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Basan Commodities Limited – INFORMATION MEMORANDUM

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INFORMATION MEMORANDUM [In accordance with SEBI (Listing of specified securities on Institutional Trading Platform) Regulations, 2013]

Our Company was originally incorporated in Hyderabad as "Basan Commodities Private Limited" on 15th February, 2008 under the Companies Act, 1956 vide certificate of incorporation issued by the Registrar of Companies, Andhra Pradesh. Our Company was subsequently converted into a public limited company and consequently name was changed to‚ “Basan Commodities Limited" vide fresh certificate of incorporation dated 09th May 2013 issued by the Registrar of Companies, Andhra Pradesh for the purpose of listing in BSE SME.

We are currently engaged in the business of commodity broking. We are the member of MCX, NCDEX, ICEX and NSEL. It offers trading in segments like equity and derivatives.

Website: www.basanonline.com; E-Mail: [email protected]

Compliance Officer: Mr. K. Anjani Kumar; Email: [email protected]; Phone: 040-64645000; Fax: 040-23266166; PROMOTERS OF THE COMPANY: M r . B a s a n t h K A g a r w a l M r . S a n j a y A g a r w a l

This Information Document is In terms of the Chapter XC of the SEBI (ICDR) Regulations, 2009, as amended from time to time and we propose to list our Equity Shares on Institution Trading Platform (ITP) of BSE SME.

mailto:[email protected]



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INDEX

SECTION – 1 – GENERAL ............................................................................................................................... 3

DEFINATIONS AND ABBREVIATIONS ................................................................................................................. 3

General Information ......................................................................................................................................... 6

ELIGIBILITY CRITERIA ........................................................................................................................................ 8

SECTION I – BUSINESS ................................................................................................................................ 10

SUMMARY OF OUR BUSINESS AND OPERATIONS .......................................................................................... 10

FINANCIAL INFORMATION .............................................................................................................................. 20

CAPITAL STRUCTURE ....................................................................................................................................... 34

Properties ........................................................................................................................................................ 43

SECTION – II - RISK FACTORS ...................................................................................................................... 44

RISK FACTORS ENVISAGED BY MANAGEMENT ............................................................................................... 44

INTERNAL RISK FACTORS ................................................................................................................................. 45

EXTERNAL RISK FACTORS ................................................................................................................................ 48

RISKS RELATING TO THE EQUITY SHARES ....................................................................................................... 50

SECTION III – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ............... 52

SECTION IV: OUR MANAGEMENT............................................................................................................... 53

SECTION – V: OUR PROMOTERS AND PROMOTER GROUP ............................................................................ 61

SECTION VI – RELATED PARTY TRANSACTIONS ........................................................................................ 63

SECTION –VII - LEGAL AND OTHER INFORMATION ..................................................................................... 64

Outstanding litigation, material development and others ............................................................................. 64

GOVERNMENT AND OTHER APPROVALS ........................................................................................................ 65

SECTION VIII – DECLARATION ................................................................................................................... 67


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SECTION – 1 – GENERAL

DEFINATIONS AND ABBREVIATIONS

Company/ Industry related terms

Term Description

Act/Companies Act The Companies Act, 1956 and amendment thereto. AGM Annual General meeting Articles/Articles of Association Articles of Association of the Company AS Accounting Standard as issued by the Institute of

Chartered Accountant of India Auditor M/s. M.M PALOD & Co the statutory auditors of our

Company. Board/Board of Directors of the Company The Board of Directors of our Company including duly

constituted committee authorized to act on their behalf.

BSE BSE Limited BSE-SME SME platform of BSE Limited Capital/ Share Capital/Equity Share Capital Equity Share Capital of the Company CDSL Central Depository Services (India) Limited DP Depository Participant Depository The Depositories Act, 1996 and amendment thereto. Equity Share(s) or Share(s) Means the equity shares of the Company having a face

value of Rs. 10/- unless specified otherwise in the context thereof.

Equity Shareholder Means a holder of Equity Shares of Our Company Financial Year/Fiscal/FY Period of 12 month ended March 31 of that particular

year unless stated otherwise. ITP Institutional Trading Platform Memorandum/Memorandum of Association Memorandum of Association of the Company Promoter(s) Mr. Basanth K Agarwal; Mr. Sanjay Agarwal

RBI Reserve Bank of India ROC Registrar of Company, Hyderabad, Andhra Pradesh SEBI Regulation/ SEBI (ICDR) Regulations

The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended

T.P. Transfer of Property Act, 1882 SEBI Securities and Exchange Board of India


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Industry Related Terms

Conventional Terms / General Terms / Abbreviations

Abbreviation Full Form A/C Account ACS Associate Company Secretary AGM Annual General Meeting

AS Accounting Standards as issued by the Institute of Chartered Accountants of India

ASBA Applications Supported by Blocked Amount AY Assessment Year

BSE BSE Limited (formerly known as Bombay Stock Exchange Limited) Compounded Annual Growth Rate

CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited CFO Chief Financial Officer CIN Company Identification Number CIT Commissioner of Income Tax DIN Director Identification Number DP Depository Participant ECS Electronic Clearing System

Term Description CSO Central Statistical Organization GDP Gross Domestic Product DEPB Duty entitlement pass book scheme EPCG Export Promotion Capital Goods Scheme FDI Foreign Direct Investment F&O Futures and Options FMC Forward Market Commission FOB Free on Board GOI Government of India MCX Multi Commodity Exchange of India Limited NCDEX National Commodity & Derivatives Exchange Limited NSEL National Spot Exchange Limited RONW Return on Net Worth SSI Small Scale Industry VCF Venture Capital Funds SENSEX Bombay Stock Exchange Sensitive Index NIFTY National Stock Exchange Sensitive Index


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EPS Earnings Per Share EGM Extraordinary General Meeting

FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and the regulations framed there under

FII

Foreign Institutional Investors (as defined under Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000) registered with SEBI under applicable laws in India

FIPB Foreign Investment Promotion Board F&NG Father and Natural Guardian

FY / FISCAL Period of twelve months ended March 31 of that particular year, unless otherwise stated

GDP Gross Domestic Product GOI Government of India HUF Hindu Undivided Family IT ACT Income Tax Act, 1961, as amended from time to time ICSI Institute of Company Secretaries Of India MAPIN Market Participants and Investors’ Integrated Database

MB / MERCHANT BANKER Merchant Banker as defined under the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992

MOF Ministry of Finance, Government of India MOU Memorandum of Understanding N/A Not Applicable NAV Net Asset Value NPV Net Present Value NRE ACC Non Resident External Account NRI Non Resident Indians

NRO ACCOUNT Non Resident Ordinary Account National Securities Depository Limited Overseas Corporate Bodies

NSDL National Securities Depository Limited OCB Overseas Corporate Bodies p.a. per annum P/E Ratio Price/Earnings Ratio PAC Persons Acting in Concert PAN Permanent Account Number PAT Profit After Tax QIC Quarterly Income Certificate RBI The Reserve Bank of India ROE Return on Equity TONW Return on Net Worth BN Billion RS. Rupees, the official currency of the Republic of India


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RTGS Real Time Gross Settlement

SCRA Securities Contract (Regulation) Act, 1956, as amended from time to time

SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time.

SEC Section STT Securities Transaction Tax US United States United States of America USD / US$ / $ United States Dollar, the official currency of the Unites States of America

VCF

Venture Capital Fund Foreign Venture Capital Funds (as defined under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996) registered with SEBI under applicable laws in India.

Working Days All days except Saturday, Sunday and any public holiday

General Information

Basan Commodities Limited

Our Company was originally incorporated in Hyderabad as “Basan Commodities Private Limited” on 15th February, 2008 under the Companies Act, 1956 vide certificate of incorporation issued by the Registrar of Companies, Hyderabad, Andhra Pradesh. Our Company was subsequently converted into a public limited company and consequently name was changed to “Basan Commodities Limited” vide fresh certificate of incorporation dated 09th May 2013 issued by the Registrar of Companies, Hyderabad, Andhra Pradesh. REGISTERED OFFICE:

#15-8/1/2/3,2ND Floor, Siddiamber Bazar, Hyderabad- 500 012. Andhra Pradesh, India.

CORPORATE OFFICE: #3-6-196 & 197, 2nd Floor, Prime Plaza, Himayatnagar, (Above KFC), Hyderabad – 500029. Andhra Pradesh, India.

Website: www.basanonline.Com E-Mail: [email protected] COMPANY IDENTIFICATION NUMBER: U67120AP2008PTC057632 Address of Registrar of Companies: 2nd Floor, Cpwd Bldg,

Kendriya Sadan, Sultan Bazar, Koti, Hyderabad-500 195 Andhra Pradesh. WWW.MCA.GOV.IN

http://www.basanonline.com/


http://www.mca.gov.in/


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DESIGNATED STOCK EXCHANGE BSE Limited

LISTING OF SHARES INSTITUTIONAL TRADING PLATFORM (ITP) OF BSE SME STATUTORY AUDITORS:

M M PALOD & CO Chartered Accountants, #5-3-3989,2nd Floor, Room No 210, Sherza Estate, Adjacent to seena Bakery , Nizam Shah Road,Hyderabad-500 095. Tel : +91-40-24733616 Email: [email protected] Contact Person: Muralimanohar Palod Firm Registration No.: 00628S Membership No. 200858.

CONTACT PERSON:

Mr. Basanth Agarwal, Designated Director, #3-6-196 & 197, 2nd Floor, Prime Plaza, Himayatnagar, (Above KFC), Hyderabad – 500029. Andhra Pradesh, India. Tel: +91-40-64645000 Fax: +91-40-23266166. Email id: [email protected]

COMPLIANCE OFFICER:

Mr.Anjani K Kumar #3-6-196 & 197, 2nd Floor, Prime Plaza, Himayatnagar, (Above KFC), Hyderabad – 500029. Andhra Pradesh, India. Tel: +91-40-64645000 Fax: +91-40-23266166 Email: [email protected]

INVESTING MERCHANT BANKER BASAN FINANCIAL SERVICES LIMITED 3-6-65, 1st Floor, Beside Skyline Theatre, Basheer Bagh Hyderabad– 500029 Tel: - (040) 64645002 / 5003, Email: [email protected] Contact Person: Mr. Vikas Sharma SEBI REGN NO: INM000011989

REGISTRAR TO THE COMPANY Bigshare Services Pvt. Ltd. E-2 & 3, Ansa Industrial Estate, Saki-Vihar Road, Sakinaka, Andheri(E), Mumbai - 400 072. Tel: 91-22-28470652 | 40430200 | 28470653 Fax: 91-22-2847 5207 E-mail: [email protected]






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BOARD OF DIRECTORS:

NAME ADDRESS DESIGNATION DIN Nature of Directorship

Mr. Basanth K Agarwal

#3-6-69/B/2,Flat No 101,J.V.Residencey,Avanthi Nagar Colony, Basheer Bagh,Hyderabad-500 029. Director 1863070 Promoter

Mr. Sanjay Agarwal

#3-6-69/B/2,Flat No 101,J.V.Residencey,Avanthi Nagar Colony, Basheer Bagh,Hyderabad-500 029. Director 1863088 Promoter

Mrs. Varsha Sharma

#4-4-248, I FLOOR,SULTAN BAZAR,NEAR ANDHRA BANK,HYDERABAD-500096 Director 1863074 Director

Mr.Damodar Agarwal

#21-7-69,70,KOKARWADI,GHANSI BAZAR,HYDERABAD-500002 Director 1863046

Independent Director

Mr. Nikhil Agarwal

# Siri Pratap Residency, Flat No.205, Sri Malle Garden Phase 3, Plot No.1, Upparapalli, Attapur, Hyderabad – 500048. Director 6550039


Mr. Rajesh Kumar Agarwal

# 19-1-912/A/B, Gola khidki , Murlinagar, Hyderabad – 500064. Director 6550051


ELIGIBILITY CRITERIA

We are an unlisted company as on date and we propose to list our Equity Shares on Institution Trading Platform (ITP) of BSE SME In terms of the Chapter XC of the SEBI (ICDR) Regulations, 2009. Our Company is eligible for the listing in terms of 106 Y and other provisions of Chapter XC of the SEBI (ICDR) Regulations, 2009.

We Confirm that

1. The name of our company, our promoters, any of our group companies or directors do not

appear in the wilful defaulters list of Reserve Bank of India as maintained by Credit Information Bureau (India) Limited;

2. There is no winding up petition against the company that has been admitted by a competent

court;


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3. Our company, group companies or subsidiaries have not been referred to the Board for

Industrial and Financial Reconstruction within a period of five years prior to the date of application for listing;

4. No regulatory action has been taken against the company, its promoter or director, by the

Board, Reserve Bank of India, Insurance Regulatory and Development Authority or Ministry of Corporate Affairs within a period of five years prior to the date of application for listing;

5. The paid up capital of the company has not exceeded twenty five crore rupees in any of the

previous financial years;

6. We have completed fiscal 2012-13 being one full year of audited financial statements, for the immediately preceding financial year at the time of making listing application;

7. M/s BASAN FINANCIAL SERVICES LIMITED (A SEBI Registered Merchant Banker) in accordance with

Regulation 106 Y (h) (iv) of SEBI (ICDR) Regulations, 2009, as amended has conducted due diligence and invested a sum of Rs. 60 Lacs on dated 20 t h , Dec 2013 by applying 2 ,00,000 Equity Shares of our Company at a price of Rs. 3 0/- Each and these shares would be under lock in for a period of Three years from the date of listing.

8. In accordance with Regulation 106 ZB of Chapter XC of the SEBI (ICDR) Regulations, 2009, Our

Promoters i.e. Mr. Basanth K Agarwal and Mr. Sanjay Agarwal have given their consent to lock-in Equity Share representing 20.45% of Paid up Capital of the Company.

9. We have entered tripartite depository agreement with CDSL.

Absolute Responsibility of Basan Commodities Limited

Basan Commodities Limited having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to the Company, which is material, that the information contained in the Information Memorandum 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 Information Memorandum as a whole or any of such information or the expression of any such opinions are intentions misleading in any material respect.


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SECTION I – BUSINESS

SUMMARY OF OUR BUSINESS AND OPERATIONS In this section, unless the context otherwise requires, a reference to "we", "us" and "our" refers to Basan Commodities Limited (BCL). Unless otherwise stated or the context otherwise requires, the financial information used in this section is derived from our restated financial information. This section should be read together with "Risk Factors" on page 6. Overview: Our Company was originally incorporated in Hyderabad as "Basan Commodities Private Limited" on 15th February, 2008 under the Companies Act, 1956 vide certificate of incorporation issued the Registrar of Companies, Hyderabad, Andhra Pradesh. Our Company was subsequently converted into a public limited company and consequently name was changed to “Basan Commodities Limited" vide fresh certificate of incorporation dated 09 May, 2013 issued by the Registrar of Companies, Hyderabad, Andhra Pradesh. We are currently engaged in the business of commodity broking. We are the member of MCX and NCDEX and ICEX. It offers trading in many commodities such as AGRI PRODUCTS like Cereals and Pulses, Oil and Oil seeds, Fibres, Spices, Plantation Products, Guar Complex and NON AGRI PRODUCTS like Metals, Precious Metals (Gold, Silver, Platinum), Energy (Crude Oil, Natural Gas, Etc.), Others (CER, Polyvinyl Chloride). Our Strength: Our promoters Mr. Sanjay Agarwal & Mr. Basanth Kumar Agarwal have collectively more than 8 years of experience in the field of commodity market including capital market transactions, research & broking. During this tenure they have developed good client base, technical capability & contributed in the growth of our Company and our group companies. Our Strategy: We endeavor to capitalize and strengthen our presence Southern and Northern Region by opening new Branches within a radius of 100 – 150 kms from our existing Offices in such region. This ensures that we create a cluster of Branches within a region and this strategy provides us the following benefits:

• Enhancing Brand Visibility • Understanding Client Preferences • Better utilization of human resources • Effective implementation of marketing activities

SWOT Analysis: Strengths


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• Experienced Promoters and management team • Cordial relationship with Customers. • Strong Risk management policy. • Highly qualified staff and active presence of key managerial personnel. • Latest server configuration, with one of the best and leading software vendors in India for frontend

trading platform. • Having accounting backoffice software, such that it allows clients, sub brokers, remisers to access

their accounts directly through website. • Easy to understand accounting system for clients and e-Contract Notes facility for quick delivery

mechanism. • Confirmation of trades, ledger balances, and other important information sending directly on client’s

mobile on daily basis for greater transparency and to avoid future trade disputes.

Weaknesses • Dependent upon growth in commodity broking industry. • Dependence upon existing customers for our business. • Strongly dependent on international markets such as COMEX, NYMEX for non-agri products.

Opportunities

• Establishment of market in neighboring states. • Potential to increase the business in the existing facility.

Threats

• Industry is prone to change in government policies • There are no entry barriers in our industry which puts us to the threat of competition from new

entrants. Organisation Structure:

Risk Management System: We believe that effective risk management is of primary importance to the success of our operations.


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Accordingly, we have deployed necessary resources in terms of technology, people and processes to monitor, evaluate and manage the principal risks we assume in conducting our activities which include market, credit & liquidity, operational, legal and reputation risks. We analyze factors and reasons causing risk on a periodic basis, plan for control of identified risks, decide on and implement appropriate risk management tools and monitor policies and procedures with the view of continuous improvement. Risk management policy and organization Our Risk management limits the exposure and margins of each client whether they are serviced directly by us or through a Business Associate. We believe that we have effective procedures for evaluating and managing the market, credit and other risks to which we are exposed, as well as protecting our reputation in the market. To meet the need for a robust and efficient risk management system, we have created a risk management cell which is regionally operational and centrally controlled and administered by the head office team at Mumbai in order to mitigate business risk. Risk management policies are decided by a risk management committee. This committee is constituted of senior officials of our Company. These policies are monitored, reviewed and revised periodically. Risk monitoring and mitigation We use products from leading software companies such as KG Financial Services Limited, Back office software of N-Trust along with ODIN software programs provided by Financial Technologies (India) Limited to monitor, among other things, client level margins and MTM losses. These software packages enable us to provide broking services through our remote branches, including online trading for various categories of clients. We have experienced personnel to manage risk and regulatory compliance and ensure implementation of risk management policy. The risk management policy is controlled by the top management of our Company. All the regional risk team members work under the direction and control of the central risk management team at our head office. Team reviews set monitoring parameters, suggest changes on the basis of regulatory and stock exchange requirements and share best practices. Risk management levels: Risk management in our Company is carried out at the client-level, the scrip-level and the company-level:

a. Client-level risk management: This is carried out by using online surveillance and monitoring tools developed by professional software companies in the industry and with the help of Comfort’s internal team. We have developed procedures to serve multiple clients’ requirements and controlling the overall risk at the same time. Trading parameters are set on a dynamic basis and are robust enough to incorporate changes required due to market conditions and clients trading potential.

b. Product-level risk management: We use internal “product-based margining’ which is based on

various parameters including impact cost, liquidity, volatility and market price fundamentals. We maintain product level, group level and segment level margins and limits as per the policy. The product list with new margin rates is revised using established parameters on a periodic basis.


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c. Company-level risk management: Technology is optimized internally to implement established risk policies, create and maintain support to end users and implement robust data and network backup plans so that company- wide risk in our business can be reduced.

d. Real-time risk management: For real time risk management, a software called “Protector”, and

also a part of the software “ODIN” named “ADMIN” is used. Both these software’s are supplied by Financial Technology (India) Limited. “Protector” is complemented by a real-time risk management system that gives users information on clients open positions. This system can evaluate risks at pre-trade and post-trade levels on a dynamic or real time basis. The integrated risk management features allow our risk management team to exercise a high degree of control over the entire process. This assists us in keeping a check over the exposure limit utilized by various clients and also enables us to take action to mitigate risk in due course.

e. Security and disaster recovery: We have a information security policy and conduct periodic

systems and network penetration tests to review the vulnerability of our infrastructure. At least three recent and complete backups (not incremental backups) made on different dates containing the company’s critical records are always stored offsite. This policy ensures that a sufficient number of backup copies are always available for an important restore operation following an emergency or a disaster. If only one copy was used, the same could be damaged during a restore operation.

f. Compliance: We have in place an independent and comprehensive compliance structure to

address compliance and reputation risk. The compliance function is headed by company secretary who reports to the Corporate Governance Committee of the Company on matters relating to prevention of Insider trading as specified in the policy. The Compliance department’s role is to ensure that the Company operates in accordance with the laws and regulations of the exchanges and regulators. The Compliance officer provides support for each of the businesses. In addition, the Department provides advice on general regulatory matters, including policy, advertising, anti - money laundering, account opening, personal investment, and maintenance of Chinese wall, prevention of Insider Trading and general policies and procedures relating to regulations. The Compliance department is the main liaison arm of our Company with the regulators and handles all regulatory matters. It also ensures that persons connected to our Company do not profit by dealing in securities on the basis of unpublished price sensitive information.

g. Preservation of Price Sensitive Information: We have an insider trading policy in place. As per the

policy all connected and deemed to be connected persons including, directors, officers and designated employees of the company shall maintain the confidentiality of all unpublished price sensitive information. Such persons shall also not pass on such information to any person directly or indirectly by means such as making a recommendation for the purchase or sale of securities etc. Unpublished Price Sensitive Information is to be handled on a "need to know" basis, i.e., Price Sensitive Information should be disclosed only to those within the company who need such information to discharge their duties. All files, whether electronic or manual, containing confidential information shall be kept secure.

h. Receivables Management: In order to facilitate funds movement, we have adopted a centralized

funds management system. Online Fund Transfer facility obtained by Atom Technologies provides direct Pay – in and Pay – out to the clients.


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i. Technology: To maintain our risk management system and reduce operational errors we need to be well equipped with regards to latest software and hardware available in the market. Our investment in technology will help us to achieve economies of scale as we expand our product and service offerings.

To ensure operational efficiency and mitigate our risk, we have set up a dedicated data centre at our registered office and have invested in high-performance trading software. Networking and connectivity setup: We recognize the need to have a sophisticated technology network in place to meet our customer needs, reduce processing costs and maintain a risk management system. We have invested in high-performance trading software. Our technology infrastructure is aimed at ensuring that our trading and information systems are reliable and performance enhancing and that client data are protected. The highlights of our technology infrastructure and systems include:

• A technology team comprising of experienced persons in their respective field. • Managing a c omplex m u l t i -product/multi-architecture s y s t e m serving the needs of our

customers. • Balanced approach to IT combined with a quick response to business needs. • Scalable platforms for order management and risk management requiring minimal human

intervention. • Sophisticated server and network infrastructure. • Redundancy (alternate connectivity) for network. • Data back-up is taken on an incremental basis on hard disk. Drives and sent to another location.

Connectivity infrastructure We have set up a Local Area Network (LAN) & leased line at our office at Hyderabad. Additionally, we have a range of service providers which ensures connectivity for the trading platform and other services. All service providers endeavor to minimize time & increase speed. Internet based Share Trading System We have implemented an internet trading platform that allows us to integrate our diverse trading engines into a single platform. This allows customers, dealers and relationship managers to have a unique single window experience across all asset classes and product segments. This internet platform is architecturally scalable to handle a large number of customers concurrently. Real-Time Risk Management For real time risk management, we are using the software ‘Protector’ which is complemented by a real-time risk management system that gives users information on clients’ open positions. This system can evaluate risk at pre-trade and post-trade levels on a dynamic or real time basis. The integrated risk management features allows our risk management team to exercise a high degree of control over the entire process. This assists us in keeping a check over the exposure limit utilized by various clients and also enables us to take action to mitigate risk in due course. Back office and data processing management


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The back office for the entire organization is centralized at the Hyderabad data centre. We use software named ‘Ntrust’ supplied by ‘K G Financial Services Limited’ that has been specifically customized for our requirements. The software has advanced risk management and reporting capabilities and has been designed and developed to cater the large transaction volumes of our business.

System Control Policies: Overview This policy defines the back office activities of our organization which are expected to have their work done without any delay/disturbance within due time. Purpose This policy is designed to protect the organization from any loss due to any employee’s absence. The organization can take action immediately, if any employee is sick/on holidays/resign/fired/dead his/her task is taken over by any other employee without any loss done to the organization within one week period of time. Scope This policy applies to all employee's/directors/partners of Basan commodities Ltd to expand the business.


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Guidelines • Day to day activities of the organization must be carefully Application Software • Event or Error Logs should be carefully preserved for future audit or data recovery. • Database Backup shall be preserved for at least 90 days • Proper labeling of CDs should be done for quick access • Backup responsibility should be given to qualified System department member. • Backup activity log should be maintained.

Backup Procedure Steps: Backup jobs are scheduled on each server for each and every database at night after the completion of all front / back office processes. These backups are created on local server. We randomly select a backup and restore it to verify correctness of data. HR Policy: Our HR - Leave Policy encourages our employees to take break from work as this provides for a healthy and efficient staff. The leave policy sets out the various types of leaves that an employee is eligible for and outlines the procedure for taking leave. KYC Policy: Client code Modification Policy Objective To frame the guidelines for modification to client codes post trade execution and reporting of such Client Code Modifications. Brief about Client Code Modification Client Code Modification means modification / change of the client codes after execution of trades. Stock Exchanges provide a facility to modify any client code after the trade has been executed to rectify any error or wrong data entry done by the dealers at the time of punching orders. However, such Client Code modification is subject to certain guidelines as to the time limit within which the client code modification is to be carried out, terminal / system on which such modifications can be done etc. The facility is mainly to provide a system for modification of client codes in case genuine errors in punching / placing the orders. It is to be used as an exception and not a routine. To prevent misuse of the facility Stock Exchanges levy penalty / fine for all non-institutional client code modifications. Scope of the Policy This policy covers all the Client Code Modifications carried out / to be carried out in any of the client accounts controlled by HO, subject to the guidelines issued by the FMC / Commodity Exchanges from time to time, in any segment of any exchange for which BASAN is a member broker. “Error Trades” means the trades which will be modified / to be modified / allowed, to be modified subject to guidelines of the FMC / Commodity Exchanges and this policy. For the purpose of this Policy, only the following types of trades shall be modified / allowed to be modified:


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General Conditions It is imperative that the issue should be reported to the senior level Manager/Director and only with his approval, the modification should be carried after being satisfied that it is genuine, the same is required to be done to protect the interests of the client. Hence the facility to modify the client codes should be available only at the Corporate Manager level and should NOT be given to the branches/franchise/subbrokers. A register is to be maintained for recording all the code modifications with details like error code, correct code, scrip name quantity, client name, the name of the dealer who punched the code, the explanation of the dealer/Branch Manager, the ‘analysis /study’ of the authorized Manager and his approval/disapproval for modification. Finally the decision of the authorized Manager should be ratified later by the Director. The facility for Client Code Modification can be used only in case of Error Trade. The Client Code Modification shall be carried out only on the designated system and / or as per the process as may be prescribed by FMC / Commodity Exchange. Place for Client Code Modification Any Client Code Modification shall, subject to compliance of this policy, be carried out by RMS at HO of all the Error Trades happened in MCX/NCDEX. Penalty The penalty or fine, if any, levied on BASAN for any wrong trade occurred due to any miscommunication from the client / authorized representative of the client shall be borne by the client. PMLA Policy: 1. What is Money Laundering? Money Laundering can be defined as engaging in financial transactions that involve income derived from criminal activity, transactions designed to conceal the true origin of criminally derived proceeds and appears to have been received through legitimate sources/origins. This is done in three phases – Placement Phase, Layering Phase & Integration Phase. 2. Prevention of Money Laundering Act, 2002 Prevention of Money Laundering Act, 2002 (PMLA 2002) forms the core of the legal framework put in place by India to combat money laundering. PMLA 2002 and the Rules notified there under came into force with effect from July 1, 2005. The PMLA 2002 and Rules notified there under impose an obligation on intermediaries (including stock brokers and sub-brokers) to verify identity of clients, maintain records and furnish information to the Financial Intelligence Unit (FIU) - INDIA


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3. Policy of Basan Commodities Limited Basan Commodities Limited has resolved that it would, as an internal policy, take adequate measures to prevent money laundering and shall put in place a frame-work to report cash and suspicious transactions to FIU as per the guidelines of PMLA Rules, 2002 The main aspect of this policy is the Customer Due Diligence Process which means:

• Obtaining sufficient information about to the client in order to identify who is the actual beneficial owner of the securities or on whose behalf transaction is conducted.

• Verify the customer’s identity using reliable, independent source document, data or information.

• Conduct on-going due diligence and scrutiny of the account/client to ensure that the transaction

conducted are consistent with the client’s background/financial status, its activities and risk profile. The Customer Due Diligence Process includes three specific parameters:

• Policy for Acceptance of Clients • Client Identification Procedure • Suspicious Transactions identification & reporting

Other Internal Policies: Redressal of Investors Grievances Policy Overview This policy is designed in order to manage proper operation of Redressal mechanism of Investors Grievances. This policy describes about the facilities for redressal of Investors Grievances that we provide to our clients registered for trading in MCX NCDEX, ICEX, NSEL. Purpose The purpose of this policy is to establish proper system to handle investor’s grievances and take necessary action. Scope This policy applies to all clients registered with Basan Commodities Limited. General Policies and Procedures General Queries / complaints that are been raised by clients are registered by BASAN in register of Investors Grievances. Also, there is dedicated email id for Investors Grievances – [email protected], which is regularly checked and followed by Compliance Officer and cross-checked by Managing Director. Compliance Officer maintains the records of all queries in register. Following are the Commodity Broking – Related Queries / Complaints.


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• Non-issuance of documents by the trading member • Non-receipt of credit balance as per the statement of account • Non-receipt of funds • Unauthorized trading • Excess brokerage charged (other than on option premium) • Levying of unwarranted charges / penalties • All the complaints/queries raised by clients are addressed by Compliance Officer and cross-

checked by Managing Director. Marketing Setup: Our top management and key executives enjoy the confidence of several corporate and retail clients and we market ourselves only to a selected setup of clients. Our Competition: We face the competition in our business from other commodity brokers. Our competitors are other, broking firms and financial advisory firms. We compete with some of our competitors nationally and with others on a regional, product or business line basis. Many of our competitors have substantially large capital base and resources than we do and offer a broader range of financial products and services. We believe that the principal factors affecting competition in our business include client relationships, reputation, the abilities of employees, market focus and the relative quality and price of the services and products. Collaborations: The Company has so far not entered into any technical or financial collaboration agreement. CUSTOMER MARGIN REQUIREMENT Customer margin requirements and position limits are established at levels that are adequate to protect us against reasonably foreseeable risks arising from the customer's trading activities. Customer’s significant market exposures are reviewed on a daily basis and whenever necessary we call for additional collateral or modify margin requirements or position limits to reduce the size of existing positions. We have enforced policies and procedures regarding the prompt collection of customer margin (other than in the case where there are appropriate credit arrangements in place) and the liquidation of customer accounts (or other appropriate action) where necessary.


20

FINANCIAL INFORMATION The audited annual Balance Sheet, Profit & Loss Account, Cash Flow statement, with attendant annexure and notes to accounts for the fiscal 2012-2013 is produced as under:-

BASAN COMMODITIES LTD. BALANCE SHEET AS ON 31ST MARCH 2013

(in Lakhs)

3/31/2013 3/31/2012 NOTE I) EQUITY AND LIABLITIES 1) Shares Holder's Funds a) Shares Capital 200.00 80.00 1 b) Reserves & Surplus 18.71 14.13 2 2) Shares application Money pending allotment NIL NIL 3) NON- CURRENT LIABILTIES A) Long Term Borrowings 12.04 18.36 3 b) Defered Tax Liabilites(Net) 1.51 1.51 c) Other Long Term Liabilites NIL NIL d) Long Term Provision NIL NIL 4) CURRENT LIABILITES a) Short Term Borrowings 313.79 414.14 4 b) Trader Payable 55.75 34.15 5 c) Other Current Liabilites 11.49 27.53 6 d) Short Term Provision 2.06 2.79 TOTAL 615.35 592.61 ****** II) ASSETS NON- CURRENT ASSETS (1)(a) FIXED ASSETS I) Tangible Assets 29.68 41.65 7 II) Intangible Assets NIL NIL III) Capital Work in Progress NIL NIL IV) Intangible Assets made development NIL NIL b) Non Current Investment 25.63 NIL 8 c) Deferred tax assets(Net) NIL NIL d) Long Term Loan & Advances 308.89 514.64 9 e) Other Non-Currnent Assets 0.42 0.70 10 CURRENT ASSETS a) Current Investment NIL NIL b) Inventories NIL NIL c) Trade Receivable 174.57 0.04 11 d) Cash & Cash Equivalents 76.16 35.18 12 e) Short Term Loan & Advances NIL Nil f) Other Current Assets HDFC Car Limit NIL 0 TOTAL 615.35 592.61


21

Statement of Profit and Loss for the year ended 31st March, 2013 (in Lakhs)

3/31/2013 3/31/2012 NOTE i) revenue from operations 265.14 335.67 13 ii) Other Income 32.97 25.66 14 III) TOTAL REVENUE(i+ii) 298.11 361.33 IV) EXPENSES 1) Operating Expenses 144.21 191.07 15 2) Employe Benefit Expenses 82.14 112.55 16 3) Finance Costs 2.61 3.17 17 4) Depreciation & Amortization Expenses 12.95 8.54 18 5) Other Expenses 49.56 36.98 19 TOTAL EXPENSES 291.47 352.31 v) Profit before exceptioanl and extra ordinary items & tax (III-iV) 6.64 9.02 Vi) Exceptional Items NIL NIL VII) Profit before extra ordinary NIL NIL items and tax (V-Vi) 6.64 9.02 VIII) Extra ordinary items NIL 0 IX) Profit before tax (VII-VIII) 6.64 9.02 X) Tax expenses 1) Current-Tax 2.06 2.96 2) Deferred- Tax -0.03 XI) Profit/(Loss) for the period nil from continuing operation (IX-X) 4.61 6.06 XII) Profit/(Loss) from disxontinuing operation XIII) Tax expenses of discontinuing operation NIL NIL XIV) Profit/(Loss) from discontinuing operation NIL NIL (after tax) (XII-XIII) XV) Profit ( Loss) for the period (XI+XIV) 4.61 6.06 XVI) Earning Per Share 1)Basic 0.23 Paisa 0.76 Paise


22

SUMMARY STATEMENT OF CASH FLOW, AS RESTATED (in Lakhs)

PARTICULARS 31.03.13 31.03.12 CASH FLOW FROM OPERATING ACTIVITIES Net profit before tax 6.59 9.02 Adjustment for: Add: Depreciation 12.67 8.26 Add: Interest expenses 2.61 3.17 Add: Interest income including accrued (32.39) (25.66) Add: Preliminary & issue Expenses w/off 0.28 0.28 Add: Misc. Exp. - - Add: Deffered Tax Liabilities (0.03) - Operating Profit before Working capital changes (10.17) (4.93) Adjustments for: Increase / Decrease in current assets (174.53) (34.78) Increase / Decrease in Trade Payables & current Liabilities

5.61 18.87

Net Changes in Working Capital (168.92) (15.91) Cash Generated from Operations (179.09) (20.84) Taxes paid including FBT (2.00) (1.89) Net Cash Flow from Operating Activities (A) (181.09) (22.73) CASH FLOW FROM INVESTING ACTIVITIES Interest received (excluding interest accrued on deposits)

31.91 23.43

Investment in Loans & Advances 180.12 (421.84) investment in deposits - (Purchase) / Sale of fixed assets (0.68) (33.87) Net Cash Flow from Investing Activities (B) 211.35 (432.28) CASH FLOW FROM FINANCING ACTIVITIES Issue of share capital 120 - Share Application Money - Interest expense (2.61) (3.17) Proceeds from borrowings (106.67) 420.87 Proceeds from Deposits, loans & other items - Secured Loans Taken / (Repaid) - Unsecured Loans Taken/ (Repaid) - Net Cash Flow from Financing Activities (C) 10.72 417.70 Net Increase / (Decrease) in Cash & Cash 40.98 (37.31) Equivalents Cash and cash equivalents at the beginning of the year / Period

35.18 72.49

Cash and cash equivalents at the end of the year/Period

76.16 35.18


23

Note: The above cash flow statement has been prepared under “Indirect Method” A Standard (AS) – 3 on Cash Flow Statement issued by the Institute of Chartered Accountants of India

NOTE-1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A GENERAL INFORMATION

Jaisukh Dealers Limited is a public limited company incorporated under the provisions of the Indian Companies Act, 1956. The Company is engaged in the business of trading of various kinds of Shares & other commodities.

1 SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally

Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention method. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the

Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

Difference between the actual results and estimates are recognised in the period in which the results are known/ materialized.

1.3 Inventories

Inventories are valued at the lower of cost and the net realisable value after providing for

obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.

1.4 Tangible Fixed Assets, Depreciation and amortisation

i Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any.

ii Depreciation has been provided on the written down method as per the rates prescribed in Schedule XIV to the Companies Act, 1956.

1.5 Investments


24

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties. Investment properties are carried individually at cost less accumulated depreciation and impairment, if any. Investment properties are capitalised and depreciated (where applicable) in accordance with the policy stated for Tangible Fixed Assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Assets.

1.6 Earnings per share Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post

tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus

1.7 Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in

accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.


25

1.8 Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events

and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the

1.9 Revenue Recognition

Interest: Revenue is recognised on a time proportion basis taking into account the amount outstanding and

the rate applicable.

Dividends: Revenue is recognised on actual receipt basis. Other Income: The amounts receivable from various agencies are accounted on accrual basis to the extent it is

possible to ascertain the income with reasonable accuracy.

1.10 MSMED Act, 2006

The Government of India has promulgated an Act namely The Micro, Small and Medium Enterprises Development Act, 2006 which comes into force with effect from October 2, 2006. As per the Act, the company is required to identify the Micro, Small & Medium suppliers and pay them interest on over dues beyond the specified period irrespective of the terms agreed with the suppliers. The Company does not have any dues to any entity covered under The Micro, Small and Medium Enterprises Development Act, 2006

1.11 Change of Name:

The name of the company i.e. Basan Commodities Private Limited having CIN no. U67120AP2008PTC057632 has been changed to Basan Commodities Limited having CIN no. U67120AP2008PTC057632 as per the Ministry of Corporate Affairs order dated Ninth day of May Two Thousand Thirteen.


26

Note 2 (in Lakhs)

RESERVE & SURPLUS 3/31/2013 3/31/2012 A) Surplus/ Deficit in statement of profit & loss Balance at the beginning of the year 14.13 8.07 Add: Profit during the year 4.58 6.06 Balance at the end of the year 18.71 14.13 Deffered Tax Asset:- Deffered Tax Liability Balance 1.51 1.51 Less :- Deffered Tax Asset 0.03 0.00 1.48 1.51

Note 3

(in Lakhs) LONG TERM BORROWINGS 3/31/2013 3/31/2012 HDFC Bank Car Loan NIL 0.94 ICICI Bank Car Loan 12.04 17.42 12.04 18.36

1. Vehicle Loans including current maturities is secured by hypothecation of vehicle against which the loan has been taken.

2. Vehicle loans are repayable in equal monthly installment. Over the terms of the loan ranging from 2 to 3 year

Note 4

(in Lakhs) SHORT TERM BORROWINGS 3/31/2013 3/31/2012 HDFC Bank Car Loan 0.94 1.62 Basan Equity broking limited 58.09 135.19 Basan Financial Service ltd 254.76 277.33 313.79 414.14


27

Note 5

(in Lakhs) Basan Commodites Ltd TRADE PAYABLES 3/31/2013 3/31/2012 Rajesh Dedhia NIL 0.03 Anil Kumar Gupta NIL 0.03 Tripti Agarwal 3.19 4.09 Basanth Kumar Agarwal 8.26 0.00 Vaibhav Gupta NIL 0.01 Sanjay Kumar Agarwal 4.41 4.45 Megha Agarwal 6.17 4.21 Shruti Agarwal NIL 0.01 Sunita agarwal NIL 0.43 Nisha Agarwal NIL 0.06 Anil Agarwal NIL 0.03 Vaibhav Agencies NIL 0.82 Hitendra Kumar jain NIL 2.23 Vinod Kumar Jain & Sons NIL 2.23 Pankaj Agarwal & Sons NIL 2.29 Goutam Kumar Jain & Sons NIL 2.23 Kiran Devi Jain NIL 2.29 Shreyansh Jain NIL 2.25 Balaji Invest advisory (P) Ltd NIL 3.13 Remisar Payale Control Act 1.58 1.58 Client NIL 1.75 Gangavaram rama manohar reddy 30.00 NIL Ayush Agarwal 2.14 NIL 55.75 34.15

Note 6

(in Lakhs) OTHER CURRENT LIABILITIES 3/31/2013 3/31/2012 Current Tax liabilities 0.01 0.00 Incentive Payable 1.11 3.63 Oustanding Expenses 3.00 6.2 TDS Payable 6.78 10.68 Service Tax Payable 0.34 6.74 Audit Fees Payable 0.25 0.28 11.49 27.53


28

Note 7

(in Lakhs) FIXED ASSETS 3/31/2013 3/31/2012

TANGIBLE ASSETS Furniture & Fixture 0.99 1.21 Computer 2.45 4.08 Hardware & Software 6.36 9.54 Motor Car Swift 3.13 4.22 Motor Car Fortuner 16.75 22.6 29.68 41.65

Note 8

(in Lakhs) NON CURRENT INVESTMENT 3/31/2013 3/31/2012 Basan Commodity Investment a/c 25.63 Nil 25.63 Nil

Note 9

(in Lakhs) LONG TERM LOAN & ADVANCES 3/31/2013 3/31/2012

Capital Advances NIL NIL Security Deposit ICEX Membership Account 2.50 2.50 HDFC A/c ILFS 40.00 240.00 FDR with TMB 211.17 210.19 NCDEX deposit with HDFC NIL 15.00 Interest Accrued on Deposit 0.38 2.23 Membership deposit NSEL 2.50 2.50 NCDEX membership deposit 5.00 5.00 NCDEX membership cash deposit 15.00 15.00 Membership fee multi Commodity Exchange 7.50 7.5 Membership fee National Spot Exhange 5.00 5.00 (A) 289.05 504.92 Loans & Advances to related Parties Rajesh Dedhia Nil 0.55


29

Damodar Agarwal Nil 5.00 (B) Nil 5.55 Other Loans & Advances HDFC Car Loan 0.15 0.00 Prepaid Inusrance 0.29 0.53 TDS 3.44 2.63 Rent Deposit 0.96 1.01 Hitesh P Jain 15.00 nil

( C) 19.84 4.17

TOTAL

(A+B+C) 308.89 514.64

Note 10

(in Lakhs) OTHER NON-CURRENT ASSETS 3/31/2013 3/31/2012 Misc Expenditure 0.42 0.70 0.42 0.70

Note 11

(in Lakhs) TRADE RECEIVABLES 3/31/2013 3/31/2012 Sundry Debtors 174.57 Nil NSEL Ltd NIL 0.04 174.57 0.04

Note 12

(in Lakhs) CASH & CASH EQUIVALENT 3/31/2013 3/31/2012

Cash in Hand 3.66 9.47 Cash at Bank 0.11 HDFC Bank LKP business a/c (17.08) (8.00) HDFC FDR A/c 20.00 20.00 FDR with TMB A/c 74.46 4.07 FDR with HDFC Bank 2.50 2.50 ILFS Clearing 2.01 2.00 HDFC Client A/c LKP A/c (2.10) 1.19


30

HDFC Settlement A/c 2.01 HDFC NSEL Client A/c 0.04 0.04 HDFC Bank NSEL SETTLEMENT A/C 0.05 0.10 HDFC NCDEX Settlement A/c WBO FM 0.46 1.69 Axis Bank 0.45 Nil HDFC MCX Settlement A/c Fort 0.11 Nil HDFC A/c NCDEX DUES A/C 0.01 Nil Tamilnad Mercantile Bank 0.01 Nil HDFC Online Client A/c LKP A/c 0.00 Nil TMB OD A/c (8.43) Nil ICICI Khairtabad 0.01 Nil 76.16 35.16

Note 13

(in Lakhs) REVENUE FROM OPERATIONS 3/31/2013 3/31/2012 (a) Sale of Products Own Trading 71.14 61.48 Turnover Charges 119.02 105.18 Tws Charges 1.87 3.47 (A) 192.03 170.13 (b) Sale of Service Brokerage Income 73.11 165.54 (B) 73.11 165.54 Total (A+B) 265.14 335.67


31

Note 14

(in Lakhs) OTHER INCOME 3/31/2013 3/31/2012

Interest on Deposit 32.29 25.66 Other Income NIL NIL Commodity Delivery Charges 0.08 NIL Undue Income 0.6 NIL 32.97 25.66

Note 15

(in Lakhs) EXPENSES 3/31/2013 3/31/2012

Expenses on Services Brokerage 80.60 122.77 Brokerage reversal 2.13 5.00 (A) 82.73 127.77 Expenses on Sale of Products Transaction Charges 59.11 60.26 Clearing Charges 2.37 3.04 (B) 61.48 63.30 Total (A+B) 144.21 191.07

Note 16

(in Lakhs) EMPLOYEE BENEFIT EXPENSES Salaries & wages 62.94 95.45 Director's Remuneration 19.20 17.10 82.14 112.55

Note 17

(in Lakhs) FINANCE COST 3/31/2013 3/31/2012 Interest Paid on Late payment 0.01 0.59 Interest to Bank 0.77 2.33


32

Other Interest NIL 0.25 Interest on Vehicle Loan 1.83 Nil 2.61 3.17

Note 18 (in Lakhs)

DEPRECIATION & AMORTIZATION EXPENSES 3/31/2013 3/31/2012

Depreciation 12.67 8.26 Premlinary expenses 0.28 0.28 12.95 8.54


33

Note 19

Miscellaneous Expenses 3/31/2013 3/31/2012

Advertisement 0.00 0.10 Audit Fees 0.30 0.28 bank Charges 0.05 0.15 Conveyance 0.11 0.73 Demat Charges 0.00 0.05 Exchange Funding Charges 0.40 0.61 Electrical Exp. 3.11 Nil Internet Charges 1.11 0.99 ICEX charges 0.05 Nil ISIN Charges 0.38 Nil Interest On late payment of TDS 0.08 Nil Legal Expenses 0.18 0.19 Mis Deal A/c 0.10 0.06 Other Charges 0.01 0.46 Petty Expenses 0.00 0.78 Pooja Expenses 0.13 0.12 Courier Charges 0.02 0.29 Professional Charges 0.10 0.06 Stamp Charges 0.05 0.18 Subscription 0.35 0.38 Water Expenses 0.13 0.10 (A) 6.66 5.53 Other Expenses

Bad Debts 0.00 1.47 Business Promotion Exp. 0.03 Nil Bank Gaurantee Charges 3.27 Nil Branch Exp. 8.75 Nil Computer Expenses 0.67 1.14 Debtors Written Off 17.97 Nil Fuel Account 1.05 2.37 General Charges 1.17 2.03 Motar car Insurance 0.55 0.67 MCX Charges 0.47 2.38 Motor Car Expenses 0.00 2.25 NCDEX Expenses 0.33 1.41 NCDEX Transaction Charges 0.01 Nil Printing & Stationary 0.27 1.04 Professional expenses 0.36 Nil Rates & Taxes 2.17 0.34 Rent Exp. 2.35 6.72


34

Software Maintenance Fees 1.09 3.15 Telephone Charges 1.00 1.90 Travelling Expenses 0.70 4.64 Technical Analysis Fees 0.01 Nil Tea & coffee Exp. 0.73 Nil (B) 42.95 31.45 Total (A+B) 49.61 36.98

CAPITAL STRUCTURE The share capital of the Company as at the date of this information memorandum: (Rs. in Lakh, except share data)

Sr. No

Particulars Aggregate value at face value

A. Authorized Share Capital 40,00,000 Equity Shares of face value of Rs.10 each 400

B. Issued, subscribed and paid-up Equity Share

Capital

22,00,000 Equity Shares of face value of Rs. 10 each

220

# The bonus Share was issued of Rs. 100 lakhs out of which 100 lakh is considered as Capital Reserves Account.

NOTES FORMING PART OF CAPITAL STRUCTURE

1. CHANGES IN THE AUTHORIZED SHARE CAPITAL OF OUR COMPANY:

Sr.No. Particulars of

Change Date of Shareholders’ Meeting

Meeting AGM/EGM

From To 1 - 2,50,000 Equity

Shares of Rs.10 each

- Incorporation

2 2,50,000 Equity Shares of Rs. 10 each

5,50,000 Equity Shares of Rs. 10 each

10/03/2008 EGM


35



19/05/2010 EGM



28/6/2012 EGM

5. 2,00,000 Equity Shares of Rs. 10 each


18/12/2013 EGM

Equity Share capital history of our Company

Date of/ issue allotment of Shares

No. of Equity Shares Issued

Face value (Rs)

Issue price (Rs.)

Consideration (cash, bonus, consideration other than cash)

Nature of allotment (Bonus, swap etc.)

Cumulative no. of Equity Shares

Cumulative paid-up share capital (Rs.)

Cumulative share premium (Rs.)

15/02/08 10,000 10 10 Cash Subscription to Memorandum (i)

10,000 100,000 _

19/03/08 5,40,000 10 10 Cash Allotment (ii) 550,000 55,00,000 _ 25/05/10 250,000 10 10 Cash Allotment (iii) 8,00,000 80,00,000 _ 20/08/12 2,00,000 10 60 Cash Allotment (iv) 10,00,000 1,00,00,000 1,00,00,000 18/03/13 10,00,000 10 Nil Bonus Bonus

allotment in the ratio 1:1

20,00,000 2,00,00,000 _

14/11/13 2,00,000 10 30 Cash Allotment (v) 2,00,000 20,00,000 40,00,000

# The bonus Share were issued of 100 lakhs out of which 100 lakh is considered as Capital Reserves Account.


36

Sl.No Allotment

Date Name of the Allotees Category

Numbers of Equity

Shares 1 15/02/08 MR. BASANTH KUMAR AGARWAL Promoter 1000

MR. SANJAY AGARWAL Promoter 900 MR. DAMODAR AGARWAL Promoter Group 1000 MRS. VARSHA SHARMA Promoter Group 1000 MRS. MEGHA AGARWAL Promoter Group 1000 MR. INDU SHEKHAR Promoter Group 5100 TOTAL 10000

2 19/03/08 MR. BASANTH KUMAR AGARWAL Promoter 54000 MR. SANJAY AGARWAL Promoter 48600 MR. DAMODAR AGARWAL Promoter Group 54000 MRS. VARSHA SHARMA Promoter Group 54000 MRS. MEGHA AGARWAL Promoter Group 54000 MR. INDU SHEKHAR Promoter Group 275400 TOTAL 540000

3 25/05/10 Mrs.TRIPTI AGARWAL Promoter Group 60000 MR.Narayan lal Agarwal (HUF) Promoter Group 10000 MR.Narayan lal Agarwal Promoter Group 40000 MR. SANJAY AGARWAL (HUF) Promoter Group 45000 Mrs. Nirmala Agarwal Promoter Group 40000

MR. BASANTH KUMAR AGARWAL (huf) Promoter Group 30000

Mrs. Anita Agarwal Promoter Group 25000 TOTAL 250000

4 20/08/12 MR. SANJAY AGARWAL Promoter 10000 M/s Basan Equity Broking Pvt Ltd Promoter Group 190000 TOTAL 200000

5 18/03/13 Basanth Kumar Agarwal Promoter 55000 Damodar Agarwal Promoter Group 1000 Megha Agarwal Promoter Group 80000 Sanjay Agarwal Promoter 340000 Varsha Sharma Promoter Group 55000 Basant Kumaragarwal (HUF) Promoter Group 30000 Narayan Agarwal Promoter Group 40000 Narayan Agarwal (Huf) Promoter Group 10000 Nirmala Agarwal Promoter Group 40000 Sanjay Agarwal (Huf) Promoter Group 45000 Tripti Agarwal Promoter Group 114000 Basan Equity Broking Ltd Promoter Group 190000

6 20/12/13 Basan Financial Services Limited

Others – Merchant Banker 200000

TOTAL 1200000


37

2. Transfer Details of Equity Shares:

Sl.No Transfer Date Transferor Transferee

No. of Equity Shares Category

1 01/08/08 Mr. Indu Shekhar MR. Sanjay Agarwal 280500 Promoter Group 2 20/08/12 Mrs. Anita Agarwal MRS. Megha Agarwal 25000 Promoter Group 3 20/08/12 Mr.Damodar Agarwal Mrs.Tripti Agarwal 54000 Promoter Group

3. Issue of Equity Shares for consideration other than cash Date of/ issue allotment of Shares

No. of Equity Shares Issued

Face value (Rs)

Issue price (Rs.)

Nature of allotment (Bonus, swap etc.)

Person to whom shares are issued

Reason for Issue

Benefits accrued to our Company

18/03/2013 10,00,000 10 Nil Bonus allotment

To all the shareholders holding shares as on the record date i.e. 17-03-2013

Issue of bonus Equity Shares in the ratio of 1:1

Nil

We have issued Equity Shares out of Capital Reserves (Share Premium) of Rs 1,00,00,000/- (one crore only) as on current date in terms of any scheme Approved under Sections 391- 394 of the Companies Act, 1956.

4. Issue of Equity Shares In After 1st April, 2013 Our company has allotted equity shares during preceding one year from the date of issue of Information Memorandum.

Date of allotment

Name of the Allotees

No. of equity Shares

Face Value

Issue Price

Nature of Consideration

Nature of Allotment

Part of Prmoter/Promoter Group

20/12/13

M/s Basan Financial Service Limited 200000 10/- 30 Cash

New Issue of Shares

Others – Merchant Banker


38

5. Issue of Bonus Shares after 1st April, 2013

SL.NO NAME

EXISTING NO. OF SHARES

FACE VALUE BONUS ( 1: 1)

1 Basanth Kumar Agarwal 55000 10 55000

2 Damodar Agarwal 1000 10 1000

3 Megha Agarwal 80000 10 80000

4 Sanjay Agarwal 340000 10 340000

5 Varsha Sharma 55000 10 55000

6 Basant Kumaragarwal (HUF) 30000 10 30000

7 Narayan Agarwal 40000 10 40000

8 Narayan Agarwal (Huf) 10000 10 10000

9 Nirmala Agarwal 40000 10 40000

10 Sanjay Agarwal (Huf) 45000 10 45000

11 Tripti Agarwal 114000 10 114000

12 Basan Equity Broking Ltd 190000 10 190000

TOTAL 1000000 1000000

6. Built Up of Promoters Shareholdings

Date of Allotment/ transfer

No. equity Shares

Cumulative No. of Shares

Face Value per Shares (Rs.)

Issue/ Transfer/Aquisition Price (Rs.)

Nature of Transactions

Considerations

Mr. Sanjay Agarwal 15/02/08 900 900 10 MOA Subscriber Allotment of Shares Cash 19/03/08

48600 49500 10 Further Issue of Shares Allotment of Shares cash

01/08/08 280500 330000 10 Transfer of Shares transfer of share cash

20/08/12 10000 340000 10

Further Issue of Shares Allotment of Shares Cash

18/03/2013 340000 680000 10 Bonus Shares Allotment of Shares Nil Mr. Basanth Agarwal

15/02/08 1000 1000 10 MOA Subscriber Allotment of Shares Cash 19/03/08

54000 55000 10 Further Issue of Shares Allotment of Shares cash

18/03/2013 55000 110000 10 Bonus Shares Allotment of Shares Nil


39

A: The following table presents the shareholding pattern of Our Company

Category of shareholder

No. of Sharehol

ders

Total Shares

Shares Pledged or otherwise

encumbered

No. of Equity Shares

As a % of Issued Equity

Number of shares

As a % of shareholdi

ng

Shareholding of Promoters and Promoter group

INDIAN

Individual / HUF / Promoter 11 16,20,000 73.6% - -

Central Govt. / State Govts.

Bodies Corporate 1 3,80,000 17.3% - -

Financial Institutions/Banks

Sub Total A (1) 12 20,00,000 90.9% - -

FOREIGN

Bodies Corporate - - - - - Individual - - - - -

Institutions - - - - -

Any others (specify)

Sub Total A (2) --- --- --- --- --- Total Shareholding of Promoter group A (1) + A (2) 12 20,00,000 90.9% - -

PUBLIC SHAREHOLDING

Institutions - - - - -

Central Govt./ State Govts. - - - - -

Financial Institutions/Banks - - - - -

Mutual Funds/UTI - - - - - Venture Capital Funds Insurance - - - - - Institutions Investors Foreign Venture - - - - - Capital Investors Any Others (Specify) - - - - -


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Sub Total B (1) - -

Non Institutions - - - - -

Bodies Corporate - - - - -

Individuals- shareholders holding normal share capital up to Rs. 1 Lac - - - - -

Individuals- shareholders holding normal Share capital in excess of Rs.1 Lac - - - - - Trust - - - - - Any Other – Merchant Banker 1 2,00,000 9.1 - - Directors/Relatives - - - - - Employees - - - - -

Foreign Nationals - - - - - NRIs - - - - - OCB’S - - - - - Person Acting in Concert - - - - - Sub Total B(2)

Total Public Shareholding B(1)+B(2) - - - - - Total A+B 13 22,00,000 100% - - Shares held by Custodians and against which Depository receipts have been issued - - - - -

Grand Total A+B+C 13 22,00,000 100% - -


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[B] Shareholding of our Promoters and Promoter Group The table below presents the current shareholding pattern of our Promoters and Promoter Group (individuals and companies) as per clause 34 of the Equity Listing Agreement.

Sr. No Name of the shareholder

Equity Shares Shares pledged or otherwise encumbered number

As a Percentage

As a % of grand Total

(a)+(b)+(c) of Sub- clause

(i)(a)


As a % of Issued Share Capital

Promoters

1 Mr. Basanth Kumar Agarwal 110000 5% - - -

2 Mr. Sanjay Agarwal 680000 30.9% - - -

TOTAL A 790000 35.9% - - -

3 Mr. Damodar Agarwal 2000 0.1% - - -

4 Mrs. Megha Agarwal 160000 7.3% - - -

5 Mrs. Varsha Sharma 110000 5.0% - - -

6 M/s Basan equity Broking Ltd 380000 17.3% - - -

7 Mrs. Tripti Agarwal 228000 10.4% - - -

8 Mr. Basanth Kumar Agarwal (HUF) 60000 2.7% - - -

9 Mr. Sanjay Agarwal (HUF) 90000 4.0% - - -

10 Mr. Naryanlal Agarwal 80000 3.6% - - -

11 Mr. Naryanlal Agarwal (HUF) 20000 0.9% - - -

12 Mrs. Nirmala Agarwal 80000 3.6 % - - -

TOTAL B 1210000 55.0% - - -

TOTAL A+B 2000000 90.9% - - - [C] Shareholding of Person under the category “Public” The table below presents the current shareholding pattern of Category Public (individuals and companies) as per clause 35 of the Equity Listing Agreement.

Sr. No Name of the shareholder

Equity Shares Shares pledged or otherwise encumbered number

As a Percentage

As a % of grand Total

(a)+(b)+(c) of Sub- clause

(i)(a)


As a % of Issued Share Capital

1 M/s Basan Financial Service Limited 200000 9.09% - - -

TOTAL 200000 9.09% - - -


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7. The Promoter of our Company have NOT Pledged Any of Their Shares.

8. The Transfer of Equity Shares

Sl.No Transfer Date Transferor Transferee


Face value

Issue/ transfer of prices

Nature of Consideration Category

1 01/08/08 Mr. Indu Shekhar

Mr. Sanjay Agarwal 280500 10 10 cash Promoter

2 20/08/12 Mrs.Anita Agarwal

Mrs. Megha Agarwal 25000 10 10 cash

Promoter Group

3 20/08/12 Mr.Damodar Agarwal

Mrs.Tripti Agarwal 54000 10 10 cash

Promoter Group

9. Statement showing details of Lock-in Shares

S No. Name of Shareholder No. of Lock-in Shares

Locked-in shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a)

1. Basanth K Agarwal 1,10,000 5%

2. Sanjay Agarwal 3,40,000 15.45%

3. Basan Financial Service Limited 2,00,000 9.09%

TOTAL 29.54%

10. Statement showing details of Depository Receipts (DRs)

Sr. No.

Type outstanding DR (ADRs, GDRs, SDRs, etc.)

Number of outstanding DRs

Number of shares underlying outstanding DRs

Shares underlying outstanding DRs as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}

TOTAL NIL


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11. Statement showing holding of DRs where underlying shares are in excess of 1% of the total number.

r. No.

Name of DR Holder

Type of outstanding DR (ADRs, GDRs, SDRs, etc.)

Number of shares underlying outstanding DRs

Shares underlying outstanding DRs as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}

TOTAL NIL

Properties The details of property leased by our Company are as under:

S No. Location Title (Leased / Owned)

Date of Agreement / Acquisition

Valid upto 1 #15-8-1/2/3, Siddiamber Bazar,

Hyderabad – 500012 Leased

3-Jan-11

31-Mar-15 2 #3-6-196 & 197, 2nd Floor, Prime Plaza,

Himayatnagar, (Above KFC), Hyderabad – 500029. Andhra Pradesh, India.

Leased 01-July-2013

30-June-14 The Registered Office of our Company situated #15-8-1/2/3, Siddiamber Bazar, Hyderabad – 500012-is owned by our promoter and our Promoter Group, Mr. & Mrs. Sanjay Agarwal and Mr. & Mrs. Basanth Agarwal. PURCHASE OF PROPERTY We have not entered into any agreement to buy/sell any property with the Promoters or Director or a proposed director who had any interest direct or indirect during the preceding two years.


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SECTION – II - RISK FACTORS

RISK FACTORS ENVISAGED BY MANAGEMENT An investment in Equity shares involves a high degree of risk. The investors should consider the following risk factors together with all other information included in this Letter of Offer carefully, in evaluating the Company and its business before making any investment decision. Any projections, forecasts and estimates contained herein are forward looking statements that involve risks and uncertainties. Such statements use forward looking terminology like “may”, “believes”, “will”, “expect”, “anticipate”, “estimate”, “plan” or other similar words. The Company’s actual results could differ from those anticipated in these forward looking statements as a result of certain factors including those, which are set forth in the “Risk Factors” below. If any of the following risks actually occur, the business, financial condition and results of operations could suffer, the trading price of the Equity Shares could decline, and all or part of the investment may be lost. The Risk factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality.

• Some events may not be material individually but may be found material collectively. • Some events may have material impact qualitatively instead of quantitatively. • Some events may not be material at present but may be having material impact in future.

Note: The risk factors are disclosed as envisaged by the management along with the proposals to address the risk if any. Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial implication of any of the risks described in this section. In this information memorandum, any discrepancies in any table between total and the sums of the amount listed are due to rounding off. Any percentage amounts, as set forth in "Risk Factors" and elsewhere in this information memorandum unless otherwise indicated, has been calculated on the basis of the amount disclosed in the "Auditors Report" prepared in accordance with the Indian Accounting Standards.


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INTERNAL RISK FACTORS Litigations: There are no litigations pending against the Company / its Subsidiaries / Promoter / Directors and Group companies. Contingent liabilities: We have guarantees issued by banks amounting to Rs. 1,20,00,000/- (one crore and twenty lakhs only) as on 31st, March 2013. Our business is dependent on trading activity by our clients or my own trading, which could be affected by market fluctuations: We will be affected by adverse economic and political conditions, broad trends in business and financial changes in volumes and price levels of securities and other factors that affect the volume of stock and commodities trading in India and the level of interest in Indian business developments. In recent years, the Indian and world securities markets have fluctuated considerably and a downturn in these markets could adversely affect our operating results. Also when markets are highly volatile, we run the risk of bad debts and losses and also litigations. Reduced trading volumes and prices have historically resulted in reduced transaction revenues for brokerage, which affects our profitability adversely because our overheads are substantially fixed. Severe market fluctuations or decrease in equity prices which result in decreased trading activity could have an adverse effect on our business, financial condition and operating results. Intrusions and breaches into the security of our I.T. infrastructure could damage our reputation and result in a liability to us: We maintain databases of confidential customer information on our internal network. Our facilities and infrastructure must remain secure to prevent leakages of this information outside our network. We have implemented best practices in the security of our I.T. infrastructure. But despite our best efforts, no system is foolproof and our infrastructure may be vulnerable to physical break-ins, computer viruses, programming errors or similar disruptive problems. If our security measures are circumvented, the security of confidential and propriety information stored on our systems could be jeopardized, or our operations could be interrupted. A material security breach could damage our reputation or result in liability to us, and we do not carry insurance that protects us from this kind of loss. Our management team is a key component in the successful culmination of the business strategies of our company: Our Company has a core team of professionals who form the management team, which oversees the operations and growth of our businesses. Loss of our senior management and key managerial personnel could adversely affect our business. Failure to attract and retain skilled manpower could also adversely affect our business, financial condition and results of operations. Further, any increase in our attrition rates, would adversely affect our growth plans. Our business will be adversely affected if the expansion strategy is not implemented successfully: Our Company has registered rapid growth over the past two years and the continuing improvement in the financial health of the company is dependent on the successful implementation of our expansion strategy within India. Any stumbling blocks that we come across in our strategy could derail our efforts and impede the business prospects of our company. Our business is dependent on continuing relationships with existing clients: The business of stock broking is very customer driven. The majority of our client base is retail in nature. We have 800-1000 clients across the country. The business from our clients is dependent on not only economic considerations but on healthy and cordial relations of our management and employees with our clients. We have to continue to keep contact with each of our clients and keep track of their portfolios. About 50% of the volumes are done by few of our clients. Any adverse situation with one or more of our clients could result in the


46

discontinuation of their business relationship with us and could cause additional clients to also discontinue their business relationships with us. This could adversely affect our business. Post issue the promoters will hold a majority stake in the company: Post Public Issue, the promoters will be the majority stakeholders in the company. This will result in them having a majority vote on key decisions to be taken by the management of the company. We may be unable to implement programs and strategies which may be beneficial to the company on account of a difference of opinion between the promoters and the management on several key issues pertaining to the operations of the company, which could have an adverse effect on the future condition of the company. Order input errors: Some of our clients place orders over the phone. We face the risk of making errors while inputting the orders due to misunderstanding of instructions or poor quality of the phone connection. This may lead to losses for our clients, who may choose to cease their relationships with us, leading to a loss of business. Derivatives trading by clients are generally of a higher risk and we may face losses on account of inadequate risk management policies and systems: We offer clients the facility to trade in derivative instruments in the Indian commodities market as is currently permitted in India. Trading in derivative instruments involves taking leveraged positions on the underlying assets. This aspect of the nature of derivatives trading makes it riskier as compared to the other financial instruments. As such, investors and the market intermediaries are exposed to a greater risk in dealing with such instruments. We deal in such instruments on behalf of our clients and may face financial losses if we fail to manage prudently the risk of our clients’ dealing in derivative instruments. Our project has not been appraised: Our project has not been appraised by any appraisal agency or bank. The expenditures mentioned for each aspect of the project are estimates prepared by the management team of our company, and as such, may not be absolutely accurate. Thus there may be cost overruns on account of underestimation of project expenditure of some aspects of the project. This could adversely affect the time schedule of the project implementation thereby affecting our profitability. There is no agency to monitor the utilization of the proceeds of the issue: The utilization of the proceeds of the issue will not be monitored by any monitoring agency. The utilization of the proceeds of the issue will as per the discretion of the promoters and management of the company. Rapid growth in our company and business may require us to issue fresh equity which may lead to dilution of equity and may affect the market price of our equity shares: Our growth is dependent on having a strong balance sheet to support our activities and satisfy the financial requirements of the various exchanges and regulatory authorities. Changing business conditions may require us to raise additional capital to finance the growth of our business beyond what our current balance sheet could sustain. Any fresh issue of shares/convertible securities would dilute existing holders, and such issuance may not be done at terms and conditions, which are favorable to the then existing investors or us. Material changes in the regulations that govern us could cause our business to suffer and the price of our Equity Shares to decline. We are regulated by the Companies Act and our operational activities are subject to supervision and regulation by statutory and regulatory authorities including the FMC and Indian stock exchanges. In addition, we are subject to changes in Indian law, as well as to changes in regulation, government policies and accounting principles. Any material changes in the regulations that govern us could cause our business to suffer and the price of equity shares may decline. We do not own our Registered and Corporate Office from which we operate. We do not own the premises on which our Registered Office and Corporate Office are situated. The premises are leased to our


47

company M/s. Basan Commodities Ltd. We cannot assure you that we will own, or have the right to occupy, these premises in the future, or that we will be able to continue with the uninterrupted use of this property, which may impair our operations and adversely affect our financial condition. The logo and trade-name used by our company in its official correspondence and other operational requirements is not registered in the name of the company.

Our logo is currently not registered with the Trademark Registry. We had negative cash flows from Operating Activities for certain periods. Any negative cash flow in future could affect our operations and financial conditions. We had negative cash flow from various activities, as per audited financial statements, details of which are as under: (Rs. In Lakhs)

Particulars FY ending year 2012-13

FY ending year 2011-12

Cash Flow from operating activities

-181.09 -22.73

Cash Flow from investing activities

211.35 -432.28

Cash Flow from Financing activities

10.72 417.70

Net Cash Flow for the period

40.98 -37.31

The net cash flow of a company is a key indicator to show the extent of cash generated from operations of the company to meet 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 flows, it may adversely affect our business and financial operations.


48

EXTERNAL RISK FACTORS Substantial competition could harm our financial performance: We face substantial competition in each of the markets we serve. Retail brokerage is a highly competitive field and we expect increased competition in the online brokerage arena as the industry develops. We believe that commodity brokerage will grow from current levels and this growth will attract new competition. The market for retail distribution of personal financial products has witnessed extensive growth and is currently highly competitive with a large number of players of different sizes active in this industry. We believe that our pioneering efforts in mobile phone trading of commodities will, in future, attract a lot of competition as the number of mobile phone users grows in the country and if the adoption of our service is high. We expect that competition in each of the markets we operate in will continue, grow and intensify in the future. An increase in competition and number of competitors could adversely impact our margins, market share and consequently our profitability. Online trading is an increasingly competitive market: With the spread of I.T. literacy and the increasing adoption of computers and internet usage in households and businesses, internet trading is being adopted by people as a fast and convenient way of trading in securities. We believe that the potential of the online trading industry will attract many competitors such as banks, insurance companies, providers of online financial and information services and others, as the industry develops. Increase in competition in online trading may require us to reduce our operating margins to remain competitive with other offerings. It could also result in loss of market share thereby affecting our revenue source. Political instability in our country: Persistent political instability in our country could lead to market shocks which could adversely affect our business. The government of the country is a coalition government and this scenario has been in existence for the past two regimes. By its very nature, a coalition government is not as stable as a single party government due to the possibility of conflicts between the parties in the coalition. As witnessed by the events of May 2004, the unexpected defeat of the ruling coalition government led to a severe downward reaction in the stock markets. Similarly other political events such as withdrawal of support to the coalition by one or more of its members, opposition to reforms, defection of members, etc. could lead to a negative reaction in the markets. Such events could cause financial losses to our clients leading to defaults on pay-ins, thereby affecting our business and profitability. Additionally political instability could result in decreased involvement by FIIs and other institutional investors in the Indian markets leading to lower trading volumes and consequently lower trading by our clients. Low penetration of I.T. in India: Personal computers have very low penetration rates in India as compared to other developed and some developing countries. This has led to very low adoption and access levels of the Internet in India. There is no guarantee or assurance that the penetration levels of computers or access to the internet will increase in India. This limits the market size and potential for our online trading and mobile trading services. Terrorism war can adversely affect the financial market: Civil unrest, acts of violence including terrorism or war involving India and other countries could materially and adversely affect the financial markets and our business. Any major hostilities involving India or other acts of violence, including civil unrest or similar events that are beyond our control, could have a material adverse effect on India’s economy and our business. Terrorist attacks and other acts of violence may adversely affect the Indian stock markets, where our Equity Shares will trade, and the global equity markets generally. Our ability to raise foreign capital may be constrained by Indian law: As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such regulatory restrictions limit our financing sources and hence could constrain our ability to obtain financing on competitive terms


49

and refinance existing indebtedness. In addition, we cannot assure you that the required approvals will be granted to us without onerous conditions, if at all. Limitations on raising foreign debt may have an adverse effect on our business, financial condition, and results of operations. Tax rates may have adverse impact on our business: Tax rates applicable to Our Company may increase and may have an adverse impact on our business. The tax rates including surcharge and education cess applicable to us for fiscal 2011 are 33.99%. Any increase in the tax rates may have an adverse impact on our business and results of operations and we can provide no assurance as to the extent of the impact of such changes. Restriction on daily movement in the price of the Equity shares: There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder’s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time. Following the listing, we will be subject to a daily “circuit breaker” imposed by BSE, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker operates independently of the index-based, market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on our circuit breakers will be set by the stock exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The BSE may not inform us of the percentage limit of the circuit breaker in effect from time to time and may change it without our knowledge. This circuit breaker will limit the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance can be given regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity Shares at any particular time.


50

RISKS RELATING TO THE EQUITY SHARES Our Company may raise further rounds of equity financing in which the existing shareholders may not participate resulting in reduction of their percentage of holding in our company. In order to grow business, our Company may require additional funds at various points of time. Our Company may raise funds through various means including debt, equity and securities convertible into equity. Any such issuances of equity and securities convertible into equity would dilute the holding of Equity Shareholders. Difficult market conditions can adversely affect our business in many ways, including by reducing the volume of the transactions involving our advisory business, and these could materially reduce our revenue or income. Our ability to pay any dividends in the future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures. The amount of our future dividend payments, if any, will depend upon our Company’s future earnings, financial condition, cash flows, working capital requirements, capital expenditures, applicable Indian legal restrictions and other factors. There can be no assurance that our Company will be able to pay dividends. The price of our Equity Shares may be volatile.

The trading price of our Equity Shares may fluctuate after the listing due to a variety of factors, including our results of operations and the performance of our business, competitive conditions, general economic, political and social factors, the performance of the Indian and global economy and significant developments in India’s fiscal regime, volatility in the Indian and global securities market, performance of our competitors, the Indian Capital Markets, changes in the estimates of our performance or recommendations by financial analysts and announcements by us or others regarding contracts, acquisitions, strategic partnerships, joint ventures, or capital commitments. In addition, if the stock markets experience a loss of investor confidence, the trading price of our Equity Shares could decline for reasons unrelated to our business, financial condition or operating results. The trading price of our Equity Shares might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. Each of these factors, among others, could materially affect the price of our Equity Shares. Active trading market for our Equity Shares may not develop. Till date there has been no public market for our Equity Shares. We propose to list our Equity Shares on Equity Shares on Institution Trading Platform (ITP) of BSE SME. We cann ot assure that pursuant to listing on ITP, active trading market of our Equity Shares or for securities convertible in to Equity Shares would develop as trading on ITP is subject to certain restrictions viz minimum trading lot on institutional trading platform is Rs. 10 Lacs. Further the securities listed on ITP will be mandatorily exited within 18 months of triggering various events such as completion of ten years on listing of ITP or attaining paid up capital of Rs. 25 Crores or attaining revenue of Rs. 300 Crores or attaining market capitalization of Rs. 500 Crores. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder’s a b i l i t y to sell, or the price at which it can sell, Equity Shares at a particular point in time.


51

Pursuant to listing, we will be subject to a daily “circuit breaker” imposed by BSE, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker operates independently of the index-based, market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on our circuit breakers will be set by the stock exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The BSE may not inform us of the percentage limit of the circuit breaker in effect from time to time and may change it without our knowledge. This circuit breaker will limit the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance can be given regarding shareholders ability to sell Equity Shares at any particular time.


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SECTION III – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the beneficial ownership of our shares of by each person known by us to be the beneficial owner (In case different from registered owner) of the issued and subscribed capital.

Class / Type of Securities

Name and Address o f Benefice Owner

Amount and nature of beneficial ownership

Percent

EQUITY SHARES NIL N.A. N A

SHAREHOLDERS AGREEMENTS

Our Company has not entered into any shareholders agreement as on date of this Information Memorandum.


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SECTION IV: OUR MANAGEMENT Board of Directors:

Under our Articles of Association, our Company is required to have not less than three (3) Directors and not more than twelve (12) Directors. Our Company currently has SIX (6) Directors on Board. The following table sets forth current details regarding our Board of Directors:

Name, Father’s name, Address, Occupation,

Nationality, tenure & DIN Age

Status of Directorship in our Company Other Directorships

Mr. Sanjay Agrawal

30 yrs Director

1. Basan Equity Broking Limited

S/o Narayan Lal Agrawal 2. SaiGanga Packaging Ltd

Flat No. 101 J.V. Residency, Avanti Nagar, Basheerbagh Hyderabad – 500029

Occupation: Business

Nationality: Indian

Tenure: Five years with effect from 15.02.2008

DIN: 01863088

Mr. Basanth Kumar Agarwal

29 Yrs Director


S/o Narayan Lal Agrawal 2. SaiGanga Packaging Ltd

Flat No. 101 J.V. Residency, Avanti Nagar, Basheerbagh Hyderabad – 500029


Nationality: Indian


DIN: 01863070

Mr. Damodar Agarwal

29 yrs Independent Director


S/o Gopal Das Agrawal 2. SaiGanga Packaging Ltd

# 21-7-69/70, Kokarwadi, Ghansibazar Hyderabad – 500002


Nationality: Indian


54


DIN: 01863046

Mrs. Varsha Sharma

31 yrs Director


D/o Narayan Lal Agarwal

H No 4-4-248 First Floor, Sultan Bazar, Hyderabad, 500001


Nationality: Indian


DIN: 01863074

Mr. Nikhil Agarwal


NIL

S/o Mangilal Agrawal

# Siri Pratap Residency, Flat No.205, Sri Malle Garden Phase 3, Plot No.1, Upparapalli, Attapur, Hyderabad – 500048.


Nationality: Indian


DIN: 06550039

Mr. Rajesh Kumar Agarwal


NIL

S/o Tota Ram Agrawal

# 19-1-912/A/B, Gola khidki , Murlinagar, Hyderabad – 500064.


Nationality: Indian


DIN: 06550051 Note: As on the date of the Information Memorandum:

1. None of the above mentioned Directors are on the RBI List of willful defaulters as on date. 2. Further, none of our Directors are or were directors of any company whose shares were (a)

suspended from trading by stock exchange(s) for more than 3 months during the five years prior to


55

the date of filing the Information Memorandum or (b) delisted from the stock exchanges. 3. None of the Promoters, Persons forming part of our Promoter Group, Directors or persons in

control of our Company, has been or is involved as a promoter, director or person in control of any other company, which is debarred from accessing the capital market under any order or directions made by SEBI or any other regulatory authority.

Details of Directors: Mr. Sanjay Agrawal, aged 31 years is a Promoter of our Company. He is a Bachelor of Commerce from the Osmania University and has more than 8 years of experience in the field of capital market including research, dealing etc. He holds a Diploma in Financial Management and also Computer Application from CMC. Mr. Basanth Agarwal, aged 29, is Promoter & Whole Time Director of our Company. He has Acquired Master in Business Administration from international university. He has more than 7 years of experience in the field of finance, capital markets, and business advisory and related activities. The board has the advantage of his wide experience in the financial services field. He has been designated as director of our company since incorporation. Mrs. Varsha Sharma, aged 32, joined our Basan commodities Limited. She is primarily responsible for Human Resource Department of our company. She has acquired bachelor degree of commerce from Osmania University. She possesses certificates of financial market such as NISM-CD, NCFM-DR, NCFM-EQ. She has been as designated director of our Company since incorporation. Mr. Damodar Agarwal, aged 29, joined our Basan commodities Private Limited. He is primarily responsible for Business development of our company. He Acquired Bachelor degree of commerce from Osmania University. He is also certified for derivatives trading in stock exchange and possesses a diploma for the same. Mr. Nikhil Agarwal, aged 24, joined our Basan commodities Limited since incorporation. He acquired Bachelor degree of Science from Osmania University. He possesses a diploma in Computer Application. Mr. Rajesh Agarwal, aged 44, joined our Company in 2010. Previously, he had experience of 10 years in stock market. His presence in Board of Director gives us opportunity to avail his experience in our company. CONFIRMATIONS

• None of the Directors is or was a director of any listed company during the last five years preceding the date of filing of the Information Memorandum, whose shares have been or were suspended from being traded on the BSE or the NSE, during the term of their directorship in any such company.

• None of the Directors is or was a director of any listed company which has been or was delisted

from any recognised stock exchange/Forward Market Commission in India during the term of their directorship in such company.

Family Relationship among Directors: All the Directors are related to each other. Borrowing Power of the Directors:


56

The borrowing powers of our Board are regulated by the provisions of the Articles of Association of our Company. Pursuant to a special resolution passed at the Extra Ordinary General Meeting of our shareholders held on 11th April, 2013 our Directors were authorised to borrow money(s) on behalf of our Company in excess of the paid up share capital and the free reserves of our Company from time to time, pursuant to the provisions of Section 293(1)(d) of the Companies Act, subject to an amount not exceeding Rs. 100 crores. Terms of Appointment and Compensation of our Directors: There is no definitive and /or service agreement that has been entered into between our Company and the directors in relation to their appointment. NON – EXECUTIVE DIRECTORS Currently, non–executive Directors are not paid any sitting fees. Corporate Governance: Our Company stands committed to good corporate governance practices based on the principles such as accountability, transparency in dealings with our stakeholders, emphasis on communication and transparent reporting. We have complied with the requirements of the applicable regulations, including the Listing Agreement to be executed with the Stock Exchange and the SEBI Regulations, in respect of corporate governance including constitution of the Board and Committees thereof. The corporate governance framework is based on an effective independent Board, separation of the Board’s supervisory role from the executive management team and constitution of the Board Committees, as required under law. We have a Board constituted in compliance with the Companies Act and the Listing Agreement in accordance with best practices in corporate governance. The Board functions either as a full Board or through various committees constituted to oversee specific operational areas. Our executive management provides the Board detailed reports on its performance periodically. Currently our Board has six (6) Directors. We have two (2) Whole Time Director, one (1) non-executive non independent director and three (3) independent directors. The constitution of our Board is in compliance with the requirements of Clause 52 of the Listing Agreement. Audit Committee: The following committees have been formed in compliance with the corporate governance norms: A) Audit Committee B) Shareholders/Investors Grievance Committee AUDIT COMMITTEE: Our Company has constituted an audit committee ("Audit Committee"), as per the provisions of Section292A of the Companies Act, 1956 and Clause 52 of the Listing Agreement to be entered with Stock Exchange, vide resolution passed in the meeting of the Board of Directors held on 18-Dec-2013. The terms of reference of Audit Committee complies with the requirements of Clause 52 of the Listing Agreement, proposed to be entered into with the Stock Exchange in due course. The committee presently comprises following four (4) directors. Mr. Basanth Kumar Agarwal is the Chairman of the Audit Committee.


57

No. Name of the Director Status Nature of Directorship

1 Mr. Basanth Kumar Agarwal Chairman Director

2 Mrs. Varsha Sharma Member Director

3 Mr. Sanjay Agarwal Member Director

Role of Audit Committee The role of the audit committee shall include the following:

1. Oversight of the Issuer’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

2. 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.

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4. 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 Board’s 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

b. Major accounting entries involving estimates based on the exercise of judgment by management

c. Significant adjustments made in the financial statements arising out of audit findings d. Compliance with listing and other legal requirements relating to financial statements e. Disclosure of any related party transactions f. Qualifications in the draft audit report.

5. reviewing, with the management, the half yearly financial statements before submission to the

board for approval

6. 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 information memorandum/notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.

7. Reviewing, with the management, performance of statutory and internal auditors, and

adequacy of the internal control systems.

8. 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.

9. Discussion with internal auditors any significant findings and follow up there on.


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10. 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.

11. 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.

12. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of nonpayment of declared dividends) and creditors.

13. To review the functioning of the Whistle Blower mechanism, in case the same is existing.

14. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person

heading the finance function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate.

15. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE Our Company has constituted a shareholder / investors grievance committee ("Shareholders / Investors Grievance Committee") to redress the complaints of the shareholders. The Shareholders/Investors Grievance Committee was constituted vide resolution passed at the meeting of the Board of Directors held on 6th August, 2012. Mr. Sanjay Agarwal is the Chairman of the Shareholders/ Investors Grievance committee. No. Name of the Director Status Nature of Directorship

1 Mr. Basanth Kumar Agrawal Member Director

2 Ms. Varsha Sharma Member Director

3 Mr. Sanjay Agarwal Chairman Director

Role of shareholders/investors grievance committee The Shareholders / Investors Grievance Committee of our Board look into:

• The redressal of investors complaints viz. non-receipt of annual report, dividend payments etc. • Matters related to share transfer, issue of duplicate share certificate, dematerializations. Also

delegates powers to the executives of our Company to process transfers etc. The status on various complaints received / replied is reported to the Board of Directors as an Agenda item. Interest of Directors: All the Directors of our Company may be deemed to be interested to the extent of sitting fees and/or other remuneration if any, payable to them for attending meetings of the Board or a committee thereof as well as to the extent of reimbursement of expenses if any payable to them under the


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Articles of Association. All the Directors may also be deemed to be interested in the Equity Shares of our Company, if any, held by them, their relatives or by the companies or firms or trusts in which they are interested as directors / members / partners or that may be subscribed for and allotted to them, out of the present Issue and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. All the Directors may be deemed to be interested in the contracts, agreements/arrangements entered into or to be entered into by our Company with any other company in which they have direct /indirect interest or any partnership firm in which they are partners. Our Directors may also be regarded interested to the extent of dividend payable to them and other distributions in respect of the Equity Shares, if any, held by them or by the companies / firms / ventures promoted by them or that may be subscribed by or allotted to them and the companies, firms, in which they are interested as Directors, members, partners and Promoters, pursuant to this Issue. Property Interest: Our Company has not entered into any contract, agreements or arrangement during the preceding two (2) years from the date of this Information Memorandum in which the Directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangements or are proposed to be made to them. Organisation Structure: Key Managerial Personnel: Our Company is managed by its Board of Directors, assisted by qualified professionals, in the respective field of production/finance/ distribution/marketing and corporate laws. The following key personnel assist the management of our Company:

Name Date of Joining Designation Functional Responsibilities Qualification

Mr. Basanth K Agarwal 15.02.2008

Designated Director

Being Designated Director, role is to organize each department, design and implement strategies, provide necessary training and following Rules, Regulation and Bye Laws. M B A

Mr. Sanjay Agarwal

15.02.2008

Director

RMS, Business Development, Handling Marketing Team,

B Com. Mrs. Varsha Sharma,

15.02.2008

Designated Director

Human Resource, Marketing

B Com.


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Mr. KLNA Kumar 23.03.2010 Compliance Officer

Administrative supervision, KYC Department

MBA; CISCO Certified;

Usha Sharma 15.02.2008 Senior Officer Accounts Head M Com.

Mr. Prakash Kovvali 15.02.2008

Senior Officer

Networking and Technical Head

B Com.; Microsoft certified


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SECTION – V: OUR PROMOTERS AND PROMOTER GROUP Details of our Promoters are as under: Mr. Sanjay Agrawal, aged 30 years is a Promoter of our Company. He is a Bachelor of Commerce from the OsmaniaUniversity and has more than 8 years of experience in the field of capital market including research, dealing etc..

Particulars Details Name Mr. Sanjay Agrawal

Permanent Account Number

AFFPA7786K

Passport No. H6572771

Address 3-6-69/B/2, Flat # 101, J V Residency, Basheerbagh, Hyd - 29

Mr. Basanth Agarwal aged 29, is Promoter & Whole Time Director of our Company. He has acquired Master in Business Administration. He has more than 8 years of experience in the field of finance, capital markets, and business advisory and related activities. The Board has the advantage of his wide experience in the financial services field. He has been designated as Director of our Company since incorporation.

Particulars Details

Name Mr. Basanth Agrawal

Permanent Account Number AFFPA7787J

Passport No. E7808465

Address 3-6-69/B/2, Flat # 101, J V Residency, Basheerbagh, Hyd - 29

OTHER UNDERTAKINGS AND CONFIRMATIONS Our Company undertakes that the details of Permanent Account Number, passport number of the Promoters have been submitted to the BSE Limited, where the securities of our Company are proposed to be listed at the time of submission of Information Memorandum. COMMON PURSUITS OF OUR PROMOTERS Our Promoters do not have any common pursuits and not engaged in the business similar to those carried out by our Company.


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CONFIRMATIONS For details on litigations and disputes pending against the Promoters and defaults made by them, please refer to the section titled “Outstanding Litigation and Material Developments” on page 64 of the Promoters. Our Promoters have not been declared 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. PROMOTER GROUP The Promoter Group consists of natural persons, HUF’s, private companies, trust and Partnership / proprietorship firms. (i) Individual Promoter a) The natural persons who are part of our Promoter Group (due to the relationship with our promoters), other than the Promoters named above are as follows:

Relationship Sanjay Agarwal Basanth Kumar Agarwal Sanjay Agarwal Self Brother Basanth K Agarwal Brother Self Megha Agarwal Wife Sister In Law Varsha Sharma Sister Sister Damodar Agarwal Brother In Law - Basanth Kumar Agarwal (HUF) Brother Self Sanjay Agarwal (HUF) Self Brother Basan Equity Broking Ltd Director Director

DECLARATION We confirm that the permanent account number, passport number and address of our individual promoters will be submitted to BSE Limited at the time of filing the Information Memorandum. SICK COMPANIES No Promoter Group companies listed above have been declared as a sick company under the SICA. There are no winding up proceedings against any of the Promoter Company and Promoter Group companies. Except as disclosed in this chapter the Promoter Group companies do not have negative net worth. Further, no application has been made by any of them to RoC to strike off their names. CONFIRMATION Our Promoters and persons forming part of Promoter Group have confirmed that they have not been declared as willful defaulters by the RBI or any other governmental authority and there are no violations of securities laws committed by them in the past and no proceedings pertaining to such penalties are pending against them. Additionally, none of the Promoters and persons forming part of Promoter Group has been restrained from accessing the capital markets for any reasons by SEBI or any other authorities. None of the Promoter or Group Companies has a negative net worth as of the date of the respective last audited financial statements.


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SECTION VI – RELATED PARTY TRANSACTIONS

Transaction with related party as identified by the management in accordance with Accounting Standard 18 “Related party disclosures” issued by The Institute of Chartered Accountants of India, are as follows:

I. List of Related Parties

31.03.2013 31.03.2012 31.03.2011

Party Where Control Exists BASANTH K AGARWAL BASANTH K AGARWAL BASANTH K AGARWAL SANJAY AGARWAL SANJAY AGARWAL SANJAY AGARWAL Other Parties Where Transaction have taken place Group Companies - - - Key Managerial Persons - - - Relatives of Key Managerial Persons - - -

II. Details of Transactions with Related party:

No transactions has been entered with any related parties during the preceding three fiscal years.


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SECTION –VII - LEGAL AND OTHER INFORMATION

Outstanding litigation, material development and others 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 and Promoter Group 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, fixed deposits or preference shares 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 Promoters, our Directors or Promoter Group Companies. (A)OUTSTANDING LITIGATION INVOLVING OUR COMPANY: 1. Cases filed by our Company

Civil Cases Nil

Criminal Cases Nil Arbitration Cases

S No

Case No. /Compliant No. Applicant Respondent

Brief Description of the case

Award Status

1 MCX/LEGAL/814A/12

M/s : Basan Commodities Private Limited

Mr. DINESH KUMAR SARDA

Arbitration Case filed on 05-09-2012 in MCX Arbitration Panel for amount of Rs. 317000/-

In favor of Applicant

II. Cases filed against Our Company

Civil proceedings: There are no civil proceedings filed against our Company. Criminal Proceedings: There are no criminal proceedings filed against our Company Arbitration Proceedings: There are no Arbitration Proceedings filed against our Company

III. Income tax proceedings involving our Company

Nil IV. Litigations involving our Promoter

(i) Proceedings of Civil nature


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(a) By the promoter Nil

(b) Against the promoters Nil

(ii) Proceedings of a Criminal nature- (a) By the promoters

Nil (b) Against the promoters

Nil V. Litigations involving Directors of our Company

(i) Proceedings of Civil nature (a) By the Directors of our Company

Nil (b) Against the Directors of our Company

Nil (ii) Proceedings of a Criminal nature-

(a) By the Directors of our Company Nil

(b) Against the Directors of our Company Nil

VI. Litigation involving our Group Entities

(i) Against our group entities Nil

(ii) By our group entities Nil VII. Other litigations involving any other entities which may have a material adverse effect on Our Company: There is no outstanding litigation, suits, criminal or civil prosecutions, statutory or legal proceedings including those for economic offences, tax liabilities, prosecution under any enactment in respect of Schedule XIII of the Companies Act, show cause notices or legal notices pending against any company whose outcome could affect the operation or finances of our Company or have a material adverse effect on the position of our Company. V. Potential Litigations: There are no potential litigations against our Company, our Promoters, our Directors, our Subsidiary or our Group Entities that we are currently aware of or in connection with which, we have received notice.

GOVERNMENT AND OTHER APPROVALS In view of the licenses / permissions / approvals / no-objections / certifications / registrations, (collectively “Authorisations”) listed below, our Company can undertake this Issue and our current business activities and to the best of our knowledge, no further approvals from any governmental or regulatory authority or any other entity are required to undertake this Issue or continue our business activities. Unless otherwise stated, these approvals are all valid as of the date of the Information Memorandum. It must be distinctly understood that, in granting these approvals, the GOI, the RBI or any other authority


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does not take any responsibility for our financial soundness or for the correctness of any of the statements made or opinions expressed in this behalf.

A. Corporate / General Authorisation S No.

Authorisation Granted

Issuing Authority

Registration No.

Applicable Act / Regulation

Date of Issue

Valid up to

1. Certificate of Incorporation in name of “Basan Commodities Private Limited”

Registrar of Companies, Andhra Pradesh

U67120AP2008PTC057632

Companies Act, 1956

15th Feb, 2008

Valid until cancellation

2. Commencement of Business Activities


U67120AP2008PTC057632

Companies Act, 1956

1st April, 2009


3. Conversation of “Private to Public” - “Basan Commodities Limited”


U67120AP2008PTC057632

Companies Act, 1956

9th May, 2013


B. Tax Related Authorisations

S No.

Authorisation Granted Issuing Authority Registration No Date of Issue Valid up to

1 Permanent Account Number

Income Tax Department AADCB3746Q --

Valid up to Cancellation

2 Tax Deduction Account Number

Income Tax Department HYDB04315D --


3

Service Tax Code under Service Tax Rules, 1994

Office of the Assistant Commissioner Service Tax AADCB3746QST001 26-03-2008


C. Business Related Authorisations

S No.

Authorisation Granted (Exchange) Member Code Unique Member Code Date of Admission Date of Activation

1 MCX 45300 MCX/TM/CORP/1740 23-Dec-08 9-Mar-09 2 NCDEX 1072 NCDEX/TCM/CORP/1047 11-Aug-11 31-Oct-11 3 ICEX 1403 ICEX/TCM/CORP/0401 10-Apr-10 01-Jul-10 4 NSEL 12020 -

D. Other Authorisations

ISIN Number: INE393O01012


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SECTION VIII – DECLARATION

All relevant provisions of the Companies Act, 1956, and the guidelines issued by the Government of India or the regulations issued by Securities and Exchange Board of India, applicable, as the case may be, have been complied with and no statement made in this Information Memorandum is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or the rules made there under or regulations issued, as the case may be. We further certify that all the statements in this Information Memorandum are true and correct.

Signed By all Director

Mr Basanth K Agarwal Mr Damodar Agarwal

Mr Sanjay Agarwal Mr Nikhil Agarwal

Ms Varsha Sharma Mr Rajesh K Agarwal

Signed by Company Secretary

Signed by Chairman Date: 24-Dec-2013 Place: Hyderabad

basan commodities limited – information memorandum ... · fmc : forward market commission . fob :...

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