draft letter of offer this document is ... letter of offer this document is important and requires...

DRAFT LETTER OF OFFER

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This Letter of Offer is being sent to you as a registered equity shareholder(s) of VLS Finance Limited (“the Company”), as onthe Record Date in accordance with Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 1998, asamended (Buyback Regulations). If you require any clarifications about the action to be taken, you may consult your stockbroker or your investment consultant or the Manager to the Buyback i.e. SMC Capitals Limited or the Registrar to theBuyback i.e. RCMC Share Registry Pvt. Ltd.

VLS FINANCE LIMITEDRegistered Office: 2nd Floor, 13, Sant Nagar, East of Kailash, New Delhi – 110 065

Tel: 011 – 46656666; Fax: 011-46656699Contact Person: Mr. H. Consul, Company Secretary

Email: [email protected]; [email protected];Website: www.vlsfinance.com

Cash Offer for Buyback of not exceeding 99,48,750 fully paid-up Equity Shares of face value of ` 10/- each, representing25% of the total number of equity shares in the issued, subscribed and paid-up equity share capital of the Company, fromall the existing shareholders / beneficial owners of equity shares of the Company except Promoter/Promoter group andpersons acting in concert with them (hereinafter referred to as “Public Shareholders”) as on the Record Date i.e. December27, 2013, on a proportionate basis, through the “Tender Offer” Method at a price of ` 14.50 per equity share (RupeesFourteen and Fifty Paisa Only) for an aggregate maximum amount of ` 14,42,56,875 (Rupees Fourteen Crores Forty TwoLacs Fifty Six Thousands Eight Hundred Seventy Five Only).1) The Buyback is in accordance with the provisions contained in the Article 5(iv) and (v) of the Articles of Association of the

Company, Section 77A, 77AA, 77B and other applicable provisions of the Companies Act, 1956 and Section 69, 70 and allother applicable provisions, if any, of the Companies Act, 2013, Regulation 4(1)(a) and other applicable provisionscontained in the Buyback Regulations and subject to such other approvals, permissions and sanctions as may benecessary, from time to time from statutory authorities including but not limited to Securities and Exchange Board ofIndia, the Stock Exchanges, Reserve Bank of India etc.

2) The Buyback Offer of 99,48,750 fully paid-up equity shares is 25%of the fully paid-up equity share capital and 7.63% ofthe fully paid-up equity share capital and free reserves as per the audited accounts of the Company for the financial yearended March 31, 2013 which stands at ` 18899.39 Lacs (Rupees One Hundred Eighty Eight Crores and Ninety Nine Lacsapproximately) and is within the statutory limits of 10% of the fully paid-up equity share capital and free reserves as perthe last audited accounts of the Company and is within the powers of the Board of Directors.

3) This Draft Letter of Offer is being sent to the eligible Public Shareholders / Beneficial Owner(s) of Equity Shares of theCompany as on the Record Date i.e. Friday, December 27, 2013.

4) The procedure for acceptance is set out in Section 20 on page 31 of this Letter of Offer. The Form of Acceptance-cum-Acknowledgement is enclosed together with this Letter of Offer.

5) For mode of payment of consideration to the Public Shareholders, please refer to Section 20 paragraph 20 on page 35 ofLetter of Offer.

6) A copy of the Public Announcement and this Letter of Offer (including Form of Acceptance-cum-Acknowledgement) isalso available on the website of Securities and Exchange Board of India - http://www.sebi.gov.in

7) Public Shareholders are advised to refer to Section 17 on Page 26 (Details of Statutory Approvals) and Section 21 on Page36 (Note on Taxation) before tendering their Equity Shares in the Buyback

MANAGER TO THE BUYBACK

SMC Capitals LimitedSEBI Registration No.: INM000011427#302-303, Enterprise Centre,Near Orchid Hotel, Nehru Road, VileParle (East) Mumbai- 400099Tel. No.: +91- 22- 66481818;Fax: +91- 22- 66481850Email: [email protected] Person: Mr. Sanjeev Barnwal

Registrar to the Offer

RCMC Share Registry Pvt. Ltd.SEBI Registration No.: INR000000429B-106, Sector-2,Noida, U.P. – 201301Tel: 0120 – 4015884;Fax: 0120-2444346Email: [email protected] Person: Mr. Ravinder Dua

OFFER OPENS ON: [●] OFFER CLOSES ON: [●]# SEBI Registration is valid until December 30, 2013. However, renewal application has been made to SEBI on September 25,2013 and is in process.

TABLE OF CONTENTS

1. SCHEDULE OF ACTIVITIES .............................................................................................................................. 3

2. DEFINITION OF KEY TERMS............................................................................................................................ 3

3. DISCLAIMER CLAUSE...................................................................................................................................... 5

4. TEXT OF THE RESOLUTION PASSED AT THE BOARD MEETING........................................................................ 6

5. DETAILS OF THE PUBLIC ANNOUNCEMENT.................................................................................................... 9

6. DETAILS OF THE BUYBACK ............................................................................................................................. 9

7. AUTHORITY FOR THE BUYBACK ................................................................................................................... 12

8. NECESSITY OF THE BUYBACK ....................................................................................................................... 12

9. MANAGEMENT DISCUSSION AND ANALYSIS AND THE LIKELY IMPACT OF BUYBACK ON THE COMPANY .... 12

10. BASIS OF CALCULATING THE BUYBACK PRICE .............................................................................................. 13

11. SOURCES OF FUNDS FOR THE BUYBACK ...................................................................................................... 14

12. DETAILS OF THE ESCROW ACCOUNT AND THE AMOUNT TO BE DEPOSITED THEREIN.................................. 14

13. CAPITAL STRUCTURE AND SHAREHOLDING PATTERN.................................................................................. 14

14. BRIEF INFORMATION OF THE COMPANY ..................................................................................................... 18

15. FINANCIAL INFORMATION ABOUT THE COMPANY...................................................................................... 23

16. STOCK MARKET DATA ................................................................................................................................. 24

17. DETAILS OF THE STATUTORY APPROVALS ................................................................................................... 26

18. DETAILS OF THE REGISTRAR TO THE BUYBACK ............................................................................................ 26

19. PROCESS AND METHODOLOGY FOR THE BUYBACK ..................................................................................... 27

20. PROCEDURE FOR TENDER OFFER AND SETTLEMENT.................................................................................... 31

21. NOTE ON TAXATION.................................................................................................................................... 36

22. DECLARATION BY THE BOARD OF DIRECTORS ............................................................................................. 42

23. AUDITORS CERTIFICATE............................................................................................................................... 43

24. DOCUMENTS FOR INSPECTION.................................................................................................................... 44

25. DETAILS OF THE COMPLIANCE OFFICER ....................................................................................................... 45

26. DETAILS OF THE REMEDIES AVAILABLE TO THE SHAREHOLDERS/ BENEFICIAL OWNERS.............................. 45

27. DETAILS OF INVESTOR SERVICE CENTRES .................................................................................................... 45

28. DETAILS OF THE MANAGER TO THE BUYBACK ............................................................................................. 46

29. DECLARATION BY THE DIRECTORS REGARDING AUTHENTICITY OF THE INFORMATION IN THE LETTER OFOFFER.......................................................................................................................................................... 46

30. TENDER / OFFER FORM FOR SHAREHOLDERS HOLDING SHARES IN DEMATERIALIZED FORM

31. TENDER / OFFER FORM FOR SHAREHOLDERS HOLDING SHARES IN PHYSICAL FORM

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1. SCHEDULE OF ACTIVITIES

Activity Date Day

Date of Meeting of Board of Directors approving the Buyback December 10, 2013 Tuesday

Date of publication of the Public Announcement for theBuyback

December 12, 2013 Thursday

Record Date for determining the Entitlement and the namesof Eligible Shareholders

December 27, 2013 Friday

Buyback opens on / Date of Opening of Buyback [●] [●]

Buyback closes on / Date of Closing of Buyback [●] [●]

Last date of verification [●] [●]

Last date of intimation regarding acceptance / non-acceptance of tendered Equity Shares

[●] [●]

Last date of dispatch of consideration / share certificate(s)/demat instruction(s)

[●] [●]

Last date of Extinguishment of Equity Shares [●] [●]

2. DEFINITION OF KEY TERMS

Acceptance Acceptance of Equity Shares, tendered by Eligible Persons in the BuybackOffer

Act The Companies Act, 1956, as amended (to the extent applicable)The Companies Act, 2013, as amended (to the extent notified)

Additional Shares /Additional Equity Shares

Equity Shares tendered by an Eligible Person over and above the BuybackEntitlement of such shareholder.

Company / VLS VLS Finance Limited

Board of Directors/Board

Board of Directors of the Company, or the Committee of Directors orBuyback Committee for the purpose of the Buyback.

BSE BSE LimitedBuyback Entitlement The number of Equity Shares that a Shareholder is entitled to tender in the

Buyback Offer, based on the number of Equity Shares held by thatShareholder, on the Record Date and the ratio of Buyback applicable in thecategory, to which such Shareholder belongs to.

Buyback Offer / Buyback/Offer

Offer by VLS Finance Limited to buy back up to 99,48,750 fully paid-upEquity Shares of face value of ` 10/- each at a price of ` 14.50 (RupeesFourteen and Fifty Paisa Only) per Equity Share from all the PublicShareholders of the Company through Tender Offer process, on aproportionate basis.

CSE The Calcutta Stock Exchange LimitedCDSL Central Depository Services (India) LimitedDP Depository Participant

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Eligible Person(s) Person(s) eligible to participate in the Buyback Offer and would mean allPublic Shareholders / Beneficial Owner(s) of Equity Shares of the Companyas on the Record Date i.e., December 27, 2013

Equity Shares / Shares Fully paid up Equity Shares of face value of ` 10/- each of VLS FinanceLimited

Escrow Account The Escrow Account opened with [*]ISIN International Securities Identification NumberForm/ Tender Form Form of Acceptance–cum–AcknowledgementFree Reserves Excludes revaluation reserves, statutory reserves and miscellaneous

expenditure to the extent not written offLoF/ Offer Document Letter of OfferManager to the BuybackOffer

SMC Capitals Limited

MSE Madras Stock Exchange LimitedNon-ResidentShareholders

Includes Non-Resident Indians (NRI), Foreign Institutional Investors (FII) andOverseas Corporate Bodies (OCB)

NECS National Electronic Clearing ServicesNSE The National Stock Exchange of India LimitedNSDL National Securities Depository LimitedOffer Price / BuybackPrice

Price at which Equity Shares will be bought back from the Shareholders i.e.` 14.50 (Rupees Fourteen and Fifty Paisa Only) per fully paid up EquityShare, payable in cash

Offer Size / Buyback Size Number of Equity Shares proposed to be bought back (upto 99,48,750Equity Shares) multiplied by the Offer Price (i.e. ` 14.50 (Rupees Fourteenand Fifty Paisa Only) per Equity Share) aggregating to ` 14,42,56,875(Rupees Fourteen Crores Forty Two Lacs Fifty Six Thousands Eight HundredSeventy Five Only) .

PA / PublicAnnouncement

Public Announcement regarding the Buyback dated December 11, 2013,issued in Financial Express (English daily, all editions), Jansatta (Hindi andRegional daily , all editions) on December 12, 2013

Public Shareholders /Beneficial Owner(s)

All the existing shareholders / beneficial owners of Equity Shares of theCompany except promoter/promoter group and persons acting in concertwith them

RBI Reserve Bank of IndiaRecord Date The date for the purpose of determining the entitlement and the names of

the Shareholders, to whom the Letter of Offer and Tender Offer Form willbe sent and who are eligible to participate in the proposed Buyback offer inaccordance with the Regulations. The Record Date in this Buy Back offer isDecember 27, 2013.

Registrar to the Offer /Registrar to the Buyback

RCMC Share Registry Pvt. Ltd.

Regulations / SEBIRegulations /SEBI BuybackRegulations / BuybackRegulations

Securities and Exchange Board of India (Buy-Back of Securities) Regulations,1998 including any amendments.

SEBI The Securities and Exchange Board of India

Small Shareholder An Equity Shareholder, who holds Equity Shares of market value not morethan two lakh rupees, on the basis of closing price on the recognized stockexchange registering the highest trading volume, as on Record Date i.e.

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December 27, 2013.

Stock Exchange(s)/StockExchange

BSE, NSE, CSE and MSE being the Stock Exchanges where the shares of theCompany are listed.

Tender Offer Method of buyback as defined in Regulation 2(1)(o) of the BuybackRegulations

3. DISCLAIMER CLAUSE

As required, a copy of this Letter of Offer has been submitted to Securities and Exchange Board of India(SEBI). It is to be distinctly understood that submission of the Letter of Offer to SEBI should not, in anyway be deemed or construed that the same has been cleared or approved by SEBI. SEBI does not take anyresponsibility either for the financial soundness of the Company to meet the Buyback commitments or forthe correctness of the statements made or opinions expressed in the offer document. The Manager to theBuyback Offer, SMC Capitals Limited has certified that the disclosures made in the offer document aregenerally adequate and are in conformity with the provisions of the Companies Act, 1956, the CompaniesAct, 2013 and Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 asamended. This requirement is to facilitate investors to take an informed decision for tendering theirEquity Shares in the Buyback.

It should also be clearly understood that while the Company is primarily responsible for the correctness,adequacy and disclosure of all relevant information in the offer document, the Manager to the BuybackOffer is expected to exercise due diligence to ensure that the Company discharges its duty adequately inthis behalf and towards this purpose, the Manager to the Buyback Offer, SMC Capitals Limited hasfurnished to SEBI a due diligence Certificate dated December 19, 2013 in accordance with SEBI (Buybackof Securities) Regulations 1998 which reads as follows:

“We have examined various documents and materials contained in the annexure to this letter, as part ofthe due diligence carried out by us in connection with the finalization of the Public Announcement and theLetter of Offer. On the basis of such examination and the discussions with the Company, we hereby statethat:

The Public Announcement and the Letter of Offer are in conformity with the documents, materials andpapers relevant to the Buyback Offer.

All the legal requirements connected with the said offer including SEBI (Buyback of Securities)Regulations, 1998, have been duly complied with.

The disclosures in the Public Announcement and the Letter of Offer are, to the best of our knowledge,true, fair and adequate in all material respects for the shareholders of the Company to make a wellinformed decision in respect of the captioned Buyback Offer.

Funds used for Buyback shall be as per the provisions of the Companies Act, 1956 and the CompaniesAct, 2013.”

The filing of Offer Document with SEBI does not, however, absolve the Company from any liabilities underthe provisions of the Companies Act, 1956, and the Companies Act, 2013 or from the requirement ofobtaining such statutory or other clearances as may be required for the purpose of the proposed Buyback.

Promoter/ Board of Directors declare and confirm that no information/ material likely to have a bearingon the decision of investors has been suppressed/ withheld and/ or incorporated in the manner that

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would amount to misstatement/ misrepresentation and in the event of it transpiring at any point of timethat any information/ material has been suppressed/ withheld and/ or amounts to a mis-statement/ mis-representation, the Promoter/ Board of Directors and the Company shall be liable for penalty in terms ofthe provisions of the Companies Act, 1956, the Companies Act, 2013, the Securities and Exchange Boardof India (Buy Back of Securities) Regulations, 1998 as amended and other applicable laws and regulations.

Promoter/ Board of Directors also declare and confirm that funds borrowed from Banks and FinancialInstitutions will not be used for the Buyback.

4. TEXT OF THE RESOLUTION PASSED AT THE BOARD MEETING

The Buyback through Tender Offer was considered and approved by the Board of Directors of theCompany at their meeting held on December 10, 2013. The extracts of the minutes of the Board Meetingheld in Delhi are as follows:

“RESOLVED THAT pursuant to the provisions of Article 5(iv) and (v) of the Articles of Association of theCompany, as amended and the provisions of Section 77A, 77AA, 77B and all other applicable provisions, ifany, of the Companies Act, 1956 (to the extent applicable) and Section 69, 70 and all other applicableprovisions, if any, of the Companies Act, 2013 (to the extent notified) and in compliance with theSecurities and Exchange Board of India (Buy-back of Securities) Regulations, 1998, including any statutorymodifications or re-enactments thereof (“SEBI Buyback Regulations”), and such other approvals,permissions and sanctions as may be necessary and subject to such conditions and modifications as maybe prescribed or imposed while granting such approvals, permissions and sanctions which may be agreedto by the Board of Directors of the Company (the "Board" which expression shall include any committeeconstituted by the Board to exercise its powers, including the powers conferred by this resolution), theBoard hereby approves the buy back by the Company of its fully paid-up equity shares of Rs. 10/- each notexceeding 99,48,750 (Ninety Nine Lacs Forty Eight thousand Seven Hundred and Fifty) equity shares(representing 25% of the total paid-up equity capital of the Company) at a price of Rs. 14.50/- (RupeesFourteen and Paisa Fifty Only) per equity share (the “Buy Back Offer Price”) payable in cash for anaggregate amount of Rs. 14,42,56,875 (Rupees Fourteen Crores Forty Two Lacs Fifty Six Thousands EightHundred Seventy Five Only) (the “Buyback Offer Size”) which is within 10% of the fully paid-up equityshare capital and free reserves of the Company as per the audited accounts of the Company for the yearended March 31, 2013, from the shareholders of the Company on a proportionate basis, through theTender Offer route as prescribed under the SEBI Buyback Regulations (hereinafter referred to as the"Buyback").

RESOLVED FURTHER THAT the buyback is being proposed in keeping with the Company’s desire toenhance overall shareholders value and the buyback would lead to reduction in total number of equityshares.

RESOLVED FURTHER THAT the Company may implement the Buyback of up to 10% of its paid-up equitycapital and free reserves of the Company as per the approval granted by way of this resolution thereby incompliance with proviso to section 77A (2)(b) of the Companies Act, 1956, and in accordance with theSEBI Buyback Regulations.

RESOLVED FURTHER THAT as required by Regulation 6 of the SEBI Buyback Regulations, the Companymay buy back equity Shares from the existing shareholders on a proportionate basis through tender offermechanism, provided 15% of the number of equity shares which the Company proposes to buyback ornumber of equity shares entitled as per the shareholding of small shareholders, whichever is higher, shallbe reserved for the small shareholders, as defined in the SEBI Buyback Regulations.

RESOLVED FURTHER THAT the Board of Directors hereby confirms that:

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a) all equity shares of the Company are fully paid up;

b) the Company has noted that it shall not issue and allot any equity shares including by way of bonus,till the date of closure of this Buyback;

c) the Company shall not buy back its shares from any person through negotiated deal whether on oroff the stock exchanges or through spot transactions or through any private arrangement in theimplementation of the Buyback;

d) that the aggregate amount of the Buyback i.e. Rs. 14,42,56,875 (Rupees Fourteen Crores Forty TwoLacs Fifty Six Thousands Eight Hundred Seventy Five Only) does not exceed 10% of the total paid-upcapital and free reserves as per the audited balance sheet as on March 31, 2013;

e) that the maximum number of equity shares proposed to be purchased under the Buyback i.e.99,48,750 (Ninety Nine Lacs Forty Eight Thousand Seven Hundred Fifty) equity shares, does notexceed 25% of the total number of shares in the paid-up equity capital as per the audited balancesheet as on March 31, 2013;

f) no default, has been made by the Company in the repayment of deposits accepted either before orafter the commencement of the Companies Act, 2013, interest payment thereof, redemption ofdebentures or preference shares or payment of dividend to any shareholder, or repayment of anyterm loan or interest payable to thereon to any financial institution or banking company, in the lastthree years;

g) the debt equity ratio of the Company after the Buyback will be well within the limit of 2:1 asprescribed under the Companies Act, 1956 (to the extent applicable) and Companies Act, 2013 (tothe extent notified), as the case may be.

RESOLVED FURTHER THAT as required by Clause (x) of Part A of Schedule II of the SEBI BuybackRegulations, the Board hereby confirms that they have made a full enquiry into the affairs and prospectsof the Company and that they have formed the opinion:

a) that immediately following the date of this Board meeting, there will be no grounds on which theCompany could be found unable to pay its debts;

b) as regards the Company’s prospects for the year immediately following the date of this Boardmeeting, and having regard to the Board’s intention with respect to the management of theCompany’s business during that year and to the amount and character of the financial resourceswhich will in the Board’s view be available to the Company during that year, the Company will beable to meet its liabilities as and when they fall due and will not be rendered insolvent within aperiod of one year from that date of this Board meeting; and

c) In forming an opinion for the above purposes, the Board has taken into account the liabilities, as ifthe Company were being wound up under the provisions of the Companies Act, 1956 (to the extentapplicable) and Companies Act, 2013 (to the extent notified), as the case may be, includingprospective and contingent liabilities.

RESOLVED FURTHER THAT the proposed Buyback be implemented from the existing shareholders otherthan those who are Promoters, Promoters Group and Persons Acting in concert (such shareholders hereinafter collectively as “Persons in Control”) that persons in control will be such persons as have beendisclosed under the filings made by the Company from time to time under Securities and Exchange Boardof India (Substantial Acquisition of Shares and Takeover) Regulations 2011 (“SEBI Takeover Regulations”)as the Board may consider appropriate, from out of its free reserves and/or Share Premium Account

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and/or cash balances and/ or internal accruals and/or such other sources or by such mechanisms as maybe permitted by Law, and on such terms and conditions as the Board may decide from time to time, andin the absolute discretion of the Board, as it may deem fit;

RESOLVED FURTHER THAT Company shall not use borrowed funds, directly or indirectly, whether securedor unsecured, of any form and nature, from banks and financial institutions for paying the considerationto the equity shareholders who have tendered their equity shares in the Buyback.

RESOLVED FURTHER THAT the Company shall not Buyback the locked-in equity shares or other specifiedsecurities, if any and non-transferable equity shares or other specified securities, if any, till the pendencyof the lock-in or till the equity shares or other specified securities become transferable;

RESOLVED FURTHER THAT Buyback from shareholders who are persons resident outside India includingthe Foreign Institutional Investors, Overseas Corporate Bodies, if any, shall be subject to such approvals,if, and to the extent necessary or required including approvals from Reserve Bank of India under ForeignExchange Management Act, 1999 and the Rules and Regulations framed thereunder, if any.

RESOLVED FURTHER THAT as per the provisions of Section 77A (8) of the Companies Act, 1956, theCompany will not issue same kind of shares or other specified securities shares within a period of 6months after the completion of the Buyback except by way of bonus shares or equity shares issued in thedischarge of subsisting obligations such as conversion of warrants, stock option schemes, sweat equity orconversion of preference shares or debentures into equity shares.

RESOLVED FURTHER THAT as per the provisions of Regulation 19(f) of SEBI Buyback Regulations, theCompany shall not raise any further capital for a period of one year from the date of closure of thebuyback offer, except in discharge of its subsisting obligations.

RESOLVED FURTHER THAT the powers of the Board of Directors in respect of the buy-back be delegatedto a committee (“Buy Back Committee”) consisting of the following four directors of the company namelyShri S. K. Agarwal - Managing Director, Shri K. K. Soni-Director -Finance & CFO, Shri B. M. Oza and Shri B.B. Tandon -Directors.

RESOLVED FURTHER THAT that the Buy Back Committee is hereby authorized to do all such acts, deeds,matters and things as it may in its absolute discretion deem necessary, expedient, usual or proper as theBuy Back Committee may consider to be in the best interests of the shareholders, including but notlimited to finalizing the terms of the Buy Back, record date, entitlement ratio, the specific price for the BuyBack, the actual number of Equity Shares to be bought back, mechanism for the Buy Back, opening ofEscrow Bank Account and Special Bank Account or Special Demat Account, authorizing the persons tooperate the said accounts, appointment of intermediaries or agencies for the implementation of the BuyBack and sign and execute the incidental documentation as also to prefer applications to the appropriateauthorities for their requisite approvals and to initiate all necessary actions for preparation and issue ofvarious documents including but not limited to Public Announcement, Declaration of Solvency, DraftLetter of Offer, Letter of Offer, Corporate Actions with Depositories, extinguishment of Share Certificatesand filing with appropriate authorities in connection with the Buy Back on behalf of Board of Directors.

RESOLVED FURTHER That the Buy Back Committee be and is hereby authorized to decide quorum andother issues to regulate its working, to delegate all or any of the authorities conferred upon it to theCompany Secretary or any other Director or Officer or authorized representative of the Company.

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RESOLVED FURTHER THAT Shri H. Consul, Company Secretary be and is hereby appointed as theCompliance Officer for compliance with the Buyback Regulations and to redress the grievances, if any, ofthe investors.

RESOLVED FURTHER THAT the buyback is subject to:

a. The equity shares that may be bought back do not exceed the maximum number of Sharespermissible;

b. The aggregate consideration payable pursuant to the buyback not exceeding the Buyback Offer Size;and

c. Complying with the statutory and regulatory timelines in respect of the buyback, on the terms andconditions as may be decided by the Board and in such manner as prescribed under the Act and / orthe Regulations and any other applicable Laws.

RESOLVED FURTHER THAT the Company should maintain a register of securities bought back whereindetails of equity shares bought back, consideration paid for the equity shares bought back, date ofcancellation of equity shares and date of extinguishing and physically destroying of equity shares and suchother particulars as may be prescribed, shall be entered and that the Company Secretary of the Companybe and is hereby authorized to authenticate the entries made in the said register.

RESOLVED FURTHER THAT the Company Secretary and any of the Directors except Shri M. P. Mehrotraand Shri Somesh Mehrotra being Promoter Director of the Company be and are hereby severallyauthorized to furnish a copy of this Resolution certified as true to the Appropriate Authorities.”

5. DETAILS OF THE PUBLIC ANNOUNCEMENT

As per Regulation 8(1) of the SEBI Buyback Regulations, the Company has made a Public Announcement(“PA”) for the Buyback of Equity Shares published on December 12, 2013 in the following newspaperswhich is within two working days from the date of passing the board resolution on December 10, 2013 forapproving the Buyback.

Publications/ Newspapers Language Editions

Financial Express English All

Jansatta Hindi and Regional All

(A copy of the PA is also available on the SEBI website at www.sebi.gov.in )

6. DETAILS OF THE BUYBACK

1. VLS Finance Limited has announced the buyback of not exceeding 99,48,750 fully paid up EquityShares of face value of ` 10/- each from all the existing public shareholders/ beneficial owners ofEquity Shares of the Company, on a proportionate basis, through the “Tender Offer” process, at aprice of ` 14.50 (Rupees Fourteen and Fifty Paisa Only) per Equity Shares (“Buyback Price”) payable incash for an aggregate maximum amount of ` 14,42,56,875 (Rupees Fourteen Crores Forty Two LacsFifty Six Thousands Eight Hundred Seventy Five Only).

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2. The Buyback is in accordance with the provisions contained in Article 5(iv) and (v) of the Articles ofAssociation of the Company, Section 77A, 77AA, 77B and other applicable provisions of theCompanies Act, 1956 (to the extent applicable) and Section 69, 70 and all other applicable provisions,if any, of the Companies Act, 2013 (to the extent notified) and the provisions contained in theBuyback Regulations subject to other applicable laws /approvals as may be necessary, from statutoryauthorities including SEBI, Stock Exchange(s), Reserve Bank of India, etc., and further subject to suchconditions as may be prescribed while granting such approvals which may be agreed to by the Board,.

3. The Buyback Offer Size is 7.63% of the aggregate of the Company’s total paid-up equity share capitaland free reserves as per the latest audited accounts of the Company as on March 31, 2013 whichstands at ` 188.99 Crores (Rupees One Hundred Eighty Eight Crores and Ninety Nine Lacsapproximately) and is within the statutory limits of 10% of the total paid up equity share capital andfree reserves as per the latest audited accounts of the Company and is within the power of the Boardof Directors. Further, as per the provisions of the Acts, the Buyback of equity shares in any financialyear shall not exceed 25% of the total paid up equity capital in that financial year. In compliance withthe above provisions, the Company proposes to buyback maximum of 25% of its total paid up equitycapital as at March 31, 2013 i.e. 99,48,750 equity shares (Maximum Offer Shares). The Buyback OfferSize does not include any expenses incurred or to be incurred for the Buyback like SEBI filing fees,advisors fees, Public Announcement publication expenses, printing & dispatch expenses and otherincidental & related expenses.

4. The Buy Back is proposed to be implemented by the Company through Tender Offer Method fromthe Public Shareholders on a proportionate basis, provided 15% of the number of Equity Shares whichthe Company proposes to buy back or number of Equity Shares entitled as per the shareholding ofSmall Shareholders at Record Date, whichever is higher, shall be reserved for Small Shareholders

5. The aggregate shareholding of the Promoter as on the date of the Board Meeting held on December10, 2013 and the Public Announcement on December 12, 2013 is as follows:

Sr.No.

Name of the Promoter Equity Shares Held % of the totalpaid up equity

capital1. Divya Mehrotra 1041871 2.622. Dr. Sushma Mehrotra 470500 1.183. M P Mehrotra 285 Negligible4. M P Mehrotra HUF 588762 1.485. Somesh Mehrotra 884691 2.226. South Asian Enterprises Limited 1500* 0.017. Vikas Mehrotra 486006 1.228. VLS Capital Limited 12342227@ 31.019. VLS Commodities Private Limited 267400# 0.67

Total 16083242 40.42

* As per the declarations made by South Asian Enterprises Limited, they have sold their holding i.e.1500 Equity Shares (including bonus shares on the sold shares) for which transfer instruments havenot been filed by the purchaser.

@ As per declaration made by VLS Capital Limited, out of their shareholding in the Company, theyhave sold 900 Equity Shares (including bonus shares on the sold shares) for which transferinstruments have not been filed by the purchaser.

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# As per declaration made by VLS Commodities Private Limited, out of their shareholding in theCompany, they have sold 27,400 Equity Shares (including bonus shares on the sold shares) forwhich transfer instruments have not been filed by the purchaser.

6. No Equity Shares were either purchased or sold by the Promoters and by the directors of thePromoters, where the Promoter is a company, being persons who are in control of the Company,during the period of last six months preceding December 10, 2013 being the date of the BoardMeeting which approved the Buy Back except following:

VLS Capital Limited

Date of Transaction Purchase/Sold No. of sharesPurchased/Sold

Mode ofTransaction

Rate (`)

27.06.2013 Purchase 5900 Market 8.7328.06.2013 Purchase 8392 Market 9.3001.07.2013 Purchase 1596 Market 9.51

Details pertaining to maximum and minimum price at which the purchase transaction was made byVLS Capital Limited are as under:

Maximum Price (`)* Relevant Date Minimum Price* Relevant Date9.51 01.07.2013 8.73 27.06.2013

* Including brokerage and other taxes

Mr. Somesh Mehrotra

Date of Transaction Purchase/Sold No. of sharesPurchased/Sold

Mode ofTransaction

Rate (`)

On Various dates(between 24/06/2013 to11/09/2013

Purchase 480585 Market 9.60

Details pertaining to maximum and minimum price at which the purchase transaction was made byMr. Somesh Mehrotra are as under:

Maximum Price (`)* Relevant Date Minimum Price* Relevant Date10.81 06.09.2013 8.13 26.06.2013


7. In terms of the Buyback Regulations, under the Tender Offer Process, the promoters of the Companyhave the option to participate in the Buyback. In this regard, the Promoters mentioned above haveexpressed their intention vide their letter dated December 10, 2013 not to participate in the TenderOffer and would not offer any of their shares held in the Company for the Buyback.

8. Assuming response to the Buyback is to the extent of 100% (full acceptance) from all the Public EquityShareholders upto their entitlement, the aggregate shareholding of the Promoters, post Buyback willincrease to 53.89% of the post Buyback equity share capital of the Company. The promoters of theCompany are already in control over the Company and therefore such further increase in votingrights of the Promoters will not result in any change in control over the Company. As per Regulation10(4)(c) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SASTRegulations”), an increase in voting rights beyond the permissible limit as mentioned in Regulation

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3(2) of SAST Regulations would be exempt from making an open offer provided the shareholder in hiscapacity as a director has not voted in favour of the resolution of the Board of Directors authorizingthe buy-back under section 77A of the Companies Act, 1956 and any other provisions of CompaniesAct, 2013 (to the extent notified). The promoter directors have not voted in favour of the resolutionauthorizing the Buyback.

However, post Buyback, the Non-Promoter shareholding of the Company will not fall below theminimum level required as per the listing conditions/ agreement.

7. AUTHORITY FOR THE BUYBACK

The Buyback is in accordance with the provisions contained in Article 5(iv) and (v) of the Articles ofAssociation of the Company, Section 77A, 77AA, 77B and other applicable provisions of the CompaniesAct, 1956 and Section 69, 70 and all other applicable provisions, if any, of the Companies Act, 2013 andthe provisions contained in the Buyback Regulations subject to other applicable laws /approvals as may benecessary, from statutory authorities including SEBI, Stock Exchanges, Reserve Bank of India, etc., andfurther subject to such conditions as may be prescribed while granting such approvals which may beagreed to by the Board.

The Board of Directors at their meeting on December 10, 2013 passed a resolution approving buyback ofEquity Shares of the Company through the Tender Offer Process. The directors who are shareholders ofthe Company being interested has not voted in favour of the resolution and the board resolution waspassed only by the directors who are not the shareholders of the Company.

8. NECESSITY OF THE BUYBACK

The Buyback is being proposed in keeping with the Company’s desire to enhance overall shareholders’value by returning cash to shareholders in an efficient and investor friendly manner.

Depending upon the number of equity shares actually bought back, the buyback will result in reduction inthe number of outstanding equity shares and may consequently increase earnings per equity share andenhanced return on equity over a period of time.

9. MANAGEMENT DISCUSSION AND ANALYSIS AND THE LIKELY IMPACT OF BUYBACK ON THE COMPANY

1. The Buyback is not likely to cause any material impact on the profitability/ earnings of the Companyexcept a reduction in the amount available for investment, which the Company could have otherwisedeployed towards generating investment income. Assuming there is full response to the Buyback, thefunds deployed by the Company towards the Buyback would be ` 14,42,56,875 (Rupees FourteenCrores Forty Two Lacs Fifty Six Thousands Eight Hundred Seventy Five Only) which is 7.63% of thetotal paid up capital and free reserves of the Company as per the last audited accounts of theCompany.

2. The promoters have expressed their intentions vide their letters dated December 10, 2013, not toparticipate in the Buyback.

3. The promoters holding before the buy back as on the date of Public Announcement was 40.42% ofthe paid up equity capital. Assuming response to the Buyback Offer is to the extent of 100% (fullacceptance) from all the Shareholders upto their entitlement, post Buyback the aggregateshareholding of the promoter will increase to 53.89% of the post Buyback equity share capital of theCompany since the promoters have expressed their intention of not to participate in the buyback.

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4. The public holding before the Buyback as on the date of Public Announcement was 59.58% of thepaid up equity capital of the Company. Assuming response to the Buyback Offer is to the extent of100% (full acceptance) from all the Public Shareholders upto their entitlement, the publicshareholding would fall to 46.11% of the post Buyback equity capital of the Company.

5. The Buyback of Shares will not result in a change in control or otherwise affect the existingmanagement structure of the Company.

6. Consequent to the Buyback and based on the number of Equity Shares bought back from the Non-Resident Shareholders, Indian financial institutions, banks, mutual funds and the public includingother bodies corporate, their shareholding would undergo a change.

7. The debt-equity ratio post Buyback will be compliant with the permissible limit of 2:1 prescribed bythe Act, even if the response to the Buyback is to the extent of 100% (full acceptance). As per thelatest audited accounts of the Company for the year ending on March 31, 2013, the Company is nothaving any debt and hence the debt equity ratio is not applicable.

8. The Buyback of shares is not expected to impact growth opportunities for the Company.

9. The Company shall not issue bonus shares during the period of the Buyback.

10. Salient financial parameter consequent to the Buyback based on the latest audited results as onMarch 31, 2013 is as under:

Parameters Pre-Buyback Post-Buyback

Networth* (` in Lacs) 18899.39 17456.82Return on Networth* (%) 0.98 1.06Earnings per Share (`) 0.46 0.62Book Value per Share* (`) 47.49 58.49P/E as per the latest audited financial results** 29.32 (NSE)

29.26 (BSE)21.99 (NSE)21.94 (BSE)

Total Debt/Equity Ratio* (Total Debt/Networth) N.A. N.A.

* Excluding revaluation reserves, statutory reserves and miscellaneous expenditure to the extent notwritten off.

** P/E Ratio based on the market price as on date of PA i.e. December 12, 2013- ` 13.57 (BSE) & `13.60 (NSE)

Note: Buyback numbers are calculated by reducing the net worth by the proposed buyback amount(assuming full acceptance) without factoring any impact on the profit & loss account for the FY 2012-13.

10. BASIS OF CALCULATING THE BUYBACK PRICE

1. The Buyback Offer price of ` 14.50 (Rupees Fourteen and Fifty Paisa Only) per Share has been arrivedat after considering various factors inter alia, average price of the equity shares of the Company onthe Stock Exchanges where the equity shares of the Company are listed and impact of the Buyback onthe earnings per share of the Company.

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2. The closing market price of the Equity Shares as on the date of intimation to the Stock Exchange(s) forthe Board Meeting for considering the Buyback i.e. December 5, 2013, was ` 11.22 and ` 11.25 onBSE and NSE, respectively. There is no trading in the shares of the Company on CSE and MSE.

3. The EPS of the Company pre-Buyback as on March 31, 2013 is ` 0.46 which will increase to ` 0.62post Buyback assuming full acceptance of the Buyback.

4. The Return on Networth of the Company pre Buyback as on March 31, 2013 is 0.98% which willincrease to 1.06% post Buyback assuming full acceptance of the Buyback.

5. The P/E ratio of the Company as on the date of intimation to the stock exchanges on December 05,2013 based on the market price of the shares of the Company on BSE (` 11.22 ) and NSE (` 11.25)were 24.19 and 24.25 respectively.

11. SOURCES OF FUNDS FOR THE BUYBACK

1. Assuming full acceptance, the funds that would be utilized by the Company for the purpose of theBuyback would be ` 14,42,56,875 (Rupees Fourteen Crores Forty Two Lacs Fifty Six Thousands EightHundred Seventy Five Only).

2. The funds for the Buyback will be met out of cash and/or fixed deposits of the Company lying withthe bank. The Company does not intend to raise additional debt for the explicit purposes of theBuyback. Accordingly, borrowed funds will not be used for the Buyback. However, if required, theCompany may borrow funds in the ordinary course of its business.

12. DETAILS OF THE ESCROW ACCOUNT AND THE AMOUNT TO BE DEPOSITED THEREIN

1. The Company shall before the date of opening of the Buyback Offer, create an escrow account for theperformance of its obligations in the Buyback. The escrow account may consist of a bank guarantee infavour of the Manager to the Buyback Offer of an amount equal to 25% of the total considerationpayable for the Buyback, along with a cash deposit of an amount equal to 1% of the totalconsideration payable, with a lien marked in favour of the Manager to the Buyback Offer.

2. M/s. Agiwal & Associates, Chartered Accountants (Firm Registration No. 000181N; the MembershipNo. of Mr. P.C. Agiwal (Partner): 80475) having its office at 3830, Lal Kothi, 2nd Floor, Pataudi HouseRoad, above Bank of Baroda, Darya Ganj, New Delhi-110002; Tel. No. 011-23267461 vide hiscertificate dated December 10, 2013 has certified that the Company has adequate financial resourcesto fulfill all the obligations under the Buyback Offer.

3. The Manager to the Buyback Offer having regard to the above confirms that the Company has firmarrangements for fulfilling the obligations under the Buyback in accordance with the Regulation. .

13. CAPITAL STRUCTURE AND SHAREHOLDING PATTERN

1. As on the date of Public Announcement i.e. December 12, 2013, the authorized equity share capital is`15,000 Lacs comprising of 15,00,00,000 Equity Shares of `10/- each

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2. The present issued, subscribed and paid up equity share capital and post Buyback issued, subscribedand paid up equity share capital, assuming full acceptance) would be as follows:

(` in Lacs)Particulars Pre-Buyback: Post-Buyback:

Paid-Up equity share capital 3991.72* 2996.85

* Issued Capital of the Company is ` 4026.25 Lacs. 467500 Number of shares were forfeited fromallotment made on 08/02/1995 and capital received on forfeited shares was ` 1222250 due to whichthe Paid up Equity Share Capital of the Company is reduced to ` 3991.72 comprising of 39795000equity shares of Face Value ` 10/-.

3. There are no partly paid up Shares or outstanding convertible instruments or Preferential Shares orcalls in arrears as on the date of the Public Announcement. There is no pending scheme ofamalgamation or compromise or arrangement pursuant to any provisions of the Act.

4. The Company has confirmed that it has not bought back any Equity Shares in the three yearspreceding the date of this Draft Letter of Offer.

5. The shareholding pattern of the Company pre-Buyback, taken as on December 12, 2013 (PublicAnnouncement Date), as well as the post Buyback Shareholding, is as shown below:

Category of Shareholder No. of SharesPre- Buyback

% to theexisting EquityShare capital

No. of Shares -Post Buyback#

% to theexistingEquity ShareCapital

Promoters and personsacting inConcert (Collectively “thePromoters”)

16083242 40.42 16083242 53.89

Foreign Investors(Including Non ResidentIndians, FIIs and ForeignMutual Funds)

281360 0.71 [●] [●]

FinancialInstitutions/Banks &MutualFunds promoted byBanks/Institutions

9600 0.02 [●] [●]

Others (Public, PublicBodies Corporateetc.)

23420798 58.85 [●] [●]

Total 39795000 100.00 29846250 100.00# Assuming full acceptance of Equity Shares in the Buyback.

6. No Equity Shares were either purchased or sold by the Promoters and by the directors of thePromoters, where the Promoter is a company, being persons who are in control of the Company,during the period of last twelve months preceding the date of the Public Announcement (i.e.December 12, 2013) except as under:

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(1) VLS Capital Limited

Date ofTransaction

Purchase/Sold No. of sharesPurchased/Sold

Mode ofTransaction

Rate (`)

27.06.2013 Purchase 5900 Market 8.73

28.06.2013 Purchase 8392 Market 9.30

01.07.2013 Purchase 1596 Market 9.51

Details pertaining to maximum and minimum price at which the purchase transaction was made byVLS Capital Limited are as under:

Maximum Price(`)*

Relevant Date Minimum Price* Relevant Date

9.51 01.07.2013 8.73 27.06.2013


(2) Mr. Somesh Mehrotra

Date ofTransaction


Mode ofTransaction

Rate (`)

24-06-13 Purchase 8950 Market 8.26





















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28-08-13 Purchase 12787 Market 10.00





05-09-13 Purchase 20634 Market 10.01



11-09-13 Purchase 23192 Market 10.00

Total 480585

Details pertaining to maximum and minimum price at which the purchase transaction was made byMr. Somesh Mehrotra are as under:

Maximum Price (`)* Relevant Date Minimum Price* Relevant Date

10.81 06.09.2013 8.13 26.06.2013


(3) Mr. M.P. Mehrotra (HUF)

Date ofTransaction


Mode ofTransaction

Rate (`)







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Total 78737 Average 14.09

Details pertaining to maximum and minimum price at which the purchase transaction was made byMr. M.P. Mehrotra are as under:

Maximum Price (`)* Relevant Date Minimum Price* Relevant Date

16.52 03.01.2013 12.07 27.02.2013


7. Assuming response to the Buyback Offer is to the extent of 100% (full acceptance) from all theShareholders upto their entitlement, post Buyback the aggregate shareholding of the Promoter willincrease to 53.89% of the post Buyback equity share capital of the Company from their existingshareholding of 40.42% as on the date of Public Announcement (i.e. December 12, 2013).

14. BRIEF INFORMATION OF THE COMPANY

1. The Company was originally incorporated in the name of Vardhman Leasing and Services Limited onJanuary 20, 1986 with the Registrar of Companies, Delhi & Haryana. The name of the Company waschanged to VLS Finance Limited on September 08, 1994. The registered office of the Company issituated at 2nd Floor, 13, Sant Nagar, East of Kailash, New Delhi – 110 065 Tel: 011 – 46656666; Fax:011-46656699. The Company's Corporate Identification Number (CIN) is L65910DL1986PLC023129.

2. VLS Finance Ltd. (“VLS”) is a Non Banking Finance Company (NBFC) with a diversified portfolio ofstrategic proprietary investments spread across sectors like Healthcare, Consumer Goods (Footwear),FMCG etc. However, the Company vide its letter dated August 12, 2013 has surrendered its certificateof registration as NBFC to RBI and awaiting RBI’s response.

3. VLS Finance is the flagship company of the VLS Group which is a multi-faceted multi-divisionalintegrated financial services group with major presence in almost all areas of financial services such

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as Asset Management, Strategic Private Equity Investments, and Arbitrage and more particularly inInvestment Banking, Structured Finance, Corporate Consulting & Advisory Services, Stock Broking,Portfolio Management Services, Privatization & Infrastructure Finance, Proprietary Investments &Equity Research.

4. The Company has two wholly owned subsidiaries namely VLS Securities Limited and VLS AssetManagement Limited. VLS Securities Limited is a SEBI Registered Stock Broker and Merchant Bankerand SEBI approved Portfolio Manager. VLS Asset Management is currently not doing any businessactivity.

5. The Company made a maiden public issue of its equity shares in the month of February 1993 andsubsequently got its shares listed on the Stock Exchanges at Delhi, Bombay, Calcutta, Madras, UP atKanpur and Ahmedabad. The Shares were delisted from Ahmedabad Stock Exchange w.e.f.31/03/2005 and were delisted from Delhi Stock Exchange and Uttar Pradesh Stock Exchange w.e.f.31/03/2004. The shares of the Company are presently listed at BSE, NSE, CSE and MSE.

6. Details of changes in share capital of the Company since incorporation (as certified by theManagement of the Company) are as follows:

Date of issue/Allotment

No. of EquityShares(Face Value `10/-)

Consideration Nature of Issue CumulativePaid Up Capital(`)

By Subscription toMemorandum

7 Cash Subscription toMemorandum

70

15/09/1987 15000 Cash Preferential Issue 15007014/01/1988 84358 Cash Preferential Issue 99365020/06/1988 200635 Cash Preferential Issue 300000027/03/1989 190000 Cash Preferential Issue 490000006/10/1989 510000 Cash Preferential Issue 1000000030/03/1991 1000000 Cash Preferential Issue 2000000008/04/1993 1333400 Cash Public Issue (IPO) 3333400008/02/1995 3666600* Cash Public Issue (FPO) 6654725007/05/1998 100000 ** Cash Conversion of

Warrants67547250

06/08/1998 6632500 $ Bonus Bonus Issue in theRatio of 1:1

133872250

11/07/2000 26530000@ Bonus Bonus Issue in theRatio of 2:1

399172250

Total 39795000 399172250

* 4,67,500 Equity Shares were forfeited and capital received on forfeited shares was ` 12,22,250.Hence the resultant cumulative paid up capital as on date is ` 39,91,72,250.

** Issued on Conversion of 1,00,000 optionally convertible non transferable warrants to promotergroup for which listing & trading permission from BSE (in-principle approval received) and CSE ispending as on date. However the Company has received trading & listing permission from NSEand MSE for the said shares.

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$ Out of the said bonus issue, 1,00,000 Equity Shares issued to promoter group, listing and tradingpermission from BSE (in-principle approval received) is pending as on date. However theCompany has received listing & trading permission from NSE and MSE for the said shares.

@ Out of the said bonus issue 400000 Equity Shares issued to promoter group for which listing &trading permission from BSE (in-principle approval received) and CSE is pending as on date.However the Company has received listing & trading permission from NSE and MSE for the saidshares.

Therefore, the listed capital at BSE and CSE is 3,91,95,000 i.e. except 6,00,000 Shares as mentionedabove

7. The Board of Directors of the Company as on the date of the Draft Letter of Offer is as under:

Name, Qualification,Occupation, Age and DIN

Designation Date ofAppointment/Reappointment

Other Directorships

Mr. Ajit Kumar IAS (Retd.)Qualification: M.A. (English)Occupation – RetiredAge: 71 YearsDIN: 00106597

IndependentDirectorChairman

29/10/2003 Singer India Limited

Mr. S.K. AgarwalQualification: B.Com.(Hons),CAIIBOccupation – ServiceAge: 62 YearsDIN: 00106763

ManagingDirector

28/05/2003(as director)

26/05/2004(as ManagingDirector)

VLS Securities Ltd. VLS Asset Management Ltd. Risk Software Solution Pvt.

Ltd. VLS Capital Ltd.

Mr. Somesh MehrotraQualification: M.Com.Occupation – IndustrialistAge: 46 YearsDIN: 00109902

PromoterDirector

06/06/1994 VLS Capital Ltd. VLS Commodities Pvt. Ltd. Om Sai Sports Ltd.

Mr. M.P. MehrotraQualification: B.Com, LLB, FCAOccupation – ProfessionalAge: 76 YearsDIN: 00016768

PromoterDirector

31/01/2007 Baroda Pioneer AssetManagement Co. Ltd.

South Asian Enterprises Ltd. Dhampur Sugar Mills Ltd. Empee Sugars & Chemicals

Ltd. Empee Distilleries Ltd. Delton Cables Ltd. Maxim Infracon Pvt. Ltd. VLS Commodities Pvt. Ltd. Riskpro India Ventures (P)

Ltd. Moonrock Hospitality Pvt.

Ltd SBICAP Securities Ltd.

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Superior IndustrialEnterprises Ltd.

Jinbhuvish PowerGenerations (P) Ltd.

Indsur Gears Ltd.

Mr. A.K. PuriQualification: M.SC., LLB,CAIIBOccupation – RetiredAge: 78 YearsDIN: 00106469

IndependentDirector

07/05/1998 Nil

Mr. B.M. Oza IFS (Retd.)Qualification: M.A.(Economics), Dip. InDemographic TrainingOccupation – RetiredAge: 77 YearsDIN: 00138488

IndependentDirector

30/06/2001 Nil

Dr. S. Ramesh IAS (Retd.)Qualification: M.P.A.(Harvard), Ph.D.Occupation – RetiredAge: 77 YearsDIN: 00126120

IndependentDirector

30/06/2001 South Asian Enterprises Ltd.

Mr. B.B. Tandon IAS (Retd.)Qualification: M.A., LLB, CAIIBOccupation – RetiredAge: 72 YearsDIN:00740511

IndependentDirector

22/10/2008 Adani Power Ltd. ACB (India ) Ltd. Oriental Carbon &

Chemicals Ltd. Jaiprakash Power Ventures

Ltd. Exicom Tele-Systems Ltd. Birla Corporation Ltd. Dhampur Sugar Mills Ltd. Bhushan Steels Ltd. Filatex India Ltd. Schrader Duncan Ltd. Jaypee Infratech Ltd. Ambience Pvt. Ltd. Ambuja Cement

Foundation. Jinbhuvish Power

Generations (P) Ltd.

Mr. M.G. DiwanQualification: M.Sc., F.I.A.,F.A.S.I., F.I.I.IOccupation – RetiredAge: 82 Years

IndependentDirector

17/03/1994 G.M. Breweries Ltd. Marketing Research

Corporation of India Ltd. Shriram Chits (Maharastra)

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DIN: 00001097 Ltd. GDA Trusteeship Ltd. Indian Institute of Public

Opinion Pvt. Ltd. D. S. Actuarial Education

Services Pvt. Ltd.

Mr. Gian VijeshwarQualification: M.A. (PublicAdministration)Occupation – BusinessAge: 68 YearsDIN: 00009686

IndependentDirector

31/01/2007 Appu Ghar EntertainmentPvt. Ltd.

International RecreationParks Pvt. Limited

Unitech Amusement ParksLtd.

Appu Ghar Securities andSolutions Private Limited

Appu Ghar Recreation ParksPrivate Limited

Appu Ghar Holdings Pvt.Ltd.

G.K. Holdings Pvt. Ltd. International Amusement

Solutions Limited International Amusement

and Infrastructures Limited International Amusement

Ltd. South Asian Enterprises Ltd. VLS Capital Limited GKMR Corporate Solutions

Pvt. Limited Incomtra International

Commodities Traders Pvt.Ltd.

International Recreationand Amusement Limited

RV Buildtech & AmusementPvt. Ltd.

MV Realtors & AmusementPvt. Ltd.

GV Buildcon & AmusementPvt. Ltd.

VGRM Infrastructure &Amusement Pvt. Ltd.

Mr. K.K. SoniQualification: B.Com, FCA, FCSOccupation – ServiceAge: 60 YearsDIN: 00106037

Director –Finance & CFO

14/11/2013 VLS Capital Ltd. VLS Securities Limited South Asian Enterprises Ltd. Om Sai Sports Ltd. VLS Asset Management Ltd.

8. The details of changes in the Board of Directors during the last 3 years preceding the date of thisDraft Letter of Offer are as under:

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Name of the Director Appointment /Resignation

Effective Date Reasosns

Mr. Rakesh Babbar Resignation 11/03/2010 Resigned due to other preoccupations

Mr. N.C. Sundararajan Resignation 07/02/2012 Resigned due to other preoccupations

Mr. K.K. Soni Appointment 14/11/2013 Appointment

15. FINANCIAL INFORMATION ABOUT THE COMPANY

1. The salient financial information of the Company on standalone basis as extracted from the auditedresults for the last three financial years and unaudited results for Six Months ended September 30,2013 is given below:

(` in Lacs)Particulars For the Six

Months ended30.09.2013(unaudited)

For the Yearended

31.03.2013(Audited)

For the Yearended

31.03.2012(Audited)

For the Yearended

31.03.2011(Audited)

Revenue fromOperations

150955.62 232212.88 213525.92 60096.85

Other Income 0.46 0.63 135.54 3.37Total Income 150956.08 232213.50 213661.45 60100.22Total Expense 150695.46 231777.63 213239.24 59269.31Interest 0.48 15.55 66.53 59.00Depreciation 20.99 48.73 171.69 45.91Profit before Tax 239.16 371.59 183.99 725.99

Provision for Tax(including DeferredTax)

96.60 187.00 (31.01) 222.73

Profit/ (Loss) after Tax 142.56 184.59 215.00 503.26Paid-up Equity ShareCapital

3991.72 3991.72 3991.72 3991.72

Reserves & Surplus* 15050.23 14907.67 14774.75 14600.55Net Worth* 19041.95 18899.39 18766.47 18592.28Total Debt (excludingworking capital loan)

44.94 0.00 0.00 1624.36

* Excluding revaluation reserves, statutory reserves and miscellaneous expenditure to the extent notwritten off

2. Financial Ratios for the last three financials years and unaudited results for 6 months endedSeptember 30, 2013 are as under:

Particulars For the SixMonths ended30.09.2013(unaudited)

For the Yearended31.03.2013(Audited)



Earnings Per Share* (EPS) 0.36 0.46 0.54 1.26

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(`)Debt / Equity Ratio 0.0113 N.A. N.A. 0.4082Book Value (` Per Share) 47.85 47.49 47.16 46.72Return on Networth (%) 0.75 0.98 1.15 2.71

* 467500 shares were forfeited from allotment made on 08/02/1995. Hence the paid up capital of theCompany as on date is ` 39,91,72,250 comprising of 3,97,95,000 fully paid-up Equity Shares.

Note: 1. Net worth = Equity Capital + Reserves & Surplus (excluding revaluation and statutory reserves)– Miscellaneous Expenditure.

2. Total Debt = Long Term Borrowings + Short Term Borrowings + Current Maturities of Long TermBorrowings.

3. The Company shall comply with the SEBI (Substantial Acquisition of Shares and Takeovers)Regulations, 2011, as under:

Pursuant to the proposed Buyback and depending on the response to the Buy Back, the voting rightsof the Promoters in the Company may increase by more than 5% over the existing 40.42% holding inthe total equity capital and voting rights of the Company. The promoters of the Company are alreadyin control over the Company and therefore such further increase in voting rights of the Promoters willnot result in any change in control over the Company. As per Regulation 10(4)(c) of SEBI (SubstantialAcquisition of Shares and Takeovers) Regulations, 2011 (“SAST Regulations”), an increase in votingrights beyond the permissible limit as mentioned in Regulation 3(2) of SAST Regulations would beexempt from making an open offer provided the shareholder in his capacity as a director has notvoted in favour of the resolution of the board of directors authorizing the buy-back under section 77Aof the Companies Act, 1956 and any other provisions of Companies Act, 2013 (to the extent notified).The promoter directors have not voted in favour of the resolution authorizing the Buyback.

However, post Buyback, the Non-Promoter shareholding of the Company will not fall below theminimum level required as per the listing conditions/ agreement.

4. The Company hereby declares that it has complied with Section 77A (2)(c), (d), 77B (1) and 77B (2) ofthe Companies Act, 1956 and Sections 69 and 70 of the Companies Act, 2013.

16. STOCK MARKET DATA

The Company’s Equity Shares are listed on the NSE, BSE, MSE and CSE. The Equity Shares are not tradedon MSE & CSE. The high, low and average market prices in preceding three financial years (April to Marchperiod) and the monthly high, low and average market prices for the six months preceding the date ofPublic Announcement and the corresponding volumes on the NSE and BSE are as follows:

For BSEPeriod High

(`)Date ofHigh

No. ofSharestraded

on thatdate

Low(`)

Date of Low No. ofShares

traded onthat date

AveragePrice @

(`)

Total tradedvolume

during theperiod(No. ofShares)

Preceding Three YearsFY 2010-11 32.82 17/08/2010 316658 11.73 25/05/2010 16046 17.42 23447008FY 2011-12 22.95 02/03/2012 299814 9.05 19/12/2011 13663 13.12 6387960FY 2012-13 17.37 02/01/2013 376870 8.70 28/03/2013 4947 13.17 3659948

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Preceding Six Months

June 1, 2013 –June 30, 2013

10.50 10/06/2013 1838 7.99 26/06/2013 3908 8.99 105864

July 1, 2013 –July 31, 2013

10.50 11/07/2013 11430 8.01 24/07/2013 12002 9.54 172638

Aug 1, 2013 –Aug 31, 2013

10.34 19/08/2013 594 8.61 02/08/2013 4528 9.67 133661

Sep 1, 2013 –Sep 30, 2013

12.60 13/09/2013 46701 9.55 04/09/2013 7478 10.60 272439

Oct 1, 2013 –Oct 31, 2013

12.45 22/10/2013 33290 10.05 01/10/2013 11716 10.89 168327

Nov 1, 2013 –Nov 30, 2013

12.64 07/11/2013 12533 10.50 22/11/2013 8856 11.21 175469

Dec 1, 2013 –Dec 11, 2013

14.40 09/12/2013 83284 10.80 04/12/2013 1374 12.24 360672

Source: (www.bseindia.com)

@ Average Price is the arithmetical average of the closing prices of the share of the Company during therespective said period.

For NSE

Period High(`)

Date ofHigh

No. ofSharestraded onthat date

Low(`)

Date ofLow

No. ofSharestradedon thatdate

AveragePrice @(`)

Totaltradedvolumeduring theperiod(No. ofShares)

Preceding Three Years

FY 2010-11 32.95 17/08/2010 282534 11.50 25/05/2010 47212 17.42 29688799FY 2011-12 22.90 02/03/2012 336333 8.20 09/12/2011 30028 13.14 7865786FY 2012-13 17.40 02/01/2013 538630 8.70 28/03/2013 8356 13.17 5224387

Preceding Six Months

June 1, 2013 –June 30, 2013

10.30 18/06/2013 1251 7.40 12/06/2013 33392 9.04 256931

July 1, 2013 –July 31, 2013

10.65 11/07/2013 18561 8.25 24/07/2013 15190 9.54 290644

Aug 1, 2013 –Aug 31, 2013

11.15 07/08/2013 27994 8.25 02/08/2013 34215 9.66 440229

Sep 1, 2013 –Sep 30, 2013

12.60 13/09/2013 109224 9.75 05/09/2013 45269 10.61 675913

Oct 1, 2013 –Oct 31, 2013

12.50 22/10/2013 96123 10.05 04/10/2013 20629 10.86 397926

Nov 1, 2013 –Nov 30, 2013

12.85 07/11/2013 39273 10.35 21/11/2013 5821 11.23 308469

Dec 1, 2013 –Dec 9, 2013

14.15 09/12/2013 258570 10.80 05/12/2013 32416 12.25 1021479

Source: www.nseindia.com

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@ Average Price is the arithmetical average of the closing prices of the share of the Company during therespective said period.

The closing market price of the Equity Shares on the working day (December 09, 2013) previous to the daythe Board of Directors of the Company approved the proposal of the Buyback i.e. December 10, 2013, was` 13.81 and ` 13.80 on BSE and NSE, respectively. There is no trading in the shares of the Company on CSEand MSE.

17. DETAILS OF THE STATUTORY APPROVALS

1. The Buyback Offer is subject to approval, if any required, under the provisions of the Companies Act,1956 and Companies Act, 2013 , FEMA, the Buyback Regulations and/or such other applicable rulesand regulations in force for the time being.

2. Non-Resident Shareholders (excluding OCBs/ NRIs (for Shares acquired under portfolio investmentscheme)) permitted under the automatic process prescribed under applicable FEMA Regulations,read with the consolidated Foreign Direct Investment policy issued by the Government of India, arenot required to obtain approvals from RBI.

3. Erstwhile OCB are required to obtain specific prior approval from RBI for tendering Equity Shares inthe Buyback Offer. The Company shall not accept Equity Shares from OCB Shareholders in respect ofwhom such RBI approval is required and copies of such approvals are not submitted.

4. As of date, there is no other statutory or regulatory approval required to implement the BuybackOffer, other than that indicated above. If any statutory or regulatory approval becomes applicablesubsequently, the Buyback Offer will be subject to such statutory or regulatory approval(s). In theevent of any delay in receipt of any statutory / regulatory approvals, changes to the proposedtimetable of the Buyback Offer, if any, shall be intimated to the Stock Exchange.

18. DETAILS OF THE REGISTRAR TO THE BUYBACK

Registrar to the Buyback:

RCMC Share Registry Pvt. Ltd.SEBI Registration No.: INR000000429B-106, Sector-2,Noida, U.P. – 201301Tel: 0120 - 4015884;Fax: 0120 - 2444346Email: [email protected] Person: Mr. Ravinder Dua

The tender forms can be submitted on any working day during the period of the Offer i.e. [●] to [●] exceptSaturdays, Sundays & Public Holidays, to the Registrar of the Offer at the address mentioned abovebetween 10.00 AM to 05.00 PM

Please note that the Tender Form and other relevant documents should not be sent to the Company orto the Manager to the Buyback Offer.

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19. PROCESS AND METHODOLOGY FOR THE BUYBACK

1. The Company proposes to buyback not exceeding 99,48,750 (Ninety Nine Lacs Forty Eight thousandSeven Hundred and Fifty) Equity Shares from all the existing Public Shareholders/ Beneficial Ownersof Equity Shares of the Company, on a proportionate basis, through the Tender Offer process at aprice of ` 14.50 (Rupees Fourteen and Fifty Paisa only) per Equity Share, payable in cash for anaggregate amount of ` 14,42,56,875 (Rupees Fourteen Crores Forty Two Lacs Fifty Six ThousandsEight Hundred Seventy Five Only). The maximum number of Equity Shares proposed to be boughtback represents 25% of the total paid-up equity share capital of the Company. The Buyback is inaccordance with the provisions of Article 5(iv) and (v) of the Articles of Association of the Company,Section 77A and all other applicable provisions, if any, of the Companies Act, 1956, Sections 69, 70and all other applicable provisions if any, of the Companies Act, 2013, Regulation 4(1)(a) and otherapplicable provisions contained in the Buyback Regulations and subject to such other approvals,permissions and sanctions as may be necessary, from time to time from statutory authoritiesincluding but not limited to SEBI, Stock Exchange, RBI etc. The Buyback Offer Size is 7.63% of theaggregate of the Company’s total paid-up equity share capital and free reserves as per the latestaudited accounts of the Company as on March 31, 2013 which stands at ` 188.99 Crores (Rupees OneHundred Eighty Eight Crores and Ninety Nine Lacs approximately) and is within the statutory limits of10% of the total paid up equity share capital and free reserves as per the latest audited accounts ofthe Company and is within the power of the Board of Directors.

2. The aggregate shareholding of the Promoter is 1,60,83,242 Equity Shares, which represents 40.42%of the existing Equity Share capital of the Company. In terms of the Buyback Regulations, under theTender Offer process, the promoter of a company has the option to participate in the buyback. In thisregard, the Promoter of the Company has expressed their intention vide its letter dated December10, 2013, not to participate in the Buyback.

3. Assuming response to the Buyback Offer is to the extent of 100% (full acceptance) from all theShareholders upto their entitlement, post Buyback the aggregate shareholding of the Promoter willincrease to 53.89% of the post Buyback equity share capital of the Company.

The Promoters of the Company are already in control over the Company and therefore such furtherincrease in voting rights of the Promoters will not result in any change in control over the Company.As per Regulation 10(4)(c) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011(“SAST Regulations”), an increase in voting rights beyond the permissible limit as mentioned inRegulation 3(2) of SAST Regulations would be exempt from making an open offer provided theshareholder in his capacity as a director has not voted in favour of the resolution of the board ofdirectors authorizing the buy-back under section 77A of the Companies Act, 1956 and any otherprovisions of Companies Act, 2013 (to the extent notified). The promoter directors have not voted infavour of the resolution authorizing the Buyback. Post Buyback, the Non-Promoter shareholding ofthe Company will not fall below the minimum level required as per the listing conditions/ agreement.

4. Record Date, ratio of Buyback and entitlement of each Shareholder

a) The Board of Directors in its meeting held on December 10, 2013 announced December 27, 2013as Record Date for the purpose of determining the entitlement and the names of theshareholders, who are eligible to participate in the Buyback Offer.

b) The Equity Shares proposed to be bought back by the Company shall be divided in twocategories:

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Reserved category for Small Shareholders (“Reserved Category”); and General category for all shareholders other than Small Shareholders (“General Category”)

c) As defined in the Buyback Regulations, a “Small Shareholder” is a shareholder who holds EquityShares having market value, on the basis of closing price on the Stock Exchange in which thehighest trading volume as on Record Date, of not more than ` 2,00,000 (Rupees Two Lakh). As onRecord Date, the volume of shares traded on NSE was [●] shares and on BSE was [●] shares.Accordingly, [●] being the exchange with highest turnover, the closing price was ` [●] and henceall shareholders holding not more than [●] Equity Shares as on the Record Date are classified as‘Small Shareholders’ for the purpose of the Buyback Offer.

d) Based on the above definition, there are [●] Small Shareholders with aggregate shareholding of[●] Shares, as on Record Date, which constitutes [●]% of the outstanding paid up equity capital ofthe Company and [●]% of the number of [●] Equity Shares which are proposed to be bought backas part of this Buyback Offer.

e) In compliance with Regulation 6 of the Buyback Regulations, the reservation for the SmallShareholders, will be higher of:

i. Fifteen percent of the number of Equity Shares which the Company proposes to buyback i.e.15% of 99,48,750 Equity Shares which works out to 14,92,313 Equity Shares; or

ii. The number of Equity Shares entitled as per their shareholding as on Record Date [i.e.([●]/3,97,95,000 x 99,48,750] which works outs to [●] Equity Shares.

In case the total number of Equity Shares held by the Small Shareholders on the Record Date isless than higher of (i) and (ii) above, the maximum number of Equity Shares reserved for SmallShareholders will be restricted to the total number of Equity Shares held by the SmallShareholders as on Record Date.

f) Based on the above and in accordance with Regulation 6 of the Buyback Regulations, [●] EquityShares will be reserved for Small Shareholders. Accordingly, General Category shall consist of [●]Equity Shares.

g) Based on the above entitlements, the ratio of Buyback for both categories is decided as below:

Category of Shareholders Ratio of BuybackReserved Category for SmallShareholders

[•] Equity Shares out of every [•] fully paid-upEquity Shares held on the Record Date

General Category Of Other Shareholders [•] Equity Shares out of every [•] fully paid-upEquity Shares held on the Record Date

5. Fractional Entitlements

If the entitlement under Buyback, after applying the above mentioned ratios to the Equity Sharesheld on Record Date, is not a round number (i.e. not in the multiple of 1 Equity Share) then thefractional entitlement shall be ignored for computation of entitlement to tender Equity Shares in theBuyback Offer, for both categories of Shareholders.

On account of ignoring the fractional entitlement, those Small Shareholders who hold [●] or lessEquity Shares as on Record Date. Such Small Shareholders are entitled to tender additional Equity

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Shares as part of the Buyback Offer and will be given preference in the Acceptance of one EquityShare, if such Small Shareholders have tendered for additional Equity Shares.

6. Basis of Acceptance of Equity Shares validly tendered in the Reserved Category

Subject to the provisions contained in the Letter of Offer, the Company will accept the Sharestendered in the Buyback Offer by the Small Shareholders in the Reserved Category in the followingorder of priority:

a) Full acceptance of Shares from Small Shareholders in the Reserved Category who have validlytendered their Shares, to the extent of their Buyback Entitlement, or the number of Sharestendered by them, whichever is less.

b) Post the acceptance as described in paragraph 19 (6) (a) above, in case, there are any Shares leftto be bought back in the Reserved Category, the Small Shareholders who were entitled to tenderzero Shares (on account of ignoring the fractional entitlement), and have tendered AdditionalShares, shall be given preference and one Equity Share each from the Additional Shares tenderedby these Small Shareholders shall be bought back in the Reserved Category.

c) Post the acceptance as described in paragraph 19 (6) (a) and (b) above, in case, there are anyvalidly tendered unaccepted Shares in the Reserved Category (“Reserved Category AdditionalShares”) and Shares left to be bought back in Reserved Category, the Reserved CategoryAdditional Shares shall be accepted in a proportionate manner and the acceptances shall bemade in accordance with the Buyback Regulations, i.e. valid acceptances per Shareholder shall beequal to the Reserved Category Additional Shares tendered by the Shareholder divided by thetotal Reserved Category Additional Shares and multiplied by the total number of Sharesremaining to be bought back in Reserved Category. For the purpose of this calculation, theReserved Category Additional Shares taken into account for such Small Shareholders, from whomone Equity Share has been accepted in accordance with paragraph 19 (6) (b) above, shall bereduced by one.

d) Adjustment for fractional results in case of proportionate acceptance, as described in paragraph19 (6)(c) above, will be made as follows:

For any Shareholder, if the number of Additional Shares to be accepted, calculated on aproportionate basis is not in the multiple of 1 and the fractional acceptance is greater than orequal to 0.50, then the fraction would be rounded off to the next higher integer.

For any Shareholder, if the number of Additional Shares to be accepted, calculated on aproportionate basis is not in the multiple of 1 and the fractional acceptance is less than 0.50,then the fraction shall be ignored.

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7. Basis of Acceptance of Equity Shares validly tendered in the General Category

Subject to the provisions contained in the Letter of Offer, the Company will accept the Sharestendered in the Buyback Offer by Shareholders (other than Small Shareholders) in the GeneralCategory in the following order of priority:

a) Full Acceptance of Shares from Shareholders in the General Category who have validly tenderedtheir Shares, to the extent of their Buyback Entitlement, or the number of Shares tendered bythem, whichever is less.

b) Post the acceptance as described in paragraph 19(7) (a) above, in case, there are any validlytendered unaccepted Shares in the General Category (“General Category Additional Shares”) andShares left to be bought back in General Category, the General Category Additional Shares shallbe accepted in a proportionate manner and the acceptances shall be made in accordance withthe Buyback Regulations, i.e. valid acceptances per Shareholder shall be equal to the GeneralCategory Additional Shares tendered by the Shareholder divided by the total General CategoryAdditional Shares and multiplied by the total number of Shares remaining to be bought back inGeneral Category.

c) Adjustment for fractional results in case of proportionate acceptance, as described in paragraph19 (7) (b) above, will be made as follows:

For any Shareholder, if the number of additional Shares to be accepted, calculated on aproportionate basis is not in the multiple of 1 and the fractional acceptance is greater than orequal to 0.50, then the fraction would be rounded off to the next higher integer.

For any Shareholder, if the number of additional Shares to be accepted, calculated on aproportionate basis is not in the multiple of 1 and the fractional acceptance is less than 0.50,then the fraction shall be ignored.

8. Basis of Acceptance of Shares between Categories

a) After acceptances of tenders, as mentioned in 19(6) and 19(7) above, in case, there are anyShares left to be bought back in one category (‘Partially filled Category‘), and there are additionalunaccepted validly tendered Shares (‘Further Additional Shares’) in the second category (‘overtendered category’), then the additional Shares in the further additional Shares in the overtendered category shall be accepted in a proportionate manner i.e. valid acceptances pershareholder from such additional Shares shall be equal to the further additional Shares validlytendered by a shareholder in the over tendered category and multiplied by the total Shares leftto be bought back in the partially filled Category.

b) If the partially filled category is the General Category and the over tendered category is theReserved Category, then any Small Shareholder who has tendered additional Shares shall beeligible for priority acceptance of one Equity Shares before acceptance in paragraph 19(8)(a)above out of the Shares left to be bought back in the partially filled category, provided noacceptance could take place from such Shareholder in accordance with paragraph 19(6).

c) Adjustment for fraction results in case of proportionate acceptance, as defined in Clause 19(8)(a)above:

For any shareholder, if the number of further additional Shares to be accepted, calculated on aproportionate basis is not in the multiple of 1 and the fractional acceptance is greater than orequal to 0.50, then the fraction would be rounded off to the next higher integer.

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For any shareholder, if the number of further additional Shares to be accepted, calculated on aproportionate basis is not in the multiple of 1 and the fractional acceptance is less than 0.50,then the fraction shall be ignored.

9. For avoidance of doubt, it is clarified that the Shares accepted under the Buyback Offer from eachShareholder, in accordance with Clause 19(4), 19(6), 19(7) and 19(8) above, shall be lower of thefollowing:

- the number of Shares tendered by the respective Shareholder, and- the number of Shares held by the respective Shareholder, as on the Record Date.

10. For the avoidance of doubt, it is clarified that the Equity Shares tendered by any Shareholder overand above the number of Shares held by such Shareholder as on the Record Date shall not beconsidered for the purpose of acceptance in accordance with Clause 19(4), 19(6), 19(7), 19(8) and19(9) above.

20. PROCEDURE FOR TENDER OFFER AND SETTLEMENT

1. The Buyback is open to all Eligible Person(s) holding equity shares as on the Record Date.

2. The Company shall comply with Regulation 19(5) of the Buyback Regulations which states that theCompany shall not buyback the locked-in Shares and non-transferable Shares till the pendency of thelock-in or till the Shares become transferable. As on the date of the PA, there are no shares which arelocked-in or are non-transferable.

3. The Company proposes to effect the Buyback through a Tender Offer method, on a proportionatebasis. A Letter of Offer (“LoF”) and Form of Acceptance-cum-Acknowledgement (“Form”), outliningthe terms of the Buyback as well as the detailed disclosures as specified in the Buyback Regulations,will be mailed to shareholders of the Company whose names appear on the register of members ofthe Company, or who are beneficial owners of Shares as per the records of National SecuritiesDepository Limited/ Central Depository Services (India) Limited, on the Record Date.

4. The Buyback shall be open for the period as shown in the proposed timeline. Shareholders whopropose to tender in the Buyback must ensure that their Form(s), along with the requisitedocuments, reach the Registrar of the Offer before 5.00 p.m. on the date of closure of the Buyback.Shareholders must also ensure that the credit of dematerialized Shares in the Company DepositoryAccount must take place before 5:00 pm on the date of closure of the Buyback. Please note that theTender Form and other relevant documents should not be sent to the Company or to the Managerto the Buyback Offer.

5. The Company will consider all the Shares validly tendered for the Buyback by shareholders, foracceptance under the Buyback.

6. Shareholders may submit the form duly signed (by all shareholders in case the Shares are in jointnames) at the address of the Registrar of the Offer along with the share certificate(s) / copy of DPinstruction slip and other relevant documents as specified in the Letter of Offer. Multiple applicationstendered by any shareholder shall be liable to be rejected. Also, multiple tenders from the samedepository account or same registered folio shall also be liable to be rejected.

7. Shareholders may offer for Buyback their full holding or any part of their holding of Shares of theCompany, as they desire.

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8. The Company will not accept any Equity Shares offered for buyback which are under lock-in or wherethere exists any restraint order of a Court for transfer/ disposal/ sale or where loss of sharecertificates has been notified to the Company or where the title to the Shares is under dispute orotherwise not clear or where any other restraint subsists.

9. Where the Form is signed under power of attorney or by authorized signatory(ies) on behalf of acompany/ body corporate, the power of attorney/ signing authority along with the specimensignatures must have been previously registered with the Company. The registration serial number ofsuch documents should be mentioned below the relevant signature. Where the relevant document isnot so registered, a copy of the same duly certified by a Notary / Gazetted officer should be enclosedwith the form.

10. In case one or more of the joint holders is deceased, the form must be signed by all survivingholder(s) and submitted along with a certified or attested true copy of the death certificate(s). If thesole shareholder is deceased, the form must be signed by the legal representatives of the deceasedand submitted along with the certified or attested true copy of Probate/ Letters of Administration/Succession Certificate and all other relevant documentation while tendering their Shares for theBuyback.

11. Where a joint shareholder is deceased, the Shares will be consolidated with the Shares, if any, heldand tendered by the surviving shareholder(s) for the purpose of reckoning the aggregate number ofShares to be bought back from the surviving shareholders.

12. In case of any lacunae and/ or defect, incomplete information, late receipt or modifications in thedocuments/ forms submitted, the form(s) are liable to be rejected.

13. All the shareholders should provide all relevant documents, which are necessary to ensuretransferability of the Shares in respect of which the form is being sent. Such documents may include(but not be limited to):

- No objection certificate from any lender, if the Shares in respect of which the form is sent, wereunder any charge, lien or encumbrance.

- Duly attested power of attorney, if any person other than the shareholder has signed the form.

- In case of companies, the necessary certified corporate authorizations (including board and/orgeneral meeting resolutions).

14. It is mandatory for the shareholders to indicate the bank account where consideration will be payableat the appropriate place in the Form.

15. Non-receipt of the LoF by, or accidental omission to dispatch the LoF to any person who is eligible toreceive the Offer, shall not invalidate the Offer in any way.

16. In case of non-receipt of the LoF / Form:

a. In case the Shares are in dematerialized form: An Eligible Shareholder may send an applicationin writing on plain paper stating name, address, number of Shares held Client ID number, DPName/ID, beneficiary account number, number of Equity Shares tendered for the Buyback,bank account particulars for the payment of Buyback consideration etc. enclosing a photocopyof the delivery instruction in “Off-market” duly acknowledged by the DP, in favour of thedepository account and other necessary documents. Shareholders must ensure that theirForm(s), along with the requisite documents, reach the Registrar of the Offer before 5.00 pmon the date of closure of the Buyback. Shareholders must also ensure that credit of

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dematerialized Shares in the Company Depository Account must take place on or before thedate of closure of the Buyback.

b. In case the Shares are in physical form: An Eligible Shareholder may send an application inwriting on a plain paper signed by all shareholders stating name, address, folio number,number of Equity Shares held, certificate number, number of Equity Shares tendered for theBuyback and the distinctive numbers thereof, bank account particulars for payment ofconsideration, etc. enclosing the original share certificate(s), copy of shareholders‟ PAN cardand other necessary documents. Shareholders must ensure that their Form(s), along with therequisite documents, reach the Registrar of the Offer before 5.00 pm on the date of closure ofthe Buyback.

17. For Shares held in the dematerialised form by Eligible Shareholders

a) The Company has designated a Depository account named “VLS FINANCE LIMITED-BUYBACKOFFER” - operated by “RCMC Share Registry Pvt. Ltd.” in “NSDL” (“Company DepositoryAccount”). The beneficial owners are required to execute an off-market trade by submitting theDelivery Instructions for debiting his/her beneficiary account with their concerned DepositoryParticipant (“DP”). The date of execution entered in the delivery instruction should be on or afterthe date of opening of the Buyback and on or before the last date of submission of the Form tothe Registrar of the Offer or on or before mailing the Form to the Registrar to the Buyback as thecase may be, but not later than 5.00 p.m. on the date of closure of the Buyback. A photocopy ofthe Delivery Instructions or counterfoil of the Delivery Instructions duly acknowledged by the DPshall be attached to the Form while submitting the same. The beneficial owner may note that theDelivery Instructions to be made to their Depository Participant should be in the “Off-markettrade” mode, and as per the details provided below:

DP Name PNR Securities LimitedDP ID Number IN301241Beneficiary Account Name RCMC-VLS BUY BACK OFFER ESCROW A/C

Beneficiary Account Number / Client ID 10023516Execution Date On or before [●]

Please note that the aforementioned account shall be closed at the end of the day on the date ofclosure of the Buyback. Beneficial owners are requested to ensure the credit of their Shares tothe aforementioned account before the closure of the aforementioned account.

b) Shareholders having their beneficiary account in CDSL will have to use inter-depositoryinstructions slip for the purpose of crediting their Shares in favour of the Company DepositoryAccount. The ISIN No. allotted to Company is INE709A01018 for both the Depositories viz. NSDLand CDSL.

c) If the Registrar to the Buyback does not receive the documents listed in the LoF by 5.00 p.m. onthe date of closure of the Buyback, then, notwithstanding the credit of the Shares in theCompany Depository Account, the Buyback will be deemed to have been rejected by suchshareholder and the Shares tendered by such shareholder will be returned to such shareholdernot later than [●] by way of a credit to the shareholder’s depository account. Conversely, if theShares are not credited to the Company Depository Account by 5.00 pm on the date of closure ofthe Buyback, then, notwithstanding the receipt of the documents listed above by the Registrar tothe Buyback by or before 5.00 pm on the date of closure of the Buyback, the Buyback Offer willbe deemed to have been rejected by such shareholder.

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d) In the event, that any Shares have to be returned to the shareholders and if the returned Sharesare not credited to the shareholder’s beneficiary account for any reason whatsoever, the saidShares will be rematerialized and kept in physical form with the Company in trust for theshareholders until the Company receives specific directions from the shareholders with regard tothese Shares.

e) The Company shall accept/ return the tendered shares from the Eligible Persons in the followingmanner:

- In case all the Shares tendered for the Buyback are accepted by the Company, theconsideration will be paid to the concerned shareholder as specified earlier.

- In case all the Shares tendered for the Buyback are not accepted by the Company, then theShares held in dematerialized form, to the extent not accepted for the Buyback will bereturned to the beneficial owner to the credit of the beneficial owners depository accountwith their respective DP as per details furnished by the beneficial owner in the Form/ as perthose received electronically from the shareholder’s DP, under intimation to the first namedbeneficial owner by Registered/ Speed Post. The Shares shall be transferred not later than[●]. In the event that there is a conflict between the details provided in the Form and thosereceived electronically from the shareholder’s DP, the details received electronically shallprevail. However, the Shares so received are liable to be rejected and returned to theaccount as per the details provided electronically by the shareholder’s DP.

18. For Shares held in the Physical form, by Eligible Shareholders.

a) Eligible Shareholders holding Shares in physical form are required to enclose a copy of the PANcard and the original share certificate(s) while submitting the Form(s).

b) Shares held in physical form to the extent not accepted for the Buyback will be returned to themafter suitable splitting of share certificates, if any, in order to facilitate acceptance of sharecertificates tendered by them, through Registered/ Speed Post at the shareholders‟ sole risk.

c) If the Registrar to the Buyback does not receive the documents listed above by 5.00 pm on theDate of Closure of the Buyback, then, notwithstanding the receipt of the share certificates, theBuyback offer will be deemed to have been rejected by such shareholder and the sharecertificates shall be returned to such shareholder not later than [●]. Also, if the share certificatesare not received by the Registrar to the Buyback by 5.00 pm on the date of closure of theBuyback, then, notwithstanding the receipt of the documents listed above by the Registrar to theBuyback by or before 5.00 pm on the date of closure of the Buyback, the Buyback Offer will bedeemed to have been rejected by such shareholder.

19. For Shares held by Non-resident shareholders

a) Non-resident shareholders (excluding FII) should also enclose a copy of the permission receivedby them from RBI if applicable, to acquire the Shares held by them in the Company.

b) In case the Shares are held on repatriation basis, the non-resident shareholder should obtain andenclose a letter from its authorized dealer/ bank confirming that at the time of acquiring the saidShares, payment for the same was made by the non-resident shareholder from the appropriateaccount as specified by RBI in its approval or from out of funds remitted from outside India. Incase the non-resident shareholder is not in a position to produce the said certificate, the Shareswould be deemed to have been acquired on non-repatriation basis and in that case the holdershall submit a consent letter addressed to the Company, allowing the Company to make thepayment on a non-repatriation basis in respect of the valid Shares accepted under the Buyback.

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c) If any of the above stated documents, as applicable, are not enclosed along with the Form, theShares tendered under the Buyback are liable to be rejected.

20. Mode of Payment of consideration to the shareholders:

a) The payment of consideration for accepted tenders shall be made by the Company to the sole/first shareholder, whose details are recorded with the Company/ DP as applicable. Forshareholders who have opted for electronic mode of transfer, payment shall be madeelectronically through Direct Credit/ NEFT/ RTGS/ NECS (subject to availability of all informationfor crediting the funds) and other permissible modes. The payment to the shareholders would bedone through various electronic modes including but not restricted to the below in the followingorder of preference as may be applicable.

National Electronic Clearing System (“NECS”) - By NECS for shareholders having a bank accountat the designated centers. This mode of payment of consideration amount would be subject toavailability of complete bank account details including the MICR code, IFSC code, bank accountnumber, bank name and branch name as appearing on a cheque leaf, from the Depositories.. Thepayment through NECS is mandatory for Shareholders having a bank account at any of thedesignated centres, except where the Shareholder, being eligible, opts to receive paymentthrough Direct Credit or RTGS.

Direct Credit- Shareholders having bank accounts with the Escrow Agent, as mentioned in theForm, shall be eligible to receive payments through direct credit. Charges, if any, levied by theEscrow Agent for the same would be borne by the Company.

Real Time Gross Settlement (‘RTGS’)- Shareholders having a bank account at any of the RBImandated centers and whose amount exceeds ` 2 Lakhs, have the option to receive the paymentthrough RTGS. Such eligible Shareholders who indicate their preference to receive paymentthrough RTGS are required to provide the Indian Financial System Code (“IFSC‟) code in the Formof Acceptance-cum-acknowledgement form. In the event the same is not provided, paymentshall be made through NECS/other modes. Charges, if any, levied by the Escrow Agent for thesame would be borne by the Company. Charges, if any, levied by the Shareholder’s bankreceiving the credit would be borne by the Shareholder.

National Electronic Fund Transfer (‘NEFT’) - Payment shall be undertaken through NEFTwherever the Shareholder’s bank has been assigned the IFSC, which can be linked to a MICR, ifany, available to that particular bank branch. IFSC Code will be obtained from the website of RBIas on a date immediately prior to the date of payment, duly mapped with MICR numbers.Wherever the Shareholders have registered their nine digit MICR number and their bank accountnumber while opening and operating the demat account, the same will be duly mapped with theIFSC Code of that particular bank branch and the payment will be made to the Shareholderthrough this method. The payments by way of NEFT is subject to operational feasibility, cost andprocess efficiency. In the event that NEFT is not operationally feasible, the payment would bemade through any one of the other modes as discussed above.

b) The Shares lying to the credit of the Company Depository Account will be extinguished in the mannerspecified in the Regulations.

c) All documents sent by Shareholders and all remittances to Shareholders will be at their own risk.Shareholders are advised to adequately safeguard their interests in this regard.

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21. NOTE ON TAXATION

Disclosures in this paragraph are based on expert opinion sought by the Company.

SHAREHOLDERS ARE ADVISED TO CONSULT THEIR TAX ADVISORS FOR THE APPLICABLE TAXPROVISIONS INCLUDING THE TREATMENT THAT MAY BE GIVEN BY THEIR RESPECTIVE ASSESSINGOFFICERS IN THEIR CASE, AND THE APPROPRIATE COURSE OF ACTION THAT THEY SHOULD TAKE. THECOMPANY DOES NOT ACCEPT ANY RESPONSIBILITY FOR THE ACCURACY OR OTHERWISE OF SUCHADVICE.

Given below is a broad summarization of the applicable sections of the Income Tax Act relating totreatment of income-tax in case of buyback of listed equity shares, which is provided only as a guidance.

1.1 CLASSIFICATION OF SHARES AND SHAREHOLDERS

1.1.1 Based on the provisions of the Income Tax Act, shares can be classified under the following twocategories:

a. Shares held as investment (Income from transfer taxable under the head “Capital Gains”)b. Shares held as stock-in-trade (Income from transfer taxable under the head “Profits and Gains

from Business or Profession”)

1.1.2 Based on the provisions of the Income Tax Act, shareholders can be classified under the followingcategories:

a. Resident shareholders being:

• Individuals or Hindu Undivided Family (HUF), Domestic Company• Other Resident

b. Non-resident shareholders being:

• Non Resident Indians (NRIs)• Foreign Institutional Investors (FIIs)• Others:

- Company- Other than Company

1.2 SHARES HELD AS INVESTMENT

1.2.1 Capital gains on buyback of shares are governed by the provisions of section 46A of the Income TaxAct. As per the provisions of section 46A, buyback of shares held as investment, would attract capitalgains in the hands of shareholders as per provisions of section 48 of the Income Tax Act. However forshares traded through Stock Exchanges and Securities Transaction Tax (STT) is paid on such transfer,Long Term Capital Gains are exempt from tax under section 10(38) of Income Tax Act’1961.

1.2.2 Resident Shareholders

1.2.2.1 For Individuals or HUF:

a. Long Term Capital Gain (LTCG) would be taxable at the lower of the following:• @ 20% (with indexation)• @ 10% (without indexation)

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b. Short Term Capital Gain(STCG) would be taxable at applicable slab ratesFor computing capital gains, the benefit of basic exemption limit is allowable in case of residentindividuals and HUF.

Provided that where the total income as reduced by such long term capital gains is below themaximum amount which is not chargeable to income tax, then, such long term capital gains shallbe reduced by the amount by which the total income as so reduced falls short of the maximumamount which is not chargeable to income tax and the balance of such long term capital gainsshall be computed at the respective rates.

In addition to the above, surcharge @ 10% is leviable where the total income exceeds ` 1 crore.Further, Education Cess @ 2% and Secondary and Higher Education Cess @ 1% is leviable in allcases.

1.2.2.2 In the case of a Domestic Company

a. Long Term Capital Gain (LTCG) would be taxable at lower of following:• @ 20% (with indexation)• @ 10% (without indexation)

b. Short Term Capital Gain (STCG) would be taxable @ 30%

1.2.2.3 In any other case of a resident:a. Long Term Capital Gain (LTCG) would be taxable at lower of following:

• @ 20% (with indexation)• @ 10% (without indexation)


In addition to the above, in the case of domestic companies, surcharge @ 5% is leviable where thetotal income exceeds ` 1 crores and @ 10% where the total income exceeds ` 10 crore.

Further, in the case of assesses (other than domestic companies), surcharge @ 10% is leviablewhere the total income exceeds `1 crore.

Also, Education Cess @ 2% and Secondary and Higher Education Cess @ 1% is leviable in all cases.

1.2.3 Non-resident shareholders

1.2.3.1 In case of FIIs:

FIIs are taxable in accordance 115AD of the Income Tax Act, as under.

a. LTCG would be taxable @ 10%b. STCG would be taxable @ 30%

It may further be noted that for FIIs, both -first proviso to section 48 of the Income Tax Act(providing for foreign exchange fluctuation benefit) and second proviso to section 48 of theIncome Tax Act (providing for indexation benefit) would not apply.

1.2.3.2 For NRIs:

a. LTCG would be taxable @ 10% (without indexation)

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However, it is pertinent to note that for section 115E to apply, it is imperative that the Shares ofthe Company were acquired in convertible foreign exchange and such Shares were held for at leasttwelve months prior to the date of acceptance of the Shares tendered in the Buyback Offer.

b. STCG would be taxable at slab rates

In addition to the above, surcharge @ 10% is leviable where the total income exceeds ` 1 crore.

Further, Education Cess @ 2% and Secondary and Higher Education Cess @ 1% is leviable in allcases.

Please note that in case of NRIs not covered within the ambit of the above, their taxation shall beas applicable for other non-resident shareholders (i.e. paragraph 1.2.3.4 below).

1.2.3.3 In case of Foreign Companies’:

a. Long Term Capital Gain (LTCG) would be taxable, depending on whether the transaction is inforeign currency or in Indian currency:

i. Where transaction is in foreign currency, LTCG would be taxable @ 20% (without indexation) –however, benefit of foreign exchange fluctuation as per first proviso to section 48 of theIncome Tax Act shall be available.

ii. Where transaction is not in foreign currency, then benefit of indexation would apply and taxwould be calculated at lower of:• @ 20% (with indexation)• @ 10% (without indexation)


In addition to the above, surcharge @ 2% is leviable where the total income exceeds ` 1 croresand @ 5% where the total income exceeds ` 10 crore.

Education Cess @ 2% and Secondary and Higher Education Cess @ 1% is leviable in all cases.

1. This has to be read in conjunction with paragraph 1.4 on Note on taxation

1.2.3.4 In case of all other non-resident assesses, except those mentioned in paragraph 1.2.3.1, 1.2.3.2and 1.2.3.3 above:

a. Long Term Capital Gain (LTCG) would be taxable, depending on whether the transaction is inforeign currency or in Indian currency:

i. Where the Shares are purchased in foreign currency, LTCG would be taxable @ 20% (withoutindexation) – however, benefit of foreign exchange fluctuation as per first proviso to section48 of the Income Tax Act shall be available in such a case.

ii. Where the Shares are not purchased in foreign currency, then benefit of indexation wouldapply in case of LTCG and tax would be calculated at lower of:• @ 20% (with indexation)• @ 10% (without indexation)

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b. Short Term Capital Gain (STCG) would be taxable as per the slab rates or maximum marginal rateas applicable In addition to the above, surcharge @ 10% is leviable where the total incomeexceeds ` 1 crore.

Further, Education Cess @ 2% and Secondary and Higher Education Cess @ 1% is leviable in allcases.

1.2.4 Where the gross total income of an assessee includes any income arising from the transfer of a long termcapital asset, the gross total income shall be reduced by the amount of such income and the deductionunder Chapter VI-A shall be allowed as if the gross total income as so reduced were the gross totalincome of the assessee.

1.2.5 Where the total income of an assessee includes any income arising from the transfer of a long termcapital asset, the total income shall be reduced by the amount of such income and the rebate underSection 88 shall be allowed from the income tax on the total income as so reduced.

1.3. SHARES HELD AS STOCK-IN-TRADE

1.3.1 If the Shares are held as stock-in-trade by any of the Shareholders of the Company, then the gains wouldbe characterized as business income. In such a case, the provisions of section 46A of the Income Tax Actwould not apply.

1.3.2 Resident Shareholders:

1.3.2.1 For individuals or Hindu Undivided Family (HUF), and in any other case of a resident profits would betaxable at slab rates.

1.3.2.2 However for domestic companies’ profits would be taxable @ 30%.

No benefit of indexation by virtue of period of holding would be available in any case. In addition tothe above, in the case of domestic companies, surcharge @ 10% is leviable where the total incomeexceeds ` 10 Crores and @ 5% where the total income exceeds ` 1 crore. In all other cases, surcharge@ 10% is leviable where the total income exceeds ` 1 crore. Education Cess @ 2% and Secondary andHigher Education Cess @ 1% is leviable in all cases.

1.3.3 Non-Resident Shareholders:

1.3.3.1 For non-residents, taxability of profits as business income would be subject to beneficial provisions ofapplicable DTAA.

1.3.3.2 Where DTAA provisions are not applicable:

• For non-resident individuals or Hindu Undivided Family (HUF), profits would be taxable at slab rates• For foreign companies, profits would be taxed in India @ 40%• or other non-resident shareholders profits would be taxed in India @ 30%

In addition to the above, in the case of foreign companies, surcharge @ 2% is leviable where the totalincome exceeds ` 1 Crore and @ 5% where the total income exceeds ` 10 crore. In all other cases,surcharge @ 10% is leviable where the total income exceeds ` 1 crore.Education Cess @ 2% and Secondary and Higher Education Cess @ 1% is leviable in all cases.

1.4 NOTE

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1.4.1 The second proviso to section 112 of the Income Tax Act provides for beneficial tax rate on LTCG of10%, without giving indexation benefit (as per second proviso to section 48 of the Act).

1.4.2 In the case of Non-Resident Shareholders [referred to in paragraph 1.2.3.3(a)(i) and 1.2.3.4(a)(i) above](other than NRIs covered under the provisions of section 115E of the Income Tax Act and FIIs), the firstproviso to section 48 (providing for foreign exchange fluctuation benefit) would apply, where Sharesare purchased in foreign currency.

1.4.3 In this regard, it is pertinent to note that there are conflicting views on the applicability of the secondproviso to section 112 (providing for a beneficial rate of 10% when indexation is not applied) tononresidents in case where the first proviso to section 48 (providing for foreign exchange fluctuationbenefit) is applicable. We understand that the matter is presently sub-judice.

1.4.4 All the above rates (especially for non-residents) are to be read subject to the provisions of Section206AA of the Act.

1.5 TAX DEDUCTION AT SOURCE

1.5.1 In case of Resident Shareholders

1.5.1.1 In absence of any specific provision under the Income Tax Act, the Company shall not deduct tax on theconsideration payable to resident shareholders pursuant to the said Buyback.

1.5.2 In case of Foreign Institutional Investors (FIIs)

1.5.2.1 As per the provisions of Section 196D(2) of the Income Tax Act, no deduction of tax at source isrequired to be made by the Company, from income by way of capital gains arising from transfer oflisted securities payable to a FIIs as defined in section 115AD of the Income Tax Act.

1.5.2.2 For this purpose, the FIIs should provide the information as requested in the Tender Form, stating thefollowing:• It’s residential status• It does not have a permanent establishment in India• The amount received by it as a part of the Buyback constitutes capital gains and does not constitute

business income for it• Similar gains, if any, have been assessed as capital gains by the income-tax authorities in India in the

past.

1.5.2.3 In absence of certification to the effect that the income of the FIIs from sale of Shares is in the natureof capital gains, the Company shall deduct tax at the prescribed rate (including applicable surchargeand education cess) under the Income Tax Act, on the gross consideration payable.

1.5.3 In case of Non-Resident Shareholders, including NRIs

1.5.3.1 As per the provisions of section 195(1) of the Income Tax Act, any person responsible for paying to anon-resident any sum chargeable to tax is required to deduct tax at the prescribed rate (includingapplicable surcharge and education cess).

1.5.3.2 The consideration payable under the Buyback Offer would be chargeable to tax as capital gains orbusiness profits, as the case may be.

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In order to determine the tax implications of Buyback Offer, it is advised to consult your tax advisorsfor the applicable tax provisions including the treatment that may be given by your respectiveassessing officers in your case, and the appropriate course of action that you should take includingsubmitting any documents to the Company for the purpose of deduction of tax.

The Company shall deduct tax at the prescribed rates (including applicable surcharge and educationcess) for each category of Shareholder, on the gross consideration payable to such non-residentshareholders, based on the information submitted along with the Tender Form.

1.5.3.3 In case of any ambiguity, incomplete or conflicting information or information not being provided tothe Company by the Non-Resident Shareholder, the tax shall be deducted at the maximum rateprescribed for such non-resident shareholder.

1.5.3.4 If the Non-Resident Shareholder requires the Company not to deduct tax, or to deduct tax at a lowerrate, or on a lower amount, for any reason, they would need to obtain a certificate from the Income-tax authorities, either under section 195(3) or under section 197 of the Income Tax Act, and submit thesame to Company while submitting the Tender Form. In absence of such certificate from the Income-tax authorities, the Company shall deduct tax on gross consideration at the prescribed rate of tax.

1.5.3.5 Where Non-Resident Shareholder is tax resident of a country which has entered into a DTAA withIndia, it may be possible for the Non-Resident Shareholder to avail the beneficial provisions, if any,under the DTAA. If the Non-Resident Shareholder opts to avail the beneficial provisions as per DTAA, atax residency certificate of such person from the tax authorities of the country of which such person isthe tax resident and prescribed Form 10F, along with all the other prescribed information, should besubmitted along with the Tender Form. In absence of such certificate, the Company shall deduct thetax as per paragraph 1.5.3.1 to 1.5.3.4 above.

1.5.3.6 In case of a NRI, where it is claimed that he is governed by the provisions of section 115E of the IncomeTax Act, he should submit the relevant information as requested in the Tender Form, along withdocuments in support thereof and to the satisfaction of the Company. In case the information anddocuments are not submitted or the Company is not satisfied regarding the same, then the rate of taxwould be that as applicable to any other non-residents.

These can either be documents proving that the Shares were purchased by the Shareholders eitherfrom foreign remittances or from funds lying in the NRE account or FCNR account and that theseShares have been declared as such in the return of income filed by the shareholders.

1.5.4 Other Information

1.5.4.1 For the purpose of determining as to whether the capital gains are short-term or long-term in nature:

• As per the provisions of the Income Tax Act, where a capital asset (being equity shares of theCompany being bought back in the instant case) is held for a period of less than or equal to 12months prior to the date of transfer, the same shall be treated as a short-term capital asset, andthe gains arising there from shall be taxable as short-term capital gains.

• Similarly, where a capital asset is held for a period of more than 12 months prior to the date oftransfer, the same shall be treated as a long-term capital asset, and the gains arising therefromshall be taxable as long-term capital gains.

1.5.4.2 If the Company becomes liable to pay interest for delay in release of Buyback consideration tononresident shareholders, such shareholders will be required to submit a certificate for deduction oftax at Nil/ lower rate from the Income-tax authorities under the Income Tax Act indicating the amountof tax to be deducted by the Company before remitting the interest, failing which the Company will

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arrange to deduct tax at the applicable rate as may be applicable to the relevant category to which theShareholder belongs under the Income Tax Act, on the interest payment.

1.5.4.3 If the Company becomes liable to pay interest for delay in release of Buyback consideration to residentshareholder, tax will be deducted on the interest component exceeding Rs 5,000/-at the applicablerates.

If the resident Shareholder requires that no tax is to be deducted or tax is to be deducted at a lowerrate than the prescribed rate, such Shareholders will be required to submit a certificate for deductionof tax at Nil/ lower rate from the Income-tax authorities under the Income Tax Act indicating theamount of tax to be deducted by the Company.

1.5.4.4 Non-Resident Shareholders (including FIIs) are required to submit their PAN for income-tax purposes.In case of Non-Residents (including FIIs), if PAN is not submitted or is invalid or does not belong to theShareholder, Company will deduct tax @ 20% (twenty percent) or at the rate in force or at the ratespecified in the relevant provisions of the Income Tax Act, whichever is higher, in accordance withprovisions of section 206AA of the Income Tax Act.

1.5.4.5 The Company shall issue a certificate in the prescribed form to the Shareholders (resident andnonresident) who have been paid the consideration after deduction of taxes on the same certifyingthe amount of tax deducted and other prescribed particulars.

1.5.4.6 For the purpose of computing the tax deduction at source, Shareholders who wish to tender theirShares must submit the information as required along with the Tender Form.

1.5.4.7 The tax deducted under this Offer is not the final liability of the Shareholders or in no way dischargethe obligation of Shareholders to disclose the amount received in pursuant to this Buyback Offer.

1.5.4.8 If for any reasons, the income-tax department raises a vicarious liability on the Company and seeks torecover the tax on the transaction (which is actually tax liability of the Shareholder) from theCompany, the Shareholder agrees to indemnify the Company for the same.

1.5.4.9 SHAREHOLDERS ARE ADVISED TO CONSULT THEIR TAX ADVISORS FOR THE TREATMENT THAT MAYBE GIVEN BY THEIR RESPECTIVE ASSESSING OFFICERS IN THEIR CASE, AND THE APPROPRIATECOURSE OF ACTION THAT THEY SHOULD TAKE. THE STATUTORY AUDITORS DOES NOT ACCEPT ANYRESPONSIBILITY FOR THE ACCURACY OR OTHERWISE OF SUCH ADVICE.

THE TAX RATE AND OTHER PROVISIONS MAY UNDERGO CHANGES.

22. DECLARATION BY THE BOARD OF DIRECTORS

Declaration as required under clause (ix) and (x) of Schedule II, Part A to the Securities and ExchangeBoard of India (Buy-back of Securities) Regulations, 1998, is as under:

i. The Board of Directors confirm that there are no defaults subsisting in repayment of deposits,redemption of debentures or preference shares or repayment of term loans to any financialinstitutions or banks.

ii. The Board of Directors confirm that based on a full enquiry conducted into the affairs and prospectsof the Company and taking into account all the liabilities including prospective and contingentliabilities payable as if the Company were being wound up under the Companies Act, 1956, the Boardof Directors have formed an opinion that:

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a. Immediately following the date of the Letter of Offer, there are no grounds on which theCompany could be found unable to pay its debts.

b. As regards its prospects for the year immediately following the date of the Letter of Offerthat, having regard to their intentions with respect to the management of the Company'sbusiness during the said year and to the amount and character of the financial resourceswhich will be available to the Company during the said year, the Company will be able tomeet its liabilities as and when they fall due and will not be rendered insolvent within aperiod of one year from that date.

This declaration is made and issued by the Board of Directors of the Company in terms of theresolution passed at the meeting held on December 10, 2013.

23. AUDITORS CERTIFICATE

Report addressed to the Board of Directors by the Company’s Auditors on the permissible capitalpayment and the opinion formed by directors regarding insolvency:

Text of the Report dated December 10, 2013 received from Agiwal & Associates, Chartered Accountants,the Statutory Auditors of the Company addressed to the Board of Directors is given below:

To,The Board of DirectorsVLS Finance Limited2nd Floor, 13, Sant Nagar,East of Kailash,New Delhi – 110 065

Dear Sirs,

Sub: Proposed Buy-back of Equity Shares of VLS Finance Limited (“the Company”)

We have been informed that the Board of Directors of the Company in their meeting held on December10, 2013, have decided to buy back Company’s shares at a price of ` 14.50 per equity share in pursuanceof provisions of Section 77A, 77AA and 77B of the Companies Act, 1956 and Section 69 and 70 ofCompanies Act, 2013 and the Securities and Exchange Board of India (Buy-back of Securities) Regulations,1998 (as amended). In terms of the requirements of Clause (xi) of Schedule II Part A of the Securities andExchange Board of India (Buy Back of Securities) Regulations, 1998, we confirm as under:

1. We have inquired into the state of affairs of the Company with reference to its audited financialstatements for the year ended March 31, 2013, which was approved by the Board of Directors attheir meeting held on May 28, 2013.

2. The amount of permissible capital payment (including premium) towards buy-back of equity shares,as computed below, has been properly determined in accordance with Section 77A(2)(b) of theCompanies Act, 1956 and Section 68(2) of the Companies Act, 2013 based on Standalone financials:

Particulars as on 31st March, 2013 (Audited) Amount (` in Lacs)Paid Up Equity Share Capital (A) 3,991.72Free Reserves 14,907.67Total 18,899.39

Maximum amount permitted for the Buyback (i.e. 10% of theTotal Paid-up Capital and Free Reserves)

1,889.94

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3. Based on the representation made by the Company and other information and explanations given tous, which to the best of our knowledge and belief were necessary for this purpose, we report that:

(a) the Board of Directors in their meeting held on December 10, 2013 have formed the opinionas specified in clause (x) of Part A of Schedule II of the Buyback Regulations, on reasonablegrounds and that the company will not, having regard to its state of affairs, be renderedinsolvent within a period of one year from the date of their board meeting, and

b) We are not aware of anything to indicate that the opinion expressed by the Directors in thedeclaration as to any of the matters mentioned in the declaration as approved by the Boardof Directors in their meeting held on December 10, 2013 is unreasonable in the circumstancesin the present context. However we owe no financial or other liability to any one in respect ofthis in present or future.

This report has been issued solely in connection with the proposed buyback of Equity Shares of theCompany as approved at the meeting of Board of Directors held on December 10, 2013 and may notbe suitable for any other purpose.

For Agiwal & Associates,Chartered AccountantsFirm Registration Number: 000181NSd/-P.C. Agiwal(Partner)Membership No.080475

Place: New DelhiDate: December 10, 2013

24. DOCUMENTS FOR INSPECTION

The following material documents are available for inspection by shareholders of VLS Finance Limited atthe Registered Office at 2nd Floor, 13, Sant Nagar, East of Kailash, New Delhi – 110 065 from 10.00 AM to5.00 PM on any day, except Saturdays, Sundays and public holidays, during the Tendering Period.

1. Copy of the Certificate of Incorporation.

2. Memorandum and Articles of Association of VLS Finance Limited.

3. Copy of the annual reports of VLS Finance Limited for the years ended March 31, 2011, March 31,2012 and March 31, 2013.

4. Copy of the resolution passed by the Board of Directors at the meeting held on December 10, 2013,2013 approving proposal for Buyback.

5. Copy of Certificate dated December 10, 2013, 2013 received from Agiwal & Associates, the StatutoryAuditors of the Company, in terms of clause (xi) of Part A to Schedule II of the Buyback Regulations.

6. Copy of Declaration of solvency and an affidavit verifying the same as per Form 4A of the Companies(Central Governments) General Rules and Forms, 1956.

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7. Copy of Escrow Agreement dated [●] between VLS Finance Limited, [●](Escrow Bank) and SMCCapitals Limited (Manager to the Buyback Offer), confirming that [●] [` *] is kept in escrow accountand a lien has been marked on the amount in favour of the Manager to the Buyback Offer.

8. Copy of Public Announcement published in the newspapers on December 12, 2013 regardingBuyback of Equity Shares;

9. Opinion dated 18.12.2013 obtained by the Statutory Auditors on Taxation.

10. Copy of SEBI observation letter no. [●] dated [●].

25. DETAILS OF THE COMPLIANCE OFFICER

Mr. H. Consul – Company SecretaryVLS Finance LimitedRegistered Office: 2nd Floor, 13, Sant Nagar, East of Kailash, New Delhi – 110 065Tel: 011 – 46656666; Fax: 011-46656699Email: [email protected]; Website: www.vlsfinance.com

Investors may contact the Compliance Officer for any clarification or to address their grievances, if any,during office hours i.e. 10.00 am to 5.00 pm on all working days except Saturday, Sunday and Publicholidays.

26. DETAILS OF THE REMEDIES AVAILABLE TO THE SHAREHOLDERS/ BENEFICIAL OWNERS

In case of any grievances relating to the Buyback (i.e. non-receipt of the Buyback consideration, Sharecertificate, demat credit, etc.) the investor can approach the Compliance Officer and/or Manager to theBuyback and/or Registrar to the Buyback for redressal.

If the Company makes any default in complying with the provisions of Section 77A of the Companies Act,1956 or any rules made there-under, or any regulation or under clause (f) of sub- section (2) of Section77A of the Companies Act, 1956 and the Companies Act, 2013, the Company or any officer of theCompany who is in default shall be punishable with imprisonment for a term and its limit, or with a fineand its limit or with both in terms of the Companies Act, 1956 and the Companies Act, 2013.

The address of the concerned office of the Registrar of Companies is as follows:

The Registrar of CompaniesNational Capital Territory of Delhi and Haryana4th Floor, IFCI Tower61, Nehru PlaceNew Delhi 110 019

27. DETAILS OF INVESTOR SERVICE CENTRES

In case of any query, the shareholders may contact the Registrar of the Offer on any day during the Offerperiod, except Saturday, Sunday and Public holidays between 10.00 AM and 5.00 PM at the followingaddress:

RCMC Share Registry Pvt. Ltd.SEBI Registration No.: INR000000429B-106, Sector-2,

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Noida, U.P. – 201301Tel: 0120 – 4015884;Fax: 0120-2444346Email: [email protected] Person: Mr. Ravinder Dua

28. DETAILS OF THE MANAGER TO THE BUYBACK

The Company has appointed the following as the Manager to the Buyback:

MANAGER TO THE BUYBACK

SMC Capitals LimitedSEBI Regn. No.: INM000011427*302-303, Enterprise Centre,Near Orchid Hotel, Nehru Road, Vile Parle (East),Mumbai- 400099Tel. No.: +91- 22- 66481818;Fax: +91- 22- 66481850Email: [email protected]

Contact Person: Mr. Sanjeev Barnwal

# SEBI Registration is valid until December 30, 2013. However, renewal application has been made to SEBIon September 25, 2013 and is in process.

29. DECLARATION BY THE DIRECTORS REGARDING AUTHENTICITY OF THE INFORMATION IN THE LETTEROF OFFER

As per Regulation 19(1)(a) of the Regulations, the Directors of the Company accept full and finalresponsibility for the information contained in this Letter of Offer. The Letter of Offer is issued under theauthority of the Board of Directors through resolution passed at their meeting held on December 10,2013.

For and on behalf of the Board of Directors of VLS Finance Limited

Sd/- Sd/- Sd/-_______________ ______________ ______________S.K. Agarwal K.K. Soni H. ConsulManaging Director Director – Finance & CFO Company Secretary

Place: New Delhi

Date: December 18, 2013

1

The Board of DirectorsVLS Finance LimitedC/o RCMC Share Registry Pvt. Ltd.B-106, Sector-2, Noida, U.P. – 201301Tel: 0120-4015884; Fax: 0120-2444346 Email: [email protected] Date

Dear Sirs,

Ref: Letter of Offer dated _______, 2014 by VLS Finance Limited to buy back up to 99,48,750 fully paid-up Equity Shares of face value of ` 10/- each at a price of ` 14.50 (Rupees Fourteen and Fifty Paisa Only) per Equity Share from all the Public Shareholders of the Company through Tender Offer process, on a proportionate basis.

1) I/ We have read and understood the Letter of Offer dated ______, 2014 and now hereby tender / offer my/our shares in response to the Buyback Offer on the terms and conditions set out below and in the Letter of Offer.

2) I / We authorise the Company to buy back the shares offered (as mentioned below) and to issue instruction to RCMC Share Registry Pvt. Ltd. to extinguish the shares through an off market transfer.

3) I / We hereby warrant that the shares comprised in this tender offer are offered for the Buyback by me / us free from all liens, equitable interest, charges and encumbrance.

4) I / We declare that there are no restraints / injunctions or other order of any nature which limits / restricts in any manner my / our right to tender shares for the Buyback and that I / we am / are legally entitled to tender the shares for the Buyback.

5) I / we agree that the Company will pay the Buyback Price only after due verification of the validity of the documentsand that the considerationmaybepaid to the first namedshareholder.

6) I/ We undertake to return to the Company any Buyback consideration that may be wrongfully received by me/us.

7) I / We undertake to execute any further documents and give any further assurances that may be required or expedient to give effect to my / our tender / offer and agree to abide by any decision that may be taken by the Company to effect the Buyback in accordance with the Act and the Regulations.

8) Details of Shares held and offered for the Buyback:

In Figures In Words

Number of Shares held

Number of shares Entitled

Number of Shares offered for the BuyBack

BUYBACK OFFEROpens On __________, 2014Closes On ___________, 2014

For Registrar/ Collection Centre UseCentre Code

Inward No.

Date Stamp

Status: Please tick Appropriate

Individual

FII

Foreign Company Non Resident Indian/OCB

Body Corporate Bank/Financial Institution

Other (Specify)-

FORM OF ACCEPTANCE CUM ACKNOWLEDGEMENT TENDER / OFFER FORM(FOR SHAREHOLDERS HOLDING SHARES IN DEMATERIALISED FORM)

From:

2

9) Details of account with Depository Participant

Name of the Depository(tick whichever is applicable)

NSDL CDSL

Name of the Depository Participant

DP ID

Client ID with the DP

10) I / We hereby declare that we have instructed the above-mentioned DP, with whom, I / we hold an account to transfer the number of shares as mentioned under clause 8 above to RCMC-VLS BUY BACK OFFER ESCROW A/C (Client Id No. 10023516) held with (PNR Securities Limited) (DP ID. No. IN301241).

A copy of delivery instruction issued to the DP, duly endorsed by the DP is enclosed11) Details of Other Documents (please tick appropriately), if any, enclosed: Corporate Authorizations DeathCertificateSuccessionCertificate Power of Attorney Any Other, Please specify _____________12) TaxCertification (NRIs/OCBs/FIIs/Non-ResidentShareholdersOnly)

If you are a NRI, OCB or an FII or a non-resident shareholder, you should certify whether the Shares held by you are held on investment/capital account or on trade account.

Please refer to the Letter of Offer regarding tax to be deducted at source. Shareholders are also advised to consult their tax advisors for the treatment that may be given by their respective assessing officers in their case, and theappropriate course of action that they should take.

I/We certify that the Shares referred to in clause 8 of this Form of Acceptance cum Acknowledgment are held:

on investment/capital account on tradeaccount/to be taxedasBusinessProfits

I/We certify that the tax deduction on the Buyback consideration for Shares referred to in clause 8 of this Form of Acceptance cum Acknowledgment is to be deducted on account of:

short term gains long term gains BusinessProfits

Order from Income-tax authorities enclosed specifying (if applicable):

Non deduction of tax at source Deduction at lower rate

I/ We have enclosed the following (if applicable):

Evidenceof eligibility for claiminganydouble tax treaty benefit

I/ We have enclosed the following (if applicable):

Evidence of eligibility for claiming any double tax treaty benefit

Applicable only for FII shareholders:

The FII hereby undertakes that: (a) it has a valid tax residency certificate; (b) it does not have a permanentestablishment inIndia;and(c) theamountreceivedby itasapartof theOfferconstitutescapitalgainsanddoesnot constitute business income for it and that similar gains (if any) have been taxed as capital gains by the tax authorities in India in thepast (Note:Pleaseenclosea certificateof tax residency from theappropriateauthorityof the relevant country and all such other relevant documents)

The FII hereby undertakes to indemnify the Company against any and all direct losses, including reasonable costs and expenses incurred in respect thereof, arising out of or in connection with any vicarious liability on the Company raised by the tax department for any tax recoverable from the FII in relation to the consideration paid by the Company to the FII in the Buyback.

3

Applicable only for non-residents other than FIIs:The shareholder hereby undertakes that the Double Taxation Avoidance Agreement between India and _________________________________ [please insert the applicable jurisdiction] is applicable to it.[Note: Please enclose a certificate of tax residency from the appropriate authority of the relevant country and anyother documents as applicable]. The shareholder hereby undertakes to indemnify the Company against any and all direct losses, including

reasonable costs and expenses incurred in respect thereof, arising out of or in connection with any vicarious liability on the Company raised by the tax department for any tax recoverable from the shareholder in relation to the consideration paid by the Company to such shareholder in the Buyback.

The shareholder hereby undertakes to indemnify the Company against any and all direct losses, including reasonable costs and expenses incurred in respect thereof, arising out of or in connection with any vicarious liability on the Company raised by the tax department for any tax recoverable from the shareholder in relation to the consideration paid by the Company to such shareholder in the Buyback.

13) Details of Bank Account of the Sole / First Shareholder to be incorporated in the consideration warrant. (To be mandatorily filled)

Name of the Bank

Address

Branch and City

Account Number

Type of Account

MICR Code

IFSC Code (For RTGS/NEFT)

14) Shareholder(s) Details

Sole/First Shareholder Second Shareholder (if any)

Third Shareholder (if any)

Name in Full

Signature*

PAN

Address of the Sole/First Shareholder

Telephone No/E-mail id

*Corporatemust affixRubberStamp

VLS FINANCE LIMITED BUY-BACK OFFER ACKNOWLEDGEMENT(to be filledby the shareholder)

Received

From Mr./Ms./M/s______________________________________________________________________________________

Address _____________________________________________________________________________________________

_____________________________________________________________________________________________________

DP ID: ____________________________________________

Client ID: __________________________________________

No. of SharesOffered for theBuyback: (In Figures) _____________; (InWords) ____________________________________________________________________________________

Tear along this line

Stamp of Collection Centre

4

INSTRUCTIONS1. This Offer will open on __________ and close on ___________________.2. This Tender / Offer Form has to be read along with the Letter of Offer and is subject to the terms and conditions

mentioned in the Letter of Offer.3. For the purpose of the Buyback, the Company has opened an account with a Depository Participant (DP) as detailed

below:

DP Id. Number IN301241DP Name PNR Securities LimitedClient Id. Number 10023516Client Account Name RCMC-VLS BUY BACK OFFER ESCROW A/C

4. Shareholders of the Company who wish to tender / offer their shares in response to this Buyback Offer should deliver the following documents so as to reach before the close of business hours at the respective Collection Centers (as mentioned in the Letter of Offer) on or before 5.00 P.M. by __________. Shareholders residing at locations where there are no collection centres should send their response to the Registrar to the Buyback, RCMC Share Registry Pvt. Ltd. so as to reach on or before 5.00 P.M. by _________.

5. The relevant Tender / Offer Form duly signed (by all shareholders in case the shares are in joint names) in the same order in which they hold the shares.

6. Copy of delivery instruction issued by shareholders to their DP for transferring the shares tendered for Buyback, to the Company's DP account with Stock Holding Corporation of India Ltd.. Copy of the delivery instruction should be duly endorsed by the DP of shareholder, to whom the original delivery instruction should be handed over.

7. In the delivery instruction please use the “For Off-Market Trades (Receiver Details)” box. Fill in “PNR Securities Limited” against DP Name, “(IN301241)” against the DP ID and “(10023516)” against Client ID. The date of execution entered in the delivery instruction should be after the date of opening of the offer and on or before the last date of submission of the Tender / Offer Form to the Collection Centres or on or before the date of mailing of the Tender / Offer Form to the Registrar to the Buyback, as the case may be, but not in any case later than the date of Closure of the Offer

8. In case of non-receipt of this Letter of Offer, shareholders may send their application in plain paper in writing signed by all shareholders, stating, name, address, number of shares held, client Id number, DP name, DP Id number, number of shares tendered for Buy-back, bank account details together with a copy of the delivery instruction issued to the DP (duly endorsed by the DP) and other relevant documents to the Registrar to the Buyback, RCMC Share Registry Pvt. Ltd..

9. Shareholders should also provide all relevant documents in addition to the above documents. Such may include (but not limited to):

• DulyattestedPowerofAttorney,ifanypersonotherthantheshareholderhassignedtherelevantTender/OfferForm. • Duly attesteddeath certificate / succession certificate in caseany shareholder hasexpired. • Necessary corporateauthorizations, suchasBoardResolutions, etc., in caseof companies.10. Shareholders to whom the Offer is made are free to tender / offer shares to the extent of their entitlement in whole

or in part or in excess of their entitlement.11. It is mandatory for shareholders to indicate the bank account details to which the consideration would be payable at

the appropriate place in the Tender / Offer Form.12. All documents sent by shareholders will be at their own risk. Shareholders of the Company are advised to safeguard

adequately their interests in this regard. Note: Shareholders may submit multiple Tender Forms based on different folio numbers. However, the Registrar

shall identify multiple forms based on PAN number and club them for the purposes of categorizing them as “General Category” if the aggregate value of the clubbed Tender Forms exceeds the value upto which shareholders can be categorized as Small Shareholders

ALL FUTURE CORRESPONDENCE IN CONNECTION WITH THIS BUY-BACK OFFER SHOULD BE ADDRESSED TO THE REGISTRAR TO THE BUYBACK, RCMC SHARE REGISTRY PVT. LTD. QUOTING YOUR CLIENT ID & DP ID.


RCMC Share Registry Pvt. Ltd.(VLS Finance Limited BUY-BACK OFFER)

B-106, Sector-2, Noida, U.P. – 201301Tel: 0120-4015884;Fax: 0120-2444346

SEBI Registration No.: INR000000429Email: [email protected] Person: Mr. Ravinder Dua

1

The Board of DirectorsVLS Finance LimitedC/o RCMC Share Registry Pvt. Ltd.B-106, Sector-2, Noida, U.P. – 201301Tel: 0120-4015884; Fax: 0120-2444346Email: [email protected] DateDear Sirs,

Ref: Letter of Offer dated _______, 2014 by VLS Finance Limited to buy back up to 99,48,750 fully paid-up Equity Shares of face value of ` 10/- each at a price of ` 14.50 (Rupees Fourteen and Fifty Paisa Only) per Equity Share from all the Public Shareholders of the Company through Tender Offer process, on a proportionate basis.

1) I/We have read and understood the Letter of Offer dated _____, 2014 and now hereby tender / offer my/our shares in response to the Buy-back Offer on the terms and conditions set out below and in the Letter of Offer.

2) I /WeauthorisetheCompanytobuybackthesharesofferedandasaconsequencetoextinguishthesharecertificates.

3) I / We hereby warrant that the shares comprised in this tender / offer are offered for the Buyback by me / us free from all liens, equitable interest, charges and encumbrance.

4) I / We declare that there are no restraints / injunctions or other order of any nature which limits / restricts in any manner my / our right to tender shares for the Buyback and that I / we am / are legally entitled to tender the shares for the Buyback.

5) I/WeagreethattheCompanyisnotobligedtoacceptanysharesofferedfortheBuybackwherelossofsharecertificateshasbeennotified to theCompany.

6) I / We agree that the Company will pay any Buyback consideration only after due verification of the validity of thedocumentsand signaturesand that the considerationmaybepaid to the first namedshareholder.

7) I / We undertake to return to the Company any Buyback consideration that may be wrongfully received by me/us.

8) I / We undertake to execute any further documents and give any further assurances that may be required or expedient to give effect to my / our tender / offer and agree to abide by any decision that may be taken by the Company to effect the Buyback in accordance with the Act and the Regulations.

9) I/Weauthorizethecompanytosplitthesharecertificateandissuenewconsolidatedcertificatefortheunacceptedsharesin case the shares accepted by the Company are less than the shares tendered in the Buyback due to oversubscription.

10) Details of shares held and offered for the Buyback:

In Figures In Words

Number of Shares held

Number of shares entitled

Number of Shares offered for Buy-Back

BUYBACK OFFEROpens On ______, 2014Closes On ______, 2014

For Registrar/ Collection Centre UseCentre Code

Inward No.

Date Stamp

Status: Please tick appropriate box

Individual

FII

Foreign Company Non Resident Indian/OCB

Body Corporate Bank/Financial Institution

Other (Specify)-

FORM OF ACCEPTANCE CUM ACKNOWLEDGEMENT TENDER / OFFER FORM (FOR SHAREHOLDERS HOLDING IN PHYSICAL FORM)

From:

2

11) Details ofShareCertificate(s)Enclosed TotalNo. ofShareCertificates submitted

Sr. No Folio No. ShareCertificate No.

Distinctive Nos No. of SharesFrom To

1.

2.

3.

4.

5.

Total

In case the number of folios and share certificates enclosed exceed 5 nos., please attach a separate sheet givingdetails in the same format as above.

12) Details of Other Documents (please tick appropriately), if any, enclosed: Corporate AuthorizationsDeathCertificate SuccessionCertificate Power of Attorney Any Other, Please specify _____________13) TaxCertification (NRIs/OCBs/FIIs/Non-ResidentShareholdersOnly)

If you are a NRI, OCB or an FII or a non-resident shareholder, you should certify whether the Shares held by you are held on investment/capital account or on trade account.Please refer to the Letter of Offer regarding tax to be deducted at source. Shareholders are also advised to consult their tax advisors for the treatment that may be given by their respective assessing officers in their case, and theappropriate course of action that they should take.I/We certify that the Shares referred to in clause 8 of this Form of Acceptance cum Acknowledgment are held: on investment/capital account on tradeaccount/to be taxedasBusinessProfits

is to be deducted on account of: short term gains long term gains BusinessProfits

Order from Income-tax authorities enclosed specifying (if applicable): Non deduction of tax at source Deduction at lower rate

I/ We have enclosed the following (if applicable):Evidenceof eligibility for claiminganydouble tax treaty benefit

I/ We have enclosed the following (if applicable): Evidence of eligibility for claiming any double tax treaty benefit Applicable only for FII shareholders: The FII hereby undertakes that: (a) it has a valid tax residency certificate; (b) it does not have a permanent

establishmentinIndia;and(c)theamountreceivedbyitasapartoftheOfferconstitutescapitalgainsanddoesnot constitute business income for it and that similar gains (if any) have been taxed as capital gains by the tax authorities in India in thepast (Note:Pleaseencloseacertificateof tax residency from theappropriateauthorityof the relevant country and all such other relevant documents)

The FII hereby undertakes to indemnify the Company against any and all direct losses, including reasonable costs and expenses incurred in respect thereof, arising out of or in connection with any vicarious liability on the Company raised by the tax department for any tax recoverable from the FII in relation to the consideration paid by the Company to the FII in the Buyback.

Applicable only for non-residents other than FIIs:The shareholder hereby undertakes that the Double Taxation Avoidance Agreement between India and _________________________________ [please insert the applicable jurisdiction] is applicable to it.[Note:Pleaseencloseacertificateof taxresidencyfromtheappropriateauthorityof therelevantcountryandanyother documents as applicable.]



I/We certify that the tax deduction on the Shares referred to in clause 10 of this Form of Acceptance cum Acknowledgment

3


14) Details of Bank Account of the Sole / First Shareholder to be incorporated in the consideration warrant. (Tobemandatorily filled)

Name of the Bank

Address

Branch and City

Account Number

Type of Account

MICR Code

IFSC Code (For RTGS/NEFT)

15) Shareholder(s) Details (Signature(s) as per specimen recorded with the Company):

Sole/First Shareholder Second Shareholder (if any) Third Shareholder (if any)

Name in Full

Signature*

PAN

Address of the Sole/First Shareholder

Telephone No/E-mail id

*Corporatemust affixRubberStamp

VLS Finance Limited BUY-BACK OFFER ACKNOWLEDGEMENT

(to be filledby the shareholder)

Received

From Mr./Ms./M/s______________________________________________________________________________

Address ____________________________________________________________________________________

____________________________________________________________________________________________

Folio No: ____________________________________________

No. ofSharesOffered for theBuyback: (In Figures) _____________; (InWords) ____________________________________________________________________________________

Stamp of Collection Centre

4


INSTRUCTIONS

1. This Offer will open on _____, ________, 2014 and close on __________, 2014.

2. This Tender / Offer Form has to be read along with the Letter of Offer and is subject to the terms and conditions mentioned in the Letter of Offer.

3. Shareholders of the Company who wish to tender / offer their shares in response to this Buyback Offer should deliver the following documents so as to reach before the close of business hours at the respective Collection Centers (as mentioned in the Letter of Offer) on or before 5.00 PM by _______, 2014. Shareholders residing at locations where there are no collection centres should send their response to the Registrar to the Buyback, RCMC Share Registry Pvt. Ltd. so as to reach on or before 5.00 P.M. by ___, _______, 2014].

• TherelevantTender /OfferFormdulysigned(byallshareholders incasesharesare in jointnames) in thesameorder in which they hold the shares

• Original share certificates

4. Shareholders should also provide all relevant documents in addition to the above documents. Such may include (but not limited to):

• Duly attestedPower ofAttorney if any person other than the shareholder has signed the relevant Tender /OfferForm.

• Duly attesteddeath certificate / succession certificate in caseany shareholder hasexpired.

• Necessary corporateauthorisations, suchasBoardResolutions, etc., in caseof companies.

5. Shareholders to whom the Offer is made are free to tender / offer shares to the extent of their entitlement in whole or in part or in excess of their entitlement.

6. In case of non-receipt of this Letter of Offer, shareholders may send their application in plain paper in writing signed by all shareholders, stating folio number, name, address, number of shares held, share certificate number, distinctivenumbers,numberofsharestenderedfortheBuyback,bankaccountdetailstogetherwiththeoriginalsharecertificatesand other relevant documents to the Registrar to the Buyback Offer.

7. It is mandatory for shareholders to indicate the bank account details to which the consideration would be payable at the appropriate place in the Tender / Offer Form.

8. All documents sent by shareholders will be at their own risk. Shareholders of the Company are advised to safeguard adequately their interests in this regard.

Note: Shareholders may submit multiple Tender Forms based on different folio numbers. However, the Registrar shall identify multiple forms based on PAN number and club them for the purposes of categorizing them as “General Category” if the aggregate value of the clubbed Tender Forms exceeds the value upto which shareholders can be categorized as Small Shareholders

ALL FUTURE CORRESPONDENCE IN CONNECTION WITH THIS BUYBACK OFFER SHOULD BE ADDRESSED TO THE REGISTRAR TO THE BUYBACK, RCMC SHARE REGISTRY PVT. LTD. QUOTING YOUR FOLIO NO.

RCMC Share Registry Pvt. Ltd.(VLS Finance Limited BUY-BACK OFFER)

B-106, Sector-2, Noida, U.P. – 201301Tel: 0120-4015884;Fax: 0120-2444346

SEBI Registration No.: INR000000429Email: [email protected] Person: Mr. Ravinder Dua