paramount printpackaging ltd

7/28/2019 Paramount Printpackaging Ltd.

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C MY K

C MY K

DRAFT RED HERRING PROSPECTUS

Dated September 24, 2010

Please read Sections 60 and 60B of the Companies Act, 1956

The Draft Red Herring Prospectus will be

updated upon filing with the RoC

100% Book Building Issue

PUBLIC ISSUE OF 15,000,000 *EQUITY SHARES OF RS. 10/- EACH (EQUITY SHARES) OF PARAMOUNT PRINTPACKAGING LIMITED (PPL OR OURCOMPANY OR THE ISSUER) FOR CASH AT A PRICE OF RS. [ ] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [] PER EQUITY SHARE),AGGREGATING RS. [ ] (THE ISSUE). THE ISSUE SHALL CONSTITUTE 56.18% OF THE FULLY DILUTED POST ISSUE PAID UP CAPITAL OF OURCOMPANY.*Our Company is considering a Pre-IPO Placement of upto 50,00,000 Equity Shares and/or aggregating up to Rs. 13,50,00,000 with certain investors (the Pre-IPOPlacement). The Pre-IPO Placement is at the discretion of our Company. Our Company will complete the issuance, if any, of such Equity Shares prior to filing of the Red HerringProspectus with the Registrar of Companies. If the Pre-IPO Placement is completed, then the Issue size would be reduced to the extent of such Pre-IPO Placement, subjectto a minimum Issue size of 25% of the post Issue paid-up share capital of our Company.

THE FACE VALUE OF THE EQUITY SHARES IS RS. 10/-THE PRICE BAND AND THE MINIMUM BID LOT SIZE FOR THE ISSUE WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE BOOK

RUNNING LEAD MANAGER AND ADVERTISED AT LEAST TWO (2) WORKING DAYS PRIOR TO THE BID/ISSUE OPENING DATE.

In case of revision in the Price Band, the Bidding Period will be extended for three additional days after revision of the Price Band subject to the Bidding Period/Issue periodnot exceeding ten working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to theNational Stock Exchange of India Limited (the NSE) and the Bombay Stock Exchange Limited (the BSE) whose online IPO system will be available for bidding, byissuing a press release, and also by indicating the change on the website of the Book Running Lead Manager and at the terminals of the Syndicate.This Issue is being made through a 100% Book Building Process wherein upto 50% of the Issue shall be available for allocation on a proportionate basis to QualifiedInstitutional Buyers (QIBs) (of which 5% will be available for allocation for Mutual Funds), subject to valid bids being received at or above the Issue Price. Mutual Fundbidders shall also be eligible for proportionate allocation under the balance available for the QIBs. Further, not less than 15% of the Issue will be available for allocation ona proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue will be available for allocation on a proportionate basis to Retail Individual Bidders,subject to valid bids being received at or above the Issue Price.

BID/ISSUE PROGRAMME

BID/ISSUE OPENS ON : [] BID/ISSUE CLOSES ON : []

Our Company was formed originally as a partnership firm in the name and style of M/s. Paramount Printing Press on November 13, 1985. M/s. Paramount Printing Press was converted into a private

limited company under Part IX of the Companies Act 1956, with the name of Paramount Printing Press Private Limited pursuant to certificate of incorporation dated March 24, 2006 bearing CIN

U22200MH2006PTC160735, issued by the Registrar of Companies, Maharashtra, Mumbai. The name of our Company was changed to Paramount Printpackaging Private Limited pursuant to a fresh

certificate of incorporation consequent upon change of name dated June 2, 2010, issued by the Registrar of Companies, Maharashtra, Mumbai. Our Company was converted to a public limited company

and the name of our Company was changed to Paramount Printpackaging Limited pursuant to a fresh certificate of incorporation consequent upon change of name dated July 21, 2010 issued by the

Registrar of Companies, Maharashtra, Mumbai.

Registered Office and Corporate Office: A/309, TTC Industrial Estate, Mahape Road, Navi Mumbai, Maharashtra 400701.

For more information on our change in name and registered office, refer to History and Other Corporate Matters on page 66 of the Draft Red Herring Prospectus.

Tel: +91 22 4162 7777; Fax: +91 22 2778 2743

Contact Person: Ms. Ashwini Rao, Company Secretary and Compliance Officer

E-mail: [email protected]; Website: www.pppltd.in

PARAMOUNT PRINTPACKAGING LTD.

PROMOTERS OF OUR COMPANY: MR. ASHWIN BABULAL SUKHADIA, MR. ANUJ VIPIN SUKHADIA, MR. DHARMESH ASHWIN SUKHADIA,

MR. DIVYESH ASHWIN SUKHADIA, MR. KETAN VIPIN SUKHADIA AND MR. VIPUL ASHWIN SUKHADIA

LEAD MANAGER TO THE ISSUE

ONELIFE CAPITAL ADVISORS PRIVATE LIMITED

96-98, Mint Road

Mumbai - 400 001Tel: +91 22 4333 3000

Fax: +91 22 4333 3011

E-mail: [email protected]

Investor Grievance Email: [email protected]

Website: www.onelifecapital.in

Contact Person: Mr. Sumit Gupta / Mr. Tatsat Mehta

SEBI Registration No.: INM000011633

REGISTRAR TO THE ISSUE

SHAREPRO SERVICES (INDIA) PRIVATE LIMITED

13/A-B, Samitha Warehousing Complex, 2nd Floor

Near Sakinaka Tel. Exchange, Sakinaka, Andheri (East),Mumbai - 400 072

Tel: +91 22 6772 0300

Fax: +91 22 2850 8927

Email: [email protected]

Website: www.shareproservices.com

Contact Person: Mr. Subhash Dhingreja / Mr. Kumresan V

SEBI Registration No.: INR000001476

RISKS IN RELATION TO FIRST ISSUE

This being the first public issue of Equity Shares of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Sharesis Rs. 10/- each and the Floor Price is [] times of the face value and the Cap Price is [] times of the face value. The Issue Price (has been determined and justified by the BookRunning Lead Manager and our Company as stated in Basis for Issue Price on page 34 of the Draft Red Herring Prospectus) should not be taken to be indicative of themarket price of the Equity Shares after Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares of our Companyor regarding the price at which the Equity Shares will be traded after listing.

IPO GRADING

This Issue has been graded by [] as []/5 indicating [] fundamentals. The IPO grading is assigned on a five point scale from 1 to 5 wherein an IPO Grade 5 indicates strongfundamentals and an IPO Grade 1 indicates poor fundamentals. For more information please refer to General Information on page 9 of the Draft Red Herring Prospectus.

GENERAL RISKS

Investment in equity and equity related securities involve a high degree of risk and investors should not invest any funds in this Issue unless they can afford to take the riskof losing their investment. Investors are advised to read the section titled Risk Factors carefully before taking an investment decision in this Issue. For taking an investmentdecision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved bySecurities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of the Draft Red Herring Prospectus. Specific attention of the investorsis invited to the statement of Risk Facto rs on page xi of the Draft Red Herring Prospectus.

ISSUERS ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that the Draft Red Herring Prospectus contains all information with regard to theIssuer and the Issue which is material in the context of this Issue, that the information contained in the Draft Red Herring Prospectus is true and correct in all material respectsand is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makesthe Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING

The Equity Shares offered through the Draft Red Herring Prospectus are proposed to be listed on the NSE and the BSE. Our Company has received an in-principle approvalfrom the NSE and the BSE, for the listing of the Equity Shares pursuant to their letters dated [ ] and [], respectively. For the purposes of this Issue, the Designated StockExchange shall be [].


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TABLE OF CONTENTS

SECTION I DEFINITIONS AND ABBREVIATIONS .......................................................................................... iCONVENTIONAL AND GENERAL TERMS .......................................................................................................... iISSUE RELATED TERMS ...................................................................................................................................... iiiISSUER RELATED TERMS ................................................................................................................................... viiINDUSTRY RELATED TERMS .............................................................................................................................viiPRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA ........................................................ viiiFORWARD LOOKING STATEMENTS .................................................................................................................. x

SECTION II RISK FACTORS................................................................................................................................ xiSECTION III INTRODUCTION ............................................................................................................................. 1

SUMMARY OF INDUSTRY..................................................................................................................................... 1SUMMARY OF BUSINESS ...................................................................................................................................... 3THE ISSUE ................................................................................................................................................................. 5SUMMARY FINANCIAL STATEMENTS .............................................................................................................. 6GENERAL INFORMATION ..................................................................................................................................... 9CAPITAL STRUCTURE ......................................................................................................................................... 16OBJECTS OF THE ISSUE ....................................................................................................................................... 27BASIS FOR ISSUE PRICE ...................................................................................................................................... 34STATEMENT OF TAX BENEFITS ........................................................................................................................ 37

SECTION IV ABOUT OUR COMPANY ............................................................................................................. 43INDUSTRY OVERVIEW ........................................................................................................................................ 43BUSINESS OVERVIEW ......................................................................................................................................... 51KEY INDUSTRY REGULATIONS AND POLICIES ............................................................................................ 61HISTORY AND OTHER CORPORATE MATTERS ............................................................................................. 66OUR MANAGEMENT ............................................................................................................................................ 69OUR PROMOTERS AND THEIR BACKGROUND ............................................................................................. 81OUR PROMOTER GROUP ..................................................................................................................................... 83OUR PROMOTER GROUP ENTITIES .................................................................................................................. 85RELATED PARTY TRANSACTIONS ................................................................................................................... 89DIVIDEND POLICY................................................................................................................................................ 90

SECTION V FINANCIAL STATEMENTS .......................................................................................................... 91AUDITORS REPORT ON FINANCIAL INFORMATION .................................................................................. 91MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS ........................................................................................................................................................ 126FINANCIAL INDEBTEDNESS ............................................................................................................................ 135

SECTION VI LEGAL AND OTHER INFORMATION ................................................................................... 138OUTSTANDING LITIGATION, DEFAULTS AND MATERIAL DEVELOPMENTS ..................................... 138GOVERNMENT, STATUTORY AND BUSINESS APPROVALS ..................................................................... 141

OTHER REGULATORY AND STATUTORY DISCLOSURES ......................................................................... 144

SECTION VII ISSUE RELATED INFORMATION ......................................................................................... 156TERMS OF THE ISSUE ........................................................................................................................................ 156ISSUE STRUCTURE ............................................................................................................................................. 159ISSUE PROCEDURE ............... ............... ............... ................ ................ ............... ................ ............... ................ .. 163RESTRICTION ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ........................................................ 192

SECTION VIII MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ............... ............... .......... 193SECTION IX OTHER INFORMATION ............................................................................................................ 244

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION .............................................................. 244DECLARATION .................................................................................................................................................... 246


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SECTION I DEFINITIONS AND ABBREVIATIONS

In the Draft Red Herring Prospectus, unless the context otherwise requires, the following terms shall have the

meaning given below.

CONVENTIONAL AND GENERAL TERMS

Term Description

Act or Companies Act Companies Act, 1956, as amended from time to time.

AGM Annual General Meeting.

AS Accounting Standard as issued by The Institute of Chartered Accountants ofIndia.

AY Assessment Year.

BSE Bombay Stock Exchange Limited.

CAGR Compounded Annual Growth Rate.

CARO Companies (Auditors Report) Order, 2003.

CDSL Central Depository Services (India) Limited.CHL Swiss Franc.

DP/ Depository Participant A depository participant as defined under the Depositories Act, 1996.

DP ID Depository Participants Identity.

Depository A depository registered with SEBI under the SEBI (Depository andParticipant) Regulations, 1996, as amended from time to time.

Depositories Act The Depositories Act, 1996, as amended from time to time.

Depositories Regulations The SEBI (Depository and Participant) Regulations, 1996, as amended fromtime to time.

DER Debt Equity Ratio.

EBIDTA Earnings before Interest Depreciation, Tax and Amortization.

ECS Electronic Clearing Service.

EGM Extra-Ordinary General Meeting.

EPF Act Employees Provident Funds and Miscellaneous Provisions Act, 1952.EPS Unless otherwise specified, Earnings Per Share, i.e., profit after tax for a

fiscal year divided by the weighted average outstanding number of EquityShares during that fiscal year.

Euro Currency of European Union

FCNR Foreign Currency (Non Residential) accounts.

FDI Foreign Direct Investment.

FEMA Foreign Exchange Management Act, 1999, and the subsequent amendmentsthereto.

FEMA Regulations FEMA (Transfer or Issue of Security by a Person Resident Outside India)Regulations, 2000 and amendments thereto.

FII(s) Foreign Institutional Investor as defined Under SEBI (Foreign InstitutionalInvestors) Regulations, 1995 registered with SEBI and as defined under

FEMA (Transfer or Issue of Security by a Person Resident Outside India)Regulations, 2000 and under other applicable laws in India.

FIPB Foreign Investment Promotion Board.

FVCI Foreign Venture Capital Investor registered under the Securities andExchange Board of India (Foreign Venture Capital Investor) Regulations,2000, as amended from time to time.

FY/ Fiscal Year ended March 31.

GDP Gross Domestic Product.

GoI/ Government Government of India.

HNI High Net worth Individual.

HUF Hindu Undivided Family.

IFRS International Financial Reporting Standards.


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Term Description

ISIN International Securities Identification Number allotted by the Depository.

IST Indian Standard Time.

IT Information Technology.Income Tax Act or the I. T. Act The Income Tax Act, 1961, as amended from time to time.

Indian GAAP Generally Accepted Accounting Principles in India.

IPO Initial Public Offer.

KVA Kilo Volt Ampere.

MAT Minimum Alternate Tax.

Mn Million.

MoU Memorandum of Understanding.

NAV Net Asset Value.

NEFT National Electronic Fund Transfer.

NR Non Resident.

N. A. Not applicable.

NECS National Electronic Clearing Service.

NRE Non- Resident (External) Rupee Account Scheme.NRO Non-Resident Ordinary Rupee Account Scheme.

NRI Non Resident Indian, is a person resident outside India, who is a citizen ofIndia or a person of Indian origin and shall have the same meaning asascribed to such term in the Foreign Exchange Management (Deposit)Regulations, 2000, as amended from time to time.

NSDL National Securities Depository Limited.

NSE The National Stock Exchange of India Limited.

OCB(s) A company, partnership, society or other corporate body owned directly orindirectly to the extent of up to 60% by NRIs including overseas trusts inwhich not less than 60% of beneficial interest is irrevocably held by NRIsdirectly or indirectly and which was in existence on October 3, 2003 andimmediately before such date was eligible to undertake transactions

pursuant to the general permission granted to OCBs under the FEMA. OCBsare not allowed to invest in this Issue.

PBT Profit before tax.

p.a. per annum.

P/E ratio Price to Earnings Ratio.

PAN Permanent Account Number.

PAT Profit after Tax.

PBT Profit Before Tax.

PIO Persons of Indian Origin.

PLR Prime Lending Rate.

RBI The Reserve Bank of India.

Re. One Indian Rupee.

RoC The Registrar of Companies, Maharashtra, Mumbai.

ROI Return on Investment.RONW Return on Networth.

Rs. Indian Rupees.

RTGS Real Time Gross Settlement.

SAT Securities Appellate Tribunal.

SICA Sick Industries (Special Provisions) Act, 1985.

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

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

SEBI The Securities and Exchange Board of India constituted under the SEBI Act,1992.

SEBI Act Securities and Exchange Board of India Act 1992, as amended from time to


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iii

Term Description

time.

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

SENSEX Sensitive Index.STT Securities Transaction Tax.

Stamp Act The Indian Stamp Act, 1899, as amended from time to time.

State Government The Government of a State of India.

Stock Exchanges BSE and/or NSE as the context may refer to.

UIN Unique Identification Number.

U.S./ USA United States of America.

U.S. GAAP Generally Accepted Accounting Principles in the United States of America.

USD/ US$ United States Dollars.

VAT Value Added Tax.

VCF(s) Venture Capital Funds as defined and registered with SEBI under the SEBI(Venture Capital Fund) Regulations, 1996, as amended from time to time.

WCA Workmen Compensation Act, 1923.

ISSUE RELATED TERMS

Term Description

Allotment Unless the context otherwise requires, the allotment of Equity Sharespursuant to the Issue.

Allottee An successful Bidder to whom the Equity Shares are allotted.

Application Supported by BlockedAmount/ ASBA

An application, whether physical or electronic, used by a Resident RetailIndividual Bidder to make a Bid authorising a SCSB to block the BidAmount in their specified bank account maintained with the SCSB.

ASBA Bidder Any Bidder who intends to apply through ASBA and, (a) is bidding at Cut-off Price, with single option as to the number of shares; (b) is applyingthrough blocking of funds in a bank account with the SCSB; (c) has agreed

not to revise his/her bid; and (d) is not bidding under any of the reservedcategories.

ASBA Bid cum Application Form orASBA BCAF

The form, whether physical or electronic, used by an ASBA Bidder to makea Bid, which will be considered as the application for Allotment for thepurposes of the Draft Red Herring Prospectus and the Prospectus.

ASBA Public Issue Account A bank account of our Company, under Section 73 of the Act where thefunds shall be transferred by the SCSBs from the bank accounts of theASBA Bidders.

Bankers to the Issue/ Escrowcollection Bank(s)

The banks registered with SEBI as Banker to the Issue with whom theEscrow Account will be opened, in this case being [].

Basis of Allotment The basis on which Equity Shares will be Allotted to Bidders under theIssue and which is described in Basis of Allotment forming a part ofIssue Procedure on page 163 of the Draft Red Herring Prospectus.

Bid An indication to make an offer during the Bidding Period by a prospectiveinvestor to subscribe to the Equity Shares of our Company at a price withinthe Price Band, including all revisions and modifications thereto.For the purposes of ASBA Bidders, it means an indication to make an offerduring the Bidding Period by a Retail Resident Individual Bidder tosubscribe to the Equity Shares of our Company at Cut-off Price.

Bid Amount The highest value of the optional Bids indicated in the Bid cum ApplicationForm.

Bid /Issue Closing Date The date after which the Syndicate will not accept any Bids for the Issue,which shall be notified in an English national newspaper and a Hindinational newspaper and a Marathi newspaper, each with wide circulation.

Bid /Issue Opening Date Except in relation to Anchor Investors, the date on which the Syndicate shallstart accepting Bids for the Issue, which shall be the date notified in an


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Term Description

English national newspaper and a Hindi national newspaper and a Marathinewspaper, each with wide circulation.

Bid cum Application Form The form used by a Bidder to make a Bid and which will be considered asthe application for Allotment for the purposes of the Draft Red HerringProspectus and the Prospectus.

Bidder Any prospective investor who makes a Bid pursuant to the terms of theDraft Red Herring Prospectus and the Bid cum Application Form.

Bidding/Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue ClosingDate inclusive of both days and during which prospective Bidders cansubmit their Bids.

Book Building Process/Method Book building route as provided in Chapter XI of the SEBI Regulations interms of which this Issue is being made.

BRLM/ Book Running LeadManager

Book Running Lead Manager to the Issue, in this case being Onelife CapitalAdvisors Private Limited.

BRLM Memorandum of

Understanding

The agreement entered into on August 24, 2010 between our Company and

the Book Running Lead Manager, pursuant to which certain arrangementsare agreed to in relation to the Issue.

Business Day Any day, other than a Saturday or a Sunday, on which commercial banks inMumbai are open for business.

CAN/ Confirmation of AllocationNote

Note or advice or intimation of allocation of Equity Shares sent to theBidders who have been allocated Equity Shares after discovery of the IssuePrice in accordance with the Book Building Process.

Cap Price The higher end of the Price Band, above which the Issue Price will not befinalised and above which no Bids will be accepted.

Controlling Branches Such branches of the SCSB which coordinates with the BRLM, theRegistrar to the Issue and the Stock Exchanges.

Cut-off Price Issue Price, finalised by our Company in consultation with the BRLM. OnlyRetail Individual Bidders whose Bid Amount does not exceed Rs. 1,00,000

are entitled to Bid at the Cut Off Price. QIBs and Non- Institutional Biddersare not entitled to Bid at the Cut-off Price.

Designated Branches Such branches of the SCSBs which shall collect the ASBA Bid cumApplication Form used by ASBA Bidders and a list of which is available onhttp://www.sebi.gov.in.

Designated Date The date on which funds are transferred from the Escrow Account to thePublic Issue Account or the amount blocked by the SCSB is transferredfrom the bank account of the ASBA Bidder to the ASBA Public IssueAccount, as the case may be, after the Prospectus is filed with the RoC,following which the Board of Directors shall Allot Equity Shares tosuccessful Bidders.

Designated Stock Exchange [].

Draft Red Herring Prospectus The Draft Red Herring Prospectus issued in accordance with Section 60B of

the Companies Act, which does not contain complete particulars of the priceat which the Equity Shares are issued and the size (in terms of value) of theIssue.

Eligible NRI NRIs from jurisdictions outside India where it is not unlawful to make anissue or invitation under the Issue and in relation to whom the Draft RedHerring Prospectus constitutes an invitation to subscribe to the EquityShares Allotted herein.

Equity Shares Equity Shares of our Company having a face value of Rs. 10 each, unlessotherwise specified.

Escrow Account Account opened with the Escrow Collection Bank(s) for the Issue and inwhose favour the Bidder (excluding the ASBA Bidders) will issue chequesor drafts in respect of the Bid Amount when submitting a Bid.

Escrow Collection Bank(s) The banks with whom Escrow Agreement will be entered into, for collection


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Term Description

of the Bid Amounts and where applicable, refunds of the amounts collectedto the Bidders (excluding the ASBA Bidders).

Escrow Agreement Agreement to be entered into by our Company, the Registrar to the Issue,the BRLM, the Syndicate Members and the Escrow Collection Bank(s) forcollection of the Bid Amounts and where applicable, refunds of the amountscollected to the Bidders (excluding the ASBA Bidders) on the terms andconditions thereof.

First Bidder The Bidder whose name appears first in the Bid cum Application Form orRevision Form or the ASBA Bid cum Application Form.

Floor Price The lower end of the Price Band, at or above which the Issue Price will befinalised and below which no Bids will be accepted.

Issue Public issue of 1,50,00,000 Equity Shares of our Company for cash at aprice of Rs. [] per Equity Share (including a share premium of Rs. [] perEquity Share) aggregating Rs. [].

Issue Closing Date [].

Issue Opening Date [

].Issue Price The final price at which Equity Shares will be issued and allotted in terms of

the Red Herring Prospectus. The Issue Price will be decided by ourCompany in consultation with the BRLM on the Pricing Date.

Issue Proceeds The proceeds of the Issue that are available to our Company.

Mutual Fund Portion 5% of the QIB Portion or 3,75,000 Equity Shares available for allocation toMutual Funds only, out of the QIB Portion.

Mutual Funds A mutual fund registered with SEBI under the SEBI (Mutual Funds)Regulations, 1996.

Net Proceeds The Issue Proceeds less the Issue expenses. For further information aboutuse of the Issue Proceeds and the Issue expenses, please refer to Objects ofthe Issue on page 27 of the Draft Red Herring Prospectus.

Non-Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders and who have Bid

for Equity Shares for an amount more than Rs. 1,00,000 (but not includingNRIs other than eligible NRIs).

Non-Institutional Portion The portion of the Issue being not less than 22,50,000 Equity Sharesavailable for allocation to Non-Institutional Bidders.

Non-Resident A person resident outside India, as defined under FEMA and includes a NonResident Indian.

Objects of the Issue The objects for which the money is being raised through this Issue. Fordetails, please refer to page 27 of the Draft Red Herring Prospectus.

Pay-in Date Bid/Issue Closing Date or the last date specified in the CAN sent to Bidders,as applicable.

Pay-in-Period The period commencing on the Bid/Issue Opening Date and extending untilthe closure of the Pay-in Date.

Price Band Price Band of a minimum price of Rs. [] (Floor Price) and the maximum

price of Rs. [

] (Cap Price) and include revisions thereof. The price bandand the minimum bid lot size for this Issue will be decided by our Companyin consultation with the BRLM and advertised by us in the nationalnewspapers (one each in English and Hindi) at least two (2) working daysprior to the Bid/Issue Opening Date.

Pricing Date The date on which our Company, in consultation with the BRLM, finalizesthe Issue Price.

Prospectus The Prospectus to be filed with the RoC in accordance with Section 60 ofthe Companies Act, containing, inter alia, the Issue Price that is determinedat the end of the Book Building Process, the size of the Issue and certainother information.

Public Issue Account Account opened with the Bankers to the Issue to receive monies from theEscrow Account on the Designated Date.


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Term Description

QIB Portion The portion of the Issue being up to 75,00,000 Equity Shares of Rs. 10 eachto be Allotted to QIBs.

Qualified Institutional Buyers orQIBs

Public financial institutions as specified in Section 4A of the CompaniesAct, scheduled commercial banks, mutual fund registered with SEBI, FIIsand sub-account registered with SEBI, other than which is a foreigncorporate or foreign individual, multilateral and bilateral developmentfinancial institution, venture capital fund registered with SEBI, foreignventure capital investor registered with SEBI, state industrial developmentcorporation, insurance company registered with IRDA, provident fund withminimum corpus of Rs. 25 crores, pension fund with minimum corpus ofRs. 25 crores and National Investment Fund set up by Government of India.

Red Herring Prospectus or RHP The Red Herring Prospectus issued in accordance with Section 60B of theCompanies Act, which does not have complete particulars of the price atwhich the Equity Shares are offered and the size of the Issue. The RedHerring Prospectus will be filed with the RoC at least three (3) days before

the Bid Opening Date and will become a Prospectus upon filing with theRoC after the Pricing Date.

Refund Account(s) The account opened with Escrow Collection Bank(s), from which refunds, ifany, of the whole or part of the Bid Amount (excluding to the ASBABidder) shall be made.

Refund Banker(s) [].

Refunds through electronic transferof funds

Refunds through ECS, Direct Credit, NEFT, RTGS or the ASBA process, asapplicable.

Registrar/Registrar to the Issue Sharepro Services (India) Private Limited.

Resident Retail Individual Investoror RRII

Retail Individual Bidder who is a person resident in India as defined in theForeign Exchange Management Act, 1999 and who has not Bid for EquityShares for an amount more than Rs. 1,00,000 in any of the bidding optionsin the Issue.

Retail Individual Bidder(s) Individual Bidders (including HUFs applying through their karta, EligibleNRIs and Resident Retail Individual Bidders) who have not Bid for EquityShares for an amount more than Rs. 1,00,000 in any of the bidding optionsin the Issue.

Retail Portion The portion of the Issue being not less than 52,50,000 Equity Shares of Rs.10 each available for allocation to Retail Individual Bidder(s).

Revision Form The form used by the Bidders, excluding ASBA Bidders, to modify thequantity of Equity Shares or the Bid Price in any of their Bid cumApplication Forms or any previous Revision Form(s).

SCSB Agreement The agreement to be entered into between the SCSBs, the BRLM, theRegistrar to the Issue and our Company only in relation to the collection ofBids from the ASBA Bidders.

Self Certified Syndicate Bank orSCSB

The Banks that are registered with SEBI under SEBI (Bankers to an Issue)Regulations, 1994 and offers services of ASBA, including blocking of bankaccount and a list of which is available on http://www.sebi.gov.in.

Stock Exchanges The BSE and the NSE.

Syndicate The BRLM and the Syndicate Members (if any).

Syndicate Agreement The agreement to be entered into between the Syndicate and our Companyin relation to the collection of Bids in this Issue (excluding Bids from theASBA Bidders).

Syndicate Members [].

Sub Syndicate [].

Takeover Code SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997,as amended.

TRS/TransactionRegistration Slip

The slip or document issued by a Syndicate Member or the SCSB (only ondemand), as the case may be, to the Bidder as proof of registration of the


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Term Description

Bid.

Underwriters The BRLM and the Syndicate Members.

Underwriting Agreement The agreement among the Underwriter and our Company to be entered intoon or after the Pricing Date.

ISSUER RELATED TERMS

Term DescriptionAOA/ Articles / Articles ofAssociation

Articles of Association of our Company.

Auditors M/s. M.V. Damania & Co., the statutory auditors of our Company.

Board / Board of Directors The Board of Directors of our Company or a Committee authorized to acton their behalf.

Compliance Officer Ms. Ashwini Rao.

Director(s) A director on the Board of our Company.

MOA / Memorandum /Memorandum of Association

Memorandum of Association of our Company.

Paramount Printpackaging Limited /Company / PPL / Issuer Company /the Issuer / we / us / our

Unless the context otherwise requires, refers to Paramount PrintpackagingLimited, a public limited company incorporated under the Companies Act.

Promoter Group Entities Unless the context otherwise requires, refers to our promoter group entitiesas enumerated in Our Promoter Group Entities on page 85 of the DraftRed Herring Prospectus.

Promoter(s) Unless the context otherwise requires, refers to Mr. Ashwin BabulalSukhadia, Mr. Anuj Vipin Sukhadia, Mr. Dharmesh Ashwin Sukhadia, Mr.Divyesh Ashwin Sukhadia, Mr. Ketan Vipin Sukhadia and Mr. VipulAshwin Sukhadia.

Registered Office A/309, TTC Industrial Estate, Mahape Road, Navi Mumbai, Maharashtra

400701.ROC / RoC Registrar of Companies, Maharashtra, Mumbai.

INDUSTRY RELATED TERMS

Term Description

PVC Poly Vinyl Chloride.

HDPE High Density Polythene.

PET Polythylene Terephthalate.

FIBC Flexible Intermediate Bulk Container.

FMCG Fast Moving Consumer Goods.

IIP Indian Institute of Packaging.

EPCG Export Promotion Capital Goods scheme.


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PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

Certain conventions

All references to India contained in the Draft Red Herring Prospectus are to the Republic of India. All referencesto the US, USA or United States are to the United States of America. All references to the UK are to theUnited Kingdom.

Financial Data

Unless stated otherwise, the financial data in the Draft Red Herring Prospectus is derived from the restated financialstatements of our Company, prepared in accordance with Indian GAAP and the Companies Act, and restated inaccordance with the SEBI Regulations and Indian GAAP.

There are significant differences between Indian GAAP, IFRS and US GAAP. The Red Herring Prospectus does notcontain a reconciliation of our financial statements to IFRS or U.S. GAAP nor does it include any information inrelation to the differences between Indian GAAP, IFRS and U.S. GAAP.

Accordingly, the degree to which the Indian GAAP financial statements included in the Draft Red HerringProspectus will provide meaningful information is entirely dependent on the readers level of familiarity with Indianaccounting practices, Indian GAAP and the Companies Act. Any reliance by persons not familiar with Indianaccounting practices, Indian GAAP and the Companies Act on the financial disclosures presented in the Draft RedHerring Prospectus should accordingly be limited. Our Company urges you to consult your own advisors regardingsuch differences and their impact on our Companys financial data.

Any percentage amounts, as set forth in Risk Factors, Business Overview, Managements Discussion andAnalysis of Financial Condition and Results of Operations on pages xi, 51 and 126 respectively, and elsewhere inthe Draft Red Herring Prospectus, unless otherwise indicated, have been calculated on the basis of the restatedfinancial statements of our Company.

The fiscal year of our Company commences on April 1 of each year and ends on March 31 of the next year. Allreferences to a particular fiscal year are to the 12 month period ending March 31 of that year.

In the Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amountslisted are due to rounding-off.

Currency and units of Presentation

All references to Rupees or Rs. are to Indian Rupees, the official currency of the Republic of India. Allreferences to Euro are to Euros, the lawful currency of certain nations within the European Union. All referencesto US$, USD or US Dollars are to United States Dollars, the official currency of the United States ofAmerica.

In the Draft Red Herring Prospectus our Company has presented certain numerical information in lacs andcrores units. One lac represents 1,00,000 and one crore represents 1,00,00,000.

Exchange Rates

The Draft Red Herring Prospectus contains translations of certain Euro, US Dollar and other currency amounts intoIndian Rupees that have been presented solely to comply with the requirements of the SEBI Regulations. Unless,otherwise stated, our Company has used a conversion rate of Rs. 60.25 for one Euro and Rs. 45.16 for one USD, oneRs. 45.79 for one CHS being the RBI reference rate as of September 19, 2010, in the Draft Red Herring Prospectus.Such conversions should not be considered as a representation that such amounts have been, could have been orcould be converted into Rupees at any particular rate, the rates stated above or at all.


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Industry and Market Data

Unless stated otherwise, industry and market data used throughout the Draft Red Herring Prospectus has been

obtained from industry publications and Government data. Industry publications generally state that the informationcontained in those publications has been obtained from sources believed to be reliable but that their accuracy andcompleteness are not guaranteed and their reliability cannot be assured. Although our Company believes thatindustry data used in the Draft Red Herring Prospectus is reliable, it has not been independently verified. The extentto which the market and industry data used in the Draft Red Herring Prospectus is meaningful depends on thereaders familiarity with and understanding of the methodologies used in compiling such data.


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FORWARD LOOKING STATEMENTS

The Draft Red Herring Prospectus contains certain forward-looking statements. These forward-looking statements

generally can be identified by words or phrases like will, aim, will likely result, believe, expect, willcontinue, anticipate, estimate, intend, plan, contemplate, seek to, future, objective, goal, project,should, will pursue and similar expressions or variations of such expressions, that are forward lookingstatements. Similarly, the statements that describe our objectives, plans or goals are also forward-lookingstatements.

Important factors that could cause actual results to differ materially from expectations include, but are not limited to,the following:

General economic and business conditions in India; Our ability to manage our growth and expansion effectively and successfully launch the expansion project

for which funds are being raised through this Issue;

Our ability to meet out capital expenditure requirements;

Contingent liabilities, environmental problems etc; Government approvals; Changes in government policies and regulatory actions that apply to or affect our business; Any adverse outcome in the legal proceedings in which our Company is involved; The loss or shutdown of operations of our Company at any times due to strike or labour unrest or any other

reason; and

Changes in political and social conditions in India.For further discussion of factors that could cause our actual results to differ, please refer to Risk Factors andManagements Discussion and Analysis of Financial Condition and Results of Operations on page xi and 126 ofthe Draft Red Herring Prospectus.

By their nature, certain market risk disclosures are only estimates and could be materially different from what

actually occurs in the future. As a result, actual future gains or losses could materially differ from those that havebeen estimated.

Neither our Company nor the BRLM, nor any of their respective affiliates have any obligation to update orotherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence ofunderlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBIrequirements, our Company and the BRLM will ensure that investors in India are informed of materialdevelopments until such time as the grant of trading permission by the Stock Exchanges for the Equity Sharesallotted pursuant to the Issue.


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SECTION II RISK FACTORS

An investment in Equity Shares involves a high degree of risk. You should carefully consider all of the information

in the Draft Red Herring Prospectus, including the risks and uncertainties described below, before making aninvestment in our Companys Equity Shares. To obtain a complete understanding of our business, you should readthis section in conjunction with Business Overview on page 51 and Managements Discussion and Analysis onResults of Operations and Financial Conditions on page 126 of the Draft Red Herring Prospectus. Any of thefollowing risks as well as other risks and uncertainties discussed in the Draft Red Herring Prospectus could have amaterial adverse impact on our business, financial condition and results of our operation and could cause the tradingprice of our Equity Shares to decline which could result in the loss of all or part of your investment.

The Draft Red Herring Prospectus also contains forward looking statements that involve risks and uncertainties. Ouractual results could differ materially from those anticipated in these forward-looking statements as a result of certainfactors, including the considerations described below and elsewhere in the Draft Red Herring Prospectus.

Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial orother implications of any of the risks described in this section.

Materiality:

The risk factors have been determined on the basis of their materiality. The following factors have been consideredfor determining their materiality:

Some risks may not be material individually but may be material when considered collectively. Some risks may have an impact which is qualitative though not quantitative. Some risks may not be material at present but may have a material impact in the future.

A. Internal Risk FactorsRisk related to our Company, our business and our industry

1. Some of our Promoter Group entities have incurred loss in the past.Some of our Promoter Group entities have incurred losses during the last three (3) financial years as given below:

(in lacs)

Name of the Entities Loss for the year ended March 31,2010 2009 2008

M/s. Parapack - 20.55 -

Paramount Nourishment Private Limited 36.85 1.66 3.28

If our Promoter Group entities incur losses in the future, it may have an adverse impact on our Promoters andconsequently affect our Company.

2. We are involved in certain legal and other proceedings and may face certain liabilities as a result.Our Company is involved in certain legal proceedings and claims in relation to certain civil and tax mattersincidental to its business and operations. These legal proceedings are pending at different levels of adjudicationbefore various courts and tribunals. Any adverse decision may render us liable and may adversely affect ourbusiness and results of operations. A classification of these legal and other proceedings instituted against/by ourCompany is given in the following table:

Cases filed against our Company

Type of Legal Proceedings Total Number of Pending Cases Amount InvolvedTax Matters 2 Rs. 2,000 with daily fine of Rs. 100


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For further details regarding these legal proceedings, please refer to Outstanding Litigations, Defaults and MaterialDevelopments on page 138 of the Draft Red Herring Prospectus.

3. Our Company has incurred loss during fiscal 2007 and 2009.Our Company had incurred a loss (after tax) of Rs. 1.52 lacs and Rs. 1.88 lacs in the years ended March 31, 2009and March 31, 2007, respectively. For further details please refer to Auditors Report on Financial Information onpage 91 of the Draft Red Herring Prospectus.

4. We have limited experience in the manufacturing of shippers and printed corrugated boxesAs a part of our expansion plans, we propose to engage in the manufacture of shippers, high end duplex boxes andprinted corrugated boxes. We propose to import new machines from China for the manufacture of the corrugatedcartons. We have no prior experience in the manufacture of these products and the usage of the new technology. Itcannot be assured that we shall be able to successfully manufacture and market the new products and this mayadversely affect our growth plans, business and profitability.

5. Our proposed expansion plans are fully dependent on the success of this Initial Public Offer.Implementation of the Objects of the issue is entirely dependent on receipt of the Issue proceeds. Any delay in theIssue process or any under-subscription of equity shares offered as part of this issue could adversely affect ourgrowth plans and hence our business. Further, in the event there is an increase in the expenditure required to beincurred by us in respect of our objects, consequent to increase in cost, change in laws, or for any other reasons andwe are not able to meet the cost overruns, it could adversely affect our growth plans and profitability.

6. Some of our group concerns/ entities are also engaged in the manufacturing of paper products whichcould lead to a conflict of interest. The operations and financials of our Company may be negatively

affected, in case these group companies provide any competitive services or expand their presence in the

business in which we are already present or offer services to companies in direct competition with us.

Some of our group concerns/ entities are engaged in the printing and packaging business. The productsmanufactured by other companies can lead to a conflict of interest. There is no assurance that the Group Companieswill not provide competitive services or expand their presence in the business in which we are already present oroffer services to companies in direct competition with us.

7. There are certain audit qualifications in the auditors report of our previous financial years/periods.There are following qualifications in the Auditors Report for the Financial Year ended March 31, 2010. Please referto Auditors Report on Financial Information on page 91 of the Draft Red Herring Prospectus.

8. We have not made contributions to the Provident Fund and Employees State Insurance funds for fiscal2010.

We have not made the contributionsto the extent of Rs. 5.05 lacs and Rs. 22.54 lacs to the Provident Fund and theEmployees State Insurance fund, for which penalty may be imposed upon our Company, which may affect outfinancial condition.

9. We have in the past entered into related party transactions and may continue to do so in the future.There could be no assurance that in future such transactions will not have any adverse effect on our

financial condition and results of operation.

We have in the normal course of our business entered into certain transactions with our Promoters or PromoterGroup. We have significant number of job work transactions with our Promoter Group entity, M/s. Parapack.Although we believe that all such transactions have been conducted on an arms-length basis, there can be noassurance that we could not have achieved more favorable terms had such transactions not been entered into with


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related parties. Furthermore, it is likely that we will enter into related party transactions in the future. There can beno assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our financialcondition and results of operation.

For more information, please refer to Related Party Transactions forming a part of AuditorsReport onFinancial Information on page 91 of the Draft Red Herring Prospectus.

10. Our funds requirements are based on internal management estimates and on the basis of quotationsobtained, wherever possible, and have not been appraised by any bank or financial institution. Any

increase in the actual deployment of funds may cause an additional burden on our finance plans. We

have not entered into definitive agreements to utilize our Issue proceeds.

The fund requirement mentioned as a part of the Objects of the Issue is based on internal management estimates andon the basis of quotations obtained, wherever possible, and has not been appraised by any bank or financialinstitution. These are based on current conditions and are subject to change in light of changes in externalcircumstances or costs or in other financial conditions, business strategy, etc. With increase in costs, our actualdeployment of funds may exceed our estimates and may cause us an additional burden on our finance plans. As onthe date of the Draft Red Herring Prospectus, we have not entered into any definitive agreements for implementingthe Objects of the Issue or incurred any expenses towards the same.

For more information, please refer to Objects of the Issue on page 27 of the Draft Red Herring Prospectus.

11. There can be delay in the schedule of deployment of the expansion plans for which the funds are beingraised in this Issue. This may affect our financial condition and results of operation.

Our proposed expansion plans are mainly dependent on the proceeds of this Issue. However, timely commencementof commercial operations of our expansion plans will have a critical bearing on our financial performance. We havenot arranged for any alternate source of funding for the Objects of the Issue. As on the date of the Draft Red HerringProspectus, we have not initiated any activities towards the Objects of the Issue and there can be a delay in theschedule of implementation on account of delay in the Issue. Any delay in the Issue may also increase the fund

requirement for the Objects of the Issue. This may adversely affect our operations and profitability.

12. Delay/inability in acquiring land required for our proposed project may affect our profitability.Our Company has earmarked land for acquisition and is in the process of acquiring the land situated at Bhilad,Gujarat admeasuring 4.00 acres. The acquisition of the land is critical to the Objects of the Issue. Any delay in theacquisition of land may delay our project, which in turn will have an adverse effect on our results of operations.

Further, we have not entered into any definitive agreement for the purchase of the said land and we cannot assureyou that we will be able to acquire the said land. If we are unable to acquire the said piece of land, it may impact ourfund requirement and schedule of implementation of the Objects of the Issue.

13. We have not yet placed orders for 100% of our plant and machinery, equipment etc. for which funds arebeing raised through this Issue. Any delay in procurement of necessary plant and machinery, equipmentetc. may delay the implementation schedule which may also lead to increase in prices of these

equipments, further affecting our cost, revenue and profitability.

The Net Proceeds of the Issue are proposed to fund the proposed expansion plans as explained in Objects of theIssue on page 27 of the Draft Red Herring Prospectus. We have not yet placed orders for any plant and machineryor equipment for our proposed expansion plans. Any delay in placing the orders or procurement of plant andmachinery, equipment, etc. may delay the implementation schedule. Such delays may also lead to increase in pricesof these equipments, further affecting our cost, revenue and profitability.


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14. Our business is dependent on the availability/supply and cost of raw materials. Any significant increasein the prices or decrease in the availability of these raw materials may adversely affect our results of

operations.

Our main raw material includes duplex board/folding box board, art card, ink, varnish and lamination film which weprocure from domestic suppliers. These raw materials form approximately 38% of our total expenses. We currentlydo not have any long term tie-ups or agreements for supply of these raw materials. Any decrease in the availabilityof these raw materials for whatever reason, could adversely affect our production capacity and profitability. Further,any price volatility of these raw materials and our inability to adjust to the same could adversely affect our costs,results of operations and profitability.

15. There is no long term supply agreements for the supply of raw materials required for manufacturing ofour products. Volatility in the prices of the raw material may also have an adverse impact on our

business and financial operations.

Our major raw materials include duplex board/ folding box board, art cards, ink, varnish and lamination films. Weprocure all our raw materials from third parties. We do not have any long-term supply contracts with respect to rawmaterial used in the manufacture of our products. Any significant increase in the prices of these raw materials andour inability to pass on increased costs of raw material to our customers may increase our total cost of production, inturn adversely affecting our profitability. In the event of any disruption in raw material supply in terms of requisitequantities and qualities our production schedule may also be adversely affected.

16. The shortage or non-availability of power may adversely affect the manufacturing processes and ourperformance may be affected adversely.

The manufacturing processes of our Company require substantial amount of power and fuel. Our manufacturingfacilities may face power interruptions due to power cuts and as a result our operations or financial condition may beadversely affected. The shortage of electricity supply may further increase our dependency on the usage of DG sets.The same can increase our cost of power and may have an adverse impact on our profitability.

17. Any loss of or breakdown of operations at any of our manufacturing facilities may have a materialadverse effect on our business, financial condition and results of operations.

Our manufacturing facilities are subject to operating risks, such as the breakdown or failure of equipment, powersupply or processes, performance below expected levels of output or efficiency, obsolescence, labour disputes,natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities.The occurrence of any of these risks could significantly affect our operating results. We are required to carry outplanned shutdowns of our plants for maintenance, statutory inspections and testing. Although precautions are takento minimize the risk of any significant operational issues at our manufacturing facilities, our business, financialcondition and results of operations may be adversely affected by any disruption of operations at our facilities,including due to any of the factors mentioned above.

18. Our Company does not have any long-term contracts with our customers which may adversely affect ourresults of operations.

Our Company does not have any long-term contracts with any of our customers. Any change in the buying patternof our end users can adversely affect the business of our Company. Our inability to sell our existing products as wellas products to be produced after our proposed expansion, may adversely affect our business and profitability infuture.

19. Our Company is dependent on third party transportation providers for the supply of raw materials anddelivery of products.

Our Company uses services of third party transportation providers for supply of raw materials and for delivery offinished products to the customers. Any non availability of these services due to strike or any other reason may have


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an adverse impact on the receipt of supplies and delivery of the finished products thereby adversely affecting ouroperations.

20.

Our business requires high working capital. Our Company has not yet tied-up for debt component forenhanced working capital needs on account of proposed expansion; in case there are insufficient cash

flows to meet our requirement or our inability to arrange the same from other sources, there may be an

adverse impact on the results of our operations.

Our business demands substantial fund and non-fund based working capital facilities. Our Company will approachbanks and financial institutions to arrange for the enhanced working capital needs at the appropriate time. In casethere is insufficient cash flows to meet our working capital requirement or our inability to arrange the same fromother sources or due to other factors including delay in disbursement of arranged funds, resulting in our inability tofinance our working capital needs when needed or there is any increase in interest rate on our borrowings, it mayadversely affect our operations and profitability.

21. Our Company may require additional capital resources to achieve our expansion plans.The rate of our expansion will depend to an extent on the availability of adequate debt and equity capital. Our cashflow requirements will be based on cash flows generated by our business. Further, the actual expenditure incurredmay be higher than current estimates owing to but not limited to, implementation delays or cost overruns. We may,therefore, primarily try to meet such cost overruns through our internal generations and in case if the same is notadequate, we may have to raise additional funds by way of additional term debt from banks/ financial institutionsand unsecured loans from Promoter and Promoter Group, which may have an adverse effect on our business andresults of operations.

22. Technological obsolescence may result in our operation as unviable or may require capital investmentswhich may have an adverse effect on our performance.

Any changes in technology may render our existing plant and machineries or even our proposed plant andmachineries obsolete or we may have to incur substantial capital investment to upgrade our plant and machineries,

which may adversely affect the performance of our Company.

23. The management of our Company will have significant flexibility in temporarily investing the NetProceeds of the Issue.

Our Company intends to use the Net Proceeds of the Issue for proposed capital expenditure as described in Objectsof the Issue on page 27 of the Draft Red Herring Prospectus. Pending utilization of the Net Proceeds for the Issuemay be temporarily invested in interest bearing liquid instruments including deposits with banks and investments inmutual funds and other financial products, such as principal protected funds, derivative linked debt instruments,other fixed and variable return instruments, listed debt instruments and rated debentures in accordance with thepolices established by the Board. The management of our Company will have significant flexibility in temporarilyinvesting the Net Proceeds of the Issue. The management may also determine that it is appropriate to revise itsestimated fund requirements and deployment schedule owing to factors such as geological assessments, exchange or

interest rate fluctuations, any other preoperative expenses and other external factors which may not be within thecontrol of management of our Company but may affect the use of Net Proceeds.

24. Our Companys inability to effectively manage its growth or to successfully implement its business planand growth strategy could have an adverse effect on our Companys operations, results and financial

condition.

Our Company expects that its growth strategy will place significant demands on its management, financial and otherresources. In particular, continued expansion increases the challenges involved in financial and technicalmanagement, recruitment, training and retaining sufficient skilled technical and management personnel, anddeveloping and improving its internal administrative infrastructure. Our Company intends to continue expansion inthe foreseeable future to pursue existing and potential market opportunities. Our Companys inability to manage its


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business plan effectively and execute its growth strategy could have an adverse effect on its operations, results,financial condition and cash flows.

In order to manage growth effectively, our Company must implement and improve operational systems, proceduresand internal controls on a timely basis. If our Company fails to implement these systems, procedures and controls ona timely basis, or if there are weaknesses in its internal controls that would result in inconsistent internal standardoperating procedures, our Company may not be able to meet its customers needs, hire and retain new employees,pursue new business, complete future strategic agreements or operate its business effectively. There can be noassurance that our Companys current or future management, operational and financial systems, procedures andcontrols will be adequate to support future operations or establish or develop business relationships beneficial tofuture operations.

25. Our business requires us to obtain and renew certain registrations, licenses and permits fromgovernment and regulatory authorities and the failure to obtain and renew them in a timely manner may

adversely affect our business operations

Our business operations require us to obtain and renew from time to time, certain approvals, licenses, registrationsand permits, some of which may expire and for which we may have to make an application for obtaining theapproval or its renewal. We will be applying for certain approvals relating to our business. Further, our proposedplant at Gujarat will require us to obtain, inter alia, the following licenses and approvals:

License under the Factories Act, 1948 Environmental clearances by the Gujarat State Pollution Board Registrations under the Gujarat VAT Act, 2005, Excise Act, etc.If we fail to maintain such registrations and licenses or comply with applicable conditions, or a regulatory authorityclaims we have not complied, with these conditions, our certificate of registration for carrying on a particularactivity may be suspended and/or cancelled and we will not then be able to carry on such activity. This couldmaterially and adversely affect our business, financial condition and results of operations.

We cannot assure you that we will be able to obtain approvals in respect of such applications or any applicationmade by us in the future. For more information about the licenses required in our business and the licenses andapprovals applied for, please refer to Other Regulatory and Statutory Declarations and Government/Statutoryand Other Business Approvals on page 144 and 141 respectively of the Draft Red Herring Prospectus.

26. Our Company is dependent on our senior management team and the loss of team members mayadversely affect our business or results of operations

Our Company has a team of professionals to manage the operations and growth of our Company. Our success andperformance are substantially dependent on the services of our key managerial personnel. Any loss of these keymanagerial personnel could have an adverse effect on our business operations.

27. Our name and logo is not registered trademark and any misuse of the same may result in loss of ourbusiness

Our Company has made an application to register the name and logo of our Company. Till the time we do notreceive a registration certificate from the concerned authority, any misuse of the name and logo of our Companymay result in the loss of our business.

28. The utilisation of our Issue proceeds will be not be monitored by any external, independent or aMonitoring Agency but through our Board of Directors.

There will be no external, independent or a monitoring agency which would monitor the utilization of our Issueproceeds. However, our Board will monitor the utilization of the proceeds of the Issue. We will disclose the detailsof the utilisation of the Issue proceeds, including interim use, under a separate head in our financial statementsspecifying the purpose for which such proceeds have been utilized or otherwise disclose as per the disclosure


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requirements of our listing agreements with the Stock Exchanges and in particular clause 49 of the listingagreement.

29.

If we are unable to source business opportunities effectively, we may not achieve our financialobjectives.

Our ability to achieve our financial objectives will depend on our ability to identify, evaluate and accomplishbusiness opportunities. To grow our business, we will need to hire, train, supervise and manage new employees andto implement systems capable of effectively accommodating our growth. However, we cannot assure you that anysuch employees will contribute to the success of our business or that we will implement such systems effectively.Our failure to source business opportunities effectively could have a material adverse effect on our business,financial condition and results of operations. Additionally, the success of the business strategies followed by us willdepend upon our success in analyzing and correctly interpreting market and other data. It also is possible that thestrategies used by us in the future may be different from those presently in use. No assurance can be given that ouranalyses of market and other data or the strategies we use or plans in future to use will be successful under variousmarket conditions.

30. We do not have a track record for payment of dividend on Equity SharesWe have not declared and hence paid any dividend on our Equity Shares since inception as we had been deliberatelypursuing the policy of ploughing back our profits to fund our expansion plans. The future payment of dividends, ifany, would be based on the then available distributable profits and the recommendations of our Board of Directors.

31. Our Board of Directors and management may change our operating policies and strategies without priornotice or shareholder approval.

Our Board of Directors and management has the authority to modify certain of our operating policies and strategieswithout prior notice (except as required by law) and without shareholder approval. However, without shareholderapproval, we may not change the nature of our business. We cannot predict the effect that any changes to our currentoperating policies or strategies would have on our business, operating results and the price of our Equity Shares.

32. Any inability to manage our growth could disrupt our business and reduce our profitabilityWe may not be able to manage our growth effectively. Addressing the challenges arising from our growth requiressubstantial senior level management time and resources and would put significant demand on our management teamand their resources. Any inability to manage our growth could have an adverse effect on our profitability and resultsof operations.

33. Quality concerns could adversely impact our business.The business of our Company is dependent on the trust our customers have in the quality of our packaging. Anygoods sold by us to our customers, which do not comply with the quality specifications or standards prevalent in thebusiness or market segment, may result in customer dissatisfaction, which may have an adverse effect on our sales

and profitability.

34. Work stoppages, slowdowns and other labour problems could delay our projects or result in increasedoperating costs.

We operate in a labour-intensive industry and we or our contractors may hire casual labour in relation to ourprojects. Also, we may rely on external agencies, contractors and subcontractors to meet our labour requirements.Accordingly, the time and quality of construction of our projects may depend on the availability and skill of thosesubcontractors. Any strained relations with these agencies would severely affect our business requirements, as wemay not be able to compensate for labour shortages. Additionally, our operations may also be affected bycircumstances beyond our control, which may be due to work stoppages, labour disputes, and shortage of qualifiedskilled labour and lack of adequate infrastructure services. In addition, it may be difficult to procure the required


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labour for existing or future projects. Any factors affecting the availability or quality of labour could adverselyaffect our business, financial position, results of operations and cash flows.

35.

We may suffer uninsured losses or losses exceeding our insurance limits.

We generally maintain insurance on property and equipment in amounts believed to be consistent with industrypractices and our insurance policies cover physical loss or damage to our property and equipment arising from anumber of specified risks including burglary, fire, landslides and other perils. Notwithstanding the insurancecoverage that we carry, we may not be fully insured against some business risks and the occurrence of an accidentthat causes losses in excess of limits specified under the relevant policy, or losses arising from events not covered byinsurance policies, could materially harm our financial condition and future operating results.

We face the risk of losses in our operations arising from a variety of sources, including, among others, risks relatedto catastrophic events, terrorist attacks, accidents and theft of construction supplies.

We may suffer uninsured losses from time to time. If we suffer any losses, damages and liabilities in the course ofour operations, we may not have sufficient insurance or funds to cover such losses, damages or liabilities or toreplace any property that has been destroyed. In addition, any payment we make to cover any uninsured losses,damages or liabilities could have a material adverse effect on our business, financial condition and results ofoperations.

Furthermore, in the future we may not be able to maintain insurance of the types or at levels which we deemnecessary or adequate. Moreover, any payments we make to cover any losses, damages or liabilities or any delayswe experience in receiving appropriate payments from our insurers could have an adverse effect on our financialcondition and results of operations.

36. Our Promoters have given personal guarantees in relation to certain debt facilities provided to us.Mr. Divyesh Ashwin Sukhadia, Mr. Dharmesh Ashwin Sukhadia and Mr. Anuj Vipin Sukhadia have given personalguarantees in relation to majority of our unconsolidated secured debt facilities. In the event that our Promoters

withdraw or terminate their guarantees, the lenders for such facilities may ask for alternate guarantees, repayment ofamounts outstanding under such facilities, or even terminate such facilities. We may not be successful in procuringguarantees satisfactory to the lenders, and as a result may need to repay outstanding amounts under such facilities orseek additional sources of capital, which could adversely affect our financial condition. For further information,please refer to Financial Indebtedness on page 135 of the Draft Red Herring Prospectus.

37. Our Lenders have imposed certain restrictions under our financing arrangement.As of March 31, 2010, our total indebtedness was Rs. 2,518.82 lacs and we may incur additional indebtedness in thefuture. As of March 31, 2010, we had Rs. 20.96 lacs of unsecured loans and Rs. 2,497.86 lacs of secured loans. Ourindebtedness could have several consequences, including but not limited to the following:

a portion of our cash flow will be used towards repayment of our existing debt, which will reduce theavailability of cash to fund working capital needs, capital expenditures, acquisitions and other generalcorporate requirements;

our ability to obtain additional financing in the future at reasonable terms may be restricted; and fluctuations and increase in prevailing interest rates may affect the cost of our borrowings, with respect to

existing floating rate obligations and new loans.

We have entered into agreements with certain banks and financial institution for term loans and working capitalloans, which contain restrictive covenants, including, but not limited to, requirements that we obtain consent fromthe lenders prior to altering the capital structure, implement any scheme of expansion, diversification ormodernisation, effecting any scheme of amalgamation or reconstitution or making any corporate investments. Therecan be no assurance that we will be able to comply with these financial or other covenants or that we will be able toobtain consents necessary to take the actions that we believe are required to operate and grow our business.Furthermore, a default, including our inability to service our debt, on some of our loans may also trigger cross-


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defaults under some of the other loan agreements. In such event, we may have to raise large amounts of money torefinance these obligations. This requirement to refinance loans at short notice may have a material and adverseeffect on our business operations and financial condition.

Furthermore, our ability to make payments on and refinance our indebtedness will depend on our ability to generaterevenues from our future operations. We may not be able to generate sufficient revenues from operations or obtainenough capital to service our debt. In addition, we may need to refinance some or all of our indebtedness on orbefore maturity and we cannot assure you that we shall be able to do so at commercially reasonable terms, or at all.Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerouscovenants which could further restrict our business operations. We may not be able to refinance our debt, ifnecessary, on commercially reasonable terms or at all. If we cannot successfully refinance our debt, we may berequired to take actions such as selling assets, seeking additional equity financing or reducing or delaying capitalexpenditures, including development of our planned and/or ongoing projects.

38. There are outstanding legal proceedings against our Promoter Group.There are outstanding legal proceedings involving our Promoter Group. These proceedings are pending at differentlevels of adjudication before various courts and enquiry officers. For further details of outstanding litigation againstour Promoter Group, please refer to Outstanding Litigation, Defaults and Material Developments on page 138 ofthe Draft Red Herring Prospectus.

39. Any failure or disruption of our information technology systems could adversely impact our operations.Any delay in implementation or disruption of the functioning of our IT systems could disrupt our ability to track,record and analyse work in progress or cause loss of data and disruption to our operations, including an inability toassess the progress of our projects, process financial information or manage creditors/debtors or engage in normalbusiness activities. Any such disruption could have an adverse effect on our operations.

40. In the past 12 months we have issued Equity Shares at a price which may be lower than the Issue Price.Our Company has made preferential allotments at a price which may be lower than the Issue Price, in the 12 monthspreceding the date of the Draft Red Herring Prospectus. For further details, please refer to Capital Structure onpage 16 of the Draft Red Herring Prospectus.

41. We may face a risk on account of not meeting our export obligations.We have obtained licenses under Export Promotion Capital Goods scheme (EPCG). As per the licensingrequirement under the said scheme, we are required to export goods of a defined amount, failing which, we have tomake payment to the Government of India equivalent to the duty benefit enjoyed by us under the said scheme alongwith interest. As on March 31, 2010, the total outstanding export obligations under EPCG scheme are US $ 9.44million and the duty saved thereon is Rs. 4.62 million. In case we fail to fulfil these export obligations in full, wewill have to pay duty proportionate to unfulfilled obligation along with the interest. Further, some new plant andmachinery will be imported under the then EPCG scheme and will result in further export obligations. We cannot

guarantee that these export obligations will be met.

For further details on our Export Obligations please refer to Business Overview on page 51 of the Draft RedHerring Prospectus.

42. Substantial portion of our revenues come from limited number of customers.Substantial portion of our revenues is derived from small number of customers. Our top ten customers contributed80% of our sales for financial year 2009-10. Similarly, for financial years 2007-08 and 2008-09, the sales to the topten customers were 89% and 73% respectively. We believe that we are dependent on a few customers for substantialpart of our sales. In the event, any of these top ten customers decide to procure their packing material requirementsfrom other suppliers, our revenues and profitability may get adversely affected. Our management keeps ondeveloping new customers for increasing our sales as well to reduce the dependence on few customers.


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43. We outsource some of our manufacturing activities.We outsource printing jobs to M/s. Parapack of approximately 0.3% of our total expenses in Fiscal 2010, which isour Promoter Group entity. To the extent, the work is outsourced, we are dependent on them and any delay indelivery in time or failure to maintain quality standards on their part may adversely affect our turnover, timeschedule and our business reputation.

44. All our current manufacturing facilities are geographically located at one place at Navi Mumbai,Maharashtra and the loss or shutdown of operations at the facility would have a material adverse effect

on us.

All our existing manufacturing facilities are based in Navi Mumbai, Maharashtra. As a result, any local socialunrest, natural disaster or break down of services and utilities in that area could have material adverse effect on thebusiness, financial position and results of operation of our Company.

45. Our limited experience of managing corporate affairs of widely held companies.Till date, our Promoters were running their businesses through closely held companies and partnership firms. OurPromoters have no experience in managing compliance requirements applicable to widely held companies. Inabilityof our Promoters to respond appropriately to the changed regulatory environment applicable to widely heldcompanies may adversely affect our Company.

46. Changes in technology may impact our business by making our plants less competitive.Advancement in technology may require us to make additional capital expenditure for upgrading our manufacturingfacilities or may make our competitors plants more competitive. If we are not able to respond to such technologicaladvancement well in time, we may lose our competitiveness.

47. We may face operational risk of project.Our Company has embarked upon a Rs. 3229.93 lac expansion plan, which is fairly large in size in view of ourcurrent operations. Our management may face the problem in managing the day-to-day affairs of our Company afterthe completion of project and increased scale of operations. An equity investor is therefore faced with an uncertaintyof performance by the management.

48. Under-utilisation of capacity of our present manufacturing facilities or proposed project may adverselyaffect our business, results of operations and financial condition.

Our Company currently has a manufacturing facility for manufacturing 20 lacs cartons per day. We propose to setup a manufacturing facility to manufacture shippers, printed-corrugated and high end duplex board cartons inGujarat. We will incur significant capital expenditure pursuant to the same, and it cannot be assured that we shall beable to completely utilize these production capacities. Our capacity utilization for the fiscal year 2008 was 57%, for

fiscal year 2009 was 70% and for fiscal year 2010 was 90%.

Use of production capacity is subject to several variables like availability of raw material, power, water, properworking of machinery, orders on hand, etc. It cannot be assured that we shall be able to utilize our existing orproposed manufacturing facilities to their full capacity or up to an optimum capacity, and non-utilisation of the samemay lead to loss of profits or can result in losses, and may adversely affect our business, results of operations andfinancial condition.

49. Delays or defaults in client payments could adversely affect our operations.We may be subject to working capital shortages due to delays or defaults in payment by clients. In case ourcustomers default/delay in their payment obligations to us, for which we have devoted significant resources, it could


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have a material adverse effect on our business, financial condition and results of operations and could cause theprice of our Equity Shares to decline.

B.

External Risk Factors

Risk related to our Shareholders and Equity Shares

1. Our Promoters will continue to hold a significant portion of our Equity Shares after the Issue and cansignificantly influence our corporate action.

Following the completion of the Issue, our Promoters will own an aggregate of 40.18% of our post issue paid-upEquity Share capital. They have, and will continue to have, considerable influence over our business and may takeactions that do not reflect the will or best interests of the other shareholders. Our Promoters have the ability tocontrol our business including matters relating to any sale of all or substantially all of its assets, the timing anddistribution of dividends and the election or termination of appointment of its officers and directors. By virtue oftheir shareholding, our Promoters can exercise substantial influence over the Board and over matters that are subjectto a shareholder vote. This control could delay, defer or prevent a change in control of our Company, impede amerger, consolidation, takeover or other business combination involving our Company, or discourage a potentialacquirer from making a tender offer or otherwise attempting to obtain control of our Company even if it is in thebest interest of its shareholders.

Our Promoters and/or the members of our Promoter Group will also continue to have the ability to cause us to takeactions that are not in, or may conflict with, our interests and/or the interests of our minority shareholders, and therecan be no assurance that such actions will not have an adverse effect on our future financial performance and theprice of our Equity Shares.

For further information, please refer to Capital Structure, History and Other Corporate Matters, OurPromoters and their Background and Our Promoter Group Entities on page 16, 66, 81 and 85 respectively of theDraft Red Herring Prospectus.

2. Being a growing company, we may require further equity issuance, which will lead to dilution of equityand may affect the market price of our Equity Shares or additional funds through incurring debt to

satisfy our capital needs, which we may not be able to procure and any future equity offerings by us.

Our growth is dependent on having a strong balance sheet to support our activities. In addition to the Net Proceedsand our internally generated cash flow, we may need other sources of financing to meet our capital needs which mayinclude entering into new debt facilities with lending institutions or raising additional equity in the capital markets.We may need to raise additional capital from time to time, dependent on business condit

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