury tax on time. 3. The Prevention of Food and Adulteration Act, 1954 The Prevention of Food and Adulteration Act is a central legislation and provides provisions for the prevention of adulteration of food. The State Governments have adopted the Central Act which requires any person/ entity manufacturing / storing/ selling food articles to be registered under the provisions of the Act. 4. Project approval and Star Classification of hotels from the Department of Tourism, Government of India Under the Tourism Policy of the Government of India, any project seeking to establish a hotel in India has an option to seek the classification of the proposed hotel in a star category. The classification in category is issued based on an application made to the Department of Tourism, Government of India. The HRACC inspects and assesses the hotel based on the facilities and services offered by the hotel against a fixed marks sheet, including the assessment of quality of facilities provided. Upon the hotel obtaining a qualifying mark prescribed for the particular status of star classification, and based on a recommendation of the HRACC, the hotel is conferred the status of a Star hotel by the Department of Tourism, Government of India. The Government of India, Department of Tourism approves projects of two types: (i) approvals for starting a Star hotel without apartment facilities and (ii) approval for starting a Star Apartment

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Hotel. Both these types of approvals involve the same procedure in the following 2 stages: (i) the approval of the Project Report and (ii) the classification of the hotel as a star hotel. 5. Registration of Tourist Trade Act Every state in India has in general a Registration of Tourist Trade Act (the "Tourist Trade Act"). The Tourist Trade Act requires all hotels, travel agents, tour operators, tourist guides, tourist taxi operators and dealers of notified articles and other persons engaged in tourist activities in each particular state to register themselves under the Tourist Trade Act. Under the Tourist Trade Act of each state, some officers of the Tourism Department have been vested with magisterial powers, including the power of compounding in case of cheating, overcharging, harassment, pestering, touting, etc. faced by tourists. 6. The Competition Act, 2002 The main legislation governing competition in India is the Competition Act, 2002 ("Competition Act") which repealed the Monopolies and Restrictive Trade Practices Act, 1969 and provided for a modern framework of competition protection. The main objectives of the Competition Act are (i) to provide for the establishment of a commission to prevent practices having adverse effect on competition; (ii) to promote and sustain competition in markets in India; (iii) to protect the interests of consumers; (iv) to ensure freedom of trade carried on by the participants in the markets in India and for related matters. The Central Government has established a Commission to be called the 'Competition Commission of India' ("CCI") whose duty is to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India. The Competition Act prohibits anti-competitive agreements. It declares void any agreement by an enterprise or association of enterprises which restricts the production, supply, distribution, acquisition or control of goods or provision of services. It recognises horizontal and vertical agreements as having potential of restricting competition in an economy. The Competition Act prohibits abuse of dominant position by any enterprise. Dominant position means a position of strength, enjoyed by an enterprise, in the relevant market in India. Such a position enables a firm to (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its favour. The Competition Act regulates the various forms of business combinations and does not prohibit their formation. Under it, no person or enterprise shall enter into a combination, in the form of an acquisition, merger or amalgamation, which causes or is likely to cause an appreciable adverse effect on competition in the relevant market and such a combination shall be void. But, all combinations do not call for scrutiny unless the resulting combination exceeds the threshold limits in terms of assets or turnover as specified by the CCI. Thus, the Competition Act does not seek to eliminate combinations and only aims to eliminate their harmful effects. Industrial Laws: 1. The Payment of Gratuity Act, 1972 The Payment of Gratuity Act, 1972 was enacted with the objective to regulate the payment of gratuity, to an employee who has rendered for his long and meritorious service, at the time of termination of his services. Gratuity is payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years: On his/her superannuation; or On his/her retirement or resignation; or On his/her death or disablement due to accident or disease (in this case the minimum requirement of five years does not apply).

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2.

The Payment of Bonus Act, 1965 The Payment of Bonus Act, 1965 was enacted with the objective of providing of payment of bonus to employees on the basis of profit or on the basis of productivity. This Act ensures that a minimum annual bonus is payable to every employee regardless of whether the employer has made a profit or a loss in the accounting year in which the bonus is payable. Every employer is bound to pay to every employee, in respect of the accounting year, a minimum bonus which is 8.33% of the salary or wage earned by the employee during the accounting year or `100, whichever is higher.

3.

Employees' Provident Funds and Miscellaneous Provisions Act, 1952 Employees' Provident Funds and Miscellaneous Provisions Act, 1952 was introduced with the object to institute provident fund for the benefit of employees in factories and other establishments. It empowers the Central Government to frame the "Employee's Provident Fund Scheme", "Employee's Deposit linked Insurance Scheme' and the "Employees' Family Pension Scheme" for the establishment of provident funds under the EPFA for the employees. It also prescribes that contributions to the provident fund are to be made by the employer and the employee.

Environmental Laws: 1. The Environmental Protection Act, 1986 The Environmental Protection Act, 1986 is an "umbrella" legislation designed to provide a framework for co-ordination of the activities of various central and state authorities established under various laws. The potential scope of the Act is broad, with "environment" defined to include water, air and land and the interrelationships which exist among water, air and land, and human beings and other living creatures, plants, micro-organisms and property. 2. The Water (Prevention and Control of Pollution) Act, 1981 The Water (Prevention and Control of Pollution) Act, 1981 prohibits the use of any stream or well for disposal of polluting matter, in violation of standards set down by the State Pollution Control Board. 3. The Air (Prevention and Control of Pollution) Act, 1981 The Air (Prevention and Control of Pollution) Act, 1981 provides for the prevention, control and abatement of air pollution. No person operating any industrial plant, in any air pollution control area shall discharge or cause emission of any air pollutant in excess of the standards prescribed by the State Board in this regard. Tax Regime: 1. Service Tax Act, 1994 The service tax gains its authority from item No 97 in the Union List of Seventh Schedule to the Constitution of India. Section 64 to 96 - I of the Finance Act, 1994, as amended from time to time. Service Tax had been imposed as an indirect tax which is demanded from one person on the expectation and intention that such person shall indemnify at the expense of other person who is consuming such service. The tax is levied on services and not on income or profits, thus carrying thus carrying the tax to the point of consumption.

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Intellectual Property Laws: 1. Copyright Act, 1957 The Copyright Act, 1957 governs the law relating to copyright in India and defines infringement and provides remedies for the same. Copyright means the exclusive right to do or authorise others to do certain acts in relation to original (1) literary, dramatic or musical works, not being a computer programme, (2) computer programme, (3) artistic work, (4) cinematograph film and (5) sound recording. The object of copyrights is to protect the author of a copyrighted work from any unlawful reproduction or exploitation. Copyright subsists during the life of the author/creator of the work and 60 years thereafter in case the author is a natural person. In all other cases, copyright subsists for 60 years from the date of publication of the work concerned. 2. Trade Marks Act, 1999 The Indian law on trademark is enshrined in the Trade Marks Act of 1999. Under the existing Act, a trademark is a mark used in relation to goods and/or services so as to indicate a connection between the goods or services being provided and the proprietor or user of the mark. A Mark may consist of a word or invented word, signature, device, letter, numeral, brand, heading, label, name written in a particular style, the shape of goods other than those for which a mark is proposed to be used, or any combination thereof or a combination of colours and so forth. The trademark once it is applied for is advertised in the trademarks journal, oppositions, if any, are invited and after satisfactory adjudication of the same, is given a certificate of registration. The right to use a mark can be exercised either by the registered proprietor or a registered user. The present term of registration of a trademark is ten years, which may be renewed for similar periods on payment of prescribed renewal fees. Foreign Investment Regime in Hotel & Tourism Sector: Foreign investment in India is governed primarily by the provisions of the Foreign Exchange Management Act ("FEMA"), and the rules, regulations and notifications thereunder, as issued by the RBI from time to time, and the policy prescribed by the Department of Industrial Policy and Promotion, which provides for whether or not approval of the Foreign Investment Promotion Board ("FIPB") is required for activities to be carried out by foreigners in India. The RBI, in exercise of its power under the FEMA, has notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (FEMA Regulations) to prohibit, restrict or regulate, transfer by or issue security to a person resident outside India. As laid down by the FEMA Regulations, no prior consents and approvals is required from the RBI, for FDI under the "automatic route" within the specified sectoral caps. In respect of all industries not specified as FDI under the automatic route, and in respect of investment in excess of the specified sectoral limits under the automatic route, approval may be required from the FIPB and/or the RBI. At present, FDI in the Indian "Hotel and Tourism" sector is permitted up to 100% through the "automatic route", which does not require prior approval of the GoI or the RBI.

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HISTORY AND CERTAIN CORPORATE MATTERS History and Background Our Company was originally incorporated as a private limited company under the Companies Act, 1956 in the name of Gandhinagar Hospitality Private Limited at Ahmedabad vide Certificate of Incorporation dated November 27, 1998 bearing Corporate Identity Number U55110GJ1998PLC035044. The name of our Company was changed to Neesa Leisure Private Limited on January 13, 2004 and a Fresh Certificate of Incorporation dated January 21, 2004 was issued by the RoC, Gujarat, Dadra & Nagar Haveli. Our Company was subsequently converted into a public limited company pursuant to a resolution passed at a shareholders meeting held on November 15, 2005 and the RoC issued a Fresh Certificate of Incorporation dated December 15, 2005. The Registered Office of our Company is situated at Plot no. X-22, 23 and 24, GIDC Electronic Estate, Sector 25, Gandhinagar 382 044. Our Company was acquired by the present Promoters in the year 2002. Pursuant to the acquisition, our Company initiated activities in the hospitality sector and acquired land on lease basis from GIDC to develop the first Cambay Spa & Resort, at Gandhinagar in the year 2004. Changes in registered office of our Company since inception: Date of Shareholders resolution On Incorporation From TF-3, Malak Complex, near old High Court, off Ashram road, Ahmedabad 380 009, India. TF-3, Malak Complex, near old High Court, off Ashram road, Ahmedabad 380 009, India. -To

June 15, 2005

Plot no. X-22, 23 and 24, GIDC Electronic Estate, Sector 25, Gandhinagar 382 044, India.

Key Milestones Year 1998 2002 2003 2004 Particulars Incorporated in the name of "Gandhinagar Hospitality Private Limited" on November 27, 1998. The Management and control of our Company was taken over by the present Promoters. Name changed from "Gandhinagar Hospitality Private Limited" to "Neesa Leisure Private Limited" Commenced the development of our property at Gandhinagar Commenced operations of our first resort at Gandhinagar under the brand name "Cambay Spa & Resort". Expansion of room inventory and facility at Gandhinagar. Commenced operations of service apartments under the brand name "Cambay Boutique" at Gurgaon. Company was converted into a Public Limited Company. Commenced the development of our property at Ahmedabad - Vejalpur Commenced the development of Golf Course at Gandhinagar with club facilities. Commenced development of our properties at Jaipur (Jamdoli), Jaipur (Kukas) and Ahmedabad (Thaltej) Commenced convention centre with other facility addition at Gandhinagar. Launched a nine (9) hole golf course at Gandhinagar, Gujarat. Commenced operations of our property at Ahmedabad -Vejalpur. Commenced the development of our property at Udaipur.

2005

2006 2007

161

Year 2008

2009

2010

2011

Particulars Raised private equity funding from Axis Private Equity Limited. Forayed into vacation ownership business under the brand "Cambay Family Holidays". Commenced operations of our hotel at Jaipur, Kukas. Launched our first CIHM centre for hospitality education at Jaipur, Kukas. Commenced the development of our properties at Neemrana, Rajasthan. Acquired Kollam, Kerala property "Palm Lagoon". Refurbishment and commencement of the operations of Kerala property. After successful launch of Jaipur Centre (Kukas), started CIHM centre at Gandhinagar and Udaipur. Launch of Upscale property at Ahmedabad (Thaltej), Jaipur (Jamdoli) and Mid-market property at Udaipur (Kaladwas). Acquired a Mid-market property at Goa on lease basis. First in India to launch a unique RCI Points System under the name 'Cambay Family Holiday Club - Points'. Our Company entered into an arrangement with CRN Developers to manage and operate a hotel property at Bangalore. Properties at Cambay Spa & Resort, Jaipur (Kukas) and Cambay Palm Lagoon, Kerala (Kollam) awarded Gold Crown and Silver Crown Award respectively by the RCI. Partly commenced operations at our Neemrana property. Our Company entered into an arrangement with Cambay SEZ Hotels Private Limited to develop, manage and operate a hotel property at Dahej SEZ.

Main Objects The main objects of our Company as contained in its Memorandum of Association are: (a) To carry on activities and business of and to establish and run hotel, resorts, motels, clubs, residential accommodations, holiday home, complexes, sports, indoor and outdoor games, amusement parks for members, tourists, visitors and to provide and cater all type of food, soft drinks, beverages through restaurant caf and to provide facilities of health club, swimming pool, recreation, conference, convention and to carry all the activities in the field of hospitality tourism and recreation. To establish, provide, maintain & conduct or otherwise subsidise in India or in any part of the world, educational and training institutions including management institutes for hotel, catering, nutrition and other related management studies at all levels and to undertake and carry on all management & technical researches and tests all kinds, to promote studies and researches, by providing, subsiding, endowing or assisting workshops, libraries, lectures, meetings and conferences and by providing or contributing to the remuneration of management & technical professors or teachers and providing or contributing to the award of scholarships, prizes, grants to students or otherwise and generally to encourage, promote and reward studies, researches, investigations, experiments, tests and inventions of any kind that may be considered likely to assist any business which the company is authorized to carry on and enter into any arrangements with government or any other party in India or elsewhere for the aforesaid purpose. To carry on the business of travel agents, importer & exporters of foods or merchandise of any description or act as shippers, underwriters, commission agents, advertising agents, transport agents, forwarding and cleaning agents so as to facilitate traveling and to arrange for all convenience of traveling by securing tickets, sleeping cars, berths, hotel, boarding and lodging, guides and so on and to promote traveling and to carry on the business of booking agents for passenger traffic and for all goods, commodities and cargoes by sea, land and air. To carry on business as money changing in foreign currencies as full fledged Money Changer, Financiers, Concessionaries and to provide discount, buy, sell, deal and exchange all kinds of

(b)

(c)

(d)

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currency notes, coins and similar other promissory notes, travelers cheques, credit cards and other negotiable or transferable securities issued by the Government of India or by any other Government abroad. (e) To carry on business of restaurant, caf tavern, bear house, keeper, licensed victuallers, wine, beer and spirit merchant, maltsters, manufacturers of aerated minerals and artificial waters and drinks purveyors, caterers for public amusements, coach, cab, carriage and motor car proprietors, livery, stable and garage keepers, jobmasters, importers and brokers of food, live and dead stock, hair dressers, perfumers, chemists, proprietors of clubs, baths, dressing room laundries, reading, writing and newspaper rooms, libraries, grounds and places of amusements and recreation, sport, entertainment and instructions of all kinds, tobacco and cigar merchants, agents for railways, road, air and shipping companies and carries theoretical and opera-box office proprietors and general agents and to provide services and facilities for all kinds on a commercial basis, that may be required for the tourists and entertainment industry. To undertake and/or direct all types of construction and the maintenance of or/and acquire by purchase, lease, exchange, hire or otherwise, lands, properties, buildings and estates of any tenure or any interest therein, to sell, lease, let, mortgage or otherwise dispose off the same and to purchase, construct and sell for self or for any person free hold or lease hold lands, house properties, buildings, offices, factories, work-shops, godowns, farm houses, farms and any kind of landed properties or any share/interest therein and to carry on the business of land and estate agents on commission or otherwise without commission. To carry on the business of and act as promoters, organisers and developers of lands, estates, properties, co-operative housing societies, associations, housing schemes, shopping-office complexes, townships, farms, farm houses, holiday resorts, hotels, motels and to finance with or without security and/or interest for the same and to deal with and improve such properties either as owner or as agents. To carry on the business of developing, maintaining and operating of airport, carry out detailed studies for the airport project inclusive of physical/engineering surveys and investigation, concept planning, detailed master planning, detailed design and engineering and all such activities that together provide the basis for the implementation of the project and to carry on business of developing, running, maintaining, operating, leasing, sub-leasing, acquiring, managing, using, setting up of airstrips, air immunities, airports, aerodromes, runways, flying clubs, air traffic control systems & services, setting up, operating, organizing flying schools, air transport services and all other aviation work, and imparting education and training to run, maintain, operate, manage airstrip, flying clubs, air traffic control systems, aircrafts or hovercrafts, aeroplanes and to carry on business of user, holder, hirers, repairers, cleaners of, and dealers in all types of aircraft, hovercrafts and other crafts of all types and descriptions, that are capable of being flown in air or run on land whether on dry land or water ways like rivers, lakes or sea, whether carrying passenger or cargo or other equipments of whatever nature or kinds which are presently being used or may be used herein after in aircrafts or hovercrafts.

(f)

(g)

(h)

Amendments to the Memorandum of Association of our Company Since the incorporation of our Company, the following changes have been made to our Memorandum of Association: Date of the Shareholders resolution November 12, 2003 December 30, 2003 Amendment

Change of name of our Company from "Gandhinagar Hospitality Private Limited" to "Neesa Leisure Private Limited" Increase in Authorised Share Capital from `10,00,000 to `50,00,000

163

Date of the Shareholders resolution May 3, 2004 April 11, 2005 August 25, 2005

Amendment

comprising of 5,00,000 Equity Shares of `10 each. Increase in Authorised Share Capital from `50,00,000 to `1,30,00,000 comprising of 13,00,000 Equity Shares of `10 each. Increase in Authorised Share Capital from `1,30,00,000 to `2,50,00,000 comprising of 25,00,000 Equity Shares of `10 each. Change in the object clause of the MOA Main Object Clause A of Clause III of the MoA is altered by inserting subclause 3, 4 and 5 after the existing sub-clause 2: Amended Object Clause: 3. To carry on the business of travel agents, importer & exporters of foods or merchandise of any description or act as shippers, underwriters, commission agents, advertising agents, transport agents, forwarding and cleaning agents so as to facilitate traveling and to arrange for all convenience of traveling by securing tickets, sleeping cars, berths, hotel, boarding and lodging, guides and so on and to promote traveling and to carry on the business of booking agents for passenger traffic and for all goods, commodities and cargoes by sea, land and air. To carry on business as money changing in foreign currencies as full fledged Money Changer, Financiers, Concessionaries and to provide discount, buy, sell, deal and exchange all kinds of currency notes, coins and similar other promissory notes, travelers cheques, credit cards and other negotiable or transferable securities issued by the Government of India or by any other Government abroad.

4.

September 9, 2005 November 15, 2005 January 17, 2006 August 16, 2007

To carry on business of restaurant, caf tavern, bear house, keeper, licensed victuallers, wine, beer and spirit merchant, maltsters, manufacturers of aerated minerals and artificial waters and drinks purveyors, caterers for public amusements, coach, cab, carriage and motor car proprietors, livery, stable and garage keepers, jobmasters, importers and brokers of food, live and dead stock, hair dressers, perfumers, chemists, proprietors of clubs, baths, dressing room laundries, reading, writing and newspaper rooms, libraries, grounds and places of amusements and recreation, sport, entertainment and instructions of all kinds, tobacco and cigar merchants, agents for railways, road, air and shipping companies and carriers theoretical and opera-box office proprietors and general agents and to provide services and facilities for all kinds on a commercial basis, that may be required for the tourists and entertainment industry. Increase in Authorised Share Capital from `2,50,00,000 to `10,00,00,000 comprising of 1,00,00,000 Equity Shares of `10 each. Conversion of our Company from private limited to public limited Increase in Authorised Share Capital from `10,00,00,000 to `32,00,00,000 comprising of 3,20,00,000 Equity Shares of `10 each. Change in the objects of our Company. Sub-Clause 2 and Sub-clause 3 of the other Object (Clause III (C)) of the MoA shifted from Other Object to the existing sub-clause 5 of the Main Object [Clause III (A)] of the MoA

5.

164

Date of the Shareholders resolution

Amendment

Further the Main Object [Cluase III(A)] of the MoA has been altered by inserting the following new sub-clause immediately after the sub-clause 7 as below: 6. To undertake and/or direct all types of construction and the maintenance of or/and acquire by purchase, lease, exchange, hire or otherwise, lands, properties, buildings and estates of any tenure or any interest therein, to sell, lease, let, mortgage or otherwise dispose off the same and to purchase, construct and sell for self or for any person free hold or lease hold lands, house properties, buildings, offices, factories, work-shops, godowns, farm houses, farms and any kind of landed properties or any share/interest therein and to carry on the business of land and estate agents on commission or otherwise without commission. To carry on the business of and act as promoters, organisers and developers of lands, estates, properties, co-operative housing societies, associations, housing schemes, shopping-office complexes, townships, farms, farm houses, holiday resorts, hotels, motels and to finance with or without security and/or interest for the same and to deal with and improve such properties either as owner or as agents.

7.

March 29, 2008

June 25, 2009

July 21, 2010

To carry on the business of developing, maintaining and operating of airport, carry out detailed studies for the airport project inclusive of physical/engineering surveys and investigation, concept planning, detailed master planning, detailed design and engineering and all such activities that together provide the basis for the implementation of the project and to carry on business of developing, running, maintaining, operating, leasing, sub-leasing, acquiring, managing, using, setting up of airstrips, air immunities, airports, aerodromes, runways, flying clubs, air traffic control systems & services, setting up, operating, organizing flying schools, air transport services and all other aviation work, and imparting education and training to run, maintain, operate, manage airstrip, flying clubs, air traffic control systems, aircrafts or hovercrafts, aeroplanes and to carry on business of user, holder, hirers, repairers, cleaners of, and dealers in all types of aircraft, hovercrafts and other crafts of all types and descriptions, that are capable of being flown in air or run on land whether on dry land or water ways like rivers, lakes or sea, whether carrying passenger or cargo or other equipments of whatever nature or kinds which are presently being used or may be used herein after in aircrafts or hovercrafts. Increase in Authorised Share Capital from `32,00,00,000 to `82,00,00,000 comprising of 3,20,00,000 Equity Shares of `10 each and 5,00,000 Preference Shares of `1,000 each. Increase in Authorised Share Capital from `82,00,00,000 to `90,00,00,000 comprising of 4,00,00,000 Equity Shares of `10 each and 5,00,000 Preference Shares of `1,000 each. Increase in Authorised Share Capital from `90,00,00,000 to `1,35,00,00,000 comprising of 5,30,00,000 Equity Shares of `10 each and 8,20,000 Preference Shares of `1,000 each.

8.

165

Conversion of loan into Equity Shares of our Company Our Company was sanctioned a Corporate Loan of `1,500 Lakhs in terms of the Loan agreement dated March 29, 2010 with IFCI Limited. Our Company and the Promoters have entered into a Share Subscription Agreement dated August 24, 2010 ("IFCI SSA") with IFCI Limited ("IFCI") in relation to investment of an aggregate sum of `2,600 lakhs ("Investment Amount") by IFCI pursuant to conversion of term loan of `1,500 Lakhs into Cumulative Convertible Preference Shares ("CCPS") and a further subscription to CCPS to the extent to `1,100 lakhs. As per the terms of SSA, IFCI has subscribed to 2,60,000 CCPS of `1,000 each. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the IFCI Share Subscription Agreement. For further details on IFCI Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. Changes in activities of our Company during the last five (5) years Our Company has not changed its line of activities in the last five (5) years. For further details, please refer to Section titled "Our Business" beginning on page 44 of this Draft Red Herring Prospectus. Awards and Accreditations: 1. The Times of India initiated "Times Food Award" has adjudged our restaurant "Golden Cilantro" at Cambay Grand, Ahmedabad as the Best Multi-cuisine restaurant in Ahmedabad on April 24, 2010. Our properties have been certified as an ISO 9001:2008 in relation to Quality Management Services. In September 2010, our properties at Cambay Spa & Resort, Jaipur (Kukas) and Cambay Palm Lagoon, Kerala (Kollam) have been awarded Gold Crown and Silver Crown Award respectively by the RCI for the year 2010-2011. Delhi 2010 Common Wealth International Travel Mart coferred the "Fastest Growing Business Hotel Award".

2. 3.

4.

Subsidiary of our Company Our Company has one (1) subsidiary, viz. Palm Lagoon Backwater Resorts Private Limited as on the date of this Draft Red Herring Prospectus. Palm Lagoon Backwater Resorts Private Limited ("Palm Lagoon") Palm Lagoon was incorporated on May 15, 2002 bearing CIN U55101KL2002PTC015416. Palm Lagoon is presently carrying on the activities of operating hotels & resorts. The registered office of Palm Lagoon is situated at Door No.PP VI/I, Velliman West, P.O. Kollam, Kerala 691 511. A Sale Deed and Transfer Agreement dated March 10, 2009 ("Agreement") was entered into between The Gujarat Sysport Services Private Limited ("GSSPL"), Palm Lagoon Backwater Resorts Private Limited ("Palm Lagoon") and our Company for the purchase of one hundred percent shareholding of Palm Lagoon for a consideration of `565 Lakhs (`5,65,00,000) pursuant to which Palm Lagoon became our Wholly Owned Subsidiary (WoS) w.e.f April 1, 2009. Our Company has entered into a lease deed dated July 29, 2009 with Palm Lagoon in respect of the property at Kollam, Kerala wherein our Company has been leased this property for a period of thirty (30) years.

166

Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Prawin Dwary Mr. Hemant Patel Designation Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `1,000 each) Shareholding (%) 11,999 99.99 1 Negligible

Name of the Shareholder Neesa Leisure Limited Ms. Sanjana Gupta jointly with Neesa Leisure Limited* Total

Number of shares

12,000

100.00

*Ms. Sanjana Gupta is holding the equity shares in the beneficial interest of our Company.

Financial Performance The audited financial performance for last three (3) financial years is given below: Particulars Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value `10) Net Asset Value per equity share (in `) (Face value `10) September 30, 2010 120.00 (90.66) 0.06 (1.00) -244.50 March 31, 2010 120.00 (89.67) 0.06 (23.63) -252.75 March 31, 2009 120.00 (66.04) 4.53 (7.12) -449.67 (` in Lakhs) March 31, 2008 120.00 (58.92) 14.72 (18.49) -509.00

Palm Lagoon is an unlisted company and has not made any public or rights issue since the date of its incorporation. Palm Lagoon has not become a sick company under SICA, is not under winding up and does not have negative net worth. Shareholders Agreement: 1. Share Subscription and Shareholders Agreement with Axis Infrastructure Fund I Our Company and Promoters have entered into a Share Subscription Agreement dated March 28, 2008 with Axis Private Equity Limited ("Axis SSA") in relation to the investment of an aggregate sum of `75,00,00,000 ("Investment Amount") by Axis Private Equity Limited ("Investor") in our Company. As per the terms of Axis SSA, the Investor has subscribed to (i) 34,65,347 Equity Shares of `10 each at a price of ` 101 per Equity Share ("Investor Shares") and (ii) 4,00,000 Compulsory Convertible Preference Shares ("CCPS") of ` 1,000 each. Pursuant to the above Axis SSA, our Company, our Promoters and the Investor have entered into a Shareholders Agreement dated March 28, 2008 ("SHA") setting out the rights and obligations of our Company, Promoters and Investor in our Company. The SHA, inter alia, provides for certain rights to the Investor such as Tag-Along Rights, Drag Along Rights, Put Option Right, Antidilution Rights, Affirmative Voting Rights on certain issues related to the management of our Company as stated in the SHA. Pursuant to a Transfer Agreement dated June 30, 2008, the

167

Investor transferred the Investor Shares, the CCPS and all rights and obligations under the SHA to Axis Infrastruture Fund I ("AIF"). All the special rights of the Investor (read as AIF) set out in the SHA shall cease on listing of the Equity Shares of our Company pursuant to the IPO. However, the right to appoint greater of 1 (one) Director or such number of Directors on the Board of our Company in proportion to the Investors shareholding shall survive, subject to applicable laws, so long as the Investor holds thirty three percent (33%) of the initial investment in our Company or till twelve months (12) post the IPO, whichever is earlier. Terms of conversion of CCPS into Equity Shares: The SSA, interalia, provides for the following terms of conversion of CCPS: 1. If the CCPS are converted within 36 months from the Closing Date for Investor Shares, a price that would ensure the holder of the CCPS an IRR of 22% from the date of subscription of the CCPS based on the value arrived at 90% of the average of the low and high price of the price band indicated by the merchant banker. If the CCPS are converted at any time between 36 months to 51 months from the Closing Date for Investor Shares, a price at a discount of 60% of the value arrived at 90% of the average of the low and high price of the first price band indicated by the merchant banker. If the CCPS are converted after 51 months but before 120 months from the Closing Date for Investor Shares, a price that would ensure the holder of the CCPS an IRR of 22% from the date of subscription of the CCPS based on value arrived at in the event that our Company comes out with a IPO, 90% of the average of the low and high price of the first price band indicated by the merchant banker.

2.

3.

Pursuant to a letter dated March 30, 2011, the aforementioned terms of conversion of CCPS have been modified as set out below: 1. If the CCPS are converted within 48 months from the Closing Date for Investor Shares, a price that would ensure the holder of the CCPS an IRR of 22% from the date of subscription of the CCPS based on the value arrived at 90% of the average of the low and high price of the price band indicated by the merchant banker. If the CCPS are converted at any time between 48 months to 51 months from the Closing Date for Investor Shares, a price at a discount of 60% of the value arrived at 90% of the average of the low and high price of the first price band indicated by the merchant banker. If the CCPS are converted after 51 months but before 120 months from the Closing Date for Investor Shares, a price that would ensure the holder of the CCPS an IRR of 22% from the date of subscription of the CCPS based on value arrived at in the event that our Company comes out with a IPO, 90% of the average of the low and high price of the first price band indicated by the merchant banker.

2.

3.

Since the investment by the Investor was made in March 31 2008, in view of the above terms of conversion, the CCPS shall be converted at price being a discount of 90% of the value arrived at 90% of the average of the low and high price of the first price band indicated by the merchant banker. Waiver Letter

168

As per the terms of the Axis SSA, if the conversion of all the CCPS results in the Investor being entitled to more than 40% of the total paid-up equity share capital of our Company, then such number of CCPS entitling the Investor in excess of forty percent (40%) of the paid-up equity share capital of our Company shall be purchased by our Promoters at a price that would ensure the Investor an IRR of 22% from the date of subscription of the CCPS. Pursuant to the waiver letter dated November 25, 2010 ("Waiver Letter"), AIF has waived the above right to call upon the Promoters to purchase such number of CCPS entitling AIF shareholding in excess of forty percent (40%) of the paid-up Equity Share capital of our Company post conversion into Equity Shares. Further, in terms of SSA and Waiver Letter, all the special rights of AIF set out in the Axis SSA shall cease on listing of the Equity Shares of our Company pursuant to the IPO. 2. Share Subscription Agreement with HT Media Limited Our Company and the Promoters have entered into a Share Subscription Agreement dated June 17, 2009 with HT Media Limited ("HTML SSA") in relation to investment of an aggregate sum of `1,79,99,931 ("Investment Amount") by HT Media Limited ("HTML") in our Company. As per the terms of HTML SSA, HTML has subscribed to 1,03,746 Equity Shares of `10 each at a price of `173.50 per Equity Share. The HTML SSA, inter alia, provides for certain rights such as TagAlong Rights, Anti-dilution Rights, Affirmative Voting Rights on certain issues related to the management of our Company as stated in the HTML SSA. In terms of the HTML SSA and the waiver letter dated March 29, 2011, all the special rights of HTML set out in the HTML SSA shall cease on listing of the Equity Shares of our Company pursuant to the IPO. 3. Share Subscription Agreement with Brand Equity Treaties Limited Our Company and the Promoters have entered into a Share Subscription Agreement dated October 30, 2009 with Brand Equity Treaties Limited ("BETL SSA") in relation to investment of an aggregate sum of `6,66,59,604 ("Investment Amount") by Brand Equity Treaties Limited ("BETL") in our Company. As per the terms of BETL SSA, BETL has subscribed to 3,59,700 Equity Shares of `10 each at a price of `185.32 per Equity Share. Pursuant to the waiver letter dated March 24, 2010, The BETL SSA, inter alia, provides for certain rights to BETL such as Tag-Along Rights, Drag-along Rights, Put Option Anti-dilution Rights, Right of First Refusal as mentioned in the BETL SSA. Pursuant to a waiver letter dated March 24, 2011, all the special rights of BETL set out in the BETL SSA shall cease on listing of the Equity Shares of our Company pursuant to the IPO. 4. Share Subscription Agreement with Writers & Publishers Limited Our Company and the Promoters have entered into a Share Subscription Agreement dated October 3, 2008 ("W&P SSA") with Writers & Publishers Limited ("WPL") in relation to investment of an aggregate sum of `50,00,00,055 ("Investment Amount") by WPL in our Company. As per the terms of W&P SSA, WPL has subscribed to 2,30,415 Equity Shares of `10 each at a price of `217 per Equity Share. 5. Share Subscription Agreement with IFCI Limited Our Company and the Promoters have entered into a Share Subscription Agreement dated August 24, 2010 with IFCI Limited ("IFCI SSA") in relation to investment of an aggregate sum of `26,00,00,000 ("Investment Amount") by IFCI Limited ("IFCI") pursuant to conversion of term loan of `1,500 Lakhs into Cumulative Convertible Preference Shares ("CCPS") and a further

169

subscription to CCPS to the extent to Rs.1,100 lakhs. As per the terms of IFCI SSA, IFCI has subscribed to 2,60,000 CCPS of `1,000 each. In terms of the IFCI SSA, IFCI (as holder of the CCPS) shall convert the CCPS into Equity Shares at a price computed in the manner set out in the SSA, i.e. to say, a price that would ensure the holder of the CCPS an IRR of 20% from the date of the subscription of the CCPS. The IFCI SSA further provides for an additional pledge of 8,00,000 Equity Shares of our Company held by Mr. Sanjay Gupta, apart from 13,83,055 Equity Shares which have already been pledged with IFCI. Mr. Sanjay Gupta shall create such pledge of 8,00,000 Equity Shares within a period of nine (9) months from the date of subscription of CCPS by IFCI for securing an assured twenty percent (20%) IRR per annum compounded quarterly alongwith the Investment Amount. Further IFCI pursuant to a letter dated March 1, 2011 has rescinded its right to call upon the Promoters to buy back Equity Shares held by it in terms of Clause 3.2 and Clause 3.3 of the IFCI SSA. Debenture Subscription Agreement: 1. Non Convertible Debenture (NCD) Subscription Agreement with Axis Bank Limited Our Company has entered into a Subscription Agreement dated October 27, 2008 ("Agreement") with Axis Bank Limited ("Axis Bank") wherein Axis Bank has subscribed to the Secured Redeemable Non-Convertible Debentures ("NCDs") of face value `10,00,000 each aggregating to `25,00,00,000. Our Company availed the aforesaid financial assistance from Axis Bank to finance the capital expenditure for development of its properties at Ahmedabad (Thaltej), Jaipur (Jamdoli), Jaipur (Kukas), Udaipur and Neemrana. Further, as per the terms of the Agreement, our Company has agreed to redeem the NCDs in twenty (20) equal quarterly instalments beginning October 1, 2010. Other Agreements: Our Company has not entered into any other material agreements, other than disclosed in this Draft Red Herring Prospectus. Strategic Partners: As on the date of this Draft Red Herring Prospectus, our Company does not have any strategic partners. Financial Partners: As on the date of this Draft Red Herring Prospectus, our Company does not have any financial partners.

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OUR MANAGEMENT Board of Directors As per our Articles of Association our Company shall not appoint less than three (3) and more than twelve (12). Currently, our Company has eleven (11) Directors out of which six (6) are Independent Directors. The following table sets forth details regarding our Board of Directors as on the date of this Draft Red Herring Prospectus: Name, Fathers/Husbands Name, Residential Address, Nature of Directorship, Occupation, Term and DIN Mr. Sanjay Gupta S/o Mr. Gupta Raghunath Prasad Nationality Age Other Directorship/ Partnerships as on the date of this Draft Red Herring Prospectus 1. 2. 3. 4. 5. 6. 7. 8. 9. Neesa Infrastructure Limited Neesa Agritech and Foods Limited Neesa Technology Private Limited Cambay Hotels and Holidays Limited Neesa Education Private Limited Orient Spa Limited Neesa Township and Properties Limited Cambay SEZ Hotels Private Limited Neesa Financial Services Limited

Indian

47 years

Residential Address: B/202, Dhananjay Tower, Nr. Shayamal Cross Road - III, Satellite, Ahmedabad 380 015, India. Nature of Directorship: Non-Executive Chairman* Date of Re-appointment: March 26, 2011 Term: Liable rotation to retire by

Occupation: Business DIN: 00006361 Mr. Manoj Singhal S/o Mr. Vinod Kumar Singhal Residential Address: A-2/202, La Habitat Apartment, Thaltej, Ahmedabad, Gujarat, India. Nature of Directorship: Executive Director Date of Appointment: November 14, 2010 Term: Five (5) years Occupation: Service Indian 35 years 1. Cambay Hotels and Holidays Limited

171

Name, Fathers/Husbands Name, Residential Address, Nature of Directorship, Occupation, Term and DIN DIN: 01830419 Ms. Neelu Gupta W/o Mr. Sanjay Gupta Residential Address: B/202, Dhananjay Tower, Nr. Shayamal Cross Road III, Satellite, Ahmedabad 380 015, India. Nature of Directorship: NonIndependent and Non-Executive Director Date of Appointment: November 18, 2002 Term: Liable rotation to retire by

Nationality

Age

Other Directorship/ Partnerships as on the date of this Draft Red Herring Prospectus

Indian

45 years

1. 2. 3.

Neesa Townships and Properties Limited Neesa Infrastructure Limited Cambay Hotels and Holidays Limited

Occupation: Business DIN: 00064415 Mr. Arun Prakash Korati S/o Mr. Srinivas Rao Korati Residential Address: 302, Vishal Villa, Plot No. 167, Road No.5, Shivaji Park, Dadar (West), Mumbai 400 016, India. Nature of Directorship: Nominee Director of Axis Infrastructure Fund I Date of March 31, 2008 Appointment: Indian 44 years 1. Vishwa Infrastructures and Services Private Limited

Term: Not liable to retire by rotation Occupation: Service DIN: 00027783 Mr. V.Anish Babu Indian 32 1. GTC Industries Limited

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Name, Fathers/Husbands Name, Residential Address, Nature of Directorship, Occupation, Term and DIN S/o Mr. K.Venugopal Residential Address: 1-2-234/45, B-32, New SBH Colony, Domalguda, Hyderabad 500 029, India. Nature Nominee Limited of Directorship: Director of IFCI

Nationality

Age

Other Directorship/ Partnerships as on the date of this Draft Red Herring Prospectus

years

Date of Appointment: January 17, 2011 Term: Not liable to retire by rotation Occupation: Service DIN: 02830575 Mr.Shailesh Modi S/o Mr. Suryakant Modi Residential Address: No.10, Bhikubhai Bunglow, Satellite Road, Ahmedabad 380 015, India. Nature of Directorship: NonNon-Independent and NonExecutive Director Date of Re-appointment: January 30, 2008 Term: Liable rotation to retire by Indian 58 years 1. 2. 3. Neesa Education Private Limited Neesa Infrastructure Limited Neesa Financial Services Limited

Occupation: Business DIN: 00341722 Mr. Pankaj Mudholkar S/o Mr. Anand Mudholkar 3. Residential Address: 2/103, Goyal Intercity, Drive4. Indian 47 years 1. 2. Scan Point Geomatics Limited Aakriti Promotions and Media Limited Aakriti Management Services Private Limited Aatash Computers and

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Name, Fathers/Husbands Name, Residential Address, Nature of Directorship, Occupation, Term and DIN in-Road, Taltej, Ahmedabad 380 054, India. Nature of Directorship: Independent and Non-Executive Director Date of July 1, 2003 Term:Liable rotation Re-appointment:

Nationality

Age

Other Directorship/ Partnerships as on the date of this Draft Red Herring Prospectus Communications Private Limited

to

retire

by

Occupation: Business DIN: 00076276 Mr.Yogesh Joshi S/o Mr. Thakor Joshi Residential Address: 12-B, Nehru Park Society, Near Malhar Point, Off. Old Padra Road, Vadodara 390 007, India. Nature of Directorship: Independent and Non-Executive Director Date of Re-appointment: January 18, 2006 Term: Liable rotation to retire by Indian 55 years 1. 2. 3. New Light Hotels & Resorts Limited Gandhinagar Hotels Limited Gandhinagar Leasing and Finance Limited

Occupation: Business DIN: 00118454 Mr.Mehar Karan Singh S/o Mr. Karan Singh 3. Residential Address: 607, Olympus Apartments, Altamount Road, Mumbai 400 026, India. Nature of Directorship: Independent and Non-Executive Indian 54 years 1. 2. Indologies Services Private Limited Augustus Avani (Punjab) Land Developers Private Limited Aguada Heritage Real Estate Company Private Limited

174

Name, Fathers/Husbands Name, Residential Address, Nature of Directorship, Occupation, Term and DIN Director Date of Re-appointment: May 26, 2009 Term: Liable rotation to retire by

Nationality

Age

Other Directorship/ Partnerships as on the date of this Draft Red Herring Prospectus

Occupation: Business DIN: 00041178 Mr.M. Narayanan S/o Mr. Kuppus Mahalinga Iyer K.G. Residential Address: Palmlands, Flat No. 2C, House No. 21/10, Lynwood Avenue, Mahalingapuram, Chennai 34, India. Nature of Directorship: Independent and Non-Executive Director Date of Appointment: March 31, 2010 Term: Liable rotation to retire by Indian 65 years 1. 2. 3. Cox and Kings Limited Royale Indian Rail Tours Limited Gujarat Hotels Limited

Occupation: Service DIN: 00159288 Mr. Jasvinder Singh Rana S/o Major Bakhtawar Singh Rana Residential Address: B-1004, Asavari Towers, Behind Fun Republic, Ahmedabad 380 015, India. Nature of Directorship: Independent and Non-Executive Director Date of Appointment: Indian 64 years --

175

Name, Fathers/Husbands Name, Residential Address, Nature of Directorship, Occupation, Term and DIN December 31, 2010 Term: Liable rotation Occupation: Servant DIN: 01749361 to retire by

Nationality

Age

Other Directorship/ Partnerships as on the date of this Draft Red Herring Prospectus

Ex-Government

*Mr. Sanjay Gupta was an Executive Chairman of our Company till March 26, 2011.

There are no arrangements or understanding with major shareholders, customers, suppliers or others pursuant to which any of the Directors were selected as a Director or member of a senior management except for the (i) Shareholders Agreement with Axis Infrastructure Fund I pursuant to which Mr. Arun Prakash Korati has been appointed as a nominee director of AIF on the Board of our Company and (ii) Share Subscription Agreement with IFCI pursuant to which Mr. V. Anish Babu has been appointed as a nominee director of IFCI on the Board of our Company. Relationships between our Directors None of the directors are related to each other except where Mr. Sanjay Gupta is the spouse of Ms. Neelu Gupta. Brief Biographies of our Directors 1. Mr. Sanjay Gupta, 47 years, Promoter of our Company, is also our Non-Executive Chairman of our Company. Mr. Gupta is a Civil Engineer from IIT Roorkee, holding a Diploma in Business Finance from ICFAI, who joined the Indian Administrative Service in the year 1985 and played a key role by implementing various policy initiatives in the Tourism, Industry, Energy and Infrastructure Sector in Gujarat, and held different positions in the Government of Gujarat during his seventeen (17) years tenure. Mr. Gupta has played a key role in Gujarat State Petronet Limited (GSPL) establishing the intra-state gas transmission pipeline grid, setting up a power project of 160 MW capacity (gas based) at Hazira through an SPV namely Gujarat State Energy Generation Limited, setting up Gujarat Info. Petro Limited as subsidiary of GSPL, setting up Gujarat State Fuel Management Company Limited as a subsidiary of GSPL. He resigned in 2002 to join the Private Sector as a Senior Executive. Subsequently, Mr. Gupta set up his own ventures in various sectors. Under his leadership, Neesa Group has converted itself into a well-diversified group involved in hospitality services, agro-biotechnology, steel casting and I. T. Services through innovative business planning and professional management. He has been recently appointed as Vice Chairman of the All India Handicrafts Board, Ministry of Textiles, Government of India. Mr. Gupta has been appointed as Chairman of Tourism and Hospitality Committee, FICCI, Gujarat State Council. Mr. Manoj Singhal, 35 years, is the Managing Director of our Company. He graduated from the University of Delhi in commerce and also has an MBA degree in Human Resources from the Institute of Advanced Studies in Education, Rajasthan. Mr. Singhal has also done his M. Com from the Madurai Kamraj University and is a holder of post graduate diploma in Export Management from Management Studies Promotion Institute as well as a diploma in Computer Accounting Application from IEC. Mr. Singhal has been associated with our Company since 2004 as the head of Corporate Affairs and business development and has recently in November 2010 been appointed as the Managing Director of our Company. Mr. Singhal has over sixteen (16) years

2.

176

of experience in the Hospitality, FMCG and Pharmaceutical industry. He has been associated with reputed organizations like Tuli International, Candigo India Limited, DeePharma Limited, Mahek Foods Products Limited and Gujrat State Petroleum Corporation Limited. 3. Ms. Neelu Gupta, 45 years, is the Promoter and Non-executive Director of our Company. Ms. Gupta has been associated with our Company since November 2002. She holds a Masters Degree in Arts from Bhavnagar University and is Diploma holder in computers. Ms. Gupta has more than five (5) years of experience in general administration. Mr.Arun Prakash Korati, 44 years, is a nominee director on the Board of our Company appointed by Axis Infrastructure Fund I. Mr. Korati holds a Masters degree in Marketing from Narsee Monjee Institute of Management Studies, Mumbai. He is also a Mechanical Engineer (BE from RV college of Engineering Bangalore) and Qualified Cost Accountant (ICWA). Mr.Korati has been associated with our Company since March 2008 and has over twenty one (21) years of experience with over eighteen (18) years of experience in the Indian private equity/venture capital industry. Prior to joining Axis Private Equity Limited, Mr. Korati headed the private equity activities at NV Advisory Services Private Limited, the advisor to a India-focused fund, New Vernon Capital, which he joined at its inception in 2004. His investments include road construction, logistics, energy saving equipment, forgings companies, etc. Mr. Korati was earlier responsible for investments relating to manufacturing and was the designated fund manager for an auto-related fund for an IL&FS group company, IL&FS Investment Managers Limited (IIML). Mr. Korati has also worked with CDC Advisors.and Pathfinder Investments Private Limited. Mr. V. Anish Babu, 32 years, is a nominee director on the Board of our Company appointed by IFCI Limited. Mr. Anish holds a Post Graduate Diploma in Business Management in Finance from IMT Ghaziabad and Bachelors of Commerce Degree from Osmania University, Hyderabad. Mr. Anish has recently in January 2011 been appointed on the board of our Company. He started his career with IFCI Limited in 2002 and over the last nine (9) years has experience in Credit Appraisal & Management, Resolution of Non-Performing Assets and Business Development. He is presently Senior Vice President in IFCI and is head of IFCIs Regional Office at Ahmedabad. He is also been appointed as a nominee director of IFCI Limited on the board of GTC Industries Limited and Gujarat Industrial Technical Consultancy Organisation (GITCO). Mr. Shailesh Modi, 58 years, is a Non-Executive, Non-Independent Director of our Company. He is an MBA, from Indian Institute of Management (IIM), Ahmedabad. He has more than thirty (30) years experience in consultancy mainly in relation to design, management support and evaluation of development programmes, business plan for SMEs and market research. Mr. Modi heads the Fourth Vision, a consultancy firm. Prior to co-founding Fourth Vision, he was the chief consultant at Gujarat Industrial and Technical Consultancy Organization Limited (GITCO), and was involved in designing, evaluating and providing management support to development programs sponsored by public organizations as well as business-plans for mid-sized and large-sized companies. He managed several World Bank funded studies such as Strategy and Plan for Industrial Development of Saurashtra (Gujarat). Mr. Modi is also a visiting faculty at various academic and training institutions and has authored two (2) books published by Entrepreneurship Development Institute of India. Mr. Pankaj Mudholkar, 47 years, is a Non-Executive, Independent Director of our Company. Mr. Mudholkar is a B.Sc.(Hons.) from Gujarat University. He started his career with M/s Sarabhai Chemicals (Pharma) as professional service representative in 1983. He is associated with Trikaya Grey Advertising India Limited. He has experience in brand building for reputed corporates in various industries such as textiles, consumer electronics, home decor, energy and infrastructure projects. Hes been the visiting faculty at premier institutes like Mudra Institute of Communication, Ahmedabad (MICA), National Institute of Designs, Ahmedabad and Nirma Institute of Management, Ahmedabad.

4.

5.

6.

7.

177

8.

Mr.Yogesh Joshi, 55 years, is a Non-Executive, Independent Director of our Company. He has been associated with our Company since the year 2006. He is a Commerce Graduate and is M.S.W (Master of Social Work), DIPIRPM (Diploma in Industrial Relation & Personnel Management), D.L.P (Diploma in Labour Practice), L.L.B, C.H.A. (Certified Hotel Administrator) (USA). Mr. Joshi started his career in 1978 as a faculty with M.S.University, Vadodara and also served Bank of Baroda in the capacity of personnel officer and thereafter in Dena Bank as a Chief Manager. Mr. Joshi is presently the Managing Director of Newlight Hotels and Resorts Limited. He is also an office bearer and member of the managing committee of Hotel & Restaurant Association, Western India Region, Gujarat State and Classification Committee of Government of India for Hotels in Gujarat. Mr. Mehar Karan Singh, 54 years, is a Non-Executive, Independent Director of our Company. He is B.Tech (Mechanical) from IIT, Delhi and Masters in Business Administration (MBA) from Indian Institute of Management (IIM), Ahmedabad. He has thirty (30) years of experience in real estate development and financing in India with a focus on the hotel and leisure sector. His expertise extends to project management, finance, industrial and general administration. Mr. Singh worked with Tata Administrative Service (18 years) and the Taj Group of hotels as Vice President (projects and development). He started and led the Swiss multinational's India business, Schindler India Limited for five (5) years as Managing Director and then CEO & Executive Director of Bombay Dyeing for the textile mill land development. He was Vice Chairman of Dawnay Day Group's property development business in India until August 2008. Presently, Mr. Singh is the Country Head, India at Voyagers Partners Limited. Mr. M. Narayanan, 65 years, is a Non-Executive, Independent Director of our Company. Mr. Narayanan holds Post Graduate Degree in Commerce, Degree in Law and Diploma in Business management. Mr. Narayanan has more than forty five (45) years of experience in Hospitality and Banking Sectors. Mr. Narayanan was the Chairman and Managing Director of the Tourism Finance Corporation of India (TFCI) and held senior management position in Industrial Finance Corporation of India (IFCI). Mr. Jasvinder Singh Rana, 60 years, is Non-Executive, Independent Director of our Company. Mr. Rana is an ex-IAS officer (1975 batch) and retired as a principal secretary to the Government of Gujarat. Mr. Rana holds a BA degree in Economis and MA Diploma (Finance). Mr. Rana has more than thrity five (35) years of experience in public administration with specialisation in the filed of IT, Energy, Industrial and Finance Policy etc.

9.

10.

11.

Service Contracts Our Company has not executed any service contracts with its directors providing for benefits upon termination of their employment. Borrowing Powers of the Board Our Articles, subject to the provisions of the Companies Act, authorize our Board to raise, borrow or secure the payment of any sum or sums of money for the purposes of our Company. Our shareholders have, pursuant to a resolution passed at the Extra Ordinary General Meeting held on January 3 2007, in accordance with the Companies Act, authorized our Board to borrow from time to time, all such sums of money for the purposes of the business of our Company, as the Board may in its discretion think fit, notwithstanding that the money or monies to be so borrowed together with the sums already borrowed by our Company (apart from the temporary loans obtained from our Companys bankers in the ordinary course of business), may exceed the aggregate of the paid-up capital of our Company and its free reserves that is to say, reserves not set apart for any specific purposes, provided however that such monies shall not exceed `50,000 Lakhs.

178

Remuneration to Non-Executive Directors Our Non-Executive Directors are not paid any sitting fees to attend the meetings of the Board and any committee of the Board. Remuneration to Executive Director: Mr. Manoj Singhal Our Company has executed Employment Agreement dated November 14, 2011, enumerating the terms of his employment along with remuneration, details of which are set out below: Particulars Basic Salary Appointment as a Managing Director Other Allowances Remuneration `4,80,000 per annum Five (5) years with effect from November 14, 2011 House Rent Allowance of `1,80,000 per annum Gratuity of of `23,040 per annum Leave Travel allwancce of `39,984 per annum Other allowances of `3,04,896 per annum --

Remuneration paid for F.Y. 2010

Shareholding of Directors in our Company as on the date of this Draft Red Herring Prospectus The shareholding of our Directors as on the date of filing of this Draft Red Herring Prospectus is as below: Name of the Director Mr. Sanjay Gupta Ms. Neelu Gupta Mr. Pankaj Mudholkar Interests of Directors All of our Directors may be deemed to be interested to the extent of fees payable, if any, to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under our Articles of Association, and to the extent of remuneration paid to them for services rendered as an officer or employee of our Company. Further, our Non Executive Directors are also directors on the boards of certain Group entities and they may be deemed to be interested to the extent of transactions, if any entered into by our Company with these Group entities. For the payments that are made by our Company to certain Group entities, please refer to Annexure 18 titled "Restated Standalone Statement of Related Party Transactions" in the section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus. Our Directors may also be regarded as interested in the Equity Shares held by them, if any, or that may be subscribed by or allotted to their relatives or the companies in which they are interested as directors, members, partners, trustees and promoters, pursuant to this Issue. Our Directors may also be deemed to be interested to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. Except as stated in this section "Our Management" or the section titled "Financial Statements - Related Party Transactions" beginning on page 171 and 208 respectively of this Draft Red Herring Prospectus, and except to the extent of shareholding in our Company, our Directors do not have any other interest in our business. Number of Equity Shares held 1,66,72,903 36,96,745 4,191 Shareholding (%) 64.60 14.32 0.02

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Our Directors have no interest in any property acquired by our Company within two (2) years of the date of this Draft Red Herring Prospectus. Common directorships of our Directors in companies whose shares are/were suspended from trading on the BSE and/ or the NSE for a period beginning from five (5) years prior to the date of this Draft Red Herring Prospectus None of our Directors are/ were directors of any company whose shares were suspended from trading by Stock Exchange(s) or under any order or directions issued by the stock exchange(s)/ SEBI/ other regulatory authority in the last five (5) years. Except as disclosed in this Offer Document, none of the Directors are associated with securities market. Common directorships of our Directors in listed companies that have been/ were delisted from stock exchanges in India
None of our Directors are/ were directors of any entity, whose shares were delisted from any Stock Exchange(s) or which have been debarred from accessing the capital markets under any order or directions issued by the Stock Exchange(s), SEBI or anyother Regulatory Authority.

Changes in our Companys Board of Directors during the last three (3) years The changes in the Board of Directors of our Company in the last three (3) years are as follows: No. 1. 2. 3. 4. 5. 6. 7. 8. Name of the Director Mr. V.Anish Babu Mr. Jasvinder Singh Rana Mr. Arvind Gupta Mr.Onkar Nath Singh Mr. M. Narayanan Mr. Onkar Nath Singh Mr. Rohit Gupta Mr. M. Narayanan Date of Appointment January 17, 2011 December 31, 2010 --March 31, 2010 April 27, 2010 -September 12, 2009 May 26, 2009 January 1, 2009 March 31, 2008 Date of Resignation --November 14, 2011 September 22, 2010 --June 1, 2009 November 10, 2009 ---Reasons for change Appointment Appointment Resignation Resignation Appointment Appointment Resignation Appointment/ Resignation Appointment Appointment Appointment

9. Mr. Mehar Karan Singh 10. Mr. Arvind Gupta 11. Mr. Arun Prakash Korati Corporate Governance

The provisions of the listing agreement to be entered into with BSE and NSE with respect to corporate governance and the SEBI (ICDR) Regulations in respect of corporate governance will be applicable to our Company immediately upon the listing of the Equity Shares on the Stock Exchanges. As of the date of the Draft Red Herring Prospectus, our Company has taken steps to comply with the provisions of Clause 49 of the Listing Agreements, including with respect to the composition of Board of Directors, the constitution of the Audit Committee, Remuneration Committee and Shareholders/Investors Grievance Committee. The Chairman of the Board is an Non-Executive Director. The Board of Directors consists of eleven (11) directors, of which one (1) is Executive Director, four (4) are Non-Executive Directors and six (6) are Independent Directors. In accordance with Clause 49 of the listing agreement, our Company has constituted/re-constituted the following committees:

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a)

Audit Committee Our Company re-constituted an audit committee in accordance with the Section 292A of the Companies Act, and Clause 49 of the Listing Agreement in the meeting of our Board of Directors held on May 12, 2010. The audit committee presently consists of the following Directors of the Board: i) ii) iii) Mr. M.Narayanan, Chairperson Mr. Sanjay Gupta, Member Mr. Mehar Karan Singh, Member

The scope of the Audit Committee shall include the following: 1. Oversight of our Companys financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to: a. Matters required to be included in the Directors Responsibility Statement to be included in the Boards report in terms of clause (2AA) of section 217 of the Companies Act, 1956 Changes, if any, in accounting policies and practices and reasons for the same Major accounting entries involving estimates based on the exercise of judgment by management Significant adjustments made in the financial statements arising out of audit findings Compliance with listing and other legal requirements relating to financial statements Disclosure of any related party transactions Qualifications in the draft audit report.

2.

3.

4.

b. c. d. e. f. g. 5.

Reviewing, with the management, the quarterly financial statements before submission to the board for approval Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

5A.

6.

7.

181

8. 9.

Discussion with internal auditors any significant findings and follow up there on. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. To review the functioning of the Whistle Blower mechanism, in case the same is existing. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. Explanation (i): The term "related party transactions" shall have the same meaning as contained in the Accounting Standard 18, Related Party Transactions, issued by The Institute of Chartered Accountants of India. Explanation (ii): If the company has set up an audit committee pursuant to provision of the Companies Act, the said audit committee shall have such additional functions / features as is contained in this clause. Review of information by Audit Committee The Audit Committee shall mandatorily review the following information: 1. Management discussion and analysis of financial condition and results of operations; 2. Statement of significant related party transactions (as defined by the audit committee), submitted by management; 3. Management letters / letters of internal control weaknesses issued by the statutory auditors; 4. Internal audit reports relating to internal control weaknesses; and 5. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee

10.

11.

12. 13.

b)

Shareholders/ Investors Grievance Committee: Our Company has constituted shareholders/investors grievance committee in the meeting of our Board of Directors held on January 18, 2006. The shareholders/investors grievance committee presently consists of the following Directors of the Board: i) ii) iii) Mr. Pankaj Mudholkar, Chairperson Ms. Neelu Gupta, Member Mr. Yogesh Joshi, Member

This Committee was constituted to carry out such functions for the redressal of shareholders and investors complaints, including but not limited to, transfer of shares, non-receipt of balance sheet, nonreceipt of dividends, and any other grievance that a shareholder or investor of our Company may have against our Company. The terms of reference of the Investor Grievance Committee are as follows:

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1. 2. 3.

Investor relations and redressal of shareholders grievances in general and relating to nonreceipt of dividends, interest, non- receipt of balance sheet etc. Such other matters as may from time to time be required by any statutory, contractual or other regulatory requirements to be attended to by such committee. To approve a request received for transfer, transmission, demat etc. of securities of our Company.

c)

Remuneration/ Compensation Committee: Our Company has re-constituted remuneration/compensation committee in the meeting of our Board of Directors held on January 30, 2008. The remuneration/compensation committee presently consists of the following Directors of the Board: i) ii) iii) Mr. M. Narayanan, Chairperson Mr. Yogesh Joshi, Member Mr. Shailesh Modi, Member

The terms of reference of the Remuneration/Compensation Committee is set out below: 1. Determine our Companys policy on specific remuneration packages for executive directors including pension rights and any compensation payments.

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MANAGEMENT ORGANIZATIONAL STRUCTURE

Board of Directors

Managing Director

Customer Care

Sales

Reservations and Revenues

Operations

Business Development

Audit

Legal & Corporate Affairs

Account & Finance

Human Resources

Marketing

Projects

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Profile of Key Managerial Personnel All our Key Managerial Personnels are permanent employees of our Company. 1. Mr. Shashi Angshuman, 46 years, is a Sr. Vice President of our Company. Mr. Angshuman holds a Diploma in Hotel management Catering Technology and applied Nutritution from the Indian Institute of Business Management, Patna. He has been associated with our Company since April 2010. He has more than twenty (20) years of experience in the Hospitality industry. Mr. Angshuman is primarily responsible for Operational functions of our Company. Prior to joining our Company, he was associated with the HHI group as general manager (operations). Mr. Angshuman was paid a gross remuneration of `12.84 lakhs for the F.Y.2009-2010. Mr. Bishwajit Sikdar, 46 years, is a Sr. Vice- President, Sales of our Company. Mr. Sikdar holds the degree of B.E. Electronics from Sardar Vallabhai REC, Surat and Post graduate Degree in Materials Management from Indian Institute of Material Management. He has been associated with our Company since August 2009. He has more than twenty three (23) years of experience in various sectors like FMCG, Energy, IT, Manufacturing, Hotel & Power. Mr. Sikdar is primarily responsible for Business Development functions of our Company. Prior to joining our Company, he was associated with Albellon Clean Energy Limited as Head of Operations. Mr. Sikdar was paid a gross remuneration of `16.56 lakhs for the F.Y.2009-2010. Mr. Kavan Purohit, 41 years, is the Vice - President Human Resources of our company. Mr. Kavan Purohit holds a degree in M.Sc. from Saurashtra University, and a diploma course from Brilliant Management School, Chennai. He has been associated with our Company since November 2010. He has over fourteen (14) years of experience in various sectors like Telecom, HR, IT, manufacturing industry etc. Prior to joining our Company, he has been associated with Videocon Telecommunication Limited as circle head (HR). Mr. Purohit was paid a gross remuneration of ` 22.50 lakhs for the F.Y.2009-2010. Mr. Kamlendra Joshi, 55 years, is the Vice President (Finance & Accounts) of our Company. He holds a degree of Bachelor of Arts and MBA from Gujarat University. Mr. Joshi has recently, in December 2010, joined our Company. He has over twenty four (24) years of experience in various sectors like banking, steel, hospitality, engineering, facility management etc. Prior to joining our Company, he had been associated with New Tech Forge and Foundry Limited as Vice President (Finance). Mr. Sanjeev Mahendra Thadani, 31 years, is Assistant General Manager, Marketing of our Company. Mr. Sanjeev Thadani holds a Post Graduate Diploma in Management Studies from Somaiya Institute of Management Studies and Research. He has been associated with our Company since September 2009. He has more than eight (8) years of experience in the Hospitality, Consumer durables, FMCG & Multimedia business. Prior to joining our Company, he was associated with BJN Hotels Limited as head communications. Mr. Thadani was paid a gross remuneration of `12.60 Lakhs for the F.Y.2009-2010. Mr. Shibu S Pillai, 32 years, is the General Manager, Corporate Affairs of our Company. Mr. Shibu Pillai holds Post Graduation in MBA from Allahabad Agricultural Institute Deemed University. He has been associated with our Company since December 2004. He has more than fourteen (14) years of experience in various sectors like Petroleum, Hotel & Resorts, Education, Bio-fertilizer, IT, Infrastructure, Food Processing & Agri-Biotech. Prior to joining our Company, he was associated with Gujarat State Petroleum Corporation as Executive Assistant to the Chairman and Managing Director and officer Administration & HR. Mr. Pillai was paid a gross remuneration of `6.60 lakhs for the F.Y.2009-2010. Mr. Kapil Sharma, 29 years, is the Deputy General Manager, Projects of our Company. Mr. Sharma holds a Degree of B.E, Civil Engineering from Bangalore University. He has been associated with our Company since June 2008. He has an experience of more than nine (9) years in various construction projects. Prior to

2.

3.

4.

5.

6.

7.

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joining our Company, he was associated with CHL International Dushanbe as Senior Engineer. Mr. Sharma was paid a gross remuneration of `13.38 lakhs for the F.Y.2009-2010. 8. Mr. Vijay Kumar, 46 years, is Sr. General Manager of our Company. Mr. Kumar holds Diploma in Hotel Management from Indian Institute of Science, Ranchi. He has been associated with our Company since August 2009. He has more than nineteen (19) years of experience in the Hospitality Industry. Mr. Kumar is primarily responsible for A & G functions of our Company. Prior to joining our Company, he was associated as Vice President in Jupiter Business & Luxury Hotel. Mr. Kumar was paid a gross remuneration of `8.40 lakhs for the F.Y.2009-2010. Mr. Kirteepal Singh, 32 years, is Resident Manager of our Company. Mr. Singh holds a degree in Hotel Management from Durgapur Society of Management Science, Durgapur. He has been associated with our Company since September 2009. He has more than nine (9) years of experience in Hospitality Industry. Mr. Singh is primarily responsible for Operational functions of our Company. Prior to joining our Company, he was associated with Concept Hospitality Limited as Executive Assistant Manager. Mr. Singh was paid a gross remuneration of `4.91 lakhs for the F.Y.2009-2010. Mr. Paresh Shah, 47 years, is the General Manager (Audit) of our Company. Mr. Shah is a member of Institute of Chartered Accountants of India (ICAI) and holds a degree of Master of Science in Finance from Northern Illinois University, Illinois, USA. He has over nineteen (19) years of experience in areas such as retail, audit and consultancy. Prior to joining our Company, he was associated with Al Futtaim Trading Co. LLC as Process and Compliance Manager. Mr. Shah was paid a gross remuneration of `11.00 lakhs for the F.Y.2009-2010. Mr. Jaymal Desai, 82 years, is the Company Secretary of our Company. Mr. Desai is a member of Institute of Company Secretaries of India (ICSI). Mr. Desai has recently been appointed in our Company in March 2011. He has over thirty (30) years of experience in legal and secretarial practice.

9.

10.

11.

Shareholding of Key Managerial Personnel in our Company None of the Key Managerial Personnel hold Equity Shares in our Company. Bonus or profit sharing plan of the Key Managerial Personnel Our Company does not have a performance linked bonus or a profit sharing plans for the Key Managerial Personnels. Interests of Key Managerial Personnel The Key Managerial Personnel do not have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business. Payment of Benefits to Officers of our Company Except for any statutory payments made by our Company upon termination of services of its officer or employees, our Company has not paid any sum, any non-salary amount or benefit to any of its officers or to its employees including amounts towards super-annuation, ex-gratia/rewards. None of the beneficiaries of loans and advances and sundry debtors are related to the Directors of our Company except and otherwise disclosed under Annexure 18 titled "Restated Standalone Statement of Related Party Transactions" in the section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus.

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There is no family relationship between our Promoters/Directors and Key Managerial Personnels of our Company None of the key personnel mentioned above are related to the promoters/directors of our company. None of the above has been selected pursuant to any arrangement/understanding with major shareholders/customers/suppliers. Employee Stock Option or Employee Stock Purchase Our Company does not have any ESOP/ESOS as on the date of this Draft Red Herring Prospectus. Changes in our Companys Key Managerial Personnel during the last three (3) years The changes in the Key Managerial Personnel of our Company in the last three (3) years are as follows: No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. Name of the Key Management Personnel & Designation Mr. Jaymal Desai, Company Secretary Mr. Gaurav Khatri, Company Secretary Mr. Pankaj Pabaiya, Company Secretary Mr. Kamlendra Joshi, VP (Finance & Accounts) Mr. Rajendra Harsh Mr. Kavan Purohit, Vice President (HR) Mr. Rajiv Mehrotra, Senior General Manager, Tours & Travel Mr. Paresh Shah, General Manager (Audit) Mr. Hemant Patel, General Manager HR Mr. Rajesh Mishra, Vice President Sales Mr. Clement John Jecob, General Manager (Revenue Management) Mr. Kapil Sharma, Head Project Mr. Abhijit Dey, Vice President Sales Mr. Shashi Angshuman, Group Vice President Operations Mr. Abhishek Srivastava, Head of Tours & Travels Mr. Manoj Raichandani, President Finance & Company Secretary Mr. Gopal Singh Rathore, Sr. Vice President Commercial Mr. Sandip Shah, Chief Information Officer Mr. Vijay Kumar, Senior General Date of Appointment March 23, 2011 January 3, 2011 February 1, 2010 December 9, 2010 January 3, 2011 November 19, 2010 October 21, 2009 August 2, 2010 April 10, 2008 May 2, 2008 April 22, 2010 June 30, 2008 June 24, 2009 April 1, 2010 April 7, 2009 October 23, 2010 -July 2, 2010 August 20, 2009 Date of Resignation -March 23, 2011 January 3, 2011 -March 3, 2011 -November 16, 2010 -October 28, 2010 September 30, 2010 August 7, 2010 August 1, 2010 June 30, 2010 -February 20, 2010 February 17, 2010 February 6, 2010 --Transferred to one of our Group Entity Transferred to one of our Group Entity Resignation Resignation Resignation -Resignation Resignation Resignation -Resignation Transferred to one of our Group Entity Resignation Resignation Reason

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No.

20. 21. 22. 23.

Name of the Key Management Personnel & Designation Manager Mr. Sarad Kapadiya, General Manager IT Mr. Kirteepal Singh, Resident Manager Mr. Someshwara Rao, Company Secretary Mr. Bishwajit Sikdar, Group Vice President

Date of Appointment -September 9, 2009 April 9, 2008 August 10, 2009

Date of Resignation

Reason

November 30, 2009 -September 21, 2009 --

Resignation

Resignation --

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OUR PROMOTERS AND PROMOTER GROUP Our Promoters Our Promoters are Mr. Sanjay Gupta and Ms. Neelu Gupta. The brief profiles of our Promoters are set out below: Mr. Sanjay Gupta is the Non-Executive Chairman of our Company. He is a resident Indian national. For further details, please refer to the section titled "Our Management" beginning on page 171 of this Draft Red Herring Prospectus. Permanent Account Number: ABUPG5799B Driving Licence Number: 193983-87-RJT Passport No.: F4074127 Voter Identification Number: LBR8884256

Ms. Neelu Gupta is the Non-Executive Director of our Company. She is a resident Indian national. For further details, please refer to the section titled "Our Management" beginning on page 171 of this Draft Red Herring Prospectus. Permanent Account Number: ADYPG0351K Driving Licence Number: 04-91-16172 Passport No.: F2562314 Voter Identification Number: LBR8884264

Our Company undertakes that the details of the PAN, Bank Account Numbers, and Passport Numbers of our Promoters will be submitted to the Stock Exchanges at the time of filing this Draft Red Herring Prospectus with the Stock Exchanges. For more details on our Promoters, please refer to the section titled "Our Management" beginning on page 171 of this Draft Red Herring Prospectus. Interests of our Promoters, Group Entities and Common Pursuits Our individual Promoters who are also the Directors of our Company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a committee thereof as well as to the extent of

189

other remuneration or reimbursement of expenses payable to them and also to the extent of dividend payable to them and other distributions in respect of the Equity Shares held by them. Our individual Directors (excluding the Promoters of our Company) may also be deemed to be interested to the extent of Equity Shares that may be subscribed for and allotted to them out of the present Issue in terms of this Draft Red Herring Prospectus and also to the extent of dividend payable to them and other distributions in respect of the said Equity Shares. Further, our individual Promoters are also directors on the boards of certain Group entities and they may be deemed to be interested to the extent of transactions, if any entered into by our Company with these Group entities. For the payments that are made by our Company to certain Group entities, please refer to the section titled "Financial Statements" beginning on page 208 of this Draft Red Herring Prospectus. Except as stated otherwise in this Draft Red Herring Prospectus, we have not entered into any contract, agreements or arrangements in which our Promoters are directly or indirectly interested and no payments have been made to them in respect of the contracts, agreements or arrangements which are proposed to be made with them including the properties purchased by our Company other than in the normal course of business. Common Pursuits Except for one of our Group Entity, Cambay SEZ Hotels Private Limited, an SPV formed for the purpose of development of hotel property at the Dahej SEZ, our Promoters or directors are not involved with any ventures in the same line of activity or business as that of our Company. Our Company holds 37.50% in the aforementioned SPV. Confirmations Further, none of our Promoters have been declared as a willful defaulter by the RBI or any other governmental authority and there are no violations of securities laws committed by our Promoters in the past or are pending against them. None of our Promoters, Promoter Group or Directors or persons in control of our Company or bodies corporate forming part of our Promoter Group have been (i) prohibited from accessing the capital markets under any order or direction passed by SEBI or any other authority or (ii) refused listing of any of the securities issued by such entity by any stock exchange, in India or abroad. Payment or benefits to our Promoters No payment or benefit has been made to our Promoters except as disclosed in the related party transaction. For further details, please refer to Annexure 18 titled "Restated Standalone Statement of Related Party Transactions" in the section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus. Our Promoter Group I. No. Individual Promoter Group Name of the Person Relationship

Relatives of Mr. Sanjay Gupta 1. Mr. Raghunath Prasad Gupta 2. Ms. Vijayalaxmi R. Gupta 3. Ms. Neelu Gupta 4. Master Neelabh Gupta 5. Ms. Sanjana Gupta 6. Mr. Sandeep Gupta Mr. Rohit Gupta 7. Ms. Sarita Gupta

Father Mother Spouse Son Daughter Brother Brothers spouse

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No.

Name of the Person

Relationship

Ms. Anami Gupta 8. Mr. Vidya Sagar Gupta 9. Mr. Rajan Gupta 10. Ms. Sandhya Gupta Relatives of Ms. Neelu Gupta 1. Mr. Vidya Sagar Gupta 2. Ms. Prabha Rani Gupta 3. Mr. Rajan Gupta 4. Mr. Sanjay Gupta 5. Master Neelabh Gupta 6. Ms. Sanjana Gupta 7. Ms. Kiran Gupta 8. Ms. Sandhya Gupta 9. Mr. Narmadeshwar Nath Gupta 10. Mr. Raghunath Prasad Gupta 11. Ms. Vijayalaxmi R. Gupta 12. Mr. Sandeep Gupta Mr. Rohit Gupta II. Entities forming a part of Promoter Group (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii)

Spouses Father Spouses Brother Spouses Sister Father Mother Brother Spouse Son Daughter Brothers spouse Sister Sisters Spouse Spouses Father Spouses Mother Spouses Brother

Neesa Agritech and Foods Limited Neesa Technologies Private Limited Gujarat Syscom Technologies Private Limited Neesa Education Private Limited Neesa Infrastructure Limited Neesa Energy Private Limited Cambay Hotels and Holidays Limited Orient Spa Limited Neesa Township and Properties Limited Neesa Sales Private Limited Technosys Services Private Limited Sunshreya Infrastructure Private Limited Cambay SEZ Hotels Private Limited

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OUR GROUP ENTITIES I. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 1. Companies forming part of our Group Entities: Name of Group Entities Neesa Infrastructure Limited Neesa Agritech and Foods Limited Orient Spa Limited Neesa Technologies Private Limited Neesa Financial Services Limited Neesa Township and Proeprties Limited Cambay SEZ Hotels Private Limited Cambay Hotels and Holidays Limited Neesa Education Private Limited Gujarat Syscom Technologies Private Limited Neesa Energy Private Limited Technodot Engineers Limited Neesa Sales Private Limited Neesa Biotech Private Limited Neesa Infrastructure Limited ("NIL") NIL, formerly known as Neesa Infrastructure Private Limited, was incorporated on February 5, 2003 bearing CIN U4520GJ2003PLC062049. NIL is carrying on the business of high grade casting and MS Ingot casting production. The registered office of NIL is presently situated at Block No.278/279, Panchratna Industrial Estate, Opp Arnec Cold Storage, Changodar 382 213. The Company Law Board, New Delhi Bench, has passed an order dated July 16, 2010 for the change in the registered office of NIL from the State of Delhi to the State of Gujarat. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Arvind Gupta Mr. Sanjay Gupta Ms. Neelu Gupta Mr. Shailesh Modi Designation Managing Director Director Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of equity shares Shareholding held (%) 92,01,250 96.89 1,65,000 1.74 69,996 0.74 60,000 0.63 1 Negligible 1 Negligible 1 Negligible 1 Negligible 94,96,250 100.00

Particulars Mr. Sanjay Gupta Ms. Neelu Gupta Mr. Shailesh Amin Ms. Sanjana Gupta Mr. Kiran Patel Mr. Shailesh Modi Mr. Pankaj Mudholkar Mr. Aman Shah Total

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Financial Performance The audited financial performance for the last three (3) financial years is given below: (` in Lakhs) March 31, 2008 645.50 240.93 2,938.90 144.43 2.24 13.73

Particulars Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value `10) Net Asset Value per equity share (in `) (Face value ` 10)

March 31, 2010 889.00 2,512.30 6,712.42 304.86 4.25 38.26

March 31, 2009 645.50 502.93 4,617.09 261.99 4.06 17.78

NIL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 2. Neesa Agritech and Foods Limited ("NAFL") NAFL, formerly known as Neesa Agritech Limited, was incorporated on November 29, 1994 bearing CIN U01110GJ1994PLC023697. NAFL is carrying on the activities of agri biotechnology and food processing. The registered office of NAFL is situated at Block no.279P, Panchratna Industrial Estate, Changodar 382 213. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Sanjay Gupta Mr. Arvind Gupta Mr. Suresh Kumar Mr. Sandip Shah Designation Director Director Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of equity shares Shareholding held (%) 20,29,997 93.98 1,20,000 5.56 9,980 0.46 20 Negligible 1 Negligible 1 Negligible 1 Negligible 21,60,000 100.00

Particulars Mr. Sanjay Gupta Ms. Neelu Gupta Ms. Sarita Gupta Mr. Sandeep Gupta Mr. Maulin Pandya Mr. Umang Shah Mr. Divyesh Mehta Total

193

Financial Performance The audited financial performance for the last three (3) financial years is given below: (` in Lakhs) March 31, 2008 137.50 67.84 197.13 20.02 1.78 14.89

Particulars Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value `10) Net Asset Value per equity share (in `) (Face value ` 10)

March 31, 2010 165.5 332.83 1,404.87 178.49 10.79 30.11

March 31, 2009 165.50 154.33 551.42 58.48 3.65 19.31

NAFL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 3. Orient Spa Limited ("OSL") OSL, formerly known as Orient Spa Private Limited, was incorporated on January 9, 2008 bearing CIN U85100GJ2008PLC052614. OSL is carrying on the activities of Spa therapies and selling of spa products. The registered office of OSL is situated at Cambay Square, Plot No.X-24, G.I.D.C Electronics Estate, Sector 25, Gandhinagar 382 044. Most of our properties have spa facilities that have been set-up by OSL. OSL has also launched a pioneering spa-training school 'Orient Spa Academy' in collaborative partnership with the internationally renowned Thai Spa Academy, Lanna. It offers short-term courses in international spa therapies at our Gandhinagar and Udaipur properties. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Sanjay Gupta Ms. Sanjana Gupta Mr. Prawin Dwary Mr. Hemant Patel Designation Director Director Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of equity shares Shareholding held (%) 16,19,995 75.00 5,40,000 25.00 1 Negligible 1 Negligible 1 Negligible 1 Negligible 1 Negligible 21,60,000 100.00

Particulars Ms. Neelu Gupta Ms. Sanjana Gupta Mr. Sanjay Gupta Mr. Arvind Gupta Mr. Prawin Dwary Mr. Vijay Rawal Mr. Hemant Patel Total

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Financial Performance The audited financial performance for last two (2) financial years is given below: ` in Lakhs) March 31, 2009* 1.00 11.78 100.24 11.78 117.82 126.94

Particulars Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value `10) Net Asset Value per equity share (in `) (Face value ` 10)
*Figures for fifteen (15) Months ended on March 31, 2009.

March 31, 2010 1.00 31.44 169.94 19.66 196.62 323.78

OSL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 4. Neesa Technologies Private Limited ("NTPL") NTPL, formerly known as Gujarat Sysport Services Private Limited, was incorporated on March 16, 2000 bearing CIN U72200GJ2000PTC037577. NTPL is carrying on the business of manufacturers, importers, exporters, assemblers, hires and repairers of and/or dealers in and marketing of computer hardwares, software and information technology products, electronics and communication (voice, data and video) etc. The registered office of NTPL is situated at 9th floor, Cambay Grand, behind PERD Center, near Sola overbridge, Thaltej, Ahmedabad 380 054. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Sanjay Gupta Ms. Sanjana Gupta Mr. Prawin Dwary Mr. Arvind Gupta Mr. Suresh Kumar Mr. Sandip Shah Designation Director Director Director Director Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of equity shares Shareholding held (%) 6,25,000 63.24 3,33,332 33.73 25,000 2.53 5000 0.51 1 Negligible 1 Negligible 1 Negligible 9,88,335 100.00

Particulars Ms. Sanjana Gupta Mr. Sanjay Gupta Neesa Infrastructure Limited Ms. Sarita Gupta Mr. Maulin Pandya Mr. Umang Shah Mr. Divyesh Mehta Total

195

Financial Performance The audited financial performance for the last three (3) financials years is given below: Particulars Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value `10) Net Asset Value per equity share (in `) (Face value ` 10) March 31, 2010 98.83 198.71 300.85 56.14 6.91 30.11 March 31, 2009 65.50 75.90 113.08 20.36 3.11 21.59 (` in Lakhs) March 31, 2008 65.50 55.54 75.68 17.24 2.63 18.48

NTPL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 5. Neesa Financial Services Limited ("NFSL") NFSL, formerly known as Dahej Thermal Power Private Limited, was incorporated on January 27, 2010 bearing CIN U74999GJ2010PTC059338 with the objective to generate, accumulate, distribution and supply of and to generally deal in electricity or in other forms of energy from any source whatever and to acquire coal and coal mines in India or abroad. However, in the year 2010, the main objects of NFSL was changed to carry on the activities to act as financial and investment consultants on behalf of individuals, firms, associations, societies, companies and other relation to stock, shares, bonds, securities, units, loan, debentures, estates, properties and other assets. The registered office of NFSL is situated at Block No.278, Panchratna Industrial Estate, Opposite Armec Cold Storage, Changodar 382 213. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Sanjay Gupta Mr. Shailesh Modi Mr. Biswajit Sikdar Designation Director Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of shares Shareholding held (%) 35,000 70 10,000 20 3,500 7 1,000 2 200 0.4 200 0.4 100 0.2 50,000 100.00

Particulars Mr. Sanjay Gupta Ms. Neelu Gupta Ms. Sanjana Gupta Mr. Arvind Gupta Mr. Biswajit Sikdar Mr. Shailesh Modi Mr. Suresh Kumar Total

196

Financial Performance Since NFSL has been incorporated in January 2010, NFSL is yet to prepare its financial statements. NFSL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 6. Neesa Township and Properties Limited ("NTPL") NTPL was incorporated on August 13, 2010 bearing CIN U70101GJ2010PLC062166 with the objective to business of colonizers, builders, real estate developers, contractors, designers, architects, decorators, furniture consultants, constructors, & brokers of all types of buildings and structures. NTPL has not yet started its commercial operations. The registered office of NTPL is situated at Plot No. X-24, G.I.D.C Electronics Estate, Sector 25, Gandhinagar 382 044. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Sanjay Gupta Ms. Neelu Gupta Mr. Arvind Gupta Designation Director Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of shares Shareholding held (%) 16,370 32.74 16,300 32.60 16,300 32.60 1,000 2.00 10 0.02 10 0.02 10 0.02 50,000 100.00

Particulars Mr. Sanjay Gupta Ms. Neelu Gupta Ms. Sanjana Gupta Mr. Arvind Gupta Mr. Gopa Kumar Pillai Mr. Radhesh Bhatt Mr. Hemant Patel Total Financial Performance

Since NTPL has been incorporated in August 2010, NTPL is yet to prepare its financial statements. NTPL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 7. Cambay SEZ Hotels Private Limited ("CSHPL") CSHPL, formerly known as Dahej Hospitality Private Limited, was incorporated on January 9, 2009 bearing CIN U55101GJ2009PTC055864 with an objective to establish and run hotels, resorts, motels, clubs, residential accommodations, holiday home, complexes, sports, indoor and outdoor games, amusement parks for members, tourists, visitors and to provide all kinds of food and beverages. The

197

registered office of CSHPL is situated at Plot No.X-24, G.I.D.C Electronic Estate, Sector 25, Gandhinagar 382 044. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Sanjay Gupta Mr. Arvind Gupta Designation Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) Number of shares Shareholding (%) 15,00,000 15,00,000 5,00,000 4,90,000 9,900 100 40,00,000 37.50 37.50 12.50 12.25 0.25 0.00 100.00

Name of the Shareholder Mr. Sanjay Gupta Neesa Leisure Limited Neesa Infrastructure Limited Neesa Foods and Agritech Limited Ms. Sanjana Gupta Mr. G.K.Pillai Total Financial Performance

The audited financial performance for the financial year ended March 31, 2010 is given below: (` in Lakhs) March 31, 2010 1.00 ----10.00

For the financial year ended Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value `10) Net Asset Value per equity share (in `) (Face value ` 10)

CSHPL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 8. Cambay Hotels and Holidays Limited ("CHHL") CHHL, formerly known as Cambay Hotels and Holidays Private Limited, was incorporated on February 11, 2008 bearing CIN U55101GJ2008PLC052883. CHHL was incorporated with the objective to operate hotels, motels, resorts, clubs, residential accommodations, complexes, malls, indoor and outdoor games, amusements parts, etc. The registered office of CHHL is situated at Plot No. 24, G.I.D.C Electronics Estate, Sector 25, Gandhinagar 382 044. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Sanjay Gupta Ms.Neelu Gupta Designation Director Director

198

Name of the Director Mr. Manoj Singhal Mr. Prawin Dwary Mr. Arvind Gupta

Designation Director Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of shares Shareholding Held (%) 10,00,000 50.00 9,99,995 49.99 1 Negligible 1 Negligible 1 Negligible 1 Negligible 1 Negligible 20,00,000 100.00

Particulars Neesa Leisure Limited Mr.Sanjay Gupta Ms. Neelu Gupta Ms. Sanjana Gupta Mr. Arvind Gupta Mr. Prawin Dwary Mr. Hemant Patel Total Financial Performance

The audited financial performance for the financial year ended as on March 31, 2010 and March 31, 2009 are given below: (` in Lakhs) March 31, 2009* 1.00 (4.76) 0.00 (4.76) 0.00 --

For the financial year ended Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value ` 10) Net Asset Value per equity share (in `) (Face value ` 10)
*Figures for fifteen (15) Months ended on March 31, 2009.

March 31, 2010 1.00 6.39 233.96 11.15 111.50 73.20

CHHL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up. CHHL has a negative net worth for the F.Y.2008-2009. 9. Neesa Education Private Limited ("NEPL") NEPL was incorporated on May 9, 2010 bearing CIN U80301GJ2010PTC060597. NEPL is carrying on activities in the field of education. The registered office of NEPL is situated at FP-8, Cambay Plazza, C/o Cambay Grand, Behind Perd Center, Near Sola Overbridge, Thaltej, Ahmedabad 380 054. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Sanjay Gupta Mr. Shailesh Modi Mr. Biswajit Sikdar Designation Director Director Director

199

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of shares Shareholding held (%) 9,999 99.99 1 Negligible 10,000 100.00

Particulars Mr. Sanjay Gupta Mr. Shailesh Modi Total Financial Performance

Since NEPL has been incorporated in May 2010, NEPL is yet to prepare its financial statements. NEPL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 10. Gujarat Syscom Technologies Private Limited ("GSTPL") GSTPL was incorporated on November 18, 1997 bearing CIN U31909GJ1997PTC033328. GSTPL leverages its extensive experience in the industry to offer superior quality solutions and services at very competitive rates. The services provided by GSTPL include networking Services, hardware services, office automation, telecommunications, repairing services and software services. The registered office of GSTPL is situated at 1st Floor, Cambay Grand, Behind PERD Center, Near Sola Overbridge, Thaltej, Ahmedabad 380 054. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Suresh Kumar Ms. Sanjana Gupta Designation Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of shares Shareholding held (%) 1,39,100 99.93 100 0.07 1,39,200 100.00

Particulars Ms. Sanjana Gupta Ms. Preety Gupta Total Financial Performance

The audited financial performance for the last three (3) financial years is given below: (` in Lakhs) March 31, 2008 13.92 91.166 416.61 26.73 19.21

Particulars Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value ` 10)

March 31, 2010 13.92 170.35 645.78 30.72 22.07

March 31, 2009 13.92 139.63 960.56 48.46 34.82

200

Particulars Net Asset Value per equity share (in `) (Face value ` 10)

March 31, 2010 132.38

March 31, 2009 110.31

March 31, 2008 75.44

GSTPL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 11. Neesa Energy Private Limited ("NEPL") NEPL was incorporated on July 2, 2004 bearing CIN U40105GJ2004PTC044402. NEPL is carrying on trading activity for products related to rolling mills and casting projects. The registered office of NEPL is situated at Block No. 279P, Pancharatna Industrial Estate, Changodar 382 213. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Kapil Sharma Mr. Nitish Kumar Designation Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of shares Shareholding held (%) 9,999 99.99 1 0.01 10,000 100.00

Particulars Ms. Sanjana Gupta Ms. Preety Gupta Total Financial Performance

The audited financial performance for the last two (2) financial years is given below: (` in Lakhs) March 31, 2008 1.00 0.52 5.30 0.52 5.23 (122.19)

Particulars Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value ` 10) Net Asset Value per equity share (in `) (Face value ` 10)

March 31, 2009 1.00 0.86 8.50 0.34 3.36 (118.21)

The annual accounts for the year ended March 31, 2010 are yet to be prepared and filed with the RoC.

NEPL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 12. Technodot Engineers Limited ("TEL") TEL, formerly known as Technodot Engineers Private Limited, was incorporated on January 15, 1999 bearing CIN U51909DL1999PLC097954. TEL is into providing services to property managers, IT & ITES, banks & corporate offices. TEL provides services relating to corporate maintenance services, corporate

201

office maintenance services, corporate office maintenance, office maintenance services, housekeeping services, office boy services, receptionist cum-telephone operator services, pantry services, mail room services, reprographic services, pest control services, security services, florist horticulture & landscaping, carpet & upholstery shampooing, maintenance services (electrical, carpentry, plumbing & horticultural), exterior cleaning services and courier boys/ delivery boys/ loaders/ drives services. The registered office of TEL is situated at 3E/12, 3rd Floor, Jhandewala Extension, New Delhi 110 055. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Radhesh Bhatt Mr. Rohit Gupta Mr. Suresh Kumar Mr. Biswajit Sikdar Designation Director Director Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of shares Shareholding held (%) 49,994 99.99 1 Negligible 1 Negligible 1 Negligible 1 Negligible 1 Negligible 1 Negligible 50,000 100.00

Particulars Mr. G.K. Pillai Mr. Rajendra Patel Mr. Umang Shah Mr. Maulin Pandya Mr. Prawin Dwary Mr. Ravi Patel Mr. Kiran Patel Total Financial Performance

The audited financial performance for the last three (3) financial years is given below: Particulars Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value ` 10) Net Asset Value per equity share (in `) (Face value ` 10) March 31, 2010 1.68 97.54 1,245.23 94.95 564.49 590.60 March 31, 2009 1.68 2.58 0.70 (0.19) 0.00 25.36 (` in Lakhs) March 31, 2008 1.68 2.78 0.70 (0.28) -26.55

TEL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 13. Neesa Sales Private Limited ("NSPL") NSPL, formerly known as Cambay Sales Private Limited, was incorporated on April 1, 2009 bearing CIN U74300GJ2009PTC056510. NSPL is a full fledge sales and marketing company providing marketing and promotion solutions as well as undertake sales assignment of various products and services related to hospitality, education etc. The registered office of NSPL is situated at Plot No.X-24, G.I.D.C Electronic Estate, Sector 25, Gandhinagar 382 044.

202

Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. G.K. Pillai Mr. Kapil Sharma Designation Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) No. of shares Shareholding held (%) 5,000 50.00 5,000 50.00 10,000 100.00

Particulars Mr. G.K. Pillai Mr. Kapil Sharma Total Financial Performance

The audited financial performance for the financial year ended on March 31, 2010 is given below: For the financial year ended Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value ` 10) Net Asset Value per equity share (in `) (Face value ` 10) March 31, 2010 1.00 ------

NSPL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. 14. Neesa Biotech Private Limited ("NBPL") NBPL was incorporated on October 21, 2004 bearing CIN U73100GJ2004PTC044938. NBPL is carrying on activities relating to products distribution like hybrid seeds, genetically modified seeds of field crops, horticulture crops, medicinal and aromatic plants, primary and secondary plants metabolities, bio-fules, bio-pesticides, bio-fertilizers, amino acids, organic acids etc. The registered office of NBPL is situated at Block No.279, Pancharatna Industrial Estate, Opp. Aramac Cold Storage, Changodar 382 213. Board of Directors as on the date of this Draft Red Herring Prospectus Name of the Director Mr. Sanjana Gupta Mr. Suresh Kumar Designation Director Director

Shareholding Pattern as on the date of this Draft Red Herring Prospectus (Equity Shares of face value `10 each) Particulars No. of shares Shareholding held (%) Mr. Sanjana Gupta 9,99,500 99.95

203

Particulars Mr. Shailesh Modi Total Financial Performance

No. of shares held 500 10,00,000

Shareholding (%) 0.05 100.00

The audited financial performance for the last three (3) financial years is given below: (` in Lakhs) March 31, 2008 100.00 99.00 ---17.62

Particulars Equity Capital Reserves and Surplus (excluding revaluation reserves) Income/Sales Profit (Loss) after Tax Earnings per Share (in `) (Face value ` 10) Net Asset Value per equity share (in `) (Face value ` 10)

March 31, 2010 100.00 99.89 196.75 0.43 0.04 17.84

March 31, 2009 100.00 99.46 200.38 0.46 0.05 17.76

NBPL is an unlisted company and has not made any public or rights issue since the date of its incorporation. It has not become a sick company under SICA, is not under winding up and does not have negative net worth. Defunct group companies None of our group companies are defunct companies. Disassociation by our Promoters from entities in last three (3) years Our Promoters have not disassociated themselves from any Company in the past three (3) years. Common Pursuits Except for one of our Group Entitiy, Cambay SEZ Hotels Private Limited, an SPV formed for the purpose of development of hotel property at the Dahej SEZ, our Promoters or directors are not involved with any ventures in the same line of activity or business as that of our Company. Our Company holds 37.50% in the aforementioned SPV. Related Party Tansactions There have been no sales or purchases between entities in our Group Entities and Promoter Group of our Company exceeding in value in the aggregate 10% of the total sales or purchases of our Company. For further details, please refer to Annexure 18 titled "Restated Standalone Statement of Related Party Transactions" in the section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus. Some of our Group Entities have commercial interest in our Company. For further details, please refer to Annexure 18 titled "Restated Standalone Statement of Related Party Transactions" in the section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus.

204

Changes in Accounting Policies in last three (3) years Our Company has revised its Financial Statements for the year ended March 31, 2010 to give effect to change in accounting policy in respect of income recognition from Time Share Membership admission fees constituting income of the year in which membership is sold, recognizing the same as income to the extent of 60% of Membership fee instead of 80% recognised in the financial statements previously approved by our Board of Director on May 12, 2010. The effect of the change in accounting policy for revenue recognition of Time Share Income has been given from the F.Y. 2009-2010. The above mentioned change in accounting policy has been adopted by our Board in view of the upward revision of the Time Share Membership Fees w.e.f. F.Y. 2009-2010 which entitles the member more benefits over the membership period, its should adopt conservative accounting policy for recognizing the revenue in the initial year of membership and also provide for its future liability. During the year ended March 31, 2006 and March 31, 2007 our Company had not accounted for its gratuity and leave encashment liability. To have a uniform accounting policy for all the years, an actuarial valuation has been made for gratuity and leave salary using the projected unit credit method and adjustments have been in the respective years.

205

RELATED PARTY TRANSACTION For details on related party transactions of our Company, please refer to Annexure 18 titled "Restated Standalone Statement of Related Party Transactions" in the section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus.

206

DIVIDEND POLICY The declaration and payment of dividends will be recommended by our Board of Directors and approved by our shareholders, in their discretion, and will depend on a number of factors, including but not limited to our earnings, general financial conditions, capital requirements, results of operations, contractual obligations and overall financial position, applicable Indian legal restrictions, our Articles of Association and other factors considered relevant by the Board of Directors. Our Company has not paid any dividends in the in last five (5) years and it has no stated dividend policy.

207

SECTION V: FINANCIAL INFORMATION No. 1. 2. Name of the Person Auditors Report dated March 29, 2011 on the restated standalone financial statements as of and for the years ended March 31, 2006, 2007, 2008, 2009, 2010 and six (6) months ended on September 30, 2010. Auditors Report dated March 29, 2011 on the restated Consolidated financial statements as of and for the years ended March 31, 2010 and six (6) months ended on September 30, 2010.

208

AUDITORS REPORT ON RESTATED STANDALONE FINANCIAL INFORMATION OF NEESA LEISURE LIMITED (as required by Part II of Schedule II to the Companies Act, 1956) To The Board of Directors Neesa Leisure Limited Plot No.X-22, 23 & 24, G.I.D.C. Electronics Estate, Sector-25, Gandhinagar - 382044 Gujarat, India 1. We have examined the attached Restated Standalone Statement of assets and liabilities of Neesa Leisure Limited (the Company) as of September 30, 2010, March 31, 2010, March 31, 2009, March 31, 2008, March 31, 2007, and March 31, 2006 and the related Restated Standalone Statement of profits and losses and Restated Standalone Statement of cash flows for the six months ended September 30, 2010 and financial years ended March 31, 2 0 1 0 , M a r c h 3 1 , 2009, March 31, 2008, March 31, 2007, and March 31, 2006 (collectively the Restated Standalone Summary Statements). These Restated Standalone Summary Statements have been prepared by the Company and approved by the Board of Directors, in accordance with the requirements of : (a) (b) Paragraph B(1) of Part II of Schedule II of the Companies Act, 1956 (the Act); the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (SEBI Regulations).

2.

We have examined such restated financial information taking into consideration: (a) the terms of reference to our engagement, requesting us to carry out the assignment, in connection with the Draft Red Herring Prospectus being issued by the Company for its proposed Initial Public Offering (IPO) of equity shares and The Guidance Note on Reports in Company Prospectuses (Revised) issued by the Institute of Chartered Accountants of India.

(b)

3.

The Restated Standalone Summary Statements of the Company have been extracted by the management from the Audited Financial Statements of the Company for the period / years ended September 30, 2010, March 31, 2010, March 31, 2009, March 31, 2008, March 31, 2007, and March 31, 2006 which have been approved by the Board of Directors. In accordance with the requirements of Paragraph B(1) of Part II of schedule II of the Act, the SEBI Regulations and terms of our engagement agreed with you, we report that : (a) The Restated Standalone Statement of Assets and Liabilities as at September 30, 2010, March 31, 2010, March 31, 2009, March 31, 2008, March 31, 2007, and March 31, 2006 examined by us, as set out in Annexure 1 to this report, is after making such adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies and Notes to the Restated Standalone Summary Statements as set out in Annexure-4 to this report. The Restated Standalone Statement of Profits and Losses of the company for the years / periods ended September 30, 2010, March 31, 2010, March 31, 2009, March 31, 2008, March 31, 2007, and March 31, 2006 examined by us, as set out in Annexure 2 to this report are after making such adjustments and regrouping as in our opinion were appropriate and

4.

(b)

209

(c)

more fully described in Significant Accounting Policies and Notes to the Restated Standalone Summary Statements as set out in Annexure- 4 to this report. The Restated Standalone Statement of Cash flow of the company for the years / periods ended September 30, 2010, March 31, 2010, March 31, 2009, March 31, 2008, March 31, 2007, and March 31, 2006 examined by us, as set out in Annexure 3 to this report are after making such adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies and Notes to the Restated Standalone Summary Statements as set out in Annexure-4 to this report.

5.

based on the above, we are of t he opinion that the Restated Standalone Summary Statements have been made, after incorporating: i) Adjustments for the changes in accounting policies retrospectively in respective financial years to reflect the same accounting treatment as per changed accounting policy for all the reporting periods. Adjustments for the material amounts in the respective financial years to which they relate. And there are no extra-ordinary items that need to be disclosed separately in the accounts and qualifications requiring adjustments.

ii) iii)

6.

We have not audited any financial statements of the Company as of any date or for any period subsequent to September 30, 2010. Accordingly, we express no opinion on the financial position, results of operations or cash flows of the Company or its subsidiary as of any date or for any period subsequent to September 30, 2010. At the Companys request, we have also examined the following financial information proposed to be included in the Draft Offer Document, prepared by the management and approved by the Board of Directors of the Company and annexed to this report relating to the Company for the six months ended September 30, 2010 and for the financial years ended March 31, 2010, March 31, 2009, March 31, 2008, March 31, 2007 and March 31, 2006. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) Annexure -5 Restated Standalone Statement of Income from operations; Annexure -6 Restated Standalone Statement of Other Income; Annexure-7 Restated Standalone Statement of Investments; Annexure-8 Restated Age wise Analysis of Sundry Debtors on Standalone basis; Annexure-9 Restated Standalone Statement of Loans & Advances; Annexure-10 Restated Standalone Statement of Secured Loans ; Annexure-11 Restated Standalone Statement of Unsecured Loans ; Annexure-12 Restated Standalone Statement of Current Liabilities & Provisions ; Annexure-13 Restated Standalone Statement of Share Capital; Annexure-14 Restated Standalone Statement of Accounting Ratios Annexure-15 Restated Standalone Statement of Dividend Annexure-16 Restated Standalone Statement of Capitalization as on 30th September, 2010; Annexure-17 Restated Standalone Statement of Contingent Liabilities; Annexure-18 Restated Standalone Statement of Related Party Transactions; Annexure-19 Restated Standalone Statement of Tax Shelter;

7.

In our opinion, the other Standalone financial information as disclosed in the Annexures to this report as referred to above, read with the respective Significant Accounting Policies and Notes to Restated Standalone Summary Statements as set out in Annexure-4 and prepared after making the adjustments and regrouping as considered appropriate, have been prepared in accordance with Part II of Schedule II of the Act and the SEBI Regulations. 8. This report should not be in any way construed as a re issuance or re dating of any of the previous audit

210

reports issued by us, nor should this report be construed as a new opinion on any of the financial statements referred to herein. 9. This report is intended solely for your information and for inclusion in the Offer Document in connection with the proposed IPO of the Company and is not to be used, referred to or distributed for any other purpose except with our prior written consent.

For ISK & Associates Chartered Accountants Firm Registration No: 115764W I.S.Kadri Partner Membership No. 33991 Ahmedabad Dated: March 29, 2011

211

ANNEXURE 1 RESTATED STANDALONE STATEMENT OF ASSETS & LIABILITIES (` in Lakhs) As at March 31, 2006 1094.41 30.69 1,063.73 40.77 1,022.96

Sr. No. A

Particulars

As at Sept. 30, 2010 54,021.86 3,383.98 50,637.88 4,011.57 46,626.31

As at March 31, 2010 47,019.09 2,349.68 44,669.41 4,011.57 40,657.84

As at March 31, 2009 26,540.79 935.95 25,604.83 4,011.57 21,593.26

As at March 31, 2008 13,260.34 320.96 12,939.38 4,011.57 8,927.81

As at March 31, 2007 9,189.03 99.29 9,089.74 4,011.57 5,078.17

Fixed Assets : Gross Block Less : Depreciation Net Block Less : Revaluation Reserve Net Block after adjustment of Revaluation Reserve Add: Capital Work in Progress

11,042.63 57,668.94 816.41

11,710.44 52,368.28 566.30

18,884.28 40,477.54 1.41

12,724.57 21,652.38 0.10

1,680.58 6,758.75 -

871.78 1,894.74 -

B C

Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and bank balances Loans and Advances Total Liabilities and Provisions Secured Loans Unsecured Loans Current Liabilities and Provisions Total Deferred Tax Liability Net worth (A+B+C-DE) Net worth Represented by : Equity Share Capital Preference Share Capital Share Premium Share Application Money Reserves & Surplus Less: Revaluation Reserve Net Reserves & Surplus Net worth

169.72 5,234.63 554.92 5,947.48 11,906.76

166.54 4,383.71 1,076.29 4,166.33 9,792.87

65.33 1,573.46 1,524.11 2,256.36 5,419.27

64.03 394.22 2,725.58 2,777.74 5,961.56

21.09 105.95 259.98 1,742.04 2,129.06

5.76 56.80 257.32 276.86 596.74

34,986.79 758.72 8,562.86 44,308.37 1,450.89 24,632.85

34,332.95 159.82 6,685.08 41,177.85 1,078.38 20,471.22

24,788.16 57.77 4,095.12 28,941.04 525.12 16,432.06

16,172.45 30.01 1,570.70 17,773.16 207.00 9,633.88

4,544.50 160.94 634.18 5,339.63 85.96 3,462.22

1,125.60 154.48 1,280.08 31.35 1,180.05

2,560.51 6,600.00 11,860.57 396.00 7,227.33 4,011.57 3,215.76 24,632.85

2,541.08 4,000.00 11,501.01 6440.69 4,011.57 2429.13 20,471.22

2,305.09 4,000.00 7,192.40 1,800.00 5,146.13 4,011.57 1,134.56 16,432.06

2,282.05 6,715.44 4,647.95 4,011.57 636.38 9,633.87

1,516.31 950.26 808.68 4,198.54 4,011.57 186.97 3,462.22

599.29 545.56 75.96 40.77 35.19 1,180.04

212

The accompanying summary of significant accounting policies and notes (Annexure 4) are an integral part of this statement.

213

ANNEXURE-2 RESTATED STANDALONE STATEMENT OF PROFIT & LOSS Particulars Half Year ended Sept. 30, 2010 6,872.13 142.40 (5.26) 7,009.27 Year ended March 31, 2010 Year ended March 31, 2009 Year ended March 31, 2008 (` in Lakhs) Year Year ended ended March March 31, 2007 31, 2006

INCOME Income from Operations Other Income Increase /( Decrease) in Inventories Total Income EXPENDITURE F& B Consumed Personnel Expenses Operating & Administrative Expenses Selling and Distribution Expenses Profit Before Interest, Depreciation & Tax Depreciation / Amortization Interest & Finance Charge Profit before Tax Provision for Tax - Current Tax - MAT Credit entitlement -Deferred tax -Fringe Benefit Tax Profit After Tax Add : Balance brought forward from previous year Balance available for Appropriation APPROPRIATIONS Less : Transfer to Debenture Redemption Reserve Capitalized for Bonus Issue Transfer to general reserve Proposed dividend Tax on proposed dividend

10,304.21 255.74 78.14 10,638.10

5,233.66 85.42 (1.42) 5,317.66

2,646.24 116.95 29.33 2,792.52

1,092.68 6.22 14.48 1,113.38

312.80 16.04 2.54 331.38

312.32 617.80 1,425.51 376.17 4,277.46 1,034.30 2,046.17 1,196.99 (245.61) 207.99 (372.52) 786.86 2,169.44 2,956.30

428.96 1,301.16 2,590.08 577.11 5,740.79 1,496.97 2,310.40 1,933.42 (358.87) 174.02 (553.26) 1,195.31 1,080.54 2,275.85

221.25 742.10 1,800.84 238.10 2,315.37 638.79 745.59 930.99 (106.22) 11.04 (318.12) (19.50) 498.19 626.38 1,124.57

178.97 350.35 651.42 86.86 1,524.91 227.46 581.34 716.11 (136.92) (121.04) (8.75) 449.41 176.97 626.38

103.49 155.57 362.07 20.12 472.12 74.39 158.33 239.40 (30.47) (54.62) (2.54) 151.77 25.20 176.97

49.34 45.17 96.49 5.24 135.13 26.72 18.07 90.35 (0.81) (30.33) (0.92) 58.29 1.69 59.98

52.83 0.20

105.66 0.64 0.11

44.02 -

34.79

0.03 Balance carried to Balance sheet 2,903.23 2,169.44 1,080.54 626.38 176.97 25.20 The accompanying significant accounting policies and notes (Annexure 4) are an integral part of this statement.

214

ANNEXURE-3 RESTATED STANDALONE STATEMENT OF CASH FLOW (` in Lakhs) Year ended March 31, 2006

No.

Particulars

Half Year ended Sept. 30, 2010

Year ended March 31, 2010

Year ended March 31, 2009

Year ended March 31, 2008

Year ended March 31, 2007

A]

Cash Flow from Operating Activities Net Profit Before Tax Adjustments: Depreciation / Amortization Interest Income Lease and Rental Income Interest & financial charges Operating Profit before working capital changes Adjustments for (Increase)/Decrease in Inventories (Increase)/Decrease in Trade Receivable (Increase)/Decrease in Loans and Advances Increase/(Decrease) in Current Liabilities Cash Generated from operations Taxes Paid Net cash Generated from operating activities (A) 1,196.99 1,933.42 930.99 716.11 239.40 90.35

1,034.30 (12.66) (91.87) 2,046.17

1,413.72 (21.86) (174.47) 2,310.40

615.00 (11.92) (14.50) 745.59

221.67 (1.51) (110.55) 581.34

68.60 (0.21) (5.52) 158.33

25.87 (14.20) 18.07

4,172.92

5,461.21

2,265.16

1,407.07

460.60

120.08

(3.18) (850.93) (1573.16)

(101.22) (2,810.25) (1,735.94)

(1.30) (1179.24) 532.41

(42.94) (288.27) (1,035.70)

(15.33) (49.15) (1465.17)

(2.56) (51.66) (256.11)

1,652.08

2,382.43

2,564.04

886.18

456.59

(47.16)

3,397.73

3,196.24

4,181.07

926.34

(612.47)

(237.41)

(19.51) 3,378.22

(152.08) 3,044.16

(165.37) 4,015.70

(95.32) 831.02

(9.90) (622.37)

(1.09) (238.50)

B]

Cash flow from Investing Activities Purchase of fixed assets Purchase of Investments (Net)

(6,334.96) (250.11)

(13,304.46) (564.89)

(19,440.16) (1.31)

(15,115.30) (0.10)

(4,932.61) -

(1,324.78) -

215

No.

Particulars

Interest Income Lease and Rental Income Net cash used in Investing Activities (B) C] Cash flow from Financing Activities Proceeds from issue of Equity Share Capital (including premium) Proceeds from Preference Share Capital Increase/(Decrease) in Share Application Money Proceeds from borrowings (net) Proceed from Capital Subsidy Preference Dividend Paid Interest & financial charges Net cash generated from Financing Activities (C) Net Increase in Cash and Cash equivalents ( A+B+C) Cash and Cash equivalents (Refer Note 3 ) at the beginning of the year at the end of the year Net Increase in Cash and Cash equivalents

Half Year ended Sept. 30, 2010 12.66 91.87

Year ended March 31, 2010 21.86 174.47

Year ended March 31, 2009 11.92 14.50

Year ended March 31, 2008 1.51 110.55

Year ended March 31, 2007 0.21 5.52

Year ended March 31, 2006 14.20

(6,480.53)

(13,673.03)

(19,415.05)

(15,003.35)

(4,926.88)

(1,310.58)

378.99

4,544.60

500.00

6,530.93

1,867.28

409.50

1,100.00

4,000.00

396.00

(1,800.00)

1,800.00

(808.68)

263.12

455.48

2,752.74 (0.63) (2,046.17) 2,580.94

9,646.85 100.00

8,643.47 -

11,497.01 -

3,579.85 -

944.15 10.00

(2,310.40) 10,181.05

(745.59) 14,197.88

(581.34) 16,637.92

(158.33) 5,551.92

(18.07) 1,801.06

(521.37)

(447.81)

(1,201.46)

2,465.59

2.66

251.97

1,076.29 554.92 (521.37)

1,524.11 1,076.29 (447.82)

2,725.58 1,524.11 (1,201.46)

259.98 2,725.58 2,465.59

257.32 259.98 2.66

5.26 257.32 252.06

NOTES TO CASH FLOW STATEMENT

216

1.

The Restated Standalone Statement of Cash flow has been prepared under the indirect method as set out in Accounting Standard 3 (AS 3) Cash flow Statement as issued by ICAI. The accompanying significant accounting policies and notes (Annexure 4) are an integral part of this statement. Cash and Cash equivalents Consist of : Particulars As at September 30, 2010 323.07 153.19 77.70 0.07 0.90 554.92 As at March 31, 2010 885.43 147.37 41.52 1.98 1,076.29 As at March 31, 2009 1,175.38 145.76 178.23 24.74 1,524.11 As at March 31, 2008 2,635.87 23.07 As at March 31, 2007 201.86 45.22 (` in Lakhs) As at March 31, 2006 256.46 0.10

2.

3.

Balance with Schedule Banks: In Current Accounts In Fixed Deposit Accounts Cheques on Hand Cash on Hand Currency On Hand Gold Coin Total

66.63 2,725.58

12.90 259.98

0.76 257.32

217

ANNEXURE 4 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE RESTATED STANDALONE SUMMARY STATEMENTS A. 1. SIGNIFICANT ACCOUTING POLICIES BASIS OF ACCOUNTING a) Basis of preparation The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (GAAP) under the historical cost convention on an accrual basis to comply in all material respects with mandatory Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. b) Accounting policies not specifically referred to otherwise are consistent with the Generally Accepted Accounting Principles followed by the Company.

2.

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

3.

FIXED ASSETS a) Fixed assets are stated at cost of acquisition or construction less depreciation, except revalued assets. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during the construction incurred up to the date of commissioning. Capital Work in Progress includes capital items not installed or Building construction not completed and preoperative expenditure related to and incurred during implementation of projects and pending to be allocated. Vehicles taken on Hire Purchase arrangements, wherein the company has option to acquire the vehicles are accounted for as Fixed Assets.

b)

c)

4.

DEPRECIATION i) ii) iii) iv) Depreciation on Fixed assets is provided on Straight Line Method as per rates prescribed in Schedule-XIV to the Companies Act 1956. Depreciation on Plant & Machinery for Hotel is provided @ 7.42% p.a. on double shift basis. Depreciation on addition to fixed assets during the year is provided on pro-rata basis. Depreciation on Intangible Assets has been provided as per the estimated useful life of the assets i.e. 3 years.

5.

IMPAIRMENT OF ASSETS An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as

218

impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount. 6. PRE-OPERATIVE EXPENSES & ALLOCATION Expenses incurred relating to projects prior to commencement of commercial operations are classified as Pre-operative expenses and disclosed under Capital Work-in-Progress. These expenses are allocated to the relevant fixed assets of the project on a proportionate basis on the respective date of the assets put to use. 7. INVESTMENTS Current Investments are carried at the lower of cost or quoted / fair value, computed category wise. Long Term Investments are stated at cost less any provision for permanent diminution. 8. OPERATING LEASE: Asset acquired on lease where significant portions of the risks and rewards incidental to ownership are retained by the lessor is classified as operating lease. Lease rentals are charged to profit and loss account on accrual basis. 9. INVENTORIES Inventories are valued at lower of Cost determined on FIFO basis or Net Realizable Value. 10. REVENUE RECOGNITION Room Sales is recognised on a day to day basis after the guest checks into the hotels. Income from Food and Beverages are recognised at the point of serving these items to the guests. Banquet Income is recognized at the time the banquet facilities are utilized by the customer. Income stated is exclusive of amount recovered towards Sales Tax, Luxury Tax and Service Tax. Income from vacation ownership and Club Membership, fees related to One time Admission Fee is recognized as income on admission of a member and balance portion of membership fee entitling the member to use the facilities over the membership period, is recognized as income equally over the membership period. Income from educational activity is recognized over the academic period during which the coaching is imparted. Income from long term construction contracts are recognised on the percentage of completion basis in accordance with Accounting Standard (AS)- 7. As the long term contracts necessarily extend beyond one year, revision in costs and revenues estimated during the course of the contract are reflected in the accounting period in which the facts requiring the revision become known.

11.

EMPLOYEE BENEFITS Post-employment benefit: Defined Contribution: Contribution for provident fund are accrued in accordance with applicable statutes and deposited with the Regional Provident Fund Commissioner. Defined Benefit: Companys liabilities towards Defined Benefit Schemes viz. Gratuity benefits and other long term benefit viz. leave encashment are determined using the Projected Unit Credit

219

Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the Balance Sheet date. Actuarial gains and losses are recognised in the Profit and Loss account in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent of benefits are vested, otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested. Short-term employee benefits: Short term employee benefits are charged off at the undiscounted amount in the profit and loss account in the year in which the related service is rendered.

12.

FOREIGN CURRENCY TRANSACTIONS In accordance with Accounting Standard (AS) 11 on Accounting for the Effects of changes in Foreign Exchange Rates, Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction date. Realized gains and losses on settlement of foreign currency transactions are recognised in the Profit and Loss Account, Foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates, and the resultant exchange difference is recognised in the Profit and Loss Account. Monetary items denominated in foreign currency are restated using the exchange rates prevailing at the date of the balance sheet, and the resulting net exchange difference is recognized in the profit and loss account.

13.

BORROWING COSTS Borrowing costs attributable to acquisition, construction or production of qualifying assets are capitalized as part of the cost of that asset, till the asset is ready for use as per Accounting Standard (AS) - 16. Other borrowing costs are recognized as an expense in the year in which these are incurred.

14.

TAXES ON INCOME The provision for current tax is based on the assessable profits of the Company computed in accordance with the applicable provisions of the Income Tax Act, 1961. Minimum Alternate Tax (MAT) eligible for set off in subsequent years (as per Tax Laws), is recognized as an asset by way of credit to the profit and loss account. Deferred Tax resulting from timing difference between book and taxable profit is accounted for using the tax rates and laws that have been enacted as on the Balance Sheet date. The deferred tax asset is recognized only to the extent that there is reasonable certainty that the asset will be realized in future.

15.

PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

16.

PRIOR PERIOD ADJUSTMENTS, ACCOUNTING POLICIES

EXTRAORDINARY

ITEMS

AND

CHANGES

IN

Prior period adjustments, extraordinary items and changes in accounting policies having material impact on the financial affairs of the Company are disclosed.

220

B.

IMPACT OF CHANGES IN ACCOUNTING POLICIES, MATERIAL ADJUSTMENTS AND PRIOR PERIOD ITEMS ADJUSTMENT TO RESTATED STANDALONE STATEMENT OF PROFIT AND LOSS (` in Lakhs) As at March 31, 2006 73.38

1.

No.

Particulars

As at September 30, 2010 760.08

As at March 31, 2010 1,227.56

As at March 31, 2009 712.06

As at March 31, 2008 448.08

As at March 31, 2007

A (i) (ii)

Profit After Tax as per Audited Financial Statement Add/ (Less): Impact of Changes in Accounting Policies Employee Benefits ( Refer Note No. 2(a)(1)(i) ) Revenue Recognition for Vacation Ownership Membership Fees ( Refer Note No 2(a)(1) (ii)) Sub Total [A] Add/ (Less): Impact of Material Adjustments and prior period items: Prior Period Items ( Refer Note No 2 (a) (2) (i) ) Employee Benefits (Refer Note No.2 (a) (2) (ii) ) Adjustment of Miscellaneous Expenditure (Refer Note No.2 (a) (2) (iii) ) Sub Total [B] Adjustments on account of Provision for Taxation (Refer Note No.2 (a) (3) ) MAT Credit Entitlement Current Tax Impact Tax Impact of Earlier Year Sub Total [C] Total Adjustments on account of Restatement {Sub Total (A)+(B)} Profit After Tax as per Restated Financial Statement

157.81

4.87 9.74

(233.81)

4.28

(3.49)

(0.79)

4.87

9.74

(233.81)

4.28

(3.49)

(0.79)

27.51

(29.84) (30.66) 83.25

2.24 30.66 (66.23)

5.79

(0.23) (1.21)

0.09 (21.60)

(i) (ii)

(iii)

27.51

22.75

(33.33)

5.79

(1.44)

(21.51)

C (i) (ii) (iii)

(5.61) (5.61)

(55.86) (8.87) (64.73)

11.04 33.78 8.45 53.27

(3.42) (5.32) (8.74)

1.66 (2.76) (1.10)

7.50 (0.30) 7.20

26.77

(32.24)

(213.87)

1.33

(6.03)

(15.09)

786.85

1,195.31

498.19

449.41

151.77

58.29

221

2.

NOTES ON ADJUSTMENTS : In terms of Schedule VIII, Clause IX (9) of the SEBI (ICDR) Regulations, 2009 and other provisions, the Statement of Assets and Liabilities and the Statement of Profit and Loss Account for half year ended September 30, 2010 and for the years ended March 31, 2010, March 31, 2009, March 31, 2008, March 31, 2007 and March 31, 2006 have been restated as explained below -

(a)

Impact of changes in Profit and Loss Items 1. (i) Impact of changes in Accounting Policies Employee Benefits During the year ended March 31, 2006 and March 31, 2007 the company had not accounted for its gratuity and leave encashment liability. To have a uniform accounting policy for all the years, an actuarial valuation has been made for gratuity and leave salary using the projected unit credit method and adjustments have been made in the respective years. (ii) Revenue Recognition Policy in respect of Vacation Ownership Membership fees During the year ended March 31 2010 the company has changed its accounting policy in respect of income recognition for vacation ownership membership admission fees. It was decided to recognize revenue from vacation ownership membership fees to the extent of 60% in the first year instead of 80% in the first year, as done for the financial year ended March 31 2009. The effect of such changes in accounting policy has been given in the restated financial statement for year ended March 31 2009. 2. (i) Impact of Material Adjustments and prior period items In the Audited Financial Statements for half year ended September 30, 2010 and for the years ended March 31, 2010,2009,2008, 2007 and 2006 the Company has classified certain items as prior period items in Profit & Loss Account. Accordingly, for the purpose of the Restated Summary Statement, the said items have been appropriately adjusted in the respective years to which they pertain. Due to change in estimate of gratuity and leave salary for the year ended March 31, 2009, the additional provision made in the year ended March 31, 2009 has been adjusted in the year ended March 31, 2010. In the restated financial information for the years ended on March 31, 2009, 2008, 2007 & 2006 the Miscellaneous Expenses like preliminary expenses and Deferred Revenue Expenses have been charged to the Profit and Loss Account in the year of incurrence as against the treatment accorded in the audited financial statements where the Miscellaneous Expenditure not written off were carried forward to the next year. Adjustments on account of Provision for Taxation The provision for taxation (current tax and deferred tax) for half year ended September 30, 2010 and for the years ended March 31, 2010, 2009, 2008, 2007, and 2006 has been recomputed on the adjusted profits on the basis of the rates applicable to the respective years. Tax impact of earlier year indicates the (short)/excess provision of tax adjusted in respective year.

(ii)

(iii)

3.

222

(b)

Revaluation of Assets

During the years ended 31st March, 2005 and 31st March, 2007, the company had revalued its Lease hold Land, on the basis of the valuation carried out by the Government approved valuer, by crediting a Revaluation Reserve. For the purpose of the Restated Summary Statement of Assets and liabilities, the said item has been appropriately adjusted. (` in Lakhs) Particulars Date of Revaluation Book Value Revalued Amount Revaluation Reserve Gandhinagar Land 31.03.2005 24.95 65.71 40.77 Gandhinagar Land 30.06.2006 521.80 3987.30 3465.50 Gurgaon Land 30.06.2006 159.00 664.30 505.29 Total 705.75 4717.31 4011.56 (c) Miscellaneous Expenditure Discount On Issue of DDOCB In the restated financial information for the years ended on March 31, 2009 and 2008, miscellaneous expenditure being discount on issue of Deep Discount Optionally Convertible Bonds (DDOCB) is treated as pre operative expenses pending capitalization and apportioned to respective fixed assets on commissioning of the project (` in Lakhs) Particulars As at As at As at As at As at As at September March 31, March 31, March 31, March March 30, 2010 2009 2008 31, 31, 2010 2007 2006 Net Block as restated 46626.31 40,657.84 21,593.26 8,927.81 5,078.17 1,022.96 (after adjustment of revaluation reserve) Capital Work in Progress 9863.98 10,463.88 15,408.55 10,723.38 1,386.26 810.68 (excluding preoperative expenses) Preoperative Expenditure 1178.65 1,246.56 2,795.38 229.24 294.32 61.10 pending allocation Adjustments on account (0.00) (0.00) 680.35 1,771.95 (0.00) 0.00 of discount on issue of DDOCB Capital Work In Progress/ 11042.63 11,710.44 18,884.28 12,724.57 1,680.58 871.78 Expenditure During Construction Period as restated 40,477.54 21,652.38 6,758.75 1,894.74 Total Fixed Assets After 57668.94 52,368.28 Restatement (I+II) Material Regrouping Figures have been regrouped to ensure consistency of presentation. The following significant regrouping has been made in the Restated Standalone Statement of Assets and Liabilities and the Restated Standalone Statement of Profit and Loss -

No.

II

(d)

i)

In the year ended March 31, 2009 amount invested as share application money pending allotment has been classified as Investments. From the year ended March 31, 2010 the same has been classified under Loans and Advances.

223

ii) iii) iv)

Up to the year ended March 31, 2009, increase/ (decrease) of inventory and purchase of food and beverages are shown separately in profit and loss account. From the year ended March 31, 2010 the same has been shown as consumption of food and beverages. Up to the year ended March 31, 2009, vat expense was classified as administration expense and credit card commission was classified as Interest and Financial charges. From the year ended March 31, 2010 both the items are classified as selling and distribution expense. Up to the year ended March 31, 2009, Provision for Taxations and Advance Taxes had been shown separately, while from the year ended March 31, 2010 the same has been shown as Net of Provision / Net of Advance tax as applicable.

C.

Audit Qualification / emphasis under Companies ( Auditors Report ) Order,2003 ( CARO ), which do not required any corrective adjustment in the Restated Standalone Financial Information : Year ended March 31,2010 As informed to us, the Company is in the process of compiling data for updating the Fixed assets Register and records showing full particulars including quantitative details and situation of Fixed Assets. As informed to us, the Fixed Assets have been physically verified by the Management during the year. However, as the fixed assets records are not maintained, no comparison with the book records have been made. As per the records of the Company, undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales-tax, Customs duty, Service Tax, Cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there have been delays in few cases. As informed to us, no undisputed amounts payable in respect of the aforesaid dues were in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable except Works Contract Tax amounting to `1,42,075/- which was outstanding as on 31st March, 2010 for a period exceeding six months from the date it became payable. According to the information and explanations given to us and on an overall examination of the Balance sheet of the Company, in our opinion, prima facie, funds raised on short-term basis have been used during the year for long-term investment.

(i)

(ii)

Year ended March 31, 2007 a) According to the information and explanations given to us, and as far as we could ascertain from the books and records examined by us, following Statutory Liabilities are outstanding as on 31st March, 2007 for a period of more than six months from the date they became payable. Nature of the Dues Fringe Benefit Tax Amount (`) `1,12,085/Period to which The amount relates April, 2006 to September, 2006

Name of the Statute Income Tax Act, 1961

D. 1.

OTHER NOTES TO ACCOUNTS The company has issued 6,30,837 equity shares of `10 each as fully paid up in the financial year 2005-06 as bonus shares by capitalizing share premium and surplus in profit and loss account. During the year ended March 31, 2009, the company has issued 4,00,000 Compulsorily Convertible Preference Shares (CCPS) of `1,000 each to the investor based on Share Subscription Agreement dated March 28, 2008. The CCPS shall be converted into equity shares based on the conversion ratio specified in the said agreement.

2.

224

3.

During the year ended March 31, 2010, the company has acquired 100% shares of Palm Lagoon Backwaters Resort Private Limited for the consideration of `565.00 lakhs. During the year ended March 31, 2009 and March 31, 2010 and half year ended September 30, 2010 the company has accepted deposits from the public as per the provision of Section 58A and 58AA of the Companies Act, 1956 and the ruled framed there under. During the half year ended September 30, 2010 the company has issued 2,60,000 Compulsorily Convertible Preference Shares (CCPS) of `1, 000 each to the investor based on Share Subscription Agreement dated August 24, 2010. The CCPS shall be converted into equity shares based on the conversion ratio specified in the said agreement. During the half year ended September 30, 2010 the company acquired 49.83% holding in Cambay SEZ Hotels Private Limited & 50% holding in Cambay Hotels & Holidays Limited. Statement of Capital Commitments Particulars As at Sept. 30, 2010 1575.07 As at March 31, 2010 851.99 As at March 31, 2009 1737.54 As at March 31, 2008 899.00 As at March 31, 2007 (` in lakhs) As at March 31, 2006 2346.00 153.31

4.

5.

6.

7. No.

(i)

Estimated amount of contracts remaining to be executed on Capital Account and not provided for.

8.

The Income Tax Department had conducted Search Operations under section 132 of Income Tax Act, 1961 against the company on 8th and 9th September, 2010. As per statutory time limit and permitted extension there of, time period for proceeding is over. No demand has been raised and there are no pending disputed statutory direct tax liabilities on the company as on date in respect of the proceedings conducted there of. In the opinion of the company, no provision for any tax liability is required to be made as nothing has been found against the company during the search operations which may require any provision to be made. Against the search operations conducted by the Income Tax Department, the company has filed a Writ Petition in High Court of Gujarat, challenging the said proceedings by the Income Tax Department, which is pending with Honble Court. Balance of Secured Loans, Sundry Creditors , Sundry Debtors , Loans & advances are subject to confirmation and reconciliation , if any. The Company has applied to the ministry of Law & Company Affairs ( Department of Company Affairs ), Government of India, for exemption from disclosing quantitative details of turn over and consumption in respect of goods dealt with by the company as required in Part II, Schedule VI to the Companies Act,1956 STATEMENT OF DEFERRED TAXATION: Deferred Tax Assets and Liabilities arising on account of timing differences are as under:

9.

10.

11.

225

No.

Particulars

As at Sept. 30, 2010

As at March 31, 2010

As at March 31, 2009

As at March 31, 2008

As at March 31, 2007

(` in Lakhs) As at March 31, 2006

I) i) ii)

Deferred Tax Liability (DTL) Depreciation Others Deferred Tax Asset (DTA) Employee Gratuity Employee Leave encashment Total Deferred Tax Liability (Net)

1,450.89 1,450.89

1,078.38 1,078.38

525.12 525.12

210.90 210.90

85.96 85.96

31.35 31.35

II) i) ii) (III) 12.

1,450.89

1,078.38

525.12

1.86 2.04 3.90 207.00

85.96

31.35

STATEMENT OF SEGMENT REPORTING: The company is primarily engaged in the business of Hospitality (Including Vacation Ownership business). The company has identified two primary business segments, namely Hospitality and Construction for FY 2009 and FY 2010, which in the context of Accounting Standard ( AS 17 ) on Segment Reporting constitute reportable segments. However, for the half year ended 30 September ,2010 and the Financial Years 2008 , 2007 and 2006, Accounting Standard -17 (AS 17 ) is not applicable to the company . The company has not identified any Geographical Segment where risk and returns are materially different. (` in Lakhs) Year ended March 31, 2009 4,467.87 789.47 60.32 5,317.66

No.

Particulars

Year ended March 31, 2010 9493.94 882.9 261.26 10,638.10

Revenue Hospitality Construction Other TOTAL Results Hospitality Construction Other TOTAL Unallocable Expenses Profit Before Interest & Tax Restated Profit Before Interest & Tax (Segment Results Unallocable) Less : Interest & Finance Charges

7200.30 241.58 66.79 7,508.67 3264.86 4,243.81 4,243.81

2,906.88 192.90 (14.03) 3,085.75 1,409.17 1,676.58 1,676.58

(2,310.40)

(745.59)

226

No.

Particulars

Less : Tax Restated Profit After Tax

Year ended March 31, 2010 (738.11) 1,195.30

Year ended March 31, 2009 (432.80) 498.19

Note: Un allocable Expenses Include Depreciation / Amortization & Corporate Overheads 13. (A) No. 1 STATEMENT OF EMPLOYEE BENEFITS AS PER AS -15( REVISED) For Gratuity Particulars Amounts to be recognized in Balance Sheet Present value of funded obligations Fair value of plan assets Present value of unfunded obligations Unrecognized past service cost Net liability Amounts in the balance sheet: Liabilities Assets Net liability 2 Expenses recognized in Income Statement Current service cost Interest on obligation Expected return on plan assets Net actuarial losses (gains) recognized in the year Past service cost Losses (gains) on curtailments and settlement Expense recognized in P & L Table Showing Change in Benefit Obligation Opening Defined Benefit Obligation Service cost for the period Interest cost for the period Actuarial losses (gains) Benefits paid Closing defined benefit obligation Table of Fair Value of Plan Assets Opening fair value of plan assets Expected return Actuarial gains and (losses) Assets distributed on settlements Contributions by employer 0.92 0.02 (0.02) Nil Nil 0.92 0.08 (0.08) 0.92 0.92 32.70 Nil 32.70 33.62 0.92 32.70 0.92 0.92 26.83 26.83 27.75 0.92 26.83 As at Sept. 30, 2010 (` in Lakhs) As at March 31, 2010

5.50 0.60 (0.02) 3.48 Nil Nil 2.60

15.76 1.34 (0.08) (5.01) 12.01

31.02 5.50 0.60 (3.50) Nil 33.62

15.74 15.76 1.34 (5.09) 27.75

227

No.

Particulars Assets acquired in an amalgamation in the nature of purchase Exchange differences on foreign plans Benefits paid Closing balance of fund Table showing Category of Plan Assets Government of India Securities High quality corporate bonds Equity shares of listed companies Property Funds managed by Insurer Bank Balance

As at Sept. 30, 2010

As at March 31, 2010 0.92

Nil Nil Nil 0.92

Nil Nil Nil Nil 1.00 Nil

1.00 -

Principal Actuarial Valuation Discount rate as on 31.03.2010 Expected return on plan assets at 31.03.2010 Annual increase in Salary costs Table Showing Surplus / (Deficit) Defined Benefit Obligation Plan assets Surplus / (deficit)

7.75% 9.00% 6.50%

8.50% 9.00% 6.50%

33.62 0.92 (32.70)

27.75 0.92 (26.83)

(B)

For Leave Encashment (` in Lakhs) As at March 31, 2010

No. 1

Particulars Amounts to be recognized in Balance Sheet Present Value of Funded Obligation Fair Value of plan assets Present value of unfunded obligation Unrecognized past service cost Net Liability Amounts in the balance sheet Liabilities Assets Net Liability

As at September 30, 2010

Nil Nil 16.45 Nil 16.45 16.45 Nil 16.45

11.93 Nil 11.93 11.93 11.93

Expense recognized in Income Statement Current Service Cost Interest on obligation Expected return on plan assets Net actuarial losses (gains) recognized in the year 3.79 0.21 2.49 4.43 1.14 (3.43)

228

No.

Particulars Past Service Cost Losses (gains) on curtailments and settlement Expenses recognized in P&L

As at September 30, 2010 Nil Nil 6.49

As at March 31, 2010 2.14

Table Showing Change in Benefit Obligation Opening Defined Benefit Obligation Service cost for the period Interest cost for the period Actuarial losses (gains) Losses (gains) on curtailments Benefits paid Closing defined benefit obligation 11.93 0.59 0.23 (0.97) Nil (0.96) 10.82 13.45 4.43 1.14 (3.43) (3.66) 11.93

Table of Fair Value of Plan Assets Opening fair value of plan assets Expected return Actuarial gains and (losses) Assets distributed on settlements Contributions by employer Assets acquired in an amalgamation in the nature of purchase Exchange differences on foreign plans Benefits paid Closing balance of fund Table showing Category of Plan Assets Privilege Leave Benefits Government of India Securities High quality corporate bonds Equity shares of listed companies Property Funds managed by Insurer Bank Balance

Principal Actuarial Valuation Discount rate as on Balance sheet date Expected return on plan assets at Balance sheet date Annual increase in Salary costs 7.75% Nil 6.50% 8.50% 6.50%

Table Showing Surplus / (Deficit) Defined Benefit Obligation Plan assets Surplus / (deficit) 16.45 Nil (16.45) 11.93 (11.93)

229

14.

STATEMENT OF MANAGERIAL REMUNERATION (` in Lakhs) Year Year ended ended March March 31, 31, 2007 2006 3.00 3.00 0.75 0.75

No.

Particulars

Year ended September 30, 2010 26.10 26.10

Year ended March 31, 2010 52.50 52.50

Year ended March 31, 2009 51.00 51.00

Year ended March 31, 2008 3.00 3.00

Director Remuneration Total

230

ANNEXURE 5 RESTATED STANDALONE STATEMENT OF INCOME FROM OPERATIONS (` in Lakhs) Year ended March 31, 2006 662.52 78.31 111.27 82.62 112.78 113.04 68.29 11.75 36.43 101.40 1,092.68 4.01 23.06 312.80

No.

Particulars

Half Year ended Sep-30 2010 4,143.57 984.83 140.76 1,171.29 175.54 189.87 66.27 6,872.13

Room Sales Food & Beverages Sales Banquet Income Timeshare & Club Membership Tour & Travel Income Income From Educational Activity Income From Constructon Contract Other Services TOTAL

Year ended March 31, 2010 4,853.66 360.96 310.40 3,392.59 98.55 261.10 883.06 143.91 10,304.21

Year ended March 31, 2009 2,578.98 329.95 297.19 1,044.40 54.41 41.38 789.47 97.88 5,233.66

Year ended March 31, 2008 1,507.21 792.54 170.53 59.44 57.22 59.30 2,646.24

Year ended March 31, 2007

231

ANNEXURE 6 RESTATED STANDALONE STATEMENT OF OTHER INCOME (` in Lakhs) Year ended March 31, 2006 1.84

No.

Particulars

Half Year ended Sep-30 2010 37.86 -

Year ended March 31, 2010 59.42 -

Year ended March 31, 2009 59.00 -

Year ended March 31, 2008 4.89

Year ended March 31, 2007 0.49

1.) Operating Other Income Recurring (Miscellaneous Income) 2.) Non Operational Other Income (Recurring in nature) Rental Income Interest Received TOTAL

91.87 12.66 142.40

174.47 21.86 255.74

14.50 11.92 85.42

110.55 1.51 116.95

5.52 0.21 6.22

14.20 16.04

232

ANNEXURE 7 RESTATED STANDALONE STATEMENT OF INVESTMENTS (` in Lakhs) As at March 31, 2006 Nos. ` `

Particulars

As at Sept. 30, 2010

As at March 31, 2010

As at March 31, 2009 Nos. `

As at March 31, 2008 Nos. `

As at March 31, 2007 Nos.

Nos. (I) Long Term Investments (unquoted) In Govt Securities NSC ( Pledge with commercial tax Department) In subsidiary companies 11,999 (Previous Year Nil) Equity Shares of ` 1000 each Fully Paid up of Palm Lagoon Backwater Resorts Pvt. Ltd. In Shares Others Cambay Hotels & Holidays Pvt. Ltd. 10,00,000 (Previous Year Nil)Equity Shares of ` 10 each Fully Paid up

Nos.

1.41

1.30

1.41

0.10 -

11,999

565.00

11,999

565.00

1,000,000

100.00

233

Particulars

As at Sept. 30, 2010

As at March 31, 2010

As at March 31, 2009 Nos. `

As at March 31, 2008 Nos. `

As at March 31, 2007 Nos. `

(II)

Dahej Hospitality Pvt. Ltd. 15,00,000 (Previous Year Nil) Equity Shares of ` 10 each Fully Paid up Current Investments Quoted

Nos. 1,500,000

` 150.00

Nos.

As at March 31, 2006 Nos. `

Unquoted Total Investments Less: Provision for Diminution in value Net Investment

816.41

566.30

1.41

0.10

0.00

816.41

566.30

1.41

0.10

234

ANNEXURE 8 RESTATED AGE WISE ANALYSIS OF SUNDRY DEBTORS ON STANDALONE BASIS (` in Lakhs) As at As at March March 31, 31, 2007 2006 0.91 105.04 105.95 105.95 105.95 105.95 0.34 56.46 56.80 56.80 56.80 56.80 -

Particulars

As at Sept. 30, 2010

As at March 31, 2010 2,481.64 1,902.07 4,383.71 4,383.71 4,383.71 4,383.71 24.35

As at March 31, 2009 341.66 1,231.80 1,573.46 1,573.46 1,573.46 1,573.46 -

As at March 31, 2008 18.44 375.78 394.22 394.22 394.22 394.22 -

Debts Outstanding for a period exceeding six months Other Debts Gross Less : Provision TOTAL Considered Good Considered Doubtful TOTAL Debt outstanding from promoters and promoter group companies

2,828.90 2,405.73 5,234.63 5,234.63 5,234.63 5,234.63 0.18

235

ANNEXURE 9 RESTATED STANDALONE STATEMENT OF LOANS & ADVANCES (` in Lakhs) As at As at March March 31, 31, 2007 2006 21.75 22.01 1,663.90 4.02 52.37 1,742.04 1,742.04 164.87 89.98 276.86 276.86

Particulars

As at Sept. 30, 2010 2,759.84 2,344.44 142.27 118.08 189.79 393.06 5,947.48 5,947.48

Advances recoverable in cash or in kind or for value to be received Advance for Capital Expenditure Share Application Pending Allotment Balances with Excise Authorities Deposits MAT Credit Entitlement Gross Less : Provision TOTAL Loans and Advances included : Considered Good Considered Doubtful TOTAL Loans and advances outstanding from promoters and promoter group companies

As at March 31, 2010 1,398.18 2,049.50 235.00 110.00 188.57 185.07 4,166.33 4,166.33

As at March 31, 2009 688.79 637.53 700.00 89.78 129.23 11.04 2,256.36 2,256.36

As at March 31, 2008 48.55 2,579.86 59.57 89.76 2,777.74 2,777.74

5,947.48 5,947.48 143.97

4,166.33 4,166.33 163.77

2,256.36 2,256.36 -

2,777.74 2,777.74 25.99

1,742.04 1,742.04 -

276.86 276.86 69.65

236

ANNEXURE 10 RESTATED STANDALONE STATEMENT OF SECURED LOANS (` in Lakhs) As at As at March March 31, 31, 2007 2006 -

Particulars

Rate of Interest

As at Sept. 30, 2010

As at March 31, 2010 2,500.00 30.79 2,530.79

As at March 31, 2009 2,200.00 2,500.00 101.28 4,801.28

As at March 31, 2008 6,000.00 6,000.00

a) Debenture/ Bonds Deep Discount Optionally Convertible Bonds Non Convertible Debentures Interest accrued and Due Sub-Total (a) b) Term Loans (1) From Financial Institutions -Rupee Loans (2) From banks -Rupee Loans (3) Non Banking Financial Companies -Rupee Loans (4) Interest accrued and due on above loan Sub-Total (b)

Varied 14.50%

2,500.00 30.56 2,530.56

Varied

9,408.98

11,178.42

6,994.90

6,332.60

1,905.00

753.20

Varied

16,933.10

14,305.44

9,458.84

3,077.63

2,575.86

359.53

Varied

4,439.63 140.19

4,398.21 119.12

2,940.93 93.49

452.69 0.00

0.00

0.00

30,921.90

30,001.19

19,488.16

9,862.92

4,480.86

1,112.73

c) From Banks on Cash Credit Accounts, Working Capital Demand Loans etc d) Loans under Hire Purchase/Lease Arrangements Total - Secured Loans [a+b+c+d]

Varied

1,383.93

1,571.47

441.57

194.26

Varied

150.39

229.51

57.14

115.27

63.64

12.87

34,986.79

34,332.95

24,788.16

16,172.45

4,544.50

1,125.60

237

DETAILS OF SECURED LOANS OUTSTANDING AS ON 30th SEPTEMBER,2010 TERM LOAN No Name of Lending Institution IDFC - I Amt Sanctioned 2,815.00 O/s as on September 30, 2010 2,184.73 Interest Rate Repayment Schedule/ Validity 33 quarterly installments payable as per terms ( % of Loan) has been commenced from 15th January 2008 32 quarterly installments payable as per terms ( % of Loan) has been commenced from 15th March 2009 Equal 89 monthly installments of ` 16.67 lakhs commencing from 15th July 2010 & last 90th installment of Security (Primary Collateral (` in Lakhs) Guarantee

2.40 % over and above the IDFC Benchmark Rate (Current Rate : 11.95%)

i) 1st charge on all the movable and immovable assets of the Company's Hotel Properties at Gandhinagar. ii) Pledge of shares of 51% of the total paid up capital

Personal guarantee of Promoters, Directors of the Company

IDFC II

3,250.00

2,664.25

3.75 % pa over and above the IDFC Benchmark Rate (Current Rate : 12.65%) 0.50% Plus Prime Lending Rate (Current Rate : 12.50%)

i) 1st charge on all the movable and immovable assets of the Company's Hotel Properties at Gandhinagar and Vejalpur , Ahmedabad ii) Pledge of shares of 51% of the total paid up capital i) 1st Pari passu charge on all the movable and immovable assets of the 5star hotel at Thaltej ii) Hypothecation charge on pari passu basis (with the other lender for the hotel project) on all the movable assets of the 5 star hotel subject to prior charges of banker on specified

Personal guarantee of Promoters, Directors of the Company

TFCI

1,500.00

1,450.00

Personal guarantee of Promoters, Directors of the Company

238

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

Repayment Schedule/ Validity `16.37 lakhs

Security (Primary

Collateral

Guarantee

State Bank of India- I

1,600.00

1,368.91

0.50% below SBAR (Current Rate : 13.75%)

State Bank of India - II

1,100.00

940.53

1% above SBAR (Current Rate : 13.75%)

12 quarterly installments of ` 130 lakhs & subsequent 12 quarterly installments of ` 95 lakhs commencing from 1 December 2009 and 125 lakhs last installment

movable assets for securing working capital facilities. iii) Pledge of entire promoters shareholding for the project on pari passu basis with other banks/financial institutions. 1st Pari passu charge on all the movable and immovable assets of the 5- star hotel at Thaltej

i) 2nd charge by way of EM on company's hotel cum shoppping mall cum entertainment plaza at thaltej, Ahmedabad with TFCI and UBI ii) 2nd pari passu charge on the land & building at Vejalpur iii) 2nd pari passu charge on the entire fixed assets of the exisitng hotel and convention centre at Gandhinagar (including mortgage over the land and building at X-22,23,24 & 27 at Gandhinagar)

Personal guarantee of Promoters, Directors of the Company

239

No

Name of Lending Institution United Bank of India

Amt Sanctioned 1,034.00

O/s as on September 30, 2010 908.55

Interest Rate

BPLR +0.5% (Current Rate : 12.75%)

Repayment Schedule/ Validity 23 quarterly installments of ` 44.96 lakhs commencing from December 2009

Security (Primary

Collateral

Guarantee

i) 1st Pari passu charge on all the movable and immovable assets of the 5star hotel at Thaltej ii) First Hypothecation charge on pari passu basis (with the other lender for the hotel project) on all the movable assets of the 5 star hotel subject to prior charges of banker on specified movable assets for securing working capital facilities. iii) Pledge of entire promoters shareholding for the project on pari passu basis with other banks/financial institutions.

i) 2nd charge by way of EM on company's hotel cum shoppping mall cum entertainment plaza at thaltej, Ahmedabad with TFCI and UBI ii) 2nd pari passu charge on the land & building at Vejalpur iii) 2nd pari passu charge on the entire fixed assets of the exisitng hotel and convention centre at Gandhinagar (including mortgage over the land and building at X-22,23,24 & 27 at Gandhinagar)

Personal guarantee of Promoters, Directors of the Company

United Bank of India ( Kollam )

1,450.00

1,367.66

BPLR +0.5% (Current Rate : 12.75%)

30 quarterly installments of ` 48.34 lakhs commencing from March 2010

Exclusive charge on immovable and movable properties of the company relating to Cambay Palm Lagoon Resort, Kollam, Kerala.

i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Guarantee of Palm Lagoon Backwater

240

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

Repayment Schedule/ Validity

Security (Primary

Collateral

Guarantee

L&T Infrastructure Finance Company Limited

4,000.00

4,000.00

L&T infra PLR - 0.75% (Current Rate : 13.25%)

4 quarterly installments of ` 300 lakhs commencing from April 2011 & 14 quarterly instalments of Rs,200 lakhs 20 quarterly installments of ` 175 lakhs commencing from 1st April 2010

Axis Bank

3,500.00

3,144.00

BPLR 1.50%(Current Rate : 13.50%)

i) Equitable Mortgage of land & property at Ahmedabad, Udaipur, Jaipur( two propertis) & Neemrana ii) 1st charge on all the present and futute immovable and movable fixed assets of the company iii) Pledge of shares of the company held by the promoter. i) Equitable Mortgage of land & property at Jamdoli, kukas Uadaipur and Neemrana ii) Hypothecation of all the present and futute immovable and movable fixed assets of the company i) Pari Passu charge of land & building with the Neemrana Plot ii) 1st Pari passu charge on other present and future immovable and movable fixed assets of the company

Resorts Pvt. Ltd. i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa Agritech Pvt. Ltd.

10

Bank of India

2,500.00

2,547.94

0.25% over and above BPLR (Current Rate : 14%)

24 quarterly installments in yearly ballooning format commencing from 1st April 2011

i) 2nd charge on all other current assets of the company on pari passu basis ii)Pledge of 30% shares of the company held by promoters i) 2nd charge on all other current assets of the company on pari passu basis ii)Pledge of promoters shareholding

Personal guarantee of Promoters, Directors of the Company

11

Oriental Bank of

2,500.00

2526.61

PLR + 1%

20 quarterly

i) Pari Passu charge of land

i) 2nd charge on

i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa Agritech Pvt. Ltd. i) Personal

241

No

Name of Lending Institution Commerce

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

(Current Rate : 13.15%)

Repayment Schedule/ Validity installments of ` 125 lakhs commencing from 1st April 2011

Security (Primary

Collateral

Guarantee

& building with the Neemrana Plot ii) 1st Pari passu charge on other present and future immovable and movable fixed assets of the company

all other current assets of the company on pari passu basis ii)Pledge of promoters shareholding

12

Corporation Bank

1,000.00

1018.23

COBAR+25 bps (Current Rate : 14.00%)

20 quarterly installments of ` 50 lakhs commencing from 1st April,2011

i) Pari Passu charge of land & building with the Neemrana Plot ii) Pari passu charge on other present and future immovable and movable fixed assets of the company

i) 2nd charge on all other current assets of the company on pari passu basis ii)Pledge of shares of the company held by the promoters

guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa Agritech Pvt. Ltd. i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa Agritech Pvt. Ltd. Personal guarantee of Promoters, Directors of the Company

13

IFCI

3,000.00

3000.00

13.50% (Current Rate : 13.50%)

24 quarterly installments in yearly Ballooning format from May 2012

Pari Passu basis charge on project assets ( Rajasthan ) with other term lenders

i)2 nd chanrge on all current assets of the company on parri passu basis with existing term lenders ii) Parri passu charge on 1.1 crore share i) Pledge on 1.11,core share of promnoters on parripassu basis

14

Central Bank of India

1875.00

1897.35

BPLR + 1%( Current Rate : 14.50%)

Equal 28 quarterly installments from Oct.

1) 1st parrripassu charge with IDFC on Cambay Spa & Resort Gandhinagar 2) Mortgage on immovable

242

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

Repayment Schedule/ Validity 15, 2010

Security (Primary

Collateral

Guarantee

proprty of Project 3) Hypothecation movable assets of project i) 1st charge on project assets (Rajasthan) on parripasu basis with other exisitng term lenders 2) second charge on current aseest of on parripassu basis 3) parripassu charge on 1.11 crore shares of face with IDFC & other lenders

with Other Banker

15

Syndicate Bank

2500.00

1213.32

PLR + 1.5% ( Current Rate 14% )

24 quarterly installments in yearly Ballooning format from June 2012

i) Personal guarante of Promoters,

16

Indiabulls

180.00

168.37

Current Rate : 20%

17

Indiabulls

290.00

271.26

Current Rate : 20%

18

Rajasthan Industrial InvestmentsCorporation

180.00

110.00

15.50%

120 monthly installments of ` 3.24 lakhs commencing from 1st September 2007 120 monthly installments of ` 5.23 lakhs commencing from 1st September 2007 18 quarterly installments of `10 lakhs

Fisrt and exclusive charge by way of mortgaze on immovable properties at Gurgaon

Personal guarantee of Promoters, Directors of the Company

Fisrt and exclusive charge by way of mortgaze on immovable properties at Gurgaon

Personal guarantee of Promoters, Directors of the Company

i)First mortgage on present and future immovable and movable properties of the

Pledge of shares of the company held by the

Personal guarantee of Promoters,

243

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

Interest accrued and due on Term Loans Sub Total DEBENTURE 19 Non Convertible Debenture

140.19 30,921.90 2,500.00 2,500.00

NA

Repayment Schedule/ Validity commencing from 15th February 2009 NA

Security (Primary

Collateral

Guarantee

company ii) 1st pari passu charge on all other movables of the company NA

promoters

Directors of the Company

NA

NA

Interest accrued and due on NCD Sub Total VEHICLE LOANS 20 Vehicle Loan WORKING CAPITAL CC 21 State Bank of India

30.56 2530.56 150.39

14.5% or 5 yr G-sec plus spread of 675 bps whichever is higher on the date of signing of subscription agreement (Current Rate: 14.5%) NA

20 quarterly installments of ` 125 lakhs commencing from 1st October 2010

i) Pari Passu charge of land & building with the Neemrana Plot ii) 1st Pari passu charge on other present and future immovable and movable fixed assets of the company

i)2nd charge on all other current assets of the company on pari passu basis ii)Pledge of shares of the company held by the promoters

Personal guarantee of Promoters, Directors of the Company

NA

NA

NA

NA

Against hypothecation of specific vehicles At SBAR (Current Rate : 13.75%) Repayable on demand 1st charge by way of Hypothecation of entire chargeable current assets of the company i) 2nd charge by way of EM on company's hotel cum shoppping mall cum entertainment plaza at thaltej, Ahmedabad with TFCI and UBI Personal guarantee of Promoters, Directors of the Company

500

473.58

244

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

Repayment Schedule/ Validity

Security (Primary

Collateral

Guarantee

22

State Bank of India ( TOD )

400

202.97

2% above SBAR(Current Rate : 13.75%)

Repayable on demand

1st charge by way of Hypothecation of entire chargeable current assets of the company

ii) 2nd pari passu charge on the land & building at Vejalpur iii) 2nd pari passu charge on the entire fixed assets of the exisitng hotel and convention centre at Gandhinagar (including mortgage over the land and building at X22,23,24 & 27 at Gandhinagar) Pledge of 1,00,000 shares of the company

23

Axis Bank

700

707.38

PLR less 2.75% (Current Rate : 14.75%)

Repayable on demand

Hypothecation of all current assets of the Jaipur Kukas, Jaipur Jamdoli, Udaipur and Neemrana, present and future on pari passu basis with other lenders

i) Fisrt charge on pari passu basis on all the fixed assets of Jaipur Kukas, Jaipur Jamdoli, Udaipur and Neemrana, present and future ii) Subservient charge on all other fixed.

Personal guarantee of Promoters, Directors of the Company i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa Agritech

245

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

Repayment Schedule/ Validity

Security (Primary

Collateral

Guarantee

Pvt. Ltd. assets of the company, present and future excluding above fixed assets Subtotal Grand Total 1383.93 34,986.79

246

ANNEXURE 11 RESTATED STANDALONE STATEMENT OF UNSECURED LOANS Particulars Rate of Interest As at Sept. 30, 2010 734.12 As at March 31, 2010 155.22 As at March 31, 2009 57.77 As at March 31, 2008 (`in lakhs) As at As at March March 31, 31, 2007 2006 -

(a) Fixed Deposits Note below)

(Refer

Varied

(b) Term Loans and Advances -Rupee Loans From Banks and Financial Institutions (c) Others : From Directors From Others Total - Unsecured Loans varied

30.01

142.25

24.60 758.72

4.60 159.82

57.77

30.01

4.99 13.71 160.94

Break up of Fixed Deposits received

As at Sept. 30, 2010

As at March 31, 2010

As at March 31, 2009

As at March 31, 2008 -

As at March 31, 2007

(`in lakhs) As at March 31, 2006 -

Fixed Deposits received from From Directors From Others Total Fixed Deposits

48.00 686.12 734.12

48.00 107.22 155.22

46.00 11.77 57.77

247

ANNEXURE 12 RESTATED STANDALONE STATEMENT OF CURRENT LIABILITIES & PROVISIONS (` in lakhs) As at March 31, 2006

No.

Particulars

As at Sept. 30, 2010

As at March 31, 2010

As at March 31, 2009

As at March 31, 2008

As at March 31, 2007

A) CURRENT LIABILITIES : Sundry Creditors Total Outstanding dues to : - Micro Enterprises and Small Enterprises* - Creditors other than Micro Enterprises and Small Enterprises * In the absence of any information with the company about the Micro, Small & Medium Enterprises status of the suppliers, the details regarding the dues owed by the company to them have not been given. Interest accrued but not due on loans Deposits Other Liabilities TOTAL (A) B) PROVISIONS Provision for Gratuity and Compensated Absences Provision for Taxation (Net of Advance Tax) Proposed Dividend Tax on Dividend TOTAL (B) TOTAL (A+B)

2,052.93 2,052.93

2,796.92 2,796.92

2,882.09 2,882.09

1,136.60 1,136.60

559.98 559.98

133.95 133.95

85.94 238.29 5,642.48 8,019.63

73.12 237.91 3,275.83 6,383.77

41.14 231.26 868.87 4,023.36

116.15 1.70 230.44 1,484.89

1.70 48.50 610.19

2.33 1.70 15.62 153.60

75.28 467.60 0.20 0.14 543.22 8,562.86

59.07 241.49 0.64 0.11 301.30 6,685.08

37.04 34.71 0.00 0.00 71.75 4,095.12

11.47 74.34 85.81 1,570.70

24.00 24.00 634.18

0.88 0.88 154.48

248

ANNEXURE-13 RESTATED STANDALONE STATEMENT OF SHARE CAPITAL Particulars As at Sept. 30, 2010 8300.00 8200.00 As at March 31, 2010 4000.00 5000.00 As at March 31, 2009 3200.00 5000.00 As at March 31, 2008 3200.00 As at March 31, 2007 (` in lakhs) As at March 31, 2006 3200.00 -

Authorized Capital Equity Shares of `10/- each Preference Shares of `1000/- each Issued, Subscribed & Paid-up Capital Equity Shares of `10/- each Note: Of the above 6,30,836 equity shares of `10 each have been issued as Bonus Shares in the financial year 2005-06 by way of capitalisation of Share Premium and Reserves. 4,00,000 0.01% Compulsorily Convertible Preference Shares (CCPS) of `1000/- each 2,60,000, Compulsorily Convertible Preference Shares (CCPS) of ` 1000/each

3200.00 -

2560.51

2541.08

2305.09

2282.05

1516.31

599.29

4000.00 2600.00

4000.00

4000.00

9160.51

6541.08

6305.09

2282.05

1516.31

599.29

249

ANNEXURE 14 RESTATED STANDALONE STATEMENT OF ACCOUNTING RATIOS No. Particulars As at Sept. 30, 2010 As at March 31, 2010 As at March 31, 2009 As at March 31, 2008 (Rs in Lakhs) As at As at March March 31, 31, 2007 2006

Profit attributable to equity shareholders Restated Net profit after tax [A] Less: Dividend on Preference Shares including Dividend tax Net Profit Available for Equity Shareholders (Basic) [B] Add: Preference Dividend payable Add: Interest on convertible Preference shares Net profit available for Equity Shareholders (Dilutive) [C] Net Worth [D] Less: Preference Share Capital Networth excluding Prefernce Share Capital [E] Weighted average Number of equity shares outstanding Weighted average number of Equity Shares (Basic) (Nos.) [F] Add: Effect of Share Application Money (Nos.) Add: Effect of potential Equity Shares on conversion of CCPSs (Nos) Weighted average number of Equity Shares Dilutive (Nos.) [G] Outstanding Shares at Year End (Nos) [H] Face Value of Equity Shares Ratios:

786.86 (0.23)

1195.31 (0.47)

498.19 (0.28)

449.41 -

151.77 -

58.29 -

787.09

1194.84

497.91

449.41

151.77

58.29

787.09

1194.84

497.91

449.41

151.77

58.29

24632.84 6600.00 18032.84

20471.21 4000.00 16471.21

16432.06 4000.00 12432.06

9633.87 9633.87

3462.22 3462.22

1180.04 1180.04

25488291

24231228

23893657

17906652

12575672

3634171

56,697

38,609

25544988

24231228

23932266

17906652

12575672

3634171

25605118

25410760

23050906

22820491

15163063

5992942

10

10

10

10

10

10

250

No.

Particulars

As at Sept. 30, 2010

As at March 31, 2010

As at March 31, 2009

As at March 31, 2008

As at March 31, 2007

As at March 31, 2006

Earning per share (EPS) Basic EPS (in `)* [C/F] (Net Profit Available for Equity Shareholders (Basic)*100000/ Weighted average number of Equity Shares Basic (Nos.)) Diluted EPS (in `)*[C/G] (Net Profit Available for Equity Shareholders (Diluted)*100000/ Weighted average number of Equity Shares Diluted (Nos.)) Return on Net Worth (in %)* [A/D] (Restated Net Profit after Tax/ Net Worth * 100) Net Asset value per Share (in `)* [E/H] (Net Worth*100000 / Outstanding Shares at Year End (Nos)) Notes : 1.

3.09

4.93

2.08

2.51

1.21

1.60

3.08

4.93

2.08

2.51

1.21

1.60

3.19%

5.84%

3.03%

4.66%

4.38%

4.94%

70.43

64.82

53.93

42.22

22.83

19.69

The Above Ratios have been computed as under Net Profit After Tax - restated = ----------------------------------------------------------------Weighted average number of equity shares outstanding during the period Net worth Restated, at the end of period = ----------------------------------------------------------------Total number of equity shares outstanding at the end of the period

Basic & Diluted earning per Share (INR)

Net Assets value per Share (INR)

Return on Net worth (INR) 2.

Net Profit After Tax restated = ----------------------------------------------------------------Net worth restated, at the end of period Earning per share calculations are done in accordance with Accounting standard 20 on Earning Per share. Net Profit as appearing in the Summary Statement of Profits and Losses Restated has been considered for computing the above ratios. Net Worth means Equity Share Capital + Preference Share Capital + Share Application Money + Share premium + Reserves and Surplus.

3.

4.

251

5.

As Conversion price of Outstanding CCPS as on September 30, 2010 , March 31 , 2010 and March 31 2009 in to Equity shares is based on proposed Issue price, at this stage we have not taken in to consideration number of potential equity shares to be issued and hence Diluted EPS pending determination of Issue price, is not calculated.

252

ANNEXURE-15 RESTATED STANDALONE STATEMENT OF DIVIDEND Particulars Face Value (`/Share) Half Year ended Sept. 30, 2010 Year ended March 31, 2010 Year ended March 31, 2009 Year ended March 31, 2008 Year ended March 31, 2007 (` In lakhs) Year ended March 31, 2006

Class of Shares Equity Share Capital 0.01% Compulsorily Convertible Preference Shares Compulsorily Convertible Preference Shares (CCPS) Dividend On Equity Share Capital Tax on Dividend Rate of Dividend(%) On Preference Share Capital Tax on Dividend Rate of Dividend(%) 0.20 0.03 0.01 0.40 0.07 0.01 0.24 0.04 0.01 10 2560.51 2541.08 2305.09 2282.05 1516.31 599.29

1000

4000.00

4000.00

4000.00

1000

2600.00

253

ANNEXURE 16 RESTATED STANDALONE STATEMENT OF CAPITALIZATION AS ON 30TH SEPTEMBER, 2010 (` in Lakhs) Pre Issue Post Issue2 Borrowings Short Term 2142.66 Long Term 33602.86 35,745.51 Shareholders' Funds Equity Share Capital Preference Share Capital Share Premium Reserve and Surplus Total Shareholders Fund Long Term Debt / Equity

2,560.51 6,600.00 11,860.57 3,215.75 24,236.84 1.39

1) Based on Restated Standalone Statement of Assets & Liabilities as at September 30, 2010 2 ) The post-issue debt equity ratio will be computed after finalization of issue price. 3 ) Short term Debts are debts due within one year 4) The Company on November 14,2010 has made an allotment of 2,03,078 Equity shares of ` 10/- each at a price per Equity Share of ` 195/- to one of the Promoters of the Company viz Mr Sanjay Gupta.

254

ANNEXURE-17 RESTATED STANDALONE STATEMENT OF CONTINGENT LIABILITIES (`in Lakhs) As at March 31, 2006 -

No.

Particulars

As at Sept. 30, 2010 109.30 0 169.00

As at March 31, 2010 22.6 152.24 169.00

(i) (ii) (iii)

Guarantees given by banks on behalf of the Company Letters of Credit issued by bank on behalf of company Corporate Guarantee given by Company

As at March 31, 2009 82.17 -

As at March 31, 2008 21.77 29.01 -

As at March 31, 2007 10.00 -

255

ANNEXURE-18 RESTATED STANDALONE STATEMENT OF RELATED PARTIES TRANSACTIONS A) LIST OF RELATED PARTIES No. I Particulars Associates Neesa Infrastructure Limited Neesa Agritech & Foods Limited ( Formerly Neesa Agritech Pvt Limited ) Neesa Technologies Pvt. Ltd Gujarat Syscom Technologies Pvt. Ltd. Cambay Hotels & Holidays Limited (Formerly Cambay Hotels & Holidays Pvt. Ltd.) Orient Spa Limited (Formerly Orient Spa Pvt. Ltd.) Cambay Hotels SEZ Limited ( Formerly Dahej Hospitality Pvt. Ltd) Neesa Energy Pvt. Limited. Neesa Bio-tech Pvt. Limited . Subsidiaries Palm Lagoon Backwater Resorts Pvt. Ltd. Key Management Personnel Mr. Sanjay Gupta Mrs. Neelu Gupta Mr. Arvind Gupta

II

III

256

Transactions with Related Parties (` in Lakhs) Particulars Upto Sept. 2010 For Financial Year 2008-09 2007-08 2006-07

2009-10

2005-06

Subsidiary Rent Paid Palm Lagoon Backwater Resorts Pvt. Ltd. Key Managerial Personnel Remuneration Sanjay Gupta Closing Balance Arvind Gupta Closing Balance Share Capital & Application Money Sanjay Gupta Closing Balance Neelu Gupta Closing Balance Unsecured Loan During year Sanjay Gupta Closing Balance Arvind Gupta Closing Balance Neelu Gupta Closing Balance Unsecured Loan Repaid Sanjay Gupta Neelu Gupta Interest Paid/Payable by Company Sanjay Gupta Arvind Gupta

0.06

0.06

24.00 8.16 2.10 1.75

48.00 0.30 4.50 1.76

48.00 7.24 3.00 3.93

3.00 0.02

3.00 2.51

0.75 0.75

876.00 396.00 -

1,898.00 -

1,800.00 1,800.00 -

1,650.00 125.50 -

1,790.89 791.53 96.50 15.00

49.60 3.00 20.00 20.00

112.69 49.60 2.00 3.00 -

50.55 45.00 1.00 1.00 25.00 -

1,388.35 7.00 -

81.35 4.99 -

108.08 -

5.55 25.00

1,393.33 7.00

76.36 -

3.33 0.21

5.63 0.27

1.30 0.05

257

Associates Loans and Advances Given Neesa Agritech & Foods Ltd. Closing Balance Cambay Hotels & Holidays Ltd. Closing Balance Orient Spa Ltd. Closing Balance Neesa Energy Pvt. Ltd. Closing Balance Neesa Infrastructure Ltd. Closing Balance Neesa Biotech Pvt Ltd Closing Balance Gujarat Syscom Technologies Pvt. Ltd. Closing Balance Cambay SEZ Hotels Pvt Ltd Closing Balance 217.19 (588.62) 180.45 (58.80) 12.04 22.05 60.00 643.21 (375.61) (17.51) 68.02 62.79 32.04 15.75 60.00 60.00 355.80 (12.82) 78.00 151.53 271.63 25.99 122.05 69.65

(34.24) 37.92 58.90 1.91 2.57 81.26 25.23 -

Loans and Advances Repaid Neesa Agritech & Foods Ltd. Cambay Hotels & Holidays Ltd. Orient Spa Ltd. Neesa Infrastructure Ltd. Gujarat Syscom Technologies Pvt. Ltd. Service Provided to/from: Neesa Agritech & Foods Ltd. Closing Balance Neesa Technologies Pvt. Ltd. Closing Balance Neesa Infrastructure Ltd. Closing Balance Rent Income from: Neesa Agritech & Foods Ltd. Closing Balance 24.01 50.91 1.74 1.28 0.18 439.59 9.81 167.32 9.67 14.26 0.66 788.30 302.04 5.74 1,006 4.25 (17.51) 5.23 16.29 368.61 110.26 78.00 177.52 245.64 52.39

258

Neesa Technologies Pvt. Ltd. Closing Balance Orient Spa Ltd. Closing Balance Cambay SEZ Hotels Pvt Ltd Closing Balance Purchases of goods & Assets from: Neesa Agritech & Foods Ltd. Closing Balance Neesa Technologies Pvt. Ltd. Closing Balance Gujarat Syscom Technologies Pvt. Ltd. Closing Balance Neesa Infrastructure Ltd. Closing Balance Service Received from: Cambay Hotels & Holidays Ltd. Closing Balance Purchases of Shares/Investments Neesa Technologies Pvt. Ltd. Closing Balance Cambay Hotels & Holidays Ltd. Closing Balance Cambay SEZ Hotels Pvt Ltd . Closing Balance Sale of Shares/Investments Cambay SEZ Hotels Pvt Ltd . Closing Balance

27.00 38.80 0.60

59.56 3.48 71.94 0.73

180.19 9.73 176.56 80.46 2.77 0.20

177.45 21.01 322.32 9.67 198.56 32.24 56.28 -

38.16 0.71 -

783.51 -

1,045.41 69.65

237.03 -

427.04 -

152.04 -

565.00 565.00 100.00 100.00 300.00 150.00

150.00 150.00

Share Application Money Pending Allotment Neesa Technologies Pvt. Ltd. Closing Balance Cambay Hotels & Holidays Ltd. Closing Balance Cambay SEZ Hotels Pvt Ltd . Closing Balance 95.00 100.00 135.00 135.00 700.00 700.00 5.00 5.00 -

142.27

259

ANNEXURE -19 RESTATED STANDALONE STATEMENT OF TAX SHELTER (` In lakhs) Year ended March 31, 2006 90.35

No.

Particulars

Restated Profit before current and deferred taxes Less : Fringe Benefit Tax Income Tax Rate (including surcharge & education cess) Minimum Alternate Tax (including surcharge & education cess) Tax at Income Tax Rates Adjustments a) Permanent Differences Donations Disallowed Disallowance u/s 40 and 43B Total Permanent Differences b)Timing Differences Difference between book & Tax depreciation Expenses disallowed u/s 40 (a) (ia) Preliminary expenditure Provision for leave Salary & Gratuity Unabsorbed Depreciation Total Timing Differences Total Adjustments (C+ D) Tax Expenses / (tax saving thereon (E*A) Tax Liability ( F+B) Tax Liability as per provision of MAT Interest under section 234B & 234C Total tax as per books of account ( G + H + I ) Deferred Tax Fringe Benefit Tax MAT Credit Entitlement Total Tax as per restated Profit & Loss (J+K+L+M)

Half Year ended Sept 30 2010 1,196.99

Year ended March 31, 2010 1,933.42

Year ended March 31, 2009 930.99 (16.14) 33.99% 11.33%

Year ended March 31, 2008 716.11

Year ended March 31, 2007 239.40

33.22% 20.39%

33.99% 17.00%

33.99% 11.33%

33.66% 11.22%

33.66% 11.22%

244.11

328.58

103.65

243.41

80.58

30.41

0.015 0.02

0.56 2.97 3.53

3.36 1.18 4.54

0.1 0.22 0.32

0.08 0.13 0.21

0.05 0.05

(1,095.96) -

(1,627.70) (6.74)

(924.45) 26.83

(365.08) 4.51

(159.96) 0.76

(62.23) 0.14 0.39

18.17

26.87

55.33

7.19

(30.41) (92.11) (92.06) (30.99) (0.58) 1.38 0.80 30.33 0.92 -

D E F G H I J K L M N

(1,077.79) (1,077.77) (219.80) 244.11 1.49 245.60 372.52 (207.99)

(1,607.57) (1,604.04) (272.61) 328.58 30.28 358.86 553.26 (174.02)

(842.29 (837.75) (284.75) 103.65 2.57 106.22 318.12 19.50 (11.04)

(353.38) (353.06) (120.01) 123.40 13.51 136.91 121.04 8.75 -

(159.20) (158.99) (53.52) 27.07 3.40 30.47 54.62 2.54 -

410.13

738.11

432.80

266.70

87.63

32.05

260

AUDITORSREPORT ON RESTATED CONSOLIDATED FINANCIAL INFORMATION OF NEESA LEISURE LIMITED AND ITS GROUP (as required by Part II of Schedule II to the Companies Act, 1956) To The Board of Directors Neesa Leisure Limited Plot No.X-22, 23 & 24, G.I.D.C. Electronics Estate, Sector-25, Gandhinagar - 382044 Gujarat, India 1. We have examined the attached Restated Consolidated Statement of assets and liabilities of Neesa Leisure Limited (the Company) as of September 30, 2010 and March 31, 2010 and the related Restated Consolidated Statement of profits and losses and Restated Consolidated Statement of cash flows for the six months ended September 30, 2010 and financial year ended March 31, 2 0 1 0 (collectively the Restated Consolidated Summary Statements). These Restated Consolidated Summary Statements have been prepared by the Company and approved by the Board of Directors, in accordance with the requirements of: (a) (b) Paragraph B(1) of Part II of Schedule II of the Companies Act, 1956 (the Act); the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (SEBI Regulations).

2.

We have examined such restated financial information taking into consideration: (a) the terms of reference to our engagement, requesting us to carry out the assignment, in connection with the Draft Red Herring Prospectus being issued by the Company for its proposed Initial Public Offering (IPO) of equity shares and The Guidance Note on Reports in Company Prospectuses (Revised) issued by the Institute of Chartered Accountants of India.

(b)

3.

The Restated Consolidated Summary Statements of the Company have been extracted by the management from the Audited Consolidated Financial Statements of the Group for the period / years ended September 30, 2010 and March 31, 2010 which have been approved by the Board of Directors. In accordance with the requirements of Paragraph B(1) of Part II of schedule II of the Act, the SEBI Regulations and terms of our engagement agreed with you, we report that: a. The Restated Consolidated Statement of Assets and Liabilities as at September 30, 2010 and March 31, 2010 examined by us, as set out in Annexure 1 to this report are after making such adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies and Notes to the Restated Consolidated Summary Statements as set out in Annexure 4 to this report. The Restated Consolidated Statement of Profits and Losses for the years / periods ended September 30, 2010 and March 31, 2010 examined by us, as set out in Annexure 2 to this report are after making such adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies and Notes to the Restated Consolidated Summary Statements as set out in Annexure 4 to this report. The Restated Consolidated Statement of Cash flow for the years / periods ended September 30, 2010 and March 31, 2010 examined by us, as set out in Annexure 3 to this report are after making such adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies and Notes to the Restated Consolidated Summary Statements as set out in Annexure 4 to this report.

4.

b.

c.

261

5.

Based on the above, we are of the opinion that the Restated Consolidated Summary Statements have been made, after incorporating: 1. Adjustments for the changes in accounting policies retrospectively in respective financial years to reflect the same accounting treatment as per changed accounting policy for all the reporting periods. 2. Adjustments for the material amounts in the respective financial years to which they relate. 3. And there are no extra-ordinary items that need to be disclosed separately in the accounts and qualifications requiring adjustments. We have not audited any financial statements of the Company or any of its subsidiaries as of any date or for any period subsequent to September 30, 2010. Accordingly, we express no opinion on the financial position, results of operations or cash flows of the Company or its subsidiary as of any date or for any period subsequent to September 30, 2010. At the Companys request, we have also examined the following Other Consolidated financial information proposed to be included in the Draft Offer Document, prepared by the management and approved by the Board of Directors of the Company and annexed to this report relating to the Group for the six months ended September 30, 2010 and for the financial year ended March 31, 2010. (a) Annexure -5 Restated Consolidated Statement of Income from operations; (b) Annexure -6 Restated Consolidated Statement of Other Income; (c) Annexure-7 Restated Consolidated Statement of Investments; (d) Annexure-8 Restated Age wise Analysis of Sundry Debtors on Consolidated basis; (e) Annexure-9 Restated Consolidated Statement of Loans & Advances; (f) Annexure-10 Restated Consolidated Statement of Secured Loans; (g) Annexure-11 Restated Consolidated Statement of Unsecured Loans; (h) Annexure-12 Restated Consolidated Statement of Current Liabilities & Provisions; (i) Annexure-13 Restated Consolidated Statement of Share Capital; (j) Annexure-14 Restated Consolidated Statement of Accounting Ratios: (k) Annexure-15 Restated Consolidated Statement of Dividend: (l) Annexure-16 Restated Consolidated Statement of Capitalization as on 30 September 2010; (m) Annexure-17 Restated Consolidated Statement of Contingent Liabilities; (n) Annexure-18 Restated Consolidated Statement of Related Party Transactions;

6.

7.

In our opinion, the other Consolidated financial information as disclosed in the Annexures to this report as referred to above, read with the respective Significant Accounting Policies and Notes to Restated Consolidated Summary Statements as set out in Annexure 4 and prepared after making the adjustments and regrouping as considered appropriate, have been prepared in accordance with Part II of Schedule II of the Act and the SEBI Regulations. 8. This report should not be in any way 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 to herein. This report is intended solely for your information and for inclusion in the Offer Document in connection with the proposed IPO of the Company and is not to be used, referred to or distributed for any other purpose except with our prior written consent.

9.

For ISK & Associates Chartered Accountants Firm Registration No: 115764W I.S.Kadri Partner Membership No. 33991 Ahmedabad Dated: March 29, 2011

262

ANNEXURE-1 RESTATED CONSOLIDATED STATEMENT OF ASSETS & LIABILITIES (` in Lakhs) As at March 31, 2010 512.46 47,096.94 2,384.73 44,712.21 4,011.57 40,700.64 11,710.44 52,411.08 1.30 166.54 4,383.71 1,077.50 4,166.48 9,794.23 34,332.95 173.58 6,685.17 41,191.71 1,078.38 20,448.99

No.

Particulars

As at Sept. 30, 2010 512.46 54,099.71 3,419.89 50,679.82 4,011.57 46,668.25 11,042.63 57,710.88 260.77 169.72 5,234.63 556.10 5,947.64 11,908.09 34,986.79 772.48 8,562.92 44,322.19 1,450.89 24,619.12

Goodwill on Consolidation Fixed Assets : Gross Block Less : Depreciation Net Block Less : Revaluation Reserve Net Block after adjustment of Revaluation Reserve Add: Capital Work in Progress & Preoperative Expenditure Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and bank balances Loans and Advances Total Liabilities and Provisions Secured Loans Unsecured Loans Current Liabilities and Provisions Total Deferred Tax Liability Networth (A+B+C-D-E) Networth Represented by : Equity Share Capital Preference Share Capital Share Premium Share Application Money Reserves & Surplus Less: Revaluation Reserve Net Reserves & Surplus Networth

B C

2,560.51 6,600.00 11,860.57 396.00 7,214.00 4,011.57 3,202.43 24,619.12

2,541.08 4,000.00 11,501.01 6,418.87 4,011.57 2,407.30 20,448.99

The accompanying significant accounting policies and notes (Annexure 4) are an integral part of this statement.

263

ANNEXURE-2 RESTATED CONSOLIDATED STATEMENT OF PROFIT & LOSS (` in Lakhs) Year ended March, 31 2010

No.

Particulars

Half Year ended Sept. 30, 2010 6,872.13 142.40 (5.26) 7,009.27

INCOME Income from Operation Other Income Increase /( Decrease) in Inventories Total Income EXPENDITURE F& B Consumed Personnel Expenses Operating & Administrative Expenses Selling and Distribution Expenses Profit Before Interest, Depreciation & Tax Interest & Finance Charge (Net) Depreciation / Amortization Profit before Tax Provision for Tax - Current Tax - MAT Credit entitlement -Deferred tax Profit after Tax and before share in profit in Associates Add : Share of profit in Associates Profit After Tax Add : Balance brought forward from previous year Balance available for Appropriation APPROPRIATIONS Less : Transfer to Debenture Redemption Reserve Proposed dividend Tax on proposed dividend Balance carried to Balance Sheet

10,304.21 255.74 78.14 10,638.10

312.32 617.80 1,425.49 376.17 4,277.48 2,046.20 1,035.16 1,196.12 (245.61) 207.99 (372.52) 785.98 9.36 795.35 2,146.21 2,941.56

428.96 1,301.16 2,590.54 577.11 5,740.33 2,310.40 1,519.74 1,910.19 (358.87) 174.01 (553.26) 1,172.07 1,172.07 1,080.54 2,252.61

52.83 0.20 0.03 2,888.49

105.66 0.64 0.11 2,146.21

The accompanying significant accounting policies and notes (Annexure 4) are an integral part of this statement.

264

ANNEXURE-3 RESTATED CONSOLIDATED STATEMENT OF CASH FLOW (` in Lakhs) Year ended March, 31 2010 1,910.19 1,910.19 1,436.49 (21.86) (174.47) 2,310.40 3,550.56 5,460.75 (101.22) (2,810.31) (1,735.94) 2,382.08 3,195.37 (152.08) 3,043.30

No.

Particulars

Half Year ended Sept. 30, 2010 1,196.12 1,196.12 1,035.16 (12.66) (91.87) 2,046.20 2,976.82 4,172.94 (3.18) (850.92) (1,573.16) 1652.05 3,397.73 (19.51) 3,378.22

A]

Cash Flow from Operating Activities Net Profit Before Tax Restated Profit Before Tax Adjustments: Depreciation / Amortization Interest Income Lease and Rental Income Interest & financial charges

Operating Profit before working capital changes Adjustments for (Increase)/Decrease in Inventories (Increase)/Decrease in Trade Receivable (Increase)/Decrease in Loans and Advances Increase/(Decrease) in Current Liabilities Cash Generated from operations Taxes Paid Net cash Generated from operating activities (A) B] Cash flow from Investing Activities Purchase of fixed assets Purchase of Investments (Net) Lease and Rental Income Interest & financial charges Net cash used in Investing Activities (B) C] Cash flow from Financing Activities Proceeds from issue of Equity Share Capital (including premium) Proceeds from Preference Share Capital Proceed from Equity Share Application Money Proceeds from borrowings (net) Proceed from Capital Subsidy Dividend Paid Interest & financial charges Net cash generated from Financing Activities (C) Net Increase in Cash and Cash equivalents ( A+B+C) Cash and Cash equivalents (Refer Note 3) at the beginning of the year at the end of the year Net Increase in Cash and Cash equivalents

(6,334.96) (250.11) 12.66 91.87 (6,480.53)

(13,304.47) (564.89) 21.86 174.47 (13,673.03)

378.99 2,600.00 396.00 1,252.74 (0.64) (2,046.20) 2,580.90 (521.41) 1,077.50 556.10 (521.41)

4,544.60 (1,800.00) 9,646.85 100.00 (2,310.40) 10,181.05 (448.68) 1,526.18 1,077.50 (448.68)

265

No.

Particulars

Half Year ended Sept. 30, 2010

Year ended March, 31 2010

NOTES TO CASH FLOW STATEMENT 1 The Restated Consolidated Statement of Cash flows has been prepared under the indirect method as set out in Accounting Standard 3 (AS 3) Cash flow Statement as issued by ICAI 2 The accompanying significant accounting policies and notes ( Annexure 4) are an integral part of this statement 3 Cash and Cash equivalents Consist of : Particulars As at Sept. 30, 2010 323.89 153.19 78.05 0.07 0.90 556.10 (` in Lakhs) As at March 31, 2010 886.28 147.37 41.87 1.98 1,077.50

Balance with Schedule Banks : In Current Accounts In Fixed Deposit Accounts Cash on Hand Currency On Hand Gold Coins TOTAL

266

ANNEXURE-4 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS A. 1. SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the financial statements relating to Neesa Leisure Ltd (the Company ) and its wholly owned subsidiary, Palm Lagoon Backwater Resorts Private Limited and its two associates, i) Cambay Hotels and Holidays Limited. and ii) Dahej Hospitality Private Limited (Collectively referred to as the Group). The consolidated financial statements have been prepared in accordance with the principles and procedures required for the preparation and presentation of financial statements as laid down under the accounting standards issued by the Institute of Chartered Accountants of India. The Financial Statements of the Company, its Subsidiary and Associates used in the consolidation are drawn upto the same reporting date as of the company i.e. for the half year ended on September 30, 2010. The Consolidated Financial Statements are presented, to the extent possible, in the same format as that adopted by the company for its separate financial statements. Differences if any, in accounting policies have been disclosed separately. The Consolidated Financial Statements have been prepared on the following basis: (a) Investment in Subsidiary The Financial Statements of the company and its subsidiary company have been consolidated on line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra- group transactions in accordance with Accounting Standard (AS) 21 - Consolidated Financial Statements The difference between the cost of investment in the subsidiary over the companys portion of Equity in subsidiary, is recognized in the financial statements as Goodwill On Consolidation. The operations of the companys subsidiary are considered as non-integral operations for the purpose of consolidation. Depreciation on Fixed assets of the Company is provided on Straight Line Method (SLM) and depreciation on Fixed Assets of Subsidiary Company is provided on Written Down Value (WDV) method, as per rates prescribed in Schedule-XIV to the Companies Act 1956. (b) Investment in Associates Investments in Associates are accounted for using the Equity Method in accordance with Accounting Standard 23 Accounting for Investment in Associates in Consolidated Financial Statements. The Company accounts for it share in the change in net assets of the associates, post acquisition; through its Profit & Loss account to the extent such change is attributable to the associates Profit & Loss account, based on available information. The difference between the cost of investment in the associates and the share of net assets at the time of acquisition of shares in the associates is identified in the financial statements as Goodwill or Capital Reserve as the case may be.

267

2. a)

BASIS OF ACCOUNTING Basis of preparation The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (GAAP) under the historical cost convention on an accrual basis to comply in all material respects with mandatory Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

b)

Accounting policies not specifically referred to otherwise are consistent with the Generally Accepted Accounting Principles followed by the Company. USE OF ESTIMATES The preparation of financial statements in confirmative with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known /materialized.

3.

4. a)

FIXED ASSETS Fixed assets are stated at cost of acquisition or construction less depreciation, except revalued assets. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during the construction incurred up to the date of commissioning. Capital Work in Progress includes capital items not installed or Building construction not completed and preoperative expenditure related to and incurred during implementation of projects and pending to be allocated. Vehicles taken on Hire Purchase arrangements, wherein the company has option to acquire the vehicles are accounted for as Fixed Assets. IMPAIRMENT OF ASSETS An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

b)

c)

5.

6.

PRE-OPERATIVE EXPENSES & ALLOCATION Expenses incurred relating to projects prior to commencement of commercial operations are classified as Pre-operative expenses and disclosed under Capital Work-in-Progress. These expenses are allocated to the relevant fixed assets of the project on a proportionate basis on the respective date of the assets put to use.

7.

INVESTMENTS Current Investments are carried at the lower of cost or quoted / fair value, computed category wise. Long Term Investments are stated at cost less any provision for permanent diminution.

268

8.

OPERATING LEASE: Asset acquired on lease where significant portions of the risks and rewards incidental to ownership are retained by the lessor is classified as operating lease. Lease rentals are charged to profit and loss account on accrual basis.

9.

INVENTORIES Inventories are valued at lower of Cost determined on FIFO basis or Net Realizable Value.

10.

REVENUE RECOGNITION Room Sales is recognized on a day to day basis after the guest checks into the hotels. Income from Food and Beverages are recognized at the point of serving these items to the guests. Banquet Income is recognized at the time the banquet facilities are utilized by the customer. Income stated is exclusive of amount recovered towards Sales Tax, Luxury Tax and Service Tax. Income from Vacation Ownership and Club Membership, fees related to One time Admission Fee is recognized as income on admission of a member and balance portion of membership fee entitling the member to use the facilities over the membership period, is recognized as income equally over the membership period. Income from educational activity is recognized over the academic period during which the coaching is imparted. Income from long term construction contracts are recognized on the percentage of completion basis in accordance with Accounting Standard (AS) - 7. As the long term contracts necessarily extend beyond one year, revision in costs and revenues estimated during the course of the contract are reflected in the accounting period in which the facts requiring the revision become known.

11.

EMPLOYEE BENEFITS Post-employment benefit: Defined Contribution: Contribution for provident fund are accrued in accordance with applicable statutes and deposited with the Regional Provident Fund Commissioner. Defined Benefit: Companys liabilities towards Defined Benefit Schemes viz. Gratuity benefits and other long term benefit viz. leave encashment are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the Balance Sheet date. Actuarial gains and losses are recognized in the Profit and Loss account in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent of benefits are vested, otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested. Short-term employee benefits: Short term employee benefits are charged off at the undiscounted amount in the profit and loss account in the year in which the related service is rendered.

12.

FOREIGN CURRENCY TRANSACTIONS In accordance with Accounting Standard (AS) 11 on Accounting for the Effects of changes in Foreign Exchange Rates, Transactions in foreign currencies are recognized at the prevailing exchange rates on the transaction date. Realized gains and losses on settlement of foreign currency transactions are recognized in the Profit and Loss Account, Foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates, and the resultant exchange difference is recognized in the Profit and Loss Account.

269

Monetary items denominated in foreign currency are restated using the exchange rates prevailing at the date of the balance sheet, and the resulting net exchange difference is recognized in the profit and loss account. 13. BORROWING COSTS Borrowing costs attributable to acquisition, construction or production of qualifying assets are capitalized as part of the cost of that asset, till the asset is ready for use as per Accounting Standard (AS) - 16. Other borrowing costs are recognized as an expense in the year in which these are incurred. 14. TAXES ON INCOME The provision for current tax is based on the assessable profits of the Company computed in accordance with the applicable provisions of the Income Tax Act, 1961. Minimum Alternate Tax (MAT) eligible for set off in subsequent years (as per Tax Laws), is recognized as an asset by way of credit to the profit and loss account. Deferred Tax resulting from timing difference between book and taxable profit is accounted for using the tax rates and laws that have been enacted as on the Balance Sheet date. The deferred tax asset is recognized only to the extent that there is reasonable certainty that the asset will be realized in future. 15. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements. 16. PRIOR PERIOD ADJUSTMENTS, EXTRAORDINARY ITEMS AND CHANGES IN ACCOUNTING POLICIES Prior period adjustments, extraordinary items and changes in accounting policies having material impact on the financial affairs of the Company are disclosed. B. IMPACT OF CHANGES IN ACCOUNTING POLICIES, MATERIAL ADJUSTMENTS AND PRIOR PERIOD ITEMS ADJUSTMENT TO RESTATED CONSOLIDATED STATEMENT OF PROFIT AND LOSS (` in Lakhs) As at March 31, 2010 1203.92 9.74

1.

No.

Particulars

As at September 30, 2010 768.57 4.87

Profit After Tax as per Audited Financial Statements Add/ (Less): Impact of Changes in Accounting Policy for Revenue Recognition for Vacation Ownership Membership Fees (Refer Note No 2(a)(1)) Impact of Material Adjustments and prior period items: Prior Period Items ( Refer Note No 2 (a) (2) (i) ) Employee Benefits (Refer Note No.2 (a) (2) (ii) ) Adjustment of Miscellaneous Expenditure (Refer Note No.2 (a) (2) (iii) ) Sub Total [B] Adjustments on account of Provision for Taxation (Refer Note No.2 (a) (3))

B (i) (ii) (iii)

27.51

27.51

(29.45) (30.66) 83.25 23.14

270

No.

Particulars

As at September 30, 2010

As at March 31, 2010 (55.86) (8.87) (64.73) (31.85)

(i) (ii)

MAT Credit Entitlement Current Tax Impact Sub Total [C] Total Adjustments on account of Restatement {Sub Total (A)+(B)+(C)} Profit After Tax as per Restated Financial Statement

(5.61) (5.61) 26.77

795.35

1172.07

2.

NOTES ON ADJUSTMENTS : In terms of Schedule VIII, Clause IX (9) of the SEBI (ICDR) Regulations, 2009 and other provisions, the Statement of Assets and Liabilities and the Statement of Profit and Loss Account for half year ended September 30, 2010 and for the year ended March 31, 2010 have been restated as explained below:

(a)

Impact of changes in Profit and Loss Items 1. Impact of changes in Accounting Policy for Revenue Recognition in respect of Vacation Ownership Membership Fees During the year ended March 31 2010 the company has changed its accounting policy in respect of income recognition for vacation ownership membership admission fees. It was decided to recognize revenue from vacation ownership membership fees to the extent of 60% in the first year instead of 80% in the first year, as done for the financial year ended March 31 2009. The effect of such changes in accounting policy has been given in the restated financial statement for year ended March 31, 2009. 2. Impact of Material Adjustments and prior period items (i) In the Financial Statements for half year ended September 30, 2010 and for the year ended March 31, 2010 the Company has classified certain items as prior period items in Profit & Loss Account. Accordingly, for the purpose of the Restated Summary Statement, the said items have been appropriately adjusted in the respective years to which they pertain. Due to change in estimate of gratuity and leave salary for the year ended March 31, 2009, the additional provision made in the year ended March 31, 2009 has been adjusted in the year ended March 31, 2010. In the restated financial information for the years ended on March 31 2010 the Miscellaneous Expenses like preliminary expenses and Deferred Revenue Expenses have been charged to the Profit and Loss Account in the year of incurrence as against the treatment accorded in the audited financial statements where the Miscellaneous Expenditure not written off were carried forward to the next year.

(ii)

(iii)

3.

Adjustments on account of Provision for Taxation The provision for taxation (current tax and deferred tax) for half year ended September 30, 2010 and for the year ended March 31, 2010 has been recomputed on the adjusted profits on the basis of the rates applicable to the respective yea` Tax impact of earlier year indicates the (short)/excess provision of tax adjusted in respective year.

271

(b)

Revaluation of Assets During the years ended 31st March, 2005 and 31st March, 2007, the company had revalued its Lease hold Land, on the basis of the valuation carried out by the Government approved valuer, by crediting a Revaluation Reserve. For the purpose of the Restated Summary Statement of Assets and liabilities, the said item has been appropriately adjusted. (` in Lakhs.) Revaluation Reserve 40.77 3465.50 505.29 4011.56

Particulars Gandhinagar Land Gandhinagar Land Gurgaon Land Total (c) Material Regrouping

Date of Revaluation 31.03.2005 30.06.2006 30.06.2006

Book Value 24.95 521.80 159.00 705.75

Revalued Amount 65.71 3987.30 664.30 4717.31

Figures have been regrouped to ensure consistency of presentation. The following significant regrouping has been made in the Restated Consolidated Profit and Loss Account and the Restated Consolidated Statement of Assets and Liabilities. (i) In the year ended March 31, 2009 amount invested as share application money pending allotment has been classified as Investments. From the year ended March 31, 2010 the same has been classified under Loans and Advances. Up to the year ended March 31, 2009, increase/ (decrease) of inventory and purchase of food and beverages are shown separately in profit and loss account. From the year ended March 31, 2010 the same has been shown as consumption of food and beverages. Up to the year ended March 31, 2009, vat expense was classified as administration expense and credit card commission was classified as Interest and Financial charges. From the year ended March 31, 2010 both the items are classified as selling and distribution expense. Up to the year ended March 31, 2009, Provision for Taxations and Advance Taxes had been shown separately, while from the year ended March 31, 2010 the same has been shown as Net of Provision / Net of Advance tax as applicable.

(ii)

(iii)

(iv)

C. 1.

OTHER NOTES TO ACCOUNTS During the year ended March 31, 2010, the company has acquired 100% shares of Palm Lagoon Backwaters Resort Private Limited for the consideration of `565.00 Lakhs. During the year ended March 31, 2010 and half year ended September 30, 2010 the company has accepted deposits from the public as per the provision of Section 58A and 58AA of the Companies Act, 1956 and the ruled framed there under. During the half year ended September 30, 2010 the company has issued 2,60,000 Compulsorily Convertible Preference Shares (CCPS) of `1, 000 each to the investor based on Share Subscription Agreement dated August 24, 2010. The CCPS shall be converted into equity shares based on the conversion ratio specified in the said agreement. During the half year ended September 30, 2010 the company acquired 49.83% holding in Cambay SEZ Hotels Private Limited & 50% holding in Cambay Hotels & Holidays Limited.

2.

3.

4.

272

5.

STATEMENT OF CAPITAL COMMITMENTS (` in Lakhs) As at March 31, 2010 851.99

No. (i)

Particulars Estimated amount of contracts remaining to be executed on Capital Account and not provided for.

As at Sept. 30, 2010 1,575.07

6.

The Income Tax Department had conducted Search Operations under section 132 of Income Tax Act, 1961 against thecompany on 8th and 9th September, 2010. As per statutory time limit and permitted extension there of, time period for proceeding is over. No demand has been raised and there are no pending disputed statutory direct tax liabilities on the company as on date in respect of the proceedings conducted there of. In the opinion of the company, no provision for any tax liability is required to be made as nothing has been found against the company during the search operations which may require any provision to be made. Against the search operations conducted by the Income Tax Department, the company has filed a Writ Petition in High Court of Gujarat, challenging the said proceedings by the Income Tax Department, which is pending with Honble Court. Balance of Secured Loans, Sundry Creditors, Sundry Debtors , Loans & advances are subject to confirmation and reconciliation , if any. The Company has applied to the ministry of Law & Company Affairs ( Department of Company Affairs ), Government of India, for exemption from disclosing quantitative details of turn over and consumption in respect of goods dealt with by the company as required in Part II, Schedule VI to the Companies Act,1956 STATEMENT OF DEFERRED TAXATION : Deferred Tax Assets and Liabilities arising on account of timing differences are as under (` in Lakhs) As at March 31, 2010 1,078.38 -

7.

8.

9.

No.

Particulars

As at Sept. 30, 2010

I) i) ii) II)

Deferred Tax Liability (DTL) Depreciation Others Deferred Tax Asset (DTA)

1,450.89 -

(I-II) Total Deferred Tax Liability (Net) as per Audited Financial Statements Adjustments on account of Restatement Restated Deferred Tax Liability (net) 1,450.89 1,450.89

1,078.38 1,078.38

10. A) No.

STATEMENT OF EMPLOYEE BENEFITS AS PER AS -15( REVISED) For Gratuity Particulars As at Sept. 30, 2010 (` in Lakhs) As at March 31, 2010

Amounts to be recognized in Balance Sheet

273

No.

Particulars

As at Sept. 30, 2010

As at March 31, 2010

Present value of funded obligations Fair value of plan assets Present value of unfunded obligations Unrecognized past service cost Net liability Amounts in the balance sheet: Liabilities Assets Net liability 2 Expenses recognized in Income Statement Current service cost Interest on obligation Expected return on plan assets Net actuarial losses (gains) recognized in the year Past service cost Losses (gains) on curtailments and settlement Expense recognized in P & L 3 Table Showing Change in Benefit Obligation Opening Defined Benefit Obligation Service cost for the period Interest cost for the period Actuarial losses (gains) Benefits paid Closing defined benefit obligation

0.92 0.92 32.70 Nil 32.70 33.62 0.92 32.70

0.92 0.92 26.83 26.83 27.75 0.92 26.83

5.50 0.60 (0.02) 3.48 Nil Nil 2.60

15.76 1.34 (0.08) (5.01) 12.01

31.02 5.50 0.60 (3.50) Nil 33.62

15.74 15.76 1.34 (5.09) 27.75

Table of Fair Value of Plan Assets Opening fair value of plan assets Expected return Actuarial gains and (losses) Assets distributed on settlements Contributions by employer Assets acquired in an amalgamation in the nature of purchase Exchange differences on foreign plans Benefits paid Closing balance of fund 0.92 0.02 (0.02) Nil Nil Nil Nil Nil 0.92 0.92 0.08 (0.08) 0.92

Table showing Category of Plan Assets Government of India Securities High quality corporate bonds Equity shares of listed companies Property Funds managed by Insurer Bank Balance Nil Nil Nil Nil 1.00 Nil 1.00 -

274

No.

Particulars

As at Sept. 30, 2010

As at March 31, 2010

Principal Actuarial Valuation Discount rate as on Balance Sheet date Expected return on plan assets as on Balance sheet date Annual increase in Salary costs 7.75% 9.00% 6.50% 8.50% 9.00% 6.50%

Table Showing Surplus / (Deficit) Defined Benefit Obligation Plan assets Surplus / (deficit) 33.62 0.92 (32.70) 27.75 0.92 (26.83)

B) 1

For Leave Encashment Amounts to be recognized in Balance Sheet Present Value of Funded Obligation Fair Value of plan assets Present value of unfunded obligation Unrecognized past service cost Net Liability Amounts in the balance sheet Liabilities Assets Net Liability Nil Nil 16.45 Nil 16.45 16.45 Nil 16.45 11.93 Nil 11.93 11.93 11.93

Expense recognized in Income Statement Current Service Cost Interest on obligation Expected return on plan assets Net actuarial losses (gains) recognized in the year Past Service Cost Losses (gains) on curtailments and settlement Expenses recognized in P&L Table Showing Change in Benefit Obligation Opening Defined Benefit Obligation Service cost for the period Interest cost for the period Actuarial losses (gains) Losses (gains) on curtailments Benefits paid Closing defined benefit obligation 3.79 0.21 2.49 Nil Nil 6.49 4.43 1.14 (3.43) 2.14

11.93 0.59 0.23 (0.97) Nil (0.96) 10.82

13.45 4.43 1.14 (3.43) (3.66) 11.93

Table of Fair Value of Plan Assets Opening fair value of plan assets Expected return Actuarial gains and (losses) Assets distributed on settlements -

275

No.

Particulars

As at Sept. 30, 2010 -

As at March 31, 2010 -

Contributions by employer Assets acquired in an amalgamation in the nature of purchase Exchange differences on foreign plans Benefits paid Closing balance of fund 5 Table showing Category of Plan Assets Privilege Leave Benefits Government of India Securities High quality corporate bonds Equity shares of listed companies Property Funds managed by Insurer Bank Balance 6 Principal Actuarial Valuation Discount rate as on 31.03.2010 Expected return on plan assets at 31.03.2010 Annual increase in Salary costs

7.75% Nil 6.50%

8.50% 6.50%

Table Showing Surplus / (Deficit) Defined Benefit Obligation Plan assets Surplus / (deficit) 16.45 Nil (16.45) 11.93 (11.93)

11. No.

STATEMENT OF MANAGERIAL REMUNERATION Particulars Year ended September 30, 2010 26.10 26.10 (` in Lakhs) Year ended March 31, 2010 52.50 52.50

Director Remuneration Total

276

ANNEXURE 5 RESTATED CONSOLIDATED STATEMENT OF INCOME FROM OPERATIONS (Rs in Lakhs) Year ended March 31, 2010 4,853.66 360.96 310.40 3,392.59 98.55 261.10 883.06 143.91 10,304.21

No.

Particulars

Room Sales Food & Beverages Sales Banquet Income Timeshare & Club Membership Tour & Travel Income Income From Educational Activity Income From Construction Contract Other Services TOTAL

Half Year ended Sept 30 2010 4,143.57 984.83 140.76 1,171.29 175.54 189.87 66.27 6,872.13

277

ANNEXURE 6 RESTATED CONSOLIDATED STATEMENT OF OTHER INCOME (` in Lakhs) Year ended March, 31 2010

No.

Particulars

Half Year ended Sept. 30, 2010

1.) Operating Other Income Recurring (Miscellaneous) 2.) Non Operational Other Income (Recurring in nature) Rental Income Interest Received TOTAL

37.86

59.42

91.87 12.66 142.40

174.47 21.86 255.74

278

ANNEXURE 7 RESTATED CONSOLIDATED STATEMENT OF INVESTMENTS (` in Lakhs) As at March 31, 2010 Nos. ` 1.30

Particulars

As at Sept. 30, 2010 Nos. ` 1.41

Long Term Investments (Unquoted) In Govt Securities NSC ( Pledge with commercial tax Department) In Shares - Others Cambay Hotels & Holidays Pvt. Ltd. 10,00,000 (Previous Year Nil) Equity Shares of ` 10 each Fully Paid up Add : Share in Post acquisition profit till 30th Sept,2010 (Capital reserve as on date of acquisition of shares ` 3,89,575/-) Dahej Hospitality Pvt. Ltd.15,00,000 (Previous Year Nil) Equity Shares of ` 10 each Fully Paid up Add : Share in Post acquisition of shares ` NIL) ( Goodwill as on date of acquisition of shares ` 3,911/- )

1,000,000

100.00 9.36

1,500,000

150.00

Total Investments Less: Provision for Diminution in value Net Investment

260.77 260.77

1.30 1.30

279

ANNEXURE 8 RESTATED AGE WISE ANALYSIS OF SUNDRY DEBTORS ON CONSOLIDATED BASIS (` in Lakhs) As at March 31, 2010 2,481.64 1,902.07 4,383.71 4,383.71 4,383.71 4,383.71 24.35

Particulars

As at Sept. 30, 2010 2,828.90 2,405.73 5,234.63 5,234.63 5,234.63 5,234.63 0.18

Debts Outstanding for a period exceeding six months Other Debts Gross Less : Provision TOTAL* Considered Good Considered Doubtful TOTAL Debt outstanding from promoters and promoter group companies

280

ANNEXURE 9 RESTATED CONSOLIDATED STATEMENT OF LOANS & ADVANCES (` in Lakhs) As at March 31, 2010 1,398.18 2,049.50 235.00 110.00 188.73 185.07 4,166.48 4,166.48 4,166.48 4,166.48

Particulars

As at Sept. 30, 2010 2,759.84 2,344.44 142.27 118.08 189.95 393.06 5,947.64 5,947.64 5,947.64 5,947.64

Advances recoverable in cash or in kind or for value to be received Advance for Capital Expenditure Share Application Pending Allotment Balances with Excise Authorities Deposits MAT Credit Entitlement Gross Less : Provision TOTAL Loans and Advances included : Considered Good Considered Doubtful TOTAL Loans & Advances outstanding from promoters and promoter group companies

143.97

163.77

281

ANNEXURE 10 RESTATED CONSOLIDATED STATEMENT OF SECURED LOANS (` in Lakhs) As at March 31, 2010

No.

Particulars

Rate of Interest

As at Sept. 30, 2010

A) SECURED LOANS a) Debenture/ Bonds Deep Discount Optionally Convertible Bonds Non Convertible Debentures Interest accrued and Due Sub-Total (a) b) Term Loans (1) From Financial Institutions -Rupee Loans (2) From banks -Rupee Loans (3) Non Banking Financial Companies -Rupee Loans (4) Interest accrued and due on above loan Sub-Total (b) c) From Banks on Cash Credit Accounts, Working Capital Demand Loans etc d) Loans under Hire Purchase/Lease Arrangements Total - Secured Loans [a+b+c+d]

Varied 14.50%

2,500.00 30.56 2,530.56

2,500.00 30.79 2,530.79

Varied Varied Varied

9,408.98 16,933.10 4,439.63 140.19 30,921.90 1,383.93

11,178.42 14,305.44 4,398.21 119.12 30,001.19 1,571.47

Varied

Varied

150.39 34,986.79

229.51 34,332.95

282

DETAILS OF SECURED LOANS OUTSTANDING AS ON 30th SEPTEMBER,2010 Name of Lending Institution TERM LOAN 1 IDFC - I No Amt Sanctioned O/s as on September 30, 2010 2,184.73 Interest Rate Repayment Schedule/ Validity 33 quarterly installments payable as per terms ( % of Loan) has been commenced from 15th January 2008 32 quarterly installments payable as per terms ( % of Loan) has been commenced from 15th March 2009 Security (Primary) Collateral (` in Lakhs) Guarantee

2,815.00

2.40 % over and above the IDFC Benchmark Rate (Current Rate : 11.95%)

IDFC II

3,250.00

2,664.25

3.75 % pa over and above the IDFC Benchmark Rate (Current Rate : 12.65%)

TFCI

1,500.00

1,450.00

0.50% Plus Prime Lending Rate (Current Rate : 12.50%)

Equal 89 monthly installments of ` 16.67 Lakhs commencing from 15th July 2010 & last 90th installment of ` 16.37 Lakhs

i) 1st charge on all the movable and immovable assets of the Company's Hotel Properties at Gandhinagar. ii) Pledge of shares of 51% of the total paid up capital i) 1st charge on all the movable and immovable assets of the Company's Hotel Properties at Gandhinagar and Vejalpur , Ahmedabad ii) Pledge of shares of 51% of the total paid up capital i) 1st Pari passu charge on all the movable and immovable assets of the 5- star hotel at Thaltej ii) Hypothecation charge on pari passu basis (with the other lender for the hotel

Personal guarantee of Promoters, Directors of the Company

Personal guarantee of Promoters, Directors of the Company

Personal guarantee of Promoters, Directors of the Company

283

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

Repayment Schedule/ Validity

Security (Primary)

Collateral

Guarantee

State Bank of India- I

1,600.00

1,368.91

0.50% below SBAR (Current Rate : 13.75%)

State Bank of India - II

1,100.00

940.53

1% above SBAR (Current Rate : 13.75%)

12 quarterly installments of ` 130 Lakhs & subsequent 12 quarterly installments of ` 95 Lakhs commencing from 1 December 2009 and 125 Lakhs last installment

project) on all the movable assets of the 5 star hotel subject to prior charges of banker on specified movable assets for securing working capital facilities. iii) Pledge of entire promoters shareholding for the project on pari passu basis with other banks/financial institutions 1st Pari passu charge on all the movable and immovable assets of the 5- star hotel at Thaltej

i) 2nd charge by way of EM on company's hotel cum shoppping mall cum entertainment plaza at thaltej, Ahmedabad with TFCI and UBI ii) 2nd pari passu charge on the land & building at Vejalpur iii) 2nd pari passu charge on the entire fixed assets of the exisitng hotel and convention centre at Gandhinagar (including mortgage over the land and building at X-22,23,24 & 27 at Gandhinagar)

Personal guarantee of Promoters, Directors of the Company

284

No

Name of Lending Institution United Bank of India

Amt Sanctioned 1,034.00

O/s as on September 30, 2010 908.55

Interest Rate

BPLR +0.5% (Current Rate : 12.75%)

Repayment Schedule/ Validity 23 quarterly installments of ` 44.96 Lakhs commencing from December 2009

Security (Primary)

Collateral

Guarantee

United Bank of India ( Kollam

1,450.00

1,367.66

BPLR +0.5% (Current Rate : 12.75%)

30 quarterly installments of ` 48.34 Lakhs commencing from March 2010

i) 1st Pari passu charge on all the movable and immovable assets of the 5- star hotel at Thaltej ii) First Hypothecation charge on pari passu basis (with the other lender for the hotel project) on all the movable assets of the 5 star hotel subject to prior charges of banker on specified movable assets for securing working capital facilities. iii) Pledge of entire promoters shareholding for the project on pari passu basis with other banks/financial institutions. Exclusive charge on immovable and movable properties of the company relating to Cambay Palm Lagoon Resort, Kollam,

i) 2nd charge by way of EM on company's hotel cum shoppping mall cum entertainment plaza at thaltej, Ahmedabad with TFCI and UBI ii) 2nd pari passu chargeon the land & building at Vejalpur iii) 2nd pari passu charge on the entire fixed assets of the exisitng hotel and convention centre at Gandhinagar (including mortgage over the land and building at X-22,23,24 & 27 at Gandhinagar

Personal guarantee of Promoters, Directors of the Company

i) Personal guarantee of Promoters, Directors of the Company ii)

285

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

Repayment Schedule/ Validity

Security (Primary)

Collateral

Guarantee

Kerala

L&T Infrastructure Finance Company Limited

4,000.00

4,000.00

L&T infra PLR - 0.75% (Current Rate : 13.25%)

4 quarterly installments of ` 300 Lakhs commencing from April 2011 & 14 quarterly instalments of Rs,200 Lakhs

Axis Bank

3,500.00

3,144.00

BPLR 1.50%(Current Rate : 13.50

20 quarterly installments of ` 175 Lakhs commencing from 1st April 2010

) Equitable Mortgage of land & property at Ahmedabad, Udaipur, Jaipur( two propertis) & Neemrana ii) 1st charge on all the present and futute immovable and movable fixed assets of the company iii) Pledge of shares of the company held by the promoter. i) Equitable Mortgage of land & property at Jamdoli, kukas Uadaipur and Neemrana ii) Hypothecation of all the present and futute immovable and movable fixed assets of the company

Corporate Guarantee of Palm Lagoon Backwater Resorts Pvt. Ltd. i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa Agritech Pvt. Ltd.

i) 2nd charge on all other current assets of the company on pari passu basis ii)Pledge of 30% shares of the company held by promoters..

Personal guarantee of Promoters, Directors of the Company

286

No

10

Name of Lending Institution Bank of India

Amt Sanctioned 2,500.00

O/s as on September 30, 2010 2,547.94

Interest Rate

0.25% over and above BPLR (Current Rate : 14%)

Repayment Schedule/ Validity 24 quarterly installments in yearly ballooning format commencing from 1st April 2011

Security (Primary)

Collateral

Guarantee

i) Pari Passu charge of land & building with the Neemrana Plot ii) 1st Pari passu charge on other present and future immovable and movable fixed assets of the company

i) 2nd charge on all other current assets of the company on pari passu basis ii)Pledge of promoters shareholding.

11

Oriental Bank of Commerce

2,500.00

2526.61

PLR + 1% (Current Rate : 13.15%)

20 quarterly installments of ` 125 Lakhs commencing from 1st April 2011

) Pari Passu charge of land & building with the Neemrana Plot ii) 1st Pari passu charge on other present and future immovable and movable fixed assets of the company

) 2nd charge on all other current assets of the company on pari passu basis ii)Pledge of promoters shareholdin

12

Corporation Bank

1,000.00

1018.23

COBAR+25 bps (Current Rate : 14.00%)

20 quarterly installments of ` 50 Lakhs commencing from 1st April,2011

i) Pari Passu charge of land & building with the Neemrana Plot ii) Pari passu charge on other present and future immovable and movable fixed assets of the company

i) 2nd charge on all other current assets of the company on pari passu basis ii)Pledge of shares of the company held by the promoters

i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa Agritech Pvt. Ltd. i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa Agritech Pvt. Ltd. i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa

287

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

Repayment Schedule/ Validity

Security (Primary)

Collateral

Guarantee

13

IFCI

3,000.00

3000.00

13.50% (Current Rate : 13.50%)

14

Central Bank of India

1875.00

1897.35

BPLR + 1% (Current Rate : 14.50%)

24 quarterly installments in yearly Ballooning format from May 2012 Equal 28 quarterly installments from Oct. 15, 2010

Pari Passu basis charge on project assets ( Rajasthan ) with other term lenders 1) 1st parrripassu charge with IDFC on Cambay Spa & Resort Gandhinagar 2) Mortgage on immovable proprty of Project 3) Hypothecation movable assets of project i) 1st charge on project assets (Rajasthan) on parripasu basis with other exisitng term lenders 2) second charge on current aseest of on parripassu basis 3) parripassu charge on 1.11 crore shares of face with IDFC & other lenders Fisrt and exclusive charge by way of

)2 nd chanrge on all current assets of the company on parri passu basis with existing term lenders ii) Parri passu charge on 1.1 crore share i) Pledge on 1.11,core share of promnoters on parripassu basis with Other Banker

Agritech Pvt. Ltd. Personal guarantee of Promoters, Directors of the Company

15

Syndicate Bank

2500.00

1213.32

PLR + 1.5% ( Current Rate 14% )

24 quarterly installments in yearly Ballooning format from June 2012

16

Indiabulls

180.00

168.37

Current Rate : 20%

120 monthly installments of `

Personal guarantee of

288

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010

Interest Rate

17

Indiabulls

290.00

271.26

Current Rate : 20%

18

Rajasthan Industrial Investments Corporation

180.00

110.00

15.50%

Repayment Schedule/ Validity 3.24 Lakhs commencing from 1st September 2007 120 monthly installments of ` 5.23 Lakhs commencing from 1st September 2007 18 quarterly installments of `10 Lakhs commencing from 15th February 2009

Security (Primary)

Collateral

Guarantee

19

Interest accrued and due on Term Loans Sub Total DEBENTURE Non Convertible Debenture

140.19

NA

NA

mortgaze on immovable properties at Gurgaon Fisrt and exclusive charge by way of mortgaze on immovable properties at Gurgaon i) First mortgage on present and future immovable and movable properties of the company ii) 1st pari passu charge on all other movables of the company NA

Pledge of shares of the company held by the promoters.

Promoters, Directors of the Company Personal guarantee of Promoters, Directors of the Company Personal guarantee of Promoters, Directors of the Company

NA

NA

30,921.90 2,500.00 2,500.00 14.5% or 5 yr G-sec plus spread of 675 bps whichever is higher on the date of signing of subscription agreement (Current Rate: 20 quarterly installments of ` 125 Lakhs commencing from 1st October 2010 i) Pari Passu charge of land & building with the Neemrana Plot ii) 1st Pari passu charge on other present and future immovable and movable fixed assets of the i) 2nd charge on all other current assets of the company on pari passu basis ii)Pledge of shares of the company held by the promoters Personal guarantee of Promoters, Directors of the Company

289

No

Name of Lending Institution

Amt Sanctioned

O/s as on September 30, 2010 30.56

Interest Rate

Repayment Schedule/ Validity NA

Security (Primary)

Collateral

Guarantee

Interest accrued and due on NCD Sub Total VEHICLE LOANS 20 Vehicle Loan

14.5%) NA

company NA

NA

NA

2530.56 150.39 Against hypothecation of specific vehicles At SBAR (Current Rate : 13.75%) Repayable on demand 1st charge by way of Hypothecation of entire chargeable current assets of the company i) 2nd charge by way of EM on company's hotel cum shoppping mall cum entertainment plaza at thaltej, Ahmedabad with TFCI and UBI ii) 2nd paripassu charge on the land & building at Vejalpur iii) 2nd pari passu charge on the entire fixed assets of the exisitng hotel and convention centre at Gandhinagar (including mortgage over the land and building at X-22,23,24 & 27 at Gandhinagar Pledge of 1,00,000 shares of the company Personal guarantee of Promoters, Directors of the Company

WORKING CAPITAL CC 21 State Bank of India

500

473.58

22

State Bank of India ( TOD

400

202.97

2% above SBAR(Current Rate : 13.75%)

Repayable demand

on

1st charge by way of Hypothecation of entire chargeable current assets of the company

Personal guarantee of Promoters, Directors of the Company

290

No

23

Name of Lending Institution Axis Bank

Amt Sanctioned 700

O/s as on September 30, 2010 707.38

Interest Rate

PLR less 2.75% (Current Rate : 14.75%)

Repayment Schedule/ Validity Repayable on demand

Security (Primary)

Collateral

Guarantee

Hypothecation of all current assets of the Jaipur Kukas, Jaipur Jamdoli, Udaipur and Neemrana, present and future on pari passu basis with other lenders.

i) Fisrt charge on pari passu basis on all the fixed assets of Jaipur Kukas, Jaipur Jamdoli, Udaipur and Neemrana, present and future ii) Subservient charge on all other fixed assets of the company, present and future excluding above fixed assets.

i) Personal guarantee of Promoters, Directors of the Company ii) Corporate Gurantee of Neesa Agritech Pvt. Ltd

Subtotal Grand Total

1383.93 34,986.79

291

ANNEXURE 11 RESTATED CONSOLIDATED STATEMENT OF UNSECURED LOANS (` in Lakhs) As at March 31, 2010 155.22

Particulars

Rate of Interest Varied

As at Sept. 30, 2010 734.12

(a) Fixed Deposits (Refer Note below) (b) Others : From Directors Total - Unsecured Loans

varied

24.60 758.72

4.60 159.82 (` in Lakhs) As at March 31, 2010 48.00 107.22 155.22

Break up of Fixed Deposits

As at Sept. 30, 2010

Fixed Deposits are received from From Directors From Others Total Fixed Deposits

48.00 686.12 734.12

292

ANNEXURE 12 RESTATED CONSOLIDATED STATEMENT OF CURRENT LIABILITIES & PROVISIONS (` in Lakhs) As at March 31, 2010

No.

Particulars

As at Sept. 30, 2010

(A)

CURRENT LIABILITIES : Sundry Creditors Total Outstanding dues to : - Micro Enterprises and Small Enterprises* - Creditors other than Micro Enterprises and Small Enterprises * In the absence of any information with the company about the Micro, Small & Medium Enterprises status of the suppliers, the details regarding the dues owed by the company to them have not been given. Interest accrued but not due on loans Deposits Other Liabilities TOTAL (A)

2,052.85

2,796.86

85.94 238.29 5,642.63 8,019.70

73.12 237.91 3,275.98 6,383.86

(B)

PROVISIONS Provision for Gratuity and Compensated Absences Provision for Taxation (Net of Advance Tax) Proposed Dividend Tax on Dividend TOTAL (B) TOTAL (A+B) 75.28 467.60 0.20 0.14 543.23 8,562.93 59.07 241.50 0.64 0.11 301.31 6,685.17

293

ANNEXURE-13 RESTATED CONSOLIDATED STATEMENT OF SHARE CAPITAL (` in Lakhs) As at March 31, 2010

Particulars

As at Sept. 30, 2010

Authorised Capital Equity Shares of `10/- each Preference Shares of `1000/- each Issued, Subscribed & Paid-up Capital Equity Shares of `10/- each Note: Of the above 6,30,836 equity shares of `10 each have been issued as Bonus Shares by way of capitalisation of Share Premium and Reserves. 4,00,000 0.01% Compulsorily Convertible Preference Shares (CCPS) of `1000/- each 2,60,000, Compulsorily Convertible Preference Shares (CCPS) of `1000/- each TOTAL

5300.00 8200.00

4000.00 5000.00

2560.51

2541.08

4000.00

4000.00

2600.00 9,160.51

6,541.08

294

ANNEXURE 14 RESTATED CONSOLIDATED STATEMENT OF ACCOUNTING RATIOS (` in Lakhs) As at March 31, 2010 1172.07 (0.47) 1171.60 0 0 1171.60 20449.39 4000.00 16449.39

Particulars Profit attributable to equity shareholders Restated Net profit after tax Less: Dividend on Preference Shares including Dividend tax Net Profit Available for Equity Shareholders (Basic) Add: Preference Dividend payable Add: Interest on convertible Preference shares Net profit available for Equity Shareholders (Dilutive) Net Worth Less: Preference Share Capital Networth excluding Prefernce Share Capital [E] Weighted average Number of equity shares outstanding Weighted average number of Equity Shares (Basic) (Nos.) Add: Effect of Share Application Money (Nos.) Add: Effect of potential Equity Shares on conversion of CCPSs (Nos) Weighted average number of Equity Shares Dilutive (Nos.) Outstanding Shares at Year End (Nos) Face Value of Equity Shares Ratios: Earning per share (EPS) Basic EPS (in `)*

As at Sept. 30, 2010 795.35 (0.23) 795.58 0 0 795.58 24619.51 6600.00 18019.51

25488291 56697

24231228 0

25544988 25605118 10

24231228 25410760 10

3.12 (Net Profit Available for Equity Shareholders - (Basic)*100000/ Weighted average number of Equity Shares Basic (Nos.)) Diluted EPS (in `)* (Net Profit Available for Equity Shareholders - (Diluted)*100000/ Weighted average number of Equity Shares Diluted (Nos.)) Return on Net Worth (in %)* (Restated Net Profit after Tax/ Net Worth * 100) Net Asset value per Share (in `)* (Net Worth*100000 / Outstanding Shares at Year End (Nos)) 3.11

4.84

4.84

3.23%

5.73%

70.37

64.73

295

Notes: (1) The Above Ratios have been computed as under Net Profit After Tax restated = ----------------------------------------------------------------Weighted average number of equity shares outstanding during the period

Basic & Diluted earning per Share (INR)

Net Assets value per Share (INR)

Net worth Restated, at the end of period = ----------------------------------------------------------------Total number of equity shares outstanding at the end of the period Net Profit After Tax restated = ----------------------------------------------------------------Net worth restated, at the end of period

Return on Net worth (INR)

(2)

Earning per share calculations are done in accordance with Accounting standard 20 on Earning Per Share. Net Profit as appearing in the Summary Statement of Consolidated Profits and Losses Restated has been considered for computing the above ratios. Net Worth means Equity Share Capital + Preference Share Capital + Share Application Money + Share premium + Reserves and Surplus. As Conversion price of Outstanding CCPS as on September 30, 2010 , March 31 , 2010 and March 31 2009 in to Equity shares is based on proposed Issue price, at this stage we have not taken in to consideration number of potential equity shares to be issued and hence Diluted EPS pending determination of Issue price, is not calculated.

(3)

(4)

(5)

296

ANNEXURE-15 RESTATED CONSOLIDATED STATEMENT OF DIVIDEND (` in Lakhs) As at Sept 30, 2010 2560.51 4000.00 2600.00

No

Particulars Class of Shares Equity Share Capital 0.01% Compulsorily Convertible Preference Shares Compulsorily Convertible Preference Shares (CCPS) Dividend On Equity Share Capital Tax on Dividend Rate of Dividend(%) On Preference Share Capital Tax on Dividend Rate of Dividend(%)

Face Value (`/Share) 10 1000 1000

0.20 0.03 0.01

297

ANNEXURE 16 RESTATED CONSOLIDATED STATEMENT OF CAPITALIZATION AS ON 30TH SEPTEMBER 2010 (` in Lakhs) Post-Issue#

Pre-Issue Borrowings Short Term Long Term 2156.42 33602.86 35,759.27

Shareholders' Funds Equity Share Capital Preference Share Capital Share Premium Reserve and Surplus Total Shareholders Fund Long Term Debt / Equity

2,560.51 6,600.00 11,860.57 3,202.43 24,619.51 1.36

1) Based on Restated Consolidated Statement of Assets & Liabilities as at September 30, 2010 2 ) The post-issue debt equity ratio will be computed after finalization of issue price. 3 ) Short term Debts are debts due within one year 4) The Company on November 14,2010 has made an allotment of 2,03,078 Equity shares of ` 10/- each at Rs. 195/- each to one of the Promoters of the Company viz Mr Sanjay Gupta.

298

ANNEXURE-17 RESTATED CONSOLIDATED STATEMENT OF CONTINGENT LIABILITIES: (` in Lakhs) As at March 31, 2010 22.6 152.24 169.00

No.

Particulars

As at Sept. 30, 2010 109.30 169.00

(i) (ii) (iii)

Guarantees given by banks on behalf of the Company Letters of Credit issued by bank on behalf of company Corporate Guarantee given by Company

299

ANNEXURE 18 RESTATED CONSOLIDATED STATEMENT OF RELATED PARTIES TRANSACTIONS A) LIST OF RELATED PARTIES No. I Particulars Associates Neesa Infrastructure Limited Neesa Agritech & Foods Limited ( Formerly Neesa Agritech Pvt Limited ) Neesa Technologies Pvt. Ltd Gujarat Syscom Technologies Pvt. Ltd. Cambay Hotels & Holidays Limited (Formerly Cambay Hotels & Holidays Pvt. Ltd.) Orient Spa Limited (Formerly Orient Spa Pvt. Ltd.) Cambay Hotels SEZ Limited ( Formerly Dahej Hospitality Pvt. Ltd) Neesa Energy Pvt. Limited. Neesa Bio-tech Pvt. Limited . Key Management Personnel Mr. Sanjay Gupta Mrs. Neelu Gupta Mr. Arvind Gupta

II

300

Transactions with Related Parties Particulars Key Managerial Personnel Remuneration Sanjay Gupta Closing Balance Arvind Gupta Closing Balance Share Capital & Application Money Sanjay Gupta Closing Balance Unsecured Loan During year Sanjay Gupta Closing Balance Arvind Gupta Closing Balance Neelu Gupta Closing Balance Unsecured Loan Repaid Sanjay Gupta Interest Paid/Payable by Company Sanjay Gupta Arvind Gupta Associates Loans and Advances Given Neesa Agritech & Foods Ltd. Closing Balance Cambay Hotels & Holidays Ltd. Closing Balance Orient Spa Ltd. Closing Balance Neesa Energy Pvt. Ltd. Closing Balance Neesa Infrastructure Ltd. Closing Balance Gujarat Syscom Technologies Pvt. Ltd. Closing Balance 217.19 (588.62) 180.45 (58.80) 12.04 22.05 60.00 643.21 (375.61) 37.92 58.90 (17.51) 68.02 62.79 32.04 15.75 60.00 60.00 355.80 (12.82) 81.26 25.23 108.08 Upto Sept. 2010 (` inLakhs) FY 2009-10

24.00 8.16 2.10 1.75

48.00 0.30 4.50 1.76

876.00 396.00

1,898.00 -

49.60 3.00 20.00 20.00

112.69 49.60 2.00 3.00 -

3.33 0.21

5.63 0.27

301

Particulars

Upto Sept. 2010 1.91 2.57

FY 2009-10

Cambay Hotels SEZ Ltd Closing Balance Neesa Biotech Pvt. Ltd. Closing Balance

(34.24)

Loans and Advances Repaid Neesa Agritech & Foods Ltd. Cambay Hotels & Holidays Ltd. Orient Spa Ltd. Neesa Infrastructure Ltd. Gujarat Syscom Technologies Pvt. Ltd. 788.30 302.04 5.74 1,006 4.25 (17.51) 5.23 16.29 368.61 110.26

Service Provided to/from: Neesa Agritech & Foods Ltd. Closing Balance Neesa Technologies Pvt. Ltd. Closing Balance Neesa Infrastructure Ltd. Closing Balance Rent Income from: Neesa Agritech & Foods Ltd. Closing Balance Neesa Technologies Pvt. Ltd. Closing Balance Orient Spa Ltd. Closing Balance Cambay Hotels SEZ Ltd Closing Balance

1.74 1.28 0.18

439.59 9.81 167.32 9.67 14.26 0.66

24.01 27.00 38.80 0.60

50.91 59.56 3.48 71.94 0.73

Purchases of goods & Assets from: Neesa Agritech & Foods Ltd. Closing Balance Neesa Technologies Pvt. Ltd. Closing Balance Gujarat Syscom Technologies Pvt. Ltd. Closing Balance Neesa Infrastructure Ltd. Closing Balance Service Received from:

180.19 9.73 176.56 80.46 2.77 0.20

177.45 21.01 322.32 9.67 198.56 32.24 56.28 -

302

Particulars Cambay Hotels & Holidays Ltd. Closing Balance Purchases of Shares/Investments Neesa Technologies Pvt. Ltd. Closing Balance Cambay Hotels & Holidays Ltd. Closing Balance Cambay Hotels SEZ Ltd Closing Balance Sale of Shares/Investments Cambay Hotels SEZ Ltd. Closing Balance Share Application Money Pending Allotment Cambay Hotels & Holidays Ltd. Closing Balance Cambay Hotels SEZ Ltd Closing Balance

Upto Sept. 2010 427.04 -

FY 2009-10 152.04 -

565.00 565.00 100.00 100.00 300.00 150.00

150.00 150.00

142.27

100.00 100.00 135.00 135.00

303

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations on standalone basis, and, unless otherwise stated, is based upon, and should be read in conjunction with our restated standalone financial statements for the half year ended September 30, 2010 and the financial years ended March 31, 2010, 2009, 2008, 2007 and 2006, including the schedules, annexure and notes thereto and the reports thereon beginning on page 208 of this Draft Red Herring Prospectus. These financial statements are based on our audited financial statements prepared in accordance with Indian GAAP, the Accounting Standards and other applicable provisions of the Companies Act and are restated in accordance with the SEBI (ICDR) Regulations. Our financial year ends on March 31 of each year. Accordingly, all references to a particular financial year are to the twelve month period ended March 31 of that year. The following discussion and analysis contains forward-looking statements that reflect our current views with regard to our plans, estimates and beliefs and involve risks and uncertainties. Our actual results may differ materially from those discussed in these forward-looking statements. For additional information regarding such risks and uncertainties, please refer to section titled "Forward Looking Statements" and "Risk Factors" beginning on pages 13 and 15 respectively of this Draft Red Herring Prospectus. Overview We are an integrated hospitality company in the business of owning, operating and managing hotels & resorts, providing club & vacation ownership services and hospitality education. We recognise ourselves as a 'full service provider' in the hospitality and leisure space offering products and services to a cross section of society i.e. from the middle class segment to the upper class segment, in addition to corporate customers and Foreign Individual Travellers (FIT). We offer our services under the brand 'Cambay'. We are an emerging player in hospitality and leisure business with properties at or near key business and leisure destinations. We have a significant geographical spread of hotels & resorts with presence in Ahmedabad, Bangalore, Gandhinagar, Jaipur, Udaipur, Neemrana, Kerala and Goa. As on February 28, 2011, we have ten (10) operational properties spread across India with an aggregate inventory of 947 rooms. Out of the above six (6) properties are Upscale properties providing five star facilities and four (4) properties are Mid-Market properties providing three to four star facilities. The following chart illustrates our capacity expansion over the years.

304

1000 900 801 800 700 No. of Rooms 600 500 400 300 200 100 0 20 40 124 220 415

947

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Financial year/ Periods

Between our ten (10) properties we have an aggregate inventory of 947 rooms with Food and Beverage outlets and convention halls facilitating banquet and MICE business. Our revenue from Hotels and F & B Sales has increased at a CAGR of 109% between F.Y. 2006 and 2010. In the year 2007, we forayed into the business of providing club membership under the brand 'Cambay Club' and in the year 2008 we forayed into the business of the providing vacation ownership under the brand 'Cambay Family Holidays Club'. We provide various facilities to our club members such as golf, lawn tennis, table tennis, squash and other indoor and outdoor games along with additional access and benefits related to Spa and beauty salon, multi-cuisine restaurants, swimming pool & well designed rooms and cottages. As on February 28, 2011, we had 2,920 club members. Our vacation ownership business offers a range of holiday destinations for a pre-determined number of days in a year for a fixed number of years to our vacation ownership members. As on February 28, 2011, we had 5,667 vacation ownership members. Apart from holidaying at any of our resorts and hotels, our affiliation with RCI facilitiates our vacation ownership members an access to over 6,500 RCI affiliated resorts in more than 100 countries and more than 80 resorts in India. Five (5) of our resorts i.e. Gandhinagar, Jaipur (Jamdoli and Kukas), Kerala and Udaipur are affiliated with RCI. Considering a shortage of trained and qualified manpower in the hospitality industry and in order to create a sustained talent pool to drive our growth, we forayed into the hospitality management education space in the year 2008. We have added a new stream of revenue to our business model by setting up education institutes under the brand 'Cambay Institute of Hospitality Management' ("CIHM") at Gandhinagar, Jaipur (Kukas) and Udaipur with necessary infrastructure for training students intending to make a career in the hospitality industry. The three (3) CIHM centres form a part of our properties facilitating a first hand experience to our students of the hospitality industry. Our CIHM centres are affiliated with Indira Gandhi National Open University (IGNOU), American Hotel & Lodging Association (AHLA) and Punjab Technical University (PTU) for its academic programmes in the hospitality education. We shall also be launching a CIHM center at our property at Cambay Sapphire, Neemrana. Our CIHM centers had enrolled 748 students till date for its various courses.

305

Significant Developments after September 30, 2010 that may affect our future results of operations (i) ICICI Bank loan and the pledge related developments ICICI Bank Limited ("ICICI Bank") by its letter dated December 20, 2010 sanctioned a Rupee Term Loan facility of `14,000 lakhs to our Company towards re-financing certain existing term loan facilities availed from IDFC, TFCI, SBI, CBI and UBI to the extent of `10,800 lakhs and the balance of `3,200 lakhs towards the capital expenditure. Pursuant to the disbursal by ICICI Bank of `14,000 lakhs and the execution of the facility agreement, the existing term loans of IDFC, TFCI, SBI, CBI and UBI have been repaid, except for `142.24 Lakhs which is yet to be repaid to IDFC. It has been agreed between the parties that ICICI Bank will hold a pari passu charge over 1,11,70,791 Equity Shares of the promoter shares with the Axis Bank Consortium. Further, ICICI Bank will also hold an exclusive charge over 25,00,000 Equity Shares held by the Promoters as collateral security for the term loan facility provided by ICICI Bank. The creation of pledge of the Promoter Shares is in process and appropriate documents are under preparation for filing with the relevant authorities. (ii) Sanction of Term Loan by Axis Bank Limited Axis Bank Limited ("Axis Bank") by its letter dated March 24, 2011 sanctioned bridge loan by way of a credit facility and modification in the sanctioned terms of the existing term loan to the tune of `1,300 lakhs to our Company to meet the deficit in the assessed debt funding for the Rajasthan properties due to non-disbursement of part term loan sanctioned by Syndicate Bank. (iii) Sanction of Term Loan by Development Credit Bank Limited Development Credit Bank Limited ("DCB") by its letter dated January 15, 2011 sanctioned Term loan to the tune of `900 Lakhs to our Company towards refinancing existing term loan of Indiabulls Housing Finance Limited to the extent of `426 Lakhs and balance `474 lakhs as fresh disbursement to our Company. (iv) Unsecured Loans SE Investments has sanctioned an unsecured loan of `700 Lakhs on March 14, 2011 and the same has been disbursed on March 16, 2011. (v) Partial launch of Neemrana property In December 2010, our property at Neemrana viz. Cambay Sapphire, Neemrana became partially operational with 60 rooms. (vi) Share allotment to promoters Our Company on November 14, 2010 has made an allotment of 2,03,078 Equity Shares to one of our Promoter viz. Mr. Sanjay Gupta. (vii) MOU with Cambay SEZ Hotels Private Limited Our Company has recently signed an Memorandum of Understanding (MoU) dated January 12, 2011 with Dahej Hospitality Private Limited (now Cambay SEZ Hotels Private Limited) to firstly develop the property and thereafter operate and manage the same for a period of ten (10) years with an automatic renewal of further period of ten (10) years.

306

Factors affecting our Results of Operations Our results of operations and financial condition are affected by a number of factors, including the following, which are of particular importance: 1. Demand and supply of hotel accommodation at the places where our existing and proposed hotel properties are located: Our revenues are driven by the occupancy rates and the average room rates at our properties. The demand and supply for hotel accommodation in the areas where our existing and proposed properties are located will impact our revenue drivers. Further, we will continue to face competition from existing as well as new hotels in such areas. Our ability to face the competition in terms of room rates, quality of accommodation and amenities, pricing pressure for our MICE segment and our service levels will also affect demand for our hotel accommodations, MICE and other facilities thereby affecting our results of operations. Seasonality in our operations: Revenues and cash flows in the hotel industry are affected by seasonality depending on the location and category of hotels. Our room revenues are generally higher during the second half of each fiscal year as compared to the first half of the fiscal year. Our club & vacation ownership business and our MICE facilities help us to leverage our assets efficiently during non seasons thereby mitigating adverse impact on our results of operations. Increase in our member base for club facilities & vacation ownerships: Our financial results are affected by the number of club members & vacation ownership memberships we can garner, resulting in an increase in our member base and additional income. We market our products through our marketing team, our marketing tie-ups and the direct sales channel present across the country which we have rapidly expanded in the recent past. We continuously try to innovate and introduce variety of products and schemes to make our memberships attractive for customers. Our Company is the first in India to launch a unique RCI Points System under the name Cambay Family Holiday Club - Points which assures the vacation ownership members, vacation flexibility, variety and complete utilisation by upgrading the traditional "week" into "points" which can then be spent or redeemed for an exchanged vacation. These points can also be used by our vacation ownership members towards car hire, theme park tickets etc. through various point partners associated with RCI. Our ability to increase our member base will directly impact our revenue from this business segment and also our Food & Beverages Sales to some extent thereby affecting our profitability. Ability to acquire and develop our room and resort inventory: Our revenues are also dependent on the number of rooms at our own resorts and through our affiliation/ networks. We have historically been able to build/own properties at destinations such as Gandhinagar, Ahmedabad, Kollam, Udaipur and Jaipur. We purchase or lease land and construct/develop our resorts through our internal Project Management Cell. Currently, we operate 10 properties with a inventory of 947 rooms. Our existing properties along with our proposed expansions/ developments will add 365 rooms taking our total room inventory to 1,312 rooms. This will help us to control the quality of the consumer experience and provide them with more options for their business and leisure travel. The ability to build our properties through our internal project management cell which does the designing as well as construction helps us to control cost as well as build quality infrastructure. Food & Beverages: Our Revenues also include income from Restaurants and Banquet functions. Most food ingredients used in the preparations are commodities and therefore subject to price fluctuations as a result of seasonality, weather, demand and other factors. However, Our Company has historically been able to pass increased costs of raw materials to the customers and also our Company is entering in to annual rate contract with supplier for the assurance of supply with minimum rate fluctuation.

2.

3.

4.

5.

307

6.

Brand recognition: Brand recognition for high quality standards and service levels plays an important role in hospitality business. The recognition and acceptance of our brand has significant contribution to the success of our business segments. Keeping the market dynamics in mind, we need to continuously improve our service levels and the quality of our products and services to provide added value to our customers. We are a customer-centric Company and need to respond in a timely and appropriate manner to the demands and expectations of our business and leisure customers to maintain our brand value. Operating Expenses: Our results of operations are affected by our ability to control the cost of developing and operating resorts and hotels. Though, our resorts and hotels are newly constructed, we will have to renovate them periodically to upgrade the ageing properties to suit the changing demands and patterns. In addition, maintenance of our properties at a sufficiently high standard involves significant expenditure due to high maintenance and development costs. Further, changes in cost of food and beverages operations, staff costs and extent of marketing and advertisements expenses will also affect our results of operations. Regulatory framework in India: Our business and operations are subject to various federal, state and municipal laws and regulations in all of the regions in which we operate, including those relating to the preparation and sale of food and beverages, such as health and liquor licensing laws. Our properties are also subject to laws and regulations governing relationships with employees in such areas as minimum wage and maximum working hours, overtime, working conditions, hiring and terminating of employees and work permits. Moreover, the success of our strategy to expand our existing properties, acquire or develop new properties is contingent upon, among other things, receipt of all required licenses, permits and authorizations, including local land use permits, building and zoning permits, environmental, health and safety permits and liquor licenses. Changes or concessions required by regulatory authorities could also involve significant costs and delay or prevent completion of the construction or opening of a project or could result in the loss of an existing license. Failure by us to renew, maintain or obtain the required permits or approvals may result in the interruption of our operations or delay or prevent our expansion plans and may have a material adverse effect on our business, financial condition and results of operations.

7.

8.

9.

Changes in Economic and Political Environment and other Market Conditions: Our results of operations are generally affected by factors such as changes in domestic as well as global economic conditions, level of disposable income of consumers, changes in local market conditions, availability of short term and long term funds at reasonable costs and related factors. The growth in the Indian economy is expected to resume and is expected to be a strong driver for growth in the hospitality sector. It is observed historically that growth in the hospitality sector has direct correlation with the economic growth. Also, a change in spending habits leading to higher spending on leisure as well as business travel has stimulated demand for hotels and resorts. This also leads to indirect growth in our other streams of business which complement our hotel business. Our results of operations are also affected by the political environment in India and globally. In the recent past, terrorism and law & order related issues have lead to the travel advisories being issued by western nations affecting the hotel industry in India. The threat of terrorist attacks and other acts of violence or war also have a direct impact on international travel and may have an adverse impact on our ability to attract international guests. In addition, the hotel industry is vulnerable to natural disasters, the occurrence of which may seriously harm our business. As is typical in the hotel industry, our results of operations have been and will continue to be significantly affected by factors outside our control such as political unrest. Other factors include potential negative changes in travel patterns, government regulation and foreign exchange fluctuations.

308

Basis for considering the Restated Standalone Financial Statements for discussion and analysis As on September 30, 2010, we have one subsidiary which has been considered in the preparation of the Consolidated Financial Statements, details of which are set out below: Name of the Subsidiary Palm Lagoon Backwater Resorts Private Limited ("Palm Lagoon") Date of becoming a subsidiary April 1, 2009 Type of Subsidiary Wholly Subsidiary Owned Type of activity Hotel business

The only revenue stream of Palm Lagoon is rental income from our Company to support its overheads. It does not undertake any other activity. The Restated Consolidated Financial Statements have not been considered for the purposes of discussion and analysis in this section, as Fiscal 2010 is the first year of consolidation. Hence, only results of operations of our Company based on the Restated Standalone Financial Statements, as appearing in "Auditors Report on Restated Standalone Financial Statements" beginning on page 208 of this Draft Red Herring Prospectus have been considered for the purposes of discussion and analysis in this section. A comparison of our results of operations and our financial condition on a standalone basis and on a consolidated basis as at and for the half year ended September 30, 2010 and as at and for the year ended March 31, 2010 are as tabulated below: As at and for the half year ended September 30, 2010 Standalone Consolidated 7,009.27 7,009.27 2,731.81 2,731.79 4,277.46 4,277.48 (` in Lakhs) As at and for the year ended March 31, 2010 Standalone Consolidated 10,638.10 10,638.10 4,897.31 4,897.77 5,740.79 5,740.33

Total Income Total Expenditure Profit before Depreciation, Interest and Tax Profit before Tax Profit after Tax Total Debt Total Assets Current Liabilities & Provisions Results of Operations

1,196.99 786.86 35,745.51 70,392.11 8,562.86

1,196.12 795.35 35,759.27 70,392.20 8,562.92

1,933.42 1,195.31 34,492.78 62,727.45 6,685.08

1,910.19 1,172.07 34506.54 62,719.07 6,685.17

The following table provides summarized financial data from our restated standalone profit and loss accounts for the half year ended September 30, 2010 and for the financial years ended March 31, 2010, 2009, 2008 and 2007, the components of which are expressed as a percentage of total income for such periods.
(` in Lakhs)
Particulars As at Sept 30, 2010 Amount % of Total Income As at March 31, 2010 Amount % of Total Income As at March 31, 2009 Amount % of Total Income As at March 31, 2008 Amount % of Total Income As at March 31, 2007 Amount % of Total Income

INCOME

309

Particulars

As at Sept 30, 2010 Amount % of Total Income 6872.13 142.40 98.04% 2.03%

As at March 31, 2010 Amount % of Total Income 10304.21 255.74 96.86% 2.40%

As at March 31, 2009 Amount % of Total Income 5233.66 85.42 98.42% 1.61%

As at March 31, 2008 Amount % of Total Income 2646.24 116.95 94.76% 4.19%

As at March 31, 2007 Amount % of Total Income 1092.68 6.22 98.14% 0.56%

Income from Operations Other Income Increase (Decrease) in Inventories

-5.26

-0.08%

78.15

0.73%

-1.42

-0.03%

29.33

1.05%

14.48

1.30%

Total Income y-o-y growth in % EXPENDITURE F& B Consumed Personnel Expenses Operating & Administrative Expenses Selling and Distribution Expenses Total Operating Expenditure Profit Before Interest, Depreciation & Tax Depreciation / Amortisation Interest & Finance Charge (Net) Profit before Tax, as Restated Provision for Tax Profit after Tax, as Restated

7,009.27

100.00%

10,638.10

100.00%

5,317.66

100.00%

2,792.52

100.00%

1,113.38

100.00%

NA

100.05%

90.43%

150.81%

235.98%

312.32 617.80

4.46% 8.81%

428.96 1,301.16

4.03% 12.23%

221.25 742.10

4.16% 13.96%

178.97 350.35

6.41% 12.55%

103.49 155.57

9.30% 13.97%

1425.51

20.34%

2,590.08

24.35%

1,800.84

33.87%

651.42

23.33%

362.07

32.52%

376.17 2,731.80

5.37% 38.97%

577.11 4,897.31

5.42% 46.04%

238.10 3,002.29

4.48% 56.46%

86.86 1,267.60

3.11% 45.39%

20.12 641.26

1.81% 57.60%

4,277.46 1034.30

61.03% 14.76%

5,740.79 1,496.97

53.96% 14.07%

2,315.37 638.79

43.54% 12.01%

1,524.91 227.46

54.61% 8.15%

472.12 74.39

42.40% 6.68%

2046.17 1,196.99 (410.13) 786.86

29.19% 17.08% -5.85% 11.23%

2,310.40 1,933.42 (738.11) 1,195.31

21.72% 18.17% -6.94% 11.24%

745.59 930.99 (432.80) 498.19

14.02% 17.51% -8.14% 9.37%

581.34 716.11 (266.71) 449.41

20.82% 25.64% -9.55% 16.09%

158.33 239.40 (87.63) 151.77

14.22% 21.50% -7.87% 13.63%

Description of Components of Results of Operations Total Income Our total income comprises of Income from Operations and Other Income. Income from Operations We are an integrated hospitality company in the business of hotels & resorts, club & vacation ownership, hospitality education and tours & travels. Our total income was `7,009.27 lakhs for half year ended on September 30, 2010 and `10,638.10 lakhs for the F.Y. 2010 as compared to `5,317.66 lakhs for the F.Y. 2009, `2,792.52 lakhs for the F.Y. 2008 and `1,113.38 lakhs for F.Y. 2007, representing year over year increases of 100.05%, 90.43%, 150.81% and 235.98% respectively. Our total income increased at a CAGR of 112.20% between F.Y. 2007 and F.Y. 2010. Our revenues comprise income from our hotel business, Club & Vacation Ownership Business, hospitality education and other services including construction activity.

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Given below is a break-up of our Income from Operations: (` in lakhs) For the Year ended March 31, 2007

Particulars

For half year ended on September 30, 2010

For the Year ended March 31, 2010

For the Year ended March 31, 2009 3,358.41 29.83% 1,044.40 1657.21% 41.38 NA 789.47 NA 5,233.66

For the Year ended March 31, 2008 2,586.80 152.52% 59.44 (12.96)% ----2,646.24

Hospitality Income y-o-y growth % Club & Vacation Ownership y-o-y growth % Income From Educational Activity y-o-y growth % Other Services y-o-y growth % Income from Operations Other Income

5,510.97 NA 1,171.29 NA 189.87 NA -NA 6,872.13

5,767.47 71.73% 3,392.59 224.84% 261.10 530.92% 883.06 11.85% 10,304.21

1,024.39 240.27% 68.29 481.23% ----1,092.68

Other Income includes lease and rental income and interest income. Total Operating Expenditure Our Total Operating Expenditure consists of expenses incurred on Food & Beverages, Personnel cost, Operating & Administrative expenses and Selling and Distribution expenses. Our total expenditure as a percentage of our total income was 38.97%, 46.04%, 56.46%, 45.39%, 57.60% for the half year ended on September, 30 2010 and F.Y. 2010, 2009, 2008 and 2007, respectively. Our Profit before Interest, Depreciation and Tax registered CAGR of 129.95% between F.Y. 2007 and F.Y. 2010. F&B Consumed F&B consumed represents total expenditure incurred towards the consumption of Food and Beverage items net of stock. Personnel Expenses Our Company's personnel expenses include employee expenses such as salaries, wages, allowances, bonuses and other statutory benefits. Operating and Administrative Expenses Operating & Administrative Expenses consist of expenses incurred on operations, contract expenses, commission and brokerage expenses, annual membership expenses, power and fuel costs, costs of repairs and maintenance of buildings and plant and machinery, printing and

311

stationery costs, golf expenses, tour travel and conveyance costs, communication costs, insurance costs, legal and professional fees and miscellaneous expenses. Selling and Distribution Expenses Selling & distribution expenses consist of advertisement costs, sales commissions and sales promotion expenses towards Brand establishment and Brand awareness. Interest and Finance Charges Interest and financial charges consist of bank charges, interest on term loans, debenture & working capital loans, vehicle loans and other financial charges. Depreciation / Amortization Depreciation on Fixed assets is provided on Straight Line Method as per rates prescribed in Schedule-XIV to the Companies Act 1956. Depreciation on Plant & Machinery for Hotel is provided on double shift basis Depreciation on additions to fixed assets during the year is provided on pro-rata basis. Apart from that the rates of depreciation is mentioned as follows: Particulars Buildings Computers & Software Furniture & Fixtures- Office Equipments Furniture & Fixtures- Others Electrifications Plant & Machinery-Hotel Plant & Machinery-Others Vehicles- Tours & Travels Vehicles- Others Provision for Taxation This includes provision for tax payable on the profit of the company. We provide for current taxes, comprising of income tax, fringe benefit tax, and deferred taxes. Significant Accounting Policies For details of significant accounting policies applicable to our Company, please refer section titled "Financial Information" beginning on page 208 of this Draft Red Herring Prospectus. Overview of the Results of Operations For half year ended September 30, 2010 The following significant events occurred in the half year ended September 30, 2010, each of which had an impact on our revenue, expenses and results of operations for the period: Total Income Our Total Income for the the half year ended September 30, 2010 was `7,009.27 lakhs. The Income from Operations was `6,872.13 lakhs which mainly consists of Hospitality Income, Club & Vacation Ownership Income and Income from Hospitality Education. Income from Hospitality Business Rate of Depreciation 1.63% 16.21% 6.33% 9.50% 4.75% 7.42% 4.75% 16.21% 9.50%

312

Income from Hospitality business was `5,510.97 lakhs which is 80% of the total income from operations. Income from Club & Vacation Ownership This activity contributed `1,171.29 lakhs which is approximately 17% of our total income from operations. Income from Hospitality Education We derived an income of `189.87 lakhs from Hospitality Education which is around 3% of our total operational income. Total Operating Expenditure During the half year ended September 30, 2010 our Company has incurred a total operating expenditure of `2,731.80 lakhs towards F & B consumed, personnel expenses, operating & administrative expenses and selling and distribution expenses. Food & Beverages Consumed For the half year ended September 30, 2010, expenditure towards Food & Beverages consumed amounted to `312.32 lakhs which is 4.46% of total income. Personnel Expenses Expenditure towards Personnel Expenses amounted to `617.80 lakhs for the half year ended on September 30, 2010 which is 8.81% of total income. Operating & Administrative Expenses Expenditure towards Operating & Administrative Expenses amounted to `1,425.51 lakhs for the half year ended September 30, 2010 which is 20.34% of total income. Selling & Distribution Expenses For the half year ended September 30, 2010, expenditure towards Selling & Distribution Expenses amounted to `376.17 lakhs which is 5.37% of total income. Profit Before Interest, Depreciation & Tax As a result of the above, our profit before Interest, depreciation and tax was `4227.47 Lakhs in the half year ended September 30, 2010 which is 61.03% of our total income Depreciation / Amortization For the half year ended September 30, 2010, Depreciation / Amortisation written off amounted to `1,034.30 lakhs which is 14.76% of the total income. Interest and Financial Charges Expenditure towards Interest & Financial charges amounted to `2,046.17 lakhs for the half year ended on September 30, 2010 which is 29.19% of the total income for the period.

313

Provision for Tax Our tax expenses were `410.13 Lakhs for the half year ended September 30, 2010, representing 5.85% of total income Profit after Tax Our profit after tax, as restated, for the half year ended on September 30, 2010 is `786.87 lakhs which is 11.23% of the total income. Results for the year ended March 31, 2010 compared to results for the year ended March 31, 2009 Our results of operations for the F.Y. 2010 were particularly influenced by the following factors: Growth in the hospitality business consequent to commencement of commercial operations of new properties; Full Year of Operation for properties launched in previous year. Increase in income through sales of Club & vacation ownership membership; and Increase in income from hospitality education. Total Income Our Total Income increased by 100.05% to `10,638.10 lakhs for the F.Y. 2010 from `5,317.66 lakhs for the F.Y. 2009, primarily due to significant growth in various business verticals. Income from Hospitality Business Our properties located at Ahmedabad, Udaipur and Jaipur were operational for a period of five (5) months and the property at Goa was operational for a period of eight (8) months. Our properties at Jaipur (Kukas) and Kerala (Kollam) commenced its operations in F.Y. 2010. Our income from hospitality business increased by 72% to `5,767.47 lakhs for the F.Y. 2010 as against `3,358.41 lakhs in F.Y. 2009 mainly due to the addition in the number of properties at various locations. Income from Club & Vacation Ownership Income from Club & Vacation Ownership business increased by 225% to `3,392.59 lakhs for F.Y. 2010 as against `1,044.40 lakhs for the F.Y. 2009 on account of increase in membership enrolments and launch of new and customized products. Income from Hospitality Education Our Company opened a CIHM center at Gandhinagar and Udaipur in F.Y. 2010 in addition to the CIHM center in Jaipur in F.Y. 2009 leading to an increase in our revenues from hospitality education to `261.10 lakhs as against ` 41.38 Lakhs in F.Y. 2009 which is an increase of 531%. Total Operating Expenditure Our total operating expenditure increased by 63.12% to `4,897.31 lakhs for the F.Y. 2010 from `3,002.29 lakhs for the F.Y. 2009. However, on YoY basis total operating expenditure as a percentage of total income has reduced from 56.46% in F.Y. 2009 to 46.04% in F.Y. 2010 primarily because of increase in operational efficiency.

314

Food & Beverages Consumed Our F&B consumed increased by 94% to `428.96 lakhs for the F.Y. 2010 from `221.25 lakhs for the F.Y. 2009, primarily due to increase in customer base and addition of new properties at various locations. Personnel Expenses Our personnel cost increased by 75% to `1,301.16 lakhs for the F.Y. 2010 as against `742.10 lakhs for the F.Y. 2009, primarily due to increase in the number of employees because of commencement of commercial operations of new properties, increase in salaries, welfare and incentives paid to our employees. Operating & Administrative Expenses Our Operating and Administrative Expenses increased by 44% to `2,590.08 lakhs for F.Y. 2010 as against `1,800.84 lakhs for F.Y. 2009, but as a % of total income has reduced from 33.87% in F.Y. 2009 to 24.35% in F.Y. 2010. Selling & Distribution Expenses Our selling & distribution expenses increased by 142% to `577.11 lakhs for the F.Y. 2010 as against `238.10 lakhs for the F.Y. 2009, due to increased incentives paid to sales agents for promotions and increased focus on brand building & creating brand awareness. Profit Before Interest, Depreciation & Tax Our Profit Before Interest, Depreciation and Tax increased by 148% to ` 5,740.79 Lakhs in FY 2010 from `2315.37 Lakhs in FY 2009. As a percentage of total income, our Profit before Interest, Depreciation and Tax increased to 53.96% in FY 2010 from 43.54% in FY 2009. The margin expansion was primarily on account of increased room inventory for the year and a steep increase in the vacation ownership & club membership enrolments and efficiency in operations. Depreciation / Amortization Our depreciation charge increased by 134% to `1,496.97 lakhs for the F.Y. 2010 from `638.79 lakhs for the F.Y. 2009 due to addition in the gross block by `20,478.30 lakhs on account of launch of four properties during the F.Y. 2010. Interest and Financial Charges Our interest and financial charges increased by 210% to `2,310.40 lakhs for the F.Y. 2010 from `745.59 lakhs for the F.Y. 2009, This is attributable to commencement of commercial operations of new properties and commencement of interest service on loans taken for these properties to profit & loss account. Provision for Tax Our tax expenses increased 71% to `738.11 Lakhs, representing 6.94% of our total income in FY 2010, from `432.80 Lakhs, representing 8.14% of total income in F.Y. 2009 Profit after Tax Our profit after tax, as restated, increased by 140% to `1,195.31 lakhs for the F.Y. 2010 from `498.19 lakhs for the F.Y. 2009 primarily due to increase in turnover and increase in operational efficiency. Our Profit after Tax as a percentage of Total Income for the F.Y. 2010 increased to 11.24% from 9.37% achieved in F.Y. 2009. Our profit after tax was constrained by increase in interest and financial charges and higher depreciation.

315

Results for the year ended March 31, 2009 compared to results for the year ended March 31, 2008 Our results of operations for the F.Y. 2009 were particularly influenced by the following factors: Growth in the hospitality business consequent to commencement of commercial operations of new properties; Launch of vacation ownership business; and Foray into hospitality education. Total Income Our total income increased by 90.43% to `5,317.66 lakhs for the F.Y. 2009 from `2,792.52 lakhs for the F.Y. 2008, primarily due to significant growth in the hospitality business and new income sources like Club & Vacation Ownership and Hospitality Education. Additionally, our Company also undertook third party construction activity through our in-house project management cell which contributed 15% to our total income. Income from Hospitality Business Two of our properties located at Jaipur kukas and Kerala began commercial operation during F.Y. 2009 and were operational for 7 and 3 months respectively. Our Cambay Sapphire property at Ahmedabad which was launched in F.Y. 2008 was fully operational during F.Y. 2009, our income from Hospitality business increased by 30% to `3,358.41 lakhs for the F.Y. 2009 from `2,586.80 lakhs for the F.Y. 2008. Income from Club & Vacation Ownership Business In addition to Club Membership, our Company added a new of line of business during the year viz. Vacation Ownership, which together with Club Membership has contributed 20% of total income amounting to `1,044.40 lakhs. Income from Education Activity Company has forayed into Hospitality Education business with the launch of first CIHM centre at Jaipur contributing revenue of `41.38 lakhs, which was 0.75% of the Total Income in F.Y. 2009. Total Operating Expenditure Our total operating expenditure increased by 136.85% to `3,002.29 lakhs for F.Y. 2009 from `1,267.60 lakhs for F.Y. 2008. However, on year on year basis total operating expenditure as a percentage of total income has increased from 45.39% in F.Y. 2008 to 56.46% in F.Y. 2009. Food & Beverages Consumed Our Food & Beverages consumption increased by 24% year on year to `221.25 lakhs for the F.Y. 2009 from `178.97 lakhs for the F.Y. 2008, primarily because of corresponding increase in hospitality revenue. However, F&B Consumed as a % to Total Income has reduced from 6.41% in F.Y. 08 to 4.16% in F.Y. 09. Personnel Expenses Our personnel expenses increased by 112% to `742.10 lakhs for the F.Y. 2009 from `350.35 lakhs for the F.Y. 2008, primarily on account of increase in the number of employees at existing properties and recruitments for new properties & business lines. The increase is also attributable to salary hikes, welfare and incentives paid to our employees.

316

Operating & Administrative Expenses Our Operating & Administrative expenses increased by 176% to `1,800.84 lakhs for the F.Y. 2009 from `651.42 lakhs for the F.Y. 2008, primarily due to the contract expenses incurred pursuant to our foray into construction activity. An increase in RoC filing fees for expansion of authorized capital of our Company, commission and brokerage expenses and legal & professional fees also contributed to the increase. In addition, expenses were also incurred on affiliation fees and general expenses relating to the CIHM centre. Selling & Distribution Expenses Our selling & distribution expenses increased by 174% to `238.10 lakhs for the F.Y. 2009 from `86.86 lakhs for the F.Y. 2008 due to increasing focus on advertising and marketing of newly launched properties and business lines. Profit Before Interest, Depreciation & Tax As a results of the above, our Profit Before Interest, Depreciation and Tax increased to 52% to `,2,315.37 Lakhs in F.Y. 2009 from `1,524.91 Lakhs in F.Y. 2008. As a percentage of total income ,our Profit before Interest, Depreciation and Tax decrease to 43.54% in F.Y. 2009 from 54.61% in F.Y. 2008 primarily due to increase in Personnel cost of recruitment for upcoming properties and administrative expenses for starting of corporate office during the F.Y. 2009. Depreciation / Amortization Our depreciation charge increased by 180.8% to `638.79 lakhs for the F.Y. 2009 from `227.46 lakhs for the F.Y. 2008 due to addition in the gross block by `13,280.45 lakhs as we commenced commercial operations of Kerala and Jaipur kukas properties during the current financial year. Interest and Financial Charges Interest expense attributable to the new properties commencing commercial operations during F.Y. 2009 was charged to the profit and loss account. Our interest and financial charges increased by 28.3% to `745.59 lakhs for the F.Y. 2009 from `581.34 lakhs for the F.Y. 2008. The incremental interest burden of 28.3% is relatively lower than the increase in Total Income of 90.43% in F.Y. 2009 over F.Y. 2008 due to private equity funding by Axis Infrastructure Fund I at the end of F.Y.2008. Provision for Tax Our tax expenses increased 62% to `432.80 Lakhs, representing 8.14% of our total income in F.Y. 2009, from `266.71 Lakhs, representing 9.55% of total income in F.Y. 2008. Profit after Tax Our profit after tax increased by 11% to `498.19 lakhs for the F.Y. 2009 from `449.41 lakhs for the F.Y. 2008, while our profit after tax as a percentage of total income reduced to 9.37% as compared to 16.09% in F.Y. 2008 primarily due to increase in the total operating costs as a percentage of total income. Results for the year ended March 31, 2008 compared to results for the year ended March 31, 2007 Our results of operations for the F.Y. 2008 were particularly influenced by the growth in the hospitality business consequent to commencement of commercial operations of a new property.

317

Total Income Our total income increased by 150.81% to `2,792.52 lakhs for the F.Y. 2008 from `1,113.38 lakhs for the F.Y. 2007, primarily due to significant growth in income from Hospitality business. Income from Hospitality Business Our income from Hospitality increased by 153% to `2,586.80 lakhs for the F.Y. 2008 from `1,024.39 lakhs for the F.Y. 2007, primarily due to commencement of commercial operations of new property at Ahmedabad Cambay Sapphire from September 2007. Income from Club & Vacation ownership Business Our club membership income in F.Y. 2007 was mainly influenced by new member acquisitions for the golf course launched at our Gandhinagar resort. Since no additional club facilities were launched in F.Y. 2008, the year experienced comparatively fewer additions in member registrations. Therefore, our income from club membership decreased by 13% to `59.44 lakhs for F.Y. 2008 from `68.29 lakhs for F.Y. 2007. Total Operating Expenditure Our total operating expenditure increased by 97.67% to `1,267.60 lakhs for the F.Y. 2008 from `641.26 lakhs for the F.Y. 2007, as a result of scaling up of our operations. However, total operating expenditure as a percentage of Total Income has reduced to 45.39% in F.Y. 2008 from 57.60% in F.Y. 2007 primarily because of efficiencies in the Operating and Administrative Expenses. Food & Beverages Consumption F & B Consumption increased by 73% to `178.97 lakhs for the F.Y. 2008 from `103.49 lakhs for the F.Y. 2007, mainly because of increase in income from hospitality business. Personnel Expenses Our personnel expenses increased by 125% to `350.35 lakhs for the F.Y. 2008 from `155.57 lakhs for the F.Y. 2007, mainly because of recruitment at newly launched property and increase in salary scales. Operating & Administrative Expenses Our Operating & Administrative expenses increased by 80% to `651.42 lakhs for the F.Y. 2008 from ` 362.07 lakhs for the F.Y. 2007 as compared to 150.81% increase in total income for our Company. This is primarily due to control in the operational and administrative expenses. Selling & Distribution Expenses Our selling & distribution expenses increased by 332% to `86.86 lakhs for the F.Y. 2008 from `20.12 lakhs for the F.Y. 2007 due to increasing focus on advertising and marketing of upcoming and newly launched properties. Profit Before Interest, Depreciation & Tax As a results of the above, our Profit Before Interest, Depreciation and Tax increased by 223% to `1,524.91 Lakhs in F.Y. 2008 from `472.12 Lakhs in F.Y. 2007. As a percentage of total income, our Profit before Interest, Depreciation and Tax increased to 54.61% in F.Y. 2008 from 42.40% in F.Y. 2007.

318

Depreciation / Amortization Our depreciation charge increased by 205.8% to `227.46 lakhs for the F.Y. 2008 from `74.39 lakhs for the F.Y. 2007 mainly due to addition in the gross block by `4,071.31 lakhs on account of launch of new property at Ahmedabad, Cambay Sapphire and increase in capital cost on account of increase in the room inventory at our Gandhinagar Resort. Interest and Financial Charges Our interest and financial charges increased by 267.2% to `581.34 lakhs for the F.Y. 2008 from `158.33 lakhs for the F.Y. 2007. This is primarily due to increase in the term loan borrowings from India Bulls Housing Finance Limited, working capital facility availed by our Company from State Bank of India and interest pertaining to operational period of the new property being debited to profit & loss account. Provision for Tax Our tax expenses increased 204% to `266.71 Lakhs, representing 9.55% of our total income in F.Y. 2008, from `87.63 Lakhs, representing 7.87% of total income in F.Y. 2007 Profit after Tax Our profit after tax increased by 196% to `449.41 lakhs for the F.Y. 2008 from `151.77 lakhs for the F.Y. 2007. The increase in the profits is in line with the growth in total income and cost control measures. Profit after Tax as a percentage of total income increased to 16.09% in F.Y. 2008 as against 13.63% in F.Y. 2007. Financial Condition, Liquidity and Capital Resources We broadly define liquidity as our ability to generate sufficient cash flows from our business operations. Therefore, liquidity cannot be considered separately from capital resources that consist of current or potentially available funds for use in achieving long-range business objectives and meeting debt service and other commitments. We have been historically financing our capital requirements primarily through revenues from our business operations, financing from banks and financial institutions in the form of term loans, working capital facilities and private equity funding. Our primary capital requirements have been towards construction and development of our new properties acquisition of hotels and resorts. We believe that we will generate sufficient resources from our operations and net proceeds of this offering of equity shares to meet our capital requirements for at least the next 12 -15 months. In the event we intend to expand further and develop new properties we may need to obtain financing from various sources. Cash Flows The table below summarizes our cash flows for the financial years 2010, 2009, 2008 and 2007: (` in Lakhs) Particulars Half Year ended on September 30, 2010 3378.22 (6480.53) 2580.94 Financial Year 2010 2009 2008 2007

Net cash Generated from operating activities (A) Net cash used in Investing Activities (B) Net cash generated from Financing Activities (C)

3044.16 (13673.03) 10181.05

4015.70 (19415.05) 14,197.88

831.02 (15,003.35) 16,637.92

(622.37) (4,926.88) 5,551.92

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Particulars Half Year ended on September 30, 2010 (521.37)

Financial Year 2010 2009

2008

2007

Net Increase in Cash and Cash equivalents (A+B+C) Cash and Cash equivalents at the end of the year

(447.82)

(1,201.46)

2,465.59

2.66

554.92

1076.29

1,524.11

2,725.58

259.98

Cash and cash equivalents include bank deposits, current account balances and cash in hand. Cash Flow from / used in Operating Activities Net cash generated from operating activities was `3,378.22 lakhs for the half year ended on September 30, 2010, and consisted of net profit before taxation as restated of `1,196.99 lakhs, as adjusted for non-cash items like Depreciation and amortization of `1,034.30 lakhs, non operating expenses of Interest & Financial charges of `2,046.17 lakhs and for income from non operating sources like interest and lease income `91.87 lakhs and changes in working capital, such as changes in inventories by `3.18 lakhs, trade receivables of `850.93 lakhs, changes in loans & advances of `1,573.16 lakhs, changes in current liabilities of `1,652.08 lakhs and income taxes paid of `19.51 lakhs. Net cash generated from operating activities was `3,044.16 lakhs for the financial year 2010, and consisted of net profit before taxation as restated of `1,933.42 lakhs, as adjusted for non-cash items like Depreciation and amortization of `1,413.72 lakhs, non operating expenses of Interest & Financial charges of `2,310.40 lakhs and for income from non operating sources like interest and lease income `174.47 lakhs and changes in working capital, such as changes in inventories by `101.22 lakhs, trade receivables of `2,810.25 lakhs, changes in loans & advances of `1,735.94 lakhs, changes in current liabilities of `2,382.43 lakhs and income taxes paid of `152.08 lakhs. Net cash generated from operating activities was `4,015.70 lakhs for the financial year 2009, and consisted of net profit before taxation as restated of `930.99 lakhs, as adjusted for non-cash items like Depreciation and amortization of `615.00 lakhs, non operating expenses of Interest & Financial charges of `745.59 lakhs and for income from non operating sources like interest and lease income `14.50 lakhs and changes in working capital, such as changes in inventories by `1.30 lakhs, trade receivables of `1,179.24 lakhs, changes (decrease) in loans & advances of `532.41 lakhs, changes in current liabilities of `2,564.04 lakhs and income taxes paid of `165.37 lakhs. Net cash generated from operating activities was `831.02 lakhs for the financial year 2008, and consisted of net profit before taxation as restated of `716.11 lakhs, as adjusted for non-cash items like Depreciation and amortization of `221.67 lakhs, non operating expenses of Interest & Financial charges of `581.34 lakhs and for income from non operating sources like interest and lease income `110.55 lakhs and changes in working capital, such as changes in inventories by `42.94 lakhs, trade receivables of `288.27 lakhs, changes in loans & advances of `1,035.70 lakhs, changes in current liabilities of `886.18 lakhs and income taxes paid of `95.32 lakhs. Net cash used in operating activities was `622.37 lakhs for the financial year 2007, and consisted of net profit before taxation as restated of `239.40 lakhs, as adjusted for non-cash items like Depreciation and amortization of `68.60 lakhs, non operating expenses of Interest & Financial charges of `158.33 lakhs and for income from non operating sources like interest and lease income `5.52 lakhs and changes in working capital, such as changes in inventories by `15.33 lakhs, trade receivables of `49.15 lakhs, changes in loans & advances of `1,465.17 lakhs , changes in current liabilities of `456.59 lakhs and income taxes paid of ` 9.90 lakhs.

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Cash Flow used in Investing Activities Net cash used in investing activities was `6,480.53 lakhs for the half year ended on September 30, 2010, primarily due to additions of fixed assets which include leasehold land, building, computers and software, furniture and fixtures, plant and machinery, electrification and vehicles amounting to `6,334.96 lakhs, investment in associates Cambay Hotel and Holidays Limited and Cambay (SEZ) Private Limited, amounting to `250.11 lakhs, and netted off with income received from interest and lease income amounting to `104.54 lakhs. Net cash used in investing activities was `13,673.03 lakhs for the financial year 2010, primarily due to additions of fixed assets which include leasehold land, building, computers and software, furniture and fixtures, plant and machinery, electrification and vehicles amounting to `13,304.46 lakhs, investment in our Subsidiary, Palm Lagoon Backwater Resorts Private Limited, amounting to `565 lakhs, and netted off with income received from interest and lease income amounting to `196.33 lakhs. Net cash used in investing activities was `19,415.05 lakhs for the financial year 2009, primarily due to additions of fixed assets which include leasehold land, building, computers and software, furniture and fixtures, plant and machinery, electrification and vehicles amounting to `19,440.16 lakhs and investments made amounting to `1.31 lakhs, and netted off with income received from interest and lease income amounting to `26.42 lakhs. Net cash used in investing activities was `15,003.35 lakhs for the financial year 2008, primarily due to additions of fixed assets which include leasehold land, building, computers and software, furniture and fixtures, plant and machinery, electrification and vehicles amounting to `15,115.30 lakhs and purchase of investments of `0.10 lakhs, and netted off with income received from interest and lease income amounting to `112.06 lakhs. Net cash used in investing activities was `4,926.88 lakhs for the financial year 2007, primarily as a result of purchases of fixed assets which include leasehold land, building, computers and software, furniture and fixtures, plant and machinery, electrification and vehicles of `4,932.61 lakhs, and netted off with income received from interest and lease income amounting to `5.73 lakhs. Cash flow from Financing Activities Net cash generated from financing activities was `2,580.94 lakhs for the half year ended September 30, 2010, as a result of issue of fresh equity shares to promoters amounting to `378.99 lakhs, share application money from promoters `396.00 lakhs and `1,100.00 lakhs towards the compulsorily convertible preference share capital contribution by IFCI Limited, proceeds from borrowings (net) of repayment amounting `2,752.74 lakhs and payment of interest and financial charges of `2,046.17 lakhs and of preference dividend of `0.63 lakhs. Net cash generated from financing activities was `10,181.05 lakhs for the financial year 2010, as a result of issue of fresh equity shares to promoters and others amounting to `2,744.60 lakhs, capital subsidy received from central government amounting to `100 lakhs, proceeds from borrowings (net) of our Company amounting `9,646.85 lakhs and payment of interest and financial charges of ` 2,310.40 lakhs. Net cash generated from financing activities was `14,197.88 lakhs for the financial year 2009, as a result of issue of fresh equity shares to promoters and others amounting to `500 lakhs, share application money received from the promoters amounting to `1,800 lakhs, issue of compulsorily convertible preference shares of `4,000.00 lakhs to Axis Infrastructure Fund I, proceeds from borrowings of our Company amounting `8,643.47 lakhs and payment of interest and financial charges of `745.59 lakhs. Net cash from financing activities was `16,637.92 lakhs for the financial year 2008, as a result of issue of fresh equity share to Axis Infrastructure Fund I, of `3,500.00 lakhs and from promoters and others

321

amounting to `2,222.25 lakhs, proceeds from borrowings of `11,497.01 lakhs for availing term loans and working capital facilities, payment of interest and financial charges of `581.34 lakhs. Net cash used in financing activities was `5,551.92 lakhs for the financial year 2007, as a result of issue of fresh equity shares of `1,867.27 lakhs to Promoters and others, proceeds from share application money of `263.12 lakhs received from the promoters, proceeds from borrowings of `3,579.85 lakhs and payment of interest and financial charges of `158.33 lakhs. Fixed Assets Our fixed assets include gross block of assets, capital work in progress and expenditure pending allocation less depreciation. Gross Block of fixed assets increased by `7,002.78 lakhs during the half year ended on September 30, 2010 as compared to the financial year 2010, on account of addition of no of Rooms and Other facilities at Jaipur Jamdoli, Udaipur and at Ahmedabad (Cambay Grand). Gross Block of fixed assets increased by `20,478.30 lakhs during the financial year 2010 as compared to the financial year 2009, on account of starting of commercial operation of four properties during the current financial year. Gross block of fixed assets increased by `13,280.45 lakhs during the financial year 2009 as compared to the financial year 2008, on account of additions in the number of rooms at Gandhinagar and starting of commercial operation of Goa and Kerala properties, Gross block of fixed assets increased by `4,071.31 lakhs during the financial year 2008 as compared to the financial year 2007, on account of additions in the number of rooms at Ahmedabad. Capital work in Progress increase net of capitalization by `366.49 lakhs representing capital expenditure incurred towards the Neemrana Property and other expansion work going on for the facility addition. Capital work in progress decreased by `6493.49 lakhs, primarily because of operation properties block capitalized to Gross Block during the current financial year. Capital work in progress increased by `7,251.31 lakhs during the financial year 2009 as compared to the financial year 2008, primarily on account of expenses incurred for construction of Resorts and Hotels at various locations. Capital work in progress increased by `9,272.03 lakhs during the financial year 2008 as compared to the financial year 2007, primarily on account of expenses incurred for construction of Resorts at various locations. Investments Investment of the company as on September 30, 2010 includes `565.00 lakhs as towards acquisition of all equity share of subsidiary company, `100 lakhs towards of 50% equity shares in Cambay Hotels and Holidays Limited (CHHL) an associate company, `150 lakhs towards of 49.83% equity shares in Cambay SEZ Hotels Private Limited (Formerly Known as Dahej Hospitality Private Limited) an associate company We have further invested `1.41 lakhs in National Savings Certificates. Our Investments of `566.30 lakhs in F.Y. 2010 comprised of `565.00 lakhs as towards acquisition of all equity shares of subsidiary company and `1.30 lakhs in National Saving Certificates. Current Assets, Loans and Advances Current assets, loans and advances consist of inventories, sundry debtors, cash and bank balances and loans and advances. As on September 30, 2010 companys total current assets and loans and advances is `11,906.76 Lakhs. Total current assets, loans and advances as of March 31, 2010, 2009, 2008 and 2007 were ` 9,792.87 lakhs, ` 5,419.27 lakhs, ` 5,961.96 lakhs and ` 2,129.06 lakhs respectively. The increase in our total current assets as of March 31, 2010, as compared to March 31, 2009, was primarily due to increase in sundry debtors and increase in capital advance. The decrease in our total current assets as of March 31, 2009, as compared to March 31, 2008, was primarily due to decrease in capital advance and corresponding increase in Gross Block due to booking of invoice against the supplier advance.

322

The increase in our total current assets as of March 31, 2008, as compared to March 31, 2007, was primarily due to increase in capital advance and increase in cash and bank balance due to disbursement of the investment amount by Axis Infrastructure Fund I at the end of financial year. Liabilities and Provisions Liabilities and provisions consist primarily of secured and unsecured loans and current liabilities and provisions. As on September 30, 2010 companys liabilities and provisions is ` 44,308.27 lakhs. Liabilities and Provisions as of March 31, 2010, 2009, 2008 and 2007 were ` 41,177.85 lakhs, ` 28,941.04 lakhs, ` 17,773.16 lakhs and ` 5,339.63 lakhs respectively. Statement of indebtedness and contingent liabilities Indebtedness As of September 30, 2010, we have `34,986.79 lakhs of aggregate principal amount of indebtedness outstanding. This represents term loan facilities from Tourism Finance Corporation of India Limited, IDFC Limited, Bank of India, Axis Bank, India Bulls Housing Finance Limited, Corporation Bank Limited, IFCI Limited, Oriental Bank of Commerce, State Bank of India, L&T Infrastructure Finance Company Limited, United Bank of India and RIICO Limited and working capital facility from State Bank of India and Axis Bank for an amount of `1,383.93 Lakhs. There is an amount outstanding on account of Non Convertible debentures from Axis Bank Limited worth `2,500 Lakhs. Contractual Obligations and Commercial Commitments The following table summarizes the Company's contractual obligations as of September 30, 2010 and the effect such obligations and commitments are expected to have on its liquidity and cash flows in future periods. (` in Lakhs) Contractual Obligations As on Less than one One (1) to More than five September 30, (1) year Five (5) (5) years 2010 years Secured Unsecured Contingent Liabilities The following table provides our contingent liabilities as of September 30, 2010: Particulars Guarantees given by banks on behalf of our Company Corporate Guarantee given by our Company Total Off Balance Sheet Commitments and Arrangements We do not have any off-balance sheet arrangements with any party, derivative instruments, swap transactions or relationships with other entities or financial partnerships that would have been established for the purpose of facilitating off-balance sheet arrangements. Amount (` in Lakhs) 109.30 169.00 278.3 33602.85 734.12 6401.20 457.45 22409.88 276.67 4791.77 -

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Quantitative and Qualitative Disclosures about Market Risk Market risk is the risk of loss related to adverse changes in market prices, which includes interest rate risk and commodities risk. We are exposed to commodity risk to a certain extent, interest rate risk for the borrowings undertaken and deposits and credit risk in the normal course of our business. Commodity Risk We are exposed to market risk with respect to the prices of materials used in construction of our hotel and resorts. These commodities primarily are steel, construction equipments and cement. The costs of these materials are subject to fluctuation based on commodity prices. The cost of materials sourced from outside manufacturers may also fluctuate based on their availability from suppliers. In the normal course of business, we purchase these materials on a contract basis. We currently do not have any hedging mechanism in place in respect of any of the materials we purchase. Interest Rate Risk We are exposed to market risk with respect to changes in interest rates related to our borrowings. Interest rate risk exists with respect to our indebtedness that bears interest at floating rates tied to certain benchmark rates as well as borrowings where the interest rate is reset primarily based on changes in the short-term interest rates set by Indian banks, as well as due to changes in interest rates set by the RBI, which are generally announced through credit policy measures issued twice a year. We have not entered into agreements to hedge risks associated with changes in interest rates. As at September 30, 2010, our secured loan funds aggregated to ` 34,986.79 lakhs, all of which were at floating rates of interest. Inflation Risk Although India has experienced fluctuation in inflation rates in recent years, inflation has not had a material impact on our business or results of operation. Information as per Schedule VIII Part A section IX (E) (5) of the SEBI (ICDR) Regulations Unusual or Infrequent Events or Transactions Except as described in the Draft Red Herring Prospectus, there have been no events or transactions to our knowledge which may be described as "unusual" or "infrequent". Significant economic changes Other than as described in the Draft Red Herring Prospectus, particularly in this section and the section titled "Risk Factors" beginning on pages 304 and 15 respectively, of this Draft Red Herring Prospectus, we do not believe that there are any other significant economic changes that materially affected or are likely to affect income from continuing operations Known Trends or Uncertainties Other than as described in this section and the section titled "Risk Factors" beginning on pages 304 and 15 respectively of this Draft Red Herring Prospectus, to our knowledge there are no known trends or uncertainties that have or are expected to have a material adverse impact on our income from our operations. Future Relationship between Costs and Revenues Other than as described in this section and section titled "Risk Factors" beginning on pages 304 and 15, respectively, of this Draft Red Herring Prospectus, to our knowledge, there are no known factors which will

324

have affect on the future relationship between costs and revenues and have a material adverse impact on our operations and finances. The extent to which material increases in net sales or revenue are due to increased sale volumes, introduction of new products or services or increased sales prices Changes in revenues during the last 3 years are explained in this chapter under the sections "Comparison of financials of F.Y. 2010 with F.Y. 2009", "Comparison of financials of F.Y. 2009 with F.Y. 2008" and "Comparison of financials of F.Y. 2008 with F.Y. 2007" and for the "half year ended September 30, 2010" under the respective paragraphs titled "Sales". Total turnover of each major industry segment in which our Company operates The total turnover, wherever available, of each of the industry segments in which we operate are described in the Section titled "Our Industry" beginning on page 115 of this Draft Red Herring Prospectus. Status of any publicly announced new products or business segment The status of any publicly announced new products or business segment is as disclosed in this section and the Section titled "Our Business" beginning on page 44 of this Draft Red Herring Prospectus. Seasonality The income for hospitality business and income from time share business is seasonal to a certain extent and is described in the Section titled "Risk Factors" beginning on page 15 of this Draft Red Herring Prospectus Significant Dependence on a Single or Few Customers Our business is based upon servicing clients from different industry segments and we do not rely upon a few customers for smooth operations and similarly we do not depend upon a few suppliers. For further details, please refer to the Sections titled "Risk Factors" and "Our Business" beginning on pages 15 and 44 respectively, of this Draft Red Herring Prospectus. Competitive Conditions We expect competition in hospitality sector from existing and potential competitors to intensify. For further details please refer to the discussions of our competitive conditions in the Section titled "Risk Factors" beginning on page 15 of this Draft Red Herring Prospectus.

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FINANCIAL INDEBTEDNESS For details on financial indebtedness, please refer to the section titled "Financial Statements" beginning on page 208 of this Draft Red Herring Prospectus. No. Name of the Lender Amount Sanctioned (`in Lakhs) Amount outstanding as on February 28, 2011 (`in Lakhs) 2,794 Rate of Interest (%) Repayment Schedule Security Guarantee

Term Loan 1. Axis Bank Limited

3,500

BPLR - 1.5%

20 quarterly installments of `175 lakhs commencing from April 1, 2010

Primary Security: i. Equitable Mortgage of land & property at Jamdoli, Kukas Uadaipur and Neemrana Hypothecation of all the present and futute immovable and movable fixed assets of our Company

Personal guarantee of Promoters, Directors of our Company

ii.

Collateral Security: i. 2nd charge on all other current assets of the company on pari passu basis ii. Pledge of 30% shares of our Company held by promoters. 2. L&T Infrastructure Finance Company Limited 4,000 4,000 L & T Infra PLR - 0.75% 4 quarterly installments of `300 lakhs commencing Primary Security: i. Equitable Mortgage of i. Personal guarantee Promoters,

of

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No.

Name of the Lender

Amount Sanctioned (`in Lakhs)

Amount outstanding as on February 28, 2011 (`in Lakhs)

Rate of Interest (%)

Repayment Schedule

Security

Guarantee

from April 2011 & 2014 quarterly installments of `200 lakhs

land & property at Ahmedabad, Udaipur, Jaipur (two propertis) & Neemrana. ii. 1st charge on all the present and futute immovable and movable fixed assets of our Company. iii. Pledge of shares of the company held by our Promoters. Collateral Security: --

Directors of our Company ii. Corporate Gurantee of Neesa Agritech Private Limited

3.

Bank of India

2,500

2,500

BPLR +0.25 %, Min 13%

24 quarterly installments in yearly ballooning format commencing from April 1, 2011

Primary Security:

Personal Guarantee of i. Pari Passu charge of land Promoters, Directors of our & building with the Neemrana Plot Company ii. 1st Pari passu charge on ii. Corporate other present and future Guarantee of Neesa Agritech immovable and movable fixed assets of our Private Limited Company Collateral Security: i. 2nd charge on all other

i.

327

No.

Name of the Lender

Amount Sanctioned (`in Lakhs)

Amount outstanding as on February 28, 2011 (`in Lakhs)

Rate of Interest (%)

Repayment Schedule

Security

Guarantee

current assets of the company on pari passu basis. ii. Pledge of promoters shareholding 4. Oriental Bank of Commerce 2,500 2,500 PLR + 1% 20 equal quarterly installments of `125 lakhs commencing from April 2011 Primary Security: i. Pari Passu charge of land & building with the Neemrana Plot 1st Pari passu charge on other present and future immovable and movable fixed assets of our Company i. Personal Guarantee of Promoters, Directors of our Company ii. Corporate Guarantee of Neesa Agritech Private Limited

ii.

Collateral Security: i. 2nd charge on all other current assets of our Company on pari passu basis Pledge of promoters shareholding. i. Personal Guarantee of Promoters, Directors of our Company

ii.

5.

Corporation Bank

1,000

1,000

COBAR + 25 bps

20 quarterly installments of `50 lakhs commencing from April 2011

Primary Security: i. Pari Passu charge of land & building with the Neemrana Plot

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No.

Name of the Lender

Amount Sanctioned (`in Lakhs)

Amount outstanding as on February 28, 2011 (`in Lakhs)

Rate of Interest (%)

Repayment Schedule

Security

Guarantee

ii. Pari passu charge on other ii. Corporate present and future Guarantee of immovable and movable Neesa Agritech fixed assets of our Private Limited Company. Collateral Security: i. 2nd charge on all other current assets of the company on pari passu basis. ii. Pledge of shares of the company held by our Promoters. 6. IFCI Limited 3,000 3,000 13.50% p.a. 24 quarterly installments in yearly Ballooning format from May 2012 Primary Security: i. 1st charge on project assets (Rajasthan) on parripasu basis with other exisitng term lenders. Personal Guarantee of our Promoters.

Collateral Security: i. 2nd charge on all current assets of the company on parripassu basis with existing term lenders. Pari Passu charge on 11 Crore Shares

ii.

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No.

Name of the Lender

Amount Sanctioned (`in Lakhs)

Amount outstanding as on February 28, 2011 (`in Lakhs) 1,200

Rate of Interest (%)

Repayment Schedule

Security

Guarantee

7.

Syndicate Bank

2,500

PLR + 1.5%

24 quarterly installments in yearly Ballooning format from June 2012

Primary Security: i. 1st charge on project assets (Rajasthan) on parripasu basis with other exisitng term lenders second charge on current aseest of on parripassu basis Pari Passu charge on 1.11 crore shares of face with IDFC & other lenders.

Personal guarantee of our Promoters

ii.

iii.

Collateral Security: -8. United Bank India (UBI) of 1,450 1,257 BPLR + 0.5% 30 quarterly installments of `48.34 lakhs commencing from March 2010 Primary Security: i. Exclusive charge on immovable and movable properties of the company relating to Cambay Palm Lagoon Resort, Kollam, Kerala. i. Personal guarantee of Promoters, Directors of the Company Corporate Guarantee of Palm Lagoon Backwater Resorts Private Limited

ii.

Collateral Security: --

330

No.

Name of the Lender

Amount Sanctioned (`in Lakhs)

9.

Rajasthan Industrial Investments Corporation

180

Amount outstanding as on February 28, 2011 (`in Lakhs) 100

Rate of Interest (%)

Repayment Schedule

Security

Guarantee

15.50%

18 quarterly installments of `10 lakhs commencing from February 15, 2009

Primary Security: i. First mortgage on present and future immovable and movable properties of our Company 1st pari passu charge on all other movables of our Company

Personal guarantee of Promoters, Directors of our Company

ii.

Collateral Security: i. Pledge of shares of the company held by our Promoters Personal guarantee of our Promoters

10.

ICICI Limited

Bank

14,000

12,478

I-Base plus Spead (7.75%+3.15% at time of Sanc)

28 Quarterly installemnts in Balloning Format from end of 1st quarter from date of Disbursement (Y-1: 5%, Y-2: 10%,, Y-3: 10%, Y-4: 15%,Y-5: 15%,Y-6: 20%,Y-7: 25%)

Primary Security:* i. First charge over present and future movable and immovable fixed assets at Gandhinagar, Vejalpur and Thaltej properties of our Company

Collateral Security:* i. Exclusive charge on the pledge of 2,500,000 Equity Shares of the Borrower held by our

331

No.

Name of the Lender

Amount Sanctioned (`in Lakhs)

Amount outstanding as on February 28, 2011 (`in Lakhs)

Rate of Interest (%)

Repayment Schedule

Security

Guarantee

Promoter. ii. Pledge of 11,170,791 Equity Shares of the Borrower held by our promoter on pari passu basis with other lenders

* Our Company has initiated the process of creation of a fresh charge and appropriate documents are under preparation for filing with the relevant Government Authorities. Personal guarantee 11. Tourism Finance 1,500 1,383 BPLR + 0.5% Equal 89 monthly Primary Security: installments of of Promoters, Corporation of India Limited 1st Pari passu charge on Directors of our `16.67 lakhs i. (TFCI)* all the movable and Company commencing from immovable assets of the July 15, 2010 & last 5- star hotel at Thaltej 90th installment of ii. Hypothecation charge on `16.37 lakhs pari passu basis (with the other lender for the hotel project) on all the movable assets of the 5 star hotel subject to prior charges of banker on specified movable assets for securing working capital facilities. iii. Pledge of entire Promoters shareholding for the project on pari passu basis with other banks/ financial

332

No.

Name of the Lender

Amount Sanctioned (`in Lakhs)

Amount outstanding as on February 28, 2011 (`in Lakhs)

Rate of Interest (%)

Repayment Schedule

Security

Guarantee

institutions. Collateral Security: -12. DCB 900 900 Base Rate + 3.75% (Min 12.25% pa) 72 equated monthly installments Primary Security: i. Equitable Mortgage on Plot No. H-34/13, DLF City, PH-1, Faridabad Road, Gurgaon, Haryana --

Collateral Security: -Sub Total Debenture 13. Axis Bank (NCD) 37,030 2,500 33,111 2,375 14.5 % pa In 20 quarterly installments of starting from October 2010 Primary Security: i. Pari Passu charge of land & building with the Neemrana Plot 1st Pari passu charge on other present and future immovable and movable fixed assets of our Company. Personal guarantee of Promoters, Directors of our Company

ii.

Collateral Security:

333

No.

Name of the Lender

Amount Sanctioned (`in Lakhs)

Amount outstanding as on February 28, 2011 (`in Lakhs)

Rate of Interest (%)

Repayment Schedule

Security

Guarantee

i.

2nd charge on all other current assets of the company on pari passu basis Pledge of shares of the company held by our promoters Personal guarantee of Promoters, Directors of the Company

ii.

Working capital 14. State Bank of India

700

707

SBAR+0.75%

Repayable demand

on

Primary Security: i. 1st charge by way of Hypothecation of entire chargeable current assets of our Company.

Collateral Security: i. 2nd charge by way of EM on company's hotel at thaltej, Ahmedabad with TFCI and UBI 2nd pari passu charge on the land & building at Vejalpur 2nd pari passu charge on the entire fixed assets of the exisitng hotel and convention centre at

ii.

iii.

334

No.

Name of the Lender

Amount Sanctioned (`in Lakhs)

Amount outstanding as on February 28, 2011 (`in Lakhs)

Rate of Interest (%)

Repayment Schedule

Security

Guarantee

Gandhinagar (including mortgage over the land and building at X22,23,24 & 27 at Gandhinagar) 15. Axis Bank Limited 700 707 PLR - 2.75% Repayable demand on Primary Security: i. Hypothecation of all current assets of the Jaipur Kukas, Jaipur Jamdoli, Udaipur and Neemrana, present and future on pari passu basis with other lenders. Collateral Security: i. First charge on pari passu basis on all the fixed assets of Jaipur Kukas, Jaipur Jamdoli, Udaipur and Neemrana, present and future. Subservient charge on all other fixed assets of the company, present and future excluding above fixed assets. i. Personal guarantee of Promoters, Directors of our Company Corporate Gurantee of Neesa Agritech Private Limited

ii.

ii.

Sub Total

1,400

1,414

335

SECTION VI: LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS Except as stated herein, there are no outstanding or pending litigation, suits, civil prosecution, criminal proceedings or tax liabilities against our Company, our Directors, our Promoters , our Subsidiary and Group Entities and there are no defaults, non-payment of statutory dues, over dues to banks and financial institutions, defaults against bank and financial institutions and there are no outstanding debentures, bonds or fixed deposits issued by our Company; no default in creation of full security as per the terms of the issue, no proceedings initiated for economic or other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part I of Schedule XIII of the Companies Act, 1956), and no disciplinary action has been taken by SEBI or any stock exchanges against our Company, our Promoters, our Directors, Subsidiary or Group Entities. Further, as stated below, there are no show-cause notices / claims served on our Company, our Promoters, our Directors, Subsidiary or Group Entities from any statutory authority / revenue authority that would have a material adverse affect on our business. I. Cases filed against our Company Civil Cases 1. Shyampuri Grah Nirman Sahakari Samiti ("SGNSS") has filed a civil suit of permanent injunction (385/2009) with Temporary Injunction application (225/2009) before the A.C.J (Junior Division) and Judicial Magistrate First Class, Jaipur (East), Jaipur against our Company to restrain our Company from construction of a boundary wall at Khasra No. 164, Jamdoli, Jaipur. Our Company has been allotted Plot bearing Khasra No. 165, 448 and 505/1 on which our Company has developed "Cambay Golf Resort", Jamdoli, Jaipur. The Court by an interim order dated October 27, 2009 has restrained our Company from construction of boundary wall on the Land comprising in Khasra No. 164. The matter shall come up for hearing on April 18, 2011. M/s Creative Communication and Sadhi Designer, Ahmedabad (through the proprietor Mr. Rohit Patel) has filed a civil suit (305/2010) before the Court of Principal Senior Civil Judge, Gandhinagar against our Company for recovery of its payment outstanding amounting to `34.04 lakhs (`34,04,151) towards work entrusted for glass fittings and labour work. Our Company has filed its written statement on November 29, 2010. The matter shall come up on hearing on April 25, 2011. Mr. Rahul Kalsi ("Mr. Kalsi") has filed a suit for recovery on December 24, 2010 before the Court of Civil Judge, Sr. Division. Gurgoan against our Company for recovery of `100.00 lakhs (`1,00,00,000) paid by Mr. Kalsi as advance money at the time of executing agreement to sell in respect of property No. H-34/13, DLF-I, Gurgaon admeasuring 855.20 Sq.Mtrs. Mr. Kalsi has further prayed for recovery of the aforementioned amount along with interest @ 12% p.a. from the date of Agreement to Sell till the date of filing this suit along with a future interest @ 12% p.a. from the date of filing the present suit till the time of final realisation of the amount. The matter shall come up for hearing on April 7, 2011. Mr. Jose Augustine Fernandes, the lessor of our Goa property i.e. Cambay Beach Resort has filed a Civil Misc. Application (30/2011) under Section 9 of the Arbitration and Conciliation Act, 1996 before the Court of Principal District Judge, North Goa, at Panaji for (i) an injunction against our Company from damaging the property or removing the furniture, fixtures and (ii) for payment of monthly rentals from the month of December 2010. The lessor has alleged that our Company has delayed and neglected the payment of rent since December 2010. Our Company is in the process of preparing and filing a reply to the above application.

2.

3.

4.

336

Criminal proceedings 1. Mr. J.A. Soni Food Inspector, Food and Drugs Departments, Gandhinagar had filed a Criminal Compliant (13106/2006) before the Honble Judicial Magistrate Court, First Class at Gandhinagar, Gujarat under the provisions of the PFA Act, 1954and the 1955 Rules against our Company and Mr. Sanjay Gupta, Ms. Neelu Gupta, Mr. Arvind Gupta, Mr. Shailesh Modi, Mr. Pankaj Mudholkar and Others for misbranding and adulteration of the product "Swad Frozen Beans". Our Company has further filed a Special Criminal Application (2239/2006) in the High Court of Gujarat to squash the matter before the Honble Judicial Magistrate Court. The High Court, Gujarat by an order dated December 27, 2006 has stayed the matter before the Judicial Magistrate. The matter is currently pending before the High Court of Gujarat. Mr. J.A. Soni Food Inspector, Food and Drugs Departments, Gandhinagar had filed a Criminal Compliant (13107/2006) before the Honble Judicial Magistrate Court, First Class at Gandhinagar, Gujarat under the provisions of the PFA Act, 1954 and the 1955 Rules against our Company and Mr. Sanjay Gupta, Ms. Neelu Gupta, Mr. Arvind Gupta, Mr. Shailesh Modi, Mr. Pankaj Mudholkar and Others for misbranding and adulteration of the product "Khoya". Our Company has filed a Special Criminal Application (2240/2006) in the High Court of Gujarat to squash the matter before the Honble Judicial Magistrate Court. The High Court, Gujarat by an order dated December 27, 2006 has stayed the matter before the Judicial Magistrate. The matter is currently pending before the High Court of Gujarat. Mr. Sameer Bhandari has filed a Criminal Compliant (1418/W/2010) ("Compliant") before the Magistrate of Metropolitan Magistrate, 27th Court, Mulund, Bombay under the Section 200 of the Criminal Procedure Code for offence under Section 406, 420, 468 read with 114 of the Indian Penal Code against our Company and its employees. The aforementioned Compliant has been filed since the Complainant had availed the membership costing `1.61 lakhs (`1,61,381) wherein our Company inadvertently registered the Complainant for membership costing `2.02 lakhs (`2,01,726). The matter shall come up for hearing in due course. Labour cases 1. Mr. R.S. Sharma has filed a compliant (112/2-5-2009/8447) before the Labour Commissioner, Jaipur, Rajasthan in relation to non-payment of salary offered as against the payment made by our Company and seeking appropriate relief. The matter is pending before the Labour Commissioner, Jaipur. Consumer case 1. Mr. Garvit Saraswat (the "Complainant") has filed a Consumer Complaint (754/2009) before the Consumer Dispute Redressal Forum, I Jaipur under Section 12 of the Consumer Protection Act, 1986 against our Company for refund of part payment made by the Complainant amounting to `0.24 Lakhs (`24,000) for cancellation of the Cambay Family Holidays membership availed by the Complainant. The Complainant has further claimed a compensation of `1.50 Lakhs (`1,50,000) along with interest towards mental harassment and `0.11 lakhs (`11,000) towards legal fees. The matter shall come up for hearing on May 23, 2011. Mr. Ajesh Agrawal (the "Complainant") has filed a consumer complaint (824/2010) against our Company before the Consumer Disputes Redressal Forum, Jaipur under Section 12 of the Consumer Protection Act, 1986 for refund of payment of `1.85 lakhs (`1,85,000) made by the Complainant for availing the Cambay Family Holidays membership together with expenses in relation to air tickets of `0.14 lakhs (`14,000), compensation for financial loss of `5.00 lakhs (`5,00,000) , compensation for mental harassment of `1.00 lakhs (`1,00,000) and `0.11 lakhs (`11,000) towards legal fees. The matter shall come up for hearing on April 11, 2011.

2.

3.

2.

337

3.

Mr. Deepak Sharma (the "Complainant") has filed a consumer complaint (901/2010) against our Company before the Consumer Disputes Redressal Forum, Jaipur under Section 12 of the Consumer Protection Act, 1986 for refund of payment of `0.11 lakhs (`11,000) made by the Complainant for availing the Cambay Family Holidays membership along with the interest @ 18% together with damages for mental harassment of `0.50 lakhs (`50,000) and other expenses amounting to `0.19 lakhs (`18,600). The matter shall come up for hearing on May 23, 2011. Mr. Deepak Chatterjee (the "Complainant") has filed a consumer complaint (483/2009) against our Company before the Consumer Disputes Redressal Forum, Noida, Delhi under Section 12 of the Consumer Protection Act, 1986 for refund of payment of `0.19 lakhs (`18,797) made by the Complainant for availing the Cambay Family Holidays membership. The Consumer Disputes Redressal Forum, Noida has passed an order dated August 26, 2010 against our Company, directing our Company to make the payment of `0.19 lakhs (`18,979) along with an additional compensation of `3,000. Our Company has obtained a stay from the State Consumer Dispute Redressal Commission on December 16, 2010 against the order. The matter shall come up for hearing on May 10, 2011. M/s Bridgeline Management Services (the "Complainant") has filed a consumer complaint (CC/1679/2010) against our Company before the Consumer Disputes Redressal Forum, Bangalore under Section 12 of the Consumer Protection Act, 1986 for failure to make the payment towards cost to company (CTC) amounting to `6.19 lakhs (`6,18,553) along with interest @ 24% p.a. to the personnels sent by the Complainant as per the agreed terms and conditions of the agreement. The Complainant has further prayed for damages amounting to `0.50 lakhs (`50,000) towards mental harassment and pain caused to the Complainant. The Court has passed the order dismissing the Complaint. However, our Company is awaiting the copy of the said order. Mr. D.K.Jain (the "Complianant") has filed a consumer compliant (948/2010) against our Company before the District Consumer Disputes Redressal Forum, Gurgaon under Section 12 of the Consumer Protection Act, 1986 for enrolment of the Complianant as a member of Cambay Family Holiday Membership since the Complianant has already made the required amount of membership fees of `0.13 lakhs (`12,878). The matter shall come up for hearing on April 15, 2011. Mr. Krishan Kumar (the "Complainant") has filed a consumer complaint (339/2010) against our Company before the Consumer Disputes Redressal Forum, Gurgaon under Section 12 of the Consumer Protection Act, 1986 for refund of deposit amount paid by the Complainant of `0.12 lakhs (`12,878) along with interest @ 24% p.a. for availing the Cambay Family Holidays membership, `3,000 for transportation, `0.20 lakhs (`20,000) for mental pain & agony and `5,000 for litigation expenses. The matter shall come up for hearing on April 11, 2011. Revenue proceedings against our Company Our Company has filed a Writ Petition (12338/2009) before the High Court of Judicature, Rajasthan, Jaipur Bench under Article 226 & 227 of the Constitution of India against (i) the State of Rajasthan, (ii) Commissioner, Commercial Taxes, Rajasthan, Jaipur (iii) The Commercial Taxes Officer, Jaipur and (iv) The Assistant Commissioner, Anti Evasion I, Jaipur (the "Respondents"). Our Company has filed the above Writ Petition for obtaining appropriate direction from the High Court to declare Rajasthan Tax on Entry of Goods into Local Area Act, 1999 and Rajasthan Tax on Entry of Goods into Local Area Rules, 1999 to be ultra vires to the Constitution of India and further prohibiting and restraining the Respondents from enforcing or raising any demand of tax under the above mentioned Act and Rules and refund of tax levied under the above Act and Rules by the Respondents. By an order dated October 12, 2009, the above Writ Petition has been declared similar to Writ Petition No.343/08 and 6349/08 which have been admitted and injunction has been granted in favour of the Petitioners in these matters which shall also be applicable to the above Writ Petition filed by our Company. The matter is currently pending before the High Court, Rajasthan.

4.

5.

6.

7.

II. 1.

338

Search and Seizure Operations 2. In September 2010, the Income Tax Department carried out search and seizure operations under Section 132(1) of the Income Tax Act, 1961 ("IT Act") at twenty four (24) business premises of our Company, the residential premises of our Promoters and on various group companies of our Company. During the course of the search and seizure operations, the IT Authorities have impounded certain materials & documents and seized `3.80 lakhs and 1,100 gms of gold and have recorded statements under Section 132(4)/131 of the IT Act of certain officials of our Company including the Promoters, their relatives and Directors of our Company. Further, during the course of survey proceedings carried out under Section 133A of the IT Act, the IT Department has issued impounding orders under Section 133A(3)(ia) wherein certain books, loose papers, diaries, registers and other documents as well as electronic storage devices in the form of hard disc, CDs, pen drive etc. have been impounded for further investigation in the matter. The Deputy Director of Income Tax ("DDIT") has also issued summons under Section 131(1A) to our Company, our Promoter(s), their relatives, group companies of our Company and certain other company officials requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein. The DDIT has further issued notice under Section 133(6) of the IT Act against Axis Private Equity Limited calling upon them to furnish information and details in relation to our Company. Further, HTML has been issued summons under Section 131 requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein notice. HTML filed its reply dated January 4, 2011 to the summons. Our Company had filed a Special Civil Application (13498/2010) ("SCA") before the High Court of Gujarat, Ahmedabad against the Union of India, the Director General of Income Tax (Investigation), Director (Investigation) and the Deputy Director of Income Tax for (i) quashing and setting aside the warrant of authorization issued under Section 132(1) of the IT Act and the subsequent action of "search and seizure" taken by the IT Authorities and to return the materials and documents seized by the IT Department; (ii) quashing and setting aside the notices issued under Section 133(6) of the IT Act to various banks, financial institutions and others and grant a stay on operation of these notices; (iii) restraining the IT Authorities from issuing notices under Section 153 (A)(1) to other group companies requiring them to furnish return of income for last six (6) assessment years; and (iv) restraining the IT Department to carry out any further inquiry and search pending the hearing and final disposal of this SCA. Our Company had further filed a Civil Application (15767/2010) before the High Court of Gujarat, Ahmedabad in the above SCA for disclosure of the contents of the satisfaction note which lead the Department to consider conducting a search and seizure operation of our Company. The IT Department has filed the Affidavit-in-reply to the aforementioned Civil Application filed by our Company. The High Court of Gujarat, Ahmedabad by its order dated March 4, 2011 has dismissed the Petition of our Company since the Court is of the view that (i) the condition precedent for exercise of powers under Section 132(1) has been duly satisfied prior to issuance of warrant of authorisation under Section 132(1) of the IT Act and (ii) that there were sufficient reasons for the concerned officer to call upon the required information as stated in the notices served under Section 133(6) of the IT Act. Further, the Assistant Commissioner of Income Tax, Central Circle 2(2), Ahmedabad ("ACIT") has served a Notice dated January 7, 2011 under Section 153A(1)(a) of the IT Act upon our Company and Mr. Sanjay Gupta requiring them to furnish the Return of Income for the last six (6) years i.e. A.Y.2005-2006 to A.Y.2010-2011 for the purposes of assessment/re-assessment. The ACIT has served a Notice dated January 27, 2011 under Section 153A(1)(a) of the IT Act upon Ms. Neelu Gupta requiring her to furnish the Return of Income for the last six (6) years i.e. A.Y.2005-2006 to A.Y.2010-2011 for the purposes of assessment/re-assessment. The matter is currently pending before the ACIT, Ahmedabad.

339

III. 1.

Notices issued against our Company Our Company has received a notice dated April 8, 2010 from Novex Communications Private Limited ("Novex") alleging that television channels comprising in the MSM Discovery Bouquet ("MSMD") were receiving/displaying the MSMD channels by the television sets installed in our properties without prior written authorisation from the MSMD channels. It has been alleged that the MSMD channels are being received through the local cable operator who did not have the license to receive/transmit the MSMD channels to commercial establishments like hotels and restaurants. Novex has alleged copyright infringement and theft of signals by us and has threatened legal action against our Company. Our Company has requested Novex to provide us with a copy of the arrangement between them and MSMD. Further, we are also awaiting clarity on the matter in view of certain proceedings pending before the TRAI/TDSAT and the Supreme Court in relation to disputes between broadcasters and Associations of Commercial Establishments. M/s R.P. Infrastructure has issued a notice dated January 10, 2011 for recovery of `57.20 Lakhs (`57,19,835.82) in relation to work order No.NLL/JAMDOLI/MB/02 for civil work awarded by our Company to M/s R.P. Infrastructure which was completed by R.P. Infrastructure in November 2009. M/s. R.P. Infrastructure has invoked the arbitration clause of the contract entered into by our Company with M/s R.P. Infrastructure. Our Company by its letter dated February 3, 2011 has replied to the aforementioned notice. M/s R.P. Infrastructure has issued a notice dated January 10, 2011 for recovery of `0.88 Lakhs (`87,954.11) in relation to work order No.NLL/PRO/JMD/006 for civil work awarded by our Company to M/s R.P. Infrastructure which was completed by R.P. Infrastructure in August 2008. M/s. R.P. Infrastructure has invoked the arbitration clause of the contract entered into by our Company with M/s R.P. Infrastructure. Our Company by its letter dated February 3, 2011 has replied to the aforementioned notice. Our Company has received certain notices from contractors claiming an amount aggregating to `9.70 Lakhs (`9,69,936) payable by our Company for works and services carried out for our Company. Our Company has responded to most of these notices. Our Company is not aware of and has not been served upon any proceedings filed in a Court in respect of these notices. Our Company has received several notices alleging misrepresentation by our Company of Cambay Family Holiday packages and cancellation and refund of the membership fees paid by the members aggregating to `3.62 Lakhs (`3,61,570). Our Company has responded to most of these notices. Our Company is not aware of and has not been served upon any proceedings filed in a Court in respect of these notices. Wipro Limited ("Wipro") has issued a notice dated December 15, 2010 against our Company for recovery of `12.70 Lakhs (`12,69,837) payable by our Company towards payment of IT products purchased by our Company and for installation and commissioning of the services. Out of the above, our Company has made only part of the part of `3.59 Lakhs (`3,58,913) due to deficiency in the services provided by Wipro. Our Company has replied to the aforementioned notice by its letter dated December 30, 2010 and January 24, 2011 setting out the grievances in relation to services rendered by Wipro. Fresh & Honest Caf Limited ("FHCL") has issued a notice dated January 18, 2011 against our Company for recovery of `0.91 Lakhs (`91,187) payable by our Company towards payment of coffee beans and other items supplied by FHCL. Our Company is in the process of replying to the above notice.

2.

3.

4.

5.

6.

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8.

Chinubhai Kalidas & Bros ("CKB") has issued a notice dated December 24, 2010 against our Company for recovery of `0.41 Lakhs (`40,921.71) along with interest @ 18% p.a.. CKB has issued the aforementioned notice for failure by our Company to make payment towards fees for services rendered by CKB for customs clearance of goods exported by our Company. Our Company has not been served with any legal proceedings that may have been filed by CKB. Mr. Navratan Rajoria ("Mr. Rajoria") has issued a notice dated December 18, 2010 against our Company for refund of `0.42 Lakhs (`42,285) paid by Mr. Rajoria towards membership fees along with interest. Our Company has not been served with any legal proceedings that may have been filed by Mr. Rajoria. Mr. Piyush Garg ("Mr. Garg") has issued a notice dated December 24, 2010 against our Company for refund of `0.18 Lakhs (`18,105) paid by Mr. Garg towards membership fees along with interest @ 24% and damages of `5.00 Lakhs (`5,00,000). Our Company has not been served with any legal proceedings that may have been filed by Mr. Garg. Mr. Davendra Chaudhary ("Mr. Chaudhary") has issued a notice dated August 31, 2010 against our Company for refund of `0.16 Lakhs (`15,635) paid by Mr. Chaudhary towards membership fees along with costs of `550. Our Company has not been served with any legal proceedings that may have been filed by Mr. Chaudhary. The Inspector Legal Metrology, Department of Weights & Measures, Bhind (MP) has served a notice dated September 15, 2009 upon our Company, Managing Director and all the directors of our Company. The aforementioned notice has been served upon them due to violation of Section 33 of the Standard Weights & Measures Act, 1976 ("Weights & Measures Act") wherein our Company had given an advertisement in Hindustan Times, New Delhi which mentioned the admeasurement of the property in "Sq.Ft." which is considered as an offence under Section 33 of the Weights & Measures Act. Our Company and its directors have been directed to file an application for compounding. Our Company and its directors are in the process of filing a compounding application. Cases filed by our Company Civil Cases

9.

10.

11.

12.

IV.

1.

Our Company has filed a Consumer Complaint (76/2008) before the Honble State Consumer Dispute Redressal Forum, Ahmedabad under the Provisions of the Consumer Protection Act, 1986 against Tata Motors Limited, Cargo Motors Private Limited and Swaminarayan Body Builders for manufacturing deficiency of mini luxury bus purchased by our Company for an amount of `13.32 Lakhs (`13,31,625) alongwith interest at the rate of 18% per annum. At the final hearing of this matter, the Honble Consumer Forum by an order dated November 18, 2009 dismissed the Complaint made by our Company. Our Company is in the process of filing an appeal against the above order. Our Company have filed Reference Application (52/2009) before JDA Appellate Tribunal, Jaipur, against Jaipur Development Authority and Shyampuri Grah Nirman Sahakari Society ("SGNSS") for cancellation of approval of residential scheme granted to SGNSS under Section 90-B of Rajasthan Land Revenue Act. The matter shall come up for hearing on April 15, 2011. Our Company has filed a Summary Suit (51/2008) before the Court of Principal Senior Civil Judge at Ahmedabad against Mr. Bhargav Trivedi for the recovery of the sum of `1.09 Lakhs (`1,08,927) alongwith interest at the rate of 18% p.a. for availing the banquet hall and catering services at Cambay Spa and Resort, Gandhinagar. The matter shall come up for hearing on March 23, 2011. Our Company has filed a Writ Petition (525/2009) before the High Court of Judicature Jaipur, Rajasthan against the State of Rajasthan and RIICO under Article 226 of the Constitution of India

2.

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341

for quashing the letter dated December 30, 2008 issued by RIICO to "put on hold" the permission granted to our Company and refund of `49.21 Lakhs (`49,21,029) deposited by our Company pursuant to the allotment of the land where our Company has developed "Cambay Spa Resort, Kukas, Jaipur". Our Company had successfully bid for a piece of land situated at SP 36/B, Industrial area, Kukas, Jaipur (the "Land") auctioned by RIICO for developing a Spa and Nutrition Institute. Post the allotment of Land in the year 2006, our Company in the year 2008 requested RIICO to permit a 25% built up FSI of the developed infrastructure for commercial purposes on payment of necessary charges. A provisional approval by a letter dated September 29, 2008 was accorded to our Company permitting 20% built up FSI of the developed infrastructure for commercial purposes. However, the Infrastructure Development Committee of RIICO has "put on hold" the permission granted to our Company and has refunded the money deposited by our Company. Our Company has returned the money refunded by RIICO for the allotment of the Land. At its meeting held on February 27, 2009, the Infrastructure Development Committee has framed a policy for change of land use from Spa and Nutrition Institute to commercial use whereby it has been provided that the change will be permissible on payment of 2.5 times of the prevailing rate of the development charges in the area. Since the amount has already been paid by our Company we have filed an application for withdrawal of the Writ Petition. The matter shall come up for hearing on July 15, 2011. 5. Our Company has filed a Civil Suit (586/2009) before the Court of Senior Civil Judge, Gurgaon, Haryana against the District Town Planner (Enforcement) for permanent injunction against sealing of the premises situated at H-34/13, DLF Phase-I, Gurgaon, Haryana ("Suit Property") used by our Company for residential purposes of its executives and officials. The matter has been adjourned for replication or for framing of issues and both the parties have been directed to maintain a status quo regarding sealing or taking coercive action against the Suit Premises. Criminal Proceedings 1. Our Company has filed a Criminal Complaint (3828/2009) before the Court of Metropolitan Magistrate (N.I.Act.), Ahmedabad under Section 138 of the Negotiable Instruments Act, 1881 against Mr. Anniruddha Nayak and Mr. Pradipta Nayak for the dishonor of a cheque amounting to `0.35 Lakhs (`34,688) issued in favor of our Company in relation to the purchase of the air tickets. The matter shall come up for hearing on May 17, 2011. Our Company has filed a Criminal Complaint (1998/2008) before the Court of Metropolitan Magistrate, Negotiable Instrument Act, under Section 138 read with section 141 and 142 of the Negotiable Instruments Act, 1881 against Sunhari World Travel Inc, Mr. Jairaj Subodh Panchal and Mr. Subodh Panchal for dishonor of a cheque amounting to `1.13 Lakhs (`1,13,221) issued in favour of our Company in relation to the purchase of the air tickets. The Court of Metropolitan Magistrate has issued a non-bailable warrant against Mr. Jairaj Subodh Panchal. The matter shall come up for hearing on May 24, 2011. Our Company has filed a Criminal Complaint (146/2009) before the Court of Metropolitan Magistrate at Ahemedabad under Section 138 of the Negotiable Instruments Act, 1881 against Mr. Raman Kapoor for the dishonor of a cheque amounting to `6.00 Lakhs (`6,00,000) issued in favour of our Company. The matter shall come up for hearing on March 28, 2011. Our Company has filed a Criminal Compliant (5017/2010) before the Court of Chief Judicial Magistrate, Gandhinagar under Section 406 & 420 of the Indian Penal Code against Global Engineers Private Limited for recovery of advance payment made by our Company of `28.78 Lakhs (`28,78,000) along with 12% interest. Our Company has made the payment of the above towards purchase of puzzle parking system consisting of two (2) car lifts and vertical structure columns and support for total purchase order aggregating to `143.93 Lakhs (`1,43,93,000). The Court has issued the summons and the matter shall come up for hearing on March 28, 2011.

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3.

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342

5.

Our Company has filed a Criminal Compliant (22/2011) before the Court of Chief Judicial Magistrate, Ahmedabad Rural under Section 138 of the Negotiable Instruments Act, 1981 against Mr. Rajesh Kalawadia for dishonour of a cheque amounting to `0.51 Lakhs (`51,088) issued for payment towards purchase of international package. The matter shall come up for hearing on April 5, 2011. Motor Accident Claim

1.

Mr. Harish Kumar has filed a Claim (1248/2009) before the Motor Accident Claim Tribunal, Jaipur under Section 140 and 166 read with Rule 10(2) of the Motor Vehicle Act, 1988 against Mr. Pavan Kumar (driver of our Company), our Company and Reliance General Insurance Company for suffering from injuries and disability due to negligent and rash driving of a car owned by our Company and thereby claiming a compensation of `22.00 Lakhs (`22,00,000) towards mental harassment, financial loss, medical expenses and other expenses. The matter shall come up for hearing on March 26, 2011. Cases filed by and against our Promoters and Directors Mr. J.A. Soni Food Inspector, Food and Drugs Departments, Gandhinagar had filed a Criminal Compliant (13106/2006) before the Honble Judicial Magistrate Court, First Class at Gandhinagar, Gujarat under the provisions of the PFA Act and the 1955 Rules against our Company and Mr. Sanjay Gupta, Ms. Neelu Gupta, Mr. Arvind Gupta, Mr. Shailesh Modi, Mr. Pankaj Mudholkar and Others for misbranding and adulteration of the product "Swad Frozen Beans". Our Company has further filed a Special Criminal Application in the High Court of Gujarat to squash the matter before the Honble Judicial Magistrate Court. The High Court, Gujarat by an order dated December 27, 2006 has stayed the matter before the Judicial Magistrate. The matter is currently pending before the High Court of Gujarat. Mr. J.A. Soni Food Inspector, Food and Drugs Departments, Gandhinagar had filed a Criminal Compliant (13107/2006) before the Honble Judicial Magistrate Court, First Class at Gandhinagar, Gujarat for under the provisions of the PFA Act and the 1955 Rules against our Company and Mr. Sanjay Gupta, Ms. Neelu Gupta, Mr. Arvind Gupta, Mr. Shailesh Modi, Mr. Pankaj Mudholkar and Others for misbranding and adulteration of the product "Khoya". Our Company has filed a Special Criminal Application in the High Court of Gujarat to squash the matter before the Honble Judicial Magistrate Court. The High Court, Gujarat by an order dated December 27, 2006 has stayed the matter before the Judicial Magistrate. The matter is currently pending before the High Court of Gujarat. The Inspector Legal Metrology, Department of Weights & Measures, Bhind (MP) has served a notice dated September 15, 2009 upon our Company, Managing Director and all the directors of our Company. The aforementioned notice has been served upon them due to violation of Section 33 of the Standard Weights & Measures Act, 1976 ("Weights & Measures Act") wherein our Company had given an advertisement in Hindustan Times, New Delhi which mentioned the admeasurement of the property in "Sq.Ft." which is considered as an offence under Section 33 of the Weights & Measures Act. Our Company and its directors have been directed to file an application for compounding. Our Company and its directors are in the process of filing a compounding application. Search and Seizure Operations against our Promoters

V. 1.

2.

3.

1.

In September 2010, the Income Tax Department carried out search and seizure operations under Section 132(1) of the Income Tax Act, 1961 ("IT Act") at twenty four (24) business premises of our Company, the residential premises of our Promoters and on various group companies of our Company. During the course of the search and seizure operations, the IT Authorities have impounded certain materials & documents and seized `3.80 lakhs and 1,100 gms of gold and have recorded statements under Section 132(4)/131 of the IT Act of certain officials of our Company

343

including the Promoters, their relatives and Directors of our Company. Further, during the course of survey proceedings carried out under Section 133A of the IT Act, the IT Department has issued impounding orders under Section 133A(3)(ia) wherein certain books, loose papers, diaries, registers and other documents as well as electronic storage devices in the form of hard disc, CDs, pen drive etc. have been impounded for further investigation in the matter. The Deputy Director of Income Tax ("DDIT") has also issued summons under Section 131(1A) to our Company, our Promoter(s), their relatives, group companies of our Company and certain other company officials requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein. The DDIT has further issued notice under Section 133(6) of the IT Act against Axis Private Equity Limited calling upon them to furnish information and details in relation to our Company. Further, HTML has been issued summons under Section 131 requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein notice. HTML filed its reply dated January 4, 2011 to the summons. Our Company had filed a Special Civil Application (13498/2010]) ("SCA") before the High Court of Gujarat, Ahmedabad against the Union of India, the Director General of Income Tax (Investigation), Director (Investigation) and the Deputy Director of Income Tax for (i) quashing and setting aside the warrant of authorization issued under Section 132(1) of the IT Act and the subsequent action of "search and seizure" taken by the IT Authorities and to return the materials and documents seized by the IT Department; (ii) quashing and setting aside the notices issued under Section 133(6) of the IT Act to various banks, financial institutions and others and grant a stay on operation of these notices; (iii) restraining the IT Authorities from issuing notices under Section 153 (A)(1) to other group companies requiring them to furnish return of income for last six (6) assessment years; and (iv) restraining the IT Department to carry out any further inquiry and search pending the hearing and final disposal of this SCA. Our Company had further filed a Civil Application (15767/2010) before the High Court of Gujarat, Ahmedabad in the above SCA for disclosure of the contents of the satisfaction note which lead the Department to consider conducting a search and seizure operation of our Company. The IT Department has filed the Affidavit-in-reply to the aforementioned Civil Application filed by our Company. The High Court of Gujarat, Ahmedabad by its order dated March 4, 2011 has dismissed the Petition of our Company since the Court is of the view that (i) the condition precedent for exercise of powers under Section 132(1) has been duly satisfied prior to issuance of warrant of authorisation under Section 132(1) of the IT Act and (ii) that there were sufficient reasons for the concerned officer to call upon the required information as stated in the notices served under Section 133(6) of the IT Act. Further, the Assistant Commissioner of Income Tax, Central Circle 2(2), Ahmedabad ("ACIT") has served a Notice dated January 7, 2011 under Section 153A(1)(a) of the IT Act upon our Company and Mr. Sanjay Gupta requiring them to furnish the Return of Income for the last six (6) years i.e. A.Y.2005-2006 to A.Y.2010-2011 for the purposes of assessment/re-assessment. The ACIT has served a Notice dated January 27, 2011 under Section 153A(1)(a) of the IT Act upon Ms. Neelu Gupta requiring her to furnish the Return of Income for the last six (6) years i.e. A.Y.2005-2006 to A.Y.2010-2011 for the purposes of assessment/re-assessment. The matter is currently pending before the ACIT, Ahmedabad. VI. Cases filed by and against our Group Entities Neesa Infrastructure Limited ("NIL") Civil Case against NIL 1. Cranoist Material Handling Equipments ("CMHE") had filed a Summary suit for recovery (632/2008) before the City Civil Court, Ahmedabad against NIL for recovery of `6.48 lakhs

344

(`6,47,615) towards the supply, installation and commission of 15MT/7.5 Ton Crane by CMHE. CMHE on May 12, 2008 filed the Summons for judgement. However, by an Order dated October 17, 2008 passed by the City Civil Court, Ahmedabad, NILs application for leave-to-defend was rejected but NIL was premitted to defend the suit on depositing `0.40 lakhs (`40,000). The matter has now been posted in the long cause suits list. Further, CMHE on December 8, 2008 moved an application for an Exparte decree which on December 26, 2008 was decreed against NIL directing NIL to make the payment of `6.48 lakhs (`6,47,615) along with interest @ 10% from the date of filing the suit till the actual realisation. NIL has filed an application to set aside the above mentioned Ex-Parter Order. Labour Case against NIL 1. Mr. Lalji Gupta has filed a suit (W.C. 63/2009) before the Honble Workmens Compensation Commission under the Workmens Compensation Act, 1923 against NIL for suffering injuries and permanent disability during the course of his employment with our Company and claiming a compensation of `3.49 Lakhs (`3,49,406). The matter shall come up for hearing on March 28, 2011. Mr. Krishna Nand Rai Kumar has filed a reference case (517/2010) before the Presiding Officer of Labour Court, Ahmedabad against NIL and contracter Mr. Vinoj Sharma for re-instatement of his job and compensation. The matter shall come up for hearing on March 24, 2011. Mr. Krishna Nand Rai Kumar has filed workmen compensation case (22/2010) before the Presiding Officer of Labour Court, Ahmedabad against NIL and contracter Mr. Vinoj Sharma for reinstatement of his job and compensation. The matter shall come up for hearing on May 25, 2011. Summons issued to NIL 1. The Deputy Director of Income Tax ("DDIT") has also issued summons under Section 131(1A) to NIL in relation to the search and seizure operations carried out in September 2010 requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein. Notices issued by NIL 1. NIL has issued a notice dated December 16, 2010 against NSSL Limited ("NSSL") for recovery of `10.35 Lakhs (`10,35,159) along with interest @ 18% p.a. and damages of `5.00 Lakhs (`5,00,000) towards supply of valves castings for the manufacturing unit of NSSL at Nagpur. NSSL has replied to the aforementioned notice by its letter dated January 12, 2011. NIL has issued a notice dated December 16, 2010 against Panchvati Valves & Flanges Private Limited ("Panchavati") for recovery of `3.34 Lakhs (`3,34,581) along with interest @ 18% p.a. and damages of `0.50 Lakhs (`50,000) towards supply of castings. Panchavati has not yet replied to the aforementioned notice. Criminal Proceedings filed by NIL 1. NIL has filed a Criminal Complaint (C.C. No. 1210/2010) under Section 138 of the Negotiable Instruments Act, 1881 before the Chief Judicial Magistrate, Sanad, Ashmedabad (Rural) against PEC Valves Private Limited ("PVPL") and its Directors for dishonour of a cheque amounting to `5.00 Lakhs (`5,00,000) issued by PVPL towards supply of grades valves by NIL. The matter shall come up for hearing on March 28, 2011. NIL has filed a Criminal Complaint (C.C. No. 313/2010) under Section 138 of the Negotiable Instruments Act, 1881 before the Chief Judicial Magistrate, Sanad, Ahmedabad (Rural) against PEC Valves Private Limited ("PVPL") and its Directors for dishonour of a cheque amounting to `5.00

2.

3.

2.

2.

345

Lakhs (`5,00,000) issued by PVPL towards supply of grades valves by NIL. The matter shall come up for hearing on May 3, 2011. Winding-up proceedings 1. NIL has filed a Winding-up Petition under Section 433 and 434 of the Companies Act, 1956 before the Bombay High Court against PEC Valves Private Limited ("PEC Valves") for default in payment of `38.33 Lakhs (`38,32,751) along with interest at the rate of 15% p.a. towards supply of grades valves by NIL. The Bombay High Court has passed an order dated November 26, 2010 has ordered PEC Valves to be wound up. Neesa Agritech and Foods Limited ("NAFL") Summons issued to NAFL 1. The Deputy Director of Income Tax ("DDIT") has also issued summons under Section 131(1A) to NAFL in relation to the search and seizure operations carried out in September 2010 requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein. Neesa Energy Private Limited ("NEPL") Summons issued to NEPL 1. The Deputy Director of Income Tax ("DDIT") has also issued summons under Section 131(1A) to NEPL in relation to the search and seizure operations carried out in September 2010 requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein. Neesa Technologies Private Limited ("NTPL") Summons issued to NTPL 1. The Deputy Director of Income Tax ("DDIT") has also issued summons under Section 131(1A) to NTPL in relation to the search and seizure operations carried out in September 2010 requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein. Gujarat Syscom Technologies Private Limited ("GSTPL") Summons issued to GSTPL 1. The Deputy Director of Income Tax ("DDIT") has also issued summons under Section 131(1A) to GSTPL in relation to the search and seizure operations carried out in September 2010 requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein. Neesa Biotech Private Limited ("NBPL") Summons issued to NBPL 1. The Deputy Director of Income Tax ("DDIT") has also issued summons under Section 131(1A) to NBPL in relation to the search and seizure operations carried out in September 2010 requiring them (either personally or through their authorized representative) to be present at the office of DDIT and to furnish the required documents as specified therein.

346

VII. Cases filed by and against our Subsidiary Company 1. Our Company Our Company acquired Palm Lagoon Backwater Resorts Private Limited ("Palm Lagoon") in the year 2009 which owns a piece of land admeasuring 1 Hectare 46 Ares 62 Sq. Mtrs. (the "Land") over which our 'Cambay Palm Lagoon' resort is situated including Block No.12 of Village Perinad, Resurvey No.1 admeasuring 62.45 Ares (the "Disputed Open Land"). One Dr. V. Harikumar, had been in possession of the Land for a period of over thirty (30) years. Dr. V. Harikumar had purchased the Land including the Disputed Open Land from various parties in the year 1964 which was then conveyed in favour of Palm Lagoon by way of a Sale Deed dated January 8, 2003. The Government of Kerala ("Government") by an order dated November 19, 2009 ("Order") passed in terms of Kerala Conservancy Act, 1957, held that the Disputed Open Land is owned by and belonged to the Government and that the same has been encroached upon by Palm Lagoon. Palm Lagoon has preferred an appeal under the provisions of Section 16 of Kerala Conservancy Act, 1957 along with a stay petition before the Revenue Divisional Officer, Kollam against the Order. The Additional Tehsildar by the Order has held that the Disputed Open Land is owned by the Government and the same has been encroached upon by Palm Lagoon. The Additional Tehsildar has imposed a penalty of ` 2 Lakhs (`2,00,000) and has further ordered Palm Lagoon to hand over the possession of the Disputed Open Land to the Government failing which the Government will initiate the eviction proceedings against Palm Lagoon in respect of the Disputed Open Land. The Senior Superintendent by an order dated January 15, 2010 has granted an injunction against the enforcement of the Order. The matter is currently pending before the Revenue Divisional Officer, Kollam. VIII. SEBI proceedings Nil IX. Past cases where penalties have been imposed Nil Pending dues of Small Scale Undertakings: Our Company does not have any dues exceeding `1 Lakh outstanding for more than thirty (30) days to any small-scale industrial undertaking(s). Material Developments Except for the below, there have been no other material developments since the last balance sheet date: i) ICICI Bank loan and the pledge related developments ICICI Bank Limited ("ICICI Bank") by its letter dated December 20, 2010 sanctioned a Rupee Term Loan facility of `14,000 lakhs to our Company towards re-financing certain existing term loan facilities availed from IDFC, TFCI, SBI, CBI and UBI to the extent of `10,800 lakhs and the balance of ` 3,200 lakhs towards the capital expenditure. Pursuant to the disbursal by ICICI Bank of `14,000 lakhs and the execution of the facility agreement, the existing term loans of IDFC, TFCI, SBI, CBI and UBI have been repaid, except for `142.24 Lakhs which is yet to be repaid to IDFC. It has been agreed between the parties that ICICI Bank will hold a pari passu charge over 1,11,70,791 Equity Shares of the promoter shares with the Axis Bank Consortium. Further, ICICI Bank will also hold an exclusive charge over 25,00,000 Equity Shares held by

347

the Promoters as collateral security for the term loan facility provided by ICICI Bank. The creation of pledge of the Promoter Shares is in process and appropriate documents are under preparation for filing with the relevant authorities.

348

ii) Sanction of Term Loan by Development Credit Bank Limited Development Credit Bank Limited ("DCB") by its letter dated January 15, 2011 sanctioned Term loan to the tune of ` 900 Lakhs to our Company towards refinancing existing term loan of India Bulls Housing Finance Limited to the extent of `426 Lakhs and balance `474 lakhs as fresh disbursement to our Company. iii) Sanction of Term Loan by Axis Bank Limited Axis Bank Limited ("Axis Bank") by its letter dated March 24, 2011 sanctioned bridge loan by way of a credit facility and modification in the sanctioned terms of the existing term loan to the tune of `1,300 lakhs to our Company to meet the deficit in the assessed debt funding for the Rajasthan properties due to non-disbursement of part term loan sanctioned by Syndicate Bank. iv) Unsecured Loans SE Investments has sanctioned an unsecured loan of `700 Lakhs on March 14, 2011 and the same has been disbursed on March 16, 2011. v) Share allotment to promoters Our Company on November 14, 2010 has made an allotment of 2,03,078 Equity Shares to one of our Promoters viz. Mr. Sanjay Gupta.

349

GOVERNMENT AND OTHER APPROVALS On the basis of the indicative list of approvals provided below, our Company can undertake this Issue and its current business activities and no further major approvals from any Government or regulatory authority are required to undertake the Issue or continue these business activities. Unless otherwise stated, these approvals are valid as of the date of this Draft Red Herring Prospectus. I. Approvals for the Issue

The following approvals have been obtained or will be obtained in connection with the Issue: a. The Board of Directors has, pursuant to a resolution adopted at its meeting held May 12, 2010, authorized the Issue, subject to the approval of the shareholders of our Company under Section 81(1A) of the Companies Act, and such other authorities as may be necessary. The Shareholders of our Company have, pursuant to a resolution under Section 81(1A) of the Companies Act, adopted at a general meeting held on June 5, 2010, authorized the further issue of Equity Shares. Our Company has obtained in-principle listing approvals dated [] and [] from the BSE and the NSE, respectively. NSDL/CDSL: ISIN No.: INE724H01012. Approvals obtained by our Company Issuing Authority Nature of License / Approval Registration/ License No. Date of granting License/ Approval November 27, 1998 -Validity

b.

c.

d. II. No.

General Approvals 1. Registrar of Companies, Dadra and Nagar Haveli, Gujarat 2. Registrar of Companies, Dadra and Nagar Haveli, Gujarat

3.

Registrar of Companies, Dadra and Nagar Haveli, Gujarat

4. 5.

Income Department Income Department

Tax Tax

Certificate of Incorporation in the name of Gandhinagar Hospitality Private Limited Fresh Certificate of Incorporation pursuant to change of name from Gandhinagar Hospitality Private Limited to Neesa Leisure Private Limited Fresh Certificate of Incorporation consequent upon change of name on conversion to Public Limited from Neesa Leisure Private Limited to Neesa Leisure Limited Permanent Account Number (PAN) Tax Deduction Account Number (TAN)

04-35044 1998-99

of

04-35044 1998-99

of

January 2004

21,

--

04-35044 1998-99

of

December 15, 2005

--

AABCG7129C AHMG01924G

November 27, 1998 June 25, 2004

One Time Registration One Time Registration

350

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

6.

Sales Tax Officer, Gandhinagar

7.

Assistant Sales Tax Commissioner, Gandhinagar

8.

Sales Tax Commissioner Gandhinagar, Gujarat State Tax on Professions, Trades, Callings and Employment Act, 1976

9.

Regional Director, Ahmedabad.

10.

Deputy Manager for the Bombay Stock Exchange

Certification of Registration certifying that our Company is registered under the Gujarat Sales Tax Act, 1969 Central Sales Tax registration certifying that our Company has been registered as a dealer under section 7(1)/ 7(2) of the Central Sales Tax Act, 1956 (Gandhinagar, Gujarat) Certificate of Registration certifying that our Company has been registered as an employer under subsection (2) of Section 5 of the Gujarat State Tax on Professions, Trades, Callings and Employment Act, 1976 Registration under E.S.I. Act, 1948 Registration of Employees and Factories/Establishments under 2(12) of the ESI Act, 1948 Listing of 250 secured Reedeemable Non Convertible Debentures of `1,000,000

24060301972

Date of granting License/ Approval April 12, 2004

Validity

One Time Registration

24560301972

January 2004

22,

One Time Registration

PE0603000740

February 2005

22,

One Time Registration

37-24112/110

February 2005

22,

One Time Registration

946072

March 2009

26,

--

III. No.

Approvals obtained by our Company for our Hotels and Resorts Issuing Authority Nature of License / Approval Registration/ License No. Date of granting License/ Approval April 2010 1, Validity

Property I Cambay Spa & Resort, Gandhinagar 1. Chief Officer, License under the Notified Area, Prevention of Food and Gandhinagar Adulteration Act, 1954 (Cambay Golf to prepare food items Resort) and bakery items for selling 2. The Collector and Certificate of District Magistrate, Registration under Gandhinagar section 4A of the

563/2009

March 2011

31,

1/2009

March 30, 2009

--

351

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

(Cambay Resort)

Golf

3.

Fire Officer, Fire and Emergency Service, Gandhinagar (Cambay Golf Resort)

Gujarat Tax on Luxuries (Hotel and Lodging Houses) Act, 1977 Letter certifying that the fire systems used by our Company are in order and "No Objection Certificate" on the securitization of the fire security systems Building use Certificate for Plot No. 27

File No.30

January 19, 2010

January 18, 2011*

*Our Company has made an application dated December 27, 2010 to the Fire Officer for renewal of the said No Objection Certificate.

4.

5.

Junior Nagar Niyojak, Gandhinagar City and Development Authority (Cambay Golf Resort) Environmental Engineer for Gujarat Pollution Control Board

PRM/26/678/04/06/878/09

December 29, 2009

One Time Approval

Water (Prevention and Control of Pollution) Act 1981, the Air Prevention and Control of Pollution) 1981 and the Hazardous Waste (Management and Handling) Rules 1989 Star Classification under the Five Star Category Registration under section 4A of the Gujarat Tax on Luxuries (Hotel and Lodging Houses) Act, 1977 Building use Certificate for Plot No. 22 and 23

GNR-334-7350

March 15, 2008

June 2010*

16,

*Our Company has made an application dated July 2, 2010 before the Pollution Control Board for renewal of the said license.

6.

7.

Deputy Director General, Ministry of Tourism, Government of India Resident Deputy Collector, Gandhinagar

No.14-HRACC/06/07

February 25, 2008

February 24, 2013

19/2005

March 19, 2005

One Time Registratio n

8.

9.

10.

Junior Nagar Niyojak, Gandhinagar City and Development Authority Junior Nagar Niyojak, Gandhinagar City and Development Authority Chief Officer for the Notified Area,

PRM/GIDC/113/02/2004

November 10, 2004

One Time Approval

Building use Certificate for Plot No. 24

PRM/25/798/07/ 05/3489/07

May 2007

31,

One Time Approval

License under the Prevention of Food and

540 /2008

April 2010

1,

March 2011

31,

352

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

Gandhinagar

11.

Fire Officer, Fire and Emergency Service, Gandhinagar

Adulteration Act, 1954 to prepare food items and bakery items for selling Letter certifying that the fire systems used by our Company are in order and "No Objection Certificate" on the securitization of the fire security systems ImporterCode (IEC) Exporter

File No. 31

January 19, 2010

January 18, 2011*

*Our Company has made an application dated December 27, 2010 to the Fire Officer for renewal of the said No Objection Certificate.

12.

Foreign Trade Development Officer Shop Inspector, Notified Area, Gandhinagar

0803011768

February 5, 2004 January 1, 2009

13.

14.

Chief Inspector of Lifts and Escalators

Certificate of Registration under The Shops and Establishments Act, 1948 License to use Lift situated at Cambay Convenion centre, Gandhinagar Renewal of Ground water withdrawal permission with a condition to adopt roof top harvesting or any other suitable recharge mechanism to recharge ground water License for Full Fledged Money Changer (FFMC)

5314

One Time Registratio n December 31, 2013

G/CZ/06/367/07

August 2, 2007

August 2010*

1,

*Our Company has paid the requisite fees for renewal of the aforementioned license. However, our Company is yet to receive the renewed license.

15.

Superintending Engineer, Gujarat Ground Water Authority

GGWA/PB/280/09

January 2009

September 5, 2010*

*Our Company has made an application dated August 20, 2010 before the Superintending Engineer, Gujarat for renewal of the above permission. However, our Company is yet to receive the renewed permission.

16.

Assistant Manager, Foreign Exchange Department, Reserve Bank of India

FE.AH.AM.01/2007

Renewed on January 18, 2010

December 31, 2010*

* Our Company has made an application dated December 21, 2010 to the Reserve Bank of India for renewal of the license. However, our Company is yet to receive the renewed license.

Property II - Hotel Cambay Grand, Thaltej (Ahmedabad) 1. Police Certificate of 53/2009 Commissioner, Zone Registration for 1, Ahmedabad operating "Cambay Grand" on a commercial basis under the Mumbai Police Act, 1951 u/s 33/1 (w) 2. Police Certificate of 52/2009

October 21, 2009

December 31, 2013

October

December

353

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Commissioner, Zone 1, Ahmedabad

3.

Police Commissioner, Zone 1, Ahmedabad

4.

Sub-Divisional Magistrate, Viramgram prant, Ahmedabad

5.

Deputy Minucipal Commissioner

6.

Deputy Municipal Commissioner

Registration for operating "Winter Garden" restaurant on a commercial basis under the Mumbai Police Act, 1951 u/s 33/1 (w) Certificate of Registration for operating "Golden Cilantro" restaurant on a commercial basis under the Mumbai Police Act, 1951 u/s 33/1 (w) Certificate of Registration registering "Cambay Grand" under Section 4/A of the Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act, 1977 Certificate of Registration to register "Cambay Grand" under the Bombay Shops and Establishment Act, 1948 Certificate in respect of adequate and effective installations of fire safety measures in "Cambay Grand"

Date of granting License/ Approval 21, 2009

Validity

31, 2013

51/2009

October 21, 2009

December 31, 2013

SDM/GLT/SR.6/2009

December 3, 2009

One Time Registratio n

PII/THL/05/0000060

August 31, 2009

Till the year 2014

--

November 22, 2010

7.

8.

9.

Chief Inspector of Lifts and Escalators, H.O. & Central Zone, Gujarat State, Gandhinagar Deputy Municipal Commissioner, New West Zone Member Secretary, State Level Environment Impact Assessment

License to use a lift

G/CZ/07/08126/09

August 3, 2009

Valid until cancelled due to noncompliance of certain terms and conditions as enumerated in the certificate. August 2, 2012

B.U. Permission high rise buildings

for

BHNTI/NWZ/110906/P/A 2458/R2/M1 SEIAA/GUJ/EC/8(a)/103/ 2008

November 7, 2009 September 25, 2008

One Time Approval September 24, 2013

Environmental clearance for development of Cambay Grand hotel

354

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

Authority, Gujarat

10.

Senior (ATC)

Manager

11.

Superintending Engineer, GWMIC, Gandhinagar

and shopping mall complex in Category 8(a) of Schedule annexed with EIA Notification dated September 14, 2006 No Objection Certificate for height clearance whereby the structure when erected shall not exceed 44.375 Mtrs (site elevation) and 48.48 Mtrs (height of the structure) above mean sea level Ground water withdrawal permission as an interim arrangement till Ahmedabad Municipal Corporation provides water supply or re-cycle water is available

AAI/20012/183/2008ARI(NOC)

August 14, 2008

August 13, 2013

F.P.No.8,Thaltej/557/08

March 3, 2008.

12.

Assistant Director

13.

Assistant Manager, Foreign Exchange Department, Reserve Bank of India Senior Environmental Engineer, Gujarat Pollution Control Board

Approval for setting up hotel at Ahmedabad under 5 Star Category from the point of its suitability to domestic and international tourists License for Full Fledged Money Changer (FFMC)

5-TH-I(34)/06

November 1, 2006

Till Ahmedabad Municipal Corporation (AMC) provides water supply or re-cycle water is available. Five (5) years

FE.AH.AM.01/2007

Renewed on January 18, 2010 June 2010 2,

December 31, 2010*

* Our Company has made an application dated December 21, 2010 to the Reserve Bank of India for renewal of the license. However, our Company is yet to receive the renewed license.

14.

Consolidated Consent and Authorisation under Section 25 of the Water (Prevention and Control of Pollution) Act, 1974, Section 21 of the Air (Prevention and Control of Pollution) Act, 1981 and Authorisation under Rule 5(4) of the Hazardous Waste (Management Handling

AWH-37667

January 26, 2015

355

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

and T.M.) Rules, 2008 framed under Environmental Protection Act, 1986 Property III - Hotel Cambay Sapphire, Vejalpur (Ahemdabad) 1. Chief Fire Officer No Objection -Certificate for certifying that our Company has provided the required Fire Protection for hotel Cambay Sapphire 2. Deputy Minicipal Certificate to certify 070720-0603-002 Commissioner that the property at Vejalpur has been registered as a commercial establishment under the Bombay Shops and Establishments Act, 1948 3. Senior Nagar Building use Certificate PRM/66/6/06/14282 Niyojak, Gandhinagar City and Development Authority 4. Chief Inspector of License to use Lift with G/CZ/07/06344/07 Lifts and Escalators, a rated load of 544 Kgs H.O. & Central Zone, Gujarat State, Gandhinagar 5. Superintending Engineer, Gujarat Ground Water Authority Ground water withdrawal permission as an interim arrangement till Ahmedabad Municipal Corporation provides water supply or re-cycle water is available 136/558/08

December 9, 2009

December 31, 2011

July 2007

20,

Renewed till the year 2015

September 6, 2007

One Time Approval

August 2, 2007

August 2010*

1,

*Our Company has paid the requisite fees for renewal of the aforementioned license. However, our Company is yet to receive the renewed license.

March 3, 2008.

6.

Deputy Police Commissioner, Ahmedabad

7.

Deputy

Police

License to operate "Cambay Sapphire" under the provisions of Bombay Police Act, 1951 with the purview of sections 33(1) (w) License to operate

23/Vejalpur

September 20, 2007

Till Ahmedabad Municipal Corporation (AMC) provides water supply or re-cycle water is available. December 31, 2014

24/2007/Vejalpur

September

December

356

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Commissioner, Ahmedabad

8.

Environmental Engineer for Gujarat Pollution Control Board

9.

10.

The Regional Director of the Western and the Central Regions for the Government of India, Department of Tourism Deputy Municipal Commissioner

"Indus restaurant" under the provisions of Bombay Police Act, 1951 Consent Order under section 25 of the Water (Prevention and Control of Pollution) Act 1981, the Air (Prevention and Control of Pollution) 1981 and the Hazardous Waste (Management and Handling) Rules 1989 as amended Certificate for the classification under the Three star category

Date of granting License/ Approval 20, 2007

Validity

31, 2014

Consent order no-10445

April 2008

9,

October 4, 2012

Trav.1(HRACC) (APP)/2008

March 17, 2008

March 2013

16,

11.

Deputy Health Officer under the Health Department, License Branch

12.

City Deputy Collector, Ahmedabad

13.

14.

Deputy Health Officer for the Ahmedabad Municipal Corporation The Deputy Health Officer

Certificate of Registration under the Shops and Establishments Act, 1948 License for keeping of lodging, except that already licensed as Eating House under section 376(1)(a) of the B.P.M.C. Act 1949 Certificate of Registration under section 4A of the Gujarat Tax on Luxuries (Hotel and Lodging Houses) Act, 1977 Health Certificate under the provisions of the Food and Adulteration Act 1954 for operating the restaurant "Indus". Health Certificate under the provisions of the Bombay Provincial Municipal Corporation Act u/s 376(1) for operating the restaurant "Indus"

PII/VEJ/06/0000007

February 3, 2011

December 31, 2015

814/07-08

October 16, 2007

March 2011

31,

191 /2007

September 29, 2007

One Time Registratio n

8/3/07-08

October 16, 2007

March 2011

31,

8/3/07-08

October 16, 2007

March 2011

31,

357

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

15.

Deputy Health Commissioner, Ahmedabad Municipal Corporation The Deputy Health Officer

16.

17.

Ahmedabad Municipal Corporations Assistant Manager, Foreign Exchange Department, Reserve Bank of India Foreign Trade Development Officer

18.

Health Certificate under the provisions of the Bombay Municipal Corporation Act u/s 376(1) for operating the restaurant "The Curry". Health Certificate under the provisions of the Food and Adulteration Act, 1954, for operating the restaurant "The Curry" Certificate of Registration as Employer under the Professional Tax License for Full Fledged Money Changer (FFMC)

8/8/07-08

Date of granting License/ Approval April 1, 2010

Validity

March 2011

31,

7/8/07-08

February 14, 2008

March 2011

31,

PECO16290872

--

One Time Registratio n December 31, 2010*

FE.AH.AM.01/2007

Renewed on January 18, 2010 February 5, 2004

* Our Company has made an application dated December 21, 2010 to the Reserve Bank of India for renewal of the license. However, our Company is yet to receive the renewed license.

19.

ImporterCode (IEC)

Exporter

0803011768

One Time Registratio n December 16, 2012

Property IV - Cambay SPA and Resorts, Kukas (Jaipur) 1. Assistant Director, Approval for setting up 5-TH-I(B3)/07 Ministry of Tourism, of 5-Star category hotel Government of project, at Kukas India, New Delhi 2. Regional manager, Sanction U(12)-7/2007-2008/2501 Rajasthan State letter/Approval of the Industrial building drawings and Development and nutrition Institute and to Investments undertake the Corporation Limited construction work in accordance to the norms prescribed as per RIICO Land Disposal Rules. 1979 3. The Assistant Certificate of TIN: 08622208853 Commercial Tax Registration, under the Officer, Jaipur Rajasthan VAT Act, 2003 (Rule 14(1)(a) and 15(2)) 4. Commercial Taxes Central Sales Tax 08622208853 (Central) Officer, Jaipur registration certifying that our Company has been registered as a dealer under section 7(1)/ 7(2) of the Central

December 17, 2007

August 27, 2007

One Time Approval

December 1, 2007

One Time Registratio n

December 24, 2007

One Time Registratio n

358

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

5.

Luxury Tax Officer, Jaipur

6.

Environment Engineer, The Rajasthan State Pollution Control Board

7.

8.

Excise Commissioner, Rajasthan, Udaipur Foreign Trade Development Officer Assistant Manager, Foreign Exchange Department, Reserve Bank of India

Sales Tax Act, 1956 (Jaipur, Kukas) Certificate of Registration as the Hotelier under section 12 of the Rajasthan Tax on Luxuries (In Hotels and Lodging Houses) Act, 1990 Consent letter to operate under section 25/26 of the Water (Prevention and Control of Pollution) Act, 1974 and under section 21(4) of the Air (Prevention and Control of Pollution) Act, 1981. License for the retail on sale of foreign liquor ImporterCode (IEC) Exporter

RLTH No. 1423/0026

September 1, 2008

One Time Registratio n

2010/2011/HDF/350

May 2010

13,

July 2012

31,

166/2008-2009

November 17, 2008 February 5, 2004 Renewed on January 18, 2010

March 2011

31,

0803011768

9.

License for Full Fledged Money Changer (FFMC)

FE.AH.AM.01/2007

One Time Registratio n December 31, 2010*

* Our Company has made an application dated December 21, 2010 to the Reserve Bank of India for renewal of the license. However, our Company is yet to receive the renewed license.

Property V - Cambay Golf Resort, Jamdoli 1. The Excise License for the retail 168/2009-2010 May 11, March 31, Commissioner, sale of foreign liquor in 2009 2011 Rajasthan, Udaipur the hotel premises 2. The Jaipur Approval Plan for the S.S/BPC/2008/D-773 June 3, April 2011 Development construction 2008 Authority. Jaipur 3. Assistant Director, Approval for setting up 5-TH-I(88)/08 September September Ministry of Tourism, of 5-Star category hotel 23, 2008 22, 2013 Government of project, at Jamdoli India, New Delhi Property VI- Cambay SPA and Resort, Kaladvas (Udaipur) 1. Senior Environment Consent to establish F.12(30November November Engineer, under Air (Prevention 597)RPCB/Gr.II/3450 28, 2008 27, 2011 The Rajasthan State and Control of Pollution Control Pollution) Act, 1981 Board and Water (Prevention and Control of Pollution) Act, 1974 2. Our Company has made an application dated February 2, 2011 before the Member Secretary, Rajasthan State Pollution Control Board to obtain consent to operate the said property under the Water Act, 1974

359

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

License for the retail UDR/2010April 1, March 31, sale of foreign liquor in 2011/RON/33260513011 2010 2011 the hotel premises 4. The Senior Deputy Letter for approval of 630 June 5, -General Manager, building plans for 2008 institutional building at RIICO Plot No. F-439 to F442, Industrial Area, Bhamashah, Kaladwas, Udaipur 5. The Fire Station No Objection Fire/09-10/79 October 6, October 8, Nagar Parishad, Certificate issued on the 2009 2011 Udaipur scrutiny of the fire security systems 6. Regional Director, Approval of ninety (90) Trav.3(15)/0-HP September September Government of rooms at Plot No. F-439 17, 2009 16, 2014 India, Ministry of to F-442, Industrial Tourism Area, Bhamashah, Kaladwas, Udaipur planned under 3 Star category 7. Senior Deputy Letter stating that 2075 October 8, One Time General Manger RIICO will meet the 2008 Approval water requirement and supply sufficient water quantity as per demand and availability for development of hospitality institution Property VII- Cambay Sapphire (Neemrana) 1. Medical and Health License to operate the 25/N/M/10 November December Department hotel and manufacture 2, 2010 31, 2011 and sale of food 2. Our Company has made an application dated July 12, 2010 to the Rajasthan State Pollution Control Board for obtaining "Consent to Establish" under Air Act, 1981 and Water Act, 1974 for its property at Neemrana. 3. Our Company had made an application dated before the Assistant Fire Officer for obtaining a No Objection Certificate issued on the scrutiny of the fire security systems. However, the Assistant Firebrigade officer by its letter dated October 28, 2010 has intimated that the above mentioned NoC shall be issued only once the property at Neemrana is fully operational. Property VIII- Cambay Beach Resort (Goa) Our property situated at Goa is a leased property and hence all the approvals and licenses for the operations are issued in the name of the owner of the property. Property IX - CRN-Cambay Sapphire (Bangalore) Our property at Bangalore is being operated under a management contract. Hence, all the approvals and licenses for the operations are issued in the name of the owner of the property. II. Approvals for the property owned by our Subsidiary Company

3.

and Air Act, 1981. District Excise Officer, Udaipur

360

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval May 2002 15, --

Validity

Property X Cambay Palm Lagoon, Kollam, Kerala 1. Assistant Certificate of U55101KL2002PTC015416 Registrar of Incorporation under (CIN) Companies, the Companies Act. Kerala 1956 (No.1 of 1956) 2. The District No Objection C2/17794/10/DMOHK Medical Officer, Certificate for Kollam commencement of the business 3. The Consent to establish PCB/KO/CTO/G/309/09 Environmental under section 25 of Engineer, The the Water Kerala State (Prevention and Pollution Control Control of Board Pollution) Act, 1974 and Rules of the Environment (Protection) Act, 1986 4. The Assistant Certificate of VII-16 Labour Office, Registration within Kundra the purview of Section 34 of the Kerala Shops and Establishment Act, 1960. 5. Canal Officer, Annual License for 829/KGN/09-10 Kallupalam, vessels other than Kollam Rafts to permit the vessels (Room No.116 & 117) to navigate the canal in accordance with the Notification issued under Act VI of 1096 6. Canal Officer, Annual License for 830/KQN/09-10 Kallupalam, vessels other than Kollam Rafts to permit the vessels (Room No.118 and 119) to navigate the canal in accordance with the Notification issued under Act VI of 1096 7. Canal Officer, Annual License for 831/KQN/09-10 Kallupalam, vessels other than Kollam Rafts to permit the vessels (Room

December 13, 2010

--

July 2009

6,

May 2012

31,

December 4, 2008

December 31, 2011

March 24, 2010

March 2011

31,

March 24, 2010

March 2011

31,

March 24, 2010

March 2011

31,

361

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

8.

Secreatary, Parinad, Grampanchayat

9.

Secreatary (Special Grade), Parinad, Grampanchayat

10.

Commercial Tax Officer, Works Contract & Luxury Tax, Civil Station, Kollam

11.

Commercial Tax Officer, Works Contract & Luxury Tax, Civil Station, Kollam

12.

Assistant Divisional Officer, Fire and Rescue Services, Kollam

13.

Secretary (Special Grade) Perinad Gram Panchayat

No.120 & 121) to navigate the canal in accordance with the Notification issued under Act VI of 1096 License under section 233, 234, 254 of The Kerala Panchayat Raj Act, 1994 for the preparation and storage of food and beverages issued by the Secreatary, Parinad, Grampanchayat. License under section 232, 233, 234, 254 of The Kerala Panchayat Raj Act, 1994 for operating the resort Certificate certifying that that Cambay Palm Lagoon, Vellimon West, Kollam is registered under Section 4B of the Kerala Tax on Luxuries Act, 1976 Certificate certifying that Cambay Palm Lagoon is registered under Section 4C of the Kerala Tax on Luxuries Act, 1976 No Objection Certificate for functioning of the hotel and certifying the adequacy of the fire fighting equipments Ownership Certificate certifying that our Subsidiary is the

P3 35/09-10

April 2009

6,

March 2011

31,

P3 43/09-10

April 2009

6,

March 2011

31,

L.T.185/08-09

January 19, 2009

One Time Approval

LT/HB/193/08-09

March 13, 2009

One Time Approval

C-5782/2008

November 5, 2008

--

P3.10/99

March 11, 2005

--

362

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

14.

Secretary (Special Grade) Perinad Gram Panchayat

15.

Secretary (Special Grade) Perinad Gram Panchayat

16.

Secretary (Special Grade) Perinad Gram Panchayat

owner of the building No. PPVI/1A according to the Assessment Register of the Perinad Gram Panchayat. This Certificate has been issued for the purpose of obtaining Electrification. Ownership Certificate certifying that our Subsidiary is the owner of the building No. PPVI/2 according to the Assessment Register of the Perinad Gram Panchayat. This Certificate has been issued for the purpose of obtaining Electrification. Ownership Certificate certifying that our Subsidiary is the owner of the building No. PPVI/2A according to the Assessment Register of the Perinad Gram Panchayat. This Certificate has been issued for the purpose of obtaining Electrification. Ownership Certificate certifying that our Subsidiary is the owner of the building No. PPVI/2B according

P3.10/99

May 2003

2,

--

P3.10/99

May 2003

2,

--

P3.10/99

May 2003

2,

--

363

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

17.

Secretary (Special Grade) Perinad Gram Panchayat

18.

Secretary (Special Grade) Perinad Gram Panchayat

19.

Secretary (Special Grade) Perinad Gram Panchayat

to the Assessment Register of the Perinad Gram Panchayat. This Certificate has been issued for the purpose of obtaining Electrification. Ownership Certificate certifying that our Subsidiary is the owner of the building No. PPVI/2C according to the Assessment Register of the Perinad Gram Panchayat. This Certificate has been issued for the purpose of obtaining Electrification. Ownership Certificate certifying that our Subsidiary is the owner of the building No. PPVI/2D according to the Assessment Register of the Perinad Gram Panchayat. This Certificate has been issued for the purpose of obtaining Electrification. Ownership Certificate certifying that our Subsidiary is the owner of the building No. PPVI/2E according to the Assessment Register of the Perinad Gram

P3.10/99

February 21, 2003

--

P3.10/99

February 21, 2005

--

P3.10/99

February 21, 2005

--

364

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

20.

Secretary (Special Grade) Perinad Gram Panchayat

21.

Secretary (Special Grade) Perinad Gram Panchayat

22.

Secretary (Special Grade) Perinad Gram Panchayat

Panchayat. This Certificate has been issued for the purpose of obtaining Electrification. Ownership Certificate certifying that our Subsidiary is the owner of the building No. PPVI/2F according to the Assessment Register of the Perinad Gram Panchayat. This Certificate has been issued for the purpose of obtaining Electrification. Ownership Certificate certifying that our Subsidiary is the owner of the building No. PPVI/2G according to the Assessment Register of the Perinad Gram Panchayat. This Certificate has been issued for the purpose of obtaining Electrification. Ownership Certificate certifying that our Subsidiary is the owner of the building No. PPVI/3A according to the Assessment Register of the Perinad Gram Panchayat. This Certificate has been issued for the

P3.10/99

February 21, 2005

--

P3.10/99

February 21, 2005

--

P3.10/99

March 11, 2005

--

365

No.

Issuing Authority

Nature of License / Approval

Registration/ License No.

Date of granting License/ Approval

Validity

23.

District Kollam

Officer,

24.

Assistant Manager, Foreign Exchange Department, Reserve Bank of India

purpose of obtaining Electrification. Letter permitting Palm Lagoon to construct tube well of depth 120 mtrs with 6" diameter License for Full Fledged Money Changer (FFMC)

GKT-835/08

July 2008

16,

--

FE.AH.AM.01/2007

Renewed on January 18, 2010

December 31, 2010*

* Our Company has made an application dated December 21, 2010 to the Reserve Bank of India for renewal of the license. However, our Company is yet to receive the renewed license.

III.

Approvals to be obtained for our proposed properties at Lucknow, Raipur and Nasik, wherever applicable: No. Licenses to be obtained for the proposed expansion Licenses to be obtained for construction 1. Construction/building plan approval by Local Bodies 2. NOC from Police Department 3. NOC from Fire Department 4. Electrical installation, transformer, DG Set etc 5. Drainage permission 6. Lift execution & use permission 7. Building Use permission 8. Star Category- Project Level 9. Water connection, if any 10. Consent to Establish the property from Pollution Control Board 11. Contract Labour License Licenses to be obtained for operation of new properties 12. Approval of Maps from local bodies / Building Use permission 13. Certificate From Municipal Health Officer / Sanitary Inspector - Hotel & Restaurants 14. NOC from fire sevice agency 15. License under prevention of edibles adulteration act 16. License under the Shops & Establishment 17. License from Food and Drugs department 18. Bar License, if any 19. Money Exchanger, if any 20. Importer Exporter Code. 21. VAT Registration 22. Service Tax Registration 23. NOC from Gujarat Pollution Control Board (consent to operate) 24. Luxury Tax 25. Sales Tax 26. Star Category- certification - operation level 27. Nomination under Food & Drug

366

No. 28. 29. 30. 31. 32.

Licenses to be obtained for the proposed expansion NOC from Pollution Control Board, if construction exceeds 20000 sqr mtr PAN & TAN from Income tax Provident Fund Professional Tax- Employee & Employer ESIC Registration

367

OTHER REGULATORY AND STATUTORY DISCLOSURES Authority for the Issue The Board of Directors has, pursuant to a resolution passed at its meeting held on May 12, 2010, authorized the Issue subject to the approval by the shareholders of our Company under Section 81(1A) of the Companies Act, and such other authorities as may be necessary. Our shareholders have authorised this Issue by a special resolution adopted under to Section 81(1A) of the Companies Act, passed at the Extra Ordinary General Meeting held on June 5, 2010. We have received in-principle approvals from the BSE and NSE for the listing of our Equity Shares pursuant to letters dated [] and [] respectively. From the Selling Shareholders Axis Infrastructure Fund I: The Selling Shareholder I by an authority letter dated June 4, 2010 has intimated its desire to participate by an Offer for Sale of [] Equity Shares aggregating upto `5,000 Lakhs in the proposed Initial Public Offer of our Company. HT Media Limited: The Selling Shareholder II has exercised its right to participate by way of an Offer for Sale of 1,03,746 Equity Shares aggregating to ` [] Lakhs in the proposed Initial Public Offer of our Company. The Selling Shareholders assume no responsibility for any of the statements made by our Company in this Draft Red Herring Prospectus relating to our Company, its business and related disclosures, except for statements with relation to them as Selling Shareholders. Prohibition by SEBI, RBI or governmental authorities Our Company, our Subsidiaries, Promoters, Promoter Group, Directors, Group Entities have not been prohibited from accessing the capital market for any reason or restrained from buying, selling or dealing in securities, under any order or directions by the SEBI or any other authorities and there are no violations of securities laws committed by any of them in the past or pending against them, nor have any companies with which any of our Company, our Promoter, Directors, persons in control of our Company or any natural person behind the Promoters are or were associated as a promoter, director or person in control, been debarred or prohibited from accessing the capital markets under any order or direction passed by the SEBI or any other authority. None of our Directors are associated with the securities market and there has been no action taken by the SEBI against the Directors or any other entity with which our Directors are associated as promoters or directors. None of our Company, Promoters, the Selling Shareholders, Directors, Group Entities, relatives (as per Companies Act, 1956) of Promoters have been identified as a willful defaulter by the RBI or other governmental authority and there has been no violation of any securities law committed by any of them in the past and no such proceedings are pending against any of them. The Selling Shareholders confirm that they have not been debarred or prohibited from accessing the capital markets under any order or direction passed by SEBI or any other authority and the Equity Shares being offered by them in the Offer for Sale have been held by them for a period of at least one (1) year prior to the filing of the Draft Red Herring Prospectus with SEBI and are free and clear of any encumbrances or liens.

368

Eligibility for the Issue Our Company is eligible for the Issue in accordance with Regulation 26(1) of the SEBI (ICDR) Regulations, as explained under the eligibility criteria calculated in accordance with financial statements under Indian GAAP. In terms of a certificate issued by ISK & Associates, Chartered Accountants, Ahmedabad, our Statutory Auditor, dated March 29, 2011 our Company satisfies the eligibility criteria in accordance with Regulation 26(1) of the SEBI (ICDR) Regulations as given below: 1. Our Company has net tangible assets of at least `300 lakhs in each of the preceding three full years (of 12 months each) of which not more than 50% are held in monetary assets; Our Company has a track record of distributable profits in terms of Section 205 of Companies Act, 1956, for at least three out of immediately preceding five (5) years; Our Company has a net worth of at least `100 lakhs in each of the preceding three (3) full years (of 12 months each); Our Company has pre-issue net worth of `16,736.98 lakhs as of March 31, 2010 and hence, the proposed Issue in the financial year 2010-11 should not exceed `83,684.92 lakhs i.e five times of the pre-Issue net worth of the Company; and Our Company has not changed its name within the last one (1) year.

2.

3.

4.

5.

The distributable profit, net worth, net tangible assets and monetary assets, of the Company for the last five (5) years as per our Companys standalone audited balance sheet are as under: (` in Lakhs) F.Y. F.Y. 2007 2006 157.81 73.38

Particulars Distributable Profits(1) for year ended 31 March Dividends Net Worth(2) Net Tangible assets(3) Monetary assets(4) Monetary assets as a percentage of the net tangible assets Notes: (1) (2) (3) (4)

F.Y. 2010 1,121.90 0.74 16,736.98 66,661.38 1,076.29 1.61%

F.Y. 2009 668.04

F.Y. 2008 448.08

10,101.98 49,479.68 1,524.11 3.08%

7,864.55 29,958.59 2,725.58 9.10%

2,651.70 12,908.99 259.98 2.01%

627.83 2,532.64 257.32 10.16%

Distributable profits have been defined in terms of Section 205 of the Companies Act. 'Net worth' has been defined as the aggregate of equity share capital and reserves, excluding preference share redemption reserve and miscellaneous expenditures, if any. 'Net tangible assets' means the sum of all net assets of the Company excluding intangible assets as defined in Accounting Standard 26 issued by Institute of Chartered Accountants of India. Monetary assets comprise of cash and bank balances (including fixed deposits with banks) and other liquid investments.

Further, in accordance with Regulation 26(4) of the SEBI (ICDR) Regulations, number of prospective Allottees will be not less than 1,000, otherwise the entire application money will be returned forthwith. In case of delay, if any, in refund, our Company and Selling Shareholders shall pay interest, in proportion to the Equity Shares offered under the Issue, on the application money at the rate of 15% per annum for the

369

period of delay, in proportion to the Equity Shares offered under the Issue, as per Section 73 of the Companies Act. The Issue is being made through the Book Building Process with Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957, as amended ("SCRR") read with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. This Issue is being made through the Book Building Process wherein upto 50% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (the "QIB Portion") provided that our Company and the Selling Shareholders in consultation with the BRLMs may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the "Anchor Investor Portion"). For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. Further 5% of QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to domestic Mutual Funds and the remaining QIB portion shall be available for allocation on proportionate basis to all QIBs, including domestic Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, upto 2,00,000 Equity Shares shall be made available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received at or above the Issue Price. Compliance with Part A of Schedule VIII of the SEBI (ICDR) Regulations Our Company is in compliance with the provisions specified in Part A of the SEBI (ICDR) Regulations. No exemption from eligibility norms has been sought under Regulation 109 of the SEBI (ICDR) Regulations, with respect to the Issue. Further, our Company has not been formed by the conversion of a partnership firm into a company. Disclaimer Clause AS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED HERRING PROSPECTUS TO SECURITIES AND EXCHANGE BOARD OF INDIA (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 DRAFT RED HERRING PROSPECTUS. THE BOOK RUNNING LEAD MANAGERS, CENTRUM CAPITAL LIMITED AND AXIS BANK LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 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 OUR COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT RED HERRING PROSPECTUS, THE BOOK RUNNING LEAD MANAGERS ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT OUR COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE BOOK RUNNING LEAD MANAGERS, CENTRUM CAPITAL LIMITED AND AXIS BANK LIMITED HAS FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED MARCH 30, 2011 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS AS FOLLOWS:

370

(I)

WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS, ETC. AND OTHER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF DOCUMENTS AND OTHER PAPERS FURNISHED BY THE COMPANY, THE AND THE THE

(II)

WE CONFIRM THAT: (A) THE DRAFT RED HERRING PROSPECTUS FILED WITH SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE, AS ALSO THE REGULATIONS, GUIDELINES, INSTRUCTIONS, ETC. FRAMED / ISSUED BY SEBI, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS. WE CONFIRM THAT BESIDE OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID. WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS. NOTED FOR COMPLIANCE WE CERTIFY THAT WRITTEN CONSENT FROM THE PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR EQUITY SHARES AS PART OF THE PROMOTERS CONTRIBUTION SUBJECT TO LOCK-IN AND THE EQUITY SHARES PROPOSED TO FORM PART OF THE PROMOTERS CONTRIBUTION SUBJECT TO LOCK-IN WILL NOT BE DISPOSED OR SOLD OR TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH SEBI UNTIL THE DATE OF COMMENCEMENT OF THE LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS. WE CERTIFY THAT REGULATION 33 OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS' CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT RED HERRING PROSPECTUS. NOTED FOR COMPLIANCE

(B)

(C)

(D)

(E)

(F)

(G)

371

(H)

WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE COMPANY ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE NOT APPLICABLE WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE MAIN OBJECTS LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SECTION 73(3) OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE PROSPECTUS. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION NOTED FOR COMPLIANCE. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT RED HERRING PROSPECTUS THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE. NOT APPLICABLE AS THE ISSUE SIZE IS MORE THAN ` 100 MILLION, HENCE UNDER SECTION 68B OF THE COMPANIES ACT, THE ALLOTMENT WILL BE MADE ONLY IN DEMAT FORM. WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT RED HERRING PROSPECTUS: (a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE SHARES OF OUR COMPANY; AND AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.

(I)

(J)

(K)

(L)

(M)

(b)

372

(N)

WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BACKGROUND OF THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE, ETC. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT RED HERRING PROSPECTUS WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY."

(O)

(P)

THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE OUR COMPANY, THE SELLING SHAREHOLDERS 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 ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE BOOK RUNNING LEAD MANAGERS ANY IRREGULARITIES OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS. AXIS BANK LIMITED HAS SIGNED THE DUE DILIGENCE CERTIFICATE PRIOR TO FILING OF THE DRAFT RED HERRING PROSPECTUS WITH SEBI AND ACCORDINGLY HAS BEEN DISCLOSED AS A BRLM. FURTHER, IN COMPLIANCE WITH THE PROVISO TO REGULATION 21A(1) AND EXPLANATION (I) TO REGULATION 21A(1) OF SEBI (MERCHANT BANKERS) REGULATIONS, 1992, READ WITH REGULATION 110 AND SCHEDULE XX OF THE SEBI ICDR REGULATIONS, AXIS BANK LIMITED WOULD BE INVOLVED ONLY IN THE MARKETING OF THE ISSUE. All legal requirements pertaining to the Issue will be complied with at the time of filing of the Red Herring Prospectus with the ROC in terms of Section 60B of the Companies Act. All legal requirements pertaining to the Issue will be complied with at the time of registration of the Prospectus with the ROC in terms of Section 56, Section 60 and Section 60B of the Companies Act. Disclaimer from our Company, the Selling Shareholders, Directors and the BRLMs Our Company, the Selling Shareholders, our Directors and the BRLMs accept no responsibility for statements made otherwise than in this Draft Red Herring Prospectus or in the advertisement or any other material issued by or at our Companys instance and that anyone placing reliance on any other source of information, including our Companys website www.neesaleisure.com would be doing so at his or her own risk. The Selling Shareholders, its directors, affiliates, associates and their respective directors and officers accept no responsibility for any statements made other than those made in relation to the Equity Shares offered through the Offer for Sale. Caution The BRLMs accept no responsibility, save to the limited extent as provided in the Issue Agreement entered into among the BRLMs, our Company and the Selling Shareholders on March 30, 2011, and the

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Underwriting Agreement to be entered into between the Underwriters, the Selling Shareholders and our Company. All information shall be made available by our Company, the Selling Shareholders and the BRLMs to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road show presentations, in research or sales reports, at bidding centres or elsewhere. Neither our Company, the Selling Shareholders, BRLMs nor any Syndicate Member is liable to the Bidders for any failure in downloading the Bids due to faults in any software/hardware system or otherwise. The BRLMs and their respective associates and affiliates may engage in transactions with, and perform services for, our Company, our Promoter Group, Group Entities, or our affiliates or associates in the ordinary course of business and have engaged, or may in future engage, in commercial banking and investment banking transactions with our Company, our Promoter Group, Group Entities, and our affiliates or associates, for which they have received and may in future receive compensation. The Bidders that Bid in the Issue will be required to confirm and will be deemed to have represented to our Company, the Selling Shareholders, the Underwriters and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares and will not offer, sell, pledge or transfer the Equity Shares of our Company to any person who is not eligible under applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares. Our Company, the Selling Shareholders, the Underwriters and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to acquire the Equity Shares in the Issue. Disclaimer in Respect of Jurisdiction This Issue is being made in India to persons resident in India (including Indian nationals resident in India who are majors, HUFs, companies, corporate bodies and societies registered under applicable laws in India and authorized to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regional rural banks, cooperative banks (subject to RBI permission), or trusts under applicable trust law and who are authorized under their constitution to hold and invest in shares, public financial institutions as specified in Section 4A of the Companies Act, VCFs, state industrial development corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds (subject to applicable law) with a minimum corpus of `2,500 lakhs and pension funds with a minimum corpus of `2,500 lakhs, and permitted non-residents including FIIs, Eligible NRIs, multilateral and bilateral development financial institutions, FVCIs and eligible foreign investors, insurance funds set up and managed by army, navy or air force of the Union of India and insurance funds set up and managed by the Department of Posts, India provided that they are eligible under all applicable laws and regulations to hold Equity Shares of our Company. This Draft Red Herring Prospectus does not, however, constitute an offer to sell or an invitation to subscribe for Equity Shares offered hereby in any jurisdiction other than India to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Draft Red Herring Prospectus comes is required to inform himself or herself about, and to observe, any such restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of the competent court(s) in Mumbai, India. 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 Draft Red Herring Prospectus has been filed with the SEBI for its observations. Accordingly, the Equity Shares represented hereby may not be offered or sold, directly or indirectly, and this Draft Red Herring Prospectus may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Draft Red Herring Prospectus nor any sale hereunder shall, under any circumstances, create any implication that

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there has been no change in the affairs of our Company from the date hereof or that the information contained herein is correct as of any time subsequent to this date. The Equity Shares have not been, and will not be, registered under the U.S. Securities Act 1933, as amended (the "Securities Act") or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares will be offered and sold only outside the United States in compliance with Regulation S of the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. The Equity Shares have not been, and will not be, registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. Further, each Bidder where required agrees that such Bidder will not sell or transfer any Equity Shares or create any economic interest therein, including any off-shore derivative instruments, such as participatory notes, issued against the Equity Shares or any similar security, other than pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with applicable laws and legislations in each jurisdiction, including India. Disclaimer clause of the BSE As required, a copy of this Draft Red Herring Prospectus shall be submitted to the BSE. The disclaimer clause as intimated by the BSE to us, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to filing the same with the RoC. Disclaimer clause of the NSE As required, a copy of this Draft Red Herring Prospectus shall be submitted to the NSE. The disclaimer clause as intimated by the NSE to us, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to filing the same with the RoC. Disclaimer of IPO Grading Agency [] Filing A copy of this Draft Red Herring Prospectus has been filed with the SEBI at the Securities and Exchange Board of India, SEBI Bhavan, G Block, 3rd Floor, Bandra Kurla Complex, Bandra (E), Mumbai 400 051, India. A copy of the Red Herring Prospectus, along with the other documents required to be filed under Section 60B of the Companies Act, will be delivered for registration to the RoC and a copy of the Prospectus to be filed under Section 60 of the Companies Act filed with the Corporation Finance Department of SEBI and will be delivered for registration to the RoC, Gujarat, Dadra & Nagar Haveli, located at ROC Bhavan, Opp. Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad 380 013, India. Listing Applications will be made to the BSE and the NSE for permission for listing of the Equity Shares being offered and sold in the Issue. The [] will be the Designated Stock Exchange with which the basis of Allotment will be finalized.

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If the permissions to deal in, and for an official quotation of, the Equity Shares are not granted by any of the Stock Exchanges mentioned above, our Company shall forthwith repay, without interest, all monies received from applicants in reliance on the Red Herring Prospectus. If such money is not repaid within eight (8) Working Days from the date on which our Company has become liable to repay it then our Company, the Selling Shareholders and every Director of our Company who is an officer in default shall, on and from the expiry of such eight day period, be liable to repay such monies, together with interest at the rate of 15% per annum on the application monies, in proportion to the Equity Shares offered under the Issue, as prescribed under Section 73 of the Companies Act. Our Company shall ensure that all steps for the completion of the necessary formalities for listing and commencement of trading at the Stock Exchanges are taken within twelve (12) Working Days of the Bid/ Issue Closing Date. Impersonation Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Companies Act, 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 Selling Shareholders, the Directors, the Company Secretary and the Compliance Officer, the Auditors, the legal advisors, the Bankers to our Company, lenders to our Company, and (b) the BRLMs, the Syndicate Members*, the Escrow Collection Banks*, Refund Bankers*, IPO Grading Agency*, and the Registrar to the Issue to act in their respective capacities, will be obtained and filed along with a copy of the Red Herring Prospectus with the RoC, as required under Sections 60 and 60B of the Companies Act and such consents will not be withdrawn up to the time of delivery of the Red Herring Prospectus for registration with the RoC.
*The aforesaid will be appointed prior to filing of the Red Herring Prospectus with RoC and their consents as above would be obtained prior to the filing of the Red Herring Prospectus with RoC.

In accordance with the Companies Act and the SEBI (ICDR) Regulations, M/s ISK & Associates, Chartered Accountants, our Statutory Auditors, have given their written consent to the inclusion of their report in the form and context in which it appears in this Draft Red Herring Prospectus and such consent and report will not be withdrawn up to the time of delivery of the Red Herring Prospectus to the RoC. M/s ISK & Associates, Chartered Accountants, our Statutory Auditors, have given their written consent to inclusion of their report relating to the possible tax benefits accruing to our Company and its shareholders in the form and context in which it appears in this Draft Red Herring Prospectus and such consent and report will not be withdrawn up to the time of delivery of the Prospectus for registration with the RoC. M/s ISK & Associates, Chartered Accountants, our Statutory Auditors, have given their written consent to the report on restated financial information of our Company, in the form and context in which it appears in this Draft Red Herring Prospectus and such consent and report will not be withdrawn up to the time of delivery of the Prospectus for registration with the RoC.

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[], a SEBI registered credit rating agency engaged by us for the purpose of obtaining IPO grading in respect of this Issue, has given its written consent to the inclusion of its report in the form and context in which it will appear in the Red Herring Prospectus and the Prospectus and such consent and report shall not be withdrawn up to the time of delivery of the Prospectus registration with the RoC. Expert Opinion Except the report of [] in respect of the IPO grading of this Issue annexed herewith and except as stated elsewhere in this Draft Red Herring Prospectus, our Company has not obtained any expert opinions. Undertaking from our Company, our Promoter and Directors Our Company accepts full responsibility for the accuracy of the information given in this Draft Red Herring Prospectus and confirms that to the best of our knowledge and belief, there are no other facts, their omission of which make any statement in this Draft Red Herring Prospectus misleading and we further confirm that we have made all reasonable inquiries to ascertain such facts. Our Company further declares that the Stock Exchanges to which an application for official quotation is proposed to be made do not take any responsibility for the financial soundness of the Issue or for the price at which the Equity Shares are offered or for the correctness of the statement made or opinions expressed in the Draft Red Herring Prospectus. Our Promoters/Directors declare and confirm that no information/material likely to have a bearing on the decision of investors in respect of the Equity Shares offered in terms of this Draft Red Herring Prospectus has been suppressed, withheld and/or incorporated in the manner that would amount to misstatement, misrepresentation and in the event of its transpiring at any point of time till allotment/refund, as the case may be, that any information/material has been suppressed /withheld and/or amounts to a misstatement/ misrepresentation, our Promoters/ Directors undertake to refund the entire application monies to all the subscribers within seven (7) days thereafter without prejudice to the provisions of Section 63 of the Companies Act. Expenses of the Issue The total expenses of the Issue are estimated to be approximately ` [] lakhs, which is []% of the Issue size. The expenses of this Issue include, among others, underwriting and management fees, selling commissions, SCSBs commissions/fees, printing and distribution expenses, legal fees, statutory advertisement expenses, registrar and depository fees, stamp duty and listing fees. The Issue consists of a Fresh Issue of Equity Shares and an Offer for Sale of Equity Shares by the Selling Shareholders. We will not receive any proceeds from the Offer for Sale. In terms of the shareholders agreement with AIF and HTML, all the expenses related to the Issue will be borne by our Company. The total estimated expenses are ` [] lakhs, which is [] % of the Issue size. Activity Expenses* (` in Lakhs) [] [] [] [] [] Percentage of Issue Expenses* [] [] [] [] [] Percentage of the Issue Size* [] [] [] [] []

Lead management, underwriting and selling commission SCSB Commission Printing and Stationery expenses Advertising and Marketing expenses Others (IPO grading, registrars fees, legal fee, listing fees, Auditor fees, SCSB Commission, Regulatory Fees including filing fees paid to SEBI and Stock Exchanges etc.) Total estimated issue expenses *will be incorporated after finalization of Issue price

[]

[]

[]

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Fees Payable to the BRLMs The total fees payable to the BRLMs will be as per the Engagement Letter dated June 28, 2010 and August 16, 2010 and Issue Agreement dated March 30, 2011 executed between our Company, Selling Shareholders and BRLMs, a copy of which is available for inspection at our Registered Office from 10.00 am to 4.00 pm on Working Days from the date of the Draft Red Herring Prospectus until the Bid/ Issue Closing Date. Fees Payable to the Registrar to the Issue The fees payable to the Registrar to the Issue for processing of applications, data entry, printing of refund orders, preparation of refund data on magnetic tape and printing of bulk mailing register will be as per the agreement among our Company, the Selling Shareholders and the Registrar to the Issue dated March 30, 2011, a copy of which is available for inspection at our Companys Registered Office. The Registrar to the Issue will be reimbursed for all out-of-pocket expenses including cost of stationery, postage, stamp duty, and communication expenses. Adequate funds will be provided to the Registrar to the Issue to enable it to make refunds in any of the modes described in this Draft Red Herring Prospectus or send allotment advice by registered post/speed post/under certificate of posting. Underwriting Commission, Brokerage and Selling Commission The underwriting commission and selling commission for this Issue is as set out in the Syndicate Agreement to be entered into between our Company, Selling Shareholders and the BRLMs and the Syndicate Members. The underwriting commission shall be paid as set out in the Underwriting Agreement to be entered into based on the Issue Price and amount underwritten in the manner mentioned in the Prospectus. Payment of underwriting commission, brokerage and selling commission would be in accordance with applicable laws. IPO Grading This Issue has been graded by [] and has been assigned the "[]" indicating [], through its letter dated [], which is valid for a period of []. The IPO grading is assigned on a five point scale from 1 to 5 wherein an "IPO Grade 5" indicates strong fundamentals and an "IPO Grade 1" indicates poor fundamentals. A copy of the report provided by [], furnishing the rationale for its grading will be annexed to the Red Herring Prospectus and will be made available for inspection at our Registered and Corporate Office from 10.00 a.m. to 4.00 p.m. on Working Days from the date of the Red Herring Prospectus until the Bid/Issue Closing Date. Summary of rationale for grading by the IPO Grading Agency [] Particulars regarding Public or Rights Issues during the last five (5) years Our Company has not made any previous public or rights issue in the five (5) years preceding the date of this Draft Red Herring Prospectus. Previous issues of Equity Shares otherwise than for cash Our Company has not made any previous issues of shares for consideration other than cash, except Bonus Issue, as mentioned in the section titled "Capital Structure" beginning on page 68 of this Draft Red Herring Prospectus.

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Underwriting Commission, brokerage and selling commission on Previous Issues Subject to the proposed Pre-IPO Placement, since this is the initial public offering of our Companys Equity Shares, no sum has been paid or has been payable as commission or brokerage for subscribing for or procuring or agreeing to procure subscription for any of the Equity Shares since our Companys inception. Previous issues by companies under the same Management No company under the same management within the meaning of Section 370(1B) of the Companies Act has made any public issue or rights issue during the last three (3) years. Performance vis-a-vis objects - Last Three Issues There has not been any previous public issue of our Equity Shares. Performance vis-a-vis objects - Last Issue of Group/Associate Companies All of our Group / Associate Companies are unlisted and have not made a public issue of shares. Outstanding Debentures or Bond Issues or Redeemable Preference Shares Our Company does not have any outstanding debentures or bonds or Preference Redeemable Shares, except for the Non-Convertible Debentures aggregating to `2500 Lakhs issued to Axis Bank Limited as on the date of filing this Draft Red Herring Prospectus.
Outstanding Convertible Instruments

As on the date of this Draft Red Herring Prospectus, Axis Infrastructute Fund I and IFCI hold 4,00,000 CCPS and 2,60,000 CCPS respectively. These CCPS shall be converted into Equity Shares before the filing of the Red Herring Prospectus with the RoC as per the terms of the Share Subscription Agreement.For further details on Share Subscription Agreement, please refer to section titled "History and Certain Corporate Matters" beginning on page 161 of this Draft Red Herring Prospectus. Option to Subscribe Equity Shares being offered through the Draft Red Herring Prospectus can be applied for in dematerialized form only. Stock Market Data of the Equity Shares This being an initial public offering of the Equity Shares of our Company, the Equity Shares are not listed on any Stock Exchanges. Mechanism for Redressal of Investor Grievances The Agreement amongst the Registrar to the Issue, our Company and the Selling Shareholders provides for retention of records with the Registrar to the Issue for a period of at least three (3) year from the last date of dispatch of the letters of allotment, or refund orders, demat credit or where refunds are being made electronically, giving of refund instructions to the clearing system, to enable the investors to approach the Registrar to the Issue for redressal of their grievances. All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such as name, address of the applicant, application number, number of Equity Shares applied for, amount paid on application, Depository Participant, and the bank branch or collection centre where the application was submitted.

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All grievances relating to the ASBA process may be addressed to the SCSBs, giving full details such as name, address of the applicant, number of Equity Shares applied for, amount paid on application and the relevant Designated Branch or the collection centre of the SCSBs where the Bid-cum-Application Form was submitted by the ASBA Bidders. Disposal of Investor Grievances by our Company Our Company estimates that the average time required by our Company or the Registrar to the Issue for the redressal of routine investor grievances shall be fifteen (15) Working Days from the date of receipt of the complaint. In case of complaints that are not routine or where external agencies are involved, our Company will seek to redress these complaints as expeditiously as possible. Our Company has constituted shareholders/investors grievance committee in the meeting of our Board of Directors held on January 18, 2006. For further details on the Shareholders and Investors Grievance Committee, please refer to section titled "Our Management" beginning on page 171 of this Draft Red Herring Prospectus. Our Company has appointed Mr. Kamlendra Joshi, VP (Finance & Accounts), as the Compliance Officer to redress complaints, if any, of the investors participating in the Issue. He can be contacted at the following address: Mr. Kamlendra Joshi Neesa Leisure Limited X-22, 23 & 24, G.I.D.C Electronic Estate Sector 25, Gandhinagar 382 044, India Telephone: + 91 079 3984 1111 Facsimile: +91 079 3984 1100 E-mail: ipo@neesaleisure.com Investors can contact the Compliance Officer or the Registrar in case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allocation, credit of allotted Equity Shares in the respective beneficiary account or refund orders, etc. Disposal of investor grievances by listed companies under the same management as our Company We do not have any other listed company under the same management. Change in Auditors during the last three (3) years There have been no changes in our Companys auditors in the last three (3) years. Capitalization of Reserves or Profits Except with respect to the bonus shares as disclosed under section titled "Capital Structure" beginning on page 68 of this Draft Red Herring Prospectus, our Company has not capitalized its reserves or profits at any time during the last five (5) years. Revaluation of Assets Our Company, during the years ended March 31, 2006 and March 31, 2007, had revalued its leasehold land by crediting the differential amount on account of revaluation to revaluation reserve account. For the purpose of the Restated Summary Statement of Assets and Liabilities, the said item has been appropriately adjusted

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Particulars Gandhinagar Land Gandhinagar Land Gurgaon Land Total

Date of Revaluation March 31, 2005 June 30,2006 June 30,2006

Book Value 24.95 521.80 159.00 705.75

Revalued Amount 65.71 3987.30 664.30 4717.31

(` In Lakhs) Revaluation Reserve 40.77 3465.50 505.29 4011.56

As a result of revaluation, the revaluation reserve was restated to ` []. As the assets were stated on revaluation as on March 2006 and March 2007, depreciation effect on account of enhanced value of assets was considered from the financial year [] onwards. Tax Implications Investors who are allotted Equity Shares in the Issue will be subject to capital gains tax on any resale of the Equity Shares at applicable rates, depending on the duration for which the investors have held the Equity Shares prior to such resale and whether the Equity Shares are sold on the Stock Exchanges. For details, please refer the section titled "Statement of Tax Benefits" beginning on page 105 of this Draft Red Herring Prospectus.

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SECTION VII: ISSUE INFORMATION TERMS OF THE ISSUE The Equity Shares being issued are subject to the provisions of the Companies Act, SCRR, the Memorandum and Articles of Association, the terms of the Draft Red Herring Prospectus, the Red Herring Prospectus, the Prospectus, the Bid-cum-Application Form, CAN, the Revision Form, the ASBA Bid-cumApplication Form, the ASBA Revision Form, Allotment advices and the listing agreement with the Stock Exchanges and other terms and conditions as may be incorporated in the documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to all applicable laws, guidelines, rules, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the GoI, the Stock Exchanges, the RoC, the FIPB, the RBI and/or other authorities, as in force on the date of the Issue and to the extent applicable. Ranking of Equity Shares The Equity Shares being issued shall be subject to the provisions of the Companies Act and our Memorandum and Articles and shall rank pari passu in all respects with the existing Equity Shares of our Company including rights in respect of dividend. The allottees will be entitled to dividend or any other corporate benefits, if any, declared by our Company after the Date of Allotment. Please refer to section titled "Main Provisions of Articles of Association" beginning on page 444 for a description of the Articles of Association of this Draft Red Herring Prospectus. Face Value and Issue Price The Equity Shares with a face value of `10 each are being issued in terms of the Draft Red Herring Prospectus at a Issue price of at the lower end of the Price Band is ` [] per Equity Share and at the higher end of the Price Band is ` [] per Equity Share. Anchor Investor Issue Price is ` [] per Equity Share. At any given point of time, there shall be only one denomination for the Equity Shares of our Company, subject to applicable laws. Mode of Payment of Dividend Our Company shall pay dividend to the shareholders of our Company in accordance with the provisions of the Companies Act. In relation to the Offer for Sale, the dividend for the entire year shall not be payable to the transferor. Compliance with SEBI (ICDR) Regulations Our Company shall comply with all disclosure and accounting norms as specified by SEBI from time to time. Rights of the Equity Shareholders Subject to applicable laws, the equity shareholders shall have the following rights: 1. 2. 3. 4. 5. 6. Right to receive dividend, if declared; Right to attend general meetings and exercise voting powers, unless prohibited by law; Right to vote on a poll either in person or by proxy; Right to receive offers for rights shares and be allotted bonus shares, if announced; Right to receive surplus on liquidation subject to any statutory and other preferential claims being satisfied; Right of free transferability; and

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7.

Such other rights, as may be available to a shareholder of a listed public company under the Companies Act, the terms of the listing agreement executed with the Stock Exchanges, and Companys Memorandum and Articles.

For further details on the main provisions of our Companys Articles of Association dealing with voting rights, dividend, forfeiture and lien, transfer and transmission and/or consolidation/splitting, please refer section titled "Main Provisions of Articles of Association" beginning on page 444 of this Draft Red Herring Prospectus. Market Lot and Trading Lot In terms of Section 68B of the Companies Act, the Equity Shares of our Company shall be allotted only in dematerialized form. Hence, the Equity Shares being offered through the Draft Red Herring Prospectus can be applied for in the dematerialised form only. The Equity Shares, as per the provisions of the SEBI (ICDR) Regulations, shall be allotted only in dematerialised form and trading shall only be in dematerialised form. Since trading of the Equity Shares is in dematerialised form, the tradable lot is one (1) Equity Share. Allotment in this Issue will be only in electronic form in multiples of one (1) Equity Share subject to a minimum Allotment of [] Equity Shares. The Price Band and the minimum bid lot will be decided by our Company in consultation with the Selling Shareholders and the BRLMs, including the relevant financial ratios computed for both the Cap Price and the Floor Price, which shall be published in English and Hindi national newspapers with wide circulation, and Gujarati newspaper with wide circulation, being the newspapers in which the pre-Issue advertisements were published, at least two (2) Working Days prior to the Bid/Issue Opening Date. Jurisdiction Exclusive jurisdiction for the purpose of this Issue is with the competent courts/authorities in Mumbai, India. Nomination Facility to Investor In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint Bidders, may nominate any one (1) person in whom, in the event of the death of sole Bidder or in case of joint Bidders, death of all the Bidders, as the case may be, the Equity Shares allotted, if any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale of equity share(s) by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the prescribed form available on request at the Registered Office or to the Registrar. Further, any person who becomes a nominee shall, upon the production of such evidence as may be required by the Board, elect either: 1. 2. To register himself or herself as the holder of the Equity Shares; or To make such transfer of the Equity Shares, as the deceased holder could have made.

Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of ninety (90) days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the Equity Shares, until the requirements of the notice have been complied with.

383

Since the Allotment of Equity Shares in the Issue will be made only in dematerialised form, there is no need to make a separate nomination with our Company. Nominations registered with respective depository participant of the applicant would prevail. If the investors require changing their nomination, they are requested to inform their respective depository participant. Minimum subscription If our Company does not receive the minimum subscription of 90% of the Fresh Issue, including devolvement of the Underwriters, if any, within sixty (60) days from the Bid/Issue Closing Date, our Company and the Selling Shareholders shall refund the entire subscription amount received, but not later than 10 weeks of the Bid/Issue Closing Date. If there is a delay beyond eight (8) days after our Company becomes liable to pay the amount, our Company shall pay interest as per Section 73 of the Companies Act. The requirement for minimum subscription is not applicable to the Offer for Sale. The requirement for minimum subscription is not applicable to the Offer for Sale. In the event of undersubscription in the Issue, the Equity Shares under the Fresh Issue will be issued prior to the sale of Equity Shares under the Offer for Sale portion. However, upon the receipt of minimum subscription of 90% of the Fresh Issue, the balance subscription shall be first satisfied from the sale of Equity Shares under the Offer for Sale portion in proportion to the Equity Shares offered by Selling Shareholder I and Selling Shareholder II. However, upon the receipt of minimum subscription of 90% of the Fresh Issue, the balance subscription shall be first satisfied from the sale of Equity Shares under the Offer for Sale portion. Our Company shall ensure that the number of prospective allottees to whom Equity Shares in the Issue will be allotted will be not less than 1,000 failing which we shall refund the entire subscription amount received. Application by Eligible NRIs, FIIs registered with SEBI and FVCIs registered with SEBI As per existing RBI regulations, OCBs cannot participate in the Issue. The current provisions of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, there exists a general permission for the NRIs, FIIs and foreign venture capital investors registered with SEBI to invest in shares of Indian companies by way of subscription in an IPO. However, such investments would be subject to other investment restrictions under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, RBI and/or SEBI regulations as may be applicable to such investors. It is to be distinctly understood that there is no reservation for eligible NRIs and FIIs registered with SEBI or FVCIs registered with SEBI. All NRIs, FIIs and foreign venture capital funds, multi-lateral and bilateral development financial institutions and any other foreign investor applicants will be treated on the same basis with other categories for the purpose of allocation. As per existing RBI regulations, OCBs cannot participate in the Issue. The allotment of the Equity Shares to Non-Residents shall be subject to the conditions, if any, as may be prescribed by the Government of India/RBI while granting such approvals. Sub accounts of FIIs registered with SEBI, being foreign corporate or foreign individuals are not eligible to participate in this Issue in the QIB Portion. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. The above information is given for the benefit of the Bidders. The Bidders are advised to make their own enquiries about the limits applicable to them. The Company and the BRLMs do not accept any responsibility for the completeness and accuracy of the information stated hereinabove. The Company and the BRLMs are not liable to inform the investors of any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Draft Red

384

Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations. Arrangements for disposal of odd lots Since the market lot for our Equity Shares will be one, no arrangements for disposal of odd lots are required. Terms of Payment Applications should be for minimum of [] Equity Shares and in multiples of [] Equity Shares thereafter. The entire Issue price of the Equity Shares of `10 per share is payable on application. In case of allotment of lesser number of Equity Shares than the number of shares applied for, our Company shall refund the excess amount paid on application, subject to minimum allotment size being the minimum application size. Period of Subscription The subscription list for public issue shall remain open for at least three (3) Working Days and not more than ten (10) Working Days. Reservations Upto 2,00,000 Equity Shares will be reserved in the Issue for subscription by Eligible Employees (the "Employee Reservation Portion") subject to valid bids being received at or above the Issue Price provided that the value of allotment to a single Eligible Employee does not exceed `2,00,000. Restriction on transfer of Equity Shares Except for lock-in of the pre-Issue Equity Shares and Promoters, minimum contribution and Anchor Investor lock-in in the Issue as detailed in the section titled "Capital Structure" beginning on page 68 of this Draft Red Herring Prospectus, and except as provided in the Articles of Association, there are no restrictions on transfers of Equity Shares. There are no restrictions on transfers of debentures except as provided in the Articles of Association. There are no restrictions on transmission of shares/ debentures and on their consolidation/ splitting except as provided in the Articles of Association. For further details, please refer to the section titled "Main Provisions of the Articles of Association" beginning on page 444 of this Draft Red Herring Prospectus. Joint Holders Where two (2) or more persons are registered as the holders of the Equity Shares, they shall be entitled to hold the same as joint tenants with benefits of survivorship.

385

ISSUE STRUCTURE Public Issue of [] Equity Shares of `10 each at the Issue Price for cash, aggregating ` [] lakhs, comprising of a Fresh Issue of [] Equity Shares at the Issue Price for cash aggregating `20,000 lakhs and an Offer for Sale of [] Equity Shares at the Issue Price for cash aggregating upto `5,000 Lakhs. The Issue comprises of a reservation of upto 2,00,000 Equity Shares of `10 each for Eligible Employees and a Net Issue to the public of [] Equity Shares of `10 each. The Issue will constitute []% of the fully diluted post-issue paid-up capital of our Company. The Net Issue will constitute []% of the post issue paid-up equity capital of our Company. Our Company and AIF are considering a Pre-IPO Placement of upto 35,00,000 Equity Shares aggregating upto `6,500 lakhs to certain investors prior to the Issue The issue of such Equity Shares pursuant to the PreIPO Placement, if any, will be completed prior to filing the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is successfully completed, the Issue size will be reduced to the extent of such Pre-IPO placement, subject to the Net Issue being at least 25% of the post-Issue paid-up Equity Share Capital of our Company. The requirement for minimum subscription is not applicable to the Offer for Sale. In the event of undersubscription in the Issue, the Equity Shares under the Fresh Issue will be issued prior to the sale of Equity Shares under the Offer for Sale portion. However, upon the receipt of minimum subscription of 90% of the Fresh Issue, the balance subscription shall be first satisfied from the sale of Equity Shares under the Offer for Sale portion in proportion to the Equity Shares offered by Selling Shareholder I and Selling Shareholder II. However, upon the receipt of minimum subscription of 90% of the Fresh Issue, the balance subscription shall be first satisfied from the sale of Equity Shares under the Offer for Sale portion. The Issue is being made through Book Building Process. QIBs# Non-Institutional Bidders Not less than [] Equity Shares available for allocation or Net Issue Size less allocation to QIB Bidders and Retail Individual Bidders. Retail Individual Bidders Not less than [] Equity Shares available for allocation or Net Issue Size less allocation to QIB Bidders and NonInstitutional Bidders. Employee Reservation Portion Upto 2,00,000 Equity Shares

Number of Shares (1) #

Equity

Upto [] Equity Shares available for allocation or Net Issue less allocation to NonInstitutional Bidders and Retail Individual Bidders Upto 50% of Net Issue to Public or Net Issue less allocation to NonInstitutional Bidders and Retail Individual Bidders. However upto

Percentage of Issue Size available for Allotment/allocation

Not less than 15% of Net Issue or Net Issue less allocation to QIB Bidders and Retail Individual Bidders

Not less than 35% of Net Issue or Net Issue less allocation to QIB Bidders and Non Institutional Bidders

Upto []% of the Post-Issue Capital.

386

QIBs#

Non-Institutional Bidders

Retail Individual Bidders

Employee Reservation Portion

5% of the QIB portion (excluding the Anchor Investor Portion) shall be available for allocation proportionately to domestic Mutual Funds only. Basis of Allocation or allotment if respective category is oversubscribed ** Proportionate as follows: 1. Equity Shares shall be allocated on proportionat e basis to domestic Mutual Funds in the Mutual Funds Portion; 2. Equity Shares shall be allocated on a proportionat e basis to al QIBs including domestic Mutual Funds receiving allocation as per (a) above Such number of Equity Shares in multiples of [] Equity Shares so that the Bid Amount exceeds ` 2,00,000. Such number of Equity Shares not exceeding the Proportionate Proportionate Proportionate

Minimum Bid

Such number of Equity Shares in multiples of [] Equity Shares so that the Bid Amount exceeds ` 2,00,000. Such number of Equity Shares not exceeding the Net

[]Equity Shares and in multiples of [] Equity Shares thereafter.

[] Equity Shares and in multiples of [] Equity Shares thereafter

Maximum Bid

Such number of Equity Shares whereby the Bid

Such number of Equity Shares whereby the Bid

387

QIBs#

Non-Institutional Bidders Issue subject to applicable limits.

Net Issue, subject to applicable limits. Mode of Allotment Compulsorily in dematerialised form. [] Equity Shares and in multiples of [] Equity Shares thereafter. [] Equity Shares and in multiples of 1 Equity Share thereafter. One Equity Share Public financial institution as defined in section 4A of the Companies Act, 1956, scheduled commercial bank, mutual fund, venture capital fund and foreign venture capital investor registered with the SEBI, foreign institutional investor and subaccount registered with SEBI (other than a sub-account which is a foreign corporate or foreign individual), multilateral and bilateral development financial institution, state industrial development corporation,

Retail Individual Bidders Amount does not exceed ` 2,00,000. Compulsorily in dematerialised form. [] Equity Shares and in multiples of [] Equity Shares thereafter. [] Equity Shares and in multiples of 1 Equity Share thereafter. One Equity Share Individuals (including HUFs, NRIs) applying for Equity Shares such that the Bid Amount does not exceed ` 2,00,000 in value.

Employee Reservation Portion Amount does not exceed ` 1,00,000. Compulsorily in dematerialised form. [] Equity Shares and in multiples of [] Equity Shares thereafter. [] Equity Shares and in multiples of 1 Equity Share thereafter. One Equity Share Eligible Employees

Compulsorily dematerialised form.

in

Bid Lot

[] Equity Shares and in multiples of [] Equity Shares thereafter. [] Equity Shares and in multiples of 1 Equity Share thereafter. One Equity Share Eligible NRIs, Resident Indian individuals, HUF (in the name of Karta), companies, corporate bodies, scientific institutions societies, trusts and eligible/permitted Sub- Accounts of FIIs registered with SEBI which are foreign corporate or foreign individuals.

Allotment Lot

Trading Lot Who can Apply (2)

388

QIBs#

Non-Institutional Bidders

Retail Individual Bidders

Employee Reservation Portion

Amount Bidding

payable

on

Terms of Payment#

insurance company registered with the Insurance Regulatory and Development Authority, provident fund with minimum corpus of Rs. 2,500 lakhs, pension fund with minimum corpus of ` 2,500 lakhs, National Investment Fund set up by resolution no. F. No. 2/3/2005DDII dated November 23, 2005 of Government of India published in the Gazette of India and insurance funds set up and managed by army, navy or air force of Union of India; and insurance funds set up and managed by the Department of Posts, India. 100% of the Bid 100% of the Bid 100% of the Bid 100% of the Bid Amount on Amount on Amount on Amount on Bidding Bidding Bidding Bidding The entire Bid Amount shall be payable at the time of submission of Bid-cumApplication Form to the members of the Syndicate. In case of ASBA Bidders, the SCSBs shall be authorised to block the Bid Amount in the ASBA Accounts that are specified in the ASBA Bid-cum-Application Form.##

Our Company may allocate 30% of the QIB Portion to Anchor Investors on descritionary basis. The QIB Portion includes Anchor Investor Portion, as per the SEBI (ICDR) Regulations. Anchor Investor Amount shall be payable at the time of submission of the application form by the Anchor Investor. In addition, one-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to other Anchor Investors. For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus.

389

##

In case of ASBA Bidders, the SCSB shall be authorised to block such funds in the bank account of the ASBA Bidder that are specified in the ASBA Bid- cum- Application- Form.

________ 1. The Issue is being made through the Book Building Process with Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957, as amended ("SCRR") read with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. This Issue is being made through the book building process wherein upto 50% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (the "QIB Portion") provided that our Company may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the "Anchor Investor Portion"). For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. Further 5% of QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to domestic Mutual Funds and the remaining QIB portion shall be available for allocation on proportionate basis to all QIBs, including domestic Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, upto 2,00,000 Equity Shares shall be made available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received at or above the Issue Price. Any Bidder (other than Anchor Investor) may participate in this Issue through the Application Supported by Blocked Amount ("ASBA") process by providing the details of their ASBA Accounts in which the corresponding Bid amounts will be blocked by Self Certified Syndicate Banks ("SCSBs"). For details in this regard, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. Under-subscription, if any, in the Qualified Institutional, Non-Institutional and Retail categories would be allowed to be met with spill-over from any other category or combination of categories at the sole discretion of our Company and the Selling Shareholders, in consultation with the BRLMs and the Designated Stock Exchange. Such inter-se spill over, if any, would be effected in accordance with applicable laws, rules, regulations and guidelines. For further details, please refer to section titled "Issue Procesdure" beginning on page 393 of this Draft Red Herring Prospectus. 2. In case the Bid-cum-Application Form is submitted in joint names, the investors should ensure that the demat account is also held in the same joint names and the names are in the same sequence in which they appear in the Bid-cum-Application Form.

Withdrawal of the Issue Our Company and the Selling Shareholders, in consultation with the BRLMs, reserves the right not to proceed with the Issue at anytime after the Bid/Issue Opening Date but before the allotment of Equity Shares. In such an event, a public notice would be issued in the newspapers, in which the pre-issue advertisements were published, within two (2) Working Days of the Bid/Issue Closing Date, providing reasons for not proceeding with the Issue. The BRLMs, through the Registrar to the Issue, shall notify the SCSBs to unblock the bank accounts of the ASBA Bidders within one (1) Working Day from the day of receipt of such notification. Our Company shall also inform the same to the Stock Exchanges on which the Equity Shares are proposed to be listed. Notwithstanding the foregoing, the Issue is also subject to obtaining (i) the final listing and trading approvals of the Stock Exchanges, which our Company shall apply for after Allotment and (ii) the final RoC acknowledgement of the Prospectus after it is filed with the RoC. Under the SEBI (ICDR) Regulations QIBs are not allowed to withdraw their Bids after the QIB Bid/Issue Closing Date. Further, in the event of withdrawal of the Issue and subsequently, if there are plans of an IPO by our Company, a Draft Red Herring Prospectus will be submitted again for observations of SEBI.

390

Allotment Advice or Refund Orders or Instructions to SCSBs Our Company and the Selling Shareholders shall credit the Equity Shares to the valid beneficiary account with its Depository Participants within two (2) Working Days from the date of the Allotment to all successful Allotees including ASBA Bidders, which in any event shall not exceed twelve (12) Working Days of the Bid/Issue Closing Date. Applicants residing at the centers where clearing houses are managed by the RBI, will get refunds through NECS except where applicant is otherwise disclosed as eligible to get refunds through Direct Credit, NEFT or RTGS. In case of applicants who receive refunds through NECS, direct credit or RTGS, the refund instructions will be given to the clearing system prior to twelve (12) Working Days from the Bid/ Issue Closing Date. A suitable communication shall be sent to the Bidders receiving refunds through this mode prior to twelve (12) Working Days of Bid/ Issue Closing Date, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund. For all other Bidders who have not updated their bank particulars along with the nine-digit MICR code, the refund orders shall be dispatched prior to twelve (12) Working Days from the Bid/Issue Closing Date through speed through speed post/registered post, or Direct Credit, National Electronic Fund Transfer ("NEFT"), Real Time Gross Settlement ("RTGS") or National Electronic Clearing Service ("NECS") at the sole or First Bidders sole risk prior to twelve (12) Working Days of the Bid Closing Date. In case of ASBA Bidders, the Registrar to the Issue shall instruct the SCSBs to unblock the funds in the relevant ASBA Account to the extent of the Bid Amount specified in the ASBA for withdrawn, rejected or unsuccessful or partially successful ASBAs prior to twelve (12) Working Days from the Bid/Issue Closing Date. Interest in case of Delay in Dispatch of Allotment Letters/Refund Orders In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI (ICDR) Regulations, our Company and the Selling Shareholders undertakes that: Our Company and the Selling Shareholders shall pay interest at 15% per annum, in proportion to the Equity Shares offered by them under the Issue, if allotment is not made, refund orders are not dispatched to the applicant or if, in a case where the refund or portion thereof is made in electronic mode/manner, the refund instructions have not been given to clearing members and/or demat credits are not made to investors prior to twelve (12) Working Days from the Bid/Issue Closing Date or if instructions to SCSBs to unblock funds in the ASBA Accounts are not given prior to twelve (12) Working Days of the Bid/Issue Closing Date. Our Company will provide adequate funds required for dispatch of refund orders or Allotment advice to the Registrar to the Issue. Refunds will be made by cheques, pay orders or demand drafts drawn on any one or more of the Escrow Collection Banks/ Refund Banker(s) and payable at par at places where Bids are received. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. In case of ASBA Bidders, the SCSBs will unblock funds in the ASBA Account to the extent of the refund to be made based on instructions received from the Registrar to the Issue. Bid/Issue Program BID/ISSUE OPENS ON BID/ISSUE CLOSES ON []* []**

*Our Company and the Selling Shareholders may consider participation by Anchor Investors in terms of SEBI (ICDR) Regulations. The Anchor Investor Bid/ Issue Period shall be one (1) Working Day prior to the Bid/ Issue Opening Date. ** Our Company may, in consultation with the BRLMs, decide to close the Bidding for QIBs one working day prior to the Bid Closing Date.

391

Except in relation to the Bids received from the Anchor Investors, Bids and any revision in Bids shall be accepted only between 10.00 a.m. and 5.00 p.m. (Indian Standard Time) during the Bid/Issue Period as mentioned above at the bidding centres mentioned on the Bid-cum-Application Form except that on the Bid/Issue Closing Date, Bids shall be accepted only between 10.00 a.m. and 3.00 p.m. (Indian Standard Time) (excluding ASBA Bidders) (10.00 a.m. and 1.00 p.m. (IST) if Bids are open only for the Retail Individual Bidders on the Bid/Issue Closing Date) and shall be uploaded until (i) 4.00 p.m. (Indian Standard Time) in case of Bids by QIB Bidders and Non-Institutional Bidders where the Bid Amount is in excess of `2,00,000 and (ii) until 5:00 p.m. (Indian Standard Time), in case of Bids by Retail Individual Bidders, where the Bid Amount is up to `2,00,000 which may be extended up to such time as deemed fit by the Stock Exchanges after taking into account the total number of applications received up to the closure of timings and reported by BRLMs to the Stock Exchanges within half an hour of such closure. Due to limitation of time available for uploading the Bids on the Bid Closing Date, the Bidders are advised to submit their Bids one (1) Working Day prior to the Bid/ Issue Closing Date and, in any case, no later than 1.00 p.m. (Indian Standard Time) on the Bid/Issue Closing Date. Bidders are cautioned that in the event a large number of Bids are received on the Bid/Issue Closing Date, as is typically experienced in initial public offers, which may lead to some Bids not being uploaded due to lack of sufficient time to upload, such Bids that cannot be uploaded will not be considered for allocation in the Issue. If such Bids are not uploaded, our Company, the Selling Shareholders, the Syndicate, BRLMs and the SCSBs shall not be responsible. Bids will be accepted only on Working Days, i.e., Monday to Friday (excluding any public holiday). Bids by ASBA Bidders shall be uploaded by the SCSBs in the electronic system to be provided by the Stock Exchanges. Bids by ASBA Bidders shall be uploaded by the SCSBs in the electronic system to be provided by the NSE and the BSE. In order that the data captured by the brokers in the electronic book is accurate, the Members of the Syndicate and the SCSBs may be permitted one (1) additional day, post the Bid/Issue Closing Date, to amend some of the data fields entered by them in the electronic bidding system. On the Bid/Issue Closing Date, extension of time will be granted by the Stock Exchanges only for uploading the Bids submitted by Retail Individual Bidders after taking into account the total number of Bids received until the closure of timings for acceptance of Bid-cum-Application Forms as stated herein and reported by the BRLMs to the Stock Exchange(s) within half an hour of such closure. Our Company and the Selling Shareholders may decide, in consultation with the BRLMs to close the bidding by QIBs (including QIBs bidding through ASBA) one (1) Working Day prior to the closure of the Issue, provided that the Bidding shall be kept open for a minimum of three (3) Working Days for all categories of Bidders. In case of discrepancy in the data entered in the electronic book vis--vis the data contained in the physical Bid form, for a particular bidder, the details as per physical application form of that Bidder may be taken as the final data for the purpose of allotment. In case of discrepancy in the data entered in the electronic book vis--vis the data contained in the physical or electronic Bid-cum-Application Form, for a particular ASBA Bidder, the Registrar to the Issue shall ask for rectified data from the SCSBs. Our Company and the Selling Shareholders reserve the right to revise the Price Band during the Bid/Issue Period in accordance with the SEBI (ICDR) Regulations provided that the Cap Price is less than or equal to 120% of the Floor Price. In case of revision of the Price Band, the Issue Period will be extended for atleast three (3) additional Working Days after revision of the Price Band subject to the total Bid /Issue Period not exceeding ten (10) Working Days. Any revision in the Price Band and the revised Bid/Issue, if applicable, will be widely disseminated by notification to the Stock Exchanges, by issuing a press release and also by indicating the changes on the web sites of the BRLMs and at the terminals of the Syndicate and informing the SCSBs.

392

ISSUE PROCEDURE This section applies to all Bidders. Please note that all Bidders other than Anchor Investors can participate in the Issue through the ASBA process. ASBA Bidders should note that the ASBA process involves application procedures that are different from the procedure applicable to Bidders other than the ASBA Bidders. Bidders applying through the ASBA process should carefully read the provisions applicable to such applications before making their application through the ASBA process. Please note that all the Bidders are required to make payment or instruct the relevant SCSB to block the full Bid Amount along with the Bid-cum-Application Form. In case of ASBA Bidders, an amount equivalent to the full Bid Amount will be blocked by the SCSBs. Also, please note that the SEBI circular no. CIR/CFD/DIL/8/2010 dated October 12, 2010 shall not be applicable to this Issue until further clarification on the procedure for Syndicate Members to procure ASBA Bid-cumApplication Forms from the ASBA Bidders. In respect of QIBs that are Anchor Investors, the issue procedure set out below should be read with, and is qualified by, the paragraphs below relating to Anchor Investors, including without limitation, the section "Anchor Investor Portion". It may also be noted that pursuant to the SEBI press release (PR No.24/2011) dated February 7, 2011, ASBA facility has been made mandatory for non-retail investors (i.e. Qualified Institutional Buyers and Non-Institutional Investors) from May 1, 2011. We shall incorporate disclosures to this effect in the Red Herring Prospectus/ Prospectus to be filed for the Issue, once an amendment to the SEBI ICDR Regulations incorporating the said change is notified by SEBI. Our Company, the Selling Shareholders and the BRLMs are not liable for any amendments, modifications or changes in applicable laws or regulations, which may occur after the date of the Draft Red Herring Prospectus. Book Building Procedure The Issue is being made through the Book Building Process with Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957, as amended ("SCRR") read with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. This Issue is being made through the Book Building Process wherein upto 50% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (the "QIB Portion") provided that our Company and the Selling Shareholders in consultation with the BRLMs may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the "Anchor Investor Portion"). For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. Further 5% of QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to domestic Mutual Funds and the remaining QIB portion shall be available for allocation on proportionate basis to all QIBs, including domestic Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to the Public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price Our Company may allocate up to 30% of the QIB Portion to the Anchor Investors on a discretionary basis. One third of the Anchor Investor Portion shall be reserved for allocation to domestic Mutual Funds, subject to valid bids being received from domestic Mutual Funds at or above the Anchor Investor Issue Price. Only QIBs can participate in the Anchor Investor Portion. Allocation to Anchor Investors will be discretionary and not on a proportionate basis. For further details in relation to participation in the Anchor Investor Portion, please refer to "Bids under the Anchor Investor Portion" beginning on page 397 of this Draft Red Herring Prospectus.

393

All Bidders (other than the ASBA Bidders) are required to submit their Bids through the Syndicate or their sub-syndicate members. ASBA Bidders are required to submit their Bids to the SCSBs, Bids by QIBs shall be submitted only to the BRLMs, other than Bids by QIBs who Bid through the ASBA process, who shall submit the Bids to the Designated Branch of the SCSBs. In case of QIB Bidders, our Company and the Selling Shareholders, in consultation with the BRLMs may reject Bids at the time of acceptance of the Bidcum-Application Form provided that the reasons for such rejection shall be disclosed to such Bidder in writing. In the cases of Non-Institutional Bidders, Retail Individual Bidders and Eligible Employees, our Company will have a right to reject the Bids only on technical grounds. Investors should note that allotment of Equity Shares to all successful Bidders will only be in the dematerialized form. The Bid-cum-Application Forms which do not have the details of the Bidders Depository account shall be treated as incomplete and rejected. Bidders will not have the option of getting allotment of the Equity Shares in physical form. The Equity Shares on allotment shall be traded only in the dematerialized segment of the Stock Exchanges. Please note that Axis Private Equity Limited, who is an associate of one of our BRLMs, Axis Bank Limited, is acting as the investment management advisor to Axis Infrastructure Fund I, one of the Selling Shareholders. Accordingly, in compliance with proviso to regulation 21A (1) and explanation (i) to regulation 21A (1) of the SEBI (Merchant Bankers) Regulations, 1992, read with Regulation 110 and Schedule XX of the SEBI ICDR Regulations, Axis Bank Limited would be involved only in the marketing of the Issue. Bid-cum-Application Form Bidders (other than ASBA Bidders) shall only use the specified Bid-cum-Application Form bearing the stamp of a Member of the Syndicate for the purpose of making a Bid. The Bidders shall have the option to make a maximum of three (3) Bids in the Bid-cum-Application Form and such options shall not be considered as multiple Bids. The Bid-Cum-Application Form shall be serially numbered and date and time stamped at the Bidding Centres and such form shall be issued in duplicate signed by the Bidder and countersigned by the relevant Member of the Syndicate. Bidders can also submit their Bids through the ASBA by submitting ASBA Bid-cum-Application Form, either in physical or electronic mode, to the SCSB with whom the ASBA Account is maintained. The ASBA Bid-cum-Application Form will also be available on the websites of the Stock Exchanges at least one (1) Working Day prior to the Bid/Issue Opening Date and shall bear an unique application number. The BRLMs and the SCSBs will provide the hyperlink to BSE or NSE on their websites. An ASBA Bidder shall use the ASBA Bid-cum-Application Form obtained from the Designated Branches for the purpose of making a Bid. ASBA Bidders can submit their Bids, either in physical or electronic mode. In case of application in physical mode, the ASBA Bidder shall submit the ASBA Bid-cum-Application Form at the relevant Designated Branch. In case of application in electronic form, the ASBA Bidder shall submit the ASBA Bid-cum-Application Form either through the internet banking facility available with the SCSB, or such other electronically enabled mechanism for bidding and blocking funds in the ASBA Account held with SCSB, and accordingly registering such Bids and authorising the SCSB for blocking of funds that are available in the bank account specified in the ASBA Bid-cum-Application Form only. The SCSB shall block an amount in the ASBA Account equal to the Bid Amount specified in the ASBA Bid-cumApplication Form. QIBs participating in the Anchor Investor Portion cannot submit their Bids in the Anchor Investor Portion through the ASBA process. QIBs participating in the Anchor Investor Portion cannot submit their Bids in the Anchor Investor Portion through the ASBA process. Upon filing of the Prospectus with the RoC, the Bid-cum-Application Form shall be considered as the Application Form. Upon completing and submitting the Bid-cum-Application Form to a member of the Syndicate or the SCSBs, the Bidder or the ASBA Bidder is deemed to have authorized our Company to make the necessary changes in the Red Herring Prospectus as would be required for filing the Prospectus with the RoC and as would be required by the RoC after such filing, without prior or subsequent notice of

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such changes to the Bidder or the ASBA Bidder. Upon determination of the Issue Price and filing of the Prospectus with the RoC, the Bid-Cum-Application Form shall be considered as the Application Form. The prescribed colour of the Bid-cum-Application Form for various categories is as follows: Category Resident Indians including resident QIBs, Non-Institutional Bidders and Retail Individual Bidders and Eligible NRIs applying on a non-repatriation basis. Eligible NRIs , FIIs and their Sub-Accounts (other than a Sub Account which is a foreign corporate or a foreign individual bidding under the QIB portion), Foreign Venture Capital Funds, registered Multilateral and Bilateral Development Financial Institutions and other Non-Residents applying on a repatriation basis, excluding the Anchor Investors Eligible Employees Anchor Investors** ASBA Bidders bidding through a physical form Anchor Investors** [] Colour of Bid-cum-Application Form/ASBA Form

[]

[] [] [] []

* The ASBA Form shall also be available on the website of the BSE (www.bseindia.com) and NSE (www.nseindia.com) **Bid-Cum-Application Forms for Anchor Investors shall be made available at our Registered and Corporate Office, and also at the offices of the BRLMs.

Who can Bid? 1. 2. 3. Persons eligible to invest under all applicable laws, rules, regulations and guidelines. Indian nationals resident in India who are not minors, in single or joint names (not more than three). Hindu Undivided Families or HUFs in the individual name of the Karta. The Bidder should specify that the Bid is being made in the name of the HUF in the Bid-cum-Application Form as follows: "Name of sole or first Bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta". Bids by HUFs would be considered at par with those from individuals. Eligible / permitted sub-accounts of FIIs registered with SEBI, which are foreign corporate or foreign individuals, only under the Non Institutional Portion, subject to receipt of appropriate approvals from applicable regulatory authorities. Foreign institutional investor (FIIs) and sub-account registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual, under the QIB Portion. Sub-accounts of FIIs registered with SEBI, which are foreign corporate or foreign individuals, only under the Non Institutional Portion. State Industrial Development Corporations. Insurance companies registered with the Insurance Regulatory and Development Authority, India constituted under the Insurance Regulatory and Development Authority Act, 1999. Provident Funds with a minimum corpus of `2,500 lakhs and who are authorized under their constitution to invest in Equity Shares.

4.

5.

6.

7. 8.

9.

10. Pension funds with a minimum corpus of `2,500 lakhs and who are authorized under their constitution to invest in Equity Shares.

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11. Companies, corporate bodies and societies registered under applicable laws in India and authorized to invest in Equity Shares. 12. Venture Capital Funds (VCFs) registered with SEBI. 13. Foreign Venture Capital Investors (FVCIs) registered with the SEBI under the SEBI (Foreign Venture Capital Investors) Regulations. 14. Mutual Funds registered with the SEBI. 15. Indian financial institutions, scheduled commercial banks (excluding foreign banks), regional rural banks, cooperative banks (subject to the RBI regulations and the SEBI (ICDR) Regulations and regulations, as applicable). 16. Multilateral and bilateral development financial institutions. 17. Trusts / societies registered under the Societies Registration Act, 1860, as amended, or under any other law relating to trusts and who are authorized under their constitution to hold and invest in Equity Shares. 18. Scientific and/or industrial research organizations in India authorized to invest in Equity Shares. 19. National Investment Fund set up by resolution No. F.No.2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazatte of India. 20. Insurance funds set up and managed by army, navy or air force of the Union of India. 21. Insurance funds set up by the Department of Posts of the Union of India. 22. Eligible Employees (as defined in the section titled "Definitions and Abbreviations" beginning on page 1 of this Draft Red Herring Prospectus). 23. Limited Liability Partnership. As per existing RBI regulations, OCBs cannot Bid in the Issue.
Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that may be held by them under applicable law.

Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for does not exceed the limits prescribed under laws or regulations. Participation by associates and affiliates of the BRLMs and the Syndicate Members The BRLMs and Syndicate Members shall not be entitled to subscribe to the Issue in any manner except towards fulfilling their underwriting obligations as stated in the Prospectus. However, associates/affiliates of the BRLMs and Syndicate Members or any person related to the BRLMs or the Syndicate Members may Bid and subscribe to Equity Shares in the Issue in the QIB Portion or in the Non- Institutional Portion as may be applicable to such investors. Such bidding and subscription may be on their own account or on behalf of their clients. Allotment to all investors including associates/affiliates of the BRLMs and Syndicate Members respectively shall be on a proportionate basis. However the BRLMs and any person related to the BRLMs or the Syndicate Members or the Promoters and the Promoter Group shall not be allowed to subscribe under the Anchor Investor Portion in any manner.

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Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation or as specified in this Draft Red Herring Prospectus. Bids under the Anchor Investor Portion Our Company may, in consultation with the Selling Shareholders and the BRLMs, consider participation by Anchor Investors in the Issue for up to [] Equity Shares in accordance with the applicable SEBI (ICDR) Regulations. The QIB Portion shall be reduced in proportion to the allocation under the Anchor Investor category. In the event of under-subscription or non Allotment in the Anchor Investor Portion, the balance Equity Shares shall be added to the Net QIB Portion. The key terms for participation in the Anchor Investor Portion are as follows: 1. 2. Anchor Investors shall be QIBs as defined in the SEBI (ICDR) Regulations; A Bid by an Anchor Investor must be for a minimum of such number of Equity Shares that the Bid Amount exceeds ` 1000 Lakhs and in multiples of [] Equity Shares thereafter. Anchor Investors cannot submit a Bid for more than 30% of the QIB Portion. In case of a Mutual Fund registered with SEBI, separate Bids by individual schemes of a Mutual Fund will be aggregated to determine the minimum application size of ` 1000 Lakhs. One-third of the Anchor Investor Portion (i.e., [] Equity Shares) shall be reserved for allocation to domestic Mutual Funds. The minimum number of allotees in the Anchor Investor Portion shall not be less than: (a) (b) 5. Two, where the allocation under Anchor Investor Portion is up to ` 25,000 Lakhs; and Five, where the allocation under Anchor Investor Portion is more than ` 25,000 Lakhs.

3.

4.

Anchor Investors shall be allowed to Bid under the Anchor Investor only on the Anchor Investor Bidding Date (i.e., one day prior to the Bid Opening Date). Anchor Investors cannot withdraw their Bids after the Anchor Investor Bidding Date. Allocation to Anchor Investors shall be completed on the Anchor Investor Bidding Date. Our Company, the Selling Shareholders shall in consultation with the BRLMs, finalise allocation to the Anchor Investors on a discretionary basis, subject to compliance with requirements regarding minimum number of Allottees under the Anchor Investor Portion. Refund on account of rejection of Bids, if any, shall be made prior to twelve (12) Working Days from the Bid/Issue Closing Date. The number of Equity Shares allocated to successful Anchor Investors and the price at which the allocation is made, shall be made available in public domain by the BRLMs on or before the Bid Opening Date. In the event of the Issue Price being higher than the price at which allocation is made to Anchor Investors, the Anchor Investors shall be required to pay such additional amount to the extent of shortfall between the price at which allocation is made to them and the Issue Price as per the payin date mentioned in the Revised Anchor Investor Allocation Notice. If the Issue Price is lower than the price at which allocation is made to Anchor Investors, the amount in excess of the Issue Price paid by Anchor Investors shall not be refunded to them. The Equity Shares allotted in the Anchor Investor Portion shall be locked-in for a period of thirty (30) days from the date of Allotment.

6.

7.

8.

9.

10.

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11.

Neither the BRLMs, nor any person related to the BRLMs, our Promoters, members of our Promoter Group or Group Entities, shall participate in the Anchor Investor Portion. Bids made by QIBs under both the Anchor Investor Portion and the Net QIB Portion shall not be considered as multiple Bids.

12.

Additional details, if any, regarding participation in the Issue under the Anchor Investor Portion shall be disclosed in the advertisement for the Price Band published by our Company and the Selling Shareholders, in consultation with the BRLMs in a national English and Hindi newspaper and a Gujarati newspaper at least two (2) Working Days prior to the Bid Opening Date. Bids by Eligible Employees Eligible Employee shall mean Permanent and full-time employee of our Company, working in India or abroad or Director of our Company, whether whole time or part time and does not include Promoters and an immediate relative of our Promoters (i.e., any spouse of that person, or any parent, brother, sister or child of the person or of the spouse) on the date of submission of the Bid-cum-Application form. Bids under Employee Reservation Portion by Eligible Employees shall be: Made only in the prescribed Bid-cum-Application Form or Revision Form (i.e., [] color form). The sole/First Bidder should be Eligible Employees as defined above. In case the Bid-cumApplication Form is submitted in joint names, it should be ensured that the Depository Account is also held in the same joint names and in the same sequence in which they appear in the Bid-cumApplication Form. Only Eligible Employees would be eligible to apply in this Issue under the Employee Reservation Portion. Eligible Employees will have to bid like any other Bidder. Only those bids, which are received at or above the Issue Price, would be considered for allocation under this category. The Bid must be for a minimum of [] Equity Shares and in multiples of [] Equity Shares thereafter so as to ensure that the Bid Price payable by Eligible Employee does not exceed `2,00,000. The Allotment in the Employee Reservation Portion will be on a proportionate basis. Bidders under the Employee Reservation Portion may Bid at Cut off Price. Eligible Employees can apply at the Cut-Off Price. Bid/Application by Eligible Employees can also be made in the Net Issue portion and such Bids shall not be treated as multiple bids. If the aggregate demand in this category is less than or equal to [] Equity Shares at or above the Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand, subject to maximum number of Equity Shares not exceeding value of ` 2,00,000. Any under-subscription in the Equity Shares under the Employee Reservation Portion will be added back to the Net Issue. If the aggregate demand in this category is greater than [] Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis. Bids by Mutual Funds Under the SEBI (ICDR) Regulations, at least one-third of the Anchor Investor Portion will be available for allocation to domestic Mutual Funds only on a discretionary basis. An eligible Bid by a domestic Mutual Fund shall first be considered for allocation proportionately in the Mutual Fund Portion. In the event that the demand from Mutual Funds is greater than [] Equity Shares, allocation shall be made to Mutual Funds on a proportionate basis to the extent of the Mutual Funds Portion. The remaining demand by Mutual Funds shall, as part of the aggregate demand by QIB Bidders, be made available for allocation proportionately out of the remainder of the QIB Portion, after excluding the allocation in the Mutual Funds Portion.

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One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to Anchor Investors. Asset management companies or custodians of mutual funds shall specifically state the names of the concerned scheme for which Bids are being made. In the case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI and such Bids in respect of more than one scheme of the Mutual Fund will not be treated as multiple Bids provided that the Bids clearly indicate the scheme for which the Bid has been made. In accordance with current regulations, the following restrictions are applicable for investments by Mutual Funds: No Mutual Fund scheme shall invest more than 10% of its net asset value in Equity Shares or equity related instruments of any company provided that the limit of 10% shall not be applicable for investments in index funds or sector or industry specific funds. No Mutual Fund under all its schemes should own more than 10% of any companys paid-up capital carrying voting rights. Bids by Eligible NRIs Bid-cum-Application Form ([] form) or the ASBA Bid-cum-Application Form, as the case may be, have been made available for Eligible NRIs at the Registered Office and with members of the Syndicate and the Registrar to the Issue. Eligible NRI applicants may please note that only such applications as are accompanied by payment in free foreign exchange or by debit to their NRE/FCNR accounts shall be considered for allotment under the Eligible NRI category on repatriable basis. Eligible NRIs intending to participate in the bidding process shall ensure that their foreign address is registered with their depository participant or furnished on the Bidcum-Application form. Post Allotment, if any, on repatriable basis, our Company is required to file FCGPR with the Reserve Bank of India through an authorised dealer along with a KYC (Know Your Client) report issued by their banker. Eligible NRIs who may be Allotted Equity Shares of our Company in the Issue are required to facilitate the issue of the above said report to be furnished to RBI. The Eligible NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the Bid-CumApplication Form meant for Resident Indians ([] colour) and shall not use the forms meant for reserved category. All instruments accompanying bids shall be payable in Mumbai only. Bids by Eligible NRIs for a Bid Amount of up to ` 2,00,000 would be considered under the Retail Portion for the purposes of allocation and Bids for a Bid Amount of more than ` 2,00,000 would be considered under Non- Institutional Portion for the purposes of allocation. Bids by FIIs In accordance with the current regulations, the following restrictions are applicable for investments by FIls: The issue of Equity Shares to a single FII should not exceed 10% of the post-Issue paid-up capital of our Company (i.e., 10% of [] Equity Shares). In respect of an FII investing in the Equity Shares on behalf of its sub-accounts (other than Sub-Accounts which are foreign corporate or foreign individuals bidding under the QIB Portion), the investment on behalf of each sub-account shall not exceed 10% of the total paid-up capital of our Company or 5% of the total paid-up capital of our Company, in case such sub-account is a foreign corporate or an individual. In accordance with the foreign investment limits applicable to us, the total FII investment cannot exceed 24% of our Companys total paid-up capital. With the approval of the Board and the shareholders by way of a special resolution, the aggregate FII holding can go up to 100%.

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However, as of the date of this Draft Red Herring Prospectus our Company has not obtained board or shareholder approval to increase the FII limit to more than 24%. Subject to compliance with all applicable Indian laws, rules, regulations guidelines and approvals in terms of Regulation 15A(1) of the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations 1995, as amended (the "SEBI FII Regulations"), an FII, as defined in the SEBI FII Regulations, may issue or otherwise deal in or hold, offshore derivative instruments (as defined under the SEBI FII Regulations as any instrument, by whatever name called, which is issued overseas by a FII against securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, as its underlying) directly or indirectly, only in the event (i) such offshore derivative instruments are issued only to persons who are regulated by an appropriate regulatory authority; and (ii) such offshore derivative instruments are issued after compliance with "know your client" norms. An FII is also required to ensure that no further issue or transfer of any offshore derivative instrument is made by or on behalf of it to any persons that are not regulated by an appropriate foreign regulatory authority as defined under the SEBI FII Regulations. Associates and affiliates of the Underwriters including the BRLMs and the Syndicate Members that are FIIs may issue offshore derivative instruments against Equity Shares Allotted to them in the Issue. Any such Offshore Derivative Instrument does not constitute any obligation or claim or an interest in our Company. An FII is also required to ensure that no further issue or transfer of any offshore derivative instrument is made to any person other than a person regulated by an appropriate foreign regulatory authority as defined under the SEBI (FII) Regulations. Sub-accounts of FIIs are not permitted to issue offshore derivative instruments. Associates and affiliates of the Underwriters, including the BRLMs, that are FIIs may issue offshore derivative instruments against Equity Shares allocated to them in the Issue. Bids by the SEBI-registered Venture Capital Funds and Foreign Venture Capital Investors The Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 and the Securities and Exchange Board of India (Foreign Venture Capital Investor) Regulations, 2000, each as amended, prescribe investment restrictions on VCFs and FVCIs. While the holding by any VCF in one (1) venture capital undertaking should not exceed 25% of the corpus of the VCF, an FVCI is permitted to invest all of its funds committed in one (1) venture capital fund. Further, VCFs and FVCIs can invest only up to 33.33% of their investable funds by way of subscription to an initial public offering of a venture capital undertaking whose shares are proposed to be listed. Pursuant to the SEBI (ICDR) Regulations, the shareholding of SEBI-registered VCFs and FVCIs held in a company prior to making an initial public offering would be exempt from lock-in requirements only if the shares have been held by them for at least one (1) year prior to the time of filing the draft red herring prospectus with the SEBI. Bids by insurance companies In case of Bids made by insurance companies registered with the IRDA, a certified copy of certificate of registration issued by IRDA must be attached to the Bid-Cum-Application Form. Failing this, our Company reserves the right to reject any Bid without assigning any reason thereof. The exposure norms for insurers, prescribed under the Insurance Regulatory and Development Authority (Investment) Regulations, 2000, as amended (the "IRDA Investment Regulations"), are broadly set forth below: a. Equity shares of a company: the least of 10.00% of the investee company's subscribed capital (face value) or 10.00% of the respective fund in case of life insurer or 10.00% of investment assets in case of general insurer or reinsurer; The entire group of the investee company: the least of 10.00% of the respective fund in case of a life insurer or 10% of investment assets in case of a general insurer or reinsurer (25.00% in case of Unit Linked Insurance Policies); and

b.

400

c.

The industry sector in which the investee company operates: 10.00% of the insurer's total investment exposure to the industry sector (25.00% in case of Unit Linked Insurance Policies).

Further, w.e.f. August 1, 2008, no investment may be made in an initial public offer ("IPO") if the issue size, including offer for sale, is less than `20,000 lakhs. In addition, the IRDA partially amended the exposure limits applicable to investments in public limited companies in the infrastructure and housing sectors, w.e.f. December 26, 2008, providing, among other things, that the exposure of an insurer to an infrastructure company may be increased to not more than 20.00%, provided that in case of equity investment, a dividend of not less than 4.00% including bonus should have been declared for at least five preceding years. In case of an IPO of a wholly owned subsidiary of a corporate or public sector enterprise, the above track record would be applied to the holding company. This limit of 20.00% would be combined for debt and equity taken together, without subceilings. Further, investments in equity including preference shares and the convertible part of debentures shall not exceed 50.00% of the exposure norms specified under the IRDA Investment Regulations. Bids by provident funds/ pension funds In case of Bids made by provident funds/pension funds, subject to applicable laws, with minimum corpus of ` 2,500 Lakhs, a certified copy of certificate from a chartered accountant certifying the corpus of the provident fund/ pension fund must be attached to the Bid-Cum-Application Form. Failing this, our Company reserves the right to reject any Bid, without assigning any reason thereof. Bids by Limited liability partnership In case of Bids made by limited liability partnerships registered under the Limited Liability Partnership Act, 2008, a certified copy of certificate of registration issued under the Limited Liability Partnership Act, 2008, must be attached to the Bid-cum-Application Form. Failing this, our Company reserves the right to reject any Bid without assigning any reason thereof. The above information is given for the benefit of the Bidders. The Bidders are advised to make their own enquiries about the limits applicable to them. Our Company, the Selling Shareholders, the BRLMs do not accept any responsibility for the completeness and accuracy of the information stated hereinabove. Our Company, the Selling Shareholders, the BRLMs are not liable to inform the investors of any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of the Red Herring Prospectus. Bidders are advised to make their independent investigations in respect of such matters and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations. Authority to Bid under a Power of Attorney By limited companies, corporate bodies, registered societies A certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the memorandum of association and articles of association and/or bye laws must be submitted along with the Bid-cum-Application Form. Failing this, our Company and the Selling Shareholders reserves the right to reject any Bid, without assigning any reason therefore. By FIIs, FVCIs, VCFs and Mutual Funds A certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of their SEBI registration certificate must be submitted along with the Bid-cum-Application Form. Failing this, our Company and the Selling Shareholders reserves the right to reject any Bid, without assigning any reason therefore. Our Company and the Selling Shareholders at its absolute discretion reserves the right to relax the above

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conditions of simultaneous lodging of the powers of attorney, subject to the terms and conditions that our Company in consultation with the BRLMs deem fit. ASBA Bidders In case of an ASBA Bid pursuant to a power of attorney, a certified copy of the power of attorney must be lodged along with the ASBA Bid-cum-Application Form. Failing this, our Company, the Selling Shareholders in consultation with the BRLMs, reserves the right to reject such Bids. Our Company, in its absolute discretion, reserves the right to relax the above condition of attaching the power of attorney along with the Bid-Cum-Application Form or the ASBA Bid-cum-Application Form, as the case may be, subject to such terms and conditions that our Company, the Selling Shareholders and the BRLMs may deem fit. Our Company, in its absolute discretion, reserves the right to permit the holder of the power of attorney to request the Registrar to the Issue that, for the purpose of printing particulars on the refund order and mailing of the refund order, allocation advice, the Demographic Details (as defined in "Bidders Depository Account and Bank Account Details" beginning on page 419 of the Draft Red Herring Prospectus) given on the Bid-Cum-Application Form should be used (and not those obtained from the Depository of the Bidder). In such cases, the Registrar to the Issue shall use Demographic Details as given on the Bid cum Application Form instead of those obtained from the Depositories. Maximum and Minimum Bid Size (a) For Retail Individual Bidders: The Bid must be for a minimum of [] Equity Shares and in multiples of [] Equity Shares thereafter, so as to ensure that the Bid Amount payable by the Bidder does not exceed `2,00,000. In case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Amount does not exceed `2,00,000. Where the Bid Amount is over `2,00,000 due to a revision in the Bid or a revision in the Price Band or upon exercise of the option to bid at Cut-off Price, the Bid would be considered for allocation under the Non-Institutional Portion. The Cut-off Price option is given only to Retail Individual Bidders and Eligible Employees indicating their agreement to the Bid and to purchase the Equity Shares at the Issue Price as determined at the end of the Book Building Process. For Non-Institutional Bidders and QIB Bidders: The Bid must be for a minimum of such number of Equity Shares such that the Bid Amount exceeds `2,00,000 and is in multiples of [] Equity Shares. A Bid cannot be submitted for more than the Issue size. However, the maximum Bid by a QIB investor should not exceed the investment limits prescribed for them under applicable laws. A QIB Bidder cannot withdraw its Bid after the Bid/Issue Closing Date and is required to pay the Bid Amount upon submission of the Bid. Our Company may close the Bid/Issue period for QIBs on working day prior to the Bid/Issue Closing date. The identity of QIBs bidding in the Issue under the Net QIB Portion shall not be made public during the Bidding Period. In case of revision in Bids, the Non-Institutional Bidders, who are individuals, have to ensure that the Bid Amount is greater than `2,00,000 to be considered for allocation in the Non-Institutional Portion. In case the Bid Amount reduces to `2,00,000 or less due to a revision in the Bids or a revision in the Price Band, Bids by Non-Institutional Bidders who are eligible for allocation in the Non-Institutional Portion would be considered for allocation under the Retail Portion. NonInstitutional Bidders and QIB Bidders are not allowed to Bid at the Cut-off Price. (c) For Bidders in the Employee Reservation Portion: The Bid must be for a minimum of [] Equity Shares and in multiples of [] Equity Shares thereafter so as to ensure that the Bid Amount payable by Eligible Employees does not exceed `2,00,000. Any Bids in the Employee Reservation Portion exceeding `2,00,000 would be rejected. In case of revision of Bids, Eligible Employees have to ensure that the Bid Amount does not exceed `2,00,000 including due to any revision in the Price

(b)

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Band, may Bid at the Cut-off Price. Where the Bid Amount is over `2,00,000 due to a revision in the Bid or a revision in the Price Band or upon exercise of the option to bid at Cut-off Price, the Bid would be rejected. Bidders in the Employee Reservation Portion may bid at Cut-off Price. However, Employee Discount will be applicable to all Eligible Employees with a maximum bid in the Employee Reservation Portion being upto `2,00,000. The Allotment in the Employee Reservation Portion will be on a proportionate basis not exceeding `2,00,000 for each Eligible Employee. Eligible Employees bidding at a price within the Price Band have to make payment based on their highest bid price option. Eligible Employees bidding at Cut-Off Price have to make payment at the upper end of the Price Band. In the case of the Employee Reservation Portion, a single applicant may make an application for a number of Equity Shares which exceeds the reservation. Payments made upon any revision of Bids shall be adjusted against the payment made at the time of the original Bid or the previously revised Bid. (d) For Bidders in the Anchor Investor Portion: The Bid must be for a minimum of such number of Equity Shares such that the Bid Amount exceeds `1,000 lakhs and in multiples of [] Equity Shares thereafter. Bids by Anchor Investors under the Anchor Investor Portion and the QIB Portion shall not be considered as multiple Bids. A Bid cannot be submitted for more than 30% of the QIB Portion under the Anchor Investor Portion. Anchor Investors cannot withdraw their Bids after the Anchor Investor Bid/ Issue Period and are required to pay the Bid Amount at the time of submission of the Bid. In case the Anchor Investor Issue Price is lower than the Issue Price, the balance amount shall be payable as per the pay-in date mentioned in the Revised Anchor Investor Allocation Notice. In the event of the Issue Price being higher than the price at which allocation is made to Anchor Investors, the Anchor Investors shall be required to pay such additional amount to the extent of shortfall between the price at which allocation is made to them and the Issue Price as per the pay-in date mentioned in the Revised Anchor Investor Allocation Notice. If the Issue Price is lower than the price at which allocation is made to Anchor Investors, the amount in excess of the Issue Price paid by Anchor Investors shall not be refunded to them. The maximum and minimum bid size applicable to a QIB, Retail Individual Bidder or a Non-Institutional Bidder shall be applicable to an ASBA Bidder in accordance with the category that such ASBA Bidder falls under. Bidders are advised to make independent queries to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation or as specified in this Draft Red Herring Prospectus. Refund amounts following a permitted withdrawal of a Bid shall be paid in the manner described in the section "Issue Procedure - Payment of Refund" beginning on page 393 of this Draft Red Herring Prospectus. Information for the Bidder: 1. Our Company and the Selling Shareholders, in consultation with the BRLMs shall declare the Bid/Issue Opening Date and Bid/Issue Closing Date in the Red Herring Prospectus to be registered with the RoC and also publish the same in two (2) national newspapers (one each in English and Hindi) and one (1) Gujarati newspaper, each with wide circulation in the format prescribed under SEBI (ICDR) Regulations. Further, the Price Band and minimum bid lot size as decided by our Company and Selling Shareholders, in consultation with the BRLMs, including the relevant financial ratios computed for both the Cap Price and the Floor Price shall also be disclosed atleast two (2) Working Days prior to Bid/Issue Opening Date in two (2) national newspapers (one each in English

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and Hindi) and one (1) Gujarati newspaper, each with wide circulation. This advertisement, subject to the provisions of Section 66 of the Companies Act, shall be in the format prescribed in Part A of Schedule XIII of the SEBI (ICDR) Regulations. 2. Our Company will file the Red Herring Prospectus with the RoC at least three (3) days before the Bid/Issue Opening Date. The BRLMs shall dispatch the Red Herring Prospectus and other issue material including ASBA Bid-cum-Application Forms, to the Designated Stock Exchange, members of the Syndicate, Bankers to the Issue, investors associations and SCSBs in advance. The Bidding Period shall be for a minimum of three (3) Working Days. In case the Price Band is revised, the Bidding Period shall be extended, for atleast three (3) Working Days, subject to the total Bidding Period not exceeding ten (10) Working Days. The revised Price Band and Bidding Period will be widely disseminated by notification to the SCSBs and Stock Exchanges, and by publishing in two (2) national newspapers (one each in English and Hindi) and one (1) Gujarati newspaper, each with wide circulation in the place where our Registered Office is situated and also by indicating the change on the websites of the BRLMs and at the terminals of the members of the Syndicate. Our Company may decide to close Bidding by QIBs one (1) Working Day prior to the Bid/Issue Closing Date. The Members of Syndicate will circulate copies of the Bid-cum-Application Form to potential investors, and at the request of potential investors, copies of the Red Herring Prospectus will be provided. Any Bidder (who is eligible to invest in the Equity Shares) who would like to obtain the Red Herring Prospectus and/ or along with the Bid-cum-Application Form can obtain the same from the Registered Office of our Company or from any Syndicate Member. Eligible investors who are interested in subscribing for the Equity Shares should approach the BRLM or Members of Syndicate or their authorized agent(s) to register their Bids. The Members of the Syndicate shall accept Bids from the Bidder during the Issue Period in accordance with the terms of the Syndicate Agreement. The Bids should be submitted on the prescribed Bid-Cum-Application Form only. Bid-Cum-Application Forms should bear the stamp of the members of the Syndicate. Bid-Cum-Application Forms, which do not bear the stamp of the members of the Syndicate, will be rejected. Bidders who wish to use the ASBA process should approach the Designated Branches of the SCSBs to register their Bids. ASBA Bidders who would like to obtain the Red Herring Prospectus and / or the ASBA Bid-cumApplication Form can obtain the same from the Designated Branches or the BRLMs. ASBA Bidders can also obtain a copy of the Red Herring Prospectus on the website of the Company and the website of the BRLMs as also the website of SEBI and/or the ASBA Bid-cum-Application Form in electronic form on the websites of the SCSBs. Copies of ASBA BCAFs will be available for downloading and printing, from website of the Stock Exchanges (which provide electronic interface for ASBA facility). A unique application number will be generated for every ASBA Bid-cum-Application Form downloaded and printed from the websites of the Stock Exchanges. The BRLMs shall ensure that adequate arrangements are made to circulate copies of the Red Herring Prospectus and ASBA Bid-cum-Application Forms to the SCSBs. The SCSBs will then make available such copies to investors intending to apply in this Issue through the ASBA process. Additionally, the BRLMs shall ensure that the SCSBs are provided with soft copies of the abridged

3.

4.

5.

6.

7.

8.

9.

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prospectus as well as the ASBA Bid-cum-Application Forms and that the same are made available on the websites of the SCSBs. 12. ASBA Bidders shall correctly mention the bank account number in the ASBA Bid-cum-Application Form and ensure that funds equal to the Bid Amount are available in the bank account maintained with the SCSBs before submitting the ASBA Bid-cum-Application Form to the respective Designated Branch. The Bids should be submitted to the SCSBs on the prescribed ASBA Bid-cum-Application Form if applied in physical mode. SCSBs may provide the electronic mode of bidding either through an internet enabled bidding and banking facility or such other secured, electronically enabled mechanism for bidding and blocking funds in the ASBA Account. The SCSBs shall accept Bids only during the Bidding Period and only from the ASBA Bidders. ASBA Bid-cum-Application Form should bear the code of the Syndicate Member and / or Designated Branch of the SCSB. With respect to Bids by ASBA Bidders ensure that the ASBA Bid cum Application Form is signed by the account holder in case the applicant is not the account holder. ASBA Bidders shall correctly mention their DP ID and Client ID in the ASBA Bid-cum-Application Form. For the purpose of evaluating the validity of Bids, the demographic details of ASBA Bidders shall be derived from the DP ID and Client ID mentioned in the ASBA Bid-cum-Application Form. The Bids should be submitted on the prescribed Bid-cum-Application Form only. Bid-cumApplication Forms (other than the ASBA Bid-cum-Application Forms) should bear the stamp of the Syndicate Member. Bid-cum-Application Forms which do not bear the stamp of a Syndicate Member will be rejected. ASBA Bid-cum-Application Form should bear the code of the Syndicate Member and/or Designated Branch of the SCSB. Bids by ASBA Bidders shall be accepted by the Designated Branches of the SCSBs in accordance with the SEBI (ICDR) Regulations and any circulars issued by SEBI in this regard. Bidders applying through the ASBA process also have an option to submit the ASBA Bid-cum-Application Form in electronic form. The Bids should be submitted to the SCSBs on the prescribed ASBA Bid-cum-Application Form if applied in physical mode. SCSBs may provide the electronic mode of bidding either through an internet enabled bidding and banking facility or such other secured, electronically enabled mechanism for bidding and blocking funds in the ASBA Account. The Price Band will be decided by our Company and the Selling Shareholders in consultation with the BRLMs at least two (2) Working Days prior to the opening of the Issue and shall also be published in all editions of [] and [] and the Gujarati edition of []. Further, it shall also be displayed on the website of our Company, www.neesaleisure.com. The Bidders can Bid at any price within the Price Band, in multiples of [] Equity Shares. In accordance with the SEBI (ICDR) Regulations, our Company and the Selling Shareholders, in consultation with the BRLMs, and without prior intimation or approval from the Bidders, reserves the right to revise the Price Band during the Bidding/Issue Period. The cap on the Price Band will not be more than 120% of the floor of the Price Band. Our Company and the Selling Shareholders in consultation with the BRLMs, shall finalise the Anchor Investor Allocation Price within the Price Band, without the prior approval of the Anchor Investors. Our Company and Selling Shareholders in consultation with the BRLMs, shall finalise the Issue Price within the Price Band, without the prior approval of, or intimation to, the Bidders.

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14. 15.

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Bidders may note that in case the Depository Participant identification number, client identification number of the demat account of the Bidder, and PAN mentioned in the Bid-cum-Application Form or the ASBA Bid-cum-Application Form, as the case may be and entered into the electronic bidding system of the Stock Exchanges by the Members of Syndicate do not match with the Depository Participant identification number, client identification number of the demat account of the Bidder, and PAN available in the Depository database, the application Bid-cum-Application Form or the ASBA Bid-cum-Application Form, as the case may be is liable to be rejected. With effect from August 16, 2010, the demat accounts for Bidders for which PAN details have not been verified, except for persons resident in the state of Sikkim, who, may be exempted from specifying their PAN for transacting in the securities market, shall be "suspended for credit" and no credit of Equity Shares pursuant to the Issue shall be made into accounts of such Bidders. Method and Process of Bidding 1. Our Company and the Selling Shareholders in consultation with the BRLMs shall declare the Bid/Issue Opening Date, the Bid/Issue Closing Date and Price Band in the Red Herring Prospectus to be filed with the RoC and also publish the same in widely circulated national newspapers one (1) each in English and Hindi and one (1) Gujarati newspaper with wide circulation. This advertisement, subject to the provisions of Section 66 of the Companies Act, shall be in the format prescribed in Schedule XIII of the SEBI (ICDR) Regulations. The Price Band and the minimum Bid lot size for the Issue will be decided by our Company and the Selling Shareholders, in consultation with the BRLMs, and will also be published in national newspapers (one each in English and Hindi) and in a Gujarati newspaper with wide circulation, at least two (2) Working Days prior to the Bid/Issue Opening Date. The Syndicate and the SCSBs shall accept Bids from the Bidders during the Bid/Issue Period. The BRLMs and Members of Syndicate shall accept Bids from the Bidders during the Bidding/Issue Period in accordance with the terms of the Syndicate Agreement. The Bidding/Issue Period shall be for a minimum of three (3) Working Days and shall not exceed ten (10) Working Days. Where the Price Band is revised, the revised Price Band and Bidding/Issue Period will be published in national newspapers (one each in English and Hindi) and in a Gujarati newspaper with wide circulation and also by indicating the change on the websites of the BRLMs and at the terminals of the members of the Syndicate. The Bidding/Issue Period may be extended, if required, by an additional three (3) Working Days, subject to the total Bidding/Issue Period not exceeding ten (10) Working Days. During the Bidding/Issue Period, Bidders, other than QIBs, who are interested in subscribing for the Equity Shares should approach the Members of Syndicate or their authorized agents to register their Bids. The Members of Syndicate shall accept Bids from all Bidders and have the right to vet the Bids during the Bid/ Issue Period in accordance with the terms of the Draft Red Herring Prospectus. The Bidders who wish to use the ASBA process should approach the Designated Branches of the SCSBs to register their Bids. Bids by QIBs shall be submitted only to the BRLMs, other than the Bids by QIBs who Bid through the ASBA process, who shall submit the Bids to the Designated Branch of the SCSBs. Each Bid-cum-Application Form will give the Bidder the choice to Bid for up to three (3) optional prices (for details refer to the paragraph "Bids at Different Price Levels") within the Price Band and specify the demand (i.e., the number of Equity Shares Bid for) in each option. The price and demand options submitted by the Bidder in the Bid-cum-Application Form will be treated as optional demands from the Bidder and will not be cumulated. After determination of the Issue Price, the maximum number of Equity Shares Bid for by a Bidder at or above the Issue Price will be considered for allocation and the rest of the Bid(s), irrespective of the Bid Price, will become automatically invalid.

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5.

The Bidder cannot Bid on another Bid-cum-Application Form after Bid(s) on one Bid-cumApplication Form have been submitted to any member of the Syndicate or the SCSBs. Submission of a second Bid-cum-Application Form to either the same or to another member of the Syndicate or the SCSBs will be treated as multiple bidding and is liable to be rejected either before entering the Bid into the electronic bidding system, or at any point in time before the Allotment of Equity Shares in the Issue. However, the Bidder can revise the Bid through the Revision Form, the procedure for which is detailed under the section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus. Except in relation to Bids received from the Anchor Investor, the members of the Syndicate/ the SCSBs will enter each Bid option into the electronic bidding system as a separate Bid and generate a Transaction Registration Slip ("TRS") for each price and demand option and give the same to the Bidder. Therefore, a Bidder can receive up to three (3) TRS for each Bid-cum-Application Form. The BRLMs shall accept the Bids from the Anchor Investors during the Anchor Investor Bid/ Issue Period i.e. one (1) Working Day prior to the Bid/ Issue Opening Date. Bids by QIBs under the Anchor Investor Portion and the QIB Portion shall not be considered as multiple Bids. During the Bidding/Issue Period, Bidders may approach the Members of Syndicate to submit their Bids. Every Syndicate Member shall accept Bids from all clients/investors who place orders through them and shall have the right to vet the Bids. Along with the Bid-cum-Application Form, all Bidders (other than ASBA Bidders) will make payment into the Escrow Account in the manner described under the paragraph "Terms of Payment and Payment into the Escrow Account" beginning on page 421 of this Draft Red Herring Prospectus. Upon receipt of the ASBA Bid-cum-Application Form, submitted whether in physical or electronic mode, the Designated Branch of the SCSBs shall verify if sufficient funds equal to the Bid Amount are available in the ASBA Account, as mentioned in the ASBA Bid-cum-Application Form, prior to uploading such Bids with the Stock Exchanges. If sufficient funds are not available in the ASBA Account, the Designated Branch of the SCSBs shall reject such Bids and shall not upload such Bids with the Stock Exchanges. If sufficient funds are available in the ASBA Account, the SCSBs shall block an amount equivalent to the Bid Amount mentioned in the ASBA Bid-cum-Application Form and will enter each Bid option into the electronic bidding system as a separate Bid and generate a TRS for each price and demand option. The TRS shall be furnished to the ASBA Bidder on request. The Designated Branches of the SCSBs shall give an acknowledgment specifying the application number to the ASBA Bidders as a proof of acceptance of the ASBA Bid-cum-Application Form. Such acknowledgment does not in any manner guarantee that the Equity Shares Bid for shall be Allocated to the ASBA Bidders. The ASBA Bid-cum-Application Form should not be accompanied by cash, draft, money order, postal order or any mode of payment other than blocked amounts in the ASBA Account. The Bid Amount shall remain blocked in the aforesaid ASBA Account until finalisation of the Basis Allotment and consequent transfer of the Bid Amount against the Allotted Equity Shares to the Public Issue Account, or until withdrawal/failure of the Issue or until withdrawal/rejection of the ASBA Bid-cum-Application Form, as the case may be. Once the Basis of Allotment is finalized, the Registrar to the Issue shall send an appropriate request to the Controlling Branch of the SCSBs for unblocking the relevant ASBA Accounts and for transferring the amount allocable to the successful Bidders to the Public Issue Account. In case of withdrawal/failure of the Issue, the blocked amount shall be unblocked on receipt of such information from the Registrar to the Issue.

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Not more than five (5) ASBA Bid-cum-Application Forms can be submitted when utilizing an ASBA Account. The identity of the QIB Bidders shall not be made public.

17.

Bids at Different Price Levels and Revision of Bids 1. The Price Band has been fixed at ` [] to ` [] per Equity Share, ` [] being the Floor Price and ` [] being the Cap Price. The Bidders can Bid at any price within the Price Band in multiples of Re.1. Our Company and the Selling Shareholders, in consultation with the BRLMs and without the prior approval of, or intimation, to the Bidders, reserves the right to revise the Price Band during the Bidding/Issue Period in accordance with the SEBI (ICDR) Regulations. The cap on the Price Band should not be more than 20% of the Floor Price. In case of a revision of the Price Band (the Floor Price can move up or down to the extent of 20% of the Floor Price), the Bidding/Issue Period shall be extended for three (3) additional Working Days, subject to a maximum of ten (10) Working Days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a public notice in two (2) widely circulated national newspapers (one each in English and Hindi) and one (1) Gujarati newspaper each of wide circulation and also by indicating the change on the websites of the BRLMs and at the terminals of the Members of Syndicate. Our Company and the Selling Shareholders, in consultation with the BRLM, can finalize the Issue Price within the Price Band without the prior approval of, or intimation to, the Bidders. Our Company and the Selling Shareholders, in consultation with the BRLMs, can finalise the Anchor Investor Issue Price within the Price Band in accordance with this clause, without the prior approval of, or intimation, to the Anchor Investors. The Bidder can Bid at any price within the Price Band. The Bidder has to Bid for the desired number of Equity Shares at a specific price. Retail Individual Bidders and the Bidders under the Employee Reservation Portion may Bid at the Cut-off Price. However, bidding at the Cut-off Price is prohibited for QIB Bidders or Non-Institutional Bidders and such Bids from QIBs or NonInstitutional Bidders shall be rejected. Retail Individual Bidders and the Bidders under the Employee Reservation Portion who Bid at the Cut-off Price agree that they shall purchase the Equity Shares at any price within the Price Band. Retail Individual Bidders and Eligible Employees bidding under the Employee Reservation Portion bidding at the Cut-off Price shall deposit the Bid Amount based on the cap of the Price Band in the Escrow Account. In the event that the Bid Amount is higher than the subscription amount payable by the Retail Individual Bidders and Eligible Employees bidding under the Employee Reservation Portion who Bid at the Cut-off Price, the Retail Individual Bidders and Eligible Employees bidding under the Employee Reservation Portion shall receive the refund of the excess amounts from the Escrow Account in the manner described under the paragraph "Payment of Refund". In case of an upward revision in the Price Band announced as above, Retail Individual Bidders and Eligible Employees bidding under the Employee Reservation Portion who had Bid at the Cut-off Price could either (i) revise their Bid or (ii) make additional payment based on the higher cap of the revised Price Band (such that the total amount i.e., the original Bid Amount plus additional payment does not exceed `2,00,000 if the Bidder wants to continue to Bid at the Cut-off Price), with the members of the Syndicate to whom the original Bid was submitted. In case the total amount (i.e., original Bid Amount plus additional payment) exceeds `2,00,000, the Bid will be considered for allocation under the Non-Institutional Portion in terms of the Red Herring Prospectus, except Bids

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by Eligible Employees. If, however, the Bidder does not either revise the Bid or make additional payment and the Issue Price is higher than the cap of the Price Band before revision, the number of Equity Shares Bid for shall be adjusted downwards for the purpose of Allotment, such that no additional payment would be required from the Bidder and the Bidder is deemed to have approved such revised Bid at the Cut-off Price. 9. In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders and Eligible Employees bidding under the Employee Reservation Portion who have Bid at the Cutoff Price could either revise their Bid or the excess amount paid at the time of bidding would be refunded from the Escrow Account. In the event of any revision in the Price Band, whether upwards or downwards, the minimum application size shall remain [] Equity Shares irrespective of whether the Bid Amount payable on such minimum application is not in the range of `5,000 to `7,000. When a Bidder has revised his or her Bid, he or she shall surrender the earlier TRS and get a revised TRS from the Members of Syndicate. It is the Bidders responsibility to request for and obtain the revised TRS, which will act as proof of his or her having revised the previous Bid.

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Electronic Registration of Bids 1. The Members of Syndicate and SCSBs will register the Bids using the on-line facilities of the BSE and the NSE. There will be atleast one (1) on-line connectivity facility in each city, where a stock exchange is located in India and where such Bids are being accepted. The BRLMs, our Company, the Selling Shareholders and the Registrar are not responsible for any acts, mistakes or errors or omission and commissions in relation to, (i) the Bids accepted by the Members of Syndicate and the SCSBs, (ii) the Bids uploaded by the Members of Syndicate and the SCSBs, (iii) the Bids accepted but not uploaded by the Members of Syndicate and the SCSBs or (iv) with respect to ASBA Bids, Bids accepted and uploaded without blocking funds in the ASBA Accounts. However, the Members of Syndicate and/or the SCSBs shall be responsible for any error in the Bid details uploaded by them. It shall be presumed that for Bids uploaded by the SCSBs, the Bid Amount has been blocked in the relevant ASBA Account. An SCSB shall not upload any Bid received through ASBA in the electronic bidding system of the Stock Exchanges unless: (i) (ii) it has received the ASBA Bid-cum-Application Form in a physical or electronic form; and it has blocked the application money in the ASBA Account specified in the ASBA Bid-cumApplication Form or has systems to ensure that electronic ASBA Bid-cum- Application Forms are accepted in the system only after blocking of application money in the relevant bank account opened with it.

2.

The Members of Syndicate and the SCSBs will undertake modification of selected fields in the Bid details already uploaded within one (1) Working Day from the Bid/Issue Closing Date. The BSE and the NSE will offer a screen-based facility for registering Bids for the Issue. This facility will be available on the terminals of the Members of Syndicate and their authorized agents and the SCSBs during the Bidding/Issue Period. The Members of Syndicate and the Designated Branches of the SCSBs can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently upload the off-line data file into the on-line facilities for book building on a regular basis. On the Bid/Issue Closing Date, the Members of Syndicate and the Designated Branches of the SCSBs shall upload the Bids until such time as may be permitted by the Stock Exchanges. On the Bid/Issue Closing Date, extension of time will be granted by the Stock Exchanges only for uploading the Bids received by Retail Individual Bidders after taking into

3.

409

account the herein and reported by the BRLMs to the Stock Exchange within half an hour of such closure. 4. The aggregate demand and price for Bids registered on electronic facilities of the BSE and the NSE will be uploaded on a regular basis, consolidated and displayed on-line at all bidding centres as well as on the BSEs website at www.bseindia.com and on the NSEs website at www.nseindia.com. Pursuant to Item 12(g) of Part A of Schedule XI, the SEBI (ICDR) Regulations require that the bidding terminals shall contain an online graphical display of demand and Bid prices updated at periodic intervals not exceeding thirty (30) minutes. A graphical representation of consolidated demand and price will be made available on the bidding terminals of the Syndicate and the websites of the Stock Exchanges by the end of each day during the Bidding Period. A graphical representation of consolidated demand and price will be made available at the bidding centres during the Bidding/Issue Period. At the time of registering each Bid, the Members of Syndicate shall enter the following details of the investor in the on-line system: Name of the Bidder(s). Bidders should ensure that the name given in the Bid-cum-Application Form is exactly the same as the name in which the Depository Account is held. In case the Bid-cum-Application Form is submitted in joint names, Bidders should ensure that the Depository Account is also held in the same joint names and are in the same sequence in which they appear in the Bid-cum-Application Form; Investor categoryIndividual, Corporate, QIBs, Eligible NRI, FVCI, FII & sub-account registered with SEBI (other than a sub-account which is a foreign corporate or foreign individual) or Mutual Fund, etc.; Numbers of Equity Shares bid for; Bid Amount; Bid-cum-Application Form number; Price Option; Depository Participant identification number and client identification number of the demat account of the Bidder; and Cheque details; PAN (of the First Bidder, in case of more than one Bidder). 6. Upon request a system-generated TRS will be given to the Bidder as proof of the registration of each of the bidding options. It is the Bidder's responsibility to obtain the TRS from the Members of Syndicate and the Designated Branches of the SCSBs. The registration of the Bid by the Syndicate Member and the Designated Branches of the SCSBs does not guarantee that the Equity Shares shall be allocated either by the Syndicate Member or our Company or the Selling Shareholders. Such TRS will be non-negotiable and by itself will not create any obligation of any kind. In case of QIB Bidders, only the BRLMs and their Affiliate Members of Syndicate also have the right to accept the Bid or reject the Bid. However, such rejection should be made at the time of receiving the Bid and only after assigning a reason for such rejection in writing. In case of NonInstitutional Bidders and Retail Individual Bidders and Eligible Employees, Bids would not be rejected except on the technical grounds listed in this Draft Red Herring Prospectus. The Members

5.

7. 8.

410

of Syndicate may also reject Bids if all the information required is not provided and the Bid-cumApplication Form is incomplete in any respect. The SCSBs shall have not right to reject Bids, except on technical grounds listed in the Red Herring Prospectus and the Prospectus. 9. The permission given by the BSE and the NSE to use their network and software of the Online IPO system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by our Company, the Selling Shareholders or the BRLMs are cleared or approved by the BSE and the NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of our Company, the Promoters, the management or any scheme or project of our Company nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Red Herring Prospectus; nor does it warrant that the Equity Shares will be listed or will continue to be listed on the Stock Exchanges. It is also to be distinctly understood that the approval given by the BSE and the NSE should not in any way be deemed or construed that the Draft Red Herring Prospectus or Red Herring Prospectus has been cleared or approved by the BSE or the NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of the Draft Red Herring Prospectus or Red Herring Prospectus; nor does it warrant that the Equity Shares will be listed or will continue to be listed on the BSE and the NSE. Only Bids that are uploaded on the online IPO system of NSE and BSE shall be considered for allocation/Allotment. The Members of Syndicate will be given upto one (1) day after the Bid/Issue Closing Date to verify the information uploaded in the online IPO system during the Bid/Issue Period after which the date will be sent to the Registrar for reconciliation and Allotment of Equity Shares. In case of discrepancy of data between BSE or NSE and the Syndicate Members, of our Company and the Selling Shareholders, in consultation with the BRLMs and the Registrar, based on the physical records of Bid-Cum-Application Forms shall be final and binding on all concerned. If the Syndicate Member finds any discrepancy in the DP name, DP Id and the Client Id, the Syndicate Member will correct the same and send the data to the Registrar for reconciliation and Allotment of Equity Shares. Details of Bids in the Anchor Investor Portion will not be registered on the on-line facilities of the electronic facilities of the Stock Exchanges. However, Anchor Investors who use the ASBA facility will have to submit the ASBA Bid-cum-Application Form to the BRLMs along with a confirmation from the SCSBs that the Bid Amount has been blocked in their respective bank accounts in terms of the ASBA process. In the event such Bid Amount has not been blocked, the Anchor Investors Bid shall be rejected.

10.

11.

12.

Electronic registration of Bids by ASBA Bidders Upon receipt of the ASBA Bid-cum-Application Form, the Designated Branch shall register and upload the Bid. Our Company, the Selling Shareholders, our Directors and officers, the Registrar to the Issue, the BRLMs, their affiliates and associates and their respective directors and officers shall not take any responsibility for acts, mistakes, errors, omissions and commissions etc. in relation to Bids accepted by SCSBs, Bids uploaded by SCSBs, Bids accepted but not uploaded by SCSBs or Bids accepted and uploaded without blocking adequate funds in the ASBA Accounts. It shall be presumed that for Bids uploaded by SCSBs, the Bid Amount has been blocked in the ASBA Account. At the time of registering each Bid, the Designated Branches shall enter the information pertaining to the investor into the online IPO system, including the following details: Name of the Bidder(s); Application number;

411

Permanent account number; Investor Category and Sub-Category; Number of Equity Shares Bid for; Depository Participant Identification No.; Client identification number of the Bidders beneficiary account; Price; and Bank Account Number In case of electronic ASBA Bid-cum-Application Form, the ASBA Bidder shall fill in all the above mentioned details, except the application number which shall be system generated. The SCSBs shall thereafter upload all the above mentioned details in the electronic bidding system provided by the Stock Exchanges. A system generated TRS will be given to the ASBA Bidder upon request as proof of the registration of the Bid. It is the ASBA Bidders responsibility to obtain the TRS from the Designated Branch. The registration of the Bid by the Designated Branch does not guarantee that the Equity Shares bid for shall be allocated to the ASBA Bidder. Such TRS will be non-negotiable and by itself will not create any obligation of any kind. The Stock Exchanges offer a screen-based facility for registering Bids which will be available on the terminals of Designated Branches during the Bidding Period. The Designated Branches can also set up facilities for offline electronic registration of Bids subject to the condition that they will subsequently upload the offline data file into the online facilities for book building on a regular basis. On the Bid Closing Date, the Designated Branches shall upload the Bids till such time as may be permitted by the Stock Exchanges. ASBA Bidders are cautioned that high inflow of bids typically received on the last day of the bidding may lead to some Bids received on the last day not being uploaded due to lack of sufficient uploading time, and such bids that are not uploaded may not be considered for allocation. Only Bids that are uploaded on the online IPO system of the Stock Exchanges shall be considered for allocation/Allotment. In case of discrepancy of data between the BSE or NSE and the Designated Branches, the decision of the Registrar to the Issue, in consultation with the BRLMs, our Company, the Selling Shareholders and the Designated Stock Exchange, based on the physical records of the ASBA Bid-cumApplication Forms shall be final and binding on all concerned. The Syndicate or the SCSB, as the case may be, will be responsible for any error in the Bid details uploaded by them in the on-line IPO system of the Stock Exchanges. The BRLMs, the Company, and the Registrar to the Issue are not responsible for any acts, mistakes or errors or omission and commission in relation to Bids accepted by SCSBs, Bids uploaded by SCSBs, Bids accepted but not uploaded by SCSBs or Bids accepted and uploaded without blocking funds in the ASBA Accounts. It shall be presumed that for Bids uploaded by SCSBs, the Bid Amount has been blocked in the relevant ASBA Account. Build Up of the Book and Revision of Bids 1. Bids registered by various Bidders through the Members of Syndicate shall be electronically transmitted to the BSE or the NSE mainframe on a regular basis. Pursuant to Item 12(g) of Part A of Schedule XI to the SEBI (ICDR) Regulations, the bidding terminals shall contain an online graphical display of demand and Bid prices updated at periodic intervals not exceeding thirty (30) minutes. The book gets built up at various price levels. This information will be available from the BRLMs on a regular basis. At the end of each day of the Bidding Period, the demand shall be shown graphically on the bidding terminals of the Syndiacte and the website of the Stock Exchanges. During the Bidding/Issue Period, any Bidder who has registered his or her interest in the Equity Shares at a particular price level is free to revise his or her Bid within the Price Band using the printed Revision Form, which is a part of the Bid-cum-Application Form.

2.

3.

412

4.

Revisions can be made in both the desired number of Equity Shares and the Bid Amount by using the Revision Form or ASBA Revision Form. Apart, from mentioning the revised options in the revision form, the Bidder must also mention the details of all the options in the Bid-cum-Application Form/ or ASBA Bid-cum-Application Form or earlier Revision Form/ ASBA Revision Form. For example, if a Bidder has Bid for three (3) options in the Bid-cum-Application Form and such Bidder is changing only one (1) of the options in the Revision Form/ ASBA Revision Form, he must still complete all the details of the other two (2) options that are not being changed in the Revision Form. The Members of Syndicate and the Designated Branches of the SCSBs will not accept incomplete or inaccurate Revision Forms. The Bidder can make this revision any number of times during the Bidding/Issue Period. However, for any revision(s) in the Bid, the Bidders will have to use the services of the same Syndicate Member or the SCSBs through whom the original Bid was placed or the same Designated Branch of the SCSB with which he or she or it holds the relevant bank account in which funds have been blocked. Bidders are advised to retain copies of the blank Revision Form/ ASBA Revision Form and the revised Bid must be made only on such Revision Form or copies thereof. Any upward revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with the terms of this Draft Red Herring Prospectus. In case of QIBs bidding under the Net QIB Portion, the members of the Syndicate shall collect the payment in the form of cheque or demand draft or through the electronic transfer of funds for the incremental amount to be paid on account of the upward revision of the Bid at the time of one or more revisions by the QIBs. With respect to ASBA Bids, if revision of the Bids results in an incremental amount, the SCSB shall block the incremental amount. In case of an upward revision in the Price Band announced as above, Retail Individual Bidders and Eligible Employees who had Bid at Cut-off Price could either (i) revise their Bid or (ii) shall make additional payment based on the cap of the revised Price Band (such that the total amount i.e., original Bid Amount plus additional payment does not exceed ` 2,00,000 if the Bidder wants to continue to Bid at Cut-off Price), with the Syndicate Member to whom the original Bid was submitted. In case the total amount (i.e., original Bid Amount plus additional payment) exceeds ` 2,00,000, the Bid will be considered for allocation under the Non-Institutional Portion in terms of this Red Herring Prospectus. If, however, the Bidder does not either revise the Bid or make additional payment and the Issue Price is higher than the cap of the Price Band prior to revision, the number of Equity Shares Bid for shall be adjusted downwards for the purpose of allocation, such that no additional payment would be required from the Bidder and the Bidder is deemed to have approved such revised Bid at Cut-off Price. In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders and Eligible Employees, who have Bid at Cut-off Price could either revise their Bid or the excess amount paid at the time of bidding would be refunded from the Escrow Account. Our Company and the Selling Shareholders, in consultation with the BRLMs, shall decide the minimum number of Equity Shares for each Bid to ensure that the minimum application value is within the range of `5,000 to `7,000. Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the incremental amount, if any, to be paid on account of the upward revision of the Bid. With respect to the ASBA Bids, if revision of the Bids results in an incremental amount, the relevant SCSBs shall block the additional Bid Amount. In case of Bids, other than ASBA Bids, the Syndicate Member shall collect the payment in the form of cheque or demand draft or electronic transfer of funds

5.

6.

7.

8.

9.

10.

11.

413

through RTGS for the incremental amount if any, to be paid on account of the upward revision of the Bid at the time of one (1) or more revisions by the QIB Bidders. In such cases, the Members of Syndicate will revise the earlier Bids details with the revised Bid and provide the cheque or demand draft number of the new payment instrument in the electronic book. The Registrar will reconcile the Bid data and consider the revised Bid data for preparing the Basis of Allotment. 12. When a Bidder revises a Bid, the Bidder shall surrender the earlier TRS and get a revised TRS from the members of the Syndicate or the SCSBs. It is the responsibility of the Bidder to request and obtain the revised TRS, which will act as proof of revision of the original Bid. In the case of ASBA Bids, after the Bid/Issue Closing Date, the SCSBs shall provide to the Registrar to the Issue aggregate information relating to the total number of ASBA Bid-cum- Application Forms uploaded and the total number of Equity Shares and total amount blocked against the uploaded ASBA Bid-cum-Application Forms. The Registrar to the Issue shall reconcile the electronic data received from the Stock Exchanges and the information received from the SCSBs. Only Bids that are uploaded on the online IPO system of the BSE and the NSE shall be considered for allocation. In the event of a discrepancy of data between the Bids registered on the online IPO system and the physical Bid-cum-Application Form, the decision of our Company and the Selling Shareholders, in consultation with the BRLMs and the Designated Stock Exchange, based on the physical records of Bid-cum-Application Forms, shall be final and binding on all concerned. Under the SEBI (ICDR) Regulations, QIBs are not allowed to withdraw their Bid after the Bid/Issue Closing Date.

13.

14.

15.

Signing of Underwriting Agreement and RoC Filing (a) Our Company and the Selling Shareholders, the BRLMs and the Members of Syndicate shall enter into an Underwriting Agreement upon finalization of the Issue Price. After signing the Underwriting Agreement, our Company and the Selling Shareholders will update and file the Red Herring Prospectus with the RoC, which will be termed "Prospectus". The Prospectus will have details of the Issue Price, Issue size, underwriting arrangements and will be complete in all material respects.

(b)

Filing of the Prospectus with the RoC We will file a copy of the Prospectus with the RoC in terms of Section 56, Section 60 and Section 60B of the Companies Act. Announcement of pre-Issue Advertisement Subject to Section 66 of the Companies Act, our Company shall, after registering the Red Herring Prospectus with RoC, publish a pre-Issue advertisement, in the form prescribed by the SEBI (ICDR) Regulations, in two (2) widely circulated national newspapers, one each in English and Hindi and one (1) Gujarati newspaper, each with wide circulation. Advertisement regarding the Issue Price and Prospectus A statutory advertisement will be issued by our Company after the filing of the Prospectus with the RoC. This advertisement, in addition to the information that is required to be set out in the statutory advertisement, shall indicate the Issue Price and the Anchor Investor Issue Price. Any material updates between the date of the Red Herring Prospectus and the Prospectus shall be included in such advertisement.

414

INVESTORS ARE ADVISED TO INSTRUCT THEIR DEPOSITORY PARTICIPANT TO ACCEPT THE EQUITY SHARES THAT MAY BE ALLOTTED TO THEM PURSUANT TO THIS PUBLIC ISSUE. Issuance of Allotment Advice a) Upon approval of the basis of Allotment by the Designated Stock Exchange, the BRLMs, or the Registrar to the Issue shall send to the members of the Syndicate and to the Controlling Branches of the SCSBs, a list of their Bidders who have been allocated Equity Shares in the Issue. The approval of the basis of allocation by the Designated Stock Exchange for QIB Bidders may be done simultaneously with or before the approval of the basis of allocation for the Retail Individual Bidders and NonInstitutional Bidders. However, the investor should note that our Company shall ensure that the instructions by our Company for demat credit of the Equity Shares to all investors in the Issue shall be given on the same date as the date of Allotment.

b) The Registrar to the Issue will send an Allotment Advice to the Bidders who have been allocated Equity Shares in the Issue. The dispatch of an Allotment Advice shall be deemed a valid, binding and irrevocable contract for the Bidder. c) In case of an Anchor Investor, the issuance of a CAN is subject to "Notice to Anchor Investors: Allotment Reconciliation and Revised CANs", as set forth below.

Notice to Anchor Investors: Allotment Reconciliation and Revised CANs A physical book will be prepared by the Registrar on the basis of the Bid-cum-Application Forms received from Anchor Investors. Based on the physical book and at the discretion of the BRLMs, select Anchor Investors shall be sent the CAN indicating the number of Equity Shares that may be allocated to them. The Anchor Investors are required to pay the entire amount at the time of submitting the Bid. This CAN shall constitute a valid, binding and irrevocable contract (subject only to the issue of a revised CAN) for the Anchor Investors that they have paid the entire Anchor Investor Issue Price for all the Equity Shares allocated to such Anchor Investor. This CAN is subject to the Bid-cum-Application Form submitted by the Anchor Investors being valid in all respects, the Issue Price being finalized at a price not higher than the Anchor Investor Issue Price and allotment by the Board of Directors. In the event the Issue Price is higher than the Anchor Investor Issue Price, a revised CAN will be sent to Anchor Investors. The price of Equity Shares in such revised CAN shall be different from that specified in the earlier CAN. Anchor Investors should note that they shall be required to pay additional amounts, if any, by the Pay-in Date specified in the revised CAN, for any increased allocation of Equity Shares or increased price of Equity Shares. Any revised CAN, if issued, to any Anchor Investor will supersede in entirety the earlier CAN. Notice to QIBs bidding in the Net QIB Portion: Allotment Reconciliation and Revised CANs After the Bid Closing Date, an electronic book will be prepared by the Registrar to the Issue on the basis of Bids uploaded on the BSE or NSE system. This shall be followed by a physical book prepared by the Registrar to the Issue on the basis of the Bid-Cum-Application Forms received. Based on the electronic book, QIBs bidding in the Net QIB Portion will be sent a CAN, indicating the number of Equity Shares that may be allocated to them. This CAN is subject, inter alia, to approval of the final Basis of Allocation by the Designated Stock Exchange. Subject to SEBI (ICDR) Regulations, certain Bids/applications may be rejected due to technical reasons, non-receipt/availability of funds, cancellation of cheques, cheque bouncing, incorrect details, etc., and these rejected applications will be reflected in the reconciliation of the book prepared by the Registrar to the Issue and the "Basis of Allocation" as approved by the Designated Stock Exchange. As a result, one or more revised CAN(s) may be sent to QIBs bidding in the Net QIB Portion and the allocation of Equity Shares in such revised CAN(s) may be different from that specified in the earlier CAN(s). QIBs bidding in the Net QIB Portion should note that they may be required to pay

415

additional amounts, if any, by the Pay-in Date specified in the revised CAN(s), for any increased allocation of Equity Shares. The CAN will constitute the valid, binding and irrevocable contract, subject only to the issue of revised CAN(s), for such QIBs to pay the entire Issue Price for all the Equity Shares allocated to such QIBs. The revised CAN(s), if issued, will supersede in entirety, the earlier CAN(s). Unblocking of ASBA Account Once the basis of Allotment is approved by the Designated Stock Exchange, the Registrar to the Issue shall provide the following details to the Controlling Branches of each SCSB, along with instructions to unblock the relevant bank accounts and transfer the requisite money to the Public Issue Account designated for this purpose, within the timelines specified in the ASBA facility: (i) the number of Equity Shares to be Allotted against each valid ASBA Bid, (ii) the amount to be transferred from the relevant bank account to the Public Issue Account, for each valid ASBA Bid, (iii) the date by which funds referred to in (ii) above shall be transferred to the Public Issue Account, and (iv) details of rejected ASBA Bids, if any, along with reasons for rejection and details of withdrawn and/or unsuccessful ASBA Bids, if any, to enable SCSBs to unblock the respective bank accounts. On the basis of instructions from the Registrar to the Issue, the SCSBs shall transfer the requisite amount against each successful ASBA Bidder to the Public Issue Account and shall unblock the excess amount, if any, in the ASBA Account. However, the Bid Amount may be unblocked in the ASBA Account prior to receipt of notification from the Registrar to the Issue by the Controlling Branch of the SCSB in relation to the approval of the basis of Allotment in the Issue by the Designated Stock Exchange in the event of withdrawal or failure of the Issue or rejection of the ASBA Bid, as the case may be. Designated Date and Allotment of Equity Shares (a) Our Company will ensure that (i) the Allotment of Equity Shares; and (ii) credit to the successful Bidders depository account will be completed within twelve (12) Working Days of the Bid/Issue Closing Date.After the funds are transferred from the Escrow Accounts to the Public Issue Account and the Refund Account on the Designated Date, our Company will ensure the credit to the depository account(s) of successful Bidder(s) within two (2) Working Days of the Allotment. As per the SEBI (ICDR) Regulations, Allotment of the Equity Shares will be only in dematerialized form to the allottees. Successful Bidders will have the option to re-materialize the Equity Shares so allotted as per the provisions of the Companies Act and the Depositories Act.

(b)

(c)

Investors are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated / Allotted to them pursuant to this Issue. GENERAL INSTRUCTIONS DOs: (a) Check if you are eligible to apply having regard to applicable law, rules, regulations, guidelines and approvals and the terms of the Red Herring Prospectus; Ensure that your Bid is within the Price Band; Read all the instructions carefully and complete the Resident Bid-cum-Application Form (white in colour), Non-Resident Bid-cum-Application Form (blue in colour), the Anchor Investor Bid-cumApplication Form (white in colour) or the Employee Bid-cum-Application Form (pink in colour) as the case may be;

(b) (c)

416

(d)

Ensure that the details of your Depository Participant and beneficiary account are correct and the beneficiary account is activated as Equity Shares will be Allotted in dematerialized form only; Ensure that the Bids are submitted at the bidding centers only on forms bearing the stamp of a member of the Syndicate Member or with respect to ASBA Bidders, ensure that your Bid is submitted at a Designated Branch of the SCSBs where the ASBA Bidder or the person whose bank account will be utilised by the Bidder for bidding has a bank account; With respect to ASBA Bids ensure that the ASBA Bid-cum-Application Form is signed by the account holder in case the applicant is not the account holder. Ensure that you have mentioned the correct bank account number in the ASBA Bid-cum-Application Form; Ensure that you have funds equal to the Bid Amount in your bank account maintained with the SCSBs before submitting the ASBA Bid-cum-Application Form to the respective Designated Branch of the SCSBs; Ensure that the full Bid Amount is paid for the Bids subsmitted to the Syndicate and funds equivalent to the Bid Amount are blocked in case of any Bids submitted throught the SCSBs. Instruct your respective banks to not release the funds blocked in the bank account under the ASBA process; Ensure that you have collected a TRS for all your Bid options; Submit Revised Bids to the same member of the Syndicate through whom the original Bid was placed and obtain a revised TRS; Except for Bids (i) on behalf of the Central or State Government and the officials appointed by the courts, and (ii) (subject to SEBI circular dated April 3, 2008) from the residents of the state of Sikkim, each of the Bidders should mention their PAN allotted under the I.T. Act. Bid-cumApplication Forms in which the PAN is not mentioned are liable to be rejected; Ensure that the name(s) given in the Bid-cum-Application Form is exactly the same as the name(s) in which the beneficiary account is held with the Depository Participant. Where the Bid-cumApplication Form is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the Bid-cumApplication Form; and Ensure that the Demographic Details are updated, true and correct in all respects.

(e)

(f)

(g)

(h)

(i)

(j) (k)

(l)

(m)

(n)

DONTs: (a) (b) (c) Do not Bid for lower than the minimum Bid size; Do not Bid or revise the Bid to a price that is less than the Floor Price or higher than the Cap Price; Do not Bid on another Bid-cum-Application Form after you have submitted a Bid to the members of the Syndicate or the SCSBs, as applicable; Do not pay the Bid amount in cash, by money order or by postal order, or by Stockinvest; Do not send Bid-cum-Application Forms by post; instead submit the same to a member of the Syndicate or the Designated Branch of SCSBs only; Do not Bid at the Cut-off Price, in the case of a Bid by a QIB Bidder or a Non-Institutional Bidder;

(d) (e)

(f)

417

(g)

Do not complete the Bid-cum-Application Form such that the number of Equity Shares Bid for exceeds the Issue size and/or investment limit or maximum number of Equity Shares that can be held under the applicable laws or regulations or maximum amount permissible under the applicable regulations or under the terms of this Draft Red Herring Prospectus; Do not submit the Bids without the Bid Amount; Do not submit more than five ASBA Bid-cum-Application Forms per bank account; Do not bid at Bid Amount exceeding `2,00,000, in the case of a Bid by a Retail Individual Bidder or Bid by Eligible Employees; and Do not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground.

(o) (p) (h)

(i)

INSTRUCTIONS FOR COMPLETING THE BID-CUM-APPLICATION FORM / ASBA BIDCUMAPPLICATION FORM Bidders can obtain Bid-cum-Application Forms and/or Revision Forms from the Members of Syndicate or the Registered Office of our Company. Bids and Revisions of Bids Bids and revisions of Bids must be: 1. Made only on the prescribed Bid-cum-Application Form/ ASBA Bid-cum-Application Form or Revision Form/ ASBA Revision Form, as applicable. Made in a single name or in joint names (not more than three (3), and in the same order as their Depository Participant details). Completed in full, in BLOCK LETTERS in English and in accordance with the instructions contained herein, on the Bid-cum-Application Form/ ASBA Bid-cum-Application Form or in the Revision Form/ ASBA Revision Form. Incomplete Bid-cum-Application Forms/ ASBA Bid-cumApplication Form or Revision Forms/ ASBA Revision Form are liable to be rejected Bidders should note that the Syndicate Member and /or the SCSBs, as appropriate, will not be liable for errors in data entry due to incomplete or illegible Bid-cum-Application Forms/ ASBA Bid-cum-Application Form or Revision Forms/ ASBA Revision Form. Information provided by the Bidders will be uploaded in the online IPO system by the Syndicate Member and the SCSBs, as the case may be, and the electronic data will be used to make allocation/Allotment. The Bidders should ensure that the details are correct and legible. Bids from the Retail Individual Bidders and from Eligible Employees must be for a minimum of [] Equity Shares and in multiples of [] Equity Shares thereafter subject to a maximum Bid Amount of `2,00,000. For Non-Institutional Bidders and QIB Bidders, Bids must be for a minimum of such number of Equity Shares such that the Bid Amount exceeds `2,00,000 and in multiples of [] Equity Shares thereafter. Bids cannot be made for more than the Issue size. Bidders are advised to ensure that a single Bid from them does not exceed the investment limits or maximum number of shares that can be held by them under the applicable laws and regulations. For Anchor Investors, Bids must be for a minimum of such number of Equity Shares that the Bid Amount exceeds or equal to `1,000 lakhs and in multiples of [] Equity Shares thereafter.

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Thumb impressions and signatures other than in the languages specified in the Eighth Schedule to the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.

Bidders PAN, Depository Account and Bank Account Details Bidders should note that on the basis of PAN of the Bidders, the name of the Bidders, Depository Participant's name, Depository Participant-identification number and beneficiary account number provided by them in the Bid-cum-Application Form, the Registrar to the Issue will obtain from the Depository, demographic details of the Bidders such as their address, bank account details for printing on refund orders or giving credit through NECS or Direct Credit, and occupation (hereinafter referred to as "Demographic Details"). These bank account details would be used for giving refunds (including through physical refund warrants, direct credit, NECS, NEFT and RTGS) or unblocking of ASBA Account or mailing of Allotment Advice/CANs to the Bidders. It is mandatory to provide the bank account details in the space provided in the Bid-cum- Application Form/ASBA Bid-cum-Application Form, and any Bid-cum-Application Form/ASBA Bid-cumApplication Form that does not contain such details is liable to be rejected. Hence, Bidders 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 dispatch/credit of refunds to Bidders or unblocking of ASBA Account at the Bidders sole risk and neither the BRLMs nor our Company nor the Selling Shareholders shall have any responsibility or undertake any liability for the same. Hence, Bidders should carefully fill in their Depository Account details on the Bid-cum- Application Form. IT IS MANDATORY FOR ALL THE BIDDERS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALIZED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY PARTICIPANTS NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID-CUMAPPLICATION FORM. INVESTORS MUST ENSURE THAT THE NAME GIVEN ON THE BID-CUM-APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IF THE BID-CUM-APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND SUCH JOINT NAMES ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR ON THE BID-CUMAPPLICATION FORM. These demographic details will be used for all correspondence with the Bidders including mailing of the refund orders/NECS credit for refunds/direct credit of refund/ allocation advice/NEFT or RTGS for refunds and printing of our Company particulars on the refund order. The demographic details given by Bidders in the Bid-cum-Application Form will not be used for any other purposes by the Registrar to the Issue. By signing the Bid-cum-Application Form, the Bidder will be deemed to have authorized the Depositories to provide, upon request, to the Registrar to the Issue, the required demographic details as available on its records. Refund orders/allocation advice would be mailed to the address of the Bidder as per the Demographic Details received from the Depositories. Bidders may note that delivery of refund orders/allocation advice may get delayed if such refund orders or documents, once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Bidder in the Bid-cum-Application Form would be used only to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk and neither the Escrow Collection Bank(s) nor the BRLMs shall be liable to compensate the Bidder for any losses caused to the Bidder due to any such delay or pay any interest for such delay. In case of refunds through electronic modes as detailed in this Draft Red Herring Prospectus, Bidders may note that refunds may get delayed if bank particulars obtained from the Depository Participant are incorrect.

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Where no corresponding record is available with the Depositories that matches three parameters, namely, names of the Bidders (including the order of names of joint holders), the Depository Participants identity (DP ID) and the beneficiarys identity, then such Bids are liable to be rejected. Bids by Anchor Investors Our Company and the Selling Shareholders, in consultation with the BRLMs, may consider participation by Anchor Investors in the QIB Portion for up to [] Equity Shares in accordance with the applicable SEBI (ICDR) Regulations. Only QIBs as defined in Regulation 2(1)(zd) of the SEBI (ICDR) Regulations and not otherwise excluded pursuant to item 10(k) of Part A of Schedule XI of the SEBI (ICDR) Regulations are eligible to invest. The QIB Portion shall be reduced in proportion to the allocation under the Anchor Investor Portion. In the event of under-subscription in the Anchor Investor Portion, the balance Equity Shares shall be added to the Net QIB Portion. In accordance with the SEBI (ICDR) Regulations, the key terms for participation in the Anchor Investor Portion are as follows: Bid-cum-Application Form have been made available for Bids under the Anchor Investor Portion at our Registered Office, with the Members of Syndicate. The Bid must be for a minimum of such number of Equity Shares so that the Bid Amount exceeds ` 100.00 million and in multiples of [] Equity Shares thereafter. A Bid cannot be submitted for more than 30% of the QIB Portion. One-third of the Anchor Investor Portion shall be reserved for allocation to domestic mutual funds. The Bidding for Anchor Investors shall open one (1) Working Day before the Bid/Issue Opening Date and shall be completed on the same day. Our Company and the Selling Shareholders, in consultation with the BRLMs, shall finalise Allocation to the Anchor Investors on a discretionary basis, subject to compliance with requirements regarding minimum number of Allottees. Allocation to Anchor Investors shall be completed on the Anchor Investor Bidding Date. The number of Equity Shares allocated to Anchor Investors and the price at which the allocation is made, shall be made available in public domain by the BRLMs before the Bid/Issue Opening Date. Anchor Investors are required to pay the entire Bid Amount at the time of submission of the Bid-cumApplication Form. In case the Issue Price is greater than the Anchor Investor Allocation Price, the additional amount being the difference between the Issue Price and the Anchor Investor Allocation Price shall be paid by the Anchor Investors by the Pay-in-Date. In the event the Issue Price is lower than the Anchor Investor Allocation Price, the Allotment to Anchor Investors shall be at the higher price i.e. the Anchor Investor Allocation Price and this shall constitute the Anchor Investor Issue Price. The Equity Shares allotted in the Anchor Investor Portion shall be locked-in for a period of thirty (30) days from the date of Allotment in the Issue. None of BRLMs nor any person related to the BRLMs or Promoters, Promoter Group shall participate in the Anchor Investor Portion. Bids made by Anchor Investors under both the Anchor Investor Portion and the QIB Portion shall not be considered as multiple Bids. The payment instruments for payment into the Escrow Account should be drawn in favour of: i. In case of resident Anchor Investors:"Escrow Account - [] Public Issue-Anchor Investor" ii. In case of non-resident Anchor Investors:"Escrow Account - [] Public Issue - Anchor Investor NR" The minimum number of Allottees in the Anchor Investor Portion shall not be less than: (a) two, where the allocation under Anchor Investor Portion is up to ` 2,500.00 million; and (b) five, where the allocation under Anchor Investor Portion is more than ` 2,500.00 million. Additional details, if any, regarding participation in the Issue under the Anchor Investor Portion shall also be disclosed in the advertisement for the Price Band which shall be taken out by our Company in a national English and Hindi newspaper and a Gujarati newspaper daily at least two (2) Working Days prior to the Bid/Issue Opening Date.

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The Red Herring Prospectus, in so far as it relates to terms of the Issue should be read in conjunction with the aforestated paragraphs, to the extent applicable. PAYMENT INSTRUCTIONS Escrow Mechanism for Bidders other than ASBA Bidders The Bidders shall draw cheques or demand drafts in respect of their Bid and/or revision of the Bid in favour of the payee detailed under "Payment into Escrow Accounts" on pages [] of the Draft Red Herring Prospectus. Cheques or demand drafts received for the full Bid Amount from Bidders in a particular category would be deposited in the Escrow Accounts. The Escrow Collection Bank(s) will act in terms of the Red Herring Prospectus, the Prospectus and the Escrow Agreement. The monies in the Escrow Accounts shall be maintained by the Escrow Collection Bank(s) for and on behalf of the Bidders. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds equivalent to the size of this Issue from the Escrow Account into the Public Issue Account and the balance amount to the Refund Account(s), as per the terms of the Escrow Agreement, the Red Herring Prospectus and the Prospectus. Bidders should note that the escrow mechanism is neither provided under any law or regulation nor has been prescribed by SEBI. The escrow mechanism has been established as an arrangement amongst our Company, the members of the Syndicate, the Escrow Collection Bank(s) and the Registrar to the Issue to facilitate collections from the Bidders. Terms of payment through escrow mechanism Our Company along with the Selling Shareholders and the Syndicate Member shall open Escrow Account(s) with one (1) or more Escrow Collection Banks in whose favour the Bidders shall make out the cheque or demand draft in respect of his or her Bid and /or revision of the Bid. The Escrow Collection Banks will act in terms of this Draft Red Herring Prospectus and the Escrow Agreement. Cheques or demand drafts received for the full Bid Amount from Bidders would be deposited in the Escrow Account with the Escrow Collection Bank(s), which will hold the monies deposited in the Escrow Account for the benefit of the Bidders until the Designated Date. On the Designated Date and no later than twelve (12) Working Days from the Bid Closing Date, the Escrow Collection Bank(s) shall transfer the funds equivalent to the size of this Issue from the Escrow Account into the Public Issue Account and the balance amount to the Refund Account(s), as per the terms of the Escrow Agreement and this Draft Red Herring Prospectus. Where a Bidder has been allocated a lesser number of Equity Shares than the Bidder has Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated, will be refunded to the Bidder from the Refund Account within twelve (12) Working Days from the Bid/ Issue Closing Date, failing which our Company and the Selling Shareholders shall pay interest at 15% per annum, in proportion to the Equity Shares offered by them under the Issue, for any delay beyond periods as mentioned above. Bidders should note that the escrow mechanism is neither provided under any law or regulation nor has been prescribed by SEBI. The escrow mechanism has been established as an arrangement amongst our Company, the members of the Syndicate, the Escrow Collection Bank(s) and the Registrar to the Issue to facilitate collections from the Bidders. Payment mechanism for ASBA Bidders The ASBA Bidders shall specify the bank account number in the ASBA Bid-cum-Application Form and the SCSBs shall block an amount equivalent to the Bid Amount in the bank account specified in the ASBA

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Bid-cum-Application Form. The SCSBs shall keep the Bid Amount in the relevant bank account blocked until withdrawal/ rejection of the ASBA Bid or receipt of instructions from the Registrar to unblock the Bid Amount. In the event of withdrawal or rejection of the ASBA Bid-cum-Application Form, failure of the Issue or for unsuccessful ASBA Bid-cum-Application Forms, the Registrar shall give instructions to the SCSBs to unblock the application money in the relevant bank account prior to twelve (12) Working Days from the Bid/Issue Closing Date and the SCSBs shall unblock the Bid Amount within one day of receipt of such instruction. The Bid Amount shall remain blocked in the ASBA Account until finalisation of the Basis of Allotment in the Issue and consequent transfer of the Bid Amount to the Public Issue Account, or until withdrawal/ failure of the Issue or until rejection of the ASBA Bid, as the case may be. Payment into Escrow Accounts for Bidders other than ASBA Bidders Each Bidder shall draw a cheque or demand draft or remit the funds electronically through the RTGS mechanism for the amount payable on the Bid and/or on allocation/Allotment as per the following terms: 1. All Bidders would be required to pay the full Bid Amount at the time of the submission of the Bidcum-Application Form. The Bidders shall, with the submission of the Bid-cum-Application Form, draw a payment instrument for the Bid Amount in favour of the Escrow Account and submit the same to the Syndicate. If the payment is not made favouring the Escrow Account along with the Bid-cumApplication Form, the Bid of the Bidder shall be rejected. The payment instruments for payment into the Escrow Account should be drawn in favor of: (a) In the case of resident QIB Bidders: []; (b) In the case of Non-Resident QIB Bidders: []; (c) In the case of Resident Retail and Non-Institutional Bidders: []; (d) In the case of Non-Resident Retail and Non-Institutional Bidders: []; (e) In the case of Eligible Employees: []; (f) In the case of Resident Anchor Investor: []; (g) In the case of Non-Resident Anchor Investor: [] 4. Anchor Investors would be required to pay the Bid Amount at the time of submission of the Bidcum-Application Form. In the event of the Issue Price being higher than the price at which allocation is made to Anchor Investors, the Anchor Investors shall be required to pay such additional amount to the extent of shortfall between the price at which allocation is made to them and the Issue Price within two (2) Working Days of the Bid/Issue Closing Date. If the Issue Price is lower than the price at which allocation is made to Anchor Investors, the amount in excess of the Issue Price paid by Anchor Investors shall not be refunded to them. In the case of Bids by Eligible NRIs applying on a repatriation basis, the payments must be made through Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application remitted through normal banking channels or out of funds held in NRE Accounts or FCNR Accounts, maintained with banks authorized to deal in foreign exchange in India, along with documentary evidence in support of the remittance. Payment will not be accepted out of NonResident Ordinary (NRO) Account of a Non-Resident Bidder bidding on a repatriation basis. Payment by draft should be accompanied by a bank certificate confirming that the draft has been issued by debiting a NRE Account or a FCNR Account.

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In the case of Bids by Eligible NRIs applying on a non-repatriation basis, the payments must be made by Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application, remitted through normal banking channels or out of funds held in NRE Accounts or FCNR Accounts, maintained with banks authorized to deal in foreign exchange in India, along with documentary evidence in support of the remittance or out of an NRO Account of a Non-Resident Bidder bidding on a non-repatriation basis. Payment by drafts should be accompanied by a bank certificate confirming that the draft has been issued by debiting an NRE or a FCNR or an NRO Account. In case of Bids by FIIs & sub-account and FVCIs the payment should be made out of funds held in a special rupee account along with documentary evidence in support of the remittance. Payment by draft should be accompanied by a bank certificate confirming that the draft has been issued by debiting a special rupee account. Where a Bidder has been allocated a lesser number of Equity Shares than the Bidder has Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated, will be refunded to the Bidder from the Refund Account. The monies deposited in the Escrow Accounts will be held for the benefit of the Bidders (other than ASBA Bidders) until the Designated Date. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow Accounts into the Public Issue Account as per the terms of the Escrow Agreement and the surplus amount to be transferred to refund account. On the Designated Date and no later than twelve (12) Working Days from the Bid/Issue Closing Date, the Escrow Collection Banks shall refund all amounts payable to unsuccessful Bidders (other than ASBA Bidders) and also the excess amount paid on Bidding, if any, after adjusting for allocation/allotment to such Bidders. Bidders are advised to mention the number of the Bid-Cum-Application Form on the reverse of the cheque or demand draft to avoid misuse of the payment instrument submitted along with the BidCum-Application Form. In case clear funds are not available in the Escrow Accounts as per final certificates from the Escrow Collection Bank(s), such Bids are liable to be rejected. Payments should be made by cheque, or demand draft drawn on any bank (including a cooperative bank), which is situated at, and is a member of or sub-member of the bankers' clearing house located at the centre where the Bid-cum-Application Form is submitted. Outstation cheques/bank drafts drawn on banks not participating in the clearing process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected. Cash/Stockinvest/money orders/postal orders will not be accepted.

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Payment by Stockinvest Under the terms of the RBI Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the option to use the stockinvest instrument in lieu of cheques or bank drafts for payment of Bid money has been withdrawn. Accordingly, payment through Stockinvest will not be accepted in this Issue. Submission of Bid-cum-Application Form All Bid-cum-Application Forms or Revision Forms duly completed and accompanied by account payee cheques or drafts shall be submitted to the Members of Syndicate at the time of submission of the Bid.

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With respect to the ASBA Bidders, the ASBA Bid-cum-Application Form or the ASBA Revision Form shall be submitted to the Designated Branches of the SCSBs. Separate receipts shall not be issued for the money payable on the submission of Bid-cum-Application Forms or Revision Forms. However, the collection centre of the Members of Syndicate will acknowledge the receipt of the Bid-cum- Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid-cumApplication Form for the records of the Bidder. OTHER INSTRUCTIONS Joint Bids in case of Individuals Bids may be made in single or joint names (not more than three). In the case of joint Bids, all refund payments will be made in favour of the Bidder whose name appears first in the Bid-cum-Application Form or Revision Form. All communications will be addressed to the first Bidder and will be dispatched to his or her address as per the Demographic Details received from the Depository. Multiple Bids A Bidder should submit only one Bid (and not more than one). Two (2) or more Bids will be deemed to be multiple Bids if the sole or first Bidder is one and the same. In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI and such Bids in respect of more than one scheme of the Mutual Fund will not be treated as multiple Bids provided that the Bids clearly indicate the scheme concerned for which the Bid has been made. Eligible Employees can Bid in the Employee Reservation Portion and the Net Issue and such Bids shall not be considered as multiple Bids. Bids by QIBs under the Anchor Investor Portion and QIB Portion (excluding Anchor Investor Portion) will not be considered as multiple Bids. Our Company and the Selling Shareholders reserve the right to reject, in its absolute discretion, all or any multiple Bids in any or all categories. In this regard, the procedures to be followed by the Registrar to the Issue to detect multiple applications are given below: 1. All Bids will be checked for common PAN and will be accumulated and taken to a separate process file which will serve as a multiple master document. In this master, a check will be carried out for the same PAN numbers. In cases where the PAN numbers are different, the same will be deleted from this master. The applications will be electronically matched for similar Depository Participants identity (DP ID) and client identity (Client ID) numbers. If applications bear the same numbers, these will be treated as multiple applications.

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In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Funds and such Bids in respect of more than one scheme of the Mutual Funds will not be treated as multiple Bids provided that the Bids clearly indicate the scheme for which the Bid has been made. Bids made by employees under both under the Employee Reservation Portion as well as in the Issue shall not be treated as multiple bids. Our Company and the Selling Shareholders, in consultation with the BRLMs reserves the right to reject, in their absolute discretion, all or any multiple Bids in any or all categories.

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Permanent Account Number ("PAN") SEBI had issued a circular directing that with effect from July 2, 2007, PAN would be the sole identifiable number for participants transacting in the securities market, irrespective of the amount of transaction. Pursuant to Item XII(B)(17)(c) of Part A of Schedule VIII to the SEBI (ICDR) Regulations, all applicants are required to disclose their PAN allotted under the I.T. Act in the Bid-cum-Application Form, irrespective of the amount of the Bid. Applications in which PAN so allotted is not mentioned would be rejected. Therefore, irrespective of the amount of the Bid, the Bidder or in the case of a Bid in joint names, each of the Bidders should mention his/her PAN allotted under the I.T. Act. Applications without this information will be considered incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not submit the GIR Number instead of the PAN as the Bid is liable to be rejected on this ground. Price Discovery and Allocation 1. After the Bid/Issue Closing Date, the Registrar to the Issue shall aggregate the demand generated under the ASBA process with the Bids received under the non-ASBA process to determine the demand generated at different price levels. Thereafter, the BRLMs shall analyze the demand generated at various price levels and discuss pricing strategy with our Company and the Selling Shareholders. Our Company and the Selling Shareholders, in consultation with the BRLMs, shall finalize the Issue Price and the number of Equity Shares to be allocated in each investor category. Allocation to Anchor Investors shall be at the discretion of our Company and the Selling Shareholders in consultation with the BRLMs subject to compliance with the SEBI (ICDR) Regulations. In the event of undersubscription in the Anchor Investor Portion, the balance Equity Shares shall be added to the Net QIB Portion. The allotment to QIBs will be not more than 50% of the Net Issue to the Public, on a proportionate basis and the availability for allocation to Non-Institutional and Retail Individual Bidders will be not less than 15% and 35% of the Net Issue to the Public, respectively, on a proportionate basis, in a manner specified in the SEBI (ICDR) Regulations and this Draft Red Herring Prospectus, in consultation with the Designated Stock Exchange, subject to valid Bids being received at or above the Issue Price. In case of over-subscription in all categories, not more than 50% of the Issue shall be available for allocation on a proportionate basis to QIBs, out of which 5% shall be reserved for domestic Mutual Funds. Domestic Mutual Funds participating in the 5% share in the QIB Portion will also be eligible for allocation in the remaining QIB Portion. However, if the aggregate demand by Mutual Funds is less than 5% of the QIB Portion, the balance Equity Shares from the portion specifically available for allocation in the Mutual Funds Portion will first be added to the QIB Portion and be allocated proportionately to the QIBs in proportion to their Bids. The allocation under the Employee Reservation Portion would be on a proportionate basis, in the manner specified in the SEBI (ICDR) Regulations and the Red Herring Prospectus, in consultation with the Designated Stock Exchange subject to valid Bids being received at or above the Issue Price. Under-subscription, if any, in the Qualified Institutional, Non-Institutional and Retail categories would be allowed to be met with spill-over from any other category or combination of categories at the sole discretion of our Company and the Selling Shareholders, in consultation with the BRLMs and the Designated Stock Exchange. Such inter-se spill over, if any, would be effected in accordance with applicable laws, rules, regulations and guidelines. For further details, please refer to section titled "Issue Procedure" beginning on page 393 of this Draft Red Herring Prospectus.

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The Allocation under the Employee Reservation Portion shall be on a proportionate basis, in the manner specified under the SEBI (ICDR) Regulations and this Draft Red Herring Prospectus, subject to valid Bids being received at or above the Issue Price, and is approved by the Designated Stock Exchange. Allotment to Eligible NRIs, FIIs & sub-account registered with SEBI (other than a sub-account which is a foreign corporate or foreign individual) or Mutual Funds or FVCls, applying on repatriation basis will be subject to applicable laws, rules, regulations, guidelines and approvals. Our Company and the Selling Shareholders reserves the right to cancel the Issue at any time after the Bid/Issue Opening Date but before the Board meeting for Allotment without assigning any reasons whatsoever. Under the SEBI (ICDR) Regulations, QIBs are not allowed to withdraw their Bids after the Bid/Issue Closing Date. Anchor Investors cannot withdraw their Bids after the Anchor Investor Bid/Issue Date. Our Company and the Selling Shareholders, in consultation with the BRLMs, reserves the right to reject any Bid procured from QIB Bidders, by any Syndicate Member. Rejection of Bids by QIBs, if any, will be made at the time of submission of Bids provided that the reasons for rejecting such Bid shall be provided to such Bidder in writing. If an ASBA Bidder wants to withdraw the ASBA Bid-cum-Application Form during the Bidding Period, the ASBA Bidder shall submit the withdrawal request to the SCSB, which shall perform the necessary actions, including deletion of details of the withdrawn ASBA Bidcum- Application Form from the electronic bidding system of the Stock Exchanges and unblocking of funds in the relevant bank account. If an ASBA Bidder wants to withdraw the ASBA Bid-cum-Application Form after the Bid/Issue Closing Date, the ASBA Bidder shall submit the withdrawal request to the Registrar to the Issue before finalization of basis of Allotment. The Registrar to the Issue shall delete the withdrawn Bid from the Bid file. The instruction for and unblocking of funds in the relevant bank account, in such withdrawals, shall be forwarded by the Registrar to the Issue to the SCSB once the basis of Allotment has been approved by the Designated Stock Exchange. Allotment status details shall be available on the website of the Registrar to the Issue. An oversubscription to the extent of 10% of this Issue can be retained for the purposed of rounding off and making Allotments in minimum lots, while finalising Basis of Allotment.

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OUR COMPANY'S RIGHT TO REJECT BIDS In case of QIB Bidders, our Company and the Selling Shareholders, in consultation with the BRLMs, may reject Bids provided that the reason for rejecting the Bid shall be provided to such Bidders in writing. In case of Non-Institutional Bidders, Retail Individual Bidders and Eligible Employees, our Company and the Selling Shareholders will have a right to reject Bids based on technical grounds only. Consequent refunds shall be made as described in this Draft Red Herring Prospectus and will be sent to the Bidders address at the Bidders risk. Right to reject ASBA Bids With respect to ASBA Bids, the Designated Branches of the SCSBs shall have the right to reject ASBA Bids if at the time of blocking the Bid Amount in the Bidders bank account, the respective Designated Branch of the SCSB ascertains that sufficient funds are not available in the Bidders bank account maintained with the SCSBs. Subsequent to the acceptance of the ASBA Bid by the SCSBs, our Company

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and the Selling Shareholders would have a right to reject the ASBA Bids only on technical grounds and/or as specified in this Draft Red Herring Prospectus. The Bidders may note that in case the DP ID, Beneficiary Account Number and PAN mentioned in the Bidcum-Application Form and as entered into the electronic Bidding system of the Stock Exchanges by the members of the Syndicate and the SCSBs, as the case may be, do not match with the DP ID, Beneficiary Account Number and PAN available in the depository database, the Bid is liable to be rejected.. Grounds for Technical Rejections Bidders should note that incomplete Bid-cum-Application Forms and Bid-cum-Application Forms that are not legible will be rejected by the members of the Syndicate of the SCSBs. Bidders are advised to note that Bids are liable to be rejected on, inter alia, the following technical grounds: 1. 2.
Application on plain paper;

Amount paid does not tally with the amount payable for the highest value of Equity Shares Bid for With respect to ASBA Bids, the amounts mentioned in the ASBA Bid-cum-Application Form does not tally with the amount payable for the value of the Equity Shares Bid for; Bank account details (for refund) not given; Age of first Bidder not given; In case of partnership firms, Equity Shares may be registered in the names of the individual partners and no firm as such shall be entitled to apply; Bids by persons not competent to contract under the Indian Contract Act, 1872, including minors and insane persons; Bidders PAN number is not mentioned in the Bid. It is to be specifically noted that the Bidders should not submit the GIR number instead of the PAN; Bids for lower number of Equity Shares than specified for that category of investors; Bids at a price less than the lower end of the Price Band; Bids at a price more than the higher end of the Price Band; Submission of more than five (5) ASBA Bid-cum-Application Forms per bank account; Bids at Cut-off Price by Non-Institutional Bidders and QIB Bidders; Bids for a number of Equity Shares, which are not in multiples of []; Category not ticked; Multiple Bids as defined in the Draft Red Herring Prospectus; In the case of a Bid under power of attorney or by limited companies, corporates, trusts etc., relevant documents are not submitted; Bids accompanied by Stockinvest/money order/postal order/cash;

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6.

7.

8. 9. 10. 11. 12. 13. 14. 15. 16.

17.

427

18. 19.

Signature of sole and/or joint Bidders missing; Bid-cum-Application Form does not have the stamp of the BRLMs or the Members of Syndicate or the SCSBs; Bid-cum-Application Form does not have the Bidder's depository account details or the details given are incomplete; With respect to ASBA Bids, inadequate funds in the bank account to block the Bid Amount specified in the ASBA Bid-cum-Application Form at the time of blocking such Bid Amount in the bank account; Bids where clear funds are not available in Escrow Accounts as per final certificate from the Escrow Collection Banks; Bid-cum-Application Form is not delivered by the Bidder within the time prescribed as per the Bidcum-Application Form and the Red Herring Prospectus and as per the instructions in the Red Herring Prospectus and the Bid-cum- Application Form; In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Bidders (including the order of names of joint holders), the Depository Participants identity (DP ID) and the beneficiary account number; Bids for amounts greater than the maximum permissible amounts prescribed by the regulations; Bids by QIBs not submitted through the BRLMs or in case of ASBA Bids for QIBs not intimated to the BRLMs; Bids by OCBs; Bids by U.S. residents or U.S. persons other than in reliance on Regulation S under the Securities Act; Bids by persons who are not eligible to acquire Equity Shares of our Company under any applicable law, rule, regulation, guideline or approval, in India or outside India; Bids by employees or directors of our Company who are not eligible to apply in the Employee Reservation Portion; and Bids by Eligible Employees for more than `2,00,000 bidding under Employee Reservation Portion. Bids not uploaded on the terminals of the Stock Exchanges; Bids by persons prohibited from buying, selling or dealing in the shares directly or indirectly by SEBI or any other regulatory authority; and In case the DP ID and Client ID and PAN mentioned in the Bid-cum-Application Form and entered into the electronic bidding system of the Stock Exchanges by the Syndicate do not match with the DP ID and Client ID and PAN available in the Settlement Depository database. Authorisation for blocking funds in the ASBA Account not ticked or provided; Signature of sole and/or joint Bidders missing in case of ASBA Bid-cum-Application Forms submitted in physical mode; and

20.

21.

22.

23.

24.

25. 26.

27. 28.

29.

30.

31. 32. 33.

34.

35. 36.

428

37.

Submission of more than five (5) ASBA Bid-cum-Application Forms per ASBA account.

ALLOTMENT Basis of Allotment A. For Retail Individual Bidders Bids received from Retail Individual Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The Allotment to all successful Retail Individual Bidders will be made at the Issue Price. The Net Issue size less Allotment to Non-Institutional Bidders and QIB Bidders shall be available for Allotment to Retail Individual Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price. If the valid Bids in this portion are less than or equal to [] Equity Shares at or above the Issue Price, full Allotment shall be made to Retail Individual Bidders to the extent of their valid Bids. If the valid Bids in this portion are greater than [] Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis of not less than [] Equity Shares and in multiples of [] Equity Shares thereafter. For the method of proportionate basis of allocation, refer below. B. For Non-Institutional Bidders Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The Allotment to all successful Non-Institutional Bidders will be made at the Issue Price. The Net Issue size less allocation to QIB Bidders and Retail Individual Bidders shall be available for allocation to Non-Institutional Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price. If the valid Bids in this portion are less than or equal to [] Equity Shares at or above the Issue Price, full Allotment shall be made to Non-Institutional Bidders to the extent of their valid Bids. If the valid Bids in this portion are greater than [] Equity Shares at or above the Issue Price, allocation shall be made on a proportionate basis of not less than [] Equity Shares and in multiples of [] Equity Shares thereafter. For the method of proportionate basis of allocation refer below. C. For QIB Bidders Bids received from QIB Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to QIB Bidders will be made at the Issue Price. The QIB Portion shall be available for allocation to QIB Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price. Allotment shall be undertaken in the following manner:

429

(a)

In the first instance allocation to domestic Mutual Funds for upto 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be determined as follows: (i) If bids from domestic Mutual Funds exceed 5% of the QIB Portion (excluding the Anchor Investor Portion), allocation to domestic Mutual Funds shall be made on a proportionate basis for up to 5% of the QIB Portion (excluding the Anchor Investor Portion). If the aggregate demand from domestic Mutual Funds is less than 5% of the QIB Portion (excluding the Anchor Investor Portion), then all domestic Mutual Funds shall get full Allotment to the extent of valid bids received above the Issue Price. Equity Shares remaining unsubscribed, if any, not allocated to domestic Mutual Funds shall be available to QIB Bidders as set out in (b) below.

(ii)

(iii)

(b)

In the second instance allocation to all Bidders shall be determined as follows: (i) In the event of an oversubscription in the QIB Portion, all QIB Bidders who have submitted Bids above the Issue Price shall be Allotted Equity Shares on a proportionate basis for up to 95% of the QIB Portion. Domestic Mutual Funds who have received allocation as per (a) above, for less than the number of Equity Shares bid for by them, are eligible to receive Equity Shares on a proportionate basis along with other QIB Bidders. Under subscription, below 5% of the QIB Portion (excluding Anchor Investor Portion), if any, in the Mutual Fund Portion, would be included for allocation to the remaining QIB Bidders on a proportionate basis.

(ii)

(iii)

D.

For Anchor Investor Portion Allocation of Equity Shares to Anchor Investors at the Anchor Investor Issue Price will be at the discretion of our Company, the Selling Shareholders in consultation with the BRLMs, subject to compliance with the following requirements: not more than 30% of the QIB Portion will be allocated to Anchor Investors; one-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to other Anchor Investors; allocation to Anchor Investors shall be on a discretionary basis and subject to a minimum number of two (2) Anchor Investors for allocation upto ` 2,500 million and minimum number of five (5) Anchor Investors for allocation more than ` 2,500 million. The number of Equity Shares Allotted to Anchor Investors and the Anchor Investor Issue Price, shall be made available in the public domain by the BRLMs before the Bid/ Issue Opening Date by intimating the same to the Stock Exchanges.

The BRLMs, the Registrar to the Issue and the executive director or the managing director of the Designated Stock Exchange shall ensure that the Basis of Allotment is finalized in a fair and proper manner in accordance with the SEBI (ICDR) Regulations. The drawing of lots (where required) to finalize the Basis of Allotment shall be done in the presence of a public representative on the governing board of the Designated Stock Exchange. E. Employee Reservation Portion

430

Bids received from the Eligible Employees at or above the Issue Price shall be grouped together to determine the total demand under this category. Allocation to all the successful Employees will be made at the Issue Price. If the aggregate demand in this category is less than or equal to [] Equity Shares at or above the Issue Price, full allocation shall be made to the Employees to the extent of their demand. If the aggregate demand in this category is greater than [] Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis. For the method of proportionate allocation, refer below. Only Eligible Employees can apply for Equity Shares under the Employee Reservation Portion. Procedure and Time of Schedule for Allotment and Demat Credit of Equity The Issue will be conducted through a "Book building process" pursuant to which the Members of Syndicate or SCSBs will accept bids for the Equity Shares during the Bidding/Issue Period. The Bidding/Issue Period will commence on [], 2010 and close on [], 2010. Following the expiration of the Bidding/Issue Period, our Company and the Selling Shareholders, in consultation with the BRLMs, will determine the Issue Price, and, the Basis of Allocation and entitlement to Allotment based on the bids received and subject to confirmation by the BSE/NSE. Successful Bidders will be provided with a confirmation of their allocation (subject to a revised confirmation of allocation) and will be required to pay any unpaid amount for the Equity Shares within a prescribed time. The SEBI (ICDR) Regulations require our Company to complete the Allotment to successful Bidders within twelve (12) Working Days of the expiration of the Bidding/Issue Period. The Equity Shares will then be credited and Allotted to the investors demat accounts maintained with the relevant depository participant. Upon approval by the Stock Exchanges, the Equity Shares will be listed and trading will commence. Method of proportionate Basis of Allotment In the event the Issue is oversubscribed, the Basis of Allotment shall be finalized by our Company and the Selling Shareholders, in consultation with the BRLMs and the Designated Stock Exchange. The executive director or managing director (or any other senior official nominated by them) of the Designated Stock Exchange along with the BRLMs and the Registrar to the Issue shall be responsible for ensuring that the basis of Allotment is finalized in a fair and proper manner. Allotment to Bidders shall be made in marketable lots on a proportionate basis as explained below: (a) (b) Bidders will be categorized according to the number of Equity Shares applied for by them. The total number of Equity Shares to be Allotted to each category as a whole shall be arrived at on a proportionate basis, which is the total number of Equity Shares applied for in that category (number of Bidders in the category multiplied by the number of Equity Shares applied for) multiplied by the inverse of the oversubscription ratio. The number of Equity Shares to be allotted to the successful Bidders will be arrived at on a proportionate basis, which is the total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse of the oversubscription ratio. If the proportionate Allotment to a Bidder is a number that is more than [] but is not a multiple of one (which is the market lot), the decimal will be rounded off to the higher whole number if that decimal is 0.5 or higher. If that number is lower than 0.5, it will be rounded off to the lower whole number. Allotment to all Bidders in such categories shall be arrived at after such rounding off.

(c)

(d)

431

(e)

In all Bids where the proportionate Allotment is less than [] Equity Shares per Bidder, the Allotment shall be made as follows: Each successful Bidder shall be Allotted a minimum of [] Equity Shares; and The successful Bidders out of the total Bidders for a portion shall be determined by the drawing of lots in a manner such that the total number of Equity Shares Allotted in that category is equal to the number of Equity Shares calculated in accordance with (c) above;

(f)

If the Equity Shares allocated on a proportionate basis to any category are more than the Equity Shares Allotted to the Bidders in that portion, the remaining Equity Shares available for Allotment shall be first adjusted against any other category, where the Equity Shares are not sufficient for proportionate Allotment to the successful Bidders in that category. The balance of Equity Shares, if any, remaining after such adjustment will be added to the category comprising Bidders applying for the minimum number of Equity Shares; and Subject to valid Bids being received, allocation of Equity Shares to Anchor Investors shall be at the sole discretion of our Company and the Selling Shareholders, in consultation with the BRLMs.

(g)

Illustration of Allotment to QIBs and Mutual Funds ("MF") Issue details No. 1. 2. 3. 4. Particulars Issue size Portion available to QIBs* Anchor Investor Portion Portion available to QIBs* other than anchor investors [(2) (3)] Of which Reservation to MF (5%) Balance for all QIBs including MFs No. of QIB applicants No. of shares applied for Issue Details 200 crores equity shares 100 crore equity shares 30 crores 70 crores equity shares

(a) (b) (c) (d)

3.5 crores equity shares 66.5 crores equity shares 10 500 crores equity shares

Details of QIB Bids No.

Type of QIBs

No. of shares bid for (in crores)

1. A1 50 2. A2 20 3. A3 130 4. A4 50 5. A5 50 6. MF1 40 7. MF2 40 8. MF3 80 9. MF4 20 10. MF5 20 TOTAL 500 *A1 A5: (QIBs bidders other than Mutual Funds), MF1 MF5: (QIB bidders which are Mutual Funds) Details of Allotment to QIB Applicants

432

Type of QIB

Shares bid for

Allocation of 5% equity shares (see Note 2 below) (III) (No. of equity shares in crores)

Allocation of 95% equity shares (see Note 4 below) (IV)

(I)

(II)

Aggregate allocation to Mutual Funds (V)

A1 A2 A3 A4 A5 MF1 MF2 MF3 MF4 MF5

50 20 130 50 50 40 40 80 20 20 500

0 0 0 0 0 0.70 0.70 1.40 0.35 0.35 3.50

6.65 2.66 17.29 6.65 6.65 5.32 5.32 10.64 2.66 2.66 66.50

0 0 0 0 0 6.02 6.02 12.04 3.01 3.01 30.10

Notes: 1. The illustration presumes compliance with the provisions of regulation 51(1) pertaining to minimum allotment. Out of 70 crore equity shares allocated to QIBs, 3.5 crores (i.e. 5%) will be allocated on proportionate basis among 5 mutual fund applicants who applied for 200 shares in QIB category. The balance 66.5 crore equity shares [i.e. 70 3.5 (available for MFs)] will be allocated on proportionate basis among 10 QIB applicants who applied for 500 shares (including 5 MF applicants who applied for 200 shares). The figures at Col. No. IV are arrived as under : a. b. c. For QIBs other than mutual funds (A1 to A5) = No. of shares bid for (i.e Col II) X 66.5 / 496.5 For mutual funds (MF1 to MF5) = {(No. of shares bid for (i.e Col II) less shares allotted (i.e., col. III )} X 66.5 / 496.5 The numerator and denominator for arriving at allocation of 66.5 crore shares to the 10 QIBs are reduced by 3.5 crore shares, which has already been allotted to mutual funds at Col. No. (III).

2.

3.

4.

Equity Shares in Dematerialized form with NSDL or CDSL As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be allotted only in a dematerialized form (i.e., not in the form of physical certificates but fungible statements issued in electronic mode). In this context, two tripartite agreements have been signed amongst our Company, the respective Depositories and the Registrar to the Issue: (a) a tripartite agreement dated July 31, 2006, among NSDL, our Company and the Registrar to the Issue; and a tripartite agreement dated [], among CDSL, our Company and the Registrar to the Issue.

(b)

Bidders will be allotted Equity Shares only in dematerialized mode. Bids from any Bidder without relevant details of his or her depository account are liable to be rejected.

433

1.

A Bidder applying for Equity Shares must have at least one beneficiary account with the Depository Participants of either NSDL or CDSL prior to making the Bid. The Bidder must necessarily complete the details (including the beneficiary account number and Depository Participant's identification number) appearing on the Bid-cum-Application Form or Revision Form. Equity Shares Allotted to a successful Bidder will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the Bidder. Names in the Bid-cum-Application Form or Bid Revision Form should be identical to those appearing in the account details with the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details with the Depository. If incomplete or incorrect details are given under the heading "Bidders Depository Account Details" in the Bid-cum- Application Form or Bid Revision Form, it is liable to be rejected. The Bidder is responsible for the correctness of his or her Demographic Details given in the Bidcum-Application Form vis--vis those recorded with his or her Depository Participant. Equity Shares in electronic form can be traded only on the Stock Exchanges having electronic connectivity with NSDL and CDSL. All the Stock Exchanges where the Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL. The trading of the Equity Shares will be in dematerialized form only for all investors in the demat segment of the respective Stock Exchanges. Non-transferable allotment advice or refund orders will be directly sent to the Bidders by the Registrar to the Issue.

2.

3.

4.

5.

6.

7.

8.

9.

PAYMENT OF REFUND The Bidders (other than ASBA Bidders) should note that on the basis of the name of the Bidders, Depository Participants name, Depository Participant identification number and beneficiary account number provided by them in the Bid-cum-Application Form, the Registrar to the Issue will obtain from the Depository the Bidder's bank account details including a nine digit Magnetic Ink Character Recognition ("MICR") code. Hence, Bidders 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 Bidders at the Bidders sole risk and neither our Company, the Selling Shareholders, the BRLMs, the Members of Syndicate nor the Escrow Collection Banks shall have any responsibility and undertake any liability for the same. In the case of Bids from Eligible NRIs and FIIs, refunds, dividends and other distributions, if any, will normally be payable in Indian Rupees only and net of bank charges and/or commission. Where so desired, such payments in Indian Rupees will be converted into US Dollars or any other freely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at the time of remittance and will be dispatched by registered post. Our Company will not be responsible for loss, if any, incurred by the Bidder on account of conversion of foreign currency.

434

Mode of making refunds The payment of refund, if any, for Bidders other than ASBA Bidders, would be done through various modes in the following order of preference: 1. NECS- Payment of refund would be done through NECS for applicants having an account at any of the centres where such facility is available. This mode of payment of refunds would be subject to availability of complete bank account details including the nine-digit MICR code as appearing on a cheque leaf from the Depository. The payment of refund through NECS is mandatory for applicants having a bank account at any of the centres where such facility is available except where the applicant is otherwise disclosed as eligible to receive refunds through direct credit or RTGS. NEFT- Payment of refund may be undertaken through NEFT wherever the applicants bank has been assigned the Indian Financial System Code ("IFSC"), which can be linked to a Magnetic Ink Character Recognition ("MICR"), if any, available to that particular bank branch. The IFSC Code will be obtained from the website of the RBI as at a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method. Direct Credit- Applicants having their bank account with the Refund Banker shall be eligible to receive refunds, if any, through direct credit. Charges, if any, levied by the Refund Bank(s) for the same will be borne by our Company. RTGS- Applicants having a bank account at any of the centres where such facility is available , and whose Bid Amount exceeds `2,00,000, shall have the option to receive refunds, if any, through RTGS. Such eligible applicants who indicate their preference to receive refunds through RTGS are required to provide the IFSC Code in the Bid-cum-Application Form. In the event of failure to provide the IFSC Code in the Bid-cum-Application Form, the refund shall be made through the NECS or direct credit. Charges, if any, levied by the Refund Bank(s) for the same will be borne by our Company. Charges, if any, levied by the applicant's bank receiving the credit will be borne by the applicant. For all the other applicants, including applicants who have not updated their bank particulars along with the nine-digit MICR Code, the refund orders will be dispatched through Speed Post/Registered Post. Some refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection Banks and payable at par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders.

2.

3.

4.

5.

Mode of making refunds for ASBA Bidders In case of ASBA Bidders, the Registrar shall instruct the relevant SCSB to unblock the funds in the relevant ASBA Account to the extent of the Bid Amount specified in the ASBA Bid-cum-Application Forms for withdrawn, rejected or unsuccessful or partially successful ASBA Bids within twelve (12) Working Days from the Bid/Issue Closing Date. The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on http://www.sebi.gov.in/pmd/scsb.html. For details on designated branches of SCSB collecting the CAF, please refer the above mentioned SEBI link.

435

Interest on refund of excess Bid Amount Our Company and the Selling Shareholders shall pay interest at the rate of 15% per annum, in proportion to the Equity Shares offered by them under the Issue, on the excess Bid Amount received if refund orders are not dispatched within fifteen (15) Working Days from the Bid/Issue Closing Date. DISPOSAL OF APPLICATIONS AND APPLICATION MONEYS AND INTEREST With respect to Bidders other than ASBA Bidders, our Company shall ensure dispatch of Allotment advice, refund orders (except for Bidders who receive refunds through electronic transfer of funds) and give benefit to the beneficiary account with Depository Participants and submit the documents pertaining to the Allotment to the Stock Exchanges within twelve (12) Working Days of Bid/Issue Closing date. In case of applicants who receive refunds through NECS, direct credit or RTGS, the refund instructions will be given to the clearing system within twelve (12) Working Days from the Bid/Issue Closing Date. A suitable communication shall be sent to the Bidders receiving refunds through this mode within twelve(12) Working Days of Bid/Issue Closing Date, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund. Our Company and the Selling Shareholders shall use best efforts to ensure that all steps for completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed are taken within twelve (12) Working Days of the Bid/Issue Closing Date. In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI Regulations, our Company further undertake that: Allotment of Equity Shares shall be made only in dematerialized form within twelve (12) Working Days of the Bid/Issue Closing Date; With respect to Bidders other than ASBA Bidders, dispatch of refund orders or in a case where the refund or portion thereof is made in electronic manner, the refund instructions are given to the clearing system within twelve (12) Working Days of the Bid/Issue Closing Date would be ensured. With respect to the ASBA Bidders, instructions for unlocking of the ASBA Bidders Bank Account shall be made within twelve (12) Working Days from the Bid/Issue Closing Date; and Our Company and the Selling Shareholders shall pay interest at 15% per annum, in proportion to the Equity Shares offered by them under the Issue, for any delay beyond the fifteen (15) Working Days time period as mentioned above, if Allotment is not made and refund orders are not dispatched or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner and/or demat credits are not made to investors within twelve (12) Working Days time prescribed above as per the SEBI (ICDR) Regulations. Our Company will provide adequate funds required for dispatch of refund orders or allotment advice to the Registrar to the Issue. No separate receipts shall be issued for the money payable on the submission of Bid-cum-Application Forms or Revision Forms. However, the collection centre of the Members of Syndicate will acknowledge the receipt of the Bid-cum-Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid-cumApplication Form for the records of the Bidder. Save and except refunds effected through the electronic mode, i.e., NECS, NEFT, direct credit or RTGS, refunds will be made by cheques, pay orders or demand drafts drawn on a bank appointed by us, as an Escrow Collection Bank and payable at par at places where Bids are received, except for Bidders who have

436

opted to receive refunds through the NECS facility. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. COMMUNICATIONS All future communications in connection with Bids made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or first Bidder, the Bid-cum-Application Form number, details of the Depository Participant, number of Equity Shares applied for, the date of Bid-cum-Application Form, the name and address of the Syndicate Member or the Designated Branch of the SCSBs where the Bid was submitted and the cheque or draft number and issuing bank thereof or with respect to ASBA Bids, bank account number in which the amount equivalent to the Bid Amount was blocked. Investors can contact the Compliance Officer or the Registrar to the Issue in the case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary accounts, refund orders etc. In case of ASBA Bids submitted to the Designated Branches of the SCSBs, the Bidders can contact the Designated Branches of the SCSBs. The Draft Red Herring Prospectus, in so far as it relates to terms of the Issue should be read in conjunction with the aforestated paragraphs, to the extent applicable. Disposal of Investor Grievances by our Company Our Company estimates that the average time required by it or the Registrar to the Issue for the redressal of routine investor grievances shall be fifteen (15) Working Days from the date of receipt of the complaint. In case of non-routine complaints and complaints where external agencies are involved, our Company will seek to redress these complaints as expeditiously as possible. Our Company has appointed Mr. Kamlendra Joshi as the Compliance Officer and he may be contacted in case of any pre-Issue or post-Issue-related problems. Letters of Allotment or Refund Orders or instructions to the SCSBs Our Company shall credit each beneficiary account with its depository participant within twelve (12) Working Days of the Bid/Issue Closing Date. Applicants that are residents of 68 cities where clearing houses are managed by the RBI will receive refunds through ECS only (subject to availability of all information for crediting the refund through ECS) except where the applicant is eligible to receive refunds through direct credit, NEFT or RTGS. In the case of other applicants our Company shall ensure the dispatch of refund orders, if any, by registered post or speed post at the sole or First Bidders, sole risk within twelve (12) Working Days of the Bid/Issue Closing Date. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter (refund advice) through ordinary post informing them about the mode of credit of refund, within twelve (12) Working Days of the Bid/Issue Closing Date. In case of ASBA Bidders, the Registrar shall instruct the relevant SCSBs to unblock the funds in the relevant ASBA Account to the extent of the Bid Amount specified in the ASBA Bid-cum-Application Forms for withdrawn, rejected or unsuccessful or partially successful ASBA Bids within twelve (12) Working Days of the Bid/Issue Closing Date. Our Company and the Selling Shareholders shall use best efforts to ensure that all steps for completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed are taken within twelve (12) Working Days from the Bid/Issue Closing Date. Interest in Case of Delay in Dispatch of Allotment Letters/Refund Orders In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI (ICDR) Regulations, our Company undertakes that:

437

Allotment of Equity Shares and credit to the successful Bidders depositary accounts will be completed within twelve (12) Working Days from the Bid/Issue Closing Date; Our Company and the Selling Shareholders further agree that they shall pay interest at 15% per annum, in proportion to the Equity Shares offered by them under the Issue, if Allotment is not made, refund orders are not dispatched to the applicant or if, in a case where the refund or portion thereof is made in electronic mode/manner, the refund instructions have not been given to clearing members and/or demat credits are not made to investors within the twelve (12) Working Days time period prescribed above. Our Company will provide adequate funds required for dispatch of refund orders or Allotment advice to the Registrar. Save and except refunds effected through the electronic mode, i.e., NECS, NEFT, direct credit or RTGS, refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection Banks and payable at par at places where Bids are received, except where the refund or portion thereof is made in electronic mode/manner. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. Undertakings by the Selling Shareholder I The Selling Shareholder I undertakes the following in respect of itself: We are legal and beneficial owner of the Equity Shares proposed to be transferred pursuant to the Offer for Sale; The Equity Shares proposed to be transferred by AIF in the Issue (a) have been held by AIF for a minimum period as specified in Regulation 26(2)(6) of the SEBI Regulations; (b) are free and clear of any pre-emptive rights, liens, mortgages, charges, pledges or any other encumbrances; and (c) shall be in dematerialized form at the time of transfer; We agree that we shall be liable to refund the application monies as required under applicable laws and within statutory time limits, and in the event of failure to do so, shall pay interest to the Bidders as provided under the Companies Act or any other applicable laws and regulations, provided such refund and interest shall be shared by the Company and AIF in proportion to the number of Equity Shares sold in the Fresh Issue and Offer for Sale of AIF, respectively. The complaints received in respect of this Issue shall be attended expeditiously and satisfactorily. The Compliance Officer and the Registrar to the Issue have been authorized to redress complaints, if any, of the investors; All steps will be taken for the completion of the necessary formalities for allotment, refunds, listing and commencement of trading at all the stock exchanges where the equity shares are proposed to be listed within twelve (12) working days from Issue closing date; We shall extend active co-operation to the Company, Merchant Bankers, Registrars, Escrow Collection Bankers and Refund Bankers for all necessary steps to ensure that the funds required for dispatch of refund orders or Allotment advice by registered post or speed post shall be made available to the Registrar to the Issue; We shall extend active co-operation to the Company, Merchant Bankers, Registrars, Escrow Collection Bankers and Refund Bankers for all necessary steps to ensure that the refund orders or Allotment advice to all the successful Bidders shall be dispatched within specified time; and

438

We shall extend active co-operation to the Company, Merchant Bankers, Registrars, Escrow Collection Bankers and Refund Bankers for all necessary steps to ensure that adequate arrangements shall be made to collect all Applications Supported by Blocked Amount (ASBA) and to consider them similar to non-ASBA applications while finalizing the basis of allotment. We, further confirm that we have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. Undertakings by the Selling Shareholder II The Selling Shareholder II undertakes the following in respect of itself: We are legal and beneficial owner of the Equity Shares proposed to be transferred pursuant to the Offer for Sale comprised in the Issue; The Equity Shares proposed to be transferred by us in the Issue - (a) have been held by us for a minimum period as specified in Regulation 26(2)(6) of the SEBI (Issue of Capital and Disclosure Regulations, 2009; (b) are free and clear of any pre-emptive rights, liens, mortgages, charges, pledges or any other encumbrances; and (c) shall be in dematerialized form at the time of transfer; We agree that we shall be liable to refund the application monies as required under applicable laws and within statutory time limits, and in the event of failure to do so, shall pay interest to the Bidders as provided under the Companies Act or any other applicable laws and regulations, provided such refund and payment of interest shall be only for Equity Shares sold by us in the Offer for Sale. We shall extend co-operation to you and various Intermediaries of the Issue for redressal of the investor complaints received in respect of this Issue so far as they pertain to the Equity Shares proposed to be transferred by us. All steps will be taken along with the Company and the Managers to the Issue for the completion of the necessary formalities for allotment, refunds, listing and commencement of trading at all the stock exchanges where the equity shares are proposed to be listed within twelve (12) working days from Issue closing date; We shall extend co-operation to you and the various Intermediaries of the Issue for issue of refund orders or Allotment advice to all the successful Bidders and their dispatch within specified time; and We shall extend co-operation to you and the various intermediaries of the Issue for adequate arrangements to collect all Applications Supported by Blocked Amount (ASBA) and to consider them similar to non-ASBA applications while finalizing the basis of allotment. We, further confirm that we have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. Undertakings by our Company Our Company undertakes as follows: that complaints received in respect of this Issue shall be dealt with expeditiously and satisfactorily; that all steps will be taken for the completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed within twelve (12) Working Days from the Bid/ Issue Closing Date;

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that the 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 our Company; that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within twelve (12) Working Days of the closure of the Issue, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund; that the certificates of the securities / refund orders to the eligible non-resident Indians shall be dispatched within the specified time; and that the refund orders or Allotment advice to the Non-Resident Bidders shall be dispatched within the specified time; and No further issue of Equity Shares shall be made until the Equity Shares offered through the Red Herring Prospectus and the Prospectus are listed or until the Bid monies are refunded on account of non-listing, under-subscription etc. that adequate arrangements shall be made to collect all Applications Supported by Blocked Amount and to consider them similar to non-ASBA applications while finalizing the basis of allotment; That the Equity Shares are free and clear of all liens or encumbrances and shall be allotted to the Allottees within the specified time; that it shall be ensured that dispatch of share certificates/refund orders and demat credit is completed and the allotment and listing documents shall be submitted to the Stock Exchanges within two (2) Working Days of the date of Allotment; and that we shall pay interest of 15% per annum (for any delays beyond twelve (12) Working Days if allotment has not been made within twelve (12) Working Days and refund orders have not been dispatched within twelve (12) Working Days. Utilization of Issue proceeds The Board of Directors certifies that: all monies received out of the Issue shall be credited/transferred to a separate bank account other than the bank account referred to in Section 73(3) of the Companies Act; details of all monies utilized out of the Issue shall be disclosed under an appropriate heading in the balance sheet of our Company indicating the purpose for which such monies have been utilized; details of all unutilized monies out of the Issue, if any, shall be disclosed under the appropriate head in the balance sheet of our Company indicating the form in which such unutilized monies have been invested; and Our Company shall comply with the requirements of Clause 49 of the listing agreement in relation to the disclosure and monitoring of the utilization of the Net Proceeds. The Board of Directors also certifies that: the utilization of monies received from the Employee Reservation Portion shall be disclosed under an appropriate head in the balance sheet of our Company, indicating the purpose for which such monies have been utilized; and

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the details of all unutilized monies out of the funds received from the Employee Reservation Portion shall be disclosed under a separate head in the balance sheet of our Company, indicating the form in which such unutilized monies have been invested. Our Company and the Selling Shareholders shall not have recourse to the proceeds of the Issue until the final listing and trading approvals from all the Stock Exchanges have been obtained.

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RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of the Government of India and FEMA. While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of the Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. Under the current foreign investment policy applicable to us foreign equity participation up to 100% is permissible under the automatic route. Subscription by foreign investors (NRIs/FIIs) By way of Circular No. 53 dated December 17, 2003, the RBI has permitted FIIs to subscribe to shares of an Indian company in a public offer without the prior approval of the RBI, so long as the price Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of the Government of India and FEMA. Foreign investment in Indian securities is governed by the provisions of the FEMA read with the applicable FEMA Regulations. The DIPP has issued Circular 2 of 2010 (the "FDI Circular") which consolidates the policy framework on FDI, with effect from October 1, 2010. The FDI Circular consolidates and subsumes all the press notes, press releases and clarifications on FDI issued by DIPP as on September 30, 2010. All the press notes, press releases, clarifications on FDI issued by DIPP as on September 30 2010 stand rescinded as on September 30, 2010. While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of the Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. The Comprehensive Manual for Foreign Direct Investment- Policy & Procedures dated November 2005 issued by the Department of Industry Policy and Promotion, Ministry of Commerce and Industry does not prescribe any cap on the foreign investments in the sector in which our Company operates. Therefore, foreign investment up to 100% is permitted in our Company under the automatic route. Transfers of equity shares previously required the prior approval of the FIPB. However, by a RBI circular dated October 4, 2004 issued by the RBI, the transfer of shares between an Indian resident and a nonresident does not require the prior approval of the FIPB or the RBI, provided that (i) the activities of the investee company are under the automatic route under the FDI Policy and transfer does not attract the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended, (ii) the non-resident shareholding is within the sectoral limits under the FDI policy, and (iii) the pricing is in accordance with the guidelines prescribed by the SEBI/RBI. Representation from the Bidders No person shall make a Bid in Issue, unless such person is eligible to acquire Equity Shares of our Company in accordance with applicable laws, rules, regulations, guidelines and approvals. Investors that Bid in the Issue will be required to confirm and will be deemed to have represented to our Company, the Underwriters, and their respective directors, officers, agents, affiliates and representatives, as applicable, that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company and will not offer, sell, pledge or transfer the Equity Shares of our Company to any person who is not eligible under applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company. Our Company, the Underwriters and their respective

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directors, officers, agents, affiliates and representatives, as applicable, accept no responsibility or liability for advising any investor on whether such investor is eligible to acquire Equity Shares of our Company. There is no reservation for Non Residents, NRIs, FIIs, foreign venture capital funds, multi-lateral and bilateral development financial institutions and any other foreign investor. All Non Residents, NRIs, FIIs and foreign venture capital funds, multi-lateral and bilateral development financial institutions and any other foreign investor applicants will be treated on the same basis with other categories for the purpose of allocation. As per existing regulations, OCBs cannot participate in the Issue. The Equity Shares have not been and will not be registered under the Securities Act or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S promulgated under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares are only being offered and sold outside the United States to certain persons in offshore transactions in compliance with Regulation S under the Securities Act. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. The above information is given for the benefit of the Bidders. Our Company and the BRLMs are not liable for any amendments or modification or changes in applicable laws or regulations, which may occur after the date of this Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations.

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SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION Capitalised terms used in this section have the meaning given to such terms in the Articles of our Company. Pursuant to Schedule II of the Companies Act, 1956 and the SEBI (ICDR) Regulations, the main provisions of the Articles of Association of our Company on listing relating to voting rights, dividend, lien, forfeiture, restrictions on transfer and transmission of Equity Sshares and or their consolidation/splitting are required to be stated. The regulations contained in Table A of Schedule I of the Companies Act, 1956, shall apply to our Company in so far as they are not inconsistent with or repugnant to any of the regulations contained in the Articles of Association of our Company. 1. No regulations contained in Table A in the First Schedule to the Companies Act, 1956, or in the Schedule to any previous Companies Act, shall apply to this Company, but the regulations for the management of the Company and for the observance of the Members thereof and their representatives shall, subject to any exercise of the statutory powers of the Company with reference to the repeal or alteration of, or addition to, its regulation by Special Resolution, as prescribed by the said Companies Act, be such as are contained in these Articles. INTERPRETATION 2. In the interpretation of these Articles, the following expressions shall have the following meanings, unless repugnant to the subject or context :The Company or This Company means NEESA LEISURE LIMITED. Interpretation clause Table A Not to apply but company to be governed by these articles

The Company or This Company These presents

These presents means the Memorandum of Association and the Articles of the Association as originally framed or as altered from time to time. Variation shall include abrogation; and vary shall include abrogate. Act means the Companies Act, 1956 and subsequent amendments thereto or any statutory modifications or re-enactment thereof for the time being in force. Alter or Alteration shall include the making of additions and omissions. Articles means the Articles of Association of the Company as originally framed and/or altered from time to time. Memorandum means the Memorandum of Association of the Company as originally framed and/or altered from time to time. Auditors means and includes those persons appointed as such for the time being by the company. The Board or The Board of Directors means a meeting of the Directors duly called and constituted, or as the case may be, the

Variation

Act

Alter or Alteration Articles

Memorandum

Auditors

The Board or The Board of

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Directors assembled at a Board, or the requisite number of Directors entitled to pass a circular resolution in accordance with the Articles, or the Directors of the Company collectively. Beneficial Owner shall mean beneficial owner as defined in clause (a) of sub section (1) of Section 2 of the Depositories Act, 1996. Capital means the share capital of the Company for the time being raised or authorised to be raised, for the purpose of the Company. Debentures includes debenture stock, bonds and other securities of the Company whether constituting a charge on the asset of the Company or not. Debenture holder means a person who holds such debentures.

Directors

Beneficial Owner Capital

Debentures

Debenture holder Directors

Directors means the Directors for the time being of the Company, or as the case may be, the Directors assembled at a Board Meeting or acting by a circular resolution under the Articles. Dividend includes bonus unless otherwise stated. Depositories Act, 1996 shall include any statutory modification or the enactment thereof. Depository shall mean a Depository as defined in clause (e) of Sub-section (1) of Section 2 of the Depositories Act, 1996. In writing and Written means and includes words written, typewritten, printed, lithographed, and any other mode or modes of representing or reproducing words in a visible form or partly by one and partly by other. Member means the duly registered holder from time to time of the shares of the Company and includes the subscribers of the Memorandum of the Company and the beneficial owner as defined above. Meeting or General Meeting means a meeting of Members.

Dividend Depositories Act, 1996 Depository

In Writing and Written

Member

Meeting or General Meeting Annual General Meeting

Annual General Meeting means a general meeting of the Members held in accordance with the provisions of Section 166 of the Act and any adjourned holding thereof. Extra Ordinary General Meeting means all general meeting of the Members other than Annual General Meeting, duly called and constituted and adjourned holding thereof. "Investor" means "Axis Infrastructure Fund I" a trust registered under the Indian Trust Act, 1882 having its registered office at C/o IDBI Trusteeship Services Limited, Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai 400 001.

Extra Ordinary General Meeting "Investor"

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"Investor Director" means the Director nominated by the Investor.

"Investor Director" "Investor Shares"

"Investor Shares" means Equity Shares held by the Investor in the Company.

Month means a calendar month. Office means the registered office of the Company for the time being. Paid-up Capital includes Capital credited as paid up.

Month Office

Paid-up Capital Persons Proxy

Persons includes corporations and firms as well as individuals. Proxy means an instrument whereby any person is authorized to vote for a member at General Meeting or at Poll and includes attorney duly constituted under the power of attorney. Public Holiday means public holiday within the meaning of the Negotiable Instruments Act, 1881 provided that no date declared by the Central Government to be a public holiday shall be deemed to be such a holiday in relation to any meeting unless the declaration was notified before the issue of the notice convening such meeting. Register of Members means the Register of Members to be maintained ursuant to the provisions of the Act. Registrar means the Registrar of Companies of the state in which the Registered Office of the Company is for the time being situated. Secretary means any individual possessing the prescribed qualifications appointed to perform the duties which may be performed by a Secretary. Section or Sections means a section of the Acts, for the time being in force. Seal means the common seal of the Company for the time being. Shares means share in the share capital of the Company and includes stock except where a distinction between stock and share is expressed or implied. Ordinary Resolution and Special Resolution, shall have the meaning respectively assigned thereto by Section 189 or any other applicable provisions of the Act.

Public Holiday

Register of Members Registrar

Secretary

Section or Sections Seal Shares

Ordinary Resolution and Special Resolution Year and Financial Year

Year means the calendar year and Financial Year shall have the meaning assigned thereto by Section 2(17) of the Act.

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National Company Law Tribunal means National Company Law Tribunal (Tribunal) as defined under section 10FB of the Companies Act,1956. Word importing the masculine gender also include, where the context requires or admits, the feminine gender. Words importing the singular number also include, where the context admits or requires, the plural number and vice versa. The Headings and Marginal Notes used in these Articles shall not affect the construction hereof. Save as aforesaid, any words or expressions defined in the Act, shall except where the subject or context forbids, bear the same meaning in these Articles. CAPITAL 3. A. The authorized share capital of the Company shall be the Capital as specified in Clause V of the Memorandum of Association, with power to increase or reduce the share capital of the Company and to divide the shares in the capital for the time being into several classes as permissible in law and to attach thereto respectively such preferential, deferred, qualified or special rights, privileges or conditions as may be determined by or in accordance with the Articles of Association of the Company and to vary, modify, amalgamate or abrogate any of such rights, privileges or conditions in such manner as may for the time being be provided in the Articles of Association. Subject to the right of the holders of any shares entitled by the terms of issue of preferential repayment over the equity shares in the event of winding up of the Company, holders of the equity shares shall be entitled to be repaid the amount of Capital paid up or credited as paid up on such equity shares and all surplus assets thereafter shall belong to the holders of Equity Shares in proportion to the amount paid up or credited as paid up on such equity shares respectively at the commencement of the winding up. The preference shares shall confer on the holder thereof the right to a cumulative preferential dividend for each year at a rate as may be fixed by the Board of Directors at the time of issue thereof or revising rate of interest on the existing preference shares in conformity with the rate prescribed by law from time to time subject to deduction of tax at sources at the prescribed rates, on the capital paid up or credited as paid up thereon, and in the event of winding up the right to redemption of capital and arrears of dividend accrued up to the date of the commencement of the winding up whether declared or undeclared shall rank in priority to equity shares in the capital of the Company for the time being, but the said preference shares shall not entitle the holder thereof to any further or other participation in the profits or assets of the Company.

National Company Law Tribunal

Authorised Capital

B.

C.

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4.

Subject to the applicable provision of the Companies Act, 1956 and all other applicable provisions of law (including any statutory modifications or re-enactment thereof for the time being in force or as may be enacted from time to time) and subject to such other approvals/permissions or sanctions as may be necessary, the Company may issue shares with non-voting rights upon such terms and conditions and with such rights and privileges (including with regard to dividend) as may be permitted by law or guidelines issued by the statutory authorities and/or listing requirements and that the provisions of these Articles of Association, to the extent they are concerning or relating to voting rights of shares shall not be applicable to the aforesaid non-voting shares, if any, issued by the Company. The Company in General Meeting may from time to time by Ordinary Resolution increase the capital by the creation of new shares, the increases to be of such aggregate amount and to be divided into Shares of such respective amounts as the Resolution shall prescribe, subject to the provisions of the Act, any shares of the original or increased capital shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the General Meeting resolving upon the creation thereof, shall direct, and if no direction be given, as the Directors shall determine, and in particular, such shares may be issued with a preferential or a qualified right to dividends, and in the distribution of the assets of the Company in conformity with Section 87 and 88 of the Act. Whenever the capital of the Company has been increased under the provisions of this Article, the Directors shall comply with the provisions of Section 97 of the Act. Except so far as otherwise provided by the conditions of issue or by these presents, any capital raised by the creation of new shares shall be considered as part of the existing capital, and shall be subject to the provisions herein contained, with reference to the payment of calls and installments, forfeiture, lien, surrender, transfer and transmission, voting and otherwise. Subject to the provisions of Sections 80 and 80A of the Act, the Company shall have the power to issue Preference Shares, which are at the option of the Company liable to be redeemed, and the resolution authorising such issue shall prescribe the manner, terms and conditions of redemption. The holder of Preference Shares shall have a right to vote only on Resolutions, which directly affect the rights attached to his Preference Shares. On the issue of Redeemable Preference Shares under the provisions of Article 7 hereof the following provisions shall take effect:

Non Voting Shares

5.

Increase in Capital

6.

New Capital same as existing capital

7.

Redeemable preference Shares

8.

Voting rights of preference shares

9.

Provision to apply on issue of redeemable preference shares

a)

no such shares shall be redeemed except out of the profits of the Company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of the

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redemption; b) c) no such shares shall be redeemed unless they are fully paid; the premium, if any, payable on redemption must have been provided for out of the profits of the Company or the Companys Share Premium Account before the shares are redeemed; Where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, which would otherwise have been available for dividend, a sum equal to the nominal amount of the shares redeemed be transferred to a reserve fund, to be called the Capital Redemption Reserve Account, and the provisions of the Act relating to the reduction of share capital of the Company shall, except as provided in Section 80 of the Act, apply as if the Capital Redemption Reserve Account was paid-up share capital of the Company. The Company may from time to time by Special Resolution, subject to the provisions of Section 78, 80, 100 to 104 (inclusive) of the Act, reduce its Share Capital and any Capital Redemption Reserve Account or Share Premium Account in any manner for the time being authorised by law, and in particular without prejudice to the generality of the forgoing power may: a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up; either with or without extinguishing or reducing liability on any of its shares, cancel any paid up share capital which is lost or is unrepresented by available assets; or either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the Company; and may, if and so far as is necessary, alter its Memorandum, by reducing the amount of its share capital and of its shares accordingly. 11. A. The Company in general meeting may subject to the provisions of Section 94 of the Act by Ordinary Resolution alter the conditions of its Memorandum as follows, that is to say, it may: Sub-division, consolidation and cancellation of shares Reduction of Capital

d)

10.

b)

c)

a)

Consolidate and divide any of its Share Capital into Shares of larger amounts than its existing shares; Sub-divide its shares or any of them into shares of smaller amount than originally fixed by the Memorandum, so however, that in the sub-division the proportion between the amount paid-up and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived and so that as between the holders of the shares resulting from such sub -division one or more of such shares may, subject to the

b)

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provisions of the Act, be given any preference or advantage or otherwise over the others or any other such share. c) Convert all or any of its fully paid-up shares in to stock and reconvert that stock into fully paid-up shares of any denomination. Cancel shares which, on the date of such General Meeting have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of shares so cancelled; The cancellation of shares in pursuance of this Article shall not be deemed to be reduction of Share Capital. Whenever the capital, by reason of the issue of Preference Shares or otherwise, is divided into different classes of shares, all or any of the rights and privileges attached to each calls may subject to the provisions of Sections 106 and 107 of the Act be modified, commuted, affected or abrogated, or dealt with by agreement between the Company and any person purporting to contract on behalf of that class, provided such agreement is ratified in writing by holders of at least three-fourths in nominal value of the issued shares of the class or is confirmed by a Special Resolution passed at separate general meeting of the holders of shares of that class. The provision of these Articles relating to General Meetings shall mutatis mutandis apply to every such separate meeting. This Article shall not derogate from any power which the Company would have if this Article were omitted. Subject to and in accordance with the applicable provisions of the Companies Act, 1956 and all other applicable provisions of law (including any statutory modification or re-enactment thereof for the time being in force or as may be enacted from time to time) and subject to such other approvals/permissions or sanctions as may be required, the Company shall have power to acquire, purchase, sell, dispose off, provide finance for the purchase of any of its own fully/ partly paid shares whether or not they are redeemable and to make the payment out of Capital Reserves or otherwise in respect of such acquisition, purchase, financing. Subject to the provisions of Section 100 to 105 (inclusive) of the Act, the board may accept from any member on such terms and conditions as shall be agreed a surrender of all or any of his shares. SHARES AND CERTIFICATES 14. The Company shall cause to be kept a Register and Index of Members in accordance with all applicable provisions of the Act and the Depositories Act, 1996 with details of shares held in material and dematerialized forms in any medias as may be permitted by law including in any form of electronic media. The Company shall be entitled to keep in any State or Country outside India a branch Register of Members resident in the State or country. a) The rights or privileges conferred upon the holders of the shares of any class issued with preferred or other rights, shall not unless Register and Index of Members Board may accept surrender of shares Modification of rights

d)

B.

12.

A.

B.

13.

15.

Issue of further shares not to

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otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied or modified affected by the creation or issue of further shares ranking pari passu therewith. b) The Board shall observe the restriction as to allotment of shares to the public contained in Sections 69 and 70 of the Act and shall cause to be made the return as to allotment provided for in Section 75 of the Act. The shares in the capital shall be numbered progressively according to their several denominations, and except in the manner herein before mentioned no shares shall be sub-divided, provided however, that the provisions relating to progressive numbering shall not apply to the shares of the Company which are in dematerialized form. Every forfeited or surrendered share shall continue to bear the number by which the same was originally distinguished. a) Where at any time after the expiry of two years from the formation of the Company or at any time after the expiry of one year from the allotment of shares in that Company made for the first time after its formation, whichever is earlier, it is proposed to increase the subscribed capital of the Company by allotment of further shares, whether out of un-issued share capital or out of increased share capital, then:

affect rights of existing shareholders

16.

Shares to be numbered progressively and no share to be sub-divided

17.

Further issue of capital

Such further shares shall be offered to the persons who at the date of the offer, are holders of the Equity Shares of the Company, in proportion, as nearly as circumstance admit, to the capital paid up on these shares at that date. ii) Such offer shall be made by notice specifying the number of shares offered and limiting a time not being less than thirty days from the date of offer within which the offer, if not accepted, will be deemed to have been declined. iii) The offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to them in favour of any person and the notice referred to in sub clause ii) hereof shall contain a statement of this right. PROVIDED THAT the Directors may decline, without assigning any reason to allot any shares to any person, in whose favour any member may renounce the shares offered to him. After the expiry of the time specified in the notice aforesaid or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board may dispose of them in such manner as they think most beneficial to the Company. b) Notwithstanding any thing contained in the preceding sub clause, the Company may :-

i)

i) ii)

By a special resolution; or Where no such special resolution is passed, if the vote cast (whether on a show of hands or on a poll, as the case may be) in

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favour of the proposal contained in the resolution moved in the General Meeting (including the casting vote, if any of the Chairman) by Members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any, cast against the proposal by Members so entitled and voting and the Central Government is satisfied, on an application made by the Board of Directors in this behalf, that the proposal is most beneficial to the Company. Offer further shares to any person or persons, and such person or persons may or may not include the persons who at the date of the offer are the holders of the equity shares of the Company.

c)

Notwithstanding any thing contained in sub-clause (a) above, but subject, however, to Section 81(3) of the Act, the Company may increase its subscribed capital on exercise of an option attached to the debentures issued or loans raised by the Company to convert such debentures or loans into shares, or to subscribe for shares in the Company. Subject to the provisions of Section 81 of the Act and these Articles, the shares in the capital of the Company for the time being shall be under the control of the Board of Directors who may issue, allot or otherwise dispose off the same or any of them to such persons, in such proportion and on such terms and conditions and either at a premium or at par or (subject to compliance with the provisions of Section 79 of the Act) at a discount and at such time as they may from time to time think fit and with the sanction of the Company in General Meeting to give any person, the option to call for any shares either at par or at a premium during such time and for such consideration the Directors think fit, and may allot and issue shares in the capital of the Company in payment or part for any property sold and transferred or for any services rendered to the Company in the conduct of its Business; and any shares which may be so allotted may be issued as fully paid-up shares and if so issued, shall be deemed to be fully paid shares. The option or right to call of shares shall not be given to any person except with the sanction of the issuer in general Meeting. Shares under Control of Directors

18.

a)

The shares or other interest of any member in the Company shall be movable property, transferable in the manner provided by the Articles of the Company. Each share in the Company shall be distinguished by its appropriate number. A Certificate under the Common Seal of the Company, specifying any shares held by any member shall be, prima facie, evidence of the title of the member of such shares. If and whenever, as a result of issue of new or further shares or any consolidation or sub-division of shares, any shares is held by members in fractions, the Directors shall, subject to the provisions of the Act, and the Articles and to the directions of the Company in Sale of Fractional Shares

b)

c)

19.

452

General Meeting, if any, sell those shares which members hold in fractions, for the best price reasonably obtainable and shall pay and distribute to and amongst the members entitled to such shares in the proportion, the net proceeds of the sale thereof. For the purpose of giving effect to any such sale the Directors may authorize any person to transfer the shares sold to the purchaser thereof, comprised in any such transfer and he shall not be bound to see the application of the purchase money nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. 20. In addition to and without derogating from the powers for that purpose conferred on the Board under Articles 17, 18 and 19 the Company in general meeting may, subject to the provisions of Section 81 of the Act determine that any shares (whether forming part of the original capital or of any increased capital of the Company) shall be offered to such person (whether a Member or not), in such proportion and on such terms and conditions and either (subject to compliance with the provisions of Section 78 and 79 of the Act) at a premium or at par or at a discount, as the general meeting shall determine and with full power to give any person (whether a Member or not) the option to call for or be allotted shares of any class of the Company either(subject to compliance with the provisions of Section 78 and 79 of the Act) at a premium or at par or at a discount, such option being exercisable at such times and for such consideration as may be directed by such General Meeting or Company in general meeting may make any other provision whatsoever for the issue, allotment or disposal of any shares. Subject to these Articles and the provisions of the Act, the Board may issue and allot share in the Capital of the Company as payment, or in consideration, or as part payment, or in part consideration of the purchase or acquisition of any property or for services, rendered to the Company in the conduct of its business and shares which may be so issued or allotted shall be credited or deemed to be credited as fully paid-up or partly paid-up shares. Any application signed by or on behalf of a applicant for shares in the Company, followed by an allotment of any share therein, shall be an acceptance of shares within the meaning of these Articles, and every person who thus or otherwise accepts any shares and whose name is on the Register shall, for the purposes of these Articles, be a Member. The money (if any) which the Board shall, on the allotment of any share being made by them, require or direct to be paid by way of deposit, call or otherwise, in respect of any shares allotted by them, shall immediately on the insertion of the name of the allottee in the Register of Members as the name of the holder of such shares, becomes a debt due to and recoverable by the Company from the allottee thereof, and shall be paid by him accordingly. Every Member, or his heirs, executors or administrators, shall pay to the Company the portion of the capital represented by his share or shares which may for the time being, remain unpaid thereon, in such amounts at such time or times in such manner as the Board shall Power also to Company in General Meeting to issue shares

21.

Issue of Shares for consideration other than Cash

22.

Acceptance of shares

23.

Deposit & Call etc. to be a debt payable immediately

24.

Liability of members

453

from time to time in accordance with the Companys regulations, require or fix for the payment thereof. 25. a) Every Member of allottee of shares shall be entitled without payment, to receive one or more certificates in marketable lots specifying the name of the person in whose favour it is issued, the shares to which it relates and the amount paid-up thereon. Such certificate shall be issued only in pursuance of a resolution passed by the board and on surrender to the company of the letter of allotment or the fractional coupons of requisite value, save in case of issue against letters of acceptance or of renunciation or in cases of issue of bonus shares. Every such certificate shall be issued under the seal of the Company, which shall be affixed in the presence of two Directors or persons acting on behalf of the Directors under a duly registered power of attorney and the Secretary, or some other person appointed by the Board for the purpose and the two Directors or their attorney and the Secretary or other person shall sign the share certificate provided that if the composition of the Board permits of it, at least one of the aforesaid two Directors shall be a person other than a Managing or a Whole time Director. Particulars of every share certificate issued shall be entered in the Register of Members against the name of the person, to whom it has been issued, indicating the date of issue. For any further certificate the Board shall be entitled, but shall not be bound to prescribed a charge not exceeding Rupee One, Provided that the Company shall not be bound to register more than three persons as joint holders of any share except in the face of executors or trustees or a deceased member and in respect of a share held jointly by several persons the Company shall not be bound to issue more than one certificate. The Company shall comply with provisions of Section 113 of the Act. Provided however, that no share certificate (s) shall be issued in respect of the shares help in Depository. b) The issue of Certificates of Shares or of duplicate or renewal of Certificates of Shares shall be governed by the provisions of Section 84 and other applicable provisions of the Act and by the rules or notifications or orders, if any, which may be prescribed or made by competent authority under the Act, the Directors shall also comply with the provisions of such rules or regulations of any stock exchange where the shares of the company may be listed for the time being and also the requirements of the Securities Contracts (Regulation) Act, 1956 as may be applicable. Every Certificate of Shares shall specify the date of issue, the numbers and distinctive numbers of the shares in respect of which it is issued and the amount paid-up thereon and shall be in such form as the Directors shall prescribe or approve. Any two or more joint allottees of a share shall, for the purpose of this Article, be treated as a single Member, and the certificate of any share, which may be subject of joint ownership, may be delivered to any one of such joint owners on behalf of all of them. The Company shall complete and have ready for delivery such Share Certificate

c)

d)

e)

454

certificates within three months from the date of allotment, unless the condition of issue thereof otherwise provides, or within one month of the receipt of application of registration of transfer, transmission, sub-division, consolidation or renewal of any of its shares as the case may be. f) If any Certificate be worn out, torn, defaced or otherwise mutilated or rendered useless, or if there be no further space on the back thereof for endorsement of transfers, then, upon production thereof to the Directors, they may order the same to be cancelled, and may issue a new Certificate in lieu thereof, without charging any fee in respect thereof. 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, a new certificate in lieu thereof shall be given to the partly entitled to such lost or destroyed Certificate on payment of such fee as may be decided by the Board of Directors from time to time on that behalf. Out of pocket expenses incurred by the Company in investigation the evidence as to the loss or destruction shall be paid to the Company if demanded. Where any shares under the power in that behalf in those Articles herein contained are sold by the Directors and the Certificate thereof has not been delivered to the Company by the former holder of the said shares, the Directors may issue a new certificate for such shares distinguishing it in such manner as they may think fit from the certificate not so delivered. Provided that not withstanding what is stated above clauses the Directors shall comply with such rules or regulations or requirements of any Stock Exchange or the rules made under Securities Contracts (Regulation) Act, 1956 or any other Act, or rules applicable in this behalf. h) The Company shall not be bound to register more than three persons as the joint holder of any shares, except in the case of executors or trustees of a deceased member in respect of a share held jointly by several persons, the Company shall not be bound to issue more than one Certificate and the delivery of a Certificate for a share to any one of several joint holders shall be sufficient delivery to all such holders. The Company may issue such fractional coupons as the Board may approve in respect of any of the shares of the Company on such terms as the Board thinks fit as to the period within which the fractional coupons are to be converted into Share Certificates. A Director may sign a share certificate by affixing his signature thereon by means of any machine, equipment or other mechanical means, such as engraving in metal or lithography, but not by means of rubber stamp, provided that the Director shall be responsible for the safe custody of such machine, equipment or other material used for the purpose. The Company may issue such fractional certificates as the Board Fractional

g)

i)

j)

26.

455

may approve in respect of any of the shares of the Company on such terms as the Board thinks fit as to the period within which the fractional certificates are to be converted into share certificates. 27. a) No certificate of any share or shares shall be issued either in exchange for those which are sub-divided or consolidated or in replacement of those which are defaced, torn or old, decrepit, worn out, or where pages on the reverse for recording transfer have been fully utilised, unless the certificate in lieu of which it is issued is surrendered to the Company. When a new share certificate has been issued in pursuance of clause (a) of this Article, it shall state on the face of it and against the stub or counterfoil to the effect that it is issued in lieu of share certificate No._____ sub-divided / replaced / on consolidation of shares. If a share certificate is lost or destroyed, a new certificate in lieu thereof shall be issued only with the prior consent of the Board and on such terms, if any, as to evidence and indemnity as to the payment of out-of pocket expenses incurred by the Company in investigating evidence, as the Board thinks fit. When a new share certificate has been issued in pursuance of clause (c) of this Article, it shall state on the face of it and against the stub or counterfoil to the effect that is a Duplicate issued in lieu of share certificate No.__. The word Duplicate shall be stamped or punched in bold letters across the face of the share certificate. Where a new certificate has been issued in pursuance of clause (a) or clause (c) of this Article, particulars of every such share certificate shall be entered in a Register of Renewed and Duplicate Certificates indicating against the names of the persons to whom the certificate is issued, the number and date of issue of the share certificate in lieu of which the new certificate is issued and the necessary changes indicated in the Register of Members by suitable cross reference in the Remarks column. All blank forms to be used for issue of share certificates shall be printed and the printing shall be done only on the authority of a resolution of the Board. The blank forms shall be consecutively numbered either mannuly or mechanically and the forms and the blocks, engravings facsimiles and hues relating to the printing of such forms shall be kept in the custody of the Secretary or such other person as the Board may appoint for the purpose and the Secretary or the other person aforesaid shall be responsible for rendering an account of these forms to the Board. The Managing Directors of the Company for the time being, or if the Company has no Managing Director, every Director of the Company shall be responsible for the maintenance, preservation and safe custody of the machine, equipment and/or other material referred to in aforesadi clauses and of all books and documents relating to the issue of share certificates except the blank forms of share certificate referred to in clause (f).

Certificates

Renewal of share certificates

b)

c)

d)

e)

f)

g)

456

h)

All books referred to in clause (g) of this Article shall be preserved in good order permanently. Not withstanding anything contained in the aforesaid clauses, the Board may in its absolute discretion refuse application for subdivision or consolidation of Share Certificates or Debenture Certificates into denominations of less than the marketable lot except when such sub-division or consolidation is required to be made to comply with as statutory provision or an order of a competent Court of law. The provisions of the Articles under this chapter to the extent applicable, shall mutatis mutandis apply to Debentures of the Company. The Company shall be entitled to dematerialise its existing shares, debentures and other securities, rematerialise its shares, debentures and other securities held in the Depositories and/or to issue its fresh shares, debentures and other securities, in a dematerialised form pursuant to the Depositories Act, 1996 and the rules framed there under, if any. If any shares stands in the name of two or more persons, the person first named in the Register shall as regards to the receipt of dividends or bonus or service of notices and all or any other matter connected with the Company, except voting at meetings and the transfer of the shares, be deemed the sole holder thereof but the joint-holders of a share shall be severally as well as jointly liable for the payment of all installments and calls due in respect of such share and for all incidents thereof according to the Companys regulations. Any one of such joint holders may give effectual receipts of any dividends, interests or other moneys payable in respect of such share/debenture. Save as herein otherwise provided, the Company shall be entitled to treat the person whose name appears on the Register of Members as the holder of any share or whose name appears as the beneficial owner of shares in the records of Depository, as the absolute owner thereof and accordingly shall not except as ordered by a court of competent jurisdiction or as by law required, be bound to recognise any benami trust or equity or equitable, contingent, future or partial or other claim or claims or right to or interest in such share on the part of any other person whether or not it shall have express or implied notice thereof. No notice of any trust, express, implied or constructive shall be entered in the Register of Members or of Debenture holders. Provisions also applicable to Debentures Dematerialisation and Rematerialisation of Securities

i)

28.

A.

B.

29.

A.

The first name of joint holders deemed sole holders

B.

Receipt of one joint holder is sufficient Company not bound to recognise an interest in shares other than that of registered holder

30.

31.

a)

Notwithstanding anything herein contained a person whose name is at any time entered in the register of members of the Company as a holder of a share in the Company, but who does not hold the beneficial interest in such share, shall, if so required by the Act, within such time and in such forms as may be prescribed make a declaration to the Company specifying the name and other

Declaration by person not holding beneficial interest in any shares

457

particulars of the person or persons who hold the beneficial interest in such share in such manner as may be provided in Section 187 C of the Act. b) A person who holds a beneficial interest in a share a class of shares of the Company shall, if so required by the Act, within the time prescribed, after his becoming such beneficial owner, make a declaration to the Company specifying the nature of his interest, particulars of the person in whose name the shares stand in the Register of Members of the Company and such other particulars as may be prescribed as provided in Section 187 C of the Act. Whenever there is a change in the beneficial interest in a share referred to above, the beneficial owner shall, if so required by the Act, within the time prescribed from the date of such change, make a declaration to the Company in such form and containing such particulars as may be prescribed as provided in Section 187 C of the Act. Notwithstanding anything contained in Section 153 of the Act and Article 30 hereof, where any declaration refered to above is made to the Company, the Company shall, if so required by the Act, make a note of such declaration in the Register of Members and file within the time prescribed from the date of receipt of the declaration a return in the prescribed form with the Registrar with regard to such declaration. Except as provided in these Articles, none of the funds of the Company shall be applied in the purchase of, or land on the security of shares of the Company and the Company shall not, except as permitted by Section 77 of the Act, give any financial assistance for the purpose of or in connection with any purchase of shares in the Company. Nothing in this Article shall affect the right of the Company to redeem any shares issued under Section 80 of the Act. 33. Subject to and in accordance with the applicable provisions of the Companies Act, 1956 and all other applicable provisions of law (including any statutory modifications or re-enactment thereof for the time being in force or as may be enacted from time to time) and subject to such other approvals/permissions or sanctions as may be required, the Company shall have power to acquire, purchase, sell, dispose off, provide finance for the purchase of any of its own fully/partly paid shares whether or not they are redeemable and to make the payment out of Capital Reserves or otherwise in respect of such acquisition, purchase, financing. Dealing in its own shares Funds of Company may not be applied in purchase of the shares of company

c)

d)

32.

34. a) DEMATERIALISATION OF SECURITIES For the purpose of this Article :Beneficial Owner means a person or persons whose name is recorded as such with a depository ; Definitions

458

SEBI means the Securities & Exchange Board of India ; Depository means a company formed and registered under the Companies Act, 1956 , and which has been granted a certificate of registration to act as a depository under the Securities & Exchange Board of India Act, 1992 ; and Security means such security as may be specified by SEBI from time to time. b) Notwithstanding anything contained in these Articles, the Company shall be entitled to dematerialise its securities and to offer securities in a Company in a dematerialised form pursuant to the Depositories Act, 1996. Dematerialisation of Securities

c) Every person subscribing to securities offered by the Company shall have the option to receive security certificate or to hold the securities with a depository. Such a person who is the beneficial owner of the securities can at any time opt out of a depository, if permitted by the law, in respect of any security in the manner provided by the Depositories Act, and the Company shall, in the manner and within the time prescribed, issue to the beneficial owner the required Certificate of Securities. If a person opts to hold his security with a depository, the Company shall intimate such depository the details of allotment of the security, and on receipt of the information, the depository shall enter in its record the name of the allottees as the beneficial owner of the security.

Option for Investors

d) All securities held by a depository shall be dematerialised and be in fungible form. Nothing contained in Section 153, 153A, 153B, 187B, 187C and 372 of the Act shall apply to a depository in respect of the securities held by it on behalf of the beneficial owners. e) (a) Notwithstanding anything to the contrary contained in the Act or these Articles , a depository shall be deemed to be the registered owner for the purpose of effecting transfer of ownership of security on behalf of the beneficial owner. (b) Save as otherwise provided in (a) above , the depository as the registered owner of the securities shall not have any voting rights or any other rights in respect of the securities held by it. (c) Every person holding securities of the Company and whose name is entered as the beneficial owner in the records of the depository shall be deemed to be a member of the Company. The beneficial owner of securities shall be entitled to all the rights and benefits and be subject to all the liabilities in respect of his securities which are held by a depository.

Securities to be in Fungible Form

Rights of the Depositories and the Beneficial Owners

459

f) Notwithstanding anything in the Act or these Articles to the contrary, where securities are held in a depository, the records of the beneficial ownership may be served by such depository to the Company by means of electronics mode or by delivery of floppies or discs.

Service of Documents

g) Nothing contained in section 108 of the Act or these Articles shall apply to a transfer of securities effected by a transferor and transferee both of whom are entered as beneficial owners in the records of a depository.

Transfer of Securities

h) Notwithstanding anything in the Act or these Articles, where securities dealt with by a depository, the Company shall intimate the details thereof to the depository immediately on allotment of such securities.

Allotment of Securities dealt with a Depository

i) Nothing contained in the Act or these Articles regarding the necessity of having distinctive numbers for securities issued by the Company shall apply to securities held with a depository.

Distinctive No. of Securities held with a Depository

j) The Register and Index of beneficial owners maintained by a depository under the Depositories Act, 1996 shall be deemed to be the Register and Index of Members and Security holders for the purposes of these Articles.

Register and Index of Beneficial Owners

35.

In the event it is permitted by law to issue shares without voting rights attached to them, the Directors may issue such share upon such terms and conditions and with such rights and privileges annexed thereto as thought fit and as may be permitted by law. Notwithstanding anything contained in these articles, in the event it is permitted by law for a company to purchase its own shares or securities, the Board of Directors may, when and if thought fit, buy back, such of the Companys own shares or securities as it may think necessary, subject to such limits, upon such terms and conditions, and subject to such approvals, as may be permitted by law. The Directors shall have the power to offer, issue and allot Equity Shares in or Debentures (Whether fully/ partly convertible or not into Equity Shares) of the Company with or without Equity

Issue of Shares without Voting Rights

36.

Buy-Back of Shares and Securities

37.

Employees Stock Options Scheme/Plan

460

Warrants to such of the Officers, Employees, Workers of the Company or of its Subsidiary and / or Associate Companies or Managing and Whole Time Directors of the Company (hereinafter in this Article collectively referred to as the Employees) as may be selected by them or by the trustees of such trust as may be set up for the benefit of the Employees in accordance with the terms and conditions of the Scheme, trust, plan or proposal that may be formulated , created, instituted or set up by the Board of Directors or the Committee thereof in that behalf on such terms and conditions as the Board may in its discretion deem fit. 38. Subject to the provisions of the Act (including any statutory modification or re-enactment thereof, for the time being in force), shares of the Company may be issued at a discount or for consideration other than cash to Directors or employees who provide know-how to the Company or create an intellectual property right or other value addition. Sweat Equity

39. The Company may pass such resolution by postal ballot in the manner prescribed by Section 192A of the Companies Act, 1956("the Act") and such other applicable provisions of the Act and any future amendments or re-enactment thereof. Notwithstanding anything contained in the provisions of the Act, the Company shall in the case of a resolution relating to such business, as the Central Government may, by notification, declare to be conducted only by postal ballot, get such resolution passed by means of postal ballot instead of transacting such business in a general meeting of the Company.

Postal Ballot

UNDERWRITING AND BROKERAGE 40. A. The company may pay a commission to any person in consideration of: Underwriting Commission and Brokerage

i)

His subscribing or agreeing to subscribe whether absolutely or conditionally, for any shares in or debentures of the Company, subject to the restrictions specified in Sub-Section(4A) of Section 76 of the Act, or

ii) His procuring or agreeing to procure subscriptions, whether absolute or conditional for any shares in, or debentures of the Company, if the following conditions are fulfilled, viz: (a) The commission paid or agreed to be paid does not exceed in the case of shares, five percent of the price at which the shares are issued and in the case of debentures, two and half percent of the price at which the debentures are issued; (b) The amount or rate percent of the commission paid or agreed to be paid, on shares or debentures offered to the public for subscriptions, shall be disclosed in the prospectus, and in the case of shares and debentures not offered to the public for

461

subscription, disclosed in the statement in lieu of prospectus and filed, before the payment of the commission, with the Registrar, and where a circular or notice, not being a prospectus inviting subscription for the shares or debentures is issued, and disclosed in that circular or notice; (c) The number of shares or debentures which persons have agreed for a commission to subscribe, absolutely or conditionally is disclosed in the manner aforesaid, and (d) A copy of the contract for the payment of commission is delivered to the Registrar at the time of delivery of the prospectus or the statement in lieu of the prospectus for registration. B. Save as aforesaid and save as provided in Section 79 of the Act, the Company shall not allot any of its Shares or Debentures or apply any of its moneys, either directly or indirectly in payment of any commission, discount or allowance, to any person in consideration of: (i) his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in, or debentures of the Company; or

(ii) his procuring or agreeing to procure subscriptions, whether absolutely or conditionally, for the shares in, or debentures of the Company whether the shares, debentures or money be so allotted or applied by, being added to the purchase money of any property acquired by the Company or to the contract price of any work to be executed for the Company, or the money be paid out of the nominal purchase money or contract price, or otherwise. C. Nothing in this Article shall affect the power of the Company to pay such brokerage as it has heretofore been lawful for the Company to pay. A vendor to promoter of, or other person who receives payment in shares, debentures or money from the Company shall have and shall be deemed always to have had power to apply any part of the shares, debentures or money so received for payment of any commission the payment of which, if made directly by the Company would have been legal under Section 76 of the Act. The commission may be paid or satisfied (subject to the provisions of the Act and these Articles) in cash, or in share, debentures or debenture-stocks of the Company. The company may also on issue of Shares, pay reasonable brokerage as it may lawful. INTEREST OUT OF CAPITAL 42. Where any shares are issued for the purpose of raising money to Interest may be

D.

E.

41.

462

defray the expenses of the construction of any work or building, or the provision of any plant, which cannot be made profitable for a lengthy period, the Company may pay interest on so much of that share capital as is for the time being paid up, for the period, at the rate and subject to the conditions and restrictions provided by Section 208 of the Act and may charge the same to capital as part of the cost of construction of the work or building, or the provisions of plant. CALLS 43. The Board may, from time to time, subject to the terms on which any shares may have been issued and subject to the conditions of allotment, by a resolution passed at a meeting of the Board (and not by circular resolution) make such call as it thinks fit upon the Members in respect of all moneys unpaid on the shares held by them respectively and such Member shall pay the amount of every call so made on him to the person or persons and at the time and places appointed by the Board. A call may be made payable by installments. Twenty-one days Notice in writing of any call shall be given by the Company specifying the time and place of payment and the person or persons by whom such call shall be paid. A call shall be deemed to have been made at the time when the resolution authorizing such call was passed at the meeting of the Board. A call may be revoked or postponed at the discretion of the Board.

paid out of capital

Directors may make calls

44.

Notice of Calls

45.

Calls to date from resolution

46.

Call may be revoked or postponed Liability of joint holders

47.

The joint-holders of any share shall be jointly and severally liable in respect of all calls or installments and other payment, which ought to be made in respect of such shares. The Board may from time to time at its discretion, extend the time fixed for the payment of any call and may extend such time as to all or any of the Members who resides at a distance or for some other lawful cause, as the Board may deem fairly entitled to such extension but no Member shall be entitled to such extension save as a matter of grace and favor. If any Member fails to pay any call due from him on the day appointed for payment thereof, or any such extension thereof as aforesaid, he shall be liable to pay interest on the same from the day appointed for the payment thereof to the time of actual payment at such rate as shall from time to time be fixed by the Board not exceeding 18 percent per annum but nothing in this Article shall render it obligatory for the Board to demand or recover any interest from any such Member and the Directors may waive payment by any one or more Members of any such interest wholly or in part. Any sum, which by the terms of issue of a share becomes payable on

48.

Directors may extend time

49.

Calls to carry interest

50.

Sums deemed to

463

allotment or at any time fixed date, whether on account of the nominal value of the share or by way of premium shall for the purposes of these Articles be deemed to be a call duly made and payable on the date on which by the terms of issue the same becomes payable, and in case of non-payment of such sum all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of call duly made and notified. 51. On the trial or hearing of any action or suit brought by the Company against any Member or his representative/s for the recovery of money claimed to be due to the Company in respect of his shares, it shall be sufficient proof that the name of the Member/s in respect of whose shares the money is sought to be recovered, appears in the Register of Members as the holder, at the date at which the resolution making the call is duly recorded in the Minute Book and that notice of such calls was duly given to the Member or his representatives sued in pursuance of these Articles; and it shall not be necessary to prove the appointment of the Directors who made such call, nor that a quorum of Directors was present at the Board at which any call was made, nor that the meeting at which any call was made was duly convened or constituted nor any other matter whatsoever but the proof of the matters aforesaid shall be conclusive evidence of the debt. Neither a judgment nor a decree in favor of the Company for calls or other moneys due in respect of any shares, nor any payment or satisfaction thereof, nor the receipt by the Company of a portion of any sum which shall from time to time be due from any member in respect of any shares either by way of principal or interest, nor any indulgence granted by the Company in respect of payment of any such money shall preclude the forfeiture of such shares as herein provided. a) The Board may, if it thinks fit, agree to and receive from any Member willing to advance the same, all or any part of the amount of his shares beyond the sums, actually called up. And upon the moneys so paid in advance or upon so much thereof from time to time and at any time thereafter as exceeds the amount of the calls then made upon and due in respect of the shares on account of which such advances are made the Board may pay or allow interest at such rate (not exceeding without the sanction of the Company in General Meeting up to fourteen per cent per annum) as the member paying the sum in advance and the Board agree to repay at any time any amount so advanced or may at any time repay the same upon giving to the Member three months notice in writing provided that moneys paid in advance of calls shall not confer the right to dividend/s or to participate in profits. No Member paying any such sum in advance shall be entitled to voting rights in respect of the moneys so paid by him until the same would but for such payments become presently payable. Advance payment made against future calls shall not be constructed deposits within the meaning of Companies (Acceptance of deposits)

be calls

Proof on trial of suit for money due on shares

52.

Partial payment not to preclude forfeiture

53.

Payment in anticipation of calls may carry interest

b)

c)

464

Rules, 1975. d) Payment made in advance against calls shall be credited in the members account and it shall carry interest at the rate, which may be prescribed by the Board from the date of payment up to the date of calls, or call, which may be made by the Board from time to time. Any calls for future share capital are made on shares such calls shall be made on a uniform basis on all shares falling under the same class. For the purpose of this Article, shares of the same nominal value on which different amount have been paid up shall not be deemed to fall under the same class. If by the condition of allotment for any shares the whole or part of the amount of issue price thereof shall be payable by installments every such installment shall, when due be paid to the company by the person who, for the time being and from time to time shall be registered holder of the share or his legal representative. The provisions of the Articles under this Chapter, to the extent applicable, shall mutatis mutandis apply to Debentures of the company. LIEN 55. The Company shall have a first and paramount lien upon all the shares (other than fully paid up shares) registered in the name of each Member (whether solely or jointly with others) and upon the proceeds of sale thereof, for all moneys (Whether presently payable or not) called or payable at a fixed time in respect of such shares, and no equitable interest in any shares shall be created except upon the footing and upon the condition that Article 30 hereof is to have full effect. Any such lien shall extend to all dividends and bonuses 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 Companys lien, if any, on such shares. Provided that the Board Directors may at any time declare any shares wholly or in part to be exempt from the provisions of this clause. The company shall be entitled to treat the registered holder of any share or debenture as the absolute owner thereof and accordingly shall not(except as order by a Court of Competent Jurisdiction or by statute required) be bound to recognize equitable or other claim to, or interest in, such shares or debentures on the part of any other person. The companys lien shall prevail notwithstanding that it has received notice of any such claims. For the purpose of enforcing such lien the Board may sell the shares subject hereto in such manner as they shall think fit, and for that purpose may cause to be issued a duplicate certificate in respect of such shares and may authorize one of their members to execute a transfer thereof on behalf of and in the name of such Member. No sale shall be made until such period as aforesaid shall have arrived, and until notice in writing of the intention to sell shall have been Company to have lien on shares Calls on shares of same class to be made on uniform basis

54.

A.

B.

Installment on shares to be duly paid

C.

Provisions to apply to Debentures also.

56.

Outsiders claim not to affect companys lien

57.

As to enforcing lien by sale.

465

served on such Member or his representatives and default shall have been made by him or them in payment, fulfillment, or discharge of such debts, liabilities or engagements for fourteen days after such notice. 58. (a) To give effect to any such sale, the Board may authorize some person to transfer the shares sold to the purchase thereof. The purchaser shall be registered as the holder of the shares comprised in any such transfer. The purchaser shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the same The net proceeds of any such sale shall be received by the Company and 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 (subject to a like for sums not presently payable as existed upon the shares before the sale) be paid to person entitled to the shares at the date of the sale. FORFEITURE AND SURRENDER OF SHARE 60. If any Member fails to pay the whole or any part of any call or installments or any money due in respect of any shares either by way of principal or interest on or before the day appointed for the payment of the same or any such extension thereof as aforesaid, the Directors may at any time thereafter, during such time as the call or installment or any part thereof or the other moneys remain unpaid or a judgment or decree in respect thereof remains unsatisfied in whole or in part, send a notice on such Member or on the person (if any) entitled to the share by transmission, requiring him to pay such call or installment or such part thereof or other moneys as remain unpaid together with any interest that may have accrued and all expenses that may have been incurred by the Company by reason of such nonpayment. 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 calls or installments and such interest thereon at such rate not exceeding 18 percent per annum as the Directors shall determine from the day on which such call or installment ought to have been paid and expenses as aforesaid are to the paid. The notice shall also state that, in the event of the non-payment at or before the time and at the place appointed, the shares in respect of which the calls was made or installment is payable, will be liable to be forfeited. If the requirements of any such notice as aforesaid shall not be complied with, every or any share in respect of which, such notice has been given, may at any time thereafter before payment of all calls or installments, Interest and expenses due in respect thereof be forfeited by a ordinary resolution of the Board to that effect. Such forfeiture shall include all dividends declared or any other moneys payable in respect of the forfeited shares and not actually paid before If money payable on shares not paid notice to be given to member Application of proceeds of sales Transfer of share sold under lien

(b)

(c)

59.

61.

Form of Notice

62.

In default of payment shares to be forfeited

466

the date of forfeiture which shall be the date on which the ordinary resolution of the Directors is passed forfeiting the shares. 63. When any share shall have been so forfeited notice of the forfeiture 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 of Members, but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or to make any such entry as aforesaid. Any share so forfeited shall be deemed to be the property of the Company, and may be sold, re-allotted, or otherwise disposed of, either to the original holder thereof or to any other person, upon such terms and in such manner as the Board shall think fit and at any time before a sale or disposal as aforesaid the board may cancel the forfeiture on such terms as it thinks fit. Upon forfeiture of shares, the member shall forthwith surrender the shares to the Company. Any member whose shares have been forfeited shall cease to be a member in respect of those shares but shall notwithstanding the forfeiture be liable to pay and shall forthwith pay to the Company, on demand all calls, installments, interest and expenses owing upon or in respect of such shares at the time of the forfeiture together with interest thereon from the time of the forfeiture until payment, at such rate not exceeding eighteen percent per annum or as the Board may determine and the Board may enforce the payment thereof, if it thinks fit. The forfeiture of a share shall involve extinction, at the time of the forfeiture, of all interest in and all claims and demand 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. A declaration in writing that the declarant is a Director or Secretary of the Company and that a share in the Company has been duly forfeited in accordance with these Articles on a date state in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares. Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers therein before given, the Board may appoint some person to execute an instrument of transfer of the shares sold and cause the Purchasers name to be entered in the Register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings, or to the application of the purchase money, and after his name has been entered in the Register in respect of such shares, the validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively. Upon any sale, re-allotment or other disposal under the provisions of Notice of Forfeiture to Member

64.

Forfeited share to be property of the company and may be sold etc.

65.

Surrender of forfeited shares Liability on forfeiture

66.

67.

Effect of forfeiture

68.

Evidence of forfeiture

69.

Validity of Sale under these Articles

70.

Cancellation of

467

the preceding Articles, the certificate or certificates originally issued in respect of the relative shares shall (unless the same shall on demand by the Company have been previously surrendered to it by the defaulting Member) stand cancelled and become null and void and of no effect, and the Directors shall be entitled to issue a duplicate certificate or certificates in respect of the said shares to the person or persons entitled thereto distinguishing it on them in such manner as they think fit from the certificates not so delivered. 71. The Board may at any time before any share so forfeited shall have been sold, re-allotted or otherwise disposed of, annul the forfeiture thereof upon such conditions as it thinks fit. The Directors may subject to the provisions of the Act, accept a surrender of any share by any member desirous of surrendering on such terms as the Directors may think fit. The provisions of the Articles under this chapter to the extent applicable, shall mutatis mutandis apply to debentures of the Company.

share certificate in respect of forfeited shares

Power to annul forfeiture

72.

Surrender of shares

73.

Provisions to apply to debentures also

TRANSFER AND TRANSMISSION OF SHARES

74.

The Company shall keep a book to be called Register of Transfer, and therein shall be fairly and distinctly entered particulars of every transfer or transmission of any share held in material form. Shares in the company may be transferred by instrument in writing in such form and by such procedure as may from time to time be prescribed by law. Subject thereto the directors may prescribe a common form of for instruments of transfer which may from time to time be altered by the Directors. In the case of transfer of shares/debentures held by joint holders, the transfer will be effective only if it is made by all the joint holders. The Instrument of Transfer duly stamped and executed by the transferor and the transferee shall be delivered to the Company in accordance with the provisions of the Act. The instrument of transfer shall be accompanied by such evidence as the Board may require to prove the title of transferor and his right to transfer the shares and every registered Instrument of Transfer shall remain in the custody of the Company until destroyed by order of the Board, The Transferor shall be deemed to be the holder of such shares until the name of the Transferee shall have been entered in the Register of Members in respect thereof. Before the registration of the transfer, the certificate or certificates of the shares must be delivered to the Company.

Register of Transfer

75.

Instrument of Transfer

76.

Transfer by Joint Holders Transfer form to be completed and Presented to the Company

77.

468

78.

The Board shall have power on giving not less than seven days previous notice by advertisement in some newspaper circulation in the district in which the Office of the Company is situated to close the Transfer Books, the Register of Members or Register of Debenture holders at such time or times and for such period or periods, not exceeding thirty days at a time and not exceeding in the aggregate forty-five days in a year. a) Subject to the provisions of Section 111 of the Act and Section 22A of the Securities Contracts (Regulation) Act, 1956, the Board may, at its own absolute and uncontrolled discretion and by giving reasons decline to register or acknowledge any transfer of shares, debentures, debenture warrants, whether fully paid or not (notwithstanding that the proposed transferee be already a Member) but in such cases it shall within one month from the date on which the instrument of transfer was lodged with the Company send to the transferee and the transferor notice of the refusal to register such transfer. The Board shall not refuse the registration of transfer on the ground of the transferor being either alone or jointly with any other person or persons indebted to the Company on any account whatsoever. Without prejudice to the generality of provisions of Articles 79 (a), the Board may refuse to register transfer of shares, debentures or debenture warrants, listed on any of the registered Stock Exchanges, in the name of the transferee on any one or more of the following grounds, namely:i) That the instrument of transfer is not proper or has not been duly stamped and executed or that the certificate relating to the share/s, debenture/s, debenture warrant/s, has not been delivered to the company, or that any other requirement under the law relating to registration of such transfer has not been complied with; ii) That the transfer of shares, debentures or debenture warrants is in contravention of any law; iii) That the transfer of shares, debentures or debenture warrants is likely to result in such a change in the composition of the Board of Directors as would be prejudicial to the interest of the company or to Articles 172; iv) That the transfer of shares, debentures or debenture warrants is prohibited by any order of any Court, Tribunal or other Authority under any law for the time being in force; c) i) The Board shall before the expiry of two months from the date on which the instrument of transfer is lodged with the company for the purposes of such transfer, form its opinion as to whether such registration ought not to be refused on any of the grounds mentioned in Articles 79 (b); ii) If the Board has formed the opinion that such registration ought to be refused on the grounds, mentioned in Clause (i) of Article 79 (b), it shall intimate the transferor and transferee by notice;

Transfer Books and Register of Members when closed

79.

Directors may refuse to register Transfers

b)

469

iii) If the Board forms an opinion that such registration ought to be refused on any of the grounds mentioned in Clause (ii) to (iv) of Article 79 (b), it shall make a reference to the Tribunal, if required, under the Law. d) The Board shall not issue debenture/bonds with the right to allotment or conversion into shares without sanction of the company in the general meeting. An application of registration of the transfer of shares may be made either by the transferor or the transferee provided that where such application is made by the transferor, no registration shall in the case of partly paid shares be effected unless the company gives notice of the application to the transferee and subject to the provisions of Clause (iv) of this Article, the company shall unless objection is made, register the name of the transferee in the same manner and subject to same conditions as if the application for registration was made by the transferee. For the purpose of Clause (i) above notice to the transferee shall be deemed to have been duly given if sent by prepaid 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 to him in the ordinary course of post. It shall be not be lawful for the company to register a transfer of any shares unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation if any, of the transferee has been delivered to the company along with the Certificate relating to the Shares and if no such Certificate is in existence, along with the letter of allotment of shares. The Directors may also call for such other evidence as may reasonably be required to show the right of the transferor to make the transfer, provided that where it is proved to the satisfaction of the Directors of the Company that an instrument of transfer signed by the transferor and the transferee has been lost, the company may, if the Directors think fit, on an application in writing made by the transferee and bearing the stamp required by an instrument of transfer register the transfer on such terms as to indemnity as the Directors may think fit. Nothing in Clause 80 (iii) above shall prejudice any power of the company to register as shareholder any person to whom the right to any share has been transmitted by operation of law. Nothing in this Article shall prejudice any power of the company to refuse to register the transfer of any share. The instrument of transfer shall after registration be retained by the company and shall remain in their custody. All instruments of transfer which the Directors may decline to register, shall on demand be returned to the persons depositing the same. The Directors may cause to be destroyed all transfer deeds lying with the company after such period as they may determine. Custody of instrument of transfer Transfer of shares

80.

i)

ii)

iii)

iv)

v)

81.

470

82.

Where, in the case of partly paid shares, an application for registration is made by the transferor, the Company shall give notice of the application to the transferee in accordance with the provision of Section 110 of the Act. Subject to Article 30 hereof in the case of the death of any one or more of the persons named in the Register of Members as the jointholders of any shares, the survivor or survivors shall be the only persons recognised by the Company as having any title to or interest in such shares, but nothing herein contained shall be taken to release the estate of a deceased joint-holder from any liabilities on shares held by him jointly with any other person. The executors or administrators or holders of a Succession Certificate or the legal representatives of a deceased Member (not being one or two or more joint-holders) shall be the only persons recognised by the Company as having any title to the shares registered in the name of such Member and the Company shall not be bound to recognise such executors or administrators or holders of a Succession Certificate or the legal representatives unless such executors or administrators or legal representatives shall have first obtained Probate or Letters of Administration or Succession Certificate, as the case may be, from a duly constituted Court in the Union of India, provided that in any case where the Board in its absolute discretion thinks fit, the Board may dispense with production of Probate or Letters of Administration or Succession Certificate, upon such terms as to indemnify or otherwise as the Board in its absolute discretion may think necessary and under Article 83 register the name of any person who claims to be absolutely entitled to the shares standing in the name of a deceased Member, as a Member. A holder or joint holders of shares in or debentures of the company may nominate, in accordance with the provisions of Section 109A of the Companies Act, 1956 (including any amendment thereto or any re-enactment thereof) and in the manner prescribed there under, any person to whom all the rights in the shares in or debentures of the Company shall vest in the event of death of such holder (s). Any nomination so made shall be dealt with by the company in accordance Act,1956 or any statutory modification or re-enactment thereof for the time being in force. Only fully paid-up shares or debentures shall be transferred to a minor acting through his/her legal or natural guardian and under no circumstances shares or debentures be transferred to any insolvent or a person of unsound mind. a) Subject to the provisions of the Act and Articles 79 to 85 and 88 any person becoming entitled to shares in consequence of the death, lunacy, bankruptcy or insolvency of any Member, or by any lawful means other than by a transfer in accordance with these Articles may, with the consent of the Board (which is shall not be under any obligation to give) upon producing such evidence that he sustains the character in respect of which be proposes to act under this Article or

Notice of application when to be given

83.

Death of one or more Joint holders of shares

84.

Title to Shares of Deceased Member

85.

Nomination

86.

Transfer to Minor etc.

87.

Registration of Persons entitled to shares otherwise than by transfer, The Transmission Article.

471

of such title as the Board thinks sufficient either be registered himself as the holder of the shares or elect to have some person nominated by him and approved by the Board registered as such holder, provided nevertheless, that if such person shall elect to have his nominee registered he shall testify the election by executing in favour of his nominee an instrument of transfer in accordance with the provisions herein contained, and until he does so, he shall not be freed from any liability in respect of the share. This Article is hereafter called The Transmission Article. b) A transfer of the share or other interest in the Company of a deceased member thereof made by his legal representative shall, although the legal representative is not himself a member be as valid as if he has been a member at the time of the execution of the instrument of transfer. The Board shall have the same right to refusal register a person entitled by transmission to any shares or his nominee as if he were the transferee named in an ordinary transfer presented for registration. A person entitled to a share by transmission shall, subject to the right of the Directors, retain such dividends or money as hereinafter provided, be entitled to receive and may give discharge for any dividends or other moneys payable in respect of the shares. Refusal to register on transmission

88.

89.

Person entitled may receive dividend without being registered as member Claimant to be entitled to same advantage

90.

The person becoming entitled to a share by reason of the death, lunacy, bankruptcy or insolvency of the holder shall be entitled to the same dividends and other advantages to which he would be entitled as if he were registered holder of the shares except that he shall not before being registered as a member in respect of the share, be entitled in respect of it, to exercise any right conferred by membership in relation to the meeting of the company provided that the Board may at any time give notice requiring any such persons to elect either to be registered himself or to transfer the shares and if the notice is not complied within sixty days, the Board may thereafter withhold payment of all dividends, interests, bonus or other moneys payable in respect of the shares until the requirements of the notice have been complied with. a) No fee shall be charged for:

91.

Fee on registration of transfer probate etc.

i) Registration of transfer of the Companys shares, debentures and Detachable warrants; ii) Sub-division and consolidation of share certificates, debenture certificates and detachable warrants and for sub-division of letters of allotment and split, consideration, renewal and pucca transfer receipts into denomination corresponding to the market units of trading;

472

iii) sub-division of renounce able letters of right; iv) issue of new certificates in replacement of those which are old, decrepit or worn out or where the pages on the reverse for recording transfer have been fully utilized; v) registration of any power of attorney, probate, letters of administration or similar other documents.

b)

Fees as agreed upon with the Stock Exchanges will be charged for : i) issue of new certificate in replacement of those that are torn, defaced, lost or destroyed; sub-division and consolidation of shares and debenture certificates and for sub-division of letters of allotment and split, consolidation renewal and pucca transfer receipts into denominations other than those fixed for the market unit of trading. No fee on transfer or transmission

ii)

92.

No fee shall be charged for registration of transfer, transmission, probate, succession certificate and Letter of administration, Certificate of Death or Marriage, Power of Attorney or similar other document.

93.

The Company shall incur no liability or responsibility whatsoever 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 or interest in the said 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 or 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 of any equitable right, title or interest or be under any liability whatsoever for refusing or neglecting so to do, 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 if the Board shall so think fit. Every transmission of a share shall be verified in such manner as the Directors may require, and the company may refuse to register any such transmission until the same be so verified or until or unless an indemnity be given to the company with regard to such registration which the Directors at their discretion In the case of transfer or transmission of shares or other marketable securities where the company has not issued any certificates and where such shares or securities are being held in an electronic and fungible form in a Depository, the provisions of the Depositories Act,1996 shall apply.

Company not liable for disregard of a notice, prohibiting registration of a transfer

94.

Directors may require evidence of transmission

95.

Transfer of shares in Dematerialised form

473

96.

The provisions of these Articles shall mutates mutandis apply to the transfer or transmission by operation of law of debentures and / or detachable warrants of the Company.

Transfer or transmission of debentures and/or detachable warrants

COPIES OF MEMORANDUM AND ARTICLES TO BE SENT TO MEMBERS 97. Copies of the Memorandum and Articles of Association of the Company and other documents referred to in Section 39 of the Act as in force for the time being, shall be sent/furnished to every Member at his request within seven days of the request on payment of prescribed fees. BORROWING POWER 98. Subject to the provisions of Section 292 and 293 of the Act and Section 58A of the Companies (Acceptance of Deposits) Rules, 1975 and of these Articles or any statutory modification thereof for the time being in force the Board may, from time to time at its discretion by a resolution passed at a meeting of the Board, accept deposits from Members either in advance of calls or otherwise and generally raise or borrow or secure the payment of any sum or sums of money for the purpose of the company. Provided the payment of any sum or sums of money for the purpose of the Company. Provided however where the moneys to be borrowed together with the moneys already borrowed (apart from temporary loans to be obtained from the Companys bankers in the ordinary course of business) exceed the aggregate of the paid up capital of the Company and its, free reserves (not being reserves set apart for any specific purpose) the Board of Directors shall not borrow such money without the sanction of the Company in General Meeting. No Debt incurred by the Company in excess of the limit imposed by these Articles shall be valid or effectual unless the lender proves that he advances the loan in good faith and without knowledge that the limit imposed by this Article had been exceeded. Subject to the provisions of Article 98 hereof, the payment or repayment of moneys borrowed as aforesaid may be secured in such manner and upon such terms and conditions in all respects as the Board may think fit., and in particular by a resolution passed at a Meeting of the Board by the issue of debentures or debenture-stock of the Company, charged upon all or any part of the property of the Company (both present and future), including its uncalled capital for the time being and debentures, debentures-stock and other securities may be made assignable free from any equities between the Company and person to whom the same may be issued. Any bonds, debentures, debenture-stock or other securities issued or to be issued by the Company shall be under the control of the Directors who may issue them upon such terms and condition and in such manner and for such consideration as they shall consider to be for the benefit of the Company. Powers to borrow Copies of Memorandum and Articles to be sent by the Company

99.

Payment or repayment of moneys borrowed

100.

Bonds, Debentures, etc. to be subject to control of Directors

474

101.

Subject to the provisions of any law, any debentures, debenture stock or other securities may be issued at a discount, premium or otherwise and may be issued on the condition that they shall be convertible into shares of any denomination, and with any privileges and conditions as to redemption, surrender, drawing, allotment of shares and attending (but not voting) at General Meeting, appointment of Directors and otherwise. Where the terms of issue of Debentures or loans includes as option to the holder to convert such debentures or loans into shares of the Company or to subscribe for shares in the Company shall comply with the provisions to Section 81 (3) of the Act. Any debenture or debenture-stock issued by the Company shall be subject to the provisions of Sections 117 to 123 (both inclusive) and other applicable provisions of the Act or of any statutory modification hereof for the time being. The Board shall cause a proper Register to be kept in accordance with the provisions of Section 143 of the Act of all mortgages, debentures and charged specifically affecting the property of the Company and shall cause the requirements of Section 118, 125 and 127 to 144 of the Act in that behalf to be duly complied with, (within the time prescribed by the said section or such extension thereof as may be permitted by the Company Law Board or the Court or the Registrar of Companies as the case may be) so far as they feel to be complied with by the Board. If any uncalled up capital of the Company is included in or charged by any mortgage or other security, the Directors shall, subject to the provisions of the Act and these Articles, make calls on the Members in respect of such uncalled up capital in trust for the person in whose favor such mortgage or security is executed or if permitted by the Act, may by instrument under the seal authorize the person in whose favor such mortgage or security is executed or any other person in trust for him to make calls on the Members in respect of such uncalled up capital and the provisions hereinbefore contained in regard to calls shall mutais mutandis apply to calls made under such authority and such authority may be made exercisable either conditionally or unconditionally and either to the exclusion or the Directors power or otherwise and shall be assignable if expressed so to be. The Directors or any of them may guarantee the whole or any part of the loans or debts raised or incurred by or on behalf of the Company or any interest payable thereon, and shall be entitled to receive such payment as consideration for the giving of any such guarantee as may be determined by the Directors with power to them to indemnify the guarantors from or against liability under their guarantees by means of a mortgage or charge on the undertaking of the company or upon any of its property or assets or otherwise. If the Directors or any of them or any other persons, shall become personally liable for the payment of any sum primarily due from the company, the Directors may execute or cause to be executed any mortgage, charge or security over or affecting the whole or any part

Terms of issue of Debentures

102.

Section 117 to 123 to apply

103.

Register of mortgage etc. to be kept

104.

Mortgage of un called up capital

105.

Indemnity may be given

475

of the assets of the company by way of indemnity to secure the Directors or persons so becoming liable as aforesaid from any loss in respect of such liability. 106. The Company shall, if at any time, issues debentures, keep a Register and Index of Debenture-holders in accordance with Section 152 and 157 of the Act. The Company shall have the power to keep in any state or country outside India a branch Register of Debentureholders resident in that State or Country. SHARE WARRANTS 107. The Company may issue share warrants subject to and in accordance with the provision of Section 114 and 115 and accordingly, the Board may in its discretion, with respect to any share which is fully paid up on application in writing signed by the persons registered as holder of the share and authenticated by such evidence (if any) as the Board, may from time to time require as to the identity of the person signing the application and on receiving the certificate (if any) of the share and the amount of the stamp duty on the warrant and such fee as the Board may from time to time require, issue a share warrant. a) The bearer of a share warrant may at any time deposit the warrant at the Office of the Company and so long as the warrant remains so deposited, the Depositor shall have the same right of signing a requisition for calling a meeting of the Company and of attending and voting and exercising the other privileges of a Member at any meeting held after the expiry of two clear days from the time of deposit, as if his name were inserted in the Register of Members as the holder of the share included in the deposit warrant. Not more than one person shall be recognised as depositor of the share warrant. The Company shall on two days written notice return the deposited share warrant to the depositor. Subject as herein otherwise expressly provided, no person shall as bearer of a share warrant sign a requisition for calling a meeting of the Company or attend or vote or exercise any other privileges of a Member at a meeting of the Company, or be entitled to receive any notices from the Company. The bearer of a share warrant shall be entitled in all other respects to the same privileges and advantages as if he were named in the Register of Members as the holder of the share included in the warrant and he shall be a Member of the Company. The Board may, from time to time make rules as to the terms on which (if it shall think fit) a new share warrant or coupon may be issued by way of renewal in case of defacement, loss or destruction. CONVERSION OF SHARES INTO STOCK AND RECONVERSION Power to make rules Privileges and disabilities of the holders of share warrant Power to issue Share warrants Register and Index of Debentures holders

108.

Deposit of share warrants

b)

c)

109.

a)

b)

110.

476

111.

The Company may by ordinary resolution of the Company in General Meeting; a) b) Convert any paid up shares into stock; and Reconvert any stock into paid-up shares of any denomination. The holders of stock may transfer the same or any part thereof in the same manner as and subject to the same regulations under which, the shares from which the stock arose before the conversion have been transferred or as near thereof as circumstances admit provided that, the board may, from time to time, fix the minimum amount of stock transferable, so that such minimum shall not exceed normal amount of the shares from which the stock arose. The holders of stock, shall according to the amount of stock held by them have the same rights, privileges and advantages as regards dividends, voting at meetings of the Company and other matters, as if they held the shares from which the stock arose, but no such privileges or advantages (except participation in the dividends and profits of the Company and in the assets on winding up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred that privilege or advantage. Such of the regulations of the Company (other than those relating to share warrants) as are applicable to paid-up shares shall apply to stock and the words share and shareholder in these Articles shall include Stock and stockholder respectively. MEETING OF MEMBERS Transfer of Stock

112.

113.

Rights of stock holders

114.

Provision for shares to apply to stock

115.

The Statutory Meeting of the Company, shall as required by Section 165 of the Act, be held at such time not being less than one month and not more than six months from the date at which the Company shall be entitled to commence business and at such place as the Board may determine, and the Board shall comply with the requirements of that Section, as to the report to be submitted and otherwise. The Company shall in each year hold a General Meeting as its Annual General Meeting in addition to any other meetings in that year. All General Meetings other than Annual General Meeting and the Statutory Meeting shall be called Extraordinary General Meetings. The First Annual General Meeting shall be held within eighteen months from the date of incorporation of the Company and the next Annual General Meeting shall be held within six months after the expiry of the financial year in which the first Annual General Meeting was held and thereafter an Annual General Meeting of the Company shall be held within six months after the expiry of each financial year, provided that not more that fifteen months shall elapse between the date of one Annual General Meeting and that of the next. Nothing contained in the foregoing provisions shall be taken as affecting the right conferred upon the Registrar under the provisions of Section 166(1) of the Act to extend the time within which any Annual General Meeting may be held.

The Statutory Meeting

116.

Annual General Meeting

477

Every Annual General Meeting shall be called for a time during business hours, on a day that is not a public holiday, and shall be held at the Registered Office of the Company. The Company may in any one Annual General Meeting fix the time for its subsequent Annual General Meeting. Every Member of the Company shall be entitled to attend either in person or by proxy and the Auditor of the Company shall have the right to attend and to be heard at any General Meeting, which he attends on any part of the business which concerns him as Auditor. At every Annual General Meeting of the Company there shall be kept on the table the Directors Report and Audited Statement of Accounts, Auditors Report (if not already incorporated in the Audited Statement of Accounts) the Proxy Register shall remain open and accessible during the continuance of the meeting. The Board shall cause to be prepared the Annual List of Members, Summary of Share Capital, Balance Sheet and Profit and Loss Account and forward the same to the Registrar in accordance with Section 159, 161 and 220 of the Act. 117. a) Section 171 to 175 and Sections 177 to 186 of the Act with such adaptations and modifications, if any, as may be prescribed shall apply with respect to meetings of any class of members or of debenture holders or any class of debenture holders of the company in like manner as they apply with respect to General Meeting of the company. Section 176 of the Act with such adaptations and modifications if any, as may be prescribed shall apply with respect to meetings of any class of members or of debenture holders of the company in like manner as it applies with respect to General Meeting. In the case of an Annual General Meeting, all business to be transacted at the meeting shall be deemed special with the exception of business relating to: i) The consideration of the Accounts, Balance Sheet and Profit and Loss account and Report of the Board of Directors and of the Auditors; ii) the declaration of dividend; iii) the appointment of Directors in the place of those retiring; iv) the appointment of and fixing of the remuneration of the Auditors. b) In the case of any other meeting all business shall be deemed special. Where any items of business to be transacted at the meeting are deemed to be special as aforesaid, there shall be annexed to the notice of the meeting a statement setting out all material facts concerning each such item of business including in particular the nature of the concern or interest, if any, therein of every Director. Where any item of business to be transacted at the meeting or the Company consists of according to the approval of the meeting to Special Business Section 171 to 186 of the Act shall apply to Meeting

b)

118.

a)

c)

d)

478

any document, the time and place where the document can be inspected shall be specified in the explanatory statement referred to in sub-clause (c ) of this Article. 119. Notice of every meeting shall be given to every Member of the Company in any manner authorized by sub-sections (1) to (4) of Section 53 of the Act and by these Articles. It shall be given to the persons entitled to a share in consequence of the death or insolvency of a Member, by sending it through the post in a prepaid letter addressed to them by name, or by any like description, at the address, if any, in India supplied for the purpose by the persons claiming to be so entitled, or until such an address has been so supplied by giving the notice in any manner in which it might have been given if the death or insolvency had not occurred, provided that where the notice of a meeting is given by advertising the same in a newspaper circulating in the neighborhood of the Registered Office of the Company under sub-section (3) of the Section 53 of the Act, explanatory statement need not be annexed to the notice as required by Section 173 of the Act, but it shall be mentioned in the advertisement that the statement has been forwarded to the Members of the Company Every notice of a meeting of the company shall specify the day, date, venue and hour of the meeting and shall contain a statement of the business to be transacted therat. Where by any provision contained in this Act or in these Articles, special notice is required of any resolution, notice in respect of the same shall be given as provided in Section 190 of the Act. No business shall be transacted at any adjourned meeting. Service of Notice

120.

Contents of Notice

121.

Resolutions requiring Special Notice Business at Adjourned Meetings Notice to be given where a Meeting is adjourned for 30 days or more

122.

123.

When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid it shall not be necessary to give any notice of the adjournment or of the business to be transacted at an adjourned meeting. A. The Board may, whenever it thinks fit, call an Extraordinary General Meeting and it shall do so upon a requisition in writing by any Member or Members holding in the aggregate not less than onetenth of such of the paid-up capital as that date carries the right of voting in regard to the matter in respect of which the requisition has been made. If at any time they are not present in India, Directors capable of acting who are sufficient in number to form a quorum, any Director of the Company may call an Extraordinary General Meeting of the Company, in the same manner, nearly a possible, as that in which such a meeting can be called by the Board.

124.

Extraordinary General Meeting

B.

479

125.

Any valid requisition so made by Members must state the object or objects of the meeting proposed to be called and must be signed by the requisitionists and be deposited at the Office, provided that such requisition may consist of several documents in like form each signed by one or more requisitionists. Upon the receipt of any such requisition, the Board shall forthwith call an Extraordinary General Meeting and if they do not proceed within twenty-one days from the date of the requisitions being deposited at the Office to cause a meeting to be called on a day not later than forty-five days from the date of deposit of the requisition, the requisitionists, or such of their number as represent either a majority in value of the paid-up share capital held by all of them or not less than one-tenth of such of the paid-up share capital of the Company as is referred to in Section 169(4) of the Act, whichever is less, may themselves call the meeting, but in either case any meeting so called shall not be held after three months from the date of the delivery of the requisition as aforesaid. Where two or more distinct matters are specified in the requisition the provisions of Clause 126 above, shall apply separately in regard to each such matters; and the requisition shall accordingly be valid only in respect of those matters in regard to which the condition specified in that clause is fulfilled.

Requisition of Members to state object of Meeting

126.

Calling of Meeting on Requisition

127.

Required number of Requisitionists to be counted separately in regard to each matter Circulation of Members Resolution

128.

The Directors shall on the requisition of members representing not less than one-twentieth of the voting rights of members having a right to vote at any Annual General Meeting or being not less than one hundred members holding shares on which there has been paid up an aggregate sum of not less than one lakh of rupees in all, give notice to the members of any resolution which can properly be moved and intended to be moved a the meeting and circulate any statement supplied by the requisitionsists in accordance with the requirements of Section 188 of the Act with which the company shall also comply. Any meeting called under the foregoing Articles by the requisitionists shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by the Board. Where two or more persons hold any shares or interest in the company jointly, a requisition, or a notice calling a meeting, signed by one or some of them shall, for the purpose of these Articles, have the same force and effect as if it had been signed by all of them. Any reasonable expenses incurred by the requisitionists by reason of the failure of the Board dully to call a meeting shall be repaid to the requisitionists by the company; and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration for their services to such of the Directors as were in default. At least Twenty-one days notice of every General Meeting, Annual

129.

Meeting called by Requisitionists Requisition by Joint holders

130.

131.

Reimbursement of expenses of calling Extraordinary General Meeting

132.

Twenty-one days

480

or Extraordinary General Meeting, and by whomsoever called specifying the day, date, place and hour of meeting and the general nature of the business to be transacted threat, shall be given in the manner hereinafter provided, to such persons as are under these Articles entitled to receive notice from the Company. Provided that in the case of an Annual General Meeting with the consent in writing of all the Members entitled to vote thereat and in case of any other meetings, with the consent of Members holding not less than 95 percent of such part of the paid-up share capital of the Company as gives a right to vote at the meeting, a meeting may be convened by a shorter notice. In the case of an Annual General Meeting, if any business other than the ordinary business is to be transacted and in the case of any other meeting in any event there shall be annexed to the notice of the Meeting a statement setting out all material facts concerning each such item of business, including in particular the nature of the concern or interest, if any, therein of every Director, and the Manager (if any) where any such item of business relates to, or affect any other Company the extent of shareholding interest in that other Company of every Director and the Manager, if any, of the Company shall also be set out in the statement if the extent of such shareholding interest is not less than twenty percent of the paidup share capital of that other Company, where any item of business consists of the according of approval to any document by the Meeting, the time and place where the document can be inspected shall be specified in the statement aforesaid. 133. The accidental omission to give any such notice as aforesaid to any of the members, or the non-receipt thereof, shall not invalidate any resolution passed at or the proceedings of any such meeting.

notice of meeting to be given

Omission to give notice not to invalidate a resolution passed Meeting not to transact business not mentioned in notice Resolution passed at Adjourned Meeting

134.

No General Meeting, Annual or Extraordinary General Meeting, shall be competent to enter upon, discuss or transact any business which has not been mentioned in the notice or notices upon which it was convened. The provisions of Section 191 of the Act shall apply to resolutions passed at an adjourned meeting of the Company, or of the holders of any class of shares in the Company and of the Board of Directors of the Company and the resolutions shall be deemed for all purposes as having been passed on the date on which in fact they were passed and shall not be deemed to have been passed on any early date. The Directors may in their absolute discretion on giving not less than seven clear days notice in accordance with these Articles, postpone or cancel any meeting of members, except a meeting called pursuant to a members requisition. Five Members present in person shall be the quorum for a General Meeting. A body corporate (whether a Company within the meaning of the Act or not) if it is a member or creditor (including a holder of debentures) of the Company may in accordance of the provisions of Section 187 of the Act authorize such person by a resolution of its

135.

136.

Postponement or cancellation of meeting

137.

Quorum at General Meeting Body corporate deemed to be personally present

138.

481

Board of Directors as it thinks fit, to act as its representative attaining meeting of the Company or of any class of members of the Company or at any meeting of creditor of the Company. 139. If, at the expiration of half an hour from the time appointed for holding a meeting of the Company, a quorum not be present, the meeting, if convened by or upon the requisition of Members, shall stand dissolved. But in any other case, the meeting shall stand adjourned to the same day in the next week or if that day is a public holiday, until the next succeeding day which is not a public holiday at the same time and place or to such other day as such other time and place in the city or town in which the Office of the company is for the time being situated, as the Board may determine, and if at such adjourned meeting a quorum is not present at the expiration of half an hour from the time appointed for holding the meeting, the Members present shall be a quorum, and may transact the business for which the meeting was called. The Chairman (if any) of the Board of Directors shall be entitled to take the chair at every General Meeting, whether Annual or Extraordinary. If there be no such Chairman or if at any meeting he shall not be present within fifteen minutes of the time appointed for holding such meeting or if he shall be unable or unwilling to take the chair then the Members present shall elect another Director as Chairman, and if no Director be present or if all the Directors present decline to take the Chair, then the Members present shall elect one of their member to be Chairman, on a show of hands. If a poll is demanded in the election of the Chairman, it shall be taken forthwith, the Chairman elected on a show of hands exercising all the powers of the Chairman under the provisions of the Act. If some other person is elected Chairman as a result of the poll, he shall be chairman for the rest of the meeting. No business shall be discussed at any General Meeting except the election of a Chairman, whilst the Chair is vacant. The Chairman, with the consent of the Members, may adjourn any meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. A poll demanded on a question of adjournment shall be taken forthwith. When a meeting is adjourned for a period of 30 days or more, seven clear days notice of the adjourned meeting shall be given specifying the place and the time of the meeting as in the case of an original meeting, but it shall not be necessary for such a notice to contain a statement of the business to be transacted or to annex thereto any statement of material facts. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted threat. At any General Meeting a resolution including a special resolution put to the vote of the meeting shall be decided on a show of hands, unless before or on the declaration of the result of the voting on any resolution on a show of hands a poll is ordered to be taken by the chairman of the meeting of his own motion or on a demand made in If quorum not present meeting to be dissolved or adjourned

140.

Chairman of General Meeting

141.

Business whilst chair vacant Chairman with consent may adjourn meeting

142.

143.

Questions at General Meeting how decided

482

that behalf by any member or members present in person or by proxy and holding shares in the company which confer a power to vote on the resolution not being less than one tenth of the total voting power in respect of the resolution or on which an aggregate sum of not less than fifty thousand rupees has been paid-up. Unless a poll be so demanded, and ordered to be taken a declaration by the Chairman that a resolution has on a show of hands, been carried or carried unanimously, or by a particular majority or lost, and an entry to that effect in the Minute Book of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against such resolution. 144. In the case of an equality of votes, the Chairman shall both on a show of hands and at a poll (if any) have a casting second vote in addition to the vote or votes to which he may be entitled to as a member. a) Before or on the declaration of the result of the voting on any resolution on a show of hands, a poll may be ordered to be taken by the Chairman of the meeting of his own motion and shall be ordered to be taken by him on a demand made in that behalf in the manner mentioned in Section 179 of the Act. The demand for a poll may be withdrawn at any time by the person or persons who made the demand. A poll demand on a question of adjournment and on the question relation to the election of the Chairman which is provided in Section 175 of the Act, shall be taken forthwith. A poll demanded on a question shall be taken at such time not being later than 48 (Forty-eight) hours from the time when the demand was made, as the Chairman may direct. Subject to the provisions of the Act, the Chairman of the Meeting shall have powers to regulate the manner in which a poll shall be taken. The result of the poll shall be deemed to be decision of the meeting on the resolution on which poll was taken. Where a poll is to be taken, the Chairman of the meeting shall appoint two scrutineers to scrutinse the votes cast at the poll and to report thereon to him. One of the scrutineers so appointed shall always be a Member (not being an officer or employee of the Company) present at the meeting, provided such a member is available and willing to be appointed. The Chairman shall have power at any time before the result of the poll is declared to remove a scrutineer from office and fill vacancies in the office of scrutineer arising from such removal or from any other cause. Any poll duly demanded on the election of a Chairman of a meeting or on any question of adjournment shall be taken at the meeting forthwith. Scrutineers at Poll Chairmans casting vote

145.

Poll to be taken if demanded

b)

c)

d)

e)

f)

146.

147.

In what case poll taken without adjournment

483

148.

The demand for a poll, except on the question of the election of the Chairman and of an adjournment, shall not prevent the continuance of meeting for the transaction of any business other than the question on which the poll has been demanded. VOTES OF MEMBERS

Demand for poll not to prevent, continuance of business

149.

No Member shall be entitled in respect of any shares registered in his name to be present or to exercise any voting right on any question at any General Meeting or be reckoned in a quorum whilst any call or other sum presently payable to the Company in respect of such shares, shall remain unpaid or in regard to which the Company has exercised any right of lien; and no member shall be entitled to be present or to vote in respect of any shares that he has acquired by transfer at any meeting unless his name has been entered as the registered holder of such share in respect of which he claims to vote. Any shareholder whose name is entered in the Register of Members of the company shall enjoy the same rights and be subject to the same liabilities as all other shareholders of the same class. Subject to the provisions of these Articles and without prejudice to any special privileges or restrictions as to voting for the time being attached to any class of shares for the time being forming part of the capital of the Company, every member, not disqualified by the last preceding Article shall be entitled to be present and to speak and vote at such meeting, and on a show of hands every Member present in person or by proxy shall have one vote and upon a poll the voting right of every Member present in person or by proxy shall be in proportion to his share of the paid-up equity share capital of the Company. Provided, however if any preference Shareholder be present at any meeting of the Company, save as provided in clause (b) of sub-section (2) of Section 87, he shall have a right to vote only on resolutions placed before the meeting which directly affect the rights attached to his preference shares. On a poll taken at a meeting of the Company a Member entitled to more than one vote or his proxy or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses. A member of unsound mind or in respect of whom an Order has been made by any Court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or other legal guardian and any such committee or guardian may, on poll vote by proxy. If any Member be a minor the vote in respect of his share or shares shall be by his guardian, or any one of his guardians, if more than one, to be selected in case of dispute by the Chairman of the meeting. If there be joint registered holders of any shares, any one of such persons may vote at any meeting either personally or may appoint another person (whether a Member or not) as his proxy in respect of such shares, as if he were solely entitled thereto but the proxy so

Restrictions on Voting

150.

Equal Rights of Shareholders

151.

Number of votes to which a member is entitled

152.

Casting of votes by a Member entitled to more than one vote How Members noncomposement may vote

153.

154.

Votes of joint members

484

appointed shall not have any right to speak at the meeting that one of the said person so present whose name stands higher on the register shall alone be entitled to speak and to vote in respect of such shares, but the other or others of the joint holders shall be entitled to be present at the meeting. Several executors or administrators of a deceased Member in whose names shares stand for the purpose of these Articles be deemed as joint holders thereof. 155. Any member of the Company entitled to attend and vote at a meeting of the Company shall be entitled to appoint any other person (whether a member or not) as his proxy to attend and vote instead of himself. A member (and in case of joint holders all holders) shall not appoint more than one person as proxy. Any person entitled under the Transmission Article (Article 87) to transfer any share may vote at any General Meeting in respect thereof in the same manner as if he were the registered holder of such shares, provided that forty-eight hours at least before the time of the holding the meeting or adjourned meeting, as the case may be, at which he proposes to vote he shall satisfy the Director of his right to transfer of such shares and give such indemnity (if any) as the Directors may require or the Directors shall have previously admitted his right to vote at such meeting in respect thereof. For the purpose of the Article, the Directors shall have same powers either to recognise or to refuse to recognise such right to transfer, as they have to reject or accept, a transfer or transmission of shares under these Articles. Voting in person or by proxy

156.

Votes in respect of shares of deceased and insolvent Member

157.

Every proxy (whether a Member or not) shall be appointed in writing under the hand of the appointer or his attorney, duly authorized in writing, or if such appointer is a body corporate under the common seal of such corporation, or be signed by an officer or any attorney duly authorised by it, and any Committee or guardian may appoint such proxy. The proxy so appointed shall not have any right to speak at the meeting. An instrument of may appoint a proxy either for purposes of a particular meeting specified in the instrument and any adjournment thereof or it may appoint for the purpose of every meeting of the Company, or of every meeting to be held before a date specified in the instrument and every adjournment of any such meetings. No Member present only by proxy shall be entitled to vote on a show of hands, unless such Member is a body corporate present by a proxy who is not himself a Member, in which case such proxy shall have a vote on the show of hands as if he were a member.

Appointment of proxy

158.

Proxy either for specified meeting or for a period

159.

No Proxy except for a body corporate to vote on a show of hands Proxy to vote only on a poll Deposit of Instrument of appointment of

160.

A Member present by proxy shall be entitled to vote only on a poll.

161.

The Instrument appointing a proxy and the power of attorney or other authority (if any) under which it signed or a notarially certified copy of that power or authority, shall be deposited at the Office not

485

later than forty-eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiry of twelve months from the date of its execution. 162. Every instrument appointing a proxy whether for a specified meeting or otherwise shall, as nearly as circumstances will admit, be in the form set out in Schedule IX of the Act, and shall be retained by the Company. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the proxy or of any power of attorney under which such proxy was signed, or the transfer of the share in respect of which the proxy is given, provided that no intimation in writing of the death or insanity, revocation or transfer shall have been received at the Office before the commencement of the meeting or adjourned meeting at which the proxy is used. a) No objection shall be made to the validity of any vote, except at the meeting or poll at which such vote shall be tendered, and every vote not disallowed at such meeting or poll shall be deemed valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the meeting whose decision shall be final and conclusive. Every Member entitled to vote at a meeting of the Company or on any resolution to be moved thereat shall be entitled, during the period beginning twenty-four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged, at any time during the business hours of the Company, provided not less than three days notice in writing of the intention so to inspect is given to the Company. The Chairman present at the taking of poll shall be the sole judge of the validity of every vote tendered at such poll.

proxy

Form of proxy

163.

Validity of votes given by proxy notwithstanding death of member

164.

Time for objections of votes and inspection of proxies

b)

165.

Chairman of the meeting to be the judge of validity of any vote Chairmans Declaration of results of voting to show of hand to be conclusive

166.

A declaration by the Chairman in pursuance of Section 177 of the Act that on a show of hands, a resolution has or has not been carried, either unanimously or by a particular majority, and an entry to that effect in the books containing the minutes of the proceedings of the company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes cast in favor of or against such resolution. MINUTES OF MEETINGS

167.

a)

The Company shall cause minutes of all proceedings of every General Meeting to be kept in accordance with the provisions of Section 193 of the Act.

Minutes of General Meeting and inspection thereof by

486

members b) Each page of every such book shall be initialed or signed and the last page of the record of proceedings of each meeting in such book shall be dated and signed by the Chairman of the same meeting within the aforesaid period of thirty days or in the event of the death or inability of that Chairman within that period, by a Director duly authorised by the Board for the purpose. In no case shall the minutes of proceedings of a meeting be attached to any such book as aforesaid by pasting or otherwise. The Minutes of each Meeting shall contain a fair and correct summary of the proceeding thereat. All appointments of Officers made at any aforesaid meeting shall be included in the Minutes of the Meeting. Nothing herein contained shall require or be deemed to require the inclusion in any such Minutes of any matter which in the opinion of the Chairman of the Meeting (a) is or could reasonably be regarded as, defamatory of a person, or (b) is irrelevant or immaterial to the proceedings, or (c) is detrimental to the interests of the Company. The Chairman of the meeting shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the Minutes on the aforesaid grounds. Any such Minutes shall be evidence of the proceedings recorded therein. The book containing the Minutes of the proceedings of any General Meeting of the Company shall: i) be kept at the Registered Office of the Company, and

c)

d)

e)

f)

g)

h)

ii) be open, during the business hours to the inspection of any members without charge, subject, to such reasonable restrictions as the Company may, in General Meeting impose so however that not less than two hours in each day are allowed for inspection. iii) Any Member shall be entitled to be furnished within seven days after he has made a request in that behalf to the company, with a copy of any minutes referred to in Clause (h) above, on payment of such fees as prescribed under Section 196 of the Act. 168. a) Where minutes of the proceedings of any General Meeting of he company have been kept in accordance with the provisions of Section 193 of the Act, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat have duly taken place and in particular all appointments of Directors or Liquidators made at the meeting shall be deemed to be valid and the minutes shall be evidence of the proceedings recorded therein. Presumptions to be drawn where minutes duly drawn and signed

487

b)

On document purporting to be a report of the proceedings of any General Meeting of he Company shall be circulated or advertised at the expense of the Company unless it includes the matters required by Section 193 of the Act to be contained in the Minutes of the proceedings of such meeting. DIRECTORS

169.

Until otherwise determined in a General Meeting of the Company and subject to the provisions of Section 252 of the Act, the number of Directors of the Company (excluding Alternate Directors) shall not be less than three or more than twelve. The first Directors of the Company are :

Number of Directors

170.

First Directors

1. SHRI SHAILESH SURYAKANT MODI 2. SHRI PANKAJ MUDHOLKAR 3. SHRI SANDEEP GUPTA
171. a) Two thirds of the total number of Directors of the Company shall: be persons whose period of office is liable to determination by retirement of Directors by rotation and save as otherwise expressly provided in the Act; be appointed by the Company in General Meeting. One third of the total number of Directors shall be non-retiring and the Managing Director of the company shall not be liable to retire by rotation. a) In Connection with any collaboration agreement with any Company or Corporation or firm or person for supply of Technical know-how and/or machinery or technical advice, the Directors may authorize such company, corporation firm or person (hereinafter in this clause referred to as Collaborator) to appoint from time to time, any person or persons as Director or Directors of the Company (hereinafter referred to as Special Director) and may agree that such Special Director shall not be liable to retire by rotation and need not possess any qualification shares to qualify him for the office of such Director, so however, that such Special Director shall hold office so long as such collaboration arrangement remains in force unless otherwise agreed upon between the Company and such Collaborator under the Collaboration arrangements or at any time thereafter. The Collaborator may at any time and from time remove any such Special Director appointed by it and may at the time of such removal and also in the case of death or resignation of the person so appointed, at any time, appoint any other person as a special director in his place and such appointment or removal shall be made in writing signed by such company or corporation or an partner of the firm or such person and shall be delivered to the Company at its registered office. Appointment of non-retiring Directors Appointment of Special Director Directors of the Company

b)

172.

173.

b)

488

c)

It is clarified that every collaborator entitled to appoint a Director under this Article may appoint one or more such person or persons as a Director(s) and so that if more than one Collaborator is so entitled there may at any time be as many Special Directors as the Collaborators eligible to make the appointment. In the event, the Company enters into any such collaboration, including the collaboration of technology; technical know-how; financial participation; buy-back of part/full production; license for manufacturing/producing/processing; license and/or rights to use patterns; and/or trade marks; or any such allied, similar or other arrangement /s and or agreement /s including the arrangements and or agreements falling under the meaning and definition of joint venture and / or 100% export oriented unit with any foreigncompany / corporation/entity and if such an arrangement and / or agreement with the foreign Company /collaborator provides the rights to the foreign company / collaborator to have their one person as a director of this company, the Board of this Company shall accordingly be bound by some and the nominated person of he foreign-company / collaborator shall be appointed as one on the directors of this company whose appointment will be subject to retirement on rotation as required under the Act and Articles 198; and such director, if nominated by the foreign company / collaborator for re-appointment, shall be re-appointed under the provisions of Articles 203 and subject to these Articles and further subject to approval of the Reserve Bank of India and / or Government of India as may required, under the Indian laws from time to time in case of any foreigner. The foreign-company / collaborator under this Article subject to approval by the Reserve Bank of India and further subject to Income Tax and other applicable Indian laws for the time being, if entitled for repatriation of dividends, profits, technical fees, commissions and other charges (that may become due and payable to the foreign company / collaborator by virtue of he aforesaid agreement and / or any amendment thereto and / or any supplementary agreement thereto) in foreign currency from time to time then the Board will grant sanction and approval by passing suitable resolutions by complying with all formalities, if any from time to time. As the Board may prescribe The foreign-company /collaborator under this Article (subject to approval by the Reserve Bank of India and other laws for the time being) if provided in their agreement will be entitled to acquire and own maximum share of the total equity and / or paid-up capital of the company from time to time and the Board will accordingly reserve this portion of the capital of the Company for the foreign company/collaborator and allot such and suitable number of shares in favor of the foreigncompany/collaborator as per the terms of their agreement with the Company/ and / or any amendment thereof and/ or any supplementary agreements thereto from time to time. A body corporate, whether a company within the meaning of the Act or not, which is a member of the Company, may by resolution of its Votes of Body Corporate Special Rights of Foreign Company or Collaborator/s

174.

a)

b)

c)

175.

489

Board of Directors or other governing body, authorize such person as it thinks fit to act as its representative at any meeting of the company or at any meeting of any class of members of the company and the persons so authorized shall be entitled to exercise the same rights and poser (including the right to vote by proxy) on behalf of the body corporate which he represents as that body could exercise as if it were as individual member of the company and the production of a copy of the Minutes of such resolution certified by a director or the copy of the Minutes of such resolution certified by a Director or the or the Secretary of such body corporate as being a true copy of the Minutes of such resolution shall be accepted as sufficient evidence of the validity of the said representatives appointment and of his right to vote. 176. Notwithstanding anything to the contrary contained in these Articles, so long as any moneys remain owing by the company to the Industrial Development Bank Of India (IDBI), Small Industrial Development Bank of India (SIDBI), Industrial Finance Corporation of India (IFCI), The Industrial Credit and Investment Corporation of India Limited (ICICI), The Industrial Reconstruction Bank of India (IRBI), Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC), and its subsidiaries viz., National Insurance Corporation of India (NIC), The New India Assurance Company INIA), The Oriental Insurance Company (OIC), United Insurance Company (UII), Unit Trust of India (UTI), Gujarat Industrial Investment Corporation Limited (GIIC), any one or more commercial Bank (Banks) or to any other Finance Corporation or Credit Corporation or any other Finance Company or Body out of any loans granted by them to the Company or so long as IDBI, IFCI, ICICI, IRBI, LIC, GIC, NIC, OIC, UTI,GIIC, Banks or any other Finance Corporation of credit Corporation or any other Finance Company or Body (each of which IDBI, IFCI, ICICI, IRBI, LIC, GIC, NIC,NIA, OIC, UTI, UII, GIIC, Banks or any other Finance Corporation or Credit Corporation or any other Finance Company or Body is hereinafter in this Article referred to as the Corporation) continue to hold debentures in the Company by direct subscription or private placement, or so long as the Corporation holds shares in the company as a result of underwriting or so long as any liability of the company arising out of any guarantee furnished by the Corporation on behalf of the company remains outstanding, the Corporation shall have a right to appoint from time to time, any person or persons as a Director or Directors whole time or nonwhole time, (which Director or Directors are hereinafter referred to as Nominee Director/s) on the Board of the Company and to remove such office any person or persons so appointed and to appoint any person or persons in his or their place/s. The Board of Directors of the Company shall have no power to remove from office the Nominee Directors/s. At the option of the Corporation such Nominee Director/s shall not be required to hold any share qualification in the company. Also at the option of the Corporation such Nominee Director/s shall not be liable to retirement by rotation of Directors. Subject as aforesaid, the Nominee Directors/s shall be entitled to the same privileges and be subject to the same obligations as any other Director of the Power to appoint ex-officio Directors

490

Company. The Nominee Director/s so appointed shall hold the said office only so long as nay moneys remain owing by the Company to the Corporation or so long as the Corporation holds Debentures in the company as a result of direct subscription or private placement or so long as the Corporation holds shares in the company as a result of underwriting or the liability of the company arising out of any Guarantee furnished by the Corporation on behalf of the Company is outstanding and the Nominee Director/s so appointed in exercise of the said power shall ipso fact vacate such office immediately the moneys owing by the Company to the Corporation is paid off or on the Corporation ceasing to hold debentures/ shares acquired in the manner referred hereinabove in the Company or on the satisfaction of the liability of the Company arising out of any Guarantee furnished by the Corporation. The Nominee Director / s appointed under this Article shall be entitled to receive all notices of and attend all General Meetings, Board Meetings and Meetings of the Committee, of which the Nominee Director /s is/are member/s and shall also be entitled to receive the minutes of such meetings. The Corporation shall also be entitled to receive all such notices and minutes. The Company shall pay to the Nominee Director/s sitting fees and expenses to which the other Directors of the Company are entitled, but if any other fees, commission, moneys or remuneration in any form is payable to the Directors of the Company, the fees, commission moneys and remuneration in relation to such Nominee Directors/s shall accrue to the Corporation and the same shall accordingly be paid by the Company directly to the Corporation. Any expenses that may be incurred by the Corporation or such Nominee Directors/s in connection with their appointment or Directorship shall also be paid or reimbursed by the company too the Corporation or as the case may be to such Nominee Director/s. Provided that if any such Nominee Director/s is/are Officer/s of the Corporation, the sitting fees in relation to such Nominee Directors/s shall accrue to the Corporation and the same shall accordingly be paid by the Company directly to the Corporation. Provided also that in the event of the Nominee Director/s being appointed as whole- time Director/s such Nominee Director/s shall exercise such powers and duties as may be approved by the Corporation and have such rights as are usually exercised by or available to the whole time Director/s, in the management of the Company. Such Nominee Director/s shall be entitled to receive such remuneration, fees, commission and moneys as may be approved by the Corporation. 177. Any Trust Deed for securing debentures or debenture stock, if so arranged provide for appointment from time to time by the Trustees thereof or by the holders of the Debentures or Debenture stock of some person to be Director of the Company and may empower such Trustees or Debenture holders or Debenture Stock from time to time to remove any Director so appointed. A Director appointed, under this Article is herein referred to as a Debenture Director and that Debenture Director

491

the term Debenture Director means a Director for the time being in office under the Article. A Debenture Director shall not be bound to hold any qualification shares and not be liable to retire by rotation or be removed by the Company. The Trust deed may contain such ancillary provisions as may be arranged between the Company and the Trustees and all such provisions shall have effect notwithstanding any of the other provisions herein contained. 178. The Board may, in accordance with and subject to the provision of Section 313 of the Act, appoint an Alternate Director during the letters absence for a period of not less than three months from the state in which the meeting of the Board is ordinarily held. An Alternate Director appointed under this Article shall not hold office for a period longer than that permissible to the original director in whose place he has been appointed and shall vacate office if and when the original director returns to that State. If the term of office of the original Director is determined before so returns to that State, any provisions in the Act or in these Articles for the automatic reappointment of a retiring Director in default of another appointment shall apply to the Original Director and not the Alternate Director. Subject to the provisions of Section 260, 261 and 264 of the Act and further subject to Articles 174, the Board shall have power at any time and from time to time to appoint any person to be an Additional Director, but so that the total number of Directors shall not at any time exceed the maximum fixed under Article 169. Any such Additional Director shall hold office only up to the date of next Annual General Meeting. A. The Board of Directors shall have the right from time to time to appoint any person or persons as Technical Director or Executive Director/s and remove any such persons from time to time without assigning any reason whatsoever. A Technical Director or Executive Director shall not be required to hold any qualification shares and shall not be entitled to vote at any meeting of the Board of Directors. Subject to the provisions of Section 262 of the Act, if the office of any Director appointed by the Company in General Meeting vacated before his term of office will expire in the normal course, the resulting casual vacancy may in default of and subject to any regulation in the Articles of the Company be filled by the Board of Directors at the meeting of the Board and the Director so appointed shall hold office only up to the date up to which the Director in whose place he is appointed would have held office if had not been vacated as aforesaid. a. The Investor shall be entitled to appoint the greater of 1 (one) Director or such number of Directors in proportion to the Investors shareholding on the Board" b. The Investor shall have a right to appoint the Investor Director till such time the Investor has 33% of the initial investment in the Company or 12 months post the IPO, Appointment of Alternate Director

179.

Additional Director

180.

Appointment of Technical or Executive Directors

B.

Appointment of Director to fill the casual vacancy

C.

"Investor Director

492

whichever is earlier."

181.

A Director shall not require acquiring or having any share qualification.

Share Qualification of Directors Remuneration of Directors

182.

a)

The remuneration to each director shall be at such rate for each meeting of the Board or Committee of the Board attended by him as may as may be prescribed by the Central Government from time to time under the Proviso to Section 310 of the Companies Act, 1956, for each such meeting including adjourned meeting attended by him. Subject to the provision of the Act, a Director who is neither in the whole-time employment of the Company nor a Managing Director, may be paid remuneration either:(i) by way of monthly, quarterly or annual payment with the approval of the Central Government, or (ii) by way of commission if the company by a Special Resolution authorities such payment. Subject to the provisions of the Act, a Managing Director or director in the Whole Time employment of the Company may be paid remuneration either by way of monthly or at a specified percentage of the net profit of the Company or partly by one way or partly by the other. The Board of Directors reserves the rights to execute and sigh the specific agreement / arrangements with the Managing Director or the Managing Directors as the case may be as well as with the Whole Time Director or Whole Time Directors specifying the details or remunerations and other terms etc.as per the act and these Articles of Association and such agreement will be sighed by two Directors to be authorized by the Board for such purpose for time to time. If any Director being willing shall be called upon to perform extra services or to make any special exertions for any of the purpose of Company or is giving special attention to the business of the Company as a member of the Committee of Directors then subject to Section 198, 309 and 310 of the Act, the Company may remunerate the Directors so performing the extra services or making special exertions or giving special attention or being a member of a committee of Directors, either by a fixed sum or by commission of like emoluments or by a percentage of profits or otherwise and such remuneration may be either in addition to or substitution for any other remuneration to which he may be entitled. The Board may allow an pay to any director (including the foreigner Director), who is not a bona fide of the place where the meeting of the Board are ordinarily held and who shall come to such place for the purpose of attending any meeting; such sum as the Board may consider fair compensation or for traveling, boarding, lodging and other expenses, in addition to his fee for attending such meeting as above specified; and if any Director by called upon to go or reside out of the ordinary place of his residence on the Companys

b)

c)

183.

Special Remuneration of Directors performing extra services

184.

Travelling expenses incurred by director not a bona fide resident

493

business, he shall be entitled to be repaid and reimbursed any travelling or other expenses incurred in connection with business of the Company. 185. The continuing Director may act notwithstanding any vacancy in their body if and so long as their number is reduced below the minimum, the continuing Director not being less than two may act for the purpose of increasing the number of Directors to that number, or of summoning a General Meeting, but for no other purpose. A person shall not be capable of being appointed as a Director if he has the disqualifications referred to in Section 274 of the Act, as may be amended from time to time. Subject to Sections 283(2) and 314 of the Act the office of a Director shall become vacant if:a) he is found to be of unsound mind by the Court of competent jurisdiction ; or he applies to be adjudicated an insolvent; or he is adjudged an insolvent ; or he fails to pay any call made on him in respect of shares of the company held by him, whether alone or jointly with other, within six months from the date fixed for the payment of such call unless the Central Government has by notification in the Official Gazette removed the disqualification incurred by such failure; or he absents himself from three consecutive meetings of the Directors or from all meetings of the Directors for a continuous period of three months, whichever is longer, without leave of absence from the Board; or He contravenes the provisions of Section 314 of the Act; or he becomes disqualified by an order of the court under section 203 of the Act; or he is removed in pursuance of section 284; or he (whether by himself or by any person for his benefit or on his account) or any firm in which is a partner or any private company of which he is a Director, accepts a loan, or ay guarantee of security for a loan, from the company in contravention of section 295 of the Act; or he acts in contravention of section 299 of the Act; or he is convicted by a court for an offence involving moral turpitude and is sentenced in respect thereof to imprisonment for not less than six months; or having been appointed a Director by virtue of his holding any office Directors may act notwithstanding any vacancy

186.

Eligibility

187.

When office of Director to become vacant

b) c) d)

e)

f) g)

h) i)

j) k)

l)

494

or other employment in the Company, he ceases to hold such office or other employment in the Company; or m) he resigns his office by a notice in writing addressed to the company. Notwithstanding anything contained in sub-clause (c), (g) and (k) of Clause 187 above, the disqualification referred to in these SubClauses shall not take effect: a) b) for thirty days from the date of the adjudication, sentence or order; Where any appeal or petition is preferred within the thirty days aforesaid against the adjudication, sentence or conviction resulting in the sentence or order until the expiry of seven days from the date on which such appeal or petition is disposed of; Where within the seven days aforesaid, any further appeal, petition is preferred in respect of the adjudication, sentence, conviction or order and the appeal or petition, if allowed, would result in the removal of the disqualification, until such further appeal or petition is disposed off. A Director or his relative, firm in which such Director or relative is a partner or any other partner in such firm or a private company of which the director is a Member or Director may enter into any contract with the company for the sale, purchase or supply of any goods, materials or services or for underwriting the subscription of any shares or debentures of the company, provided that in case of the Company having a paid-up capital of not less than Rupees One Crore, no such contract shall be entered into except with the previous approval of the Central Government and the sanction of the Board shall be obtained before or within three months of the date on which the contract is entered into in accordance with section 297 of the Act. No sanction shall, however, be necessary for; i) any purchase of goods and materials from the company, or the sale of goods or materials to the company, by any such Director, relative, firm, partner or private company as aforesaid for cash at prevailing market prices; or ii) Any contract or contracts between the company on one side and any such Director, relative, firm, partner, or private company on the other side for sale, purchase or supply of any goods, materials and services in which either the company or the Director, relative, firm, partner or private company, as the case may be, regularly trades or does business, where the value of the goods and materials or the cost of such services does not exceed Rs. 5,000/- in the aggregate in any year comprised in the period of the contract. Provided that in circumstances of urgent necessity a Director, relative, firm, partner or private company as aforesaid may, without obtaining the consent of the Board, enter into any such contract with the company for the sale, purchase or supply Director may contract with Company Disqualification not to take effect

188.

c)

189.

a)

b)

495

of any goods, materials or services even if the value of such goods or cost of such services exceeds Rs. 5,000/- in the aggregate in any year comprised in the period of the Contract, if the consent of the Board shall be obtained to such contract or contracts at a meeting within three months of the date on which the contract was entered into. 190. A Director or his relative, firm in which such director or relative is a partner, any other partner in such firm or a private company of which the Director is a member or director, may enter into any contract subject to approval of Central Government if and where applicable with the Company for the sale, purchase or supply of goods, materials, services, or for underwriting the subscription of any shares in, or debentures of the Company, provided the sanction of the Board is obtained by a resolution passed at the meeting of the Board before the date on which the contract is entered into or within three months thereof in accordance with Section 297 of the Act. No sanction however, shall be necessary in cases prescribed by SubSection (2) of Section 297 of the Act. Furthermore, nothing in this Article shall apply to any contract made in circumstances of urgent necessity which contract shall be regulated by Sub-Section (3) of Section 297 of the Act. A Director of the company who is in any way, whether directly of indirectly concerned or interested in a contract or arrangement, or proposed contract or arrangement entered into or to be entered into by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board in the manner provided in section 299(2) of the Act; provided that it shall not be necessary for a Director to disclose his concern or interest in any contract or arrangement entered into or to be entered into with any other company where any of the Directors of the company or two or more of them together hold or holds not more than two percent of the paid-up share capital in any such other Company or the Company. Disclosure of Interest

191.

192.

A General Notice given to the Board by the Directors, to the effect that he is a Director or Member of a specified body corporate or is a member of a specified firm and is to be regarded as concerned or interested in any contract or arrangement which may after the date of the notice, be entered into with that body corporate or firm, shall be deemed to be a sufficient disclosure of his concern or interest in relation to any contract or arrangement so made. Any such general notice shall expire at the end of the financial year in which it is given but may be renewed for a further period of one financial year at a time by a fresh notice given in the last month of the financial year in which it would have otherwise expired. No such general notice, and no renewal thereof shall be of effect unless, either it is given at a meeting of the Board or the Directors concerned takes reasonable steps to secure that it is brought up and read at the first meeting of the Board after it is given. Subject to the exception stipulated by Section 300(2) of the Act, on Director shall as a Director, take part in the discussion of, or vote on any contract or arrangement entered into or to be entered into by or

General notice of interest

193.

Interested Directors not to participate or

496

on behalf of the Company, if he is any way, whether directly or indirectly concerned or interested in such contract or arrangement; nor shall his presence be counted for the purpose of forming a quorum at the time of any such discussion or vote; and if he does vote, his vote shall be void; provided, however, that nothing herein contained shall apply to :a) any contract of indemnity against any loss which the Directors, or any one or more of them, may suffer by reason of becoming or being sureties or a surety for the Company; any contract or arrangement entered into or to be entered into with a public company or a private company which is a subsidiary of a public company in which the interest of the Director consists solely:(i) in his being :(a) a Director of such company; and (b) the holder of not more than shares of such number or value therein as is requisite to qualify him for appointment as a Director thereof, he having been nominated as such Director by the Company; or (ii) in his being a member holding not more than two percent of its paid up share capital. 194. The company shall keep a Register in accordance with section 301(1) of the Act and shall within the time specified in Section 301(2) enter therein such of the particulars as may be relevant having regard to the application of Section 297 or Section 299 of the Act as the case may be. Nothing in this Article shall apply to any case to which Clause (3A) of Section 301 of the Act applies. The Register shall be kept at the Registered Office of the Company and shall be open to inspection at such office, and extracts may be taken there from and copies thereof may be required by any member of the Company to the same extent, in the same manner, and on payment of the same fees as in the case of the Register of Members of the Company and the Provisions of Section 163 of the Act shall apply accordingly. A Director may be or become a Director of any Company promoted by the Company, or in which it may be interested as a vendor, shareholder or otherwise and no such Director shall be accountable for any benefits received as Director or shareholder of such Company except in so far as Section 309 (6) or Section 314 of the Act may be applicable. The Company shall observe the restrictions imposed on the Company in regard to granting of loans to Directors and other persons as provided in Section 295 and other applicable provisions, if any, of the Act. A. The appointment, re-appointment and extension of the term of a sole selling agent, shall be regulated in accordance with the provisions of Section 294 of the Act and any Rules or Notifications issued by the competent authority in accordance with that Section and the

vote in Boards proceeding

b)

Register of Contracts in which Directors are interested

195.

Directors not to hold office or place of profit

196.

Loan to Directors

197.

Appointment of Sole Selling Agents

497

Directors and/or the Company in General Meeting may make the appointment, re-appointment or extension of the term of office in accordance with and subject to the provisions of the said Section and such rules or notifications, if any, as may be applicable. B. The payment of any compensation to a sole selling agent shall be subject to the provisions of Section 294A of the Act. At every Annual General Meeting of the Company one-third of such of the Directors for the time being as are liable to retire by rotation in accordance with the provisions of Section 255 & 256 of the Act or these Articles or if their number is not three or a multiple of three, the number nearest to one-third shall retire from office. The Debenture Directors, if any, shall not be subject to retirement under this clause and shall not be taken into account in determining to rotation of retirement or the number of Directors to retire. Subject to Section 256(2) of the Act, the Directors to retire by rotation under Article 200 at every Annual General Meeting shall be those who have been longest in office since their last appointment, but as between persons who became Directors on the same day, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot. A retiring Director shall be eligible for re-election Rotation Retirement and of Directors

198.

199.

Ascertainment of Directors retirement by rotation and filling of vacancies Eligibility of reelection Company to appoint successors

200.

201.

Subject to section 258 and 261 of the Act and further subject to Article 200, the Company at the General Meeting at which a Director retires in the manner aforesaid, may fill the vacated office by electing a person thereto. A. If the place of the retiring Director is not so filled up and the meeting do not expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a holiday, at the same time and place. If at the adjourned meeting also, it has not expressly resolved not to fill the vacancy, the retiring Director shall be deemed to have been reappointed at the adjourned meeting unless : i) at that meeting or at the previous meeting resolution for the reappointment of such Director has been put to the meeting and lost; ii) the retiring Director has, by a notice in writing addressed to the Company, or its Board expressed his willingness to be so reappointed; iii) he is not qualified or is disqualified for appointment; iv) a resolution, whether special or ordinary, is required for the appointment or re appointment by virtue of any provisions of the

202.

Provision in default of appointment

B.

498

Act; or v) the provisions of sub-section (2) of section 263 of the Act is applicable to the case. Company may increase or reduce the number of Directors

203.

Subject to Sections 259 of the Act, the Company may by ordinary resolution, from time to time, increase or reduce the number of Directors, within the limits fixed in that behalf by these Articles, and may alter their qualifications and the Company may (subject to the provisions of Section 284 of the Act) remove any Director before the expiration of his period of office and appoint another qualified person in his place. The person so appointed shall hold office during such time as the Director in whose place he is appointed would have held the same if he had not been removed. a) A person who is not a retiring Director shall, in accordance with and subject to the compliance of provisions of Section 257 of the Act and Article 205 of this Articles of Association, be eligible for appointment to the office of Director at any General Meeting.

204.

Right of persons other than retiring Directors to stand for Directorship

b)

The Company shall comply with the provisions of said Section 257 of the Act in case of such an appointment. No person, not being a retiring Director, shall be eligible for appointment to the office of Director at any General Meeting unless he or some other member intending to propose him has, not less than fourteen days before the meeting, left at the office of the company, a notice in writing under his hand signifying his candidature for the office or Director for that office under these Articles, along with a deposit of Rs. 500 which shall be refunded to such person or, as the case may be, to such member if the person succeeds in getting elected as a Director. Every person (other than a Director retiring by rotation or otherwise) or a person who has left at the office of the Company a notice under section 257 of the Act signifying his candidature for the office of a Director) proposed as a candidate for the office of a Director shall sign and file with the Company, his consent in writing to act as a Director, if appointed. A person other than a Director re-appointed after retirement by rotation or immediately on the expiry of his term of office, or an Additional or Alternate Director, or a person filling a casual vacancy in the office of a Director under section 262 of the Act, appointed as a Director or re-appointed as an Additional or Alternate Director, immediately on the expiry of his term of office shall not act as a Director of the Company, unless he has within thirty days of appointment signed and filed with the Registrar his consent in writing to act as such Director. The Company may (subject to the provision of Section 284 of the Act and other applicable provisions of the Act and these Articles) remove any Director before the expiry of his period of office. Removal of Director Notice of Candidate for office of Director except in certain cases

205.

a)

b)

c)

206.

a)

499

b)

Special notice as provided by Article 121 or Section 190 of the Act shall be given of any resolution to remove a Director under this Article or to appoint some other person in place of a Director so removed at the meeting as which he is removed. On receipt of notice of a resolution to remove a director under this Article, the Company shall forthwith send a copy thereof to the Director concerned and the Director concerned and the Director (Whether or not he is a Member of the Company) shall be entitled to be heard on the resolution at the meeting. Where notice is given of resolution to remove a Director under this Article, and the Director concerned makes with respect thereto representations in writing to the Company (not exceeding a reasonable length) and requests their notification to Members of the Company, the Company shall, unless the representations are received by it too late for it to do so (i) in the notice of the resolution given to Members of the Company state the fact of the representations having been made, and (ii) send a copy of the representations to every Member of the Company, and if a copy of the representation is not sent as aforesaid because they were received too late or because of the Companys default, the Director may without prejudice to his right to be heard orally require that copies of the representations shall be read out at the meeting. Provided that copies of the representations need not be sent or read out at the meeting if on the application either of the Company or of any other person who claims to be aggrieved, the Court is satisfied that the rights conferred by this sub-clause are being abused to secure needless publicity for defamatory matter. A vacancy created by the removal of director under this Article may, if he has been appointed by the company in General Meeting or by the Board in pursuance of Article 179 and 180 or section 262 of the Act, be filled by the appointment or another director in his stead by the meeting at which he is removed, provided special notice of the intended appointment has been given under sub-clause (b) hereof. A director so appointed shall hold office until the date up to which his predecessor would have held office if he had not been removed as aforesaid. If the vacancy is not filled under sub-clause (e) hereof, it may be filled as casual bacancy in accordance with the provisions, in so far as they are applicable of Article 180 or Section 262 of the Act, and all the provisions of the said Act in all respects thereof shall accordingly apply. A Director who has removed from office under this Article shall not be re-appointed as a director by the Board of Directors. Nothing contained in this Article shall be taken : i) as depriving a person removed hereunder of any compensation or damages payable to him in respect of the termination of his appointment as director or of any appointment terminating with

c)

d)

e)

f)

g)

h)

500

that as Director; or ii) as derogating from any power to remove a Director which may exist apart from this Article. 207. a) The Company shall keep at its Office a Registrar containing the particulars of its Directors, Secretary and other persons mentioned in Section 303 of the Act, and shall otherwise comply with the provisions of the said section in all respects. Register of Directors etc. and notifications of change, to Registrar Registrar of shares or debentures held by Directors Disclosure by Director of appointment to any other Body Corporate

b)

The Company shall in respect of each of its Directors also keep at its office a Register, as required by Section 307 of the Act, and shall otherwise duly comply with the provisions of the said section in all respects. Every Director including a person deemed to be a Director (by virtue of the Explanation (1) to sub-section (1) of Section 303 of the Act), Managing Director, Manager, or Secretary of the Company shall within twenty days of his appointment to any of the above offices in any other Body Corporate, disclose to the Company the particulars relating to his office in the other body corporates which are required to be specified under sub-section (2) of Section 303 of the Act. Every Director of the Company and every person deemed to be a Director of the Company by virtue of Sub-Section (10) of Section 307 of the Acts, shall give notice to the Company of such matters as may be necessary for the purpose of enabling the Company to comply with the provisions of that Section and Section 308 of the Act. MANAGING DIRECTOR

208.

a)

b)

Disclosure by Director of his holdings of shares and debentures of the Company etc.

501

209.

Subject to the provisions of the Act and these Articles, the Board shall have the power to appoint from time to time any of its members as Managing Director or Managing Directors and/or Special Directors like Technical Director, Financial Director etc. of the Company for a fixed term not exceeding five years at a time and upon such terms and conditions as the Board thinks fit, and the Board may by resolution vest in such Managing Director or Managing Directors and Special Directors such of the powers hereby vested in the Board generally as it thinks fit, and such powers may be made exercisable for such period or periods, and upon such conditions and subject to such restrictions as it may determine. The remuneration of such Directors may be by way of monthly remuneration and/or fee for each meeting and/or participation in profits, or by any or all of those nodes, or of nay other node not expressly prohibited by the Act. Provided that, subject to the provisions of Section 198, 269, 309, 310 and 311 of the Act, the appointment and payment of remuneration shall be subject to the approval of members in General Meeting and of the Central Government, if required.

The Board to appoint Managing Director/s

210.

Managing Director or Managing Directors shall not in any event exercise the powers to: a) make calls on shareholders in respect of money unpaid on the shares in the Company; issue debentures and except to the mentioned in a resolution passed at the Board Meeting under Section 292 of the Act, shall also not exercise the power to; borrow money, otherwise than on debentures; the funds of the Company; and make loans. The company shall not appoint or employ, or continue the appointment or employment, of a person as its Managing or Wholetime Director who :-

Restriction of Management

b)

c) d) e) 211.

Certain Persons not to be appointed as a Managing Director

a)

is an undischarged insolvent or has at any time been adjudged an insolvent; suspends, or has at any time suspended, payment to his creditors, or makes or has at any time made a composition with them; or is, or has at any time been, convicted by a court of an offence involving moral turpitude. A Managing Director shall not while he continues to hold that office be subject to retirement by rotation, in accordance with Article. If he ceases to hold the office of director he shall ipso facto Special position of Managing Director

b)

c)

212.

502

immediately cease to be a Managing Director. WHOLE TIME DIRECTOR 213. Subject to the provisions of the Act and of these Articles, the Board may from time to time with such sanction of the Central Government as may be required by law appoint one or more of its Director/s or other person/s as Whole-Time Director or Whole-Time Directors of the Company out of the Directors/ persons nominated under Article only either for a fixed term that the Board may determine or permanently for life time upon such terms and conditions as the Board may thinks fit. The Board may by ordinary resolution and / or an agreement/s vest in such Whole-Time Director or Whole Time Directors such of the powers authorities and functions hereby vested in the Board generally as it thinks fit and such powers may be made exercisable and for such period of periods and upon such conditions and subject to such restrictions as it may be determined or specified by the Board and the Board has the powers to revoke, withdraw, alter or vary all or any of such powers and / or remove or dismiss him or them and appoint another or others in his or their place or places again out of the Directors / persons nominated under Article 174 only. The Whole Time Director or Whole Time Directors will be entitled for remuneration as may be fixed and determined by the Board from time to time either by way of ordinary resolution or a Court act/s or an agreement/s under such terms not expressly prohibited by the Act. Subject to the provisions of Section 255 of the Act and these Articles, a Whole Time Director or Whole Time Director shall not, while he/they continue to hold that office, be liable to retirement by rotation but (subject to the provisions of any contract between him/they and the Company) he/they shall be subject to the same provision as to resignation and removal as the other Directors, and he/they shall ipso facto and immediately ceases or otherwise under the sees to hold the office of Director/s for any reason whatsoever save that if he/they shall vacate office whether by retirement, by rotation or otherwise under the provisions of the Act any Annual General Meeting and shall be re-appointed as a Director of Directors at the same meeting he/they shall not by reason only of such vacation, cease to be a Whole Time Director or Whole Time Directors. If at any time the total number of Managing Directors and Whole Time Directors is more than one-third who shall retire shall be determined by and in accordance with their respective seniorities. For the purpose of this Article the seniorities of the Whole Time Directors and Managing Directors shall be determined by the date of their respective appointments as Whole Time Directors and Managing Directors of the Company PROCEEDINGS OF THE BOARD OF DIRECTORS 216. The Directors may meet together as a Board for the discussion of business from time to time, and shall so meet at least once in every three months and at least four such meetings shall be held in every Meeting of Directors Power to appoint Whole Time Director and/or Whole-time Directors

214.

To what provisions Whole time Directors shall subject

215.

Seniority of Whole Time Director and Managing Director

503

year. The Directors may adjourn or otherwise regulate their meeting as they think fit. 217. At least five days prior notice of every meeting of the Board shall be given in writing to every Director for the time being in India, and at his usual address inn India, to every other Director. Notice may be given by telegram, fax, telex, cable, e-mail or other means of communications to any Director who is not in India and a Notice sent by registered airmail shall confirm the same. Subject to the Section 287 of the Act, the quorum for a meeting of the Board shall be one-third of its total strength (excluding Director, if any, whose places may be vacant at the time) any fraction contained in that one-third being rounded off as one), or two Directors, whichever is higher, provided that where at any time the number of interested Directors exceeds or equal to two-third of the total strength the number of the remaining Directors, that is to say, the number of Directors who are not interested present at the meeting being not less than two, shall be the quorum during such time. If a meeting of the Board could not be held for want of a quorum, than the meeting, subjects to Section 288 of the Act, shall automatically stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday, at the same time and place or such day, time and place as may be fixed by the Chairman and the Directors present at the meeting. The secretary shall, as and when directed by the Chairman to do so, convene a meeting of the Board by giving a notice in writing to every Director. The Board may from time to time elect from among their number, a Chairman of the Board and determine the period for which he is to hold office. The Directors may likewise appoint from among their number a Vice-Chairman and determine the period for which he is to hold office. If at any meeting of the Board, the Chairman and the Vice-Chairman are not present within fifteen minutes after the time appointed for holding the same or is unwilling to act as Chairman, the Directors may choose one of their number to be Chairman of the Meeting. Subject to the provisions of the Act and of these Articles, question arising at any meeting of the Board of Directors shall be decided by a majority or votes and in the case of equality of votes, the Chairman shall have a second or a casting vote. A meeting of the Board for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions which by or under the Act or the Articles of the Company are for the time being vested in or exercisable by the Board generally. Subject to the restrictions contained in Section 292 and other Notice of Meetings

218.

Quorum

219.

Adjournment of meeting for want of quorum

220.

When meeting to be convened

221.

Chairman / Vice-Chairmen

222.

Questions at Board Meeting how decided

223.

Powers of Board Meeting

224.

Directors may

504

applicable provisions of the Act, the Board may delegate any of their powers to a committee of Directors consisting of such Director or Directors or one or more Director and a Member or Members of the Company as it thinks fit or to the Managing Director, Manager or any other Principal Officer of the Company or a Branch Officer or to one or more of them together and it may from time to time revoke and discharge any such committee of the Board either wholly or in part, and either as to purpose or purposes, but every committee of the Board so formed shall in the exercise of the powers so delegated conform to any regulations that may from time to time be imposed on it by the Board. All acts done by any such committee of the Board in Conformity with such regulations and in fulfilment of the purposes of their appointment but not otherwise, shall have the like force and effect as if done by the Board.

appoint Committee

225.

The meeting and proceedings of any such Committee of the Board consisting of two or more members shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Directors, so far, as the same are applicable thereto and are not superseded by any regulations made by the Directors under the last preceding Article.

Meeting of Committee, how to be governed

226.

No resolution shall be deemed to have been duly passed by the Board or by a Committee thereof by circulation, unless the resolution has been circulated in draft, together with the necessary papers, if any, to all the Directors, or to all the Members of the Committee, then in India (not being less in number than the quorum fixed for a meeting of the Board or Committee, as the case may be) and to all other Directors or Members of the Committee, at their usual address in India and has been approved by such of the Directors or Members of the Committee as are then in India, by a majority of such of them, as are entitled to vote on the resolution.

Resolution by circulation

227.

All acts done by any meeting of the Board or by a Committee of the Board, or by any person acting as a Director shall notwithstanding that it shall afterwards be discovered that there was some defect in the appointment of such Director or persons acting as aforesaid, or that they or any of them were disqualified or had vacated office or that the appointment of any of them had been terminated by virtue of any provisions contained in the Act or in these Articles, be as valid as if every such persons had been duly appointed and was qualified to be Director and had not vacated his office or his appointment had not been terminated, provided that nothing in his Article shall be deemed to revive validity to acts done by a Director after his appointment has been shown to the company to be invalid or to have terminated.

Acts of Board or Committee valid notwithstanding informal appointment

228.

a)

The Company shall cause Minutes of all proceedings of every meeting of the Board and committee thereof to be kept by making within thirty days of the conclusion of every such meeting entries thereof in books kept for that purpose with their pages consecutively

Minutes of proceedings of meetings of the Board

505

numbered.

b)

Each page of every such book shall be initialled or signed and the last page of they record or proceedings of every meeting in such book shall be dated and signed by the Chairman of the said meeting or the Chairman of the next succeeding meeting.

c)

In no case the minutes of proceedings of a meeting be attached in any such book as aforesaid by pasting or otherwise.

d)

The minutes of each meeting shall contain a fair and correct summary of the proceeding thereat.

e)

All appointments of officers made at any of the meeting aforesaid shall be included in the Minutes of the meeting.

f)

The minutes shall also contain :-

(iv) the names of the Directors present at the meeting, and

(v)

in the case of each resolution passed at the meeting, the names of the Directors, if any, dissenting from or not concurring in the resolution.

g)

Nothing contained in sub-clauses (a) to (f) shall be deemed to require the inclusion in any such Minutes of any matter which, in the opinion of the Chairman of the meeting :(a) is, or could reasonably be regarded as defamatory of any person; or

(b) is irrelevant or immaterial to the proceedings; or

(c)

is detrimental to the interests of the Company;

The Chairman shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in this sub- clause and the decision of the Chairman shall be final and binding.

h)

Minutes of any meeting of the Board of Directors or of any committee of the Board if purporting to be signed by the Chairman of such meeting or by the Chairman of the next succeeding meeting shall be, for all purposes whatsoever, prima facie evidence of the

506

actual passing of the resolutions recorded and the actual and regular transaction of occurrence of the proceedings so recorded and the regularity or the meeting at which the same shall appear to have been taken place.

229.

Where minutes of the proceedings of any meeting of its Board of Directors or of a Committee of the Board have been kept in accordance with the provisions of Section 193 of the Act, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken palace and in particular all appointments of Director or Liquidators made at the meeting shall be deemed to be valid and the minutes shall be evidence of the proceedings recorded therein.

Presumptions to be drawn where minutes duly drawn and signed

POWERS OF DIRECTORS

230.

The Board may exercise all such powers of the Company and do all such acts and things as are not, by the Act, or any other Act or by the Memorandum or by the Articles of the Company required to be exercised by the Company in General Meeting, but subject nevertheless to these Articles, to the provisions of the Act, or any other Act and to such regulations being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the Company in General Meeting, but no regulation made by the Company in General Meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.

Power of Directors

Provided that the Board shall not, except with the consent of the Company in General Meeting :-

a)

sell, lease or otherwise dispose of the whole, or substantially the whole of the undertaking of the Company, or where the Company owns more than one undertaking, or the whole, or substantially the whole, of any such undertaking; provided that nothing herein contained shall affect the selling or leasing of any property of the Company when the ordinary business of the Company consists of, or comprises, such selling or leasing;

b)

remit, or give time for the repayment of any debt due by a Director;

c)

invest otherwise than in trust securities the amount of compensation received by the Company in respect of compulsory acquisition of such undertaking as is referred to in clause (a) above, or of any premise or properties used for any such undertaking and without which it cannot be carried on or can be carried on only with difficulty or any after a considerable time;

507

d)

borrow moneys where the moneys to be borrowed together with the moneys already borrowed by the Company (apart from temporary loans obtained from the Companys bankers in the ordinary course of business), will exceed the aggregate of the paid-up capital of the Company and its free reserves, that is to say, reserves not set apart for any specific purpose.

e)

Contribute to charitable and other funds not directly relating to the business of the Company or the welfare of its employees in excess of limits laid down by Section 293 of the Act.

However, the Board is authorised to perform any of the following acts without the consent of the members at the general meeting:

a)

A receipt signed by the Managing Director or any one of the Managing Directors or by a Whole Time Director or by any one of the Whole Time Directors or by a person authorized by a resolution of directors to give receipt for any moneys, funds or property, lent or payable or belonging to the Company, shall be an effectual discharge on behalf of and against the Company for the moneys, funds or property which is such receipt shall be acknowledged to be received, and the person paying any such moneys shall not be bound to see to the application thereof or by answerable for the misapplication thereof

b)

To open and operate upon and overdraw bank accounts, to sign, make issue, negotiable, discount, endorse, accept or otherwise deal in all types of negotiable instruments including cheques, promissory notes, hundies, bill of exchange and bearer bonds arrange for credits in cash or in kind, specifying the bank or banks with them the cash, credit account is to be opened and the limit of such accounts.

c)

To incur from time to time such expenses and lay out such sum or sums of moneys as Directors may deem expedient for the purpose of working the work-shop/s or factory/ies or for improving the business of the Company from time to time, to erect and fix new machinery or plant, or in any of the lands, building and premises for the time being in the position or the property or the Company, and time to time removal for all or any of the machinery, plant and stores of the Company being in or upon any loans, buildings and premises of the Company, to other lands. Building or premises wherever situate of the Company.

508

d)

To effect all kinds of insurance which in the opinion of the Directors ought to be effected for the benefit of the Company and in particular to ensure the property of the Company against loss or damage by fire or otherwise, and also to ensure against any standing charges and to ensure any anticipated profits of the company of any transaction or transactions entered into by the company, and to sell assign, surrender or discontinue any policies of insurance effected in pursuance of this power.

e)

To give any person employed by the Company a commission on the profits of any particular business or transaction and such commission shall be treated as part of the working expenses of the Company. Provided further that the powers specified in Section 298 of the Act, subject to these Articles be exercised only at meeting of the Board, unless the same be delegate to the extent therein stated.

231.

Due regards and compliance shall be observed in regard to the matters dealt with by Section 293A of the Act.

Political Contributions

232.

Without prejudice to the general powers conferred by the last proceeding Article and so as not in any way to limit or restrict these powers, and without prejudice to the other powers conferred by these Articles, but subject to the restriction contained in the last proceeding Article, it is hereby declared that the Directors shall have the following powers, that is to say power :-

Certain powers of the Board

a)

To pay the costs, charges and expenses preliminary and incidental to the promotion, formation, establishment and registration of the Company;

b)

c)

d)

To pay and charge to the capital account of the Company any commission or interest lawfully payable there out under the provisions of Sections 76 and 208 of the Act; Subject to Section 292 and 297 of the Act, to purchase or otherwise acquire for the Company any property, rights or privileges which the Company is authorized to acquire, at or for such price or consideration and generally on such terms and conditions as they may think fit; and in any such purchase or other acquisition to accept such title as the Directors may believe or may be advised to be reasonably satisfactory; At their discretion and subject to the provision of the Act to pay for any property, rights or privileges acquired by or services rendered to the Company, either wholly or partially, in cash or in shares, bonds, debentures, mortgages, or other securities of the Company, and any

509

e)

f)

g)

h) i)

such shares may be issued either as fully paid-up or with such amount as paid-up thereon as may be agreed upon; and any such bonds, debentures, mortgages, or other securities may be either specifically charged upon all or any part of the property of the Company and its uncalled up capital or not so charged; To secure the fulfilment of any contracts or engagements entered into by the Company by mortgage or charge of all or any of the property of the Company and its uncalled capital for time being or in such manner as they may think fit; To appoint any person to accept and hold in trust for the Company any property belonging to the Company, in which it is interested, or for any other purpose, and to execute and do all such deeds and things as may be required in relation to any trust, and to provide for the remuneration of such trustee or trustees; To institute, conduct, defend, compound, or abandon any legal proceedings by or against the Company or its officers, or otherwise concerning the affairs of the Company, and also to compound and allow time for payment or satisfaction of any debts, dues and of any claims or demands by or against the Company and to refer any differences to arbitration and observe and perform any awards made thereon; To act on behalf of the Company in all matters relating to bankrupts and insolvents; To make and give receipts, releases, and other discharges for moneys payable to the Company and for the claims and demands of the Company; Subject to the provisions of Section 292, 293(1)(C), 295, 369, 370, 372 and 373 of the Act, to invest and deal with any moneys of the Company not immediately required for the purposes thereof upon such security (not being shares of this Company) or without security and in such manner as they may think fit and form time to time vary of realise such investments. Save as provided in Section 49 of the Act all investments shall be made and held in the Companys own name; To execute in the name and on behalf of the Company in favour of any Director or other person who may incur or be about to incur any personal liability whether as principal of security, for the benefit of the Company, such mortgages of the Companys property (present and future) as they think fit; and any such mortgage may contain a power of sale and such other powers, provisions, covenants and agreements as shall be agreed upon; To determine from time to time who shall be entitled to sign on the Companys behalf, bills, notes, receipts, acceptances, endorsements, cheques, dividend warrants, releases, contracts and documents and to give the necessary authority for such purposes; To distribute by way of bonus amongst the staff of the Company a share or shares in the profits of the Company, and to give to any officer or other person employed by the

j)

k)

l)

m)

510

n)

o)

Company commission in the profits of any particular business or transaction; and to charge such bonus or commission as part of the working expenses of the Company; To provide for the welfare of Directors or employees or ex-employees of the Company and their wives, widows and families or the dependents or connections of such persons, by building or contributing to the building of houses, dwelling or chawls, or by grants of money, pension, gratuities, allowances, bonus or other payments, or by creating, and from time to time subscribing or contributing to provident fund and other association, funds or trusts and by providing or subscribing or contributing towards places of instruction and recreation, hospitals and dispensaries, medical and other attendance and other assistance as the Board shall think fit, and subject to Section 293 (1)(C) to subscribe or contribute or otherwise assist or to guarantee money to charitable, benevolent, religious, scientific, national of other institutions or objects which shall have any moral or other claim to support or aid by the Company, either by reason of locality of operation, or of public and general utility or otherwise. Before recommending any dividend, to set aside out of the profits of the Company such sums as they may think proper for depreciation or to depreciation Fund, or to an Insurance Fund, or as a Reserve Fund or Sinking Fund or any Special Fund, to meet contingencies or to repay debentures, or debenture-stock, or redeemable preference shares or for special dividends or for equalizing dividends or for repairing, improving, extending and maintaining any of the property of the Company and for such other purpose (including the purposes referred to in the preceding clause), as the Board may in the absolute discretion, think conducive to the interest of the Company, and subject to Section 292 of the Act, to invest the several sums so set aside or so much thereof as required to be invested and disposed off and apply and expand all or part thereof for the benefit of the Company in such manner and for such purposes as the Board in their absolute discretion, think conducive to the interest of the Company notwithstanding that the matters to which the Board may apply or upon which they may expend the same, or any part hereof, may be matters to or upon which the capital moneys of the Company might rightly be applied or expended, and to divide the Reserve Fund into such special funds as the Board may think fit, with power to transfer the whole or any portion of a Reserve Fund or division of a Reserve Fund and with full power to employ the assets constituting all or any of the above funds, including the Depreciation Fund, in the business of the Company or in the purchase or repayment of debentures or debenture-stock, and without being bound to keep the same separate from the other assets and without being bound to pay interest on the same with power however to

511

p)

the Board at their discretion to pay or allow to the credit to such funds interest at such rate as the Board may think proper, not exceeding nine percent per annum. To appoint, and at their discretion remove or suspense such managers, secretaries, assistants, supervisors, clerks, agents and servants for permanent, temporary or services as they may from time to time think fit, and to determine their power and duties and fix their salary or emoluments or remuneration and to require security in such instances and to such amount as they may think fit and also from time to time to provide for the management and transaction of the affairs of the Company in any specified locality in India or elsewhere in such manner as they think fit; and the provisions contained in four next following sub clauses shall be without prejudice to the general powers conferred by this sub clause; To comply with the requirements of any local law which in their opinion it shall in the interest of the Company be necessary or expedient to comply with; From time to time and at any time to establish any local Board for managing any of the affairs of the Company in any specified locality in India or elsewhere and to appoint any persons to be members of such Local Board, and to fix their remuneration; Subject to Section 292 of the Act, from time to time, and at any time, to delegate to any person so appointed any of the powers, authorities and discretions for the time being vested in the Board, other than their power to make calls or to make loans or borrow monies and to authorize the Members for the time being of any such Local Board, or any of them to fill up any vacancies therein and to act notwithstanding vacancies, and any such appointment or delegation may be made on such terms and subject to such conditions as the Board may think fit, and the Board may at any time remove any person so appointed, and may annul or vary any such delegation; At any time and from time to time by Power of Attorney under the Seal of the Company to appoint any person or persons to be the Attorney or Attorneys of the Company for such purposes and with such powers, authorities and discretions (including exceeding those vested in or exercisable by the Board under these present and excluding the power to make calls and excluding also except in their limits authorised by the Board the power to make loans and borrow money) and for periods and subject to such conditions as the Board may from time to time think fit, and any such appointment may (if the Board thinks fit) be made in favour of the member or any of the members or any of the members of any Local Board, established as aforesaid or in favour of any Company, or the shareholders, directors, nominees, or

q)

r)

s)

t)

512

managers of any Company or firm or otherwise in favour of any fluctuating body of persons whether nominated directly or indirectly by the Board and any such Power of Attorney may contain such Powers for the protection or convenience of persons dealing with such Attorneys as the Board may think fit, and may contain powers enabling any such delegates or attorneys as aforesaid to sub-delegate all or any of the powers, authorities and discretions for the time being vested in them; u) Subject to Section 294, 297 and 300 of the Act, for or in relation to any of the matters aforesaid or otherwise for the purpose of the Company to enter into all such negotiations and contracts and rescind and vary all such contracts, and execute and do all such acts, deeds and things in the name and on behalf of the Company as they may consider expedient and generally subject to the provisions of the Act and these Articles to delegate the powers or authorities and discretions vested in the Directors to any person, firm, Company or fluctuating body of person as aforesaid; From time to time to make, vary and repeal bye-laws for the regulation of the business of the Company, its officers and servants;

v)

REGISTERS, BOOKS AND DOCU MENTS 233. a) The Company shall maintain registers, books, and documents as required by the Act or these Articles including the following namely: (i) Register of Investments not kept in the Companys name according to Section 49 of the Act. Register of Mortgages, Debentures and Charges according to Section 143 of the Act. Register of Members according to Section 150. Register and Index of Debenture-holders according to Section 152 of the Act. Register of Contracts, Companies and firms in which Directors are interested according to Section 301 of the Act. Register of Directors and Managing Directors, according to Section 303 of the Act. Registers, Books and Documents

(ii)

(iii) (iv)

(v)

(vi)

(vii) Register of Directors Shareholdings and Debenture-holdings according to Section 307 of the Act.

513

(viii) Books of accounts in accordance with the provision of Section 209 of the Act. (ix) Copies of instruments creating any charge requiring registration according to Section 136 of the Act. Copies of Annual Returns prepared under Section 159 of the Act together with the copies of certificates required under Section 161. Register of renewed and duplicate Cetificates according to Rule 7(2) of the Companies (issue of Share Certificate) Rules, 1960.

(x)

(xi)

b)

The said register, books and documents shall be maintained in conformity with the applicable provisions of the Act and shall be kept open for inspection by such persons as may be entitled thereto respectively under the Act, on such days and during such business hours as may in that behalf be determined in accordance with the provisions of the Act or these Articles and extracts shall be supplied to persons entitled thereto in accordance with the provisions of the Act or these Articles. The Company may keep a foreign Register of Member in accordance with Section 157 and 158 of the Act. Subject to the provisions of Sections 157 and 158, the directors may from time to time make such provisions as they may think fit in respect of the keeping of such Branch Registers of members and / or debentures holders. MANAGEMENT

c)

234.

The Company shall not appoint or employ at the same time more than one of the following categories of managerial personnel namely :-

Prohibition of simultaneous appointment of different categories of managerial personnel

(a) Managing Director and (b) Manager. THE SECRETARY 235. Subject to the provisions of Section 383A of the Act, the Directors may from time to time appoint, and at their discretion, remove any individual (hereinafter called the Secretary) who shall have such qualification as the authority under the Act may prescribe to perform any functions, which by the Act or these Articles are to be performed by the Secretary, and to execute any other Secretary

514

duties which may from time to time be assigned to the Secretary by the Directors. The Directors may also any time appoint some person (who need not be Secretary) to keep the register required to be kept by the Company. THE SEAL 236. a) The Board shall provide a Common Seal for the purposes of the Company, shall have powers from time to time to destroy the same and substitute a new Seal in lieu thereof, and the Board shall provide for the safe custody of the Seal for the time being, and the Seal shall never be used except by the authority of the Board of Committee of the Board, previously given. The Company shall also be at liberty to have an official Seal in accordance with Section 50 of the Act, for use in any territory, district or place outside India. The Seal, its custody and use

b)

237.

Every deed or other instrument, to which the Seal of the Company is required to be affixed shall be signed by any one Director or some other person, as authorised by the Board of Directors or as statutory required, if any. Provided that in respect of the Share Certificate the Seal shall be affixed in accordance with Article 25(a)."

Deeds how executed

DIVIDENDS 238. Subject to the provision of Section 205 of the act and the rules made there under, the profits of the Company, subject to any special rights relating thereto created or authorized to be created by these Articles and subject to the provision of these Articles, shall be divisible among Members in proportion to the amount of capital paid-up or credited as paid-up on the shares held by them respectively. The Company in General Meeting may declare dividends to be paid to Members according to their respective rights but no dividends shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend. No dividend shall be declared or paid except in accordance with Section 205 and Section 205 A of the Act and no dividend shall carry interest as against the Company. The declaration of the Board as the amount of profits of the Company shall be conclusive. Where a dividend has been declared, either the dividend shall be paid or the warrant in respect thereof shall be posted to the shareholder entitled to the payment of the dividend within time prescribed under Section 207 of the Act. Division of profits

239.

The Company in General Meeting may declare a dividend

240.

Dividends only to be paid out of profit

515

241.

No dividend shall be paid by the Company in respect of any share, except to the registered holder of such share or to his order or to his banker. Subject to the provision of the Act, the Board may, from time to time pay to the Members such interim dividend as in their judgment the position of the Company justifies. Where Capital is paid in advance of calls, such capital may carry interest but shall not in respect thereof confer a right to dividend or participate in profits.

Dividend payable to Registered holders Interim Dividend

242.

243.

Capital paid-up in advance at interest, not to earn dividend Dividends in proportion to amount paid up

244.

All dividends shall be apportioned and paid proportionately to amounts paid or credited as paid on the shares during any portion or portions of the period in respect of which the dividend is paid; but if any share is issued on terms providing that it shall rank for dividends as from a particular date, such share rank for dividend accordingly. Subject to the provisions of the Act, where any instrument of transfer of shares has been delivered to the Company for registration and the transfer of such shares has not been registered by the company, notwithstanding anything contained in any other provisions of the Act, the company shall: (a) transfer the dividend in relation to such shares to the special account referred to an Section 205-A unless the Company is authorized by the registered holder of such shares in writing to pay such dividend to the transferee specified in such instruments of transfer, and (b) keep in abeyance in relation to such shares any offer of rights shares under section 81 (1) (a) and any issue of fully paid bonus shares in pursuance of section 205 (3) of the Act. A transfer of shares shall not pass the right to any dividend declared thereon before the registration of the transfer. Any one of several persons who are registered as the jointholders of any share may give effectual receipts for all dividends or bonus and payments on account of dividends or bonus or other moneys payable in respect of such shares. No member shall be entitled to receive payment of any interest or dividend in respect of his share or shares, whilst any money may be due or owing from him to the Company in respect of such share or shares or otherwise

245.

Right to dividend rights / Bonus shares to be held in abeyance pending registration of transfer

246.

Transfer of shares must be registered Dividend etc. to joint holders

247.

248.

No member to receive dividend whilst indebted to the Company

516

on any other account whatsoever, either alone or jointly with any other person or persons, and the Board may deduct from the interest or dividend payable to any Member all sums of money so due from him to the Company. 249. Unless otherwise directed any dividend may be paid by cheques or warrant or by a pay slip or receipt having the force of a cheque or warrant sent through the post of 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 the joint-holding. Every such cheques or warrant or pay-slip shall be made payable to the order of the person to whom it is sent. The Company shall not be liable or responsible for any cheque or warrant or pay slip or receipt lost in transmission, or for any dividend lost to the Member or person entitled thereto by the forged endorsement of any cheque or warrant or the forged signature of any pay slip or receipt or the fraudulent recovery of the dividend by any other means. When a dividend cheque, warrant, pay slip or receipt is so posted the Company shall be deemed to have paid the dividend to the person entitled to it. Where the Company has declared a dividend but which has not been paid or claimed within 30 days from the date of declaration, transfer the total amount of dividend which remains unpaid or unclaimed within the said period of 30 days, to a special account to be opened by the company in that behalf in any scheduled bank. The company shall transfer any money transferred to the unpaid dividend account of a company that remains unpaid or unclaimed for a period of seven years from the date of such transfer, to the Fund known as Investor Education and Protection Fund established under section 205C of the Act.

and Companys right of reimbursement there out

Dividend how Remitted

250.

Unclaimed dividend

251.

Any General Meeting declaring a dividend, may, on the recommendation of the dividend, make a call on the Member of such amount as the meeting fixes, but so that the call on each Member shall not exceed the dividend payable to him and so that the call be made payable at the same time as the dividend; and the dividend may, if so arranged between the Company and the Member be set off against the calls.

Dividend and call together

252.

Subject to the provision of the Act, no unpaid dividend shall bear the interest as against the Company.

No interest on dividend

517

253.

Where a dividend has been declared by a company but has not been paid, or the warrant in respect thereof has not been posted, within 30 days from the date of the declaration to any shareholder entitled to the payment of the dividend, the Company shall, within 7 days from the date of expiry of the said period of 30 days transfer the total amount of dividend which remains unpaid or in relation to which no dividend warrant has been posted within the said period of 30 days, to special account to be opened by the Company in that behalf in any scheduled Bank to be called Unpaid dividend account of NEESA LEISURE LIMITED. Save as stated in Article 255, no dividend shall be payable except in cash. Provided that nothing in this Article shall be deemed to prohibit the capitalization of profits or reserves of the Company for the purpose of issuing fully paid up bonus shares or paying up any amount for the time being unpaid on nay shares held by the members of the Company. Subject to the provisions of Section 205 of the Act and if and in so far as may not be prohibited by that Section or any of the Provisions of the Act, any General Meeting sanctioning or declaring a dividend in terms of these Articles may direct payment of such dividend, wholly or in part, by the distribution of partly or fully paid up, shares and the Directors shall give effect to such direction and where any difficulty arises in regard to the distribution, they may settle the same as they think expedient, and in particular may issue fractional certificates or that fractions of less value than Rupee one may de disregarded, in order to adjust the right of the parties and may vest any such shares, in trustees upon such trusts for the person entitled to the dividend as may seem expedient to the Directors. When required the Directors shall comply with Section 75 of the Act and the Directors may appoint any person to sign any contract thereby requires on behalf of the persons entitled to the dividend and such appointment shall be effective. a) The Company in General meeting may, upon recommendation of the Board resolve that it is desirable to capitalize any undivided profits of the Company not required for paying the fixed dividends on any Preference shares (including profits carried and standing to the credit of any reserve or reserves or other special account and profit arising from the realization of any capital assets or the issue of shares at a premium) and accordingly that the Directors be authorised to the member who would have been entitled to receive the same had such sums been distributed by way of dividends in accordance with their

Unpaid dividend

254.

Dividend to be payable in cash

255.

Special provisions in respect of dividend

256.

Capitalisation of profits and reserves

518

rights, and to apply such profits on their behalf on the footing that they become entitled thereto as capital either in or towards paying up the amount, if any, for the time being unpaid on any shares by such members respectively, or in paying up in full un-issued shares, debentures or securities of the Company of a nominal amount equal to such profits, such shares, debentures or securities to be allotted and distributed, credited, as fully paid-up, to and amongst such members in the proportion aforesaid, or partly in one way and partly in other. Whenever such resolution as aforesaid shall have been passed, the Directors shall make all appropriations and applications of the undivided profits resolved to be capitalized thereby, and all the allotments and issues of fully paid shares, debentures or securities, if any, and generally shall do all acts and things required to give effect thereto with full power to the Directors to make such provisions by the issue of fractional certificates or by payment in cash or otherwise as they think fit for the case of shares, debentures or securities becoming distributable in fraction and also to authorise any person to enter on behalf of all the members in to 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 they case may require) for the payment by the Company on their behalf by the application thereto of their respective proportions of the profits resolved to be capitalized of the amounts or any parts of the amounts remaining unpaid on their existing shares, and 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 un-issued to be issued 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. ACCOUNTS 257. The Company shall keep at the Office or at such other place in India as the Board thins fit, proper Books of Accounts in accordance with Section 209 of the Act with respect to :a) all sums of money received and expended by the Company and the matters in respect of which the receipts and expenditure take place; Directors to keep true accounts

519

b) c)

all sales and purchases of goods by the Company; The assets and liabilities of the Company. Where the Board decides to keep all or any of the Books of Account at any place other than the Office of the Company, the Company shall within seven days of the decision file with the Registrar a notice in writing giving the full address of that other place. The Company shall preserve in good order the books of accounts relating to a period of not less than eight years proceeding the current year together with the vouchers relevant to any entry in such books of accounts. If the Company owns one or more than one branch office/s, whether in or outside India, proper Books of Accounts relating to the transactions effected at the branch office shall be kept at that branch office/s and proper summarized returns, made up to date at intervals of not more than three months, shall be sent by the branch office/s to the Company at its Registered Office or other place in India as the Board thinks fit where the said Books of the Company are kept. The Books of Account shall give a true and fair view of the state of affairs of the Company or branch office, as the case may be and explain its transactions. The Books of Account and other books and paper shall be open to inspection by any Directors during business hours.

258.

The Board shall from time to time determine whether and to what extend and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors, and no Member (not being a Director) shall have any right of inspecting any accounts or books or documents of the Company except as conferred by law or authorized by the Board or by a resolution of the Company in General Meeting. The Directors shall from time to time, in accordance with Sections 210, 211, 212, 215 and 217 of the Act, cause to be prepared and to be laid before this Company in General Meeting, such Balance Sheets, Profit & Loss Accounts and Reports as are required by those Sections and in the form set out in part I of Schedule VI of the Act.

As to inspection of accounts or books by Members

259

Statement of accounts to be furnished to General Meeting

520

260.

A.

Every Balance Sheet laid before the Company in General Meeting shall have attached to it a Report by the Board of Directors with respect to the state of the Companys affairs; the amounts if any which it proposes, to carry to any reserve in such Balance Sheet, the amounts, if any, which it recommends to be paid by way of dividends and material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the Balance Sheet relates and the date of the report. The Report shall so far as it is material for the appreciation of the state of the Companys affairs by its members and will not in the Boards opinion be harmful to the business of the Company or of any of its subsidiaries, deal with any changes which have occurred during the financial year in the nature of Companys business in the Companys subsidiaries or in the nature of the business in which the Company has an interest. The Report shall also include a statement showing particulars of its employees as mentioned in Section 217 (2A) of the Act. The Board shall also give the fullest information and explanation in its report or in cases falling under the provision to Section 222 of the Act in an addendum to that Report, on every reservation, qualification or adverse remark contained in the Auditors Report. The Boards Report and addendum (if any) thereto shall be signed by its Chairman if he is authorized in that behalf by the Board; and where he not so authorized shall be signed by such number of Directors as are required to sign the Balance Sheet and the Profit and Loss Account of the Company. The Board shall have the right to charge any person not being a Director with the duty of seeing that the provisions of sub-clause A to D of this Article are complied with. A copy of the audited Balance Sheet and Profit and Loss Account together with a copy of Auditors Report and a copy of every document required by law to be annexed thereto, as the case may be, to the Balance Sheet which is to be laid before the members in General Meeting shall, not less than twenty one days before the date of the Meeting, be sent to every member of the Company, unless the requirements of proviso (b) (iv) of Section 219 (1) of he Act are complied with.

Boards Report to be attached to Balance Sheet

B.

C.

D.

E.

F.

261

Power to amend audited accounts

521

262

A copy of the audited Balance Sheet and Profit and Loss Account together with a copy of Auditors Report and a copy of every document required by l aw to be annexed thereto, as the case may be, to the Balance Sheet which is to be laid before the members in General Meeting shall, not less than twenty one days before the date of the Meeting, be sent to every member of the Company, unless the requirements of the proviso (b)(iv) of Section 219(1) of the Act are complied with. The Debenture holders of the Company shall have no right to receive notice of or to be present or to vote in person or proxy at any General Meeting of the shareholders of the Company or to receive the copies of Balance Sheets and Auditors Report in accordance with the provisions of Section 219 of the Act. However, a holder of debentures of the Company will on written request be entitled to be furnished without charge, a copy of the Balance Sheet of the Company and of every document required by law to be annexed or attached thereto including the Profit & Loss Account and the Auditors Report. AUDIT

Copies shall be sent to each Member

263

a)

Every Balance Sheet and Profit & Loss Account shall be audited by one or more Auditors, as may be appointed from time to time. The Company will comply with all the provisions prescribed in Section 224 to Section 233 (both inclusive) of the Act, as amended from time to time. The first Auditor or Auditors of the Company shall be appointed by the board within one month of the date of registration of the Company and the Auditor or Auditors so appointed shall hold office until the conclusion of the first Annual General Meeting. Provided that the Company may at a General Meeting remove any such Auditor or all of such Auditors and appoint in his or their place any other person or persons who have been nominated for appointment by any member of the Company not less than fourteen days before the date of the meeting, provided further that if the Board fails to exercise its power under this Article, the Company in General Meeting may appoint the first Auditor or Auditor. Every account when audited and approved by a General Meeting shall be conclusive except as regards any error discovered therein within three months next after the approval thereof. Whenever any such error is discovered

Accounts to be audited

b)

264

First Auditor or Auditors

265

Accounts when audited and approved be conclusive

522

within that period the accounts shall forthwith be corrected and henceforth shall be conclusive, 266 Save as otherwise expressly provided in the Act, A document or proceedings requiring authentication by the Company may be signed by the Director, the Managing Director, the Manager, the Secretary or other authorized officer of the Company and need not be under its Common Seal. DOCUMENTS AND NOTICES 267 a) A document or notice may be served or given by the Company on any Member either personally or be sending it by post to him to his registered address or (if he has no registered address in India) to the address, if any, in India supplied by him to the Company for serving documents or notices on him. Where a document or notice is sent by post, service of the document or notice shall be deemed to be effected by properly addressing, preparing and posting a letter containing the document or notice, serving shall be deemed to have been effected in the case of a notice of a meeting, at the expiry of forty-eight hours after the letter containing the document or notice is posted and in any other case, at the time at which the letter would be delivered in the ordinary course of post. Where a member has intimated to the Company in advance that documents should be sent to him under a certificate of posting or by Registered Post with or without acknowledgement due, and has deposited with the Company a sum sufficient to defray the expenses of doing so, service of the documents shall not be deemed to be effected unless it is sent in the manner intimated by the member. A document or notice advertised in a newspaper circulating in the neighbourhood of the Office shall be deemed to be duly served or sent on the day on which the advertisement appears on every Member who has no registered address in India and has not supplied to the Company any address within India for the serving of documents on or the sending of notices to him and shall be deemed to have been given on the day on which the advertisement shall first appear. A document or notice may be served or given by the Company on or to the joint-holders of a share of serving or giving the document or notice to the joint-holder named By Advertisement Service of documents or notice on Members by Company Authentication of documents and proceedings

b)

c)

268

269

On joint holders

523

first in the Register of Members in respect of the shares. 270 A document or notice may be served or given by the Company on or to the persons entitled to a share in consequence of the death or insolvency of a Member by sending it through the post in prepaid letter addressed to them by name or by the little of representatives of the deceased, or assignee of the insolvent or by any like description, at the address (if any) in India supplied for the purpose by the persons claiming to be entitled, or until such an address has been so supplied by serving the document or notice in any manner in which the same have been given if the death or insolvency had not occurred. Documents or notices of every General Meeting shall be served or given in same manner hereinbefore authorized or to (a) every member, (b) every person entitled to a share in consequence of the death or insolvency of a Member, and (c) the Auditor or Auditors for the time being of the Company. Every person who, by operation of law, transfer or other means whatsoever, shall become entitled to any share, shall be bound by every document or notice in respect of such share, which previously to his name and address being entered on the Register of Members, shall have been duly served on or given to the person from whom he derives his title to such shares. All the document or notice to be served or given by the Company shall be signed by a Director, or some person duly authorized by the Board of Directors for such purpose and the signature thereto may be written, printed or lithographed. A notice may be served on the Company or any Officer thereof by sending it to the Company or Officer at the Registered Office of the Company by post under a certificate of posting or by registered post, or by leaving it at its Registered Office. On personal representatives etc.

271

To whom documents or notices must be served or given

272

Members bound by documents or notices served on or given to previous holders

273

Documents or notice by Company and signature thereto

274

Service of document or notice by Members

RECONSTRUCTION

275

On any sale of the undertaking of the Company, the Board or the Liquidators on a winding up may, if authorized by a Special Resolution and after paying off the holders of preference shares, accept fully paid or partly paid-up shares, debentures or securities of any other company, whether incorporated in India or not either than existing or to be formed for the purpose in whole or in part of the

Reconstruction

524

property of the company, and the Board (if the profits of the Company permit) or the liquidators (or winding-up) may distribute such shares or securities or any other property or the Company amongst the holders of ordinary shares without realization, or vest the same in trustees for them, and any Special Resolution may provide for the distribution or appropriation of the cash, or other securities benefit or property, otherwise than in accordance with the strict legal rights of the holders of ordinary shares, and for the valuation of any such securities or property at such price and in such manner as the meeting may approve and all holders or ordinary shares shall be bound to accept and shall be bound by any valuation or distribution so authorized and waive all rights in relation thereto save only in case the Company is proposed to be or is in the course of being wound up, such statutory rights (if any) under Section 494 of the Act as are incapable of being varied or excluded by these Articles. WINDING UP 276 A. Subject to the provisions of the Act, if the Company shall be wound up and the assets available for distribution among the members as such be less than sufficient 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 winding up, on the shares held by them respectively. And if in winding up, the assets available for distribution amongst the members shall be more than sufficient to repay the whole of the Capital paid up at the commencement of winding up the excess shall be distributed amongst the members in proportion to the Capital at the commencement of the winding up or which ought to have been paid up on the shares held by them respectively. But this clause will not prejudice the rights of the holders of shares issued upon special terms and conditions. Subject to the provisions of the Act if the Company shall be wound up whether voluntarily or otherwise the liquidator may with the sanction of a Special Resolution and any other sanction required by the Act, divide amongst the contributories, in specie or kind the whole or 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 upon such trusts for the benefit of the contributories or any of them as the liquidators with the like sanction shall think fit. Distribution in specie or in kind Winding up

B.

277

525

INDEMNITY AND RESPONSIBILITY 278 a) Subject to the provisions of Section 201 of the Act, every Director, Manager, Auditor and other Officer or Servant of the Company shall be indemnified by the Company out of the Funds of the Company and it shall be the duty of the Directors to pay all costs, losses and expenses which any such Director, Manager, Auditor or other Officer of Servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such Director, Manager, Auditor of other Officer or servant or in any way in the discharge of his duties including travelling, expenses and in particular and so as not to limit the generality of the forgoing provisions against all liabilities incurred by him as such Director, Manager, Auditor or other Officer in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or he is acquitted, or in connection with any application under Section 633 of the Act in which relief is provided shall immediately attach as a lien on the property of the Company and have priority as between the members over all other claims. Subject to the provision of Section 201 of the Act, no Director, Manager, or other Officer of the Company shall be liable for the acts, receipts neglects or defaults of any other Director or Officer or for joining in any receipt or other Act for conformity or for any loss or for joining in any receipt or other Act for conformity or for any loss or expenses happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the Directors for and on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising from the bankruptcy, insolvency or tortuous act of any person with whom any moneys, securities or effect shall be deposited or for any loss occasioned by an error of judgment or oversight on his part, or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation thereto unless the same happen through his own dishonest. SECRECY CLAUSE 279 a) Every Director, (except institutional/ex-officio Director) Auditor, Trustee, member of a committee, officer, servant, agent, accountant or any other person employed in the business of the Company shall, if so required by the Directors, before entering upon his duties, sign a declaration pledging himself to observe strict secrecy respecting all transactions and affairs of the Company and Secrecy clause Directors and others right of indemnity

b)

526

all 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 to do so by the Directors or by law or by the person to whom such matters relate and except so far as may be necessary in order to comply with any of the provisions in these presents contained. b) No member shall be entitled to visit or inspect any works of the Company, without the permission of the Directors or to require discovery of or any information respecting any details of the Companys trading, business or customers, or any matter which is or may be in the nature of a trade secret, mystery of trade, secret process or any other matter which may relate to the conduct of the business of the Company and which in the opinion of the Director, would be inexpedient in the interest of the Company to disclose. GENERAL POWER 280 Wherever in the Companies Act, it has been provided that the Company shall have any right, privilege or authority or that the Company could carry out any transaction only if the Company is so authorized by its Articles, than and in that case this Clause hereto authorizes and empowers the Company to have such right, privilege or authority and to carry such transactions as have been permitted by the Act, without there being any specific Regulation in that behalf herein provided.

527

SECTION IX: OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The following contracts (not being contracts entered into in the ordinary course of business carried on by our Company or entered into more than two (2) years before the date of this Draft Red Herring Prospectus) which are or may be deemed material have been entered or are to be entered into by our Company. These contracts, copies of which have been attached to the copy of the Red Herring Prospectus, delivered to the Registrar of Companies, Maharashtra, Mumbai for registration and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of our Company at X-22,23 & 24, GIDC Electronic Estate, Sector 25, Gandhinagar 382 044, India, from 10.00 a.m. to 4.00 p.m. on Working Days from the date of the Draft Red Herring Prospectus until the Bid/Issue Closing Date. Material Contracts 1. Engagement Letter dated June 28, 2010 between our Company and Centrum Capital Limited as BRLM to the Issue. Engagement Letter dated August 16, 2010 between our Company and Axis Bank Limited as BRLM to the Issue. Issue Agreement dated March 30, 2011 amongst our Company, the Selling Shareholders, and the BRLMs. Memorandum of Understanding dated March 30, 2011 executed by our Company, the Selling Shareholders and the Registrar to the Issue. Escrow Agreement dated [] between our Company, the Selling Shareholders, the BRLMs, Escrow Collection Banks and the Registrar to the Issue. Syndicate Agreement dated [] between our Company, the Selling Shareholders, the BRLMs and Syndicate Members. Underwriting Agreement dated [] between our Company, the Selling Shareholders, the BRLMs and Syndicate Members. Agreement dated [] with the IPO grading agency.

2.

3.

4.

5.

6.

7.

8.

Material Documents 9. 10. 11. 12. Our Companys Memorandum of Association and Articles of Association. Copy of the board resolution dated May 12, 2010 authorizing the Issue and related matters. Copy of the shareholders resolutions dated June 5, 2010 authorizing the Issue and related matters. Copy of shareholders resolution dated November 14, 2010 appointing Mr. Manoj Singhal as Managing Director of our Company; Copy of Employee Agreement dated November 14, 2010 appointing Mr.Manoj Singhal as Managing Director of our Company; Copies of Annual Reports of our Company for the years ended March 31, 2010, 2009, 2008, 2007 and 2006.

13.

14.

528

15.

Report of the Auditors, M/s ISK & Associates, Chartered Accountants dated March 29, 2011 prepared as per Indian GAAP and mentioned in the Draft Red Herring Prospectus. Copy of the Statement of Tax Benefits dated March 29, 2011 from the Statutory Auditor in this case being M/s ISK & Associates, Chartered Accountants. Consents of the Bankers to our Company, the BRLMs, the Syndicate Members, the Registrar to the Issue, the Escrow Collection Bank(s), the Lenders to the Company, the Legal Advisors to our Company, the Statutory Auditor and the Underwriters, the Directors of our Company, the Company Secretary and the Compliance Officer, as referred to, in their respective capacities. Copy of Certificate from the Statutory Auditor of our Company, ISK & Associates, Chartered Accountants, dated March 28, 2011 regarding the Eligibility of the Issue. Letter dated June 4, 2010 by Axis Infrastructure Fund I in relation to offering certain Equity Shares under the Offer for Sale Portion. Letter dated March 24, 2011 by HT Media Limited in relation to offering its Equity Shares under the Offer for Sale Portion. Board Resolution dated March 30, 2011 for approval of Draft Red Herring Prospectus. Share Subscription Agreement and Shareholders Agreement dated March 28, 2008 between our Company, our Promoters and Axis Infrastructure Fund I. AIF letter dated March 29, 2011 waiving its special rights under the AIF SSA. AIF Letter dated March 30, 2011 in relation to the modification of conversion terms of CCPS of our Company. Share Subscription Agreement and Shareholders Agreement dated October 3, 2008 between our Company, our Promoters and Writers & Publishers Limited. Share Subscription Agreement dated August 24, 2010 entered into between our Company, our Promoters and IFCI Limited. IFCI Letter dated March 1, 2011 rescinding its right to call upon the Promoters to buy back Equity Shares held by it in terms of Clause 3.2 and Clause 3.3 of the IFCI SSA. Share Subscription Agreement dated June 17, 2009 entered into between our Company, our Promoters and HT Media Limited. Letter dated March 29, 2011 waiving its special rights under the HTML SSA. Share Subscription Agreement dated October 30, 2009 entered into between our Company, our Promoters and Brand Equity Treaties Limited (BETL). BETL letter dated March 24, 2011 waiving its special rights under the BETL SSA. IPO grading report dated [] issued by [], a credit rating agency registered with SEBI. In-principle listing approvals dated [] and [] from the BSE and the NSE, respectively. Tripartite Agreement among NSDL, the Company and the Registrar to the Issue dated July 31, 2006. Tripartite Agreement among CDSL, the Company and the Registrar to the Issue dated [].

16.

17.

18.

19.

20.

21. 22.

23.

24.

25.

26.

27.

28. 29. 30.

31.

529

32. 33.

Due diligence certificate dated March 30, 2011 to SEBI from the BRLMs. SEBI observation letter No. [] dated [].

Any of the contracts or documents mentioned in this Draft Red Herring Prospectus may be amended or modified at any time if so required in the interest of our Company or if required by the other parties, without reference to the shareholders subject to compliance with the provisions contained in the Companies Act and other relevant statutes.

530

DECLARATION
We, the persons mentioned herein below, as Directors or otherwise, certify that all relevant provisions of the

Companies Act, 1956, and the guidelines issued by the Government of India or the regulations and guidelines issued by Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Draft Red Herring Prospectus is contrary to the provisions of the Companies Act, 1956, as amended or the Securities and Exchange Board of India Act, 1992 or the rules made thereunder or regulations issued, as the case may be. We further certify that all statements in this Draft Red Herring Prospectus are true and correct. SIGNED BY THE DIRECTORS OF OUR COMPANY:

Mr. Sanjay Gupta Chairman

Mr. Manoj Singhal Managing Director

Ms. Neelu Gupta Non-Independent & Non-Executive Director

Mr. Arun Prakash Korati Nominee Director of Axis Infrastructure Fund I

Mr. V.Anish Babu Nominee Director of IFCI

Mr. Shailesh Modi Non-Independent & Non-Executive Director

Mr. Pankaj Mudholkar Independent & Non-Executive Director

Mr. Yogesh Joshi Independent & Non-Executive Director

Mr. Mehar Karan Singh Independent & Non-Executive Director

Mr.M.Narayanan Independent & Non-Executive Director

Mr. Jasvinder Singh Rana Independent & Non-Executive Director SIGNED BY VICE PRESIDENT FINANCE & ACCOUNTS:

Mr. Kamlendra Joshi

Date: March 30, 2011 Place: Gandhinagar

531

DECLARATION OF THE SELLING SHAREHOLDER I We certify that all the statements in this Draft Red Herring Prospectus in relation to the Selling Shareholder I are true and correct. The Selling Shareholder assumes responsibility for statements in relation to Selling Shareholder I in this Draft Red Herring Prospectus. SIGNED BY THE SELLING SHAREHOLDER I

For and on behalf of Axis Infrastructure Fund I

Authorized Signatory Name: Arun Prakash S. Korati Designation: Action CEO, Axis PE (the investment manager of AIF I) Date: March 30, 2011

532

DECLARATION OF THE SELLING SHAREHOLDER II We certify that the statements in this Draft Red Herring Prospectus in relation to "HT Media Limited" (the "Selling Shareholder II") are true and correct. The Selling Shareholder II assumes responsibility only for such statements made in this Draft Red Herring Prospectus in relation to Selling Shareholder II. SIGNED BY THE SELLING SHAREHOLDER II

Date: March 30, 2011

533

APPENDIX A - IPO GRADING REPORT []

534