ISSUE PROGRAMME Bid/Issue Opens on [ ] Bid/Issue Closes on [ ]

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1 DRAFT RED HERRING PROSPECTUS 27 th March, 2012 Please read Section 60B of the Companies Act, % Book Building Issue ACE TOURS WORLDWIDE LIMITED Our Company was originally incorporated as Ace Tours Worldwide Private Limited on July 13, 2007 by conversion of a partnership firm Ace Tours Worldwide under Part IX of the Companies Act, 1956 vide Certificate of Incorporation bearing CIN number U63040GJ2007PTC issued by the Asst. Registrar of Companies, Gujarat, Dadra and Nagar Haveli. Our Company was converted into a public limited company vide fresh Certificate of Incorporation dated September 30, 2011 and the name of our Company was changed to Ace Tours Worldwide Limited. Registered Office: F , Jolly Arcade, Ghod Dod Road, Surat , Gujarat. Telephone: ; Facsimile: ipo@acetours.in; Website: Contact Person: Mr. Ankit Shulka, Company Secretary and Compliance Officer Our Promoter: Mr. Raju Choksi, Mr. Bharat Choksi, Mr. Jayesh Choksi and Mr. Mayank Choksi PUBLIC ISSUE OF 81,00,000 EQUITY SHARES OF ` 10/- EACH AT A PRICE OF ` [ ] PER EQUITY SHARE (INCLUDING A PREMIUM OF ` [ ] PER EQUITY SHARE) FOR CASH AGGREGATING ` [ ] LACS (THE ISSUE ), BY ACE TOURS WORLDWIDE LIMITED (THE COMPANY OR THE ISSUER ). THE ISSUE WILL CONSTITUTE 52.88% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF OUR COMPANY. Price Band: ` [ ] to ` [ ] Per Equity Share of Face Value of ` 10 each The Price Band and the minimum bid lot size will be decided by our Company, in consultation with the Book Running Lead Manager and advertised at least two working days prior to the bid/issue opening date. The Floor Price is [ ] times of the Face Value and the Cap Price is [ ] times of the Face Value In case of revision in the Price Band, the Bidding/Issue Period shall be extended for three additional working days after such revision, subject to the Bidding/Issue Period not exceeding 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 (BSE) and The National Stock Exchange of India Limited (NSE), whose online IPO system will be available for bidding, by issuing a press release and by indicating the change on the website of the Book Running Lead Manager (BRLM) and the terminals of the member(s) of the Syndicate. This being an Issue for Equity Shares representing more than 25% of the post-issue equity share capital of the Company, Equity Shares will be offered to the public for subscription in accordance with Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules, 1957, as amended ("SCRR"), and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended ("SEBI ICDR Regulations"). The Issue is being made under sub-regulation (2)(a)(i) and (2)(b)(i) of Regulation 26 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ( SEBI ICDR Regulations ) and through the 100% Book Building Process wherein at least 50% of the Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers, of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only and the remaining QIB portion shall be available for allocation to the QIB Bidders including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 35% of the Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders and not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being received at or above the Issue Price. All non-retail Bidders, shall participate in this Issue through the Application Supported by Blocked Amount ("ASBA") process. Retail Bidders participating in this Issue may also utilize the ASBA process to submit their Bids. For details, please refer to the chapter titled Issue Procedure beginning on page 181 of the Draft Red Herring Prospectus. RISKS IN RELATION TO THE FIRST ISSUE This being the first issue of Equity Shares of our Company, there has been no formal market for our Equity Shares. The face value of the Equity Shares is ` 10/- and the Floor Price is [ ] times of the Face Value and the Cap Price is [ ] times of the Face Value. The price band (has been determined and justified by the BRLM and the issuer as stated under the chapter on Basis for Issue Price beginning on page 71 of the Draft Red Herring Prospectus) should not be taken to be indicative of the market price of our Equity Shares after our Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares of our Company nor 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 the Issuer and the Issue including the risk involved. The Equity Shares have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does the SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the statement of Risk Factors beginning on Page 15 of the Draft Red Herring Prospectus. ISSUER S ABSOLUTE RESPONSIBILITY Our Company, having made all reasonable enquiries, accepts responsibility for, and confirms that the Draft Red Herring Prospectus contains all information with regard to our Company and the Issue, which is material in the context of the Issue; that the information contained in the 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 document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. IPO GRADING The Issue has been graded by [ ] and has been assigned a grade of [ ] indicating [ ].For further details and grading rationale, please refer to page [ ] of the Draft Red Herring Prospectus under the section General Information. LISTING ARRANGEMENT The Equity Shares issued through the Draft Red Herring Prospectus are proposed to be listed on Bombay Stock Exchange Limited (BSE) and on The National Stock Exchange of India Limited (NSE). In-principle approvals have been received from BSE and NSE for the listing of the Equity Shares vide their letters dated [ ] and [ ] respectively. For the purposes of this Issue, BSE shall be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE Corporate Strategic Allianz Limited SEBI Registration No: INM , Samedh Complex, Near Associated Petrol Pump, C.G. Road, Ahmedabad Tel No: Telefax No: ipoatwl@csapl.com Investor Grievance ID: investors@csapl.com Website: Contact Person: Mr. Chetan Sharma/Ms. Vidhi Shah Bigshare Services Private Limited SEBI Registration No: INR E-2, Ansa Industrial Estate, Sakivihar Road, Saki Naka, Andheri (East), Mumbai Tel No: Fax No: Website: ipo@bigshareonline.com Contact Person: Ashok Shetty ISSUE PROGRAMME Bid/Issue Opens on [ ] Bid/Issue Closes on [ ]

2 TABLE OF CONTENTS CONTENTS PAGE Section I Definitions and Abbreviations Company Related Terms Conventional/General Terms 2 Issue Related Terms 2 Technical / Industry Related Terms / Abbreviations 8 Conventional/General Terms / Abbreviations 8 Section II General Presentation of Financial Information and Use of Market Data 12 Forward Looking Statements 14 Section III Risk Factors Risk Factors 15 Section IV Introduction 28 Summary 28 Summary of Financial Information 31 Brief Details of the Issue 35 General Information 36 Capital Structure 45 Section V Objects of the Issue Objects of the Issue 58 Basic Terms of the Issue 68 Basis for Issue Price 71 Statement of Tax Benefits 73 Section VI About Us Industry Overview 81 Our Business 87 Key Industry Regulations and Policies 93 History and Other Corporate Matters 94 Our Management 99 Our Promoter and Promoter Group 113 Currency of Presentation 124 Dividend Policy 125 Section VII Financial Information Auditors Report and Financial Information of Our Company 126 Management s Discussion and Analysis of Financial Condition and Results 144 of Operations as Reflected in the Financial Statements Section VIII Legal and other Regulatory Information Outstanding Litigations, Material Developments and Other Disclosures 152 Government and Other Statutory Approvals 157 Other Regulatory and Statutory Disclosures 160 Section IX Issue Related Information Terms of the Issue 173 Issue Structure 177 Issue Procedure 181 Restrictions on Foreign Ownership of Indian Securities 222 Section X Main Provisions of the Articles of Association Main Provisions of Articles of Association 223 Section XI Other Information Material Contracts and Documents for Inspection 286 Section XII Declaration 288 1

3 SECTION I DEFINITIONS AND ABBREVIATIONS In the Draft Red Herring Prospectus, unless the context otherwise requires, the terms defined and abbreviations stated hereunder shall have the meanings as assigned therewith as stated in this Section. Company Related Terms Term the Company, our Company, Issuer, Issuer Company, Ace Tours worldwide Limited, we, us, our, The Issuer The Group Articles or Articles of Association or AoA or our Articles Audit Committee Board, Board of Directors or our Board Director(s) Memorandum, our Memorandum or Memorandum of Association or MoA Our Group Entities Our Promoters Registered Office RoC / Registrar of Companies, Gujarat Statutory Auditors Description Ace Tours Worldwide Limited, a public limited company incorporated under the Companies Act, 1956, and having its registered office at F , Jolly Arcade, Ghod Dod Road, Surat , Gujarat Unless the context otherwise requires, refers to its group companies, on a consolidation basis. The Articles of Association of our Company, as amended from time to time Committee of Directors as constituted as our Company s Audit Committee in accordance with Clause 49 of the Listing Agreement. The Board of Directors of our Company, duly constituted from time to time, including any committee thereof The Director(s) of our Company The Memorandum of Association of our Company, as amended from time to time Such entities as are included in the chapter titled Our Group Entities beginning on page 117 of the Draft Red Herring Prospectus. Mr. Raju Choksi, Mr. Bharat Choksi, Mr. Jayesh Choksi and Mr. Mayank Choksi The registered and corporate office of our Company, situated at F , Jolly Arcade, Ghod Dod Road, Surat , Gujarat The Registrar of Companies located at ROC Bhavan, Opp Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad The statutory auditors of our Company, being M/s. Rasesh Shah and Associates, Chartered Accountants Issue Related Terms Term Issue or the Issue or this Issue you, your or yours Allocation / Allocation of Equity Shares Allot / Allotted / Allotment/ Allotment of Equity Shares Allotment Advice Allottee Application Supported by Description Public Issue of 81,00,000 Equity Shares of face value of ` 10 each for cash at a price of [ ] per Equity Share (including share premium of [ ] per Equity Share) aggregating to [ ] lacs All such references are to the Bidders to the Issue, unless the context otherwise specifies Unless the context otherwise requires, the allocation of Equity Shares pursuant to this Issue to the successful Bidders Unless the context otherwise requires, means the allotment of Equity Shares pursuant to this Issue to successful Bidders The note or advice or intimation of Allotment, sent to each successful Bidder who has been or is to be Allotted the Equity Shares after discovery of the Issue Price in accordance with the Book Building Process, including any revisions thereof A successful Bidder to whom the Equity Shares are Allotted pursuant to this Issue An application, whether physical or electronic, used by all Bidders to 2

4 Term Blocked Amount/ ASBA ASBA Account ASBA Bid cum Application Form / ASBA Form ASBA Bidder(s) ASBA Revision Form Banker(s) to the Issue/ Escrow Collection Bank(s) Bankers to our Company Basis of Allotment / Basis of Allocation Bid Amount Bid cum Application Form Bid(s) Bid / Issue Closing Date Description make a Bid authorising a SCSBs to block the Bid Amount in a specified bank account maintained with the SCSBs Account maintained by an ASBA Bidder with a SCSBs which will be blocked by such SCSBs to the extent of the appropriate Bid Amount of the ASBA Bidder, as specified in the ASBA Bid cum Application Form. The form, whether physical or electronic, used by an ASBA Bidder to submit a Bid, which contains an authorisation to block the Bid Amount in an ASBA Account and would be considered as an application for Allotment to ASBA Bidders in terms of the Red Herring Prospectus. Pursuant to SEBI circular number CIR/CFD/DIL/7/2010 dated July 13, 2010, ASBA Bid cum Application Forms shall be made available for download from the respective websites of the Stock Exchange(s) Any prospective investor(s) in this Issue who Bid/ apply through the ASBA process Pursuant to SEBI circular number CIR/CFD/DIL/1/2011 dated April 29, 2011, non-retail Investors i.e. QIBs and Non-Institutional Investors participating in this Issue are required to mandatorily use the ASBA facility to submit their Bids The form, whether physical or electronic, used by an ASBA Bidder to modify the quantity of Equity Shares or the Bid Amount in any of his/her ASBA Bid cum Application Form or any previous ASBA Revision Form(s) Pursuant to SEBI circular number CIR/CFD/DIL/7/2010 dated July 13, 2010, ASBA Revision Forms shall be made available for download from the respective websites of the Stock Exchange(s) The bank(s) which are clearing members and registered with SEBI as Banker to the Issue with whom the Escrow Account will be opened, in this case being [ ] Such entities which are disclosed as Bankers to our Company in the chapter titled General Information beginning on page 36 of the Draft Red Herring Prospectus The basis on which Equity Shares will be Allotted / Allocated to successful Bidders pursuant to the Issue and which is described under chapter titled Issue Procedure beginning on page 181 of the Draft Red Herring Prospectus The highest value of the optional Bids indicated in the Bid cum Application Form and payable by a Bidder on submission of a Bid in the Issue and in case of ASBA Bidders, the amount mentioned in the ASBA Bid cum Application Form The form used by a Bidder to make a Bid including the ASBA Bid cum Application Form (as applicable), which will be considered as the application for Allotment for the purposes of the Red Herring Prospectus and the Prospectus An indication to make an offer during the Bid / Issue Period by the Bidders, pursuant to submission of the Bid cum Application Form or ASBA Form as the case may be, to subscribe to the Equity Shares of our Company in this Issue at a price within the Price Band, including all revisions and modifications if any, made to such Bid(s) The date after which the members of the Syndicate and the designated branches of the SCSBs shall not accept any Bids for the Issue, which shall be a date notified in two national daily newspapers (one each in English and in Hindi) of wide circulation, and one regional (Gujarati) daily newspaper of wide circulation, where the Registered Office of our Company is situated. Our Company may consider closing the Bidding by QIB Bidders one Working Day prior to 3

5 Term Bid / Issue Opening Date Bid / Issue Period Bidder Bidding Centre Bidding Period or Bidding/Issue Period or Issue/Bidding Period Book Building Process / Book Building Method BRLM / Book Running Lead Manager Brokers Business Day Cap Price Compliance Officer Controlling Branches Cut-off Price Demographic Details Depositories Designated Branch Designated Date Designated Stock Exchange Description the Bid / Issue Closing Date, which shall also be notified in the said advertisement in two national daily newspapers (one each in English and in Hindi) of wide circulation, and one regional (Gujarati) daily newspaper of wide circulation, where the Registered Office of our Company is situated The date on which the members of the Syndicate and the SCSBs shall start accepting Bids for the Issue, which shall be a date notified in two national daily newspapers (one each in English and in Hindi) of wide circulation and one regional (Gujarati) daily newspaper of wide circulation, where the Registered Office of our Company is situated The period between the Bid / Issue Opening Date and the Bid / Issue Closing Date, both days inclusive, during which prospective Bidders and the ASBA Bidders can submit their Bids, including any revisions thereof Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form including an ASBA Bidder who Bids through an ASBA Bid cum Application Form A centre for acceptance of the Bid cum Application Form. The period between the Issue opening Date and Issue Closing Date inclusive of both days and during which prospective Bidders can submit their Bids including any revisions thereof The book building route as provided under Schedule XI of the SEBI ICDR Regulations, in terms of which this Issue is being made Book Running Lead Manager to the Issue, in this case being Corporate Strategic Allianz Private Limited Brokers registered with any recognized stock exchange, appointed by the members of the syndicate. Any day on which commercial banks in Gujarat are open for business. The higher end of the Price Band above which the Issue Price will not be finalised and above which no Bids will be accepted The Company Secretary of our Company, being Mr. Ankit Shukla Such branches of the SCSBs which coordinate under this Issue by the ASBA Bidders with the BRLM, the Registrar to the Issue and the Stock Exchanges, a list of which is available at Any price within the Price Band finalised by our Company in consultation with the Book Running Lead Manager. Only Retail Individual Bidders are entitled to Bid at the Cut-off Price, for a Bid Amount not exceeding ` 2 lacs. No other category of Bidders are entitled to Bid at the Cut-off Price The demographic details of the Bidders such as their address, PAN, occupation and bank account details. Depositories registered with the SEBI under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, as amended from time to time, being NSDL and CDSL Such branches of the SCSBs which shall collect the ASBA Bid cum Application Form used by ASBA Bidders, a list of which is available at The date on which funds are transferred from the Escrow Account to the Public Issue Account or the Refund Account, as appropriate, or the amount blocked by the SCSBs is transferred from the ASBA Account specified by the ASBA Bidder to the Public Issue Account, as the case may be, after the Prospectus is filed with the RoC, following which the Board of Directors shall Allot Equity Shares to successful Bidders Bombay Stock Exchange Limited 4

6 Term Draft Red Herring Prospectus or DRHP Eligible NRIs Equity Shares Escrow Account(s) Escrow Agreement First / Sole Bidder Floor Price Initial Public Offering IPO Grading Agency/ Grading Agency Issue Issue Agreement Issue Price Issue Proceeds Listing Agreement Mutual Fund Portion Mutual Funds Net Proceeds NIF Non-Institutional Bidders Description The Draft Red Herring Prospectus dated, 27 th March 2012, issued in accordance with Section 60B of the Companies Act and SEBI ICDR Regulations, filed with SEBI and which does not contain complete particulars of the price at which the Equity Shares would be issued and the size of the Issue NRIs from jurisdictions outside India where it is not unlawful to make an issue or invitation under the Issue and in relation to whom the Red Herring Prospectus constitutes an invitation to subscribe to the Equity Shares offered herein Equity shares of our Company of face value of ` 10 each, fully paid up, unless otherwise specified in the context thereof Account opened with the Escrow Collection Bank(s) for the Issue and in whose favour the Bidder (excluding ASBA Bidders) will issue cheques or drafts in respect of the Bid Amount when submitting a Bid Agreement to be entered into by our Company, the Registrar to the Issue, the BRLM, the Syndicate Members and the Escrow Collection Bank(s) for collection of the Bid Amounts and where applicable, refunds of the amounts collected from the Bidders (excluding ASBA Bidders) on the terms and conditions thereof The Bidder whose name appears first in the Bid cum Application Form or Revision Form or the ASBA Bid cum Application Form or ASBA Revision Form The lower end of the Price Band, at or above which the Issue Price will be finalised and below which no Bids will be accepted An offer of specified securities by an unlisted issuer to the public for subscription. [ ], the grading agency appointed by our company for grading this issue. Public Issue of 81,00,000 equity shares of ` 10/- each of the Company for cash at a price of ` [ ] per equity shares (including a share premium of ` [ ] per equity share) aggregating to ` [ ] Lacs (the Issue) The agreement dated 27 th March, 2012, entered into by our Company and the BRLM, pursuant to which certain arrangements are agreed to, in relation to the Issue The final price at which the Equity Shares will be issued and allotted in terms of the Prospectus. The Issue Price will be decided by our Company in consultation with the BRLM on the Pricing Date Proceeds from the Issue that will be available to our Company, being ` [ ] lacs Equity listing agreements to be entered into by our Company with the Stock Exchange(s) 5% of the QIB Portion or 2,02,500 Equity Shares available for allocation to Mutual Funds, out of the QIB Portion A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996, as amended from time to time The Issue Proceeds less the Issue related expenses. For further information about use of the Issue Proceeds and the Issue related expenses, please refer to the chapter titled Objects of the Issue beginning on page 58 of the Draft Red Herring Prospectus 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 As defined in the SEBI ICDR Regulations and includes all Bidders including sub-accounts of FIIs registered with SEBI, which are foreign corporates or foreign individuals, that are not QIBs or Retail Individual Bidders and who have Bid for Equity Shares for a cumulative amount more than ` 2 lacs (but not including NRIs other than eligible NRIs) 5

7 Term Non-Institutional Portion NR / Non-Resident NRI(s) / Non Resident Indian OCB(s) / Overseas Corporate Body Pay-in-Period / Pay-in Period Payment through electronic transfer of funds Price Band Pricing Date Description The portion of the Issue being not less than 15% of the Issue, consisting of 12,15,000 Equity Shares, available for Allocation to Non Institutional Bidders on a proportionate basis, subject to receipt of valid Bids at or above the Issue Price A person resident outside India, as defined under FEMA including eligible NRIs and FIIs A person resident outside India, as defined under FEMA and who is a citizen of India or is a person of Indian origin (as defined under the Foreign Exchange Management (Deposit) Regulations, 2000, as amended) A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least 60% by NRIs, including overseas trusts in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly as defined under the Foreign Exchange Management (Deposit) Regulations, OCBs are not allowed to invest in this Issue. The period commencing on the Bid / Issue Opening Date and continuing till the Bid / Issue Closing Date Payment made through NECS, Direct Credit, RTGS or NEFT, as applicable Price band of a minimum price (Floor Price) of ` [ ] and the maximum price (Cap Price) of ` [ ] and includes revisions thereof. The Price Band and the minimum Bid lot size for the Issue will be decided by our Company in consultation with the BRLM and advertised at least two Working Days prior to the Bid / Issue Opening Date, in two national daily newspapers (one each in English and in Hindi) of wide circulation, and one regional (Gujarati) daily newspaper, of wide circulation, where the Registered Office of our Company is situated The date on which our Company in consultation with the BRLM, finalises the Issue Price Prospectus The prospectus to be filed with the RoC in accordance with Section 60 of the Companies Act, containing, inter alia, the Issue Price that is determined at the end of the Book Building process, the size of the Issue and certain other additional information Public Issue Account QFIs QIB Portion Qualified Institutional Buyers or QIBs Account opened with the Bankers to the Issue by our Company to receive monies from the Escrow Account and the SCSBs from the bank accounts of the ASBA Bidders on the Designated Date Qualified Foreign Investor means a person resident in a country, which is compliant with Financial Action Task Force standards and is a signatory to International Organization of Securities Commission s Multilateral Memorandum of Understanding. However, a QFI cannot be a resident in India or a SEBI registered Foreign Institutional Investor or a Sub-account. The expressions person and resident in India shall have the meaning as ascribed in the Income Tax Act, The portion of the Issue being at least 50% of the Issue, consisting of at least 40,50,000 Equity Shares, available for Allocation to QIBs, subject to receipt of valid Bids at or above the Issue Price. As defined under the SEBI ICDR Regulations, including public financial institutions as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual fund registered with SEBI, FII and sub-account (other than a sub-account which is a foreign corporate or foreign individual) registered with SEBI, multilateral and bilateral development financial institution, venture capital fund registered with SEBI, foreign venture capital investor registered with SEBI, state industrial development corporation, insurance company registered with Insurance Regulatory and Development Authority, provident fund with minimum corpus of ` 2,500 lacs, pension fund with 6

8 Term Red Herring Prospectus / RHP Refund Account(s) Refund Bank (s) / Refund Banker(s) Refunds through electronic transfer of funds Registrar to the Issue Resident Retail Individual Bidder / Resident Retail Individual Investor Retail Individual Bidder(s) Retail Portion Revision Form SCSB Agreement Self Certified Syndicate Bank or SCSBs Stock Exchanges Sub Syndicate Member Syndicate Syndicate Agreement Syndicate Member(s) Syndicate ASBA Centres Description minimum corpus of ` 2,500 lacs, NIF and insurance funds set up and managed by army, navy or air force of the Union of India, insurance funds set up and managed by the Department of Posts, India The Red Herring Prospectus issued in accordance with Section 60B of the Companies Act, which does not have complete particulars of the price at which the Equity Shares are offered and the size of the Issue. The Red Herring Prospectus will be filed with the RoC at least three days before the Bid/Issue Opening Date and will become the Prospectus upon filing with the RoC after the Pricing Date No-lien account maintained by the Refund Bank(s) to which the surplus money shall be transferred and from which refunds of the whole or part of the Bid Amount (excluding that of the ASBA Bidders), if any, shall be made. The bank(s) which have been appointed / designated for the purpose of refunding the amount to investors either through the electronic mode as prescribed by SEBI and / or physical mode in accordance with the procedure contained in the chapter titled Issue Procedure beginning on page 181 of the Draft Red Herring Prospectus Refunds made through ECS / NECS, Direct Credit, NEFT, RTGS or the ASBA process, as applicable Registrar to this Issue, being Bigshare Services Private Limited A Retail Individual Bidder who is a person resident in India (as defined in FEMA). Individual Bidders who have Bid for Equity Shares for an amount not more than ` 2 lacs in any of the bidding options in the Issue (includes HUFs applying through their Karta and does not include NRIs other than Eligible NRIs) The portion of the Issue being not less than 35% of the Issue, consisting of 28,35,000 Equity Shares, available for Allocation to Retail Individual Bidders on a proportionate basis. 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) The deemed agreement between the SCSBs, the BRLM, the Registrar to the Issue and our Company, in relation to the collection of Bids from the ASBA Bidders and payment of funds by the SCSBs to the Public Issue Account. Self Certified Syndicate Bank is a Banker to an Issue registered with SEBI which offers the facility of making a Applications Supported by Blocked Amount and recognised as such by SEBI, a list of which is available at BSE and NSE, referred to as collectively A SEBI registered member of BSE and / or NSE appointed by the BRLM and / or Syndicate Member to act as a Sub Syndicate Member in the Issue Jointly, the BRLM, the Syndicate Members and the Sub Syndicate Members The agreement to be entered into between the BRLM along with the Syndicate Members and our Company in relation to the collection of Bids (excluding Bids by ASBA Bidders) in this Issue An intermediary registered with the SEBI to act as a syndicate member and who is permitted to carry on the activity as an underwriter, in this case being [ ] The bidding centres of the members of the Syndicate or their respective sub-syndicate members in Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bangalore, Hyderabad, Pune, Baroda and Surat as specified by way of the SEBI circular dated April 7

9 Term Transaction Registration Slip / TRS Underwriters Underwriting Agreement Working Day Description 29,2011, bearing no CIR/CFD/DIL/1/2011. The slip or document issued by member of the Syndicate or the SCSBs (only on demand), as the case may be, to the Bidder as proof of registration of the Bid The Book Running Lead Manager and the Syndicate Members The agreement among the Underwriters and our Company to be entered into, on or after the Pricing Date Unless the context otherwise requires: (a) Till the Bid / Issue closing date: All days other than a Saturday, Sunday or a public holiday; (b) Post the Bid / Issue closing date: All days other than a Sunday or a public holiday And on which commercial banks in Mumbai are open for business in accordance with the SEBI circular no. CIR/CFD/DIL/3/2010 dated April 22, 2010 Technical / Industry Related Terms / Abbreviations Term Description CAGR Compounded Annual Growth Rate CV Curriculum Vitae FDI Foreign Direct Investment GOI Government of India HR Human Resource IT Information Technology I. T. Act The Income Tax Act, 1961, as amended from time to time I. T. Rules The Income Tax Rules, 1962, as amended from time to time MNC Multi National Company R&D Research & Development SME Small and Medium Enterprises Sq.ft. Square feet sq.mtrs. Square meters UNTWO United Nations World Tourism Organisation VOA Visa on Arrival TVOA Tourist Visa on Arrival MDA Market development Assistance PIB Press Information Bureau Conventional/General Terms / Abbreviations Abbreviation/Acronym A/c AGM AS ASBA AY BCCL BRLM BSE CAN CDSL CENVAT CIN Companies Act CRR Description Account Annual General Meeting. Accounting Standards issued by the Institute of Chartered Accountants of India Applications Supported by Blocked Amount Assessment Year; the period of twelve months commencing from the 1 st day of April every year Bennett Coleman & Co. Ltd. Book Running Lead Manager Bombay Stock Exchange Limited Confirmation of Allocation Note Central Depository Services (India) Limited. Central Value Added Tax Corporate Identity Number The Companies Act, 1956, as amended from time to time Cash Reserve Ratio 8

10 Abbreviation/Acronym Depositories Act DIN DIPP DP EBIDTA ECS EGM EPS ESIC FCNR Account FDI FEMA FEMA Regulations FII FII Regulations Financial Year / Fiscal / Fiscal Year / FY FIPB FVCI FVCI Regulations GDP GIR Number GoI/ Government HNI HUF ICAI ICSI IFRS Indian GAAP IPO ISO Key Managerial Personnel / KMP Ltd. Merchant Banker MICR MOU N.A. NAV Description The Depositories Act, 1996, as amended from time to time Director s identification number Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India. A Depository Participant as defined under the Depositories Act Earnings before Interest, Depreciation, Tax, Amortisation and extraordinary items Electronic Clearing System Extraordinary General Meeting Earnings per Share Employee State Insurance Corporation Foreign Currency Non Resident Account Foreign Direct Investment The Foreign Exchange Management Act, 1999, together with rules and regulations framed thereunder, as amended Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended Foreign Institutional Investor, as defined under the FII Regulations and registered with the SEBI under applicable laws in India Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended Period of twelve months ended March 31 of that particular year, unless specifically stated otherwise Foreign Investment Promotion Board Foreign venture capital investor as defined in and registered under the FVCI Regulations. Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, as amended. Gross Domestic Product General Index Registry Number Government of India High Net worth Individual Hindu Undivided Family Institute of Chartered Accountants of India Institute of Company Secretaries of India International Financial Reporting Standards. Generally Accepted Accounting Principles in India. Initial Public Offer International Organisation for Standardization The officers vested with executive powers and the officers at the level immediately below the Board of Directors of the Issuer Company and other persons whom the Issuer has declared as a Key Managerial Personnel and as mentioned in the chapter titled Our Management beginning on page 99 of the Draft Red Herring Prospectus Limited Merchant banker as defined under the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 as amended from time to time Magnetic Ink Character Recognition Memorandum of Understanding Not Applicable Net Asset Value being paid-up equity share capital plus free reserves (excluding reserves created out of revaluation, preference share capital and share application money) less deferred expenditure not written off (including miscellaneous expenses not written off) and debit balance of profit and loss account, divided by number of issued Equity Shares outstanding at the end of the Fiscal. 9

11 Abbreviation/Acronym NBFC NECS NEFT NIFTY NR NRE Account NRI NRO NSDL NSE NSEL NTA p.a. P/E Ratio PAN PAT PBT R & D RBI RBI Act RoNW Rs./ ` / INR/Rupees RTGS SCRA SCRR SEBI SEBI Act SEBI ICDR Regulations / ICDR Regulations / SEBI ICDR / ICDR SEBI Insider Trading Regulations SEBI Rules and Regulations SEBI Takeover Regulations/ Takeover Code Sec. Securities Act SICA Sub-account TDS U.S. or US or U. S. A. UIN Description Non-Banking Finance Company National Electronic Clearing System National Electronic Fund Transfer National Stock Exchange Sensitive Index Non-Resident Non Resident External Account Non-Resident Indian Non Resident Ordinary Account National Securities Depository Limited National Stock Exchange of India Limited National Spot Exchange Limited Net Tangible Assets Per annum Price/Earnings Ratio Permanent Account Number Profit After Tax Profit Before Tax Research and Development Reserve Bank of India The Reserve Bank of India Act, 1934, as amended from time to time. Return on Net Worth Indian Rupees, the legal currency of the Republic of India Real Time Gross Settlement Securities Contracts (Regulation) Act, 1956, as amended from time to time Securities Contracts (Regulation) Rules, 1957, as amended from time to time The Securities and Exchange Board of India constituted under the SEBI Act, 1992 Securities and Exchange Board of India Act, 1992, read with rules and regulations thereunder and amendments thereto and as amended from time to time SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time, including instructions and clarifications issued by SEBI from time to time. SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended from time to time, including instructions and clarifications issued by SEBI from time to time. SEBI ICDR Regulations, SEBI (Underwriters) Regulations, 1993, as amended, the SEBI (Merchant Bankers) Regulations, 1992, as amended, and any and all other relevant rules, regulations, guidelines, which SEBI may issue from time to time, including instructions and clarifications issued by it from time to time. SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended from time to time. Section The U.S. Securities Act of 1933, as amended. Sick Industrial Companies (Special Provisions) Act, 1985, as amended from time to time Sub-accounts registered with SEBI under the Securities and Exchange Board of India (Foreign Institutional Investor) Regulations, 1995, as amended. Tax Deducted at Source The United States of America Unique Identification Number issued in terms of SEBI (Central Database of Market Participants) Regulations, 2003, as amended from time to time. 10

12 Abbreviation/Acronym UoI VCF Regulations VCFs Description Union of India Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996, as amended from time to time Venture Capital Funds as defined in and registered with SEBI under the VCF Regulations Notwithstanding the foregoing: 1. In the section titled Main Provisions of the Articles of Association beginning on page 223 of the Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section; 2. In the chapters titled Summary of Business and Our Business beginning on pages 30 and 87 respectively, of the Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section; 1. In the section titled Risk Factors beginning on page 15 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section; 2. In the chapter titled Statement of Tax Benefits beginning on page 73 of the Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section; In the chapter titled Management s Discussion and Analysis of Financial Conditions and Results of Operation beginning on page 144 of the Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section. 11

13 SECTION II GENERAL PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA Certain Conventions Unless otherwise specified or the context otherwise requires, all references to India in the Draft Red Herring Prospectus are to the Republic of India, together with its territories and possessions, 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 the Draft Red Herring Prospectus is derived from our audited financial statements for the Fiscals 2008, 2009, 2010, 2011 and seven months period ended October 31, 2011 prepared in accordance with Indian GAAP, the Companies Act and restated in accordance with the SEBI ICDR Regulations and the Indian GAAP which are included in the Draft Red Herring Prospectus, and set out in the section titled Financial Information beginning on page 126 of the Draft Red Herring Prospectus. Our Fiscal commences on April 1 and ends on March 31 of the following year, so all references to a particular Fiscal are to the twelve-month period ended March 31 of that year. In the Draft Red Herring Prospectus, discrepancies in any table, graphs or charts between the total and the sums of the amounts listed are due to rounding-off. There are significant differences between Indian GAAP, IFRS and U.S. GAAP. Our Company has not attempted to explain those differences or quantify their impact on the financial data included herein, and the investors should consult their own advisors regarding such differences and their impact on the financial data. Accordingly, the degree to which the restated financial statements included in the Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader's level of familiarity with Indian accounting practices. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in the Draft Red Herring Prospectus should accordingly be limited. Any percentage amounts, as set forth in the sections / chapters titled Risk Factors, Our Business and Management's Discussion and Analysis of Financial Condition and Results of Operations beginning on pages 15, 87 and 144 respectively, of the Draft Red Herring Prospectus and elsewhere in the Draft Red Herring Prospectus, unless otherwise indicated, have been calculated on the basis of our restated financial statements prepared in accordance with Indian GAAP, the Companies Act and restated in accordance with the SEBI ICDR Regulations and the Indian GAAP. Currency and units of presentation In the Draft Red Herring Prospectus, unless the context otherwise requires, all references to; Rupees or ` or Rs. are to Indian rupees, the official currency of the Republic of India. US Dollars or US$ or USD or $ are to United States Dollars, the official currency of the United States of America. All references to the word Lakh or Lac, means One hundred thousand and the word Million means Ten Lacs and the word Crore means Ten Million and the word Billion means One thousand Million. Industry and Market Data Unless stated otherwise, industry data used throughout the Draft Red Herring Prospectus has been obtained from industry publications and publicly available government documents. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Similarly while information contained in the publicly available government documents that is relied upon for the purposes of the Draft Red Herring Prospectus is 12

14 believed to be complete and reliable, there can be no assurance of the same. Accordingly, no investment decisions should be made based on such information. The extent to which the market and industry data used in the Draft Red Herring Prospectus is meaningful depends on the reader s familiarity with and understanding of the methodologies used in compiling such data. Further, the extent to which the industry and market data presented in the Draft Red Herring Prospectus is meaningful depends on the reader's familiarity with and understanding of the methodologies used in compiling such data. 13

15 FORWARD LOOKING STATEMENTS All statements contained in the 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. These forwardlooking statements include statements as to our business strategy, our revenue and profitability, planned projects and other matters discussed in the Draft Red Herring Prospectus regarding matters that are not historical facts. These forward looking statements and any other projections contained in the Draft Red Herring Prospectus (whether made by us or any third party) are predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. These forward-looking statements generally can be identified by words or phrases such as aim, anticipate, believe, expect, estimate, intend, objective, plan, project, may, might, will, will continue, will pursue or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results and property valuations to differ materially from those contemplated by the relevant statement. Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, regulatory changes pertaining to the industries in India in which we have our businesses and our ability to respond to them, our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general economic and political conditions in India and which have an impact on our business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic laws, regulations and taxes and changes in competition in our industry. Important factors that could cause actual results to differ materially from our expectations include, among others: Implementation risks involved in our projects; Significant changes in the exchange rates; Increase in freight, interest rates, etc.; Competition from existing players; Working capital arrangements; Growth of unorganized sector and threat from national/regional players; Changes in laws and regulations relating to the industry in which we operate; Changes in political and social conditions in India, the monetary and interest rate policies in India and / or other countries, inflation, deflation, anticipated turbulence in interest rates, equity prices or other rates or prices; Our ability to successfully implement our strategy, growth and expansion plans; The outcome of legal or regulatory proceedings that we are or might become involved in; Contingent liabilities, environmental problems and uninsured losses; Changes in government policies and regulatory actions that apply to or affect our business; Developments affecting the Indian economy; Ability to retain appropriate personnel; Uncertainty in global financial markets; and Occurrence of natural disasters or calamities affecting the areas in which our Company has its operations. For further discussion of factors that could cause our actual results to differ from our expectations, please refer sections / chapter titled Risk Factors, Our Business and Management s Discussion and Analysis of Financial Condition and Results of Operations beginning on pages 15, 87 and 144 respectively, of the 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. 14

16 SECTION III - RISK FACTORS An investment in Equity Shares involves a high degree of financial risk. You should carefully consider all information in the Draft Red Herring Prospectus, including the risks described below, before making an investment in our Equity Shares. This section addresses general risks associated with the industry in which we operate and specific risks associated with our Company. Any of the following risks, as well as the other risks and uncertainties discussed in the Draft Red Herring Prospectus, could have a material adverse effect on our business, financial condition and results of operations and could cause the trading price of our Equity Shares to decline. In addition, the risks set out in the Draft Red Herring Prospectus may not be exhaustive and additional risks and uncertainties, not presently known to us, or which we currently deem immaterial, may arise or become material in the future. Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify or quantify the financial or other risks mentioned herein. Materiality The Risk factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality. a) Some risks may not be material individually but may be material when considered collectively. b) Some risks may have an impact which is qualitative though not quantitative. c) Some risks may not be material at present but may have a material impact in the future. RISK FACTORS INTERNAL TO OUR COMPANY 1. Our Company is involved in certain legal proceedings. Any adverse decision in such proceedings may render us liable to liabilities / penalties and may adversely affect our business and results of operations. Our Company is involved in certain legal proceedings and claims in relation to certain consumer and tax related matters. These legal proceedings are pending at different levels of adjudication. Any adverse decision may render us liable to liabilities / penalties and may adversely affect our business and results of operations. A classification of these legal and other proceedings are given in the following table: Particulars No. of cases Financial implications (` in lacs)* Cases against our Company Consumer matters Legal Notice section 138 matter Tax related matters Cases filed by our Company Civil Matters *The table above does not include those penalties, interests and costs, if any, which may be imposed or which may have been pleaded but not quantified in the course of legal proceedings, or which the tribunal otherwise has the discretion to impose. The imposition and amount of such penalties / interests / costs are at the discretion of the tribunal where the case is pending. Such liability, if any, would crystallize only on the order of the tribunal where the case(s) is / are pending. For further details regarding these legal proceedings, please refer to the chapter titled Outstanding Litigations and Material Developments beginning on page 152 of the Draft Red Herring Prospectus. 2. Our group company, viz. Choksi Circuits Private Limited is involved in matters involving default in repayment of loans and certain other matters. Our group company, viz. Choksi Circuits Private Limited is involved in following matters involving default in repayment of loans. A. Bank of Baroda had filed an Original Application No. 155 of 1995 with DRT Ahmedabad against Choksi Circuits Private Limited and its then Directors viz Mr. Jashwantlal Choksi, Mr. Raju J. Choksi, Mr. Bharat J. Choksi, Anil J. Choksi and Mr. Jayesh J. Choksi for the recovery of amount 15

17 of ` 89,92,578.18/-along with interest. The said amount pertains to various facilities such as working capital term loan, cash credit, funded interest term loan and the letter of credit to Choksi Circuits Private Limited. The presiding officer vide Judgement dated July 15, 2008 partly allowed the outstanding amount in respect of cash credit aggregating ` 29,21, along with simple per annum from December 19, 1995 and dismissed the remaining application of Bank of Baroda for other facilities. Bank of Baroda being aggrieved from the said judgement filed Appeal with the Debt Recovery Appellate Tribunal, Mumbai on August 28, The matter is pending with the Debt Recovery Appellate Tribunal, Mumbai. B. M/s. Choksi Circuits Pvt. Ltd. (CCPL) had availed financial assistance by way of a Term Loans from Gujarat Industrial Investment Corporation Limited (GIIC) for their proposed project to be established in Gandhinagar. As per the terms and conditions of the sanction letter the said loans were guaranteed jointly and severally by the personal guarantees of Promoters of CCPL. GIIC had filed a recovery suit before the City Civil Court at Ahmedabad, bearing suit no of 1995 dated October 18, 1995 against the Promoters and Guarantors of M/s. Choksi Circuits Pvt. Ltd. (CCPL), Mr. Jaswantbhai N Choksi (father of our Promoters - now deceased), Mr. Anil J Choksi (brother of our Promoters) and Mr. Jayesh J Choksi, Mr. Bharat J Choksi & Mr. Rajubhai J Choksi (all three are Our Promoters), in relation to CCPL s failure to repay Term loan principal amount of ` 81,42,709/- and Interest thereon of ` 63,72,067/- aggregating to ` 1,45,14,776/- outstanding as on August 31, GIIC has filed a suit for recovery of above said outstanding amount of Rs, 1,45,14,776/- along with 18% p.a. from September 01, 1995 and other costs and expenses. The matter is pending before the City Civil Court at Ahmedabad. Further, the statutory auditor of Choksi Circuits Private Limited has also reported in his report as follows: 1. In respect of loans taken by the company, the interest provision is not provided in books of accounts as the same is pending under judicial proceedings. 2. There are overdue loans, the sum to be decided by judicial authorities in respect of loans taken by the company, so interest for above is not provided in books of accounts as the same is under judicial proceedings. C. Choksi Circuits Private Limited ( CCPL ) was issued notice no. 02/Cex/GNR/01 dated December 27, 2004 by the Assistant Commissioner, Central Excise, Gandhinar demanding a total of ` 33,087/- towards duty and interest for wrong availment of cenvat credit on inputs. In this regards, name of CCPL also appears on the website of Central Board of Excise and Customs at the url under Ahmedabad zone. For further details regarding these legal proceedings, please refer to the chapter titled Outstanding Litigations and Material Developments beginning on page 152 of the Draft Red Herring Prospectus. 3. Our Company had negative cash flow in from investing activities in Financial year 2008, 2009, 2010, 2011 and for the seven months period ended October 31, 2011, and from operating activities in Financial year 2008 and from financing activities during seven months period ended October 31, 2011, details of which are given below. Sustained negative cash flow could adversely impact our business, financial condition and results of operations. (` in lacs) Cash flow from October 31, 2011 March 31, 2011 March 31, 2010 March 31, 2009 March 31, Operating activities (729.99) Investing activities (26.63) (28.77) (41.99) (154.96) (275.24) Financing Activities (217.92) ,

18 Cash flow of a company is a key indicator to show the extent of cash generated from operations to meet its capital expenditure, pay dividends, repay loans and make new investments without raising finance from external resources. If we are not able to generate sufficient cash flow, it may adversely affect our business and financial operations. For further details please refer to the section titled Financial Information and chapter titled Management s Discussion and Analysis of Financial Condition and Results of Operations as reflected in the Financial Statements beginning on pages 126 and 144 respectively, of the Draft Red Herring Prospectus. 4. Our Company has incurred losses in the financial year 2008 amounting to ` 2.34 lacs. Sustained losses could adversely impact our business, financial condition and results of operations. (` in lacs) March 31, 2008 Net Profit/Loss after tax, as restated (2.34) 5. Our Company along with the promoters have entered into agreements with BCCL, which may dilute the promoters holding in future.further, BCCL also has tag along rights granted to them under this agreement. We have not received any waiver or satisfaction letter from BCCL for the said agreements, which may potentially dilute the holdings of our promoters, in case the IPO price is lower than the conversion price. Our Company had entered into a Convertible Debenture subscription agreement dated January 10, 2008, with Benett, Coleman & Co. Limited and our Company s promoters, represented by Mr. Rajubhai Choksi. Through the said agreement, the Company allotted One (1) 0% fully convertible debenture for a consideration of ` 4,00,00,000 (Rupees Four crores only). As per the terms of the agreement, the debenture was to be converted into Equity Shares (BCCL Shares) on September 01, The parties through an amended agreement dated February 24, 2011 modified the terms of the original agreement dated January 10, 2008, wherein debenture to the extent of ` 2,88,26,702/- were redeemed in cash, while the balance amount of ` 1,11,73,298 was converted into Equity Shares as per the above formula and accordingly 5,19,949 Equity Shares were allotted to BCCL on February 28, While as on date there are no outstanding debentures, we have not received any waiver or satisfaction letter from BCCL and the covenants as per the original agreement hold good, which are detailed in brief as under: Promoters shall use reasonable endeavour for an IPO Submission of quarterly financial statements to BCCL No additional shares to be issued to others at a price lower than the conversion price, prior to the IPO, and in case the shares are issued, the Company to issue such shares to BCCL for no consideration, or through transfer from promoters. Company shall not issue shares through the IPO at a price lower than the conversion price. In case the IPO is priced at less than the conversion price, the promoters would transfer such number of shares to BCCL, such that the weighted average price of acquisition cost per share of BCCL is equal to the IPO price. It is however clarified that such transfer would take place after completion of the statutory lock-in period The promoters cannot dispose of or sell shares to third party who is not an affiliate of the Promoters resulting into shareholding falling below 75% of Issued & Outstanding Capital of the Company without considering sale of all the shares of BCCL to the third party. Customary Tag along rights and Right of First Refusal. Tag along rights 17

19 i) If the Promoters, or any of them, as the case may be, by themselves or through their affiliates, intends to Transfer all or part of their shareholding in the Company to a third party who is not an affiliate of the of the Promoters (the Third Party Offeror ), the Promoters shall provide notice of such proposed sale to BCCL no later than 30 (Thirty) days prior to the proposed closing of such sale. The Promoters, or any of them, as the case may be, shall not be permitted to carry out the sale unless simultaneously with the sale the Third Party Offeror makes an offer in writing tobccl to purchase a prorate portion ( i.e.a ratio of Shares of the Promoters proposed to be transferred to the Shares held by the Promoters at the time of the sale or disposal, as the case may be) of the Shares held by BCCL in the Company at such terms and conditions as the Third Party Offeror s proposed acquisition of Shares from the Promoters, or any of them, as the case may be, including as to Price ( the Tag-Along Offer ). The Third Party Offeror s Tag Along shall remain open for acceptance for not less than 30 (Thirty) days following delivery to BCCL Of the offer of the Third Party Offeror ii) Provided that in the event that any such sale or disposal by the Promoter results in the Promoter s shareholding falling below 75% ( Seventy Five Percent) of issued and outstanding capital of the company (whether in a single transaction or a series of transaction related or otherwise), the Promoter shall not be permitted to carry out such sale or otherwise dispose of the Shares held by the Promoter, unless simultaneously with the sale, the Third Party Offeror makes an offer in writing to BCCL to purchase all the BCCL Shares held by BCCL in the Company at such time, on the same terms and conditions as the Third Party Offeror s proposed acquisition of Shares from the Promoters, including as to price. iii) If the Third Party Offeror refuses to purchase Shares from BCCL and BCCL notifies the Promoters in Writing within 30 (Thirty) days following receipt by BCCL of the Promoter s notice that it desires to sell Shares to the Third Party Offer or, the Promoters shall reduce the number of shares proposed to be sold to the Third Party Offer or and BCCL shall sell to the Third Party Offer or, and Promoters shall ensure that the Third Party Offer or shall buy, a pro rata portion or all of the Shares held by BCCL at that time, as the case may be, on the same terms and conditions, including as to price. It is clarified that the Promoters will not be permitted to sell any Shares to the Third Party Offer or, unless and until the Third Party Offer or has acquired all the Shares offered by BCCL on the terms and conditions, including as to price. For further details regarding Restrictive Covenants which are affecting Equity Shareholders; please refer to History and Corporate Matters under the heading Shareholder s Agreement on Page No. 94 of the Draft Red Herring Prospectus. 6. We have issued below mentioned Equity Shares in the last twelve months from the date of filing the Draft Red Herring Prospectus with SEBI, the price of which may be lower than the Issue Price. Our Company has issued following Equity Shares in last twelve months, the price at which these shares are allotted may be at a price lower than the Issue Price and is not indicative of the price at which shares will be issued in this Issue. Date of Allotment January 25, 2012 Nature of Allotment Further allotment to Promoter group and others Name of Allottee No. of Equity Shares Face Value per Equity Share ( `) Issue Price per Equity Share (`) Nature of considerat ion Mala R. Choksi 15, Cash Suhagini Choksi 15, Cash Nileshaben Bharatbhai 50, Cash Choksi Rekha Anilbhai Choksi 50, Cash Dharmistha A. Chopra 8, Cash Pradipkumar K. Sarda 20, Cash 18

20 Date of Allotment Nature of Allotment Name of Allottee No. of Equity Shares Face Value per Equity Share ( `) Issue Price per Equity Share (`) Nature of considerat ion Shika A. Sehgal 32, Cash Kumaresh Kedarnath 8, Cash Trivedi For further details please refer to the section Capital Structure beginning on page 45 of the Draft Red Herring Prospectus. 7. Our Company has in the past entered into related party transactions with our Promoters and Promoter Group Entities and may continue to do so in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our financial condition and results of operations. Our Company has entered into related party transactions with our Promoters and Promoter Group Entities in the past. While our Company believes that all such transactions have been conducted on an arm s length basis and are accounted as per Accounting Standard 18, however there can be no assurance that we could not have achieved more favourable terms had such transactions not been entered into with related parties. Furthermore, it is likely that we may enter into related party transactions in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our financial condition and results of operations. For further details please refer to the section titled Financial Information beginning on page 126 of the Draft Red Herring Prospectus. 8. Our Company had not complied with Section 383A of the Companies Act, 1956 regarding the appointment of Whole Time Company Secretary for a period from February 28, 2011 to September 19, However we have appointed Mr. Ankit Shukla as Company Secretary with effect from September 20, Such non-compliance may result in penalties or other action on our Company by the Statutory Authorities. 9. Our Company has not complied with the AS-15 Employee Benefits in the past. However for the purpose of restatement, our Company has complied with the AS-15 and has made provision for gratuity based on actuarial valuation. 10. Internet Security breaches could adversely impact our business. Our computer systems and network infrastructure may be exposed to physical break-ins as well as security breaches and other disruptive problems caused by our increased internet connectivity. Although we keep our systems protected through antiviruses, firewalls etc, any such breach may adversely affect our business operations. 11. Our success depends largely on our senior management and key personnel and our ability to attract and retain them. We are highly dependent on the senior management of our Company. Our future performance will be affected by the lack of continued service of these persons. We do not maintain key man life insurance for any of the senior members of our management team or other key personnel. Competition for senior management in our industry is intense, and we may not be able to retain such senior management personnel or attract and retain new senior management personnel in the future. The loss of any of the members of our senior management or other key personnel may adversely affect our business, results of operations and financial condition. For further details on all of our key managerial personnel please refer to paragraph titled Our Key Managerial Personnel in the chapter titled Our Management beginning on page 99 of this Draft Red Herring Prospectus. 12. Our Company has unsecured loans amounting to ` lacs, which are repayable on demand. Any demand from lenders for repayment of such unsecured loans, may adversely affect our business operations and financial condition of our Company. 19