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LETTER OF OFFER(For private circulation to Equity Shareholders/

Beneficial Owners of the Company only)

SRINIVASA SHIPPING AND PROPERTY DEVELOPMENT LIMITED(The Company was incorporated as a “Public Limited Company” vide Registration No.01-18540 on 17th October, 1994 in Hyderabad under the CompaniesAct, 1956 and obtained certificate for commencement of business on 4th November 1994.The Registered Office of the Company was shifted from 3-5-823,3rd Floor, Hyderabad Business Center, Hyderguda, Hyderabad - 500 029 to 3-5-823, 4th Floor, Hyderabad Business Center, Hyderguda, Hyderabad - 500 029with effect from 20th June 1995. With effect from 19th July 2002 the Registered Office was shifted to ‘Srinivasa House’, 1028, Road No.45, Jubilee Hills,Hyderabad - 500 033. With effect from 20th August 2005, the Registered Office of the Company was shifted to 8-2-595/3/5, Eden Gardens, Road No.10,Banjara Hills, Hyderabad - 500 034.Subsequently, the Registered Office was shifted to the present address with effect from 31st January 2007)

REGISTERED OFFICE: 8-2-595/3/6, Eden Gardens, Road No.10, Banjara Hills, Hyderabad - 500 034.

Tel Nos.: +91 - 40 - 66637560/66507567; Fax No. +91- 40 - 66637969

Email: [email protected] Website: www.sspdl.com

Contact Person: Mr. Vishwanath Ganti, Company Secretary

CORPORATE OFFICE: “Challa Mall”, 11 Sir Thiyagaraya Road, T. Nagar, Chennai - 600 017.

Tel Nos: +91- 44 - 2432 2601/2 Fax No. +91- 44- 2434 8447

ISSUE OF 86,19,500 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PREMIUM OF RS.8/- PER SHARE (“THE

ISSUE”) AGGREGATING TO RS. 1551.51 LAKHS ON A “RIGHTS” BASIS TO THE EXISTING EQUITY

SHAREHOLDERS/BENEFICIAL OWNERS OF THE COMPANY IN THE RATIO OF TWO EQUITY SHARES FOR EVERY

ONE EQUITY SHARE HELD AS ON 3RD MAY 2007 i.e., RECORD DATE. THE FACE VALUE IS RS.10/- PER SHARE

AND THE ISSUE PRICE IS 1.8 TIMES OF THE FACE VALUE.

GENERAL RISKS

Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Offer, unless they

can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment

decision in this offering. For taking an investment decision, investors must rely on their own examination of the Issuer and the Offer

including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India nor

does the Securities and Exchange Board of India guarantee the accuracy or adequacy of this document. Specific attention of the investors

is invited to the Risk Factors on Page No. iii of the Letter of Offer.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Letter of Offer contains all information

with regard to Srinivasa Shipping and Property Development Limited and the Issue, which is material in the context of the Issue, that the

information contained in this Letter of Offer is true and correct in all material respects and is not misleading in any material respect, that the

opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document as

a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

Lead Manager to the Issue Registrar to the Issue

Karvy Investor Services Limited

SEBI Regn. No. INM000008365

“Karvy House”, 46, Avenue 4,

Street No. 1, Banjara Hills,

Hyderabad - 500 034

Tel: +91 40 2337 4714 /2332 0752

Fax: +91 40 2337 4714

Website: www.karvy.com

E-mail: [email protected]

Sathguru Management Consultants Private Limited

SEBI Regn. No. INR 000000536

Plot No. 15, Hindi Nagar,

Punjagutta, Hyderabad - 500 034,

Tel : +91 40 2335 0586/ 2335 6507

Fax : +91 40 2335 4042

Email : [email protected]

Website: www.sathguru.com

LISTING

The Company’s existing equity shares are listed on Bombay Stock Exchange Limited (“BSE”) and The Hyderabad Stock Exchange Limited

(“HSE’). The Company proposes to get the Rights Shares listed on BSE & HSE. The in-principle approval for listing the rights equity shares

has been obtained from BSE (Designated Stock Exchange) and HSE vide their letters dated 29th June, 2006 and 1st July, 2006 respectively.

ISSUE OPENS ON Thursday, June 7, 2007

LAST DATE FOR RECEIPT OF REQUESTS FOR SPLIT FORMS Thursday, June 21, 2007

ISSUE CLOSES ON Friday, July 20, 2007

KARVYKARVYKARVYKARVYKARVYINVESTOR SERVICES LTD

xiii

TABLE OF CONTENTS

TITLE PAGE NO.

SECTION - I. DEFINITIONS AND ABBREVIATIONS

1. Conventional / General Terms i

2. Issue related terms / Abbreviations i

3. Company / Industry related terms ii

SECTION - II. RISK FACTORS

1. Forward-Looking Statements; Market Data iii

2. Risks Factors iii

SECTION - III. INTRODUCTION

1. Summary 1

2. General Information 4

3. Capital Structure of the Company 6

4. Objects of the Issue 13

5. Schedule of Implementation 17

6. Deployment of funds 18

7. Terms of present Issue 19

8. Basis for Issue Price 20

9. Tax Benefits 22

SECTION - IV. ABOUT THE COMPANY

1. Industry Overview 28

2. Business Overview 31

3. History and Corporate Structure of the Company 40

4. Management 47

5. Promoters 54

6. Dividend policy 58

SECTION - V. FINANCIAL STATEMENTS

1. Financial Information of the Company 59

2. Financial Information of Group Companies/Other Ventures promoted by the Promoters 75

3. Management discussion and analysis of Financial Condition ad Results of 87Operations as reflected in the Financial Statements

SECTION - VI. LEGAL AND OTHER INFORMATION

1. Outstanding litigations and Material Developments 91

2. Government Approvals 95

SECTION - VII. OTHER REGULATORY AND STATUTORY DISCLOSURES 97

SECTION - VIII. ISSUE INFORMATION

1. Terms of the Issue 104

2. Utilization of proceeds 118

SECTION - IX. MAIN PROVISION OF THE MEMORANDUM ANDARTICLES OF ASSOCIATION 120

SECTION - X. OTHER INFORMATION

1. List of material contracts and documents for inspection 138

2. Declaration 140

i

SECTION - I. DEFINITIONS AND ABBREVIATIONS

1. Conventional/ General terms.

Term Description

“Srinivasa Shipping and Unless the context otherwise requires, refers to Srinivasa Shipping and Property

Property Development Development Limited, a public limited company incorporated under the Companies Act,

Limited”, “Company”, 1956

“SSPDL”

Act The Companies Act, 1956 as amended

Equity Shares Equity Shares of the Company having a face value of Rs.10/-

Equity Shareholders Means a holder of Equity Shares of Srinivasa Shipping and Property Development Limited

as on the record date i.e. 3rd May 2007

2. Issue related terms/Abbreviations.

Term Description

Articles Articles of Association of the Company

A/C Account

AGM Annual General Meeting

AS Accounting Standard, issued by the Institute of Chartered Accountants of India

AY Assessment Year

BSE/Designated Stock Bombay Stock Exchange Limited

Exchange

Banker to the Issue UTI Bank Limited and HDFC Bank Limited

CAGR Compounded Annual Growth Rate

CAF Composite Application Form

CDSL Central Depository Services (India) Limited

Demat Dematerialized (Electronic/Depository as the context may be)

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

Depository A depository registered with SEBI under the SEBI (Depositories and Participants)

Regulations, 1996, as amended from time to time

EGM Extra-ordinary General Meeting

EPS Earnings per Share

EBDIT Earnings before Depreciation, Interest and Tax

FCNR Account Foreign Currency Non Resident Account.

FEMA Foreign Exchange Management Act, 1999 and subsequent amendments thereof

FII Foreign Institutional Investor

FIPB Foreign Investment Promotion Board

FY Financial Year ended 31st March

GOI Government of India

Guidelines Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines

2000 and subsequent amendments thereof

HUF Hindu Undivided Family

HSE The Hyderabad Stock Exchange Limited

IT Information Technology

IT Act Income Tax Act, 1961 and subsequent amendments thereof

INR /Rs. Indian Rupees

ii

Term Description

Issue/Offer The present Rights Issue of Equity Shares to the existing Equity Shareholders/Beneficial

Owners of the Company

Lead Manager to the Issue Karvy Investor Services Limited

Ltd. Limited

Memorandum Memorandum of Association of the Company

NAV Net Asset Value

NR Non Resident as defined under FEMA, 1999

NRE Non Resident External as defined under FEMA, 1999

NRI Non Resident Indian as defined under FEMA, 1999

NRO Non Resident Ordinary as defined under FEMA, 1999

NSDL National Securities Depository Limited.

OCB(s) Overseas Corporate Body (ies)

PAN Permanent Account Number

P/E Ratio Price/ Earnings Ratio

Pvt. Private

RBI Reserve Bank of India

REITs Real Estate Investment Trusts

Record Date The relevant date, which is reckoned for determining the rights entitlement.

Registrar to the Issue Sathguru Management Consultants Private Limited

ROC Registrar of Companies, Second Floor, Kendriya Sadan, Sultan Bazaar, Hyderabad,

Andhra Pradesh, 500 195

RONW Return on Net Worth

SEBI Securities and Exchange Board of India

SEBI (SAST) Regulations, 1997 Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover)

Regulations, 1997

3. Company/Industry-related terms

Term Description

Auditors M/s. Karvy & Company

Board Board of Directors of the Company

CMDA Chennai Metropolitan Development Authority.

EIA Report Environmental Impact Assessment Report

ELCOT Electronics Corporation of Tamilnadu Limited

FSI Floor Space Index

HVAC System Heating Ventilation Air Conditioning System

ITES Information Technology Enabled Services

LUC Land User Certificate

MSB Area Multi Storied Building Area

NFPA National Fire Prevention Association

NOC No Objection Certificate

RCC Reinforced Cement Concrete

ROI Return on Investment

Sq. ft. Square Feet

In this Letter of Offer, any discrepancies in table between total and sums of the amounts listed are due to rounding off and all

references to “Rs.” or “INR” refer to Rupees, the legal currency of India. References to the singular also refer to the plural and

one gender also refers to any other gender wherever applicable.

iii

SECTION - II. RISK FACTORS

1. FORWARD-LOOKING STATEMENTS & MARKET DATA

Statements included in this Letter of Offer which contain words or phrases such as “will”, “aim”, “will likely result”, “believe”,

“expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”,

“project”, “should”, “will pursue” and similar expressions or variations of such expressions, that are “forward-looking

statements”.

Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties

associated with the Company’s expectations with respect to, but not limited to, the Company’s ability to successfully implement

its strategy, its growth and expansion, its exposure to market risks, Cancellations, contract terminations or deferrals of projects;

general economic and political conditions in India which have an impact on its business activities or investments, the monetary

and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or

prices, the performance of the financial markets in India and globally, changes in laws, regulations and taxes and changes in

competition in the industry.

For further discussion of factors that could cause the Company’s actual results to differ, see the section entitled “Risk Factors”

beginning on page no. iii of this Letter of Offer. By their nature, certain market risk disclosures are only estimates and could

be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ

from those that have been estimated. In accordance with SEBI requirements, the Company will ensure that investors are

informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges.

Market data used throughout this Letter of Offer was obtained from internal company reports. The information contained in

this Letter of Offer has been obtained from sources believed to be reliable, but their accuracy and completeness and underlying

assumptions are not guaranteed and their reliability cannot be assured. Although, the Company believes that the market data

used in this Letter of Offer is reliable, it has not been independently verified. Similarly, internal Company reports and data,

while believed to be reliable, have not been verified by any independent source.

2. RISK FACTORS

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

Letter of Offer, including the risks and uncertainties described below, before making an investment in the Equity Shares of the

Company. If any of the following risks actually occur, the business, results of operations and financial condition could suffer,

the trading price of the Equity Shares of the Company could decline, and the investor may lose all or part of his /her investment.

MATERIALITY

The Risk factors have been determined on the basis of their materiality. The following factors have been considered for

determining the materiality:

a) Some events may not be material individually but may be found material collectively.

b) Some events may have material impact qualitatively instead of quantitatively.

c) Some events may not be material at present but may be having material impacts in future.

The risk factors are as envisaged by the management and wherever possible, the financial impact of the risk factors has been

quantified.

A. INTERNAL FACTORS

1) The company did not have any commercial operations for the years 2000-05 and has incurred losses during

the period 2002-05.

The Company’s activities took a subdued tone during the period 2000-03 due to lack of investment opportunities

during the IT slump period. Further during the period 2003-2005, the company was in the process of identifying

various projects pursuant to which the company has undertaken the development of Alpha City project which is

currently in progress.

The company has incurred losses for the period 2002-2005 on account of operational overheads.

iv

The quantum of losses incurred by the Company during the financial year 2002 to 2005 are as under:

(Rs. Lakhs)

Particulars As on 31.03.2002 31.03.2003 31.03.2004 31.03.2005

Net profit after extraordinary items (26.67) (25.72) (13.60) (18.26)

2) Risks associated with the domestic and regional real estate market.

The overall demand for the property is dependent upon the availability and affordability of the target customers.

Economic growth and buying power of the people decides the general trend in the property market. The demand of

the property being constructed by the Company may be unfavorably affected by factors such as change in domestic

and regional economic situation in the place where company’s projects are located, surplus construction, reduction

in local demand etc.

3) Wide fluctuations in the prices of critical raw materials would have adverse effect on the Company’s

profitability

In the recent past, there have been wide fluctuations in the prices of critical construction materials such as, cement,

steel. Such fluctuations in prices of construction materials and the Company‘s inability to negotiate at optimum

market rates may affect its profitability. Further, the Company does not have firm tie-ups for the procurement of

raw materials.

4) Dependence on rights issue proceeds

The Company is dependent on full subscription to the rights issue in order to meet its financial requirements of the

Project. Under-subscription of the issue could jeopardize the company’s financial position, which will have an

adverse material impact on the future performance. However, some members of the promoter group, intend to

subscribe additional shares beyond their entitlement if the issue is under subscribed. The acquisition of additional

securities in such an event shall be exempt from making an open offer in terms of proviso to Regulation 3(1)(b)(ii)

of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 and the company/acquirer would

comply with the necessary formalities under the Takeover Regulations. Further, this acquisition will not result in

change of control of the management of the Company.

5) Some of the Company’s projects are in preliminary stages of planning

The Company’s projects are under various stages of preliminary planning and execution. As it is common in the

construction industry, obtaining necessary clearances and approvals from various authorities may not always be

timely which may result in the project getting delayed. Incase the Company fails to receive the necessary approvals

or the project does not take off as envisaged by the company, it may adversely affect the operations of the company.

6) The Company’s business is concentrated in Chennai, Bangalore and Hyderabad.

The Company’s business is currently concentrated in Chennai, Bangalore and Hyderabad markets. Any regulatory

changes in the policy of these regions or adverse developments in these markets could have an adverse material

effect on the performance of the Company.

7) Conflict of business interests

The individual promoters of the company are having interest in the following ventures, which are authorized by its

main object clause to carry on the similar line of activities and can result in the possible conflict of business interest

among these ventures and the company:

S.No Name of the Company Name of the Promoter Nature of Interest

(Shareholding %)

1 Jaagruthi Foundations Pvt. Ltd. Mr. E. Bhaskar Rao 13.00

2 Sunrise Homes Ltd. Mr. Challa Suresh 49.87

3 Serenity Homes Pvt. Ltd. Mr. Challa Suresh 50.00

4 SSPDL Ventures Pvt. Ltd. Mr. Challa Suresh 50.00

Mr. E. Bhaskar Rao 50.00

v

5 SSPDL Retreat Pvt. Ltd. Mr. Challa Suresh 50.00


6 Jagruthi Ventures Pvt. Ltd. Mr. Challa Suresh 50.00


7 Sri Satya Sai Constructions Mr. Challa Prakash 100.00

(Sole Proprietory Concern)


(Partnership Concern) Mr. E Bhaskar Rao 50.00

9 SVS Real Estate Traders Mr. E Bhaskar Rao (HUF) 70.00

(Partnership Concern) Mr. C Suresh Rayudu 5.00

Ms. C Usha Lakshmi 15.00

Mr. M Sharath Babu 10.00

8) Outstanding Litigations

The following cases were filed by/against the Company.

Cases filed by the Company

Sl. No. Case No Parties Adjudicating Authority Particulars Status Amount (Rs)

1 Yet to be Dr. M. Transferred from High C.S.No.479 of 1997 was filed by the Pending Rs.17,17,829.54

given Kuppuswamy Court of Chennai to Sub company against Dr. M. Kuppuswamy ps (As on date

Court, Poonamallee for recovery of Rs.10 lakhs along 18-03-2003)

with interest. Suit was decreed on

17.10.1999. Company filed execution

petition against Dr.M. Kuppuswamy.

Cases filed against the Company

S. No. Case No Parties Adjudicating Authority Particulars Status Amount (Rs)

1 Sales Tax The Commercial Sales Tax Appellate CTO Nandanam, issued re-assessment Pending Fee levied :

Appeal Tax Authority Tribunal, Chennai proceeding for the year 1997-98 demanding Rs.6,74,400/-Tax

No.93 of 2005 Rs.6,74,400/- along with penalty of on fee levied

Rs.2,02,320/-. Company succeeded in @ 20%

appeal before the Appellate Assistant :Rs.1,34,880/-

Commissioner (Commercial Taxes) III and Rs.2,02,320/-

Chennai and has claimed a relief on tax on Penalty.

fee levied of Rs. 1,34,880/- and on penalty

of Rs.202320 which amounted to Relief claimed and

Rs.3,37,200/-. Department filed second received

appeal before the Sales Tax Appellate Rs.3,37,200/-

Tribunal, Chennai. Appeal is pending.

9) Inspection of books of accounts, statutory registers and other documents U/s 209A of the Companies Act,

1956 by the Deputy Director (Inspection), Office of the Regional Director, Ministry of Company Affairs,

Southern Region, Chennai.

There was an inspection conducted U/s 209A of the Companies Act, 1956 on the books of accounts, statutory

registers and other documents of the company by the Deputy Director (Inspection), Office of the Regional Director,

Ministry of Company Affairs, Southern Region, Chennai which was carried in August 2006. The concerned Office

vide their letter dated 21st September 2006 has communicated to the company on the violation of various provisions

of the Companies Act, 1956 and Accounting Standards such as Section 211, 293, 217, 149 (2A), 291 of the Companies

Act, 1956 and AS 5, 18 and 19 read with Schedule VI of the Companies Act, 1956.

vi

The Company has made its submission to the Office of Regional Director, Chennai which is yet to revert on the

submission made by the company. For further details on the nature and particulars of the violations, please refer the

section titled “Outstanding Litigations and Material Developments” on page no. 91 of the Letter of Offer.

10) The Company may have to pay to the landowners a penalty for delay in handing over 30% of the space in

the first phase of the Alpha City project.

As per the agreement entered into by the company with Mrs. Rahila S.M.A and Mrs. Falila S.M.A, the Company

is liable to pay a sum of Rs. 20/- per square feet per month till the delivery of the Building to Mrs. Rahila and Mrs.

Falila if the company delays in handing over 30% of space in the first phase i.e. 50,000 sft. (approx.)

As per the terms of the agreement, the first phase has to be completed within a period of 18 months from the date

of obtaining statutory approvals and on handing over the possession of the land i.e. June 2007. If the company is

not in a position to handover the possession of property by June, 2007, there is a possibility that the company might

have to pay a penalty of Rs.10,00,000/- per month till the date of handing over the possession. As per the revised

estimates, the Company may end up in paying penalty to the landowners for delay in handling over of the space.

This will have an adverse effect on the performance of the Company.

11) The Company’s operations are subject to employee health and safety laws and regulations.

The Company is subject to laws and regulations governing (a) relationships with employees in such areas as

minimum wages and maximum working hours, overtime, working conditions, hiring and terminating of employees,

contract labour and work permits, (b) environmental, health and safety legislations. The success of the Company’s

strategy to modernize and optimize its existing operations, is contingent upon, among other things, receipt of all

required licenses, permits and authorizations, including local land use permits, building and zoning permits and

environmental health and safety permits.

12) Dependence on key management team

The company’s operations rely heavily on key employees. In case of shortage of key employees or high attrition of

employees, its operations could be adversely affected. Successful performance of the business operations depends

on its trained key managerial personnel and any sudden disruption in the services of these personnel may have an

adverse impact temporarily affecting the smooth operation of the business.

13) Improper handling of machinery and equipment can lead to accidents due to which the company may have

to pay compensation for loss of life and property.

The Company’s employees are well experienced at the project site and they ensure regular maintenance of machinery

and equipment in order to minimize chances of mishaps occurring at any project site.

14) The details of contingent liabilities not provided for as on 31st December 2006 are as under:

The contingent liabilities for which no provisions have been made in the books of accounts of the company for

period ended 31st December 2006.

(Rs in Lakhs)

Sl. No. Particulars Amount

1. Sales Tax demand 3.20

15) Further issue of capital

The Company may make future equity offerings to Financial/Strategic investors and options may be issued under

the Employee Stock Option Plan or Employee Stock Purchase Plan that could result in dilution to shareholding of

existing shareholders.

16) Shortfall in meeting the Promise Vs Performance

The Company came out with an initial public offer of 7,50,000 Equity Shares of Rs.10/- each aggregating Rs.75

lakhs in May, 1995.

The Company has not achieved the projections for the financial year 1994-95. For further details please refer to

section titled “Promise Vs Performance” on page no. 100 of this Letter of Offer.

vii

17) The capital expenditure mentioned in the objects of the issue has not been appraised by any Bank or Finan-

cial Institution.

The fund requirement plans are company’s estimates and the same has not been appraised by any bank or financial

institution. The deployment of funds in the project is entirely at the discretion of the company and therefore, no

independent body will monitor the use of the proceeds from the issue.

18) The projects sub-contracted by the company could get delayed on account of the sub-contractors performance,

resulting in delayed payments.

As per normal practice in construction industry a part of the work is subcontracted to the various business contractors.

The completion of the contract depends on the performance of these sub-contractors. Delay on the part of a sub-

contractor to complete the project in time, for any reason, could result in delayed payment to the company and in

turn affect its operations. Sub-contractors may not have adequate financial resources to meet their indemnity

obligations to the company.

19) The Company has a high working capital requirement. In case there is insufficient cash flow to meet its

requirement of working capital, there may be adverse effect on the results of its operation.

The company’s business demands significant amount of working capital. As payments from clients are linked to

completion, which are spread out over the execution period of the contract, significant amount of working capital

would be required to finance the purchase of material, performance of the construction projects before the payment

is received from the client and to service its financial obligations, if any. Consequently, there could be situations

where the total funds available may not be sufficient to fulfill the company’s commitments, which may affect its

financial positions.

20) Projects included in company’s backlog or under construction stage may be delayed or cancelled which

could materially harm its cash flow position, revenue and earnings

Projects under construction comprise anticipated revenues from the uncompleted portion of existing contracts.

The amount of company’s backlog does not necessarily indicate further earnings related to the performance of that

work. Projects under construction refer to expected further revenues under awarded contracts and which is considered

firm, although cancellations or scope adjustments may occur. Due to changes in project scope and schedule, it

cannot predict with certainty when or if project will be completed. In additions, even where a project proceeds as

scheduled, it is possible that contracting parties may default and fail to pay amount owed. Any delay, cancellation

or payment default could materially affect its cash flow position, revenues and / or earnings.

21) Promoter group will continue to retain majority control in the company after the Offer, which will enable

them to influence the outcome of matters submitted to shareholders for approval.

Upon completion of the Offer, Promoter / Promoter Group will own 54.14% of post-Offer equity share capital of

the Company. As a result, the Promoter Group will have the ability to control the company’s business including

matters relating to any sale of all or substantially all of its assets, the timing and distribution of dividends and the

election or termination of appointment of its officers and directors. In addition, so long as the Promoter Group

continues to exercise significant control over the Company, they may influence the material policies of the Company

in a manner that could conflict with the interest of its other shareholders. The Promoter group may have interests

that are adverse to the interests of its other shareholders and may take positions with which other shareholders do

not agree.

22) The Company requires certain registrations and permits from government and regulatory authorities in

the ordinary course of business and the failure to obtain them in a timely manner or at all may adversely

affect the company’s operations.

The Company requires various registrations/renewal of existing approvals/permits in the ordinary course of business.

The company’s business may be adversely affected and its directors and officers may be subjected to proceedings

under the relevant act for non-compliance of various statutory registrations. Failure by the company to renew,

maintain or obtain the required permits or approvals may result in the interruption of its operations and may have

material adverse effect on the Company‘s business, financial condition and results of its operations.

viii

23) The Company has entered into transactions with related parties.

The Company has entered into various transactions with related parties, including with associate ventures. For

detailed information on related party transactions, refer section “Related Party Transactions” beginning on page

no.73 of this Letter of Offer.

24) Loss making ventures of the Promoters.

Following ventures of the promoters have incurred losses during the last 3 years. (Rs in Lakhs)

Name of the company Profit After Tax

2003-2004 2004-2005 2005- 2006 Debit balance of

P& L Account

(As on 31.03.06)

Sahiti Farms Pvt. Ltd. - (0.002) (0.24) 0.24

Sri Lakshmi

Narasamma Mineral Pvt. Ltd. (10.47) (2.92) (0.53) 31.21

Pallavi Perfumes and Cosmetics Pvt. Ltd. - (33.67) (70.02) 103.69

Jaagruthi Foundations Pvt. Ltd. (27.01) (2.12) (4.91) NIL

Intelligent Software Solutions Pvt. Ltd. (10.82) (1.81) (19.24) 34.79

Mojasa Fragrances and Cosmetics Pvt. Ltd. - (2.34) (13.54) 15.88

For more information, please see section “Financial Information of Group Companies/ Other ventures promoted by the

promoters” beginning on page no.75 of this Letter of Offer.

25) Failure to adhere to agreed timelines could adversely affect the company’s reputation and /or expose the

company to financial liability.

If the Company is not in a position to adhere to the timelines stipulated by the clients, it would adversely affect its

future business and also financial position. The company has periodic check on implementation schedule of the

projects. However the company always considers contingencies of 3-4 months, while announcing the possession

date of the project.

26) Interest of Promoters/ Directors.

There is no interest of Promoters/ Directors other than reimbursement of expenses incurred or normal remuneration/

sitting fees or benefits except that Mr. Challa Prakash and Mr. E. Bhaskar Rao, directors of the company are also

partners of M/s Sri Satya Sai Constructions (Firm), which has recently entered into a development and construction

agreement with the Company for construction of residential villas at Bangalore. Necessary approvals u/s 297 of

the Companies Act, 1956 has been received from the Regional Director, Ministry of Company Affairs approving

the said agreement.

27) Work stoppages due to non-availability of casual labour could adversely affect the progress of the projects.

The Company operates in a labour-intensive industry and hires casual labour in relation to specific projects. If the

company is not in a position to procure required casual labour for its projects could adversely affect the business,

financial position and cash flows of the company.

28) Revenue recognition based on the ‘percentage of completion method’ of accounting is subject to uncertainties

and inaccurate estimates.

The Company’s income from the sale of constructed properties is recognised using the percentage of completion

method. Under this method, income in respect of a project is recognised based on the project cost, which includes

the cost of acquisition of land, development and construction costs actually incurred as a proportion of total estimated

project cost and the proportion of the saleable area of the project in respect of which bookings have been made.

The Company estimates the total cost of a project prior to its commencement based on, specifications and location

of the project among other things. If the Company’s estimates of project costs are inaccurate or if contingencies

occur that materially impact its estimates, the Company’s revenues may fluctuate significantly from period to

period.

ix

29) Pending Government Approvals

The Company is yet to receive approval from Tamilnadu Pollution Control Board and Ministry of Environment

and Forest, Government of India for the proposed project pertaining to environment Impact Assessment and from

the Director Town and Country Planning, for which the Company has already made applications. Delay in receipt

of the approval may affect the financials of the Company.

30) Any failure in Company’s IT systems could adversely impact its business.

Any disruption of the functioning of Company’s IT systems could disrupt its ability to track, record and analyse the

work in progress, cause loss of data and disruption in operations, including an ability to assess the progress of the

projects, process financial information or manage creditors/debtors or engage in normal business activities. This

could have an adverse effect on Company’s business.

31) The Company may suffer uninsured losses.

There are certain types of losses, such as those due to earthquakes, floods, hurricanes, terrorism or acts of war,

which may be uninsurable or are not insurable at a reasonable premium. The proceeds of any insurance claim may

be insufficient to cover rebuilding costs as a result of inflation, changes in building regulations, environmental

issues as well as other factors. Should an uninsured loss or a loss in excess of insured limits occur, the Company

would lose the capital invested in and the anticipated revenue from the affected property. Further, the Company’s

real estate projects could suffer physical damage from fire or other causes, resulting in losses, including loss of

rent, which may not be fully compensated by insurance. The Company would also remain liable for any debt or

other financial obligation related to that property.

32) The company does not own plot of lands for the project mentioned in the Objects clause.

The company has entered into Development agreement with the land owner for development and construction of

the scheduled property at Old Mahabalipuram Road, Navalur Village, Kancheepuram District. For details please

refer to Objects of the Issue beginning on page no. 13 of this Letter of Offer.

33) The real expansion of the Company’s commercial estate business is dependent on the willingness and ability

of its corporate customer to pay rent at suitable levels.

The Company’s focus on commercial real estate business includes sales and lease/rental options. The Company

based on market research estimates that there is a huge gap in the supply of commercial premises compared to the

demand. These rentals are the function of the demand-supply gap and are prone to change with the change in this

gap. In case this gap reduces, the corporate customers of the Company would not be willing to pay rent at the

stipulated level. This may impact the revenues of the Company.

34) Unsecured loans payable on demand

The Company has availed unsecured loans to the extent of Rs.1150.35 lakhs (as on 31.12.2006) from the Promoters/

Group Companies/Associates/Affiliate Companies for its ongoing projects, which are payable on demand. If any

of the loan is recalled, it would adversely affect the financial position of the Company

B. EXTERNAL FACTORS

1) Construction projects carry many risks which could adversely affect Company’s business.

Construction projects carry many risks which will affect Company’s business, prospects, financial condition and

results of operations but are not limited to the following:

* Political, regulatory and legal actions that may adversely affect project viability

* Changes in government and regulatory policies

* Delays in construction and operation of projects

* Adverse changes in market demand or prices for the products or services that the project, when completed, is

expected to provide

* Shortages of or adverse price movements for raw materials

* Environmental risk, including rehabilitation and resettlement costs

* Adverse developments in the overall economic environment in India

x

* Any of the foregoing could have a material adverse effect on Company’s business, prospects, financial condition

and results of operations.

2) A slow down in economic growth in India could cause the company’s business to suffer.

The Indian economy has shown substantial growth over the last few years. Any slowdown in the Indian economy

or future volatility in global commodity prices, in particular steel, cement and prices of other construction material,

could adversely affect the company’s profitability.

3) The Indian Real Estate Industry is very competitive.

The Indian Real Estate Industry is very competitive with a large number of players. The Company faces competition

from big domestic construction companies who operate at the national level and also from small and medium level

construction companies. If the Company is not able to compete effectively, its revenues and profitability will be

adversely affected.

4) The Company‘s performance is linked to the stability of policies and the political situation in India.

The role of the Central and State Governments in the Indian economy on producers, consumers and regulators has

remained significant over the years. Since 1991, the Government of India has pursued policies of economic

liberalization, including significantly relaxing restrictions on the private sector. Any political instability could

delay the reform of the Indian economy and could have a material adverse effect on the market.

5) The price of Equity shares of the Company may be highly volatile

The prices of the company’s Equity shares on the Indian stock exchanges may fluctuate after this issue as a result

of several factors including:

* Volatility in Indian and Global securities market.

* The company’s results of operations and performance.

* Performance of Company‘s competitors and perception in the Indian market about investment in the

infrastructure sector.

* Adverse or positive media reports on the company.

* Changes in the estimates of Company‘s performance or recommendations by financial analysts.

* Significant development in India’s fiscal and environmental regulations.

* Significant development in India’s economic liberalization and de-regulation policies

* There can be no assurance that the price at which the Equity Shares of the Company are initially traded will

correspond to the prices at which the company’s Equity shares will trade in the market subsequent to this

Issue.

6) Further sale by current shareholders could cause the price of the company’s shares to decline

If the existing shareholders sell a substantial number of Company‘s Equity Shares in the public market, the market

price of its Equity shares could fall. Sales and distributions of substantial amounts of its shares by existing holders,

or the perception that such sales or distributions could occur, could adversely affect prevailing market prices for its

shares.

7) Changes in tax laws, particularly Income tax, can have an impact on the post-tax profitability of the company.

8) There could be a project delays due to unfavourable climatic conditions or transportation delays, which may affect

the overheads and increase the financing cost, on account of material, machinery and work force that is employed

at the construction site.

Notes to Risk-Factors

* Investors are advised to refer to “basis of issue price” on page no. 20 before investing in this Issue.

* The net worth of the Company before the Issue as on 31st December 2006 is Rs. 2206.08 lakhs.

* The size of the Issue will be Rs. 1551.51 lakhs

xi

* Promoter Group holds 54.14% of the paid up capital of the company. The cost per share for the Promoters of the

Company is as under:

Names of the Promoters No. of Shares held Average cost per share (Rs.)

Mr. Challa Prakash 8,14,490 29.94

Mr. E. Bhaskar Rao 6,92,500 15.03

Mr. C. Ramakrishna 1,25,000 10.00

Mr. Challa Suresh 2,59,200 46.15

M/s Sri Krishnadevaraya Hatcheries Pvt. Ltd. 3,78,700 19.19

* The book value per share as on December 31st, 2006 is Rs.55.40

* Details of the shares sold/purchased by the Promoters during the last six months.

Mr. C Ramakrishna

Nature of the security Nature of the Quantity Transaction price Transaction date

transaction per share

Equity Gift 10,000 Gift 19.02.2007




* This Issue is applicable to those Equity Shareholders, whose names appear as beneficial owners as per the list to be

furnished by the Depositories in respect of the shares held in the electronic form and on the Register of Members

of the Company at the close of business hours on the Record Date i.e., 3rd May 2007.

* Your attention is drawn to the section on “Risk Factors” appearing on page no. iii of this Letter of Offer.

* Please ensure that you have received the Composite Application Form (CAF) along-with the Letter of Offer.

* Please read the Letter of Offer and the instructions contained herein and in the CAF carefully before filling in the

CAF. The instructions contained in the CAF are an integral part of this Letter of Offer and must be carefully

followed. Application is liable to be rejected for any non-compliance of the Letter of Offer or the CAF.

* There is no interest of promoters/directors/key management personnel other than reimbursement of expenses incurred

or normal remuneration or benefits except to the extent as follows:

Mr. Challa Prakash and Mr. E. Bhaskar Rao, directors of the company are also partners of M/s Sri Satya Sai

Constructions (Firm), which has recently entered into a development and construction agreement with the Company

for construction of residential villas at Bangalore. Necessary approvals u/s 297 of the Companies Act, 1956 has

been received from the Regional Director, Ministry of Company Affairs approving the said agreement.

* No loans and advances have been made to any person(s)/companies in which directors are interested except as

stated in the Auditors report. For details please refer to the Auditors report starting on page no. 59 of this Letter of

Offer.

* All enquiries in connection with this Letter of Offer or accompanying Composite Application Form and requests

for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID no., the

CAF number and the name of the first Equity Shareholder as mentioned on the CAF and super-scribed “Srinivasa

Shipping and Property Development Limited - Rights Issue” on the envelope) to the Registrar to the Issue at

the following address:

SATHGURU MANAGEMENT CONSULTANTS PRIVATE LIMITED

Plot No. 15, Hindi Nagar, Punjagutta, Hyderabad - 500 034,

Tel: 91 40 2335 0586/ 2335 6507 Fax : 91 40 2335 4042

Email: [email protected]

Website: www.sathguru.com

xii

* The Lead Manager and the Issuer shall make all information in respect of the present issue available to the public

and investors at large and no selective or additional information would be made available to a section of the

investors in any manner whatsoever including at road shows, presentations, in research or sales report etc.

* The Company and the Lead Manager will keep the public informed of any material changes till the commencement

of the listing and trading of the Equity Shares issued through the Letter of Offer.

* In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a

duplicate CAF on request of the applicant who should furnish the registered folio number / Beneficiary Owner’s

Identification Number and his/ her full name and address to the Registrar to the Issue. Please note that those who

are making the application on duplicate form should not utilize the original CAF for any purpose including

renunciation, in case if it is received subsequently. If the applicant violates any of these requirements, he/she shall

face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications.

* The investors may contact Lead Manager or the Compliance officer for any compliant/clarification/ information

pertaining to the issue who will be obliged to attend the same.

* Related party transactions are given as notes to account in Auditors Report starting on page no. 59 of this Letter of

Offer.

1

SECTION III -INTRODUCTION

1. Summary:

(i) Industry scenario and Business Over view

Industry Overview

Construction activity is an integral part of a country’s infrastructure and industrial development. It includes hospitals, schools,

townships, offices, houses and other buildings; urban infrastructure (including water supply, sewerage, drainage); highways,

roads, ports, railways, airports; power systems; irrigation and agriculture systems; telecommunications etc. Covering as it

does such a wide spectrum, construction becomes the basic input for socio-economic development. Besides, the construction

industry generates substantial employment and provides a growth impetus to other sectors through backward and forward

linkages. It is, essential therefore, that, this vital activity is nurtured for the healthy growth of the economy. With the present

emphasis on creating physical infrastructure, massive investment is planned during the Tenth Plan. The construction industry

would play a crucial role in this regard and has to gear itself to meet the challenges. In order to meet the intended investment

targets in time, the current capacity of the domestic construction industry would need considerable strengthening. The

construction sector is one of the largest employers in the country. In 1999-00, it employed 176.2 Lakhs workers, a rise of 60

Lakhs over 1993-94. The sector also recorded the highest growth rate in generation of jobs in the last two decades, doubling

its share in total employment. (Source: Tenth Five Year Plan: 2002-07)

The share of construction sector in gross domestic product (GDP), which was 5.4 per cent in 1970-71, came down to 4.4

percent in 1990-91. Subsequently it picked up and stood at 5.1 per cent in 1999-00. At present, the industry accounts for 5-6%

of the country’s Gross Domestic Product 38-40% of Gross Domestic capital formation. (Source: Tenth Five Year Plan: 2002-

07)

For further details, please refer Industry overview on page no. 28 of this Letter of Offer.

Business overview

The company is engaged in property development and construction business since its inception and was incorporated in theyear 1994 as a public limited company with its registered office in Hyderabad and corporate office at Chennai. SrinivasaHatcheries group and Mr. Challa Prakash promoted the company initially. In the year 1995 the company made its entry intothe Capital markets with a public issue of Rs 75 lakhs.

The company has constructed prestigious buildings in Chennai namely Capital Towers and FFE Towers with 1,37,000 sft at avalue of Rs. 5500 Lakhs and over 30,000 sft. valued at Rs. 1125 Lakhs respectively. The Company also undertook Rs. 1200Lakhs wind-farm project, which was divested subsequently. Company’s activities took a subdued tone in the subsequent yearsdue to lack of investment opportunities during the IT slump period.

In the year 2002-2003 there was a change in the management / owner ship control, with the Srinivasa Hatcheries Groupdivesting their interest in the company in favour of Mr. Challa Prakash, Mr. Challa Suresh, Mr. E. Bhaskar Rao and M/s. SriKrishnadevaraya Hatcheries Private Limited. Consequent to this change in the management, the Board was reconstituted withfocus on current growth opportunities in real estate sector. The Acquirers have complied with SEBI (SAST) Regulations, 1997for the said acquisition.

With the new Management’s renewed focus coupled with huge demand for commercial and residential properties, the companyhas identified projects in Chennai, Hyderabad and Bangalore and is actively pursuing the same.

(ii) Offering details:

Equity Shares offered

Fresh Issue by the Company 86,19,500 Equity Shares of Rs. 10/- each for cash at a premium of Rs.8/- per share (“the issue”)aggregating to Rs. 1551.51 lakhs on a “rights” basis to the existing equity shareholders/beneficialowners of the company in the ratio of two equity shares for every one equity share held as on 3rdMay 2007 i.e., record date.

Equity Shares outstanding prior to the Issue 43,09,750 Equity Shares of Rs.10/- each

Equity Shares outstanding after the Issue 1,29,29,250 Equity Shares of Rs.10/- each

Utilization of Issue proceeds 1. To finance the capital requirements for developing the Gamma Block of Alpha CityProject, an IT Park at Navalur, Chennai

2. To meet the expenses of the present issue.

2

(iii) Summary of Financial Operating and Other Data

STATEMENT OF PROFITS AND LOSSES: (Rs. In Lakhs)

Period ended on 31.03.02 31.03.03 31.03.04 31.03.05 31.03. 06 31.12.06

Income:

Contract Receipts & Other business related turnover 38.90 Nil Nil 193.38 191.58** 2765.65

Other Income (Rent + Others) 10.58 6.14 8.45 6.74 31.62 19.49

Increase (decrease) in inventory (122.28) (11.59) 1.42 (185.23) 506.07 272.10

Total Income (72.80) (5.45) 9.87 14.89 729.27 3057.24

Expenditure:

Construction, Selling & Administration Expenses 44.74 27.08 35.32 34.16 566.10 2530.73

Interest & Financial charges 3.70 3.12 2.76 0.22 2.27 61.33

Depreciation 2.76 1.93 1.67 2.32 2.44 9.00

Total expenditure 51.22 32.13 39.75 36.69 570.81 2601.06

Net Profit before tax and extraordinary items (124.02) (37.58) (29.88) (21.80) 158.46 456.18

Provision for Taxation -

- Current Nil Nil Nil Nil 13.79 52.82

- Deferred 15.51 11.87 16.28 3.54 53.60 31.04

Net Profit after tax & before extraordinary items (108.51) (25.71) (13.60) (18.26) 91.07 372.32

Extraordinary items 81.87 Nil Nil Nil Nil Nil

Provision for tax in respect of earlier years 0.03 0.01 Nil Nil Nil Nil

Net Profit after extraordinary items (26.67) (25.72) (13.60) (18.26) 91.07 372.32

Balance Profit/(Loss) Brought Forward 102.99 76.32 50.60 37.00 18.74 109.81

Appropriations:

Transfer to general reserve Nil Nil Nil Nil Nil Nil

Proposed dividend Nil Nil Nil Nil Nil Nil

Tax on proposed dividend Nil Nil Nil Nil Nil Nil

Balance carried to Balance sheet 76.32 50.60 37.00 18.74 109.81 482.13

Note : ** Includes Rs.100 lakhs received on account of relinquishment of rights in land, which the Officials of Ministry of Company Affairs opine

that this is not a regular business activity. The Company had furnished its reply to the same contending that it is a regular business Income, covered

under its main objects.

STATEMENT OF ASSETS AND LIABILITIES: (Rs. In Lakhs)

PARTICULARS As On As On As On As On As On As On

31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

A. Assets

Fixed Assets- gross block 37.13 34.47 34.08 40.43 120.82 267.47

Less: Depreciation 16.30 17.01 18.57 15.99 16.73 25.74

Net Block 20.83 17.46 15.51 24.44 104.09 241.73

Less: Revaluation Reserve Nil Nil Nil Nil Nil Nil

Net Block after adjustment for Revaluation Reserve (A) 20.83 17.46 15.51 24.44 104.09 241.73

3

B. Investments (B) 90.60 62.59 Nil Nil 5.07 21.95

C. Deferred Tax Asset (C) 0.00 55.22 71.51 75.05 21.45 (-)9.59

D. Current assets, loans and advances

Inventories 215.92 204.36 205.77 20.54 526.61 798.71

Receivables/Debtors Nil Nil Nil 2.47 87.44 28.29

Cash and bank balances 26.12 27.80 92.75 109.36 248.48 431.89

Other current assets 11.74 7.79 8.60 5.21 0.47 6.65

Loans and advances 198.79 160.96 106.13 253.31 1062.54 2097.69

TOTAL (D) 452.57 400.91 413.25 390.89 1925.54 3363.23

E Secured, Unsecured, Current liabilities and Provisions

Secured Loans Nil Nil Nil 7.78 4.54 2.02

Un Secured Loans 25.24 25.00 Nil Nil 150.50* 1150.35

Sundry liabilities 16.98 13.84 15.36 14.85 53.17 256.09

Provisions 0.81 0.98 1.05 1.17 14.80 2.78

TOTAL (E) 43.03 39.82 16.41 23.80 223.01 1411.24

F NET WORTH (A+B+C+D-E) 520.97 496.36 483.86 466.58 1833.14 2206.08

REPRESENTED BY

Shareholders funds:

Share capital 300.00 300.00 300.00 300.00 398.20 398.20

Convertible Warrants Application Money Nil Nil Nil Nil 41.52 41.52

Reserves and surplus 224.16 198.44 184.84 166.58 1396.78 1769.09


Reserves (Net of Revaluation Reserve) 224.16 198.44 184.84 166.58 1396.78 1769.09

Less: Miscellaneous Expenditure not written off (3.19) (2.08) (0.98) 0.00 (3.36) (2.73)

Total 520.97 496.36 483.86 466.58 1833.14 2206.08

(*) Pursuant to the inspection carried u/s 209A of the Companies Act, 1956 by the Deputy Director (Inspection), Office of the

Regional Director, Ministry of Company Affairs, Chennai, an amount of Rs.10 lakhs borrowed from M/s Sahiti Poultry Breeding

Farm, a sole proprietary of Mr E.Bhaskar Rao one of the Directors of the Company, which was wrongly classified under the

head current liabilities has been rectified and shown under the head “Unsecured Loans”.

4

2. General Information

Dear Shareholder(s),

Srinivasa Shipping & Property Development Limited was incorporated as a “Public Limited Company” vide Registration

No.01-18540 on 17th October, 1994 in Hyderabad under the Companies Act, 1956 and obtained certificate for commencementof business on 4th November 1994. The Registered Office of the Company was shifted from 3-5-823, 3rd Floor, HyderabadBusiness Center, Hyderguda, Hyderabad - 500 029 to 3-5-823, 4th Floor, Hyderabad Business Center, Hyderguda, Hyderabad- 500 029 with effect from 20th June 1995. With effect from 19th July 2002 the Registered Office was shifted to ‘SrinivasaHouse’, 1028, Road No.45, Jubilee Hills, Hyderabad - 500 033. With effect from 20th August 2005 the Registered Office ofthe Company was shifted to 8-2-595/3/5, Eden Gardens, Road No.10, Banjara Hills, Hyderabad - 500034. Subsequently, theRegistered Office was shifted to the present address with effect from 31st January 2007.

Pursuant to the resolution passed by the Board of Directors of the Company at its meetings held on 20th August 2005, it hasbeen decided to make the following offer to the Equity Shareholders of the Company.

ISSUE OF 86,19,500 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PREMIUM OF RS.8/- PER SHARE(“THE ISSUE”) AGGREGATING TO RS. 1551.51 LAKHS ON A “RIGHTS” BASIS TO THE EXISTING EQUITYSHAREHOLDERS/BENEFICIAL OWNERS OF THE COMPANY IN THE RATIO OF TWO EQUITY SHARESFOR EVERY ONE EQUITY SHARE HELD AS ON 3RD MAY 2007 i.e., RECORD DATE.

Board of Directors of the Company

Name of the Director Designation Status

Mr. Challa Prakash Managing Director Promoter

Mr. E. Bhaskar Rao Director Promoter

Mr. C. Ramakrishna Director Promoter

Mr. Challa Suresh Director Promoter

Mr. S. Suryanarayana Director Independent

Mr. K. Akmaluddin Sheriff Director Independent

Brief details of Managing Director

Mr. Challa Prakash, aged 54, the Managing Director of the Company is a M.Sc. having a vast experience of over 30 years inthe construction, banking, aquaculture and pisciculture Industry. Having worked for 13 years as senior manager in NationalisedBanks, he commenced the business of exports of tuna fish through tuna longliners and shrimp processing.

Mr. Challa Prakash has started Construction activities since July 1993 through Sri Satya Sai Constructions, a sole proprietorship concern for property development in Chennai and Hyderabad and has successfully undertaken the construction of 12residential/commercial complexes spanning an area of over 4,00,000 sft (approximately).

For the details of other Directors please refer page no 48 of this Letter of Offer.

Issue Management Team

Company Secretary Legal Advisor

Mr. Vishwanath Ganti M/s. Challa Kodanda Ram & Associates

Company Secretary Advocates & Corporate Consultants,

8-2-595/3/6, Eden Gardens, Road No.10, Banjara Hills, 05, Subhodaya Apartment, Boggulkunta,

Hyderabad - 500034 Hyderabad -500 001.

Phone: +91 - 40 - 6663 7560 / 6650 7567 Phone: +91-40-24754758

Fax: +91 - 40 - 6663 7969 Fax: +91-40-24757591

Email: [email protected] Email: [email protected]

Bankers to the Company

Andhra Bank Andhra Bank

Jubilee Hills Branch, T.Nagar Branch,

Hyderabad - 500 033 Chennai - 600 017

Phone: +91-40-2354 5555 / 2360 0190 Phone : +91-44-2434 1436 / 2434 1602.

Fax: +91-40-2354 3931

Email: [email protected]

5

Compliance Officer Auditors to the Company

Mr. Vishwanath Ganti M/s Karvy & Company

Company Secretary, Chartered Accountants,

8-2-595/3/6, Eden Gardens, Road No.10, Banjara Hills, Road No.2, Bhooma Plaza,

Hyderabad - 500034 Street No. 4, Avenue 7,

Phone: +91 - 40 - 6663 7560 / 6650 7567 Banjara Hills,

Fax: +91 - 40 - 6663 7969 Hyderabad - 500 034

Email: [email protected] Phone: + 91 - 40 - 2335 8625 / 2335 4995

Fax : +91 - 40 - 2335 8507.

Investors attention is invited to contact the Compliance Officer in case of

any Pre- issue/Post- issue related problems such as non - receipt of letters

of allotment/ share certificates/ refund orders etc.

Lead Manager to the Issue Registrar to the Issue

Karvy Investor Services Limited Sathguru Management Consultants Private Limited

“Karvy House”, Plot No. 15, Hindi Nagar, Punjagutta, Hyderabad - 500 034,

46, Avenue 4, Street No.1, Tel: + 91 040 2335 0586/ 2335 6507

Banjara Hills, Hyderabad - 500 034 Fax: + 91 040 2335 4042

Tel. No. + 91 40 23374714 /23320752 Email : [email protected]

Fax No. + 91 40 23374714 Website: www.sathguru.com

Email: [email protected] SEBI Regn. No. INR 000000536

Website: www.karvy.com Contact Person: Mr. R.Chandra Sekher.

SEBI Regn. No. INM000008365

Contact Person: Mr. V. Madhusudhan Rao

Bankers to the Issue

UTI Bank Limited HDFC Bank Limited

No.79, G N Chetty Road, 6-1-73, Ground and IIIrd Floor,

T Nagar, Saeed Plaza, Lakdikapool,

Chennai - 600 017 Hyderabad - 500 001

Tel. No. +91 44 2815 7050 / 55 Tel. No. +91 40 2321 1586

Fax No. +91 44 2815 7056 Fax No. +91 40 6666 6818

Contact Person: Mr. L Seshadrinathan Contact Person: Mr. Ch Ravi Kumar

Credit Rating

This being a rights issue of Equity Shares, no credit rating is required.

Details of underwriting, if any

The present issue is not underwritten.

Minimum Subscription

If the Company does not receive the minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the

applicants within forty-two days from the date of closure of the Issue. If there is a delay in the refund of subscription by more

than 8 days after the Company becomes liable to repay the subscription amount, (i.e. forty two days after closure of the Issue),

the Company will pay interest for the delayed period, at prescribed rates in terms of sub-section (2) and (2A) of Section 73 of

the Act.

This Rights Issue will become under-subscribed after considering the number of Equity Shares applied as per entitlement plus

additional Equity Shares by shareholders and renounces. The under-subscribed portion can be applied for only after the close

of the issue.

6

3. CAPITAL STRUCTURE OF THE COMPANY

Particulars Nominal Aggregate

Value (Rs.) Value (Rs.)

A AUTHORIZED:

2,50,00,000 Shares of Rs. 10/- each 25,00,00,000

B ISSUED, SUBSCRIBED & PAID UP SHARE CAPITAL

43,09,750 Equity Shares of Rs. 10/- each fully paid up. 4,30,97,500

C NOW OFFERED IN TERMS OF THIS LETTER OF OFFER

86,19,500 Equity shares of Rs.10/- each at a premium of Rs. 8/- per share. 8,61,95,000 15,51,51,000

D PAID-UP CAPITAL AFTER THE PRESENT ISSUE

1,29,29,250 Equity Shares of Rs.10/- each 12,92,92,500

E SHARE PREMIUM ACCOUNT

Before the Issue 15,19,31,000

After the Issue 22,08,87,000

NOTES TO CAPITAL STRUCTURE

i. Increase in authorized capital of the Company

Sl. No. Date of passing of the resolution From (Rs.) To (Rs.)

1 17.10.1994 (on incorporation) 1,00,00,000

2 11.11.1994 1,00,00,000 3,25,00,000

3 29.09.1997 3,25,00,000 9,00,00,000

4 29.09.2005 9,00,00,000 15,00,00,000

5 14.08.2006 15,00,00,000 25,00,00,000

ii. Build up of Share Capital

Date of No. of Face Issue Consi- % of Post Cumulative Nature of LLock inAllotment / Shares Value Price (Rs. deration issue Paid-up Allotmentfully paid-up Issued Per Share) capital Equity shares

17.10.94 70 10/- 10/- Cash Negligible 70 MOA Nil

10.01.95 9,92,630 10/- 10/- Cash 7.68 9,92,700 Allotment Nil

24.03.95 2,25,000 10/- 10/- Cash 1.74 12,17,700 Allotment Nil

20.06.95 10,32,300 10/- 10/- Cash 7.98 22,50,000 Allotment to NilPromoters

20.06.95 7,50,000 10/- 10/- Cash 5.80 30,00,000 Public Issue Nil

24.10.05 9,82,000 10/- 126/- Cash 7.60 39,82,000 Preferential 10,000 sharesAllotment locked in upto

24.10.2008

31.01.07 * 5,750 10/- 126 Cash 0.04 39,87,750 Conversion of Nilwarrants

19.02.07 * 34,250 10/- 126 Cash 0.26 40,22,000 Do Nil

16.04.07* 91,250 10/- 126 Cash 0.70 41,13,250 Do Nil

24.04.07 * 1,96,500 10/- 126 Cash 1.52 43,09,750 Do Nil

TOTAL 43,09,750 33.33

* The Company has obtained in-principle approval and is in the process of obtaining final listing permission from BSE

and HSE.

7

Shareholding Pattern (As on 30th April, 2007)

Category Category of No. of Total no. No. of shares

code Shareholder Shareholders of shares held in

demateria- As a % As a % of

lized form of (A+B) (A+B+C)

(A) Shareholding of Promoter and

Promoter Group

1 Indian

(a) Individuals/ Hindu Undivided Family 7 1829490 1729490 42.45 42.45

(b) Central Government/ State Government(s) - - - - -

I Bodies Corporate 1 378700 198700 8.79 8.79

(d) Financial Institutions/ Banks - - - - -

(e) Any Others - - - - -

Sub Total(A)(1) 8 2208190 1928190 51.24 51.24

2 Foreign

a Individuals (Non-Residents Individuals/

Foreign Individuals) 1 125000 125000 2.90 2.90

b Bodies Corporate - - - - -

c Institutions - - - - -

d Any Others - - - - -

Sub Total(A)(2) 1 125000 125000 2.90 2.90

Total Shareholding of Promoter and

Promoter Group (A)= (A)(1)+(A)(2) 9 2333190 2053190 54.14 54.14

(B) Public shareholding

1 Institutions

(a) Mutual Funds/ UTI - - - - -

(b) Financial Institutions / Banks - - - - -

(c) Central Government/ State Government(s) - - - - -

(d) Venture Capital Funds - - - - -

(e) Insurance Companies - - - - -

(f) Foreign Institutional Investors - - - - -

(g) Foreign Venture Capital Investors - - - - -

(h) Any Other - - - - -

Sub-Total (B)(1) - - - - -

B 2 Non-institutions

(a) Bodies Corporate 122 519697 428497 12.06 12.06

(b) Individuals

I Individual shareholders holding nominal

share capital up to Rs 1 lakh 1345 715129 562946 16.59 16.59

II Individual shareholders holding nominal share

capital in excess of Rs. 1 lakh. 21 514726 433726 11.94 11.94

Total shareholding as a % of

total no. of shares

8

(c) Any Other (specify) - - - - -

(c-i) Non Resident Indians 12 222422 57422 5.16 5.16

(c-ii) Clearing Members 7 4086 4086 0.10 0.10

(c-iii) Overseas Corporate Bodies 1 500 500 0.01 0.01

Sub-Total (B)(2) 1508 1976560 1487177 45.86 45.86

(B) Total Public Shareholding (B)= (B)(1)+(B)(2) 1508 1976560 1487177 45.86 45.86

TOTAL (A)+(B) 1517 4309750 3540367 100.00 100.00

(C) Shares held by Custodians and against which

Depository Receipts have been issued - - - - -

GRAND TOTAL (A)+(B)+(C) 1517 4309750 3540367 100.00 100.00

Shareholding Pattern Before and After the Offer

Cate- Category of No. of Total no. No. of shares Total shareholding as a % Post Issue Shareholding

gory Shareholder Shareholders of shares held in of total no. of shares pattern

code demateria- As a % As a % of Total no. As a %

lized form of (A+B) (A+B+C) of shares of Total

(A) Shareholding of Promoter

and Promoter Group

1 Indian

(a) Individuals/ Hindu Undivided 7 1829490 1729490 42.45 42.45 5488470 42.45

Family

(b) Central Government/ State

Government(s) - - - - - - -

(c) Bodies Corporate 1 378700 198700 8.79 8.79 1136100 8.79

(d) Financial Institutions/ Banks - - - - - - -

(e) Any Others - - - - - - -

Sub Total(A)(1) 8 2208190 1928190 51.24 51.24 6624570 51.24

2 Foreign

a Individuals (Non-Residents

Individuals/ Foreign Individuals) 1 125000 125000 2.90 2.90 375000 2.90

b Bodies Corporate - - - - - - -

c Institutions - - - - - - -

d Any Others - - - - - - -

Sub Total(A)(2) 1 125000 125000 2.90 2.90 375000 2.90

Total Shareholding of Promoter

and Promoter Group (A)= (A)

(1)+(A)(2) 9 2333190 2053190 54.14 54.14 6999570 54.14

(B) Public shareholding

1 Institutions

(a) Mutual Funds/ UTI - - - - - - -

(b) Financial Institutions / Banks - - - - - - -

(c) Central Government/ State

Government(s) - - - - - - -

(d) Venture Capital Funds - - - - - - -

(e) Insurance Companies - - - - - - -

(f) Foreign Institutional Investors - - - - - - -

9

(g) Foreign Venture Capital Investors - - - - - - -

(h) Any Other - - - - - - -

Sub-Total (B)(1) - - - - - - -

B 2 Non-institutions

(a) Bodies Corporate 122 519697 428497 12.06 12.06 1559091 12.06

(b) Individuals

I Individual shareholders holding

nominal share capital up to 1345 715129 562946 16.59 16.59 2145387 16.59

Rs 1 lakh

II Individual shareholders holding

nominal share capital in excess 21 514726 433726 11.94 11.94 1544178 11.94

of Rs. 1 lakh.

(c) Any Other (specify) - - - - - - -

(c-i) Non Resident Indians 12 222422 57422 5.16 5.16 667266 5.16

(c-ii) Clearing Members 7 4086 4086 0.10 0.10 12258 0.10

(c-iii) Overseas Corporate Bodies 1 500 500 0.01 0.01 1500 0.01

Sub-Total (B)(2) 1508 1976560 1487177 45.86 45.86 5929680 45.86

(B) Total Public Shareholding 1508 1976560 1487177 45.86 45.86 12929250 100.00

(B)= (B)(1)+(B)(2)

TOTAL (A)+(B) 1517 4309750 3540367 100 100 12929250 100.00

(C) Shares held by Custodians

and against which Depository - - - - - - -

Receipts have been issued

GRAND TOTAL (A)+(B)+(C) 1517 4309750 3540367 100.00 100.00 12929250 100.00

Note:

The shareholding pattern after the present Rights Issue indicated above is on the assumption that all the shareholders in

respective categories will subscribe to their full entitlement.

This being a Rights Issue in accordance with clause 4.10.1 (c) of the SEBI Guidelines, the requirements of promoters contribution

do not apply. As a consequence none of the equity shares are locked in terms of the present rights issue.

v. Details of Holding of Promoter Group (as on 30th April, 2007)

Sr. No. Promoter No. of shares % of Post-issue

Holding

1 Mr. Challa Prakash 8,14,490 6.30

2 Mr. E.Bhaskar Rao 6,92,500 5.36

3 Mr. C. Ramakrishna 1,25,000 0.97

4 Mr. Challa Suresh 2,59,200 2.00

5 M/s. Sri Krishnadevaraya Hatcheries Pvt. Ltd. 3,78,700 2.93

Persons Acting in Concert

1 Mrs. Challa Chinnamma 3,200 0.02

2 Mr. Challa Rajendra Prasad 100 Negligible

3 Mr. Vellanki V Rao 10,000 0.08

4 Mrs. E Padmaja 50,000 0.39

10

Mr. E.Bhaskar Rao, Mr. C Jagapati Rao, Dr. K Somi Reddy, Dr. T Krishna Reddy, Mrs. C Mangayamma and Smt. E Padmaja

are the natural persons in control of Sri Krishnadevaraya Hatcheries Pvt Ltd. Neither the natural persons nor Sri Krishnadevaraya

Hatcheries Pvt. Ltd. or any persons forming part of Promoters Group have been restrained from accessing the capital markets

for any reason by SEBI or any other authorities.

vi. Details of the shares sold/purchased by the Promoters during the last six months

Mr. C Ramakrishna

Nature of the Nature of the Quantity Transaction Transaction date

security transaction price per share





vii. Top Ten Shareholders of the Company

As on the date of filing of the Letter of Offer with Designated Stock Exchange

Name of the Shareholders No. of Shares % of Pre issue % of Post issue

share capital share capital

Challa Prakash 8,14,490 18.90 6.30

E.Bhaskar Rao 6,92,500 16.07 5.36

Acme Craft Private Limited 2,75,960 6.40 2.13

Sri Krishnadevaraya Hatcheries Pvt. Ltd. 3,78,700 8.79 2.93

Challa Suresh 2,59,200 6.01 2.00

C. Ramakrishna 1,25,000 2.90 0.97

Girish Kulkarni 1,08,925 2.53 0.84

Gautam Prakash 1,18,000 2.74 0.91

Amit Bhartia 54,589 1.27 0.42

Suyaash Outsourcing Private Limited 50,000 1.16 0.39

Top Ten Shareholders of the Company (Ten days prior to the date of filing of the Letter of Offer with the Designated Stock

Exchange)



Challa Prakash 8,14,490 18.90 6.30

E.Bhaskar Rao 6,92,500 16.07 5.36

Acme Craft Pvt Ltd 2,75,960 6.40 2.13

Sri Krishnadevaraya Hatcheries Pvt. Ltd. 3,78,700 8.79 2.93

Challa Suresh 2,59,200 6.01 2.00

C. Ramakrishna 1,25,000 2.90 0.97

Girish Kulkarni 1,08,925 2.53 0.84

Gautam Prakash 1,18,000 2.74 0.91

Amit Bhartia 54,589 1.27 0.42

Suyaash Outsourcing Private Limited 50,000 1.16 0.39

11

Top Ten Shareholders of the Company (Two years prior to the date of filing of the Letter of Offer with the Designated Stock

Exchange)



Challa Prakash 7,29,490 16.93 5.64

E.Bhaskar Rao 6,62,490 15.37 5.12

Challa Suresh 2,61,500 6.07 2.02

C. Ramakrishna 2,25,000 5.22 1.74

M/s. Sri Krishnadevaraya Hatcheries Pvt. Ltd. 3,46,650 8.04 2.68

Bellam Kotaiah 1,19,100 2.76 0.92

Krishna Priya Leasing & Hire Purchase Limited 56,900 1.32 0.44

Regency Securities Private Limited 31,000 0.72 0.24

Vallabhanani Gopal Krishna 20,600 0.48 0.16

R.H Rao 12,400 0.29 0.10

viii. There are no buyback, standby or other similar arrangements for purchase of Equity Shares offered through this Letter of

Offer by the Promoter Group, directors and the Lead Managers.

ix. The company has not taken any bridge loans from any bank, which would be repaid out of the issue proceeds for any

purpose whatsoever or for the proposed project.

x. The Company at its Board meeting held on 29th April 2006 has decided to raise upto USD 20 million by issue of Foreign

Currency Convertible Bonds subject to shareholders approval. Other than the above, there would be no further issue of

capital whether by way of issue of bonus shares, preferential allotment, rights issue or public issue in any other manner

during the period commencing from submission of the Letter of Offer to SEBI until equity shares offered through this

Letter of Offer have been listed or application monies refunded on account of non-listing or under subscription, etc.

xi. The Company has not issued any Equity Shares out of revaluation reserves or consideration other than cash in the past.

The company undertakes that at any given time, there shall be only one denomination for the Equity Shares of the

company and the company shall comply with such disclosures and accounting norms as may be specified by SEBI, from

time to time.

xii. The company had 1564 shareholders as on 19th May 2007.

xiii. The Company has not revalued any of its Assets since its inception.

xiv. There are no options or rights to convert debentures or other instruments into equity shares.

xv. No shares of promoter have been pledged.

xvi. The company made a public issue of 7,50,000 Equity shares for cash at par aggregating to 75 lakhs. The issue opened on

4th May 1995 and closed on 8th May 1995. The shares were listed on Bombay Stock Exchange, Hyderabad Stock

Exchange and Madras Stock Exchange. Subsequently, the company has delisted its shares from the Madras Stock Exchange

Limited with effect from 2nd April 2004.

xvii. The Company presently does not have any intention or proposal to alter its capital structure for a period of 6 months

from the date of opening of the issue, by way of split, consolidation of the denomination of the Equity Shares, or by issue

of shares on a preferential basis or issue of bonus or rights or further public issue of shares or any other securities.

xviii. As on date there are no partly paid up shares.

xix. No Shares have been allotted on firm basis or through private placement in the last two years nor has the company

bought back its equity shares in the last six months other than the following:

The Company has made a preferential allotment of 9,82,000 Equity Shares and 3,29,500 Convertible Warrants on

24.10.2005.Certificate from the Statutory Auditors confirming that the company has complied with all the preferential

allotment guidelines has been reproduced herewith

12

Certificate

M/s Karvy & Company

Chartered Accountants,

Road No.2, Bhooma Plaza,

St.No.4, Avenue 7, Banjara Hills,

Hyderabad - 500 034

TO WHOM SO EVER IT MAY CONCERN

We M/s Karvy & Company, Statutory Auditors of Srinivasa Shipping and Property Development Ltd hereby certifies as

under:

1. The issue price in respect of Preferential Allotment works out to Rs.126/- per Share/Convertible Warrant is in accordance

with SEBI guidelines.

2. The issue of 9,82,000 Equity Shares of Rs.10/- each for cash at a premium of Rs.116/- per share and 3,29,500 Convertible

Warrants @ Rs.126/- per Warrant, to the preferential allottees has been made in accordance with the requirements

contained in SEBI Guidelines. The Shares/Convertible Warrants under Preferential Allotment allotted to promoters and

persons other than promoters have been locked-in as per the SEBI Guidelines.

For Karvy & Company

Chartered Accountants K.Ajay Kumar

Dt : 10.04.2006

xx. Securities offered through this issue shall be made fully paid up or may be forfeited within 12 months from the date of

allotments of securities in the manner specified in clause 8.6.2 of the SEBI (DIP) Guidelines.

xxi. The promoters have confirmed that the promoters alongwith the promoter group (together herein after referred to as

“promoters” in this para) intend to subscribe to the full extent of their entitlement in the issue.

The promoters intend to apply for additional shares in the issue. As a result of this subscription and consequent allotment,

the promoter may acquire shares over and above their entitlement in the issue, which may result in an increase of their

shareholding being above the current shareholding with the rights entitlement under the present offer. This subscription

and acquisition of additional shares by promoters (i.e. their entitlement as well as additional shares beyond their

entitlement), if any, will not result in change of control of the management of the company and shall be exempt in terms

of provisions to Regular 3(1)b(ii) of the SEBI (SAST) Regulations, 1997. As such, other than meeting the requirements

indicated in requirement of funds, (refer “Objects of the Issue” Section of this Letter of Offer), there is no other intention/

purpose for this issue, including any intention to delist the company, even if, as a result of allotment to the promoters, in

this issue, the promoter shareholding in the company exceeds their current shareholding. However, the promoters have

confirmed that in above their entitlement and as a result, if the public shareholding in the company after the Rights Issue

falls below the “permissible minimum level” as specified in the listing condition or listing agreement, they will either

individually or jointly with other companies controlled by them make an offer for sale of their holdings so that the public

shareholding is raised to the “permissible minimum level” within a period of 3 months from the date of allotment in the

proposed issue, as per the requirements of sub-clause 17.1 and 17.2 of SEBI (Delisting of Securities) Guidelines 2003,

or as per any amendment thereto or any other period as may be directed by SEBI or any appropriate authority. In this

context, the promoter have provided following under taking:

“ We hereby undertake that, in case the Rights Issue of the Company is completed with the promoters subscribing to

Equity shares over and above our entitlement and as a result, if the public shareholding in the company after the Rights

issue falls below the “permissible minimum level” as specified in the listing condition or listing agreement, we will

either individually or jointly with other companies controlled by us make an offer for sale of our holdings so that the

public shareholding is raised to the “permissible minimum level” within a period of 3 months from the date of allotment

in the proposed issue, as per the requirements of sub-clause 17.1 and 17.2 of SEBI (Delisting of Securities) Guidelines,

2003 or as per any amendment thereto or any other period as may be directed by SEBI or any appropriate authority”.

xxii. The Issuer Company shall not make any further issue of capital either by way of issue of bonus shares, preferential

allotment, rights issue or public issue or in any manner, during the period commencing from the submission of draft

Letter of Offer to SEBI for Rights Issue till the securities referred in the Letter of Offer have been listed or application

monies refunded on account of failure of issue.

13

4. OBJECTS OF THE ISSUE:

The objects of the present issue is to finance the capital requirements for developing Phase I (Gamma block) of Alpha City an

IT Park project at Navalur, Chennai being undertaken by the Company and to meet the expenses of the present issue.

The fund requirement and deployment is based on internal management estimates. The fund requirement below is based on

the Company’s current business plan. In case of any variations in the actual utilization of funds earmarked for the above

activities, increased fund deployment for a particular activity will be met from internal accruals of the Company.

The main objects clause of Memorandum of Association of the Company enables the Company to undertake the existing

activities and the activities for which the funds are being raised through the present issue.

Requirement of funds

The Company has estimated funds requirements as under:

COST OF PROJECT (Rs. In Lakhs)

Particulars Amount

1 Cost of Construction 2153.64

2 Capital Equipment 100.00

3 Approvals, Sanctions and Consultancy fees 168.63

4 Marketing & Selling Expenses 398.71

5 Rights Issue Expenses 60.00

Total 2880.98

The Company proposes to meet the above fund requirements through the following:

MEANS OF FINANCE (Rs. In Lakhs)

Particulars Amount

1. Increase in Share Capital (Preferential Allotment of Equity

Shares and Convertible Warrants) 1278.84

2. Rights Issue Proceeds 1551.51*

3. Internal Accruals 168.62

Total 2998.97

* The Company will be utilizing Rs.1433.52 lakhs towards the proposed project from the Rights Issue proceeds. The balance

amount of Rs.117.99 lakhs will be utilized on the ongoing projects undertaken by the Company.

Notes:

a) No part of the issue proceeds will be paid as consideration to promoter, directors, key managerial personnel, associate or

group companies.

b) The Company is dependent on full-subscription to the Rights Issue in order to meet its working capital and financial

requirements for the proposed project.

c) The Company hereby confirms that firm arrangements have been made through verifiable means towards 75% of the

stated means of finance, excluding the amount to be raised through proposed Rights Issue.

d) Incase of shortfall in issue proceeds or cost overrun, the Company would meet the shortfall out of internal accruals and/

or unsecured loans from promoters).

e) The Company intends to utilize the proceeds received from sale/lease of the Alpha City project for development of other

projects of the Company.

14

PROJECT

Alpha City - Navalur, Chennai

Alpha City is a campus located in Chennai which is exclusively dedicated to and custom-built for the IT and ITES industry.

Chennai is already home to top IT companies in India and has back office operations of World Bank, Standard Chartered

Bank, ABN Amro Bank, Ford, Citi Bank and many others. Alpha City is located in the neighborhood of Infosys, TCS, Cognizant

Technologies, Polaris etc.

The campus consists of 3 buildings- Alpha, Beta and Gamma set on a well planned and beautifully landscaped area. Alpha and

Gamma are 5- storey buildings, while Beta is a 7-storey building. The project is designed by Mr. Pramod Balakrishnan of

M/s Edifice, Chennai.

Alpha City will have modern, safety and security features by deploying intelligent security management system. All safety

precautions will be complied with including state-of-the-art fire fighting equipment. The building will be fire protected as per

NFPA Regulations. Seismic zone regulations will be complied with. Alpha City offers Structural stability for Zone 3. A

dedicated agency will be given the task of Facilities Management which consists of power, water, and sewage treatment plant,

air conditioning, landscaping, etc.

The present issue is being made to fund the construction of phase - 1 (Gamma block).

Salient Features of the Project

Strategic Location: The project is strategically located in the designated IT Corridor of Old Mahabalipuram (OMR) which is

already home to some of the leading software companies.

Exclusively for IT/ITES Industry: Alpha City is a campus exclusively dedicated to, and custom-built for the IT and ITES

industry. The campus consists of 3 Grade A++ buildings- Alpha, Beta and Gamma set on a well planned and beautifully

landscaped area. Alpha and Gamma are 5- storey buildings, while Beta stands tall at 7-storeys.

Large areas of glass and elegant design combine to create an impressive façade for each building. Outside, the buildings are

complemented by landscaped gardens. Each building will have an impressive lobby with high-speed elevators. Each floor will

have expansive floor plates and large column free spaces. The Alpha City will have large amount of parking space for cars and

two-wheelers.

The present issue is being made to fund the construction of phase - 1 (Gamma block).

The Company has entered into Development Agreement on 30th March, 2005 with Mrs. Rahila S.M.A and Mrs. Falila

S.M.A (Land Owners) for development of 5.46 acres of land at Old Mahabalipuram Road, Navalur Village, Chingleput

Taluk Kancheepuram District.

The Salient features of the Agreement are as under:-

a) The Property has to be developed in two or more stages. First phase will have to be completed within the stipulated time

of 18 months from the date of plan approval. The second phase will have to be completed within the stipulated time of

18 months from the date of completion of the first phase.

b) The total super built up area shall be approximately 4,00,000 sqft after deducting the area to be surrendered to the local

body, panchayat etc. The built-up area shall be shared by the owners of the land and the company in the ratio of 30:70

respectively included car parking area.

c) The Company shall offer Rs.100 lakhs as interest free refundable security deposit at the time of signing the agreement to

the owners of the land which will be refunded at the time of handing over the property.

d) Mrs.Rahila & Mrs. Falila will hand over the land to the company as soon as the building plan is received from CMDA/

Local Panchayat and all statutory Authorities.

e) The expenses like stamp duty, registration fees and other incidentals, taxes etc. in respect of the same, shall be met only

by the Company.

f) The owners are the absolute owners of the land and that they have not encumbered the property nor the property is the

subject matter of any subsisting agreement of sale or litigation or acquisition or attachment proceedings or maintenance

claim or damage in favour of any financial institution or third party for any borrowing.

g) The company further agrees that they will indemnify in full any loss or damage or other injury to the Owners of the

property on account of any claim.

15

h) In case the company commits or delays in handling over 30% of the space in the first phase then they will be liable to pay

Rs.20/- per Square feet per month till the delivery of the building to Mrs. Rahila and Mrs. Falila the same will be applicable to

second phase.

There is no relation between any of the parties to the agreements

Present Status:-

The present status of the project is as under (as on 31st March 2007):

S. Item / Particular Date of Percentage of Original Scheduled Expected Date Delay in

No commencement Completion as Date of Completion of Completion completion

on 31.03.2007

1 Acquisition of Land 01.04.2005 100% Completed Completed —

2 Approvals 01.08.2005 57% 31.05.2006 31.07.2007 13 Months

3 Piling 15.01.2006 100% Completed Completed —

4 Excavation 15.01.2006 100% Completed Completed —

5 Concrete/Shuttering/ Reinforcement 15.02.2006 90% 30.09.2006 30.04.2007 7 months

6 Masonry / Plastering 13.05.2006 77% 18.10.2006 30.04.2007 5 Months

7 Water Proof Cladding 20.11.2006 75% 31.12.2006 31.07.2007 7 Months

8 Site Development and Road Works 19.10.2006 40% 31.12.2006 31.08.2007 8 Months

9 Electrical Works 01.06.2006 55% 31.12.2006 31.07.2007 7 Months

10 Fire Fighting 10.07.2006 50% 02.12.2006 30.06.2007 7 Months

11 HVAC 01.06.2006 56% 31.12.2006 31.07.2007 7 Months

12 Plumbing and Sanitary 01.06.2006 50% 22.12.2006 30.06.2007 6 Months

13 Elevators 01.06.2006 40% 31.12.2006 31.07.2007 7 Months

Reasons for delay in completion of works as per schedule

The Company has already received approvals for most of the works from the appropriate authorities, however it has to receive

final clearances form Ministry of Environment & Forests ( MoEF) and Tamilnadu Pollution Control Board and final plan

approval.

Other works like masonry, plastering, concreting, shuttering and reinforcement etc got delayed due to seasonal rains/monsoons

and cyclonic storms which resulted in water logging at site. Also the outbreak of chikun gunya virus has resulted in workers

being affected by the virus resulting in lean supply of labour hampering the progress of work at site.

Electrical Works/ HVAC/ Elevators works have been rescheduled due to delay in import of imported chillers/ AC units and

elevator machinery.

As other works like Water proof cladding, plumbing and sanitary works and firefighting works etc are simultaneous and

interconnected in nature with other works, their completion is dependent on completion of the above mentioned works.

The detailed write-up on the cost components are as under:-

a. Cost of Construction:

The Following expenditure has been estimated for the Construction activity as certified by M/s Edifice, Architects and

Interior Designers:-

S. No. Description Supplier/Contractor Date of quotation/(Date of (Rs. In Lakhs)

placement of order)

1 Piling Local contractors — 72.11

2 Excavation Local contractors — 20.16

3 Concreting/shuttering/reinforcement In-house — 804.28

16

4 Masonry/plastering In-house — 110.00

5 Cladding In-house — 150.00

6 Site Development and Road Works Local contractors — 19.37

7 Electrical Jaigopal & Co. 06.06.2006 459.00

8 Fire fighting Jay Dheep Techno Enterprises P Ltd. 01.06.2006 83.00

9 HVAC TRAC Fujico Air Systems Ltd. 25.05.2006 252.35

10 Plumbing and Sanitary Local contractors — 66.71

11 Elevators ETA MELCO Engg. Co. Pvt. Ltd. 01.06.2006 116.66

Total 2153.64

b. Capital Equipment

The Company has acquired the following capital equipment for the proposed project. The details of which are as under:

S.No Description Supplier/Contractor Date of place- Date of Delivery (Rs. In Lakhs)

ment of order

1 Floor forms - 900*600; Adjustable UNISCAFF Engineers 21.03.2006 Already Delivered 25.07

Spans 2.44 to 4.16 mts & Adjustable

Props 2 to 3.65 mt, 3 to 4.65

2 Adjustable Props- 3 to 4.65 mt UNISCAFF Engineers 15.04.2006 Already Delivered 10.60

3 Adjustable Spans 2.5 to 4.15 mts Buildcaff Engineers 15.04.2006 Already Delivered 15.85

& Adjustable Props 3 to 4.65 mtr

4 APS Units - 6' * 4' Uniscaff Engineers 22.04.2006 Already Delivered 4.75

5 Floor Forms 3'*2'- 2000 Nos Buildcaff Engineers 03.04.2006 Already Delivered 10.60

6 Floor Forms 900*600 - 1800 Nos Uniscaff Engineers 25.03.2006 Already Delivered 9.36

7 10/7 Concrete Mixer machine Ramaas Enterprises 03.04.2006 Already Delivered 1.10

8 Reinforcement Bar Shearing machine Sakthi Engineers 06.02.2006 Already Delivered 1.54

9 40 mm NB ms pipes Medium Pipe Field 22.04.2006 Already Delivered 3.60

10 APS Units - 250 units Saravana Industries 02.02.2006 Already Delivered 2.13

11 Hydraulic Compression Testing Machine Ashton Instruments 02.02.2006 Already Delivered 1.17

12 DG Set with acoustic enclosure Powerica 22.05.2006 Already Delivered 5.58

13 ERW MS Tubes for APS Units Shankara Pipes India Limited 11.03.2006 Already Delivered 2.03

14 IS Brass Sieve 200 mm, measuring Jar Ashton Instrument 02.02.2006 Already Delivered 1.85

15 Runners and planks Sundar Timber Pvt. Ltd. 25.102005 Already Delivered 1.71

16 Pentax Leveling instrument Lawrence and Mayo Pvt. Ltd. 15.10.2005 Already Delivered 0.39

17 Wood plaining machine Raman Engineering Corporation 28.10.2005 Already Delivered 0.71

18 Miscellaneous Local Suppliers —— 2.29

Total 100.33

Approx 100.00

Approvals, Sanctions and Consultancy Fees

The Company has estimated an amount of Rs.168.63 lakhs for obtaining various Approvals and sanctions and for payment

of Consultancy fees for the proposed Gamma Block of Alpha City.

17

Sl.No. Description (Rs. In Lakhs)

1 Architect and consultants fees 100.00

2 Statutory and other Approvals 68.63

Total 168.63

c. Marketing Expenses.

The Company uses the services of real estate consulting firms for marketing its properties in addition to the direct

marketing to the corporate customers. The Company also markets its ventures through brochures and short animated

films supplemented by print and media ads. To meet the marketing expenses and brokerage payable to the consultants

for the services rendered by them, the Company has allocated an amount of Rs.398.71 lakhs. The detailed break up is as

under:

Sl. No. Description Amount in lakhs

1. Brokerage 244.50

2. Promotion, Advertising and direct expenses 154.21

Total 398.71

d. Rights issue Expenses

The Rights issue expenses are estimated at Rs. 60.00 Lakhs comprise of fees and expenses payable to the Lead Managers

to the issue, Bankers to the issue, Registrar to the issue, printing and stationery expenses, advertising expenses and all

other expenses for listing the Equity shares on the Stock Exchanges.

5. Schedule of Implementation:

The proposed schedule of implementation for capital expenditure is as under:

Sr. No Item / Particular Date of Commencement Date of Completion Expected Date

of Completion

Alpha City (Gamma Block)

1 Acquisition of Land 01.04.2005 Completed Completed

2 Approvals 01.08.2005 31.05.2006 30.04.2007

3 Piling 15.11.2005 Completed Completed

4 Excavation 15.01.2006 Completed Completed

5 Concreting /shuttering /reinforcement 15.02.2006 30.09.2006 30.04.2007

6 Masonry/Plastering 13.05.2006 18.10.2006 30.04.2007

7 Water Proof Cladding 20.11.2006 31.12.2006 31.07.2007

8 Site development and road works 19.10.2006 31.12.2006 31.08.2007

9 Electrical 01.06.2006 31.12.2006 31.07.2007

10 Fire Fighting 10.07.2006 02.12.2006 30.06.2007

11 HVAC 01.06.2006 31.12.2006 31.07.2007

12 Plumbing and Sanitary 11.06.2006 22.12.2006 30.06.2007

13 Elevators 01.06.2006 31.12.2006 31.07.2007

Reasons for delay in completion of works as per schedule

The Company has already received approvals for most of the works from the appropriate authorities, however it has to

receive final clearances form Ministry of Environment & Forests (MoEF) and Tamilnadu Pollution Control Board and

final plan approvals.

Other works like masonry, plastering, concreting, shuttering and reinforcement etc got delayed due to seasonal rains/

monsoons and cyclonic storms which resulted in water logging at site. Also the outbreak of chikun gunya virus has

18

resulted in workers being affected by the virus resulting in lean supply of labour hampering the progress of work at site.

Electrical Works/ HVAC/ Elevators works have been rescheduled due to delay in import of imported chillers/ AC units

and elevator machinery.

As other works like Water proof cladding, plumbing and sanitary works and firefighting works etc are simultaneous and

interconnected in nature with other works, their completion is dependent on completion of the above mentioned works.

6. Deployment of funds:

The company has incurred an expenditure of Rs.1541.21 Lakhs as on 21.03.2007 on the proposed Project. The fund

deployment on the Project and its Means of Finance have been certified by M/s Karvy & Company, Chartered Accountants,

Hyderabad, the Auditors of the Company vide their certificate dated 14th May 2007, the details of which are as follows:

S.No Particulars Rs. in Lakhs

1 Construction Expenses 1402.40

2 Construction Equipment 96.52

3 Statutory Licenses & Approvals 32.54

4 Rights Issue Expenses 9.75

Total 1541.21

Sources of Financing of Funds already deployed

The funds already deployed have been sourced as under:

Particulars Rs. In lakhs

Proceeds of Preferential Issue of Equity Shares and Convertible Warrants 1278.84

Internal Accruals 262.37

Total 1541.21

Break-up of Cost of Construction incurred:-

S. No. Description (Rs. In Lakhs)

1 Piling 73.00

2 Excavation 19.00

3 Concreting/shuttering/ reinforcement 708.10

4 Masonry/plastering 82.00

5 Waterproofing and Cladding 103.00

6 Site Development and Road Works 7.74

7 Electrical works 202.45

8 Fire fighting 40.00

9 HVAC 89.11

10 Plumbing and Sanitary 32.00

11 Elevators 46.00

Total 1402.40

19

Details of balance funds requirement

The break up of funds already deployed and balance funds deployment is mentioned hereunder: (Rs. Lakhs)

Particulars Already deployed till March 22nd 2007 Total 21st March , 2007 - August, 2007

Construction Equipment 96.52 3.48 100.00

Cost of Construction 1402.40 751.24 2153.64

Approvals, Sanctions and Consultancy fees 32.54 136.09 168.63

Marketing and Selling Expenses — 398.71 398.71

Rights Issue Expenses 9.75 50.25 60.00

Total 1541.21 1339.77 2880.98

Monitoring of utilization of Funds

Appointment of a monitoring agency is not required in terms of clause 8.17 of the SEBI (DIP) Guidelines. The Auditcommittee appointed by the Board of Directors will monitor the utilization of the proceeds of the issue.

Deployment of funds pending utilization

Pending any use as described above the proceeds of the issue will be kept in Fixed Deposits with scheduled commercialbanks.

7. TERMS OF THE PRESENT ISSUE

The Equity Shares now being offered are subject to the terms of this Letter of Offer, the CAF, the Memorandum andArticles of the Company, approvals under the Foreign Direct Investment Scheme of Government of India, FEMA, ifapplicable, Guidelines issued by SEBI, the Act, the guidelines, notifications and regulations for the issue of capital andfor the listing of securities issued by the Government and/or other statutory authorities and bodies from time to time andsuch terms and conditions as may be incorporated in the Letter of Allotment/Share Certificate or any deed or documentexecuted by the Company regarding the Rights Issue. The principal terms and conditions of the Offer are as follows:

i. Present Issue: Issue of 86,19,500 equity shares of Rs. 10/- each for cash at a premium of Rs.8/- per share (“theissue”) aggregating to Rs. 1551.51 lakhs on a “rights” basis to the existing equity shareholders/beneficial ownersof the company in the ratio of two equity shares for every one equity share held as on 3rd May 2007 i.e., record date

ii. Face Value: Each Equity Share shall have a face value of Rs.10/-.

iii. Offer Price: Rs.18/- per Share

Authority for the Issue

Pursuant to Section 81(1A) of the Companies Act, 1956, the present Rights Issue has been authorized by the Equityshareholders vide Special Resolution passed at the Extra Ordinary General Meeting of the company held on 10th October2005. The rights issue has been authorized by the Board of Directors at its meeting held on 20th August 2005.

Approvals for the Offer

The Offer is being made in terms of Guidelines issued by the Securities and Exchange Board of India and in accordancewith the Companies Act, 1956 and Listing Agreement entered into with the Stock Exchanges.

Basis of Offer

The Right Issue of 86,19,500 Equity Shares of Rs. 10/- each for cash at a premium of Rs.8/- per share are being offeredon a Rights basis in the ratio of Two Equity Shares for every One Equity Share held to those Equity Shareholders whosenames appear on the Register of Members of the Company and the names of the beneficial Equity Owners as providedby the depositories at the close of business hours on 3rd May 2007 being the Record Date fixed by the Board of theCompany in consultation with the BSE (Designated Stock Exchange).

Rights Entitlement

If your name appears in the Register of Members as an Equity shareholder/Beneficial Owner (as per the list provided by

the Depositories) of the Company on the Record Date i.e. 3rd May 2007 you are entitled to the number of Equity Shares

by way of Rights as shown in Column 4 of Part A of the enclosed Composite Application Form (CAF) on the basis

mentioned above.

20

8. BASIS FOR ISSUE PRICE

A. Qualitative Factors

* The Company has experience in real estate and property development business.

* The Company has professionals with experience at various levels in the company.

B. Quantitative Factor

1. Earnings per share for the last three years

Year Ended Earnings Per Share (Rs.) Weight

31.03.04 (0.45) 1

31.03.05 (0.61) 2

31.03.06 2.66 3

The weighted average EPS works out to Rs. 1.05

2. P/E Multiple in relation to the Issue Price of Rs.18/- per share.

Particulars P/ E multiple

Based on 2005-06 EPS 6.77

Based on weighted average EPS 17.14

Industry P/E

- Highest 127.90

- Lowest 1.19

- Average 64.54

Industry average is calculated as average of high and low

(Source: Capital Market Volume XXII/04 (April 23 to May 06, 2007))

The ratios of some of the companies in the same industry group are as follows:

Company EPS (Rs) P/E Ratio NAV (Rs)

M/s. Ansal Properties 8.7 25.7 143.5

M/s. Era Constructions 14.0 10.5 122.6

M/s. D S Kulkarni Property Development 7.7 14.7 86.9

M/s. Marg Constructions 4.1 10.2 20.6

M/s. Prajay Engg 10.2 9.5 49.2

M/s. Prime Property 6.7 — 11.8

M/s. Srinivasa Shipping and Property

Development Limited 2.3 17.4 45.1

(Source: Capital Market Volume XXII/04 (April 23 to May 06, 2007)

3. Return on Net-Worth (RONW) for last three years

Financial Year % Weight

31.03.04 (2.81) 1

31.03.05 (3.91) 2

31.03.06 4.97 3

9 months ended on December 31st 2006 16.88

Weighted Average 0.71

21

4. Minimum Return on increased net worth required to maintain Pre Issue EPS at Rs. 2.66 is 8.33%

5. Net Asset Value (per share)

As at March 31, 2006 53.47

As at December 31, 2006 55.40

After Issue Rs. 31.94

Issue Price Rs. 18/-

6. The face value of the share is Rs.10/- and the issue price is 1.8 times of the face value.

The Lead Manager believes that the Issue price of Rs.18/- is justified in view of the above qualitative and quantitative

parameters. The investors may want to peruse the risk factors and the financials of the Company including important

profitability and return ratios, as set out in the Auditors’ report to have a more informed view of the investment

proposition.

22

9. TAX BENEFITS FOR THE COMPANY AND ITS SHAREHOLDERS

M/s Karvy & Company, Chartered Accountants, the Statutory Auditors of the Company, have certified vide their letter

dated 05th May, 2007, that under the current provisions of the Income Tax Act, 1961 and the existing laws for the time

being in force, the following benefits, inter-alia, will be available to the Company and the members.

I. TAX BENEFITS UNDER INCOME TAX ACT, 1961:(‘The Act’)

The company will be entitled to deduction under the sections mentioned hereunder from its total income chargeable to

income tax.

A. TO THE COMPANY:

1. Dividends received by the Company from other domestic companies are exempt in the hands of Company as per

the provisions of Section 10(34) of the Income Tax Act.

2.1. In accordance with the provisions of Section 10 (38), the long term capital gains arising on the transfer of securities

transacted in a recognized stock exchange in India shall be exempt from Income Tax.

2.2. The long-term capital gains accruing to the Company otherwise than as mentioned in 2.1 above, shall be chargeable

to tax in accordance with and subject to the provisions of Section 112 of the Income Tax Act, 1961 plus applicable

surcharge and education cess.

3. Under Section 32 of the Income Tax Act, the Company is entitled to claim depreciation on tangible and intangible

assets as well as claim the unabsorbed depreciation brought forward as explained in the said section.

4. The company is eligible under section 35D of the Act to a deduction equal to one-fifth of certain specified expenditure,

including specified expenditure incurred in connection with the issue for the extension of the industrial undertaking,

for a period of five successive years subject to the limits provided and the conditions specified under the said

section.

5. Subject to compliance with certain conditions laid down in Section 80IA of the Act, the company will enjoy 100%

tax exemption for any 10 consecutive Assessment Years out of 15/20 years , as the case may be, in respect of profits

earned from an undertaking set up for developing or operating and maintaining or developing, operating and

maintaining any notified infrastructure facility.

6. As per the provisions of section 80-IB(10) of the Act, the company is eligible to claim 100% tax benefit with

respect to profit derived from “Developing and Building Housing Projects”. However, the benefit is available

subject to fulfillment of conditions specified in Section 80IB & 80AC of the Act.

7. The short-term capital gains accruing to the company, from the transfer of a short-term capital asset, being securities,

transacted in a recognized stock exchange in India, shall be chargeable to tax at the rate of 10% (plus applicable

surcharge and education cess) as per the provisions of Section 111A.

8. Under Section 115JAA(1A) of the Act, tax credit shall be allowed of any tax paid (MAT) under section 115JB of

the Act. Credit eligible for carry forward is the difference between MAT paid and the tax computed as per the

normal provisions of the Act. Such MAT credit will be available for set-off over a period of 7 years succeeding the

year in which the Tax is paid as per the provisions of Section 115JB.

B. TO THE RESIDENT SHAREHOLDERS:

1. Dividends exempt under section 10(34)

1. Dividends (whether interim or final) declared, distributed or paid by the Company are exempt in the hands of

shareholders as per the provisions of Section 10(34) of the Income Tax Act.

2. Computation of Capital Gains:

2.1 Capital assets may be categorized into short term capital assets and long term capital assets based on the period of

holding. Shares in a company, listed securities or units of UTI or unit of Mutual Fund specified under section

10(23D) of the Act or a zero coupon bond will be considered as long term capital assets if they are held for a period

exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are

considered as “Long term capital gains”. Capital gains arising on sale of these assets held for 12 months or less are

considered as “short term capital gains”.

23

2.2 Section 48 of the Income Tax Act, which prescribes the mode of computation of capital gains, provides for deduction

of cost of acquisition/improvement and expenses incurred in connection with the transfer of a capital asset, from

the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it

offers a benefit by permitting substitution of cost of acquisition/improvement with the indexed cost of acquisition/

improvement, which adjusts the cost of acquisition/improvement by a cost inflation index as prescribed from time

to time.

2.3 As per the provisions of Section 112 of the Act, long term capital gains as computed above that are not exempt

under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and

education cess). However, as per the proviso to section 112(1), if the tax on long-term capital gains resulting on

transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation benefit

exceeds the tax on long-term gains computed at the rate of 10 percent without indexation benefit, then such gains

are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and education cess).

a. As per the provisions 111A of the Act, short-term capital gains on sale of equity shares where the transaction of

sale is chargeable to STT shall be subject to tax at a rate of 10 percent (plus applicable surcharge and education

cess).

2.4 Exemption of Capital Gains from Income-tax:

* Under section 10(38) of the Act, long term capital gains arising out of sale of equity shares or a unit of equity

oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or unit is chargeable

to STT.

* According to the provisions of section 54EC of the Act and subject to the conditions and to the extent specified

therein, capital gains not exempt under section 10(38) and arising on transfer of a long term capital asset shall not

be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from

the date of transfer. However, such investment in the notified bonds shall not exceed Rupees Fifty Lakhs in a

financial year. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately.

* In such a case, the cost of such long term specified asset will not qualify for deduction under section 80C of the

Act.

However, if the said bonds are transferred or converted into money within a period of three years from the date of

their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital

gains in the year in which the bonds are transferred or converted into money.

* According to the provisions of section 54F of the Act and subject to the conditions specified therein, in the case

of an individual, gains arising on transfer of a long term capital asset (not being a residential house) are not

chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period in

a residential house. If only a part of such net consideration is invested within the prescribed period in a residential

house, the exemption shall be allowed proportionately. For this purpose, net consideration means full value of the

consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure

incurred wholly and exclusively in connection with such transfer.

3. Rebate under Section 88E

Section 88E provides that where the total income of a person includes income chargeable under the head “Profits

and Gains of Business or Profession” arising from taxable securities transactions, he shall get rebate of STT paid

by him in the course of his business. Such rebate is to be allowed from the amount of income tax in respect of such

transactions calculated by applying average rate of income tax.

C. TO THE NON-RESIDENT INDIAN SHAREHOLDERS (Other than FIIs and Foreign venture capital investors:


Under section 10(34) of the Act, income earned by way of dividend from domestic company referred to in Section

115-O of the Act is exempt from income-tax in the hands of the shareholders.

2. Computation of capital gains:




24




2.2 Section 48 of the Act contains special provisions in relation to computation of capital gains on transfer of shares of

an Indian Company by non-residents. Computation of capital gains arising on transfer of shares in case of non-

residents has to be done in the original foreign currency, which was used to acquire the shares. The capital gain (i.e.

sale proceeds less cost of acquisition/improvement) computed in the original foreign currency is then converted

into Indian Rupees at the prevailing rate of exchange.

According to the provisions of Section 112 of the Act, long term gains as computed above that are not exempt

under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and

education cess).

2.3 In case investment is made in Indian Rupees, the long-term capital gain is to be computed after indexing the cost.

According to the provisions of Section 112 of the Act, long term capital gains as computed above that are not

exempt under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge

and education cess). However, as per the proviso to section 112(1), if the tax on long-term capital gains resulting

on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation

benefit exceeds the tax on long-term gains computed at the rate of 10 percent without indexation benefit, then such

gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and education cess).

2.4 As per the provisions 111A of the Act, short-term capital gains on sale of equity shares where the transaction of


cess).

2.5 Options available under the Act

Where shares have been subscribed to in convertible foreign exchange -

Option of taxation under Chapter XII-A of the Act:

* Non-resident Indians [as defined in Section 115C(e) of the Act] being shareholder of an Indian Company, have

the option of being governed by the provisions of Chapter XIIA of the Act, which inter alia entities them to the

following benefits in respect of income from shares of an Indian Company acquired, purchased or subscribed to in

convertible foreign exchange.

* According to the provisions of Section 115D read with Section 115E of the Act and subject to the conditions

specified therein, long term capital arising on transfer of shares in an Indian Company not exempt under section

10(38), will be subject to tax at the are of 10 percent (plus applicable surcharge and education cess) without

indexation benefit.

* According to the provisions of Section 115F of the Act and subject to the conditions specified therein, gains

arising on transfer of capital asset being shares in an Indian company shall not be chargeable to tax if the entire net

consideration received on such transfer is invested within the prescribed period of six months in any specified

asset. If part of such net consideration is invested with the prescribed period of six months in any specified asset

the exemption will be allowed on a proportionate basis. For this purpose, net consideration means full value of the



* Further, if the specified asset in which the investment has been made is transferred within a period of three years

from the date of investment, the amount of capital gains tax exempted earlier would become chargeable to tax as

long term capital gains in the year in which such specified asset or savings certificates are transferred.

* As per the provisions of Section 115G of the Act, Non-resident Indians are not obliged to file a return of Income,

under section 139(1) of the Act, if their source of income is only investment income or income and/or long term

capital gains defined in section 115C of the Act, provided tax has been deducted at source from such income as per

the provisions of Chapter XVII-B of the Act.

* Under section 115H of the Act, where the Non-resident Indian becomes assessable as a resident in India, he may

furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under section

139 of the Act, to the effect that the provisions of the Chapter XII-A shall continue to apply to him in relation to

25

such investment income derived from any foreign exchange asset being asset of the nature referred to in sub clause

(ii), (iii), (iv) & (v) of section 115C(f) for that year and subsequent assessment years until such assets are converted

into money.

* As per provisions of Section 115-I of the Act, a Non-resident Indian, may elect not to be governed by the

provisions of Chapter XII-A for any assessment year by furnishing his return of income for that assessment year

under section 139 of the Act, declaring therein that the provisions of Chapter XII-A shall not apply to him for that

assessment year and accordingly his total income for that assessment year will be computed in accordance with the

other provisions of the Act.

2.6 Exemption of capital gains from income-tax



to STT.







Act.

However, if the said bonds are transferred or converted into money within a period of three years from the date of

their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital

gains in the year in which the bonds are transferred or converted into money.

* According to the provisions of section 54F of the Act and subject to the conditions specified therein, in the case

of an individual, gains arising on transfer of a long term capital asset (not being a residential house) are not

chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period in

a residential house. If only a part of such net consideration is invested within the prescribed period in a residential

house, the exemption shall be allowed proportionately. For this purpose, net consideration means full value of the




Section 88E provides that where the total income of a person includes income chargeable under the head “Profits

and Gains of Business or Profession” arising from taxable securities transactions, he shall get rebate of STT paid

by him in the course of his business. Such rebate is to be allowed from the amount of income tax in respect of such

transactions calculated by applying average rate of income tax.

D. TO OTHER NON-RESIDENT INDIAN SHAREHOLDERS: (Other than FIIs and Foreign venture capital

investors:


Under section 10(34) of the Act, income earned by way of dividend from domestic company referred to in Section

115-O of the Act is exempt from income-tax in the hands of the shareholders.

2. Computation of capital gains:







2.2 Section 48 of the Act contains special provisions in relation to computation of capital gains on transfer of shares of

an Indian Company by non-residents. Computation of capital gains arising on transfer of shares in case of non-

residents has to be done in the original foreign currency, which was used to acquire the shares. The capital gain (i.e.

26

sale proceeds less cost of acquisition/improvement) computed in the original foreign currency is then converted

into Indian Rupees at the prevailing rate of exchange.

As per the provisions of Section 112 of the Act, long term gains as computed above that are not exempt under

section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and education

cess).

2.3 In case investment is made in Indian Rupees, the long-term capital gain is to be computed after indexing the cost.

According to the provisions of Section 112 of the Act, long term capital gains as computed above that are not

exempt under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge

and education cess). However, as per the proviso to section 112(1), if the tax on long-term capital gains resulting

on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation

benefit exceeds the tax on long-term gains computed at the rate of 10 percent without indexation benefit, then such

gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and education cess).

2.4 As per the provisions 111A of the Act, short-term capital gains on sale of equity shares where the transaction of


cess).

2.5 Exemption of capital gains from income-tax:



to STT.







Act.

However, if the said bonds are transferred or converted into money within a period of three years from the date oftheir acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capitalgains in the year in which the bonds are transferred or converted into money.

* According to the provisions of section 54F of the Act and subject to the conditions specified therein, in the caseof an individual, gains arising on transfer of a long term capital asset (not being a residential house) are notchargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period ina residential house. If only a part of such net consideration is invested within the prescribed period in a residentialhouse, the exemption shall be allowed proportionately. For this purpose, net consideration means full value of theconsideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditureincurred wholly and exclusively in connection with such transfer.


Section 88E provides that where the total income of a person includes income chargeable under the head “Profitsand Gains of Business or Profession” arising from taxable securities transactions, he shall get rebate of STT paidby him in the course of his business. Such rebate is to be allowed from the amount of income tax in respect of suchtransactions calculated by applying average rate of income tax.

E. TO FOREIGN INSTITUTIONAL INVESTORS:


Under Section 10(34) of the Act, income earned by way of dividend from domestic company refereed to in Section115-O of the Act is exempt from income tax in the hands of shareholders.

2. Taxability of capital gains

2.1 Under Section 10 (38) of the Income Tax Act (Act) long term capital gains arising out of sale of equity shares or aunit of equity oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or

unit is chargeable to STT.

27

2.2 The income by way of short term capital gains or long term capital gains [in cases not covered under section 10(38)

of the Act] realized by FIIs on sale of shares of the company would be taxed at the following rates as per section115 AD of the Act:

* Short term capital gains, other than those referred to under section 111A of the Act shall be taxed 30% (plusapplicable surcharge and education cess)

* Short term capital gains, referred to under section 111A of the Act shall be taxed @ 10% (plus applicablesurcharge and education cess)

* Long term capital gains @ 10% (plus applicable surcharge and education cess) (without cost indexation)

It may be noted here that the benefits of indexation and foreign currency fluctuation protection as provided bysection 48 of the Act are not applicable.

2.3 According to the provisions of section 54EC of the Act and subject to the conditions and to the extent specifiedtherein, capital gains not exempt under section 10(38) and arising on transfer of a long term capital asset shall notbe chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months fromthe date of transfer. However, such investment in the notified bonds shall not exceed Rupees Fifty Lakhs in afinancial year. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately.

However, if the assessee transfers or converts the notified bonds into money within a period of three years from thedate of their acquisition, the amount of capital gains exempted earlier would be come chargeable to tax as longterm capital gains in the year in which the bonds are transferred or converted into money.


Section 88E provides that where the total income of a person includes income chargeable under the head “Profitsand Gains of Business or Profession” arising from taxable securities transactions, he shall get rebate of STT paidby him in the course of his business. Such rebate is to be allowed from the amount of income tax in respect of suchtransactions calculated by applying average rate of income tax.

F. TO MUTUAL FUNDS:

As per the provisions of Section 10(23D) of the Income Tax Act, any income of Mutual Funds registered under theSecurities and Exchange Board of India Act, 1992 or regulations made there under, Mutual funds set up by Public sectorbanks or public financial institutions or authorized by the Reserve Bank of India, would be exempt from income-tax.However, the mutual funds shall be liable to pay tax on distributed income to unit holders under section 115R of the Act.

G. TO VENTURE CAPITAL COMPANIES/FUND:

Under section 10(23FB) of the Income Tax Act, all Venture Capital Companies / Funds registered with the Securities andExchange Board of India, subject to the conditions specified, are eligible for exemption from income-tax in respect ofincome from investment in the equity shares of the company.

H. TAX TREATY BENEFITS:

An investor has an option to be governed by the provisions of the Act or the provisions of a Tax Treaty that India hasentered into with another country of which the investor is a tax resident, whichever is more beneficial.

II. TAX BENEFITS UNDER WEALTH TAX ACT, 1957:

Shares of the Company held by the shareholder will not be treated as an asset within the meaning of Section 2(ea) of theWealth Tax Act, 1957, hence no Wealth Tax will be payable on the market value of shares of the Company held by theshareholders of the company.

NOTES :

1) All the above benefits are as per the current tax laws as amended by the Finance Act, 2007.

2) The stated benefits available only to the sole/first named holder in case the shares are held by the joint holders.

for KARVY AND COMPANY,

Chartered Accountants

(K. AJAY KUMAR)

P A R T N E R

Place : Hyderabad.

28

SECTION - IV. ABOUT THE COMPANY

1. Industry Overview

General

Land and gold have been the two most coveted objects for Indians since recorded history. India occupies only 2.4% of the

world’s land area while accounting for 16% of global population. India’s average population density is much higher than that

of other nations of comparable size including China, Mexico, and Brazil. Such demographic and economic trends have caused

a surge in demand thereby increasing prices of real estate. Also the discovery of India as a IT / ITES destination in the last

decade is perhaps the biggest significant factor driving the real estate market. (Source: Karvy Stock Broking Limited - Real

Estate Report, 2006)

Construction activity is an integral part of a country’s infrastructure and industrial development. It includes hospitals, schools,

townships, offices, houses and other buildings; urban infrastructure (including water supply, sewerage, drainage); highways,

roads, ports, railways, airports; power systems; irrigation and agriculture systems; telecommunications etc. Covering as it

does such a wide spectrum, construction becomes the basic input for socio-economic development. Besides, the construction

industry generates substantial employment and provides a growth impetus to other sectors through backward and forward

linkages. It is, essential therefore, that, this vital activity is nurtured for the healthy growth of the economy. With the present

emphasis on creating physical infrastructure, massive investment is planned during the Tenth Plan. The construction industry

would play a crucial role in this regard and has to gear itself to meet the challenges. In order to meet the intended investment

targets in time, the current capacity of the domestic construction industry would need considerable strengthening. Construction

is one of the sectors that have shown a sizeable addition to its work force - by close to 5.5 million. Of this increase, over 60

percent has been in the rural areas. However, less than 10 percent of the incremental work force in this sector was women

workers. The prospects for jobs are quite with the real estate development being carried out by private developers on a large

scale. This is in addition to the government plans for infrastructure development in the country under various schemes like the

“Bharat Nirman programme”. The construction sector is one of the largest employers in the country. In 1999-00, it employed

176.2 Lakhs workers, a rise of 60 Lakhs over 1993-94. The sector also recorded the highest growth rate in generation of jobs

in the last two decades, doubling its share in total employment. (Source: TENTH FIVE YEAR PLAN: 2002-07 and Karvy

Stock Broking Limited - Real Estate Report, 2006)

The main advantage of the construction sector in employment generation lays in the fact that it:

� Absorbs rural labour and unskilled workers (in addition to semi-skilled and some skilled);

� Provides opportunity for seasonal employment thereby supplementing workers’ income from farming; and

� Permits large-scale participation of women workers.

The share of construction sector in gross domestic product (GDP), which was 5.4 per cent in 1970-71, came down to 4.4

percent in 1990-91. Subsequently it picked up and stood at 5.1 per cent in 1999-00. At present, the industry accounts for 5-6%

of the country’s Gross Domestic Product 38-40% of Gross Domestic capital formation. (Source: Tenth Five Year Plan: 2002-

07)

THE REAL ESTATE SECTOR IN INDIA

The Indian real estate industry is on a high growth path with a current market size of $15 bn approximately. Moving on, it is

expected to be over $50 bn by 2010, growing at a CAGR of 35-40%. The growth of this sector is crucial for the economy as

1 rupee spent in it adds 78 paisa to the GDP. The growth is being propelled by a variety of factors including the political

reforms, favorable interest rate regime leading to easy finance availability, rising income levels and the market getting more

organised. But it has not been like that since long. Historically, the real estate sector in India was unorganized and characterised

by various factors that impeded organised dealing, such as

o The absence of a centralised title registry providing title guarantee

o Lack of uniformity in local laws and their application

o Non-availability of bank financing

o High interest rates and transfer taxes

o The lack of transparency in transaction values.

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In recent years however, the real estate sector in India has exhibited a trend towards greater organization and transparency,

accompanied by various regulatory reforms. These reforms include:

o GoI support for the repeal of the Urban Land Ceiling Act 1976, with nine state governments having already

repealed the Act;

o Liberalization of the FDI norms and extensive approval of setting up SEZs;

o Modifications in the State Rent Control Acts to protect homeowners wishing to rent out their properties;

o Rationalization of property taxes in a number of states;

o The proposed computerisation of land records.

The trend towards greater organisation and transparency has contributed to the development of reliable indicators of value and

the organised investment in the real estate sector by domestic and international financial institutions, and has also resulted in

the greater availability of financing for real estate developers. Regulatory changes permitting foreign investment are expected

to further increase investment in the Indian real estate sector.

These trends have benefited from the substantial recent growth in the Indian economy, which has stimulated demand for land

and developed real estate across our business lines. Demand for residential, commercial and retail real estate is rising throughout

India, accompanied by increased demand for hotel accommodation and improved infrastructure. Additionally, the tax and

other benefits applicable to SEZs are expected to result in a new source of real estate demand. The Real estate demand

comprises of mainly three aspects:

o Consumption demand: It comes from the strong growth in urban areas, higher disposable income, higher retail

lending, lower interest rates and higher demand for real estate.

o Demand from outsourcing: It comes from business process outsourcing in IT & ITES and Pharma. Further, with

the growth in Knowledge Process Outsourcing of skilled and high-end functions in finance and biotechnology.

o Investment demand: It comes from high Capex plans and infrastructure investments by government and public-

private initiatives.

(Source: Karvy Stock Broking Limited - Real Estate Report, 2006)

The real estate boom has gradually percolated from the big metros to tier II cities. The rapid growth of BPO (call center)

industry and expansion of the insurance industry have helped generate stronger demand for mortgage, and consequently

pushed up demand for housing. High economic growth has fuelled the demand for real estate. Cities continue to attract interest

from IT and ITES companies that are either establishing a base or are looking to expand. The changing demographics, low

interest rate regime, rising disposable incomes, and fiscal incentives have also provided huge demand for housing.

The government had also played a pivotal role in the development of this sector. It had aided the sector by giving income tax

benefits to the consumer and benefits to developers. It initiated the rationalization of stamp duty and repealed the Urban Land

Ceiling Act in nine states. A number of state governments are moving towards computerization of land records.

There is a perceptible shift in the profile of real estate developers in the last one decade. With the corporatisation of the

industry, transparency has increased in the sector. This has enhanced the comfort level of the investors putting in money in the

real estate sector. This also led to increased supply of funds to the sector. With the entry of foreign investors transparency

levels would improve.

The strong growth in real estate has led to it emerging as an alternate investment class in the country. Investment in the realty

sector has been growing steadily over the last four-five years with real estate becoming the most preferred investment destination

as compared to bonds and other funds. Apart from conventional investors, it attracted investments from corporate as well as

from high net-worth individuals (HNIs). A favorable reform in the property market was the decision of the Government to

allow 100% FDI in real estate with certain restrictions, which gathered the interest of many, who have invested in the potent

realty segment through direct investments or through the venture capital funds like ICICI Ventures, Kshitij and HDFC Realty.

Property development grows with the growth in the real estate sector. There is huge potential in the segment.

MAIN CHARACTERISTICS OF THE INDIAN REAL ESTATE SECTOR

The Indian real estate market is still in its infancy, largely unorganized and dominated by a large number of small players, with

very few corporates or large players having national presence. The Indian real estate market, as compared to the other more

developed Asian and Western markets is characterized by smaller size and higher prices.

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1. Highly fragmented market dominated by regional players

Rapid growth in the last decade has seen the emergence of larger players that have differentiated themselves through

superior execution and branding. The larger players are able to capitalize on their early mover advantage. However,

these players continue to operate in local/regional markets. While these players are now initiating efforts to develop a

broader presence, their ‘home’ markets continue to support the majority of their profitability.

2. Local know-how critical success factor in the development phase

One of the key reasons for emergence of local leaders is the criticality of local know how and relationships in ensuring

successful and timely development. Each development is dependent on a number of local clearances (e.g. municipal

corporation, water, electricity) that requires strong experience and relationships

3. High transaction costs and significant cash transactions

The sector has been burdened with high transaction cost in the form of stamp duty that varies across the country (state-

wise). These transaction costs have resulted in poor liquidity in this market. These transaction costs have led to significant

cash transactions to reduce the stamp duty burden.

AREAS OF REAL ESTATE DEVELOPMENT

Residential Real Estate Development

The residential real estate market in India occupies the lion’s share and comprises of approximately 80% of the total real estate

market in India. The demand supply gap in housing space is estimated to be 41 bn Sq ft as compared to 66 mn Sq ft in the office

market. During the Ninth 5- year Plan (1997-2002), India was facing shortage of houses around 41 million in both urban and

rural out of which shortage of about 33 million was only in urban. This supply demand gap describes the increasing prices of

real estate. The growth in the residential real estate market in India has been largely driven by rising disposable incomes, a

rapidly growing middle class, and low interest rates, fiscal incentives on both interest and principal payments for housing

loans, heightened customer expectations, as well as increased urbanisation and nuclearisation. Most of these demand drivers

have been discussed above, in the economic and socio-cultural factors. The key demand drivers for the Residential Real Estate

in India are:

o Demographics

o Urbanization

o Rising Disposable Incomes

o Easier access to finance

o Fiscal Incentives

Commercial Real Estate Development

The recent growth of the commercial real estate sector in India has been fuelled by increased revenues of companies in the

services business, particularly in the IT and ITES sectors. Industry sources expect the IT and ITES sectors to continue to grow

and generate additional employment, which we expect will result in increased demand for commercial space.

Within the IT and ITES sectors, the Indian off-shoring operations of multinational companies are expected to increase demand

for commercial space. The trend for these companies has been to set up world class business centres to house their growing

work force.

Retail Real Estate Development

Retail spending in India in fiscal 2005 was Rs. 9.9 trillion, of which organised retail accounted for Rs. 349 billion, or

approximately 3.5%. The organised retail segment in India is expected to grow at a rate of 25% to 30% over the next five fiscal

years. The growth of organised retail is expected to be driven by demographic factors, increasing disposable incomes, changes

in shopping habits, the entry of international retailers into the market and the growing number of retail malls.

The key demand drivers for the retail real estate, in the Indian scenario are:

o Relaxation of strict FDI regime

o Organized retailing gaining share

(Source: Karvy Stock Broking Limited - Real Estate Report, 2006)

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FOREIGN DIRECT INVESTMENT IN REAL ESTATE

In March 2005, Government has permitted Foreign Direct Investment (FDI) under automatic route in real estate sector. This

will help to organise the real estate sector, bridge demand and supply gap, create more professionalism, bring superior technology,

induce healthy competition and ensure availability of funds. This will help growth of country’s GDP. A large number of

companies are looking at the opportunity to invest in India. Some of the foreign players who have already tied up with Indian

developers are Lee Kim Tah Holdings, CESMA International Pvt. Ltd., Evan Kim, Keppel Land from Singapore, Salim group

from Indonesia, Edaw Ltd. From USA, Emaar from Dubai, IJM, Ho Hup Construction Co. from Malaysia, etc. A number of

real estate venture capital funds are looking at opportunities in India. Some private funds have applied to SEBI for approval

and few of them have already received the approval and started investing in real estate. This will ensure more availability of

funds to the developers and faster growth of real estate sectors. Some examples are HDFC Real Estate Fund, ICICI - Tishman

Speyer, Ascends India IT Park Fund, Kotak Mahindra Realty Fund, Kshitij Venture Fund, IDFC, Edelweiss Capital, etc

2. Business Overview

The Company is engaged in property development and construction business. The company was promoted by Srinivasa

Hatcheries Group and Mr. Challa Prakash. In 1995, the company made its maiden offer of Rs. 75 lakhs.

The Company has constructed buildings in Chennai - namely Capital Towers and FFE Towers with 1,37,000 s.ft. at a value of

Rs. 5500 lakhs and over 30,000 sft. valued at Rs. 1125 lakhs respectively. The Company also undertook a Rs. 1200 lakhs on

wind farm project which was divested subsequently with a ROI of over 20% to the company.

Company’s activities took a subdued tone in the subsequent years due to lack of investment opportunities during the IT slump

period. In the year 2002-2003 there was a change in the management / owner ship control with the Srinivasa Hatcheries Group

divesting their interest in the company in favour of Mr. Challa Prakash, Mr. Challa Suresh, Mr. E. Bhaskar Rao and Sri

Krishnadevaraya Hatcheries Private Limited.

The company engages various consultants and third party companies for various aspects of the construction activities. As it is

engaged in this business for several years, it enjoys good working relationship with all its vendors, suppliers and contractors.

The company would like to undertake project related to developing IT Park, Commercial buildings, Residential colonies, etc.

The company currently has four major projects in hand i.e., Alpha City-IT Park, Chennai Central, the Retreat (a residential

villa project at Bangalore) and an IT Park at Perungudi, Chennai.

Proposed Projects/Projects under execution

1. Alpha City - Navalur, Chennai

The company proposes to develop an IT park i.e. suitable for information Technology (BPO) for which it has entered into a

development agreement on March 30, 2005 with Mrs. Rahila S.M.A and Mrs. Falila S.M.A for development of 5.46 acres of

land identified by it at old Mahabalipuram Road, Navalur village, Chingleput Taluk Kancheepuram district. The total super

built up area will be approximately 4,00,000 Square feet which shall be shared between the owners and the company in the

30:70 ratio. The architects, M/s Edifice of Chennai have been appointed for the design. The proposed project is to be completed

in a period of 36 months in three phases.

For Salient Features of the development agreement, please refer to the section “Objects of the issue” on Page No. 13

2. Chennai Central

The company has entered into a contract with M/S Anchor Malls Private Ltd., to act as the “Development & Project Management

Consultant” for the construction of a shopping mall “Chennai Central” at Nungambakkam High Road Chennai dated March

29, 2006. The project is to be completed in 14 months in three phases with a built up area of 1,22,981 Square feet (super

structure) with 57,396 square feet basement built up area. The funds requirements for this project are minimal, as Anchor

Malls Private Limited will fund the project.

There is no relation between any of the parties to the agreements.

3. The Retreat, Bangalore

The Company has entered into an agreement with Sri Satya Sai Constructions on May 6, 2006 for construction of villas and

Club houses in the Retreat Township being developed at Tarbanahalli village, near Devanahalli, new international Airport, and

Bangalore. The total area to be constructed would be 6,22,000 Square feet, which would be completed within 36 months from

the date of written notice to proceed from Sri Satya Sai Constructions. This development contains 200 plots and will house

Mediterranean-style villas. This gated community will combine landscaped and well-manicured lawns & parks, with a sports

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club and an artificial lake making this a secure and self-contained environment.

Salient features of the Agreement entered into with Sri Satya Sai Constructions for construction of Villas and Club

House in Bangalore is as under:

The company has entered into an Agreement with Sri Satya Sai Constructions, a partnership firm on 6th May, 2006 for

construction of Villas and Club House in the Retreat Township being developed at Tarbanahalli village, near Devanahalli New

International Airport, Bangalore. The total area to be constructed would be 6,22,000 sq. ft, to be completed within 36 months

from the date of receipt of communication from the SSSC. The total value of the contract is Rs. 7700 lakhs which will be paid

on completion of various landmarks as stipulated in the agreement.

This being a related party transaction, the company, in terms of the proviso (1) of section 297 of the Companies Act, 1956

obtained approval from the Office of Regional Director, Southern Region, Chennai and Ministry of Company Affairs,

Government of India for entering into contract with SSSC vide letter no. F.NO.2/AP-9568/2006 dated 23rd March, 2006.

Sri Satya Sai Constructions is a partnership firm represented by partners Mr. E. Bhaskar Rao and Mr. Challa Prakash who are

also the directors of Srinivasa Shipping and Property Development Limited

4. Perungudi IT Project, Chennai

The Company has identified property to the extent of 1.08 acres at Perungudi in Chennai and has entered into a Joint Development

agreement on February 17,2006 with M/s Shelat Brothers for building and marketing an I.T park admeasuring 1,52,700

square feet. The proposed project is to be completed in 18 months from the date of registration of the General power of

attorney to be issued in favor of the company. The developed property shall be shared in proportion of 44:56 for M/s Shelat

brothers and the company respectively.

There is no relation between any of the parties to the agreements.

In addition to the above,

a. The Company has entered into a MOU with Spire Realty Hyderabad Retreat Limited under FDI Scheme by US based

investors for developing a residential township of 90 plus acres in Hyderabad.

b. The Company has received Power of Attorney from M/s. Bhagyanagar Investments and Trading Private Limited, M/s. G

B Trading and Investment Private Limited, M/s. Infotech Infin and Trading Private Limited; M/s. Golkonda Finance and

Trading Private Limited and Sri P V Ramana Reddy to development a residential layout in acres 19.25 guntas at

Mamidipally Village, Ranga Reddy District, Near Shamshabad International Airport, Hyderabad wherein the Company

shall be entitled to 40% of the developed plots and 60% to the landowners.

COMPANY’S COMPETITIVE STRENGTHS

1. Proven performance and experience from earlier projects

The company has executed two commercial complex projects and gained experience in handling such projects.

2. Experience promoters with proven track record

The main promoters of the Company have considerable experience in real estate industry.

3. Experienced, skilled, qualified motivated team with low attrition rates

The company’s key management personnel have good experience in various aspects of the industry. The attrition levels

of key managerial personnel have been low because of company’s ability to motivate and retain the employees.

(ii) Business strategy:

The Company till date has executed two projects namely, Capital Towers and FFE Towers in Chennai, which were fully sold.

The expertise gained by the company in completing previous projects has opened up scope for similar projects in future which

require special skills that have been acquired during the execution of these projects.

The acquisition of land at the right price level is one of the most critical factors that can spell the difference between highly

successful projects versus the not-so-successful ones. The company endeavors to ensure that it gets right property at the right

price.

The company has adopted new construction methods like pre-stressed concrete, post tension concrete, slip form work, ready

mix concrete and various water proofing methodologies. As such the company has no key processes, technology and collaboration

agreements with any other parties for technology transfers. The construction technologies and methods for the projects are

33

selected depending on type, quantum of work and site specific situation.

With the high growth real estate market the company identifies tremendous potential for itself. Towards this direction the

company has entered into development/construction agreement for Development of Alpha City IT Park at Navalur, Chennai

with the landowners, Mrs. Rahila S.M.A and Mrs. Falila S.M.A., a Memorandum of Understanding with Anchor Malls Pvt.

Ltd for development of Chennai Central Mall, a Development Agreement with M/s Sri Satya Sai Constructions for construction

and development of Residential Villas at Tarbanahalli Village, Bangalore and an IT park at Perungudi, Chennai.

Future Prospects

The year 2006 started on a promising note when the Government of India opened the construction and development sector and

allowed 100 percent Foreign Direct Investment (FDI).

At present the construction and property development sector accounts for nearly 7-8% of India’s GDP and is emerging as one

of the key growth segments in the economy. Construction firms have shot into limelight with a strong surge in order inflows.

The company has also to its credit the construction of buildings in Chennai - namely Capital Towers and FFE Towers with

1, 37,000 sq. ft at a value of Rs. 5500 Lakhs and over 30,000 sq. ft valued at Rs. 1125 Lakhs respectively.

The Company expects huge potential in infrastructure development over next five years. In order to maximize these opportunities

and to put SSPDL in the higher orbit of growth, the company has targeted JVs with a strategic fit. Seizing this opportunity, the

company has entered into a Memorandum of Understanding with Glomac Berhard, a Malaysian organization, for formation of

consortium for submission of EOI and RFQ to Government of Andhra Pradesh for development of integrated township.

The Company is also planning to foray into the global markets with such alliances with international players.

Marketing strategy:

As part of its marketing strategy, the company engages in direct marketing and generally concentrates on negotiating at

corporate levels where large blocks of space are booked. The Company also uses the services of real estate consulting firms.

Further, the company focuses on building and maintaining cordial relationships with the Architects and consultants. Quality

work and execution of the project in the stipulated time would provide the company with the word of mouth publicity. The

company constantly keeps watch on developments in the corporate sector and collects market information. Based on the

information and data it approaches the corporate clients and presents its offerings.

Apart from this, the company has over a period of years has developed excellent relationships with more than 25 Architects

and consultants. The relationship provides the Company with various opportunities to participate in marketing its development

ideas.

The Company has set up a marketing team headed by AGM- Marketing. The team identifies prospective customers especially

IT/ITES and BPO Companies and engages in personalized marketing pitch. Also the Company takes part in IT/ITES Expos

and sets up stalls and displays the features of projects of the company. Once the message is communicated to the prospective

customers, the company involves in one to one interaction.

Promotion Strategy

The Company spends resources upfront to create the right marketing message, which starts from the naming of the project to

developing the theme for the project and creating messages around the theme which results in the development of a marketing

brochure and a power point presentation and / or a short animated film. The collateral is augmented with print ads supplemented

with a dedicated website for each project.

Also the Company engages services of outdoor media and gets extensive coverage about the projects by using print media like

large hoardings , display panels at vantage points of city like prime commercial areas, airports and near project site. This

would generate interest among IT and Corporate clients. The Company also releases print ads in IT / Financial magazines

giving much needed coverage.

Competition

The Company operates in the niche and growing markets like IT Parks, Shopping Malls, Residential Township Projects etc.

where the competition is fragmented between a few large players and multiple small builders. The main competitors which the

Company perceives are Marg Constructions Limited, Mantri Developers Private Limited, Ansal Properties and Infrastructure

Limited among others. The differentiating factor for companies operating in this sphere is expertise in construction and

property development and identification of right property. The company’s promoters have several years of experience in

property development and have been successful in identifying the right property at right price, thus creating an edge over its

34

competitors. The company is in the process of negotiating with various foreign investors and partners to tie up for developing

various projects to help deal with competition. Further, the Company is relying on quality work, close relationship, modern

technologies and speedy execution of its projects to sustain competition.

Business Model

After identifying a property, the Company conceives a specific project tailor made to market needs and demand and prepares

a detailed project report. This report addresses various aspects of project implementation commencing from due diligence of

title to property, obtaining necessary clearances, determining scope of work, technical parameters, etc., to related costs which

define the approximate estimated cost of the project.

Technology

There are no key processes, technology and collaboration agreements with any parties for technology. The Company‘s client

normally specify proven technologies and methods for their project, therefore, it does not entail the need for any collaboration

agreements for technology to be used.

PROCESS OF BUSINESS

The company is mainly engaged in property development which includes location identification, site selection, land acquisition,

planning, outsourcing, construction activities, and marketing strategies for its projects.

The business process contains the following stages:

1. Location Hunting

2. Land identification

3. Price negotiation with vendor

4. Legal due diligence

5. Execution of development agreement/POA/Sale Deed.

6. Selection of Architects

7. Approval of Drawings

8. Statutory clearances

9. Selection and appointment of Sub-Contractors

10. Project planning & monitoring

11. Project marketing

Location Hunting:

The process of identification of the appropriate location is considered to be the key for the success of development. To short

list the location, the Company’s planning team gathers data /information on various cities where they find that the location is

friendly in terms of easy accessibility, sound infrastructure facilities, suitable government policies, current demand and future

prospects.

Land Identification

Upon identifying the location, the planning team steps into the next stage of land identification, wherein they collect the city-

planning map which furnishes the details of the land use such as industrial, agricultural, residential etc. From this city

planning map, areas are selected and the planning team takes the assistance of the local brokers for selection of the appropriate

site. The planning team conducts a site visit for the detailed analysis of the land, surroundings, and environment suitable for

the project.

After this exercise, the planning team would compile the details of various statutory approvals that are to be obtained such as

soil quality, water availability etc.

Price negotiation with vendor

Once the site is considered to be fit for development the price is negotiated with the landowners for outright purchase or joint

development. In case of joint development, prices are set such that the costs are adjusted for construction cost, marketing cost

and finance cost and also specifically state the benchmark figure above which prices are not to be negotiated.

35

Legal Due Diligence

This procedure involves the research work conducted by the company’s legal department. They verify the records of the

vendor to the property so as to ensure its compliances with the required Property Acts and laws that govern land ownership.

Execution of Power of Attorney and Development Agreement / Sale Deed

With the receipt of the legal clearance given by the Company’s legal department and the negotiated prices, an MOU

(Memorandum of Understanding) is entered into, between the Company & owners after paying an initial token advance, if any

to the owner. The Company then moves on by entering into a development agreement and also takes the Power of Attorney in

its favour.

Selection of Architects

As soon as the development agreement is executed and Power of Attorney is obtained, the architect is selected. For this

purpose, the Company identifies architects who are best suited for the project being undertaken.

Approval of Drawings

The architect is assigned with the job of preparing the preliminary drawings for discussions. These are evaluated in a general

meeting with the Engineering, Planning, Marketing and Finance Department taking into consideration the cost and the market

acceptability.

The architect incorporates all the agreed suggestions and modifications during the general meeting and submits revised drawings

which are deliberated upon for all minor details. Upon approval of the revised drawings, the architect prepares 3 sets of

drawings as under:

i) Working drawing for execution

ii) Marketing drawing for sales

iii) Drawings for the approval by legal authorities /Statutory Authorities

Statutory Clearances

Various statutory clearances are obtained for each project. The details of various clearances required are mentioned in the

section titled ‘Government Approvals’ beginning on page no. 95 of this Offer Document.

Selection and Appointment of sub-contractors

The Company has a list of sub-contractors for RCC, painting, electrical works, environment, landscape, etc. The Company as

a matter of policy adopts the labour contract model retaining within its scope the supply of the materials so as to ensure quality.

Project Planning & Monitoring

During the process of the statutory approval(s)/sanction(s) and the appointment of the sub-contractors the budget of the

project is decided. The budget includes the following:

i) Budget of materials with all tolerances

ii) Pert Chart for execution

iii) Finance/quantitative budgets

iv) Daily reporting format from the site

The projects are monitored by Vice President assisted by other executives on a day-to-day basis to ensure timely supply of

materials, proper usage of the materials and progress of work as per the project schedule.

Project Marketing:

Marketing of the project would involve the analysis of the rate prevailing in the area so as to bring about a competitive price

structure that would fetch brand equity to the company.

The floor rate/benchmark rate will be decided by the company considering the premium so as to enhance the initial booking of

the premises.

Collaborations:

The Company has not entered into any technical Collaboration.

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INFRASTRUCTURE FACILITIES

Raw Materials

The Major raw materials used by the company for its various activities are as under:-

a. Cement

b. Steel

c. Sand.

Plant & Machinery

The cost of plant and machinery required for construction purpose is insignificant compared to the cost of the project. The

Company has already deployed adequate machinery and centering equipments at its present site. In addition to this, Company’s

offices are equipped with computers for accounting, designing, estimation and management of projects.

The additional requirement for plant and machinery would be met by the Company depending upon the size of the projects

and the needs.

Utilities

The main utilities required in the project are power and water.

Power

The Company will temporarily procure the Electricity from State Electricity Board for the proposed project.

Water

Water usage is largely project specific and is procured locally by way of boring wells at the site.

Manpower:

The total employee strength of the Company as on 31.03.2007 is 78. The details are as follows:

Sr. No Location No. of Employees Technical Non- technical Site (Chennai) Site (Bangalore) Site (Hyderabad)

1 Registered Office

(Hyderabad) 15 3 12 — — 3

2 Corporate Office

(Chennai) 59 39 20 41 — —

3 Bangalore 4 3 1 — 3 —

As and when required, the company recruits the manpower through placement agencies, paper advertisements and various HR

websites.

Purchase of Property

Except as stated in the section titled “Objects of the Issue” in this Letter of Offer, there is no property which the Company has

purchased or acquired or propose to purchase or acquire which is to be paid for wholly, or in part, from the net proceeds of the

Issue or the purchase or acquisition of which has not been completed on the date of this Letter of Offer, other than property in

respect of which:

� The contracts for the purchase or acquisition were entered into in the ordinary course of the business, and the contracts

were not entered into in contemplation of the Issue nor is the Issue contemplated in consequence of the contracts; or

� The amount of the purchase money is not material; or

� Disclosure has been made earlier in this Letter of Offer.

Property:

The Company owns an office space measuring 681 sq. ft. with undivided share of land 23.84 Square Yards, in the premises

bearing no.3-5-823 in Second Floor of the Commercial Complex, “Hyderabad Business Centre” Old MLA Quarters Road,

Near Basheerbagh, Hyderabad.

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Key Industry Regulations and Policies

There are no specific regulations in India governing the real estate industry. Certain significant legislation and regulations that

generally govern this industry in India are as under:

General

The Company is engaged in the business of real estate development. The Company undertakes construction by sub-contracting

all the activities. Thus most of the legal requirements are taken care by such sub contractors. For the purpose of executing the

work, the company may be required to obtain licenses and approvals depending upon the prevailing laws and regulations

applicable in the relevant state and/or local governing bodies like Municipal Corporations, Fire Department, Environmental

Department, etc. For details of such approvals please see “ Government Approvals” on page 95 of this Letter of Offer.

Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996

The Central Government enacted the Building and Other Construction Workers (Regulation of Employment and Conditions

of Service) Act, 1996 (“BOCWA”) as a comprehensive central legislation governing construction worker. The BOCWA aims

at regulating the employment and conditions of service of construction workers and to provide for their safety, financial health

among other welfare measures.

Under the BOCWA every employer employing ten or more building workers for building or construction work in the past

twelve months must apply for registration of the establishment. The BOCWA vests the responsibility of providing for immediate

assistance in case of accidents, old age pension, loans for construction of house, premia for group insurance, financial assistance

for education, to meet medical expenses, maternity benefits etc to beneficiaries under the BOCWA on the Building and Other

Construction Workers Welfare Board.

The BOWCA also prescribes health and safety measures for the construction workers. For this purpose comprehensive Central

Rules i.e. Building and other Construction Workers (Regulation of Service and Conditions of Service) Central Rules, 1998

have been notified by the Central Government.

Building and Other Construction Workers’ Welfare Cess Act, 1996

The Building and Other Construction Workers Welfare Cess Act, 1996 (“Cess Act”) came into force with effect from August

19, 1996 to provide for the levy and collection of cess on the cost of construction incurred by the employer with a view to

augmenting the resources of the Building and Other Construction Workers Welfare Board constituted under the BOCWA.

Under the Cess Act, cess amount is levied and collected from the employer, within 30 days of completion of construction

project, at such rate not exceeding two per cent but not less than one per cent of the cost of the construction.

Contract Labour (Regulation and Abolition) Act, 1970

The Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”) has been enacted to regulate the employment of contract

labour in certain establishments and to provide for its abolition in certain circumstances. The CLRA applies to every establishment

in which 20 or more workmen are employed or were employed on any day of the preceding 12 months as contract labour.

The CLRA vests the responsibility on principal employer of an establishment to make an application to the registered officer

in the prescribed manner for registration of the establishment. Likewise, every contractor to whom the CLRA applies is

required to obtain a license and not to undertake or execute any work through contract labour except under and in accordance

with the license issued.

To ensure the welfare and health of the contract labour, the CLRA imposes certain obligations on the contractor in relation to

establishment of canteens, rest rooms, drinking water, washing facilities, first aid, other facilities and payment of wages.

However, in the event the contractor fails to provide these amenities, the principal employer is under an obligation to provide

these facilities within a prescribed time period.

Employee State Insurance Act, 1948

The Employee State Insurance Act, 1948 (“ESIA”) aims to provide benefits for employees or their beneficiaries in case of

sickness, maternity, disablement and employment injury and to make provision for the same. Every factory or establishment

to which the ESIA applies is required to be registered in the manner prescribed in the ESI Act.

Under the ESIA every employee (including casual and temporary employees), whether employed directly or through a contractor,

who is in receipt of wages upto Rs. 6,500 per month is entitled to be insured.

38

The ESIA contemplates a contribution payable by the principal employer in the first instance and contribution payable by the

employee in respect of an employee to the Employee State Insurance Corporation. The ESIA further states that a principal

employer, who has paid contribution in respect of an employee employed by or through an immediate employer, shall be

entitled to recover the amount of the contribution so paid from the immediate employer, either by deduction from any amount

payable to him by the principal employer under any contract, or as a debt payable by the immediate employer.

Payment of Wages Act, 1936

The object of the Payment of Wages Act, 1936 (“PWA”) is to regulate payment of wages to certain classes of employed

persons. The PWA makes every employer responsible for the payment of wages to person employed by him. No deductions

can be made from the wages nor can any fine be levied on wages earned by a person employed except as provided under the

PWA.

Minimum Wages Act, 1948

The Minimum Wages Act, 1948 (“MWA”) came into force with an objective to provide for the fixation of a minimum wage

payable by the employer to the employee. Under the MWA, every employer is mandated to pay the minimum wages to all

employees engaged to do any work skilled, unskilled, manual or clerical (including out-workers) in any employment listed in

the schedule to the MWA, in respect of which minimum rates of wages have been fixed or revised under the MWA.

Workmen’s Compensation Act, 1923:

The Workmen’s Compensation Act, 1923 (“WCA”) has been enacted with the objective to provide for the payment by certain

classes of employers to their workmen or their survivor’s compensation for industrial accidents and occupational diseases

resulting in death or disablement.

The WCA makes every employer liable to pay compensation in accordance with the WCA if a personal injury/disablement/

loss of life is caused to a workman (including those employed through a contractor) by accident arising out of and in the course

of his employment. In case the employer fails to pay compensation due under the WCA within one month from the date it falls

due the Commissioner may direct the employer to pay the compensation amount along with interest and may also impose a

penalty.

Payment of Gratuity Act, 1972

The Payment of Gratuity Act, 1972 (“PGA”) was enacted with the objective to regulate the payment of gratuity, to an employee

who has rendered for his long and meritorious service, at the time of termination of his services. Gratuity is payable to an

employee on the termination of his employment after he has rendered continuous service for not less than five years:

a. on his/her Superannuation;

b. on his/her retirement or resignation;

c. on his/her death or disablement due to accident or disease (in this case the minimum requirement of five years does not

apply).

Payment of Bonus Act, 1965

The Payment of Bonus Act, 1965 (“PBA”) was enacted with the objective of providing of payment of bonus to employees on

the basis of profit or on the basis of productivity. The provisions of the PBA ensure that a minimum annual bonus is payable

to every employee regardless of whether the employer has made a profit or a loss in the accounting year in which the bonus is

payable. Under the PBA every employer is bound to pay to every employee, in respect of the accounting year, a minimum

bonus which is 8.33% of the salary or wage earned by the employee during the accounting year or Rs.100, whichever is higher.

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPFA”) was introduced with the object to institute

provident fund for the benefit of employees in factories and other establishments. The EPFA empowers the Central Government

to frame the “Employee’s Provident Fund Scheme”, “Employee’s Deposit linked Insurance Scheme’ and the “Employees’

Family Pension Scheme” for the establishment of provident funds under the EPFA for the employees. The EPFA also prescribes

that contributions to the provident fund are to be made by the employer and the employee.

39

REGULATION OF FOREIGN INVESTMENT

Foreign Ownership

Subject to certain conditions and guidelines, the Economic Policy and FEMA permit up to 100% foreign direct investment in

development of townships, infrastructure and development projects which include construction of houses, commercial, premises,

hotels, resort, hospitals, educational institutions, recreational facilities and city and regional level infrastructure.

Investment by Foreign Institutional Investors

Foreign Institutional Investors (“FIIs”) including institutions such as pension funds, investment trusts, asset management

companies, nominee companies and incorporated, institutional portfolio managers can invest in all the securities traded on the

primary and secondary markets in India subject to certain restrictions. FIIs are regulated by FEMA and SEBI. FIIs are required

to obtain an initial registration from the SEBI and a general permission from the RBI to engage in transactions regulated under

FEMA. FIIs are required to comply with the provisions of the SEBI (Foreign Institutional Investors) Regulations, 1995, as

amended from time to time. The initial registration and the RBI’s general permission together enable the registered FII to buy

(subject to the ownership restrictions discussed below) and sell freely securities issued by Indian companies, to realise capital

gains or investments made through the initial amount invested in India, to subscribe or renounce rights issues for shares,

appoint a domestic custodian for custody of investments held and to repatriate the capital, capital gains, dividends, income

received by way of interest and any compensation received by way of interest and any compensation received towards sale or

renunciation of rights issues of shares.

Ownership restrictions of FIIs

Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis should not exceed 24%

of post-issue paid-up capital of the company. However, the limit of 24% can be raised up to the permitted sectoral cap for that

company after approval of the board of directors and shareholders of the company. The offer of equity shares to a single FII

should not exceed 10% of the post-issue paid-up capital of the Company or 5% of the total paid-up capital in case such sub-

account is a foreign corporate or an individual. In respect of an FII investing in equity shares of a company on behalf of its sub-

accounts, the investment on behalf of each sub-account shall not exceed 10% of the total issued capital of that company.

Quality Control System

The Company recognizes quality as crucial differentiator in the industry it operates in. Keeping in line with this principle, the

Company is meeting the quality control norms laid down by the markets.

The Company believes in maintaining quality for all the services it provides with a focus on Quality and Innovation. Towards

this the company has obtained ISO 9001:2000 certification from Moody International Certification Limited on 20th April

2006 vide certificate no. 29156 and the same is valid till 19th April 2009.

Insurance

The Company has taken the following insurance policies for its assets from National Insurance of India:

Sr. No Property/risk insured Sum Amount Insured

(Rs. Lakhs)

Validity till 20/8/2007

Policy No:

500502/48/05/1500001263

1. Fixed assets 3.02

2. Electronic equipments 2.20

3. All other contents 4.62

4. Infidelity/dishonesty 0.16

5. Machinery breakdown 1.60

6. Baggage 0.10

7. Wages and salaries (in transit from/to the offices) 0.25

Total 11.95

40

The Company has also taken Insurance Policy for its proposed project at Navalur, Chennai for its assets from IFFCO-TOKIO

General Insurance Company Ltd.:

Sr. No Property/risk insured Sum Amount Insured

(Rs. Lakhs)

Validity till 26/12/2007

Policy No:

91/ICA/0506/CS/000009

1. Materials or items supplied by the principal & contract value including of cost of construction 6442.00

2. Construction Plant & machinery 10.00

3. Earthquake 6442.00

4. Third party Liability incase of accidents arising out of one event 20.00

Total 12914.00

3. History and Corporate Structure of the Company

(i) History and major events

The Company was incorporated on 17th October, 1994 as a Public Limited Company with the Registrar of Companies,

Andhra Pradesh at Hyderabad for carrying on the business of Shipping, Real Estate Promotion and Development and

Construction of buildings, commercial complexes/ residential complexes, plots, farm houses, etc. The certificate of

commencement of business was obtained on 4th November 1994.

The company was originally promoted by Srinivasa Hatcheries Group and Mr. Challa Prakash. Presently, the promoters of the

Company are Mr. Challa Prakash, Mr. Challa Suresh, Mr. C. Ramakrishna, Mr. E Bhaskar Rao and Sri Krishnadevaraya

Hatcheries Private Limited. The company made its maiden Public issue in May 1995 to raise a capital of Rs 75 lakhs and got

its shares listed on Bombay, Hyderabad and Madras Stock Exchanges. The shares of the Company were delisted from Madras

Stock Exchange with effect from 2nd April 2004.

On 10th April 2003, Srinivasa Hatcheries Group has divested its holding in favour of Mr. Challa Prakash, Mr. Challa Suresh,

Mr. E Bhaskar Rao and M/s. Sri Krishnadevaraya Hatcheries Private Limited (Acquirers). The Acquirers have complied with

SEBI (SAST) Regulations, 1997 for the said acquisition.

In 1994, the Company has identified tremendous opportunity in the pressing need for several companies search for corporate

office space in Chennai. Out of this, came up its maiden venture capital towers, which is an aesthetically designed 1,40,000 sft

building with all office amenities like Central air conditioning, Comfortable car parking, etc., at a central location in

Nungambakkam area in Chennai. Immediately after that, in the year 1996 the company took up another project, a 30,000 sq.ft.

air conditioned building at G.N. Chetty Road, T. Nagar, which was sold to an American Multinational company at a sale value

of Rs 1120 Lakhs.

Major Events of the Company

� Srinivasa Shipping & Property Development Limited (SSPDL) was incorporated in 1994 and made its maiden Public

Issue in May 1995 to raise a capital of Rs. 75 lakhs. The Company has commenced its commercial operations in January

1995.

� In the year 1995-96 the Company undertook the construction of Capital Towers Project at Nungambakkam , Chennai.

The project was funded through proceeds of Public Issue, promoters contribution, loan from Global Trust Bank, Fixed

Deposits , advance from customers and internal accruals. The project was completed in October 1998.

� In the year 1995, the Company has setup a Wind Farm Project at Vadavalli village near Coimbatore with 1.8 M.W

capacity at a total outlay of Rs 9.00 Crores. Of which, Rs 4.56 Crores was funded by way of a rupee loan by Indian

Renewable Energy Development Agency (IREDA) and the balance was funded out of internal accruals. The said project

was commissioned and synchronized with Tamil Nadu Electricity Board Grid on 29th March, 1996. The said project

was divested subsequently by way of slump sale with a ROI of over 20% to the Company. The windfarm was subsequently

sold on slump sale basis for Rs.404 lakhs after obtaining approval of the Members at the EGM held on 31st March 2000.

� In the year 1996-97, the Company undertook construction of Fuller Towers, Chennai. The project was funded by fixed

deposits, unsecured loans and internal accruals. The project was completed in August 1999.

41

� There was a change in the management of the company and re-constitution of the board of directors with effect from

June 2004.

� During the phase of the IT slump, the company ‘s activities took a subdued tone due to lack of appropriate investment

opportunities. The company did not undertake any project during the period 2000-2005.

� The company has four major projects on hand:

- Alpha City - IT Park at Navalur, Chennai: 6,00,000 sq. ft. Complex for IT Industry.

- Chennai Central, a 1,20,000 sq. ft. shopping mall, is being developed for M/s. Anchor Malls Pvt Ltd.

- The Retreat, a residential villa project at Bangalore.

- IT Park at Perungudi, Chennai.

Changes in Registered Office

From To With effect from

3-5-823, 3rd Floor, Hyderabad Business 3-5-823, 4th Floor, Hyderabad Business Center, 20th June 1995.

Center, Hyderguda, Hyderabad - 500 029 Hyderguda, Hyderabad - 500 029

3-5-823, 4th Floor, Hyderabad Business ‘Srinivasa House’, 1028, Road No.45, Jubilee 19th July 2002

Center, Hyderguda, Hyderabad - 500 029 Hills, Hyderabad - 500 033

‘Srinivasa House’, 1028, Road No.45, Jubilee 8-2-595/3/5, Eden Gardens, Road No.10, 20th August 2005

Hills, Hyderabad - 500 033 Banjara Hills, Hyderabad - 500 034.

8-2-595/3/5, Eden Gardens, Road No.10, 8-2-595/3/6, Eden Gardens, Road No.10, 31st January 2007

Banjara Hills, Hyderabad - 500 034. Banjara Hills, Hyderabad - 500 034.

Changes in Memorandum of Association since incorporation

Date of Shareholders Approval Changes

11th November 1994 The authorized share capital of the Company was increased from Rs.1,00,00,000

comprising 10,00,000 Equity Shares of Rs.10 each to Rs.3,25,00,000 comprising

32,50,000 Equity Shares of Rs.10 each.

14th February 1996 The Other Objects of the company was amended to include the following object:

“To generate, receive, produce, improve, buy, sell, resell, acquire, use, transmit,

accumulate, employ, distribute, protect, supply or otherwise to deal in electric power

and in all its branches at such place or places as may be permitted by appropriate

authorities by establishment of wind power plants, solar power plants, gas based and

other power plants based on any source of energy as may be developed or invented in

future.

To construct, laydown, establish, promote, erect, build, install, commission, carry

out and run power substations, workshops, repair shops, transmission lines,

accumulators for the purpose of conservation, distribution and supply of electricity

to participating industries, state electricity boards and other boards for industrial,

commercial, domestic, public and other purposes and also to provide regular services

for repairing and maintenance of all distribution and supply lines.

To acquire concessions, facilities or licenses from electricity boards, government,

semi government or local authorities for generation, distribution, production,

transmission or use of electric power and to take over along with all movable and

immovable properties, the existing facilities on mutually agreed terms from aforesaid

authorities and to do all incidental acts and things necessary for the attainment of

foregoing objects.”

29th September 1997 The authorized share capital of the Company was increased from Rs.3,25,00,000


90,00,000 Equity Shares of Rs.10 each.

42

29th September 2005 The authorized share capital of the Company was increased from Rs.9,00,00,000


1,50,00,000 Equity Shares of Rs.10 each.

14th August 2006 The authorized share capital of the Company was increased from Rs.15,00,00,000

comprising 1,50,00,000 Equity Shares of Rs.10 each to Rs.25,00,00,000 comprising

2,50,00,000 Equity Shares of Rs.10 each.

(ii) Main Objects

The main objects of the Company, as set out in its Memorandum of Association are as follows.

1) To carry on in all their respective branches all or any of the businesses of builders, developers, masonry and general

construction contractors and among other things to construct, develop and turn to account any land acquired or belonging

to the company or in which the company is interested and to construct, alter, demolish, decorate, execute, carry out,

equip, furnish, improve, maintain, pull down, repair and work buildings, structures and erections of all kind, bridges,

roads, water tanks, waterways, runways, railways, roadways, tramways, docks, harbours, wharves, canals, water-courses,

reservoirs, embankments, irrigations, reclamations, sewage, drainage, and other sanitary works, water, gas, electric and

other supply works, houses, buildings and erections of every kind, and to carry on any other business in connection with

the above mentioned business that are customarily or usually carried on in connection therewith or naturally incidental

thereto.

2) To carry on the business of operation of ships, to establish, maintain and operate shipping and all ancillary services, to

carry on the business of ship owners and of carriage of mails, passengers, goods and cattle either by its own ships,

vessels and other forms of water transportation, or by or over the ships, vessels, and modes of water transportation of

others and to charter, hire, equip, load on commission, or otherwise use, repair, let out on hire, and trade in ships or other

vessels and to establish and maintain any shipping lines of ships and other sea going vessels between any ports in India

or elsewhere for carrying passengers or cargo or both on high seas, Inland waterways, or other waters subject to such

approvals as may be required in the matter.

The Object Clause of the Memorandum of Association of the Company enables it to undertake its present and

proposed activities. Furthermore, the activities the Company has been carrying out until now is in accordance

with the objects of the Memorandum of Association.

SWOT Analysis

Strengths

� The Company has professionals with experience at various levels in the company.

� Proven expertise in building commercial complexes

� Aggressively pursuing projects in the growing markets of Chennai, Bangalore and Hyderabad.

Weaknesses

� To develop a robust fund management system in line with planned increase in scale of operations

� Inability to raise funds in timely manner under the terms acceptable to the Company.

Opportunities

� Economic growth and development.

� Increased focus of Government on infrastructure development and construction sector.

� Indian real estate has huge potential demand in almost every sector especially commercial, residential, retail, industrial,

hospitality, healthcare etc.

� Commercial office space requirements is led by burgeoning outsourcing and Information Technology Industry. The

leaders of the IT/ITES sector alone is expected to be 150 million sq. ft. space across the major cities by 2010. (Source:

Annual Report of the Company for the FY 2005-06)

Threats

� Increased competition from domestic as well as foreign players

43

� Changes in Government policy as well as market dynamics.

� Increase in interest rates of housing finance by banks

� Existence of Urban Ceiling act in some states like Karnataka and Andhra Pradesh

� Higher stamp duties

� Increasing cost/ shortage of key construction materials like cement, steel, etc.

(iii) Subsidiaries of the Company

The following are the subsidiary companies of SSPDL

a. SSPDL REAL ESTATES INDIA PVT LTD

Constitution: Private Limited incorporated in Andhra Pradesh.

Date of Incorporation: 17th February, 2007.

Board of Directors:

Mr. Prakash Challa

Mr. Suresh Challa

Mr. E.Bhaskar Rao

Nature of activity: Property Development, Construction and Real Estate.

Shareholding Pattern

Name No. of shares of Rs.10/- each % age

Mr. Prakash Challa 10 0.10

Mr. Suresh Challa 10 0.10

Mr. E.Bhaskar Rao 10 0.10

Srinivasa Shipping and Property Development Limited 9970 99.70

Total 10000 100.00

Financial Highlights

As the company was incorporated in February 2007, no financial data is available.

b. SSPDL REAL ESTATES INDIA PVT LTD



Board of Directors:

Mr. Prakash Challa

Mr. Suresh Challa

Mr. E.Bhaskar Rao








Total 10000 100.00

44



c. SSPDL INFRASTRUCTURE DEVELOPERS PVT LTD



Board of Directors:

Mr. Prakash Challa

Mr. Suresh Challa

Mr. E.Bhaskar Rao








Total 10000 100.00



d. SSPDL INFRA PROJECTS INDIA PVT LTD



Board of Directors:

Mr. Prakash Challa

Mr. Suresh Challa

Mr. E.Bhaskar Rao








Total 10000 100.00



45

e. SSPDL MATRIX TOWERS PVT LTD



Board of Directors:

Mr. Prakash Challa

Mr. Suresh Challa

Mr. E.Bhaskar Rao








TOTAL 10000 100.00



f. SSPDL RESORTS PVT LTD



Board of Directors:

Mr. Prakash Challa

Mr. Suresh Challa

Mr. E.Bhaskar Rao

Nature of activity: Property Development, Construction, Real Estate and Resorts.







Total 10000 100.00



(iv) Shareholder agreements

There is no shareholders agreement existing as on date.

(v) Other agreements

Except the Agreements as mentioned under the sub-heading “Material documents and Contracts “ and the contracts/agreements

46

entered into the ordinary course of business on or intended to be carried on by the Company, the Company has not entered into

any other Agreement/Contract.

The company has entered into the following agreements with various parties, the brief details of which are mentioned below.

(I) MoU entered into with Glomac Berhad, Malaysia

The company has entered into a MoU with Glomac Berhad, Malaysia on 5th May, 2006 to form a Special Purpose Company

with 40: 60 shareholding (40% with the company and 60 % with Glomac Berhad) for submitting the EOI and RFQ to Government

of Andhra Pradesh for development of Integrated Township. The Parties would enter into an agreement on awarding of the

project in their favour. The responsibility of Glomac Berhad is Conceptual Design, Planning, Project Execution, Sales &

Marketing and Project Funding and the responsibilities of the Company are Local Liason, Project Execution, Sales & Marketing

and Project Funding.

The MOU shall be governed in accordance with the laws of India and courts in Hyderabad and shall have exclusive jurisdiction

to adjudicate disputes arising from the terms therein.

There is no relation between any of the parties to the agreements

(II) Lease agreement entered into between M/s Sri Satya Sai Constructions (Sole Proprietary Concern) (herein referred

to as the ‘Lessor‘) and M/s Srinivasa Shipping and Property Development Limited (herein referred as the ‘Lessee‘)

dated 2nd June 1997.

The company has entered into a lease agreement with Sri Satya Sai Constructions on 2nd June 1997 for its corporate office

located at Nos. 801 & 802, Door No. 11, 8th Floor, Challa Mall Building, Thiagaraya Road, T Nagar, Chennai admeasuring

1946 sq. ft for a monthly rent of Rs. 48,650. The validity of the agreement was for a period of 36 months with effect from 1st

April 1997 which can be further renewed for a period of 24 months on mutually agreed terms and conditions with an increase

of 30 % over the present rent from the 37th month. The company has to pay a sum of Rs. 5,00,000 towards a refundable non-

interest bearing deposit to Sri Satya Sai Constructions.

The company vide its letter dated 8th May, 2006 has renewed the agreement for a further period of 3 years commencing from

1st April 2006 with the same terms and conditions as agreed under the terms of the lease dated 2nd June 1997.

The company has entered into the above lease agreement with Mr. Challa Prakash (Sole proprietor of Sri Satya Sai Constructions)

who is also the Managing Director of M/s Srinivasa Shipping and Property Development Limited

(vi) Financial Partners

The company does not have any financial partners.

(v) Strategic Partners

The Company does not have any strategic partners.

47

4. Management

The company functions under the control of Board of Directors. The day-to-day affairs are looked after by qualified key

personnel, under the supervision of the Managing Director.

(i) THE BOARD OF DIRECTORS OF THE COMPANY

Name of Director, Fathers Age Qualifi- Expe- Appointment in the company List of other

Name, Designation, Occupation (Years) cation rience and the date of expiration of Directorships

the current term of office

Mr. Challa Prakash 54 M.Sc. 30 17th October 1994 Intelligent Software Solutions Pvt Ltd

(S/o. Mr. Challa Kondaiah) years . Re- appointed as Managing SSPDL Retreat Pvt Ltd

Managing Director Director for a period of 5 years SSPDL Real Estates India Pvt Ltd

Promoter Director w.e.f 23rd October 2004. SSPDL Realty India Pvt Ltd

Occupation: Business SSPDL Infrastructure Developers Pvt Ltd

Address: Flat No.5A, 5th Floor, No. 9, SSPDL Infra Projects India Pvt Ltd

West Mada Street, Sri Nagar Colony, SSPDL Matrix Towers Pvt Ltd

Chennai - 600 015 SSPDL Resorts Pvt Ltd

Mr. E. Bhaskar Rao 45 B.Com 11 24th October 1994 Srinivasa Foods and Feeds Pvt Ltd

(S/o. Mr. Edala Varda Rao) years Liable to Retire by rotation Srinivasa Agritech Pvt Ltd

Director SSPDL Ventures Pvt Ltd

Promoter Director Kansas Feeds Pvt Ltd

Occupation: Business Sri Srinivasa Aqua Feeds Pvt Ltd

Address: Plot No. 1086, Road No. 55, Sri Jagapati Farms Pvt Ltd

Jubilee Hills, Hyderabad - 500 035 Sri Krishnadevaraya Hatcheries Pvt Ltd

Monisha Sri Durga Farms Pvt Ltd

Sahiti Farms Pvt Ltd

Pallavi Perfumes and Cosmetics Pvt Ltd

Jaagruthi Foundations Pvt Ltd

Sri Lakshmi Narasamma Minerals Pvt Ltd

Mojasa Fragrance and Cosmetics Pvt Ltd

Mojasa Enterprises Pvt Ltd

Sahiti Suharika Properties Pvt Ltd

Sahiti Suharika Estates Pvt Ltd

SSPDL Retreat Pvt Ltd

Jagruthi Ventures Pvt Ltd

SSPDL Real Estates India Pvt Ltd

SSPDL Realty India Pvt Ltd

SSPDL Infrastructure Developers Pvt Ltd

SSPDL Infra Projects India Pvt Ltd

SSPDL Matrix Towers Pvt Ltd

SSPDL Resorts Pvt Ltd

Mr. Challa Suresh 46 B.E, MS 16 17th June 2004 SSPDL Ventures Pvt Ltd

(S/o. Mr. Challa Kondaiah) years Liable to retire by Rotation. Serenity Homes Pvt Ltd

Director Sunrise Homes Ltd

Promoter Director Neotrax Software Pvt Ltd

Occupation: Business SSPDL Retreat Pvt Ltd

Address: 216, Road No.19, SSPDL Real Estates India Pvt Ltd

Prashasan Nagar, Jubilee Hills, SSPDL Realty India Pvt Ltd

Hyderabad-500 033 SSPDL Infrastructure Developers Pvt Ltd

SSPDL Infra Projects India Pvt Ltd

SSPDL Matrix Towers Pvt Ltd

SSPDL Resorts Pvt Ltd

48

Mr. S. Suryanarayana 41 B.Com, 10 17th June 2004 State Bank of Hyderabad

(S/o. Mr. S Krishna Murthy) CA years. Liable to retire by Rotation.

Director

Independent Director

Occupation: Professional

Address: C1, Millennium House,

8-2-601/B/C1, Near Jaheer Nagar

Cross Roads, Road No.10,

Banjara Hills, Hyderabad - 500 034

Mr. C. Ramakrishna 55 MBA 30 17th June 2004 Pallavi Perfumes and Cosmetics Pvt Ltd

(S/o. Mr.. C. Veeraju) years Liable to retire by Rotation. New York Fragrance Inc

Director

Promoter Director

Occupation: Business

Address: Plot No. 1142/A, Road No. 54,

Jubilee Hills, Hyderabad - 500 033

Mr. K.Akmaluddin Sheriff 45 B.Com, 10 14th August 2006 Crescent Information and Management

(S/o Mr.K.K.Sheriff) MBA. years Liable to retire by Rotation. Centre Pvt Ltd.

Director

Independent Director

Occupation: Business

Address: Flat No. 32, Lakeview Apartment

116, Gangadhar Chetty Road, Ulsoor,

Bangalore - 560 042.

Brief Profile of the Board of Directors is given below.

Mr. Challa Prakash, aged 54, the Managing Director of the Company is an M.SC having a vast experience of over 30 years

in the construction, banking, aquaculture and pisciculture Industry. Having worked for 13 years as senior manager in Nationalised

Banks, he commenced the business of exports of tuna fish through tuna longliners and shrimp processing.

Mr. Challa Prakash has started Construction activities since July 1993 through Sri Satya Sai Constructions, a sole proprietor

ship concern for property development in Chennai and Hyderabad and has successfully undertaken the construction of 12

residential/commercial complexes spanning an area of over 4,00,000 sft (approximately).

Mr. E. Bhaskar Rao, aged about 45 years in on the Board of the Company since inception. He is a Commerce graduate. He

has varied experience in the business of poultry breeding, real estate and construction spanning more than a decade.

Mr. Challa Suresh, aged about 46 years had done his Bachelors Degree in Mechanical Engineering from Jawaharlal Nehru

Technology University, India and Masters in Industrial Engineering from University of Texas. He has varied experience

spanning over 16 years in the areas of software, manufacturing and real estate development.

Mr. S. Suryanarayana , aged about 41 years had done his Graduation in Commerce and is a Fellow Member of the Institute

of Chartered Accountants in India. He is practicing as a Chartered Accountant and has a decade of experience in the areas of

Finance and Taxation.

Mr. C. Ramakrishna, aged about 55 years, holds a Masters Degree in Business Administration. He has varied experience of

30 years in the areas of perfumes and cosmetic business in USA and India.

Mr. K. Akmaluddin Sheriff, aged about 45 years holds a Masters Degree in Business Administration. He has experience in

the field of construction and real estate field. He manages firms and is actively engaged in real estate in Bangalore.

(ii) Details of borrowing powers

The members of the company have passed a resolution under the provisions of Section 293(1)(d) of the Companies Act, 1956

in the Annual General Meeting held on 14th August 2006 enabling the Board of Directors to borrow from time to time any

sum or sums of money so that the total amounts of monies so borrowed at any time shall not exceed the sum of Rs. 200 Crores

(Rupees Two Hundred Crores Only) apart from the temporary loans obtained from Company’s bankers in the ordinary course

of business.

49

Compensation of Managing Directors/Whole time Directors/Non Executive Directors for the year ended 31st March

2007.

Name of the Director Designation Sitting Fees Commission Salary/Bonus

Mr. Challa Prakash Managing Director NA Nil 12,00,000

Mr. E. Bhaskar Rao Director Rs.87,500 Nil Nil

Mr. Challa Suresh Director Rs.87,500 Nil Nil

Mr. S. Suryanarayana Rao Director Rs.87,500 Nil Nil

Mr. C. Ramakrishna Director Nil Nil Nil

Mr. K Akmaluddin Sheriff Director Rs.87,500 Nil Nil

1. Appointment of Mr. Challa Prakash as Managing Director

A. Compensation of Managing Director

Name Challa Prakash

Designation Managing Director

Period 5 years w.e.f. 23.10.2004

Remuneration (a) SALARY: Rs. 1,00,000 per month including dearness andother allowances.

(b) PERQUISITES : In addition to the salary, Mr. ChallaPrakash, shall be entitled to the following perquisites:-

* Contribution to provident fund, super-annuation fund orannuity fund to the extent these either singly or put togetherare not taxable under the Income Tax Act, 1961.

* Gratuity payable at a rate not exceeding half a month’s salaryfor each completed year of service, and

* Encashment of leave at the end of the tenure.

There are no service agreements with the directors of the company providing for benefits upon termination of tenure.

(iii) Corporate Governance

The Company has complied with SEBI Guidelines in respect to Corporate Governance especially with respect to broad basingits Board of Directors and setting up of necessary committees such as Audit Committee, Shareholders/Investor GrievanceCommittee and Compensation Committee and made necessary disclosures as required under Corporate Governance in itsAnnual Report for the Financial Year 2005-06.

Company’s philosophy

The Company’s philosophy of Corporate Governance is aimed at strengthening the confidence among shareholders, customers,employees and ensuring a long term relationship of trust by maintaining transparency and disclosures.

Constitution of Board of Directors

The Board comprises of 4 Promoter Directors and 2 Non-executive independent directors.

Board of Directors of the Company

Name of the Director Designation Executive/Non-Executive/Independent

Mr. Challa Prakash Managing Director Executive

Mr. E. Bhaskar Rao Director Non-Executive

Mr. C. Ramakrishna Director Non-Executive

Mr. Challa Suresh Director Non-Executive

Mr. S. Suryanarayana Director Non-Executive & Independent

Mr. K. Akmaluddin Sheriff Director Non-Executive & Independent

50

Committees of the Board

Audit Committee

The Audit committee comprises of Mr. S. Suryanarayana, a Chartered Accountant as Chairman and Mr. E. Bhaskar Rao,Director and Mr. K Akmaluddin Sheriff, Director as the members. The scope of this committee is to oversee the Company’sfinancial reporting process and ensure correct, adequate and credible disclosure of financial information; recommendingappointment and removal of external auditors and fixing their fees, reviewing with Management the annual financial statementswith special emphasis on accounting policies and practices, compliances with accounting standards and other legal requirementsconcerning financial statements, reviewing the adequacy of the audit and compliance functioning including their policies,procedures, techniques and other regulatory requirements and reviewing the adequacy of internal control systems and significantaudit findings. The terms of reference of the Committee cover the matters specified under Clause 49 of the Listing agreementread with Section 292A of the Companies Act, 1956. The Committee periodically interacts with the statutory auditors, reviewsthe Company’s financial and risk management policies and adequacy of internal controls with the management and is responsiblefor effective supervision of the financial reporting process and compliance with financial policies.

Shareholders and Investor Grievances Committee

This committee deals with the transfer of shares, issue of duplicate share certificates, dematerialization of shares, and allmatters concerning shareholders. The committee comprises of three members i.e. Mr. Suresh Challa as the Chairman, Mr. EBhaskar Rao and Mr. S. Suryanarayana as members for complying with the requirements of the Securities and ExchangeBoard of India and requirements of the listing agreement with the stock exchanges.

Remuneration Committee

The Committee consists of 3 members, Mr.E Bhaskar Rao, Chairman, Mr. S Suryanarayana and Mr.Suresh Challa. TheCommittee determines on behalf of Board and Shareholders, the Company’s policy on specific remuneration packages forExecutive Directors and Non-Executive Directors, including pension rights and any compensation payment. The terms ofreference of the Committee shall be to fix and approve the payment of remuneration of managerial personnel from time totime and also covers the matters specified under Clause 49 of the Listing Agreement. The Committee also functions asRemuneration Committee under Schedule XIII of the Companies Act, 1956. The Committee recommends to the Board regardingremuneration to be paid to the Board Members and the grant of stock options to the employees based on an evaluation of theirperformance, potential for future contributions, commitment shown to work, conduct and such other factors as may be specified.

Compliance with the Listing Agreement

The Company confirms that it has complied with all the applicable clauses of the Listing agreement. The Company furtherconfirms that it has complied with Clause 49 of the listing agreement with respect to corporate governance.

iv. Details of Shares held by the Directors

Names No. of shares held % of post issue shareholding

Mr. Challa Prakash 8,14,490 6.30

Mr. E. Bhaskar Rao 6,92,500 5.36

Mr. C. Ramakrishna 1,25,000 0.97

Mr. Challa Suresh 2,59,200 2.00

Mr. S. Suryanarayana 100 Negligible

Mr. K. Akmaluddin Sheriff — —

(v) Interest of Directors

All the Non Executive Directors may be deemed to be interested to the extent of fees payable to them for attending the meetingof the Board or Committee thereof, Commission on net profits and reimbursement of traveling and other incidental expenses,if any, for such attendance as per the Articles of Association of the Company.

All the Directors of the Company shall be deemed to be interested to the extent of shares held by them and/or their andrelatives which may be allotted to them out of the present issue and are deemed to be interested to the extent of remunerationand perquisites being drawn by them from the Company.

The whole time Directors are interested to the extent of remuneration paid to them for services rendered to the Company.

Further, the Whole time Directors are interested to the extent of equity shares held by them and also to the extent of any

dividend payable to them and other distributions in respect of the said equity shares.

Mr. Challa Prakash and Mr. E. Bhaskar Rao, directors of the company are also partners of M/s Sri Satya Sai Constructions

(Firm), which has recently entered into a development and construction agreement with the Company for construction of

51

residential villas at Bangalore. Necessary approvals u/s 297 of the Companies Act, 1956 has been received from the Regional

Director, Ministry of Company Affairs approving the said agreement.

Except as stated above, the company has not entered into any contract, agreements or arrangements during the preceding two

years from the date of the Letter of Offer in which the directors are interested directly or indirectly and no payments have been

made to them in respect of these contracts, agreements or arrangements which are proposed to be made to them.

Changes in the Board of Directors during the last three years

Sl. No. Name of the Director Designation held Reasons of Change Date of Change Reason for Change

1 Mr.C.Jagapati Rao Chairman Resignation 17.06.2004 Resignation due to change in management

2 Mr. C. Suresh Rayudu Director Resignation 17.06.2004 Resignation due to change in management

3 Mr. Sudit K Parekh Director Resignation 17.06.2004 Resignation due to change in management

4 Mrs. E. Padmaja Director Resignation 17.06.2004 Resignation due to change in management

5 Mr. Challa Suresh Additional Director Appointment 17.06.2004 Appointed as Additional Director

6 Mr. C. Ramakrishna Additional Director Appointment 17.06.2004 Appointed as Additional Director

7 Mr. S. Suryanarayana Additional Director Appointment 17.06.2004 Appointed as Additional Director

8 Mr. Challa Suresh Director Appointment 30.09.2004 Appointed as Director

9 Mr. C. Ramakrishna Director Appointment 30.09.2004 Appointed as Director

10 Mr. S. Suryanarayana Director Appointment 30.09.2004 Appointed as Director

11 Mr. K Akmaluddin Sheriff Additional Director Appointment 31.12.2005 Appointed as Additional Director

12 Mr. K Akmaluddin Sheriff Director Appointment 14.08.2006 Appointed as Director

ORGANISATION CHART

BOARD OF DIRECTORS

COMPANY

SECRETARY

MANAGING DIRECTOR

VICE PRESIDENT CHIEF ENGINEER

ACCOUNTS

OFFICERCORPORATE

OFFICE

ALPHA

NAVALURRETREAT

BANGALORE

CHENNAI CENTRAL

NUNGAMBAKKAM

ACCOUNTS MANAGER MARKETING MANAGER PROJECT MANAGER PROJECT MANAGER PROJECT MANAGER

ACCOUNTS OFFICER SITE ENGINEER

LIASON OFFICER

52

Key Managerial Personnel

A brief profile of the key managerial personnel forming part of Senior Management is set out below:

Sr. Name Age Designa- Qualifi- Exp. Exp. Functional Date of Past

No. tion cation (yrs.) (in the Co.) Responsibility joining Experience

1 K.M. Satish 44 Vice-President B.Tech 24 1 year Project Management 01.01.06 Project Management

(Projects) (Civil) 4 months and Operations Consultant

2 Vishwanath Ganti 31 Company B.Com, 7 1 year Secretarial and 28.09.05 Company Secretary

Secretary ACS, Grad 8 months legal matters Ocean Park Multi

CSA, MBA Tech Ltd.

Podar Infotech

Pvt Ltd

3 K.Veeraraghava Chari 76 Chief Fellow of 53 13 Design,construction and 01.03.94 AGM, BHEL/

Engineer the Institute years co-ordination of projects Manager N.T.Patel

of Engineers Co.

4 Ramesh R. 36 Accounts B.Com., 15 11 Accounts, Finance and 25.03.96 Executive

Manager DCA years Taxation Operations,

ITI Pioneer AMC

5 Ramajeyam P. 29 Site Engineer Diploma in 9 1 year Incharge of site 07.10.05 Site Engineer,

Civil 7 months supervision Qualtech Engineers

Engineering Pvt. Ltd.

6 Sentil Kumar. N 34 Project B.E. 10 1 year Quantity surveying 04.04.06 Planning Engineer,

Coordinator (Civil) Planning and designing Qualtech Engineers

Pvt. Ltd.

7 Sundar.S 44 Chief Financial MCom, 24 10 Finance & 07.06.06 Finance Manager &

Officer ACS, months Accounts Company Secretary -

ICWA Gorden Woodroffe Ltd.

8 Ananth.N 42 Legal Officer B.A.B.L. 42 9 months Legal Issues 15.07.06 Senior Legal Officer -

Exceed International

Pvt.Ltd.

9 Balaji Narasimhan 43 AGM- B.Tech 17 3 months Marketing & Sales 15.02.07 Advertising Account

Marketing (Chemical) Manager - Everest

Advertising

10 Shankar.A.S. 42 AGM - Projects B.E. Civil 21 5 months Handling Ongoing projects 15.12.06 Construction Manager -

Shapoorji Pallonji & Co.

- Mumbai and in ETA

STAR - Saudi Arabia.

The above-mentioned employees are on the rolls of the Company as permanent employees.

Mr. Challa Suresh is the brother of Mr. Challa Prakash. Other than the above, none of the directors or key managerial personnel

are related to each other.

No Director or Member of Senior Management has been selected pursuant to any arrangement/understanding with major

shareholders/customers/suppliers/any person referred to under the heads “The Board of Directors of the Company” and “Key

Managerial Personnel”.

53

Shareholding of the Key Managerial personnel as on 31st March, 2007

Name No of shares held

K.M. Satish 100

Compensation paid to Key Managerial Personnel for the financial year 2006-07

Sr. No Name Compensation Per Annum

(Rs. in Lakhs)

1. K.M. Satish 12.00

2 Vishwanath Ganti 4.00

3 K.Veeraraghava Chari 1.54

4 Ramesh R. 1.20

5 Ramajeyam P. 1.20

6 Sentil Kumar. N 1.68

7 Sundar.S 8.40

8 Ananth.N 4.80

9 Balaji Narasimhan 4.80

10 Shankar.A.S. 6.50

Bonus or profit sharing plan of key managerial personnel.

The Company has not offered any bonus or project sharing plan to its key Managerial Personnel.

Changes in the key managerial personnel during the last three years

Following have been the changes in Key Managerial Personnel during the last three years.

Name Date of Joining Date of Resignation Designation Reason

K.M. Satish 01.01.06 - Vice President - (Projects) Appointment

Vishwanath Ganti 28.09.05 - Company Secretary Appointment

Ramajeyam P. 07.10.05 - Site Engineer Appointment

Sentil Kumar. N 04.04.05 - Project Co-ordinator Appointment

Loganathan. P 01.09.05 30.04.06 Project Manager Resignation

Ramanathan. S.K 19.09.05 30.04.06 Marketing Manager Resignation

Sundar.S 07.06.06 - Chief Financial Officer Appointment

Ananth.N 15.07.06 - Legal Officer Appointment

Balaji Narasimhan 15.02.07 - AGM-Marketing Appointment

Shankar.A.S. 15.12.06 - AGM - Projects Appointment

Employees

The total employee strength of the Company as on 31.03.07 is 78. The details are as follows:

Sr. No Location No. of Employees Technical Non- technical Site (Chennai) Site (Bangalore) Site (Hyderabad)

Registered Office

(Hyderabad) 15 3 12 — — 3

Corporate Office

(Chennai) 59 39 20 41 — —

Bangalore 4 3 1 — 3 —

Total 78

54

Disclosures Regarding Employees Stock Option / Employees Stock Purchase Scheme

The company currently has no Employees Stock Option Scheme.

Payment or Benefit to Promoters and Officers of the Company

No amount or benefit has been paid or given to the company’s officers since the incorporation of the company nor is intended

to be paid or given to any of the officer of the company except their normal remuneration and/or reimbursement for services

as Directors, Officers or Employees of the company or otherwise in accordance with the law.

5. PROMOTERS

SSPDL is promoted by Mr. Challa Prakash, Mr. E.Bhaskar Rao, Mr. Challa Suresh, Mr. C Ramakrishna & Sri Krishnadevaraya

Hatcheries Private Limited.

Mr. Challa Prakash, aged 54, the Managing Director of the Company is an M.SC having a

vast experience of over 30 years in the construction, banking, aquaculture and pisciculture

Industry. Having worked for 13 years as senior manager in Nationalised Banks, he commenced

the business of exports of tuna fish through tuna longliners and shrimp processing.

Mr. Challa Prakash has started Construction activities since July 1993 through Sri Satya Sai

Constructions, a sole proprietor ship concern for property development in Chennai and

Hyderabad and has successfully undertaken the construction of residential/commercial

complexes.

Mr. Challa Suresh, aged about 46 years had done his Bachelors Degree in Mechanical

Engineering from Jawaharlal Nehru Technology University, India and Masters in Industrial

Engineering from University of Texas. He has varied experience spanning over 16 years in the

areas of software, manufacturing and real estate development.

Mr. E. Bhaskar Rao, aged about 45 years in on the Board of the Company since inception. He

is a Commerce graduate. He has varied experience in the business of poultry breeding, real

estate and construction spanning more than a decade

Mr. C. Ramakrishna, aged about 55 years, holds a Masters Degree in Business Administra-

tion. He has varied experience of 30 years in the areas of perfumes and cosmetic business in

USA and India.

SRI KRISHNADEVARAYA HATCHERIES PRIVATE LIMITED ( SKHPL)

SKHPL was incorporated on November 03, 1989 with the objective of carrying on business of hatching eggs and rearing and

raising chicks, development of Pureline Stock and Breeding chicks, mulch, animals, sheeps, pigs, etc. and to carry on the

business of poultry farming and producing and dealing poultry feeds and all kinds of foods and feeds. SKHPL was promoted

by Mr. C Jagapati Rao, Mrs. C Mangayamma, Mr. E Bhaskar Rao and Mrs. E Padmaja.

Board of Directors as on March 31, 2007

S.No Name Designation

1 Mr. C. Jagapati Rao Chairman

2 Mr. E. Bhaskar Rao Managing Director

3 Dr. K. Somi Reddy Director

4 Dr. T. Krishna Reddy Director

5 Smt. E. Padmaja Director

6 Mr.T.Rajashekar Director

55

Shareholding pattern as on March 31, 2007

Name No. of shares held of Rs.10/- each % age of holding

Mr. C. Jagapati Rao 50 0.063

Smt. C. Mangayamma 50 0.063

Mr. E. Bhaskar Rao 38949 48.69

Dr. K . Somi Reddy 1000 1.25

Mr.T.Rajashekar 1000 1.25

Smt. E. Padmaja 38950 48.69

Mr.S.Srinivas Rao 1 0.00

Total 80000 100.00

Financials for the last three years ended March 31 (Rs. Lakhs)

PARTICULARS 2003-04 2004-05 2005-06

Sales 584.46 701.92 745.29

Other Income 76.51 89.98 114.39

PBDIT 109.72 111.39 166.93

PBT 83.89 84.11 125.84

PAT 58.86 61.34 90.16

Share Capital 8.00 8.00 8.00

Reserve & Surplus 656.19 717.54 803.01

Net Worth 664.19 725.54 811.01

EPS (Rs) 73.58 76.68 112.69

Dividend — — —

NAV 830.24 906.93 1013.76

Other Details relating to the Promoters

Sri Krishnadevaraya Hatcheries Pvt. Ltd.

PAN AADCS4048Q

Bank Account Number 007605000295

Registration Number 01-10632

Address of ROC Second floor, Kendriya Sadan, Sultan Bazaar, Hyderabad, Andhra Pradesh, 500 195

Challa Prakash E. Bhaskar Rao

Voter ID : NA Voter ID : NA

Driving License No: DLRAP009297272004 Driving License No: NA

PAN No : ABUPC7246F PAN No. : AAAPE4847R

Passport No: E8689310 Passport No: A2865238

Challa Suresh Mr. C. Ramakrishna

Voter ID : NA Voter Id: NA

Driving License No: DLFAP009297902004 Driving License No.: 232 663 695 Class D

PAN No: ABFPC5433K PAN No. : NA

Passport No : 204553273 (USA) Passport No.: 208792905

56

We confirm that the PAN, Bank Accounts numbers and Passport Numbers have been submitted to the Stock Exchanges on

which securities are proposed to be listed.

Other ventures promoted by the Promoters

S.NO COMPANY /FIRM / BUSINESS ACTIVITY ANY OUTSTANDING LITIGATION/

CONCERN NAME DEFAULTS/OVERDUES/LABOUR

PROBLEM

1 Monisha Sri Durga Poultry farming and producing and dealing poultry NIL

Farms Pvt. Ltd feeds, cattle feeds and all kinds of foods and feeds.

2 Mojasa Fragrances Manufacturers of and dealers in cosmetics and other NIL

And Cosmetics beauty preparations.

Private Limited

3 Sahiti Farms Private Poultry farming, dairy farm, garden products and all NIL

Limited other kinds of foods and feeds.

4 Sri Lakshmi Narasamma To purchase, take or lease or otherwise acquire any mining NIL

Minerals Private Limited rights, mines and lands in India or else where to work mines

or quarries, and to find, win get, work, crush, smelt, manufacture

or otherwise deal with all varieties of metals and minerals and

generally to carry on the business of mining in all branches.

5 Sri Jagapathi Farms Poultry farming and all kinds of foods and feeds. NIL

Private Limited

6 Pallavi Perfumes And Manufacturers of and dealers in all kinds of proprietary products, NIL

Cosmetics Private Limited hair skin, nail and other beauty preparations, deodorants,

aerosol and pump spray products, baby products, chemicals

and alkalies, oils and other material or things capable of being

used in connection with such manner.

7 Jaagruthi Foundations Builders, designers, architects, decorators, developers, masonry NIL

Private Limited and general construction contractors etc.; and supply works,

houses, buildings and erection.

8 Sunrise Homes Limited Builders, contractors, developers and to undertake civil contracts NIL

(SRHL) (Formerly Known and to acquire lands and buildings and other assets for the

As B.P.R. Constructions purpose of carrying out the business.

Limited)

9 Intelligent Software To enter into joint venture with Foreign companies, corporations NIL

Solutions Private Limited and firms to acquire, take on charter Mechanized Fishing

(ISSPL) (Formerly Known Trawlers of any length or types of fishing boats within or without

As Pisces Food Private India, to catch Prawn, fish and for catching any variety of fish,

Limited) prawn or sea foods and purchase and sell in home markets and

preserve prawns, fish, sea foods or any other food products by

deep freezing or ordinary storage.

With effect from August 4, 2000, the ISSPL has inserted a new

objects clause to undertake customer service in Information

Technology Industry.

10 Serenity Homes Private Carrying on the business of real estate developers, commercial, NIL

Limited (SHPL) official complexes, entertainment complexes, vocational

institutions, sub-civil contractors either by itself or in association

with other entities.

57

11 SSPDL Ventures Private Carrying on in all their respective branches all or any of the business NIL

Limited of builders, real estate developers, masonry and general constru-

ction contractors and among other things to construct, develop and

turn to account any land acquired or belonging to the SSPDL or in

which it is interested and the business of any lands, buildings,

flats, residential or business purposes and other structures,

works pertaining to real estate.

12 SSPDL Retreat Private Carrying on in all their respective branches all or any of the business NIL

Limited of builders, real estate developers, masonry and general construction

contractors and among other things to construct, develop and turn to

account any land acquired or belonging to the SSPDL or in which it

is interested and the business of any lands, buildings, flats, residential

or business purposes and other structures, works pertaining to real

estate.

13 Jagruthi Ventures Private Carrying on in all their respective branches all or any of the business NIL

Limited of builders, real estate developers, masonry and general construction

contractors and among other things to construct, develop and turn to

account any land acquired or belonging to the Company or in

which it is interested and the business of any lands, buildings, flats,

residential or business purposes and other structures, works

pertaining to real estate

PARTNERSHIP FIRMS

1 M/s. Sri Satya Sai The firm is engaged in the business of real estate, Property NIL

Constructions development and Construction.

2 M/s. S.V.S Real The firm is engaged in the business of real estate, Property NIL

Estate Traders development and Construction.

3 M/s E. Bhaskar Rao & The firm is engaged in the business of poultry farming and breeding. NIL

T. Krishna Reddy

SOLE PROPRIETORY CONCERN

1 Sri Satya Sai Constructions The main objective of the firm is to carry on business in real estate, NIL

developers and Contractors.

Litigation against Promoters

There are no pending litigations in which the promoters are involved. Further, no defaults were made to the financial institutions/

banks, non-payment of statutory dues and dues towards instrument holders like debenture holders, fixed deposits, and arrears

on cumulative preference shares by the promoters and the companies/ firms promoted by the promoters.

Further, there are no cases of pending litigations, defaults, etc. in respect of companies/ firms/ ventures with which the promoters

were associated in the past but are no longer associated.

Further, there are no litigations against the promoter involving violation of statutory regulations or alleging criminal offence.

There are no pending proceedings initiated for economic offences against the promoters, companies and firms promoted by

the promoters

There are no pending litigations, defaults, non-payment of statutory dues, proceedings initiated for economic offences/ civil

offences (including the past cases, if found guilty). Further, no disciplinary action was taken by the SEBI/ stock exchanges

against the promoters and their other business ventures (irrespective of the fact whether they are companies under the same

management with the issuer company as per section 370 (1B) of the Companies Act, 1956).

There are no outstanding litigations, disputes pertaining to matters likely to effect operations and finances of the Company

including disputed tax liabilities, prosecution under any enactment in respect of Schedule XIII of the Companies Act, 1956.

58

Common Pursuits

The individual promoters of the company are having interest in the following ventures, which are authorized by its main

object clauses to carry on the similar line of activities and can result in the possible conflict of business interest among these

ventures and the company:


(Shareholding %)








6 Jagruthi Ventures Pvt. Ltd. Mrs.E. Padmaja 50.00


7 Sri Satya Sai Constructions Mr. Challa Prakash 100.00(Sole Proprietory Concern)

8 Sri Satya Sai Constructions Mr. Challa Prakash 50.00(Partnership Concern) Mr. E Bhaskar Rao 50.00





In the above mentioned entities except, Sri Satya Sai Constructions (Firm) there are no major commercial transactions oroperations and some of them were incorporated recently and also they do not deal with the company in any manner whichcould have conflict with company’s business interest. However in future once these companies begin commercial operationsthere could be conflict of interest

Nature and extent of the interest of the promoters of the company

All the Promoters of the Company shall be deemed to be interested to the extent of shares held by them and/or their andrelatives which may be allotted to them out of the present issue and are deemed to be interested to the extent of remunerationand perquisites being drawn by them from the Company except that

Mr. Challa Prakash and Mr. E. Bhaskar Rao, directors of the company are also partners of M/s Sri Satya Sai Constructions(Firm), which has recently entered into a development and construction agreement with the Company for construction ofresidential villas at Bangalore. Necessary approvals u/s 297 of the Companies Act, 1956 has been received from the RegionalDirector, Ministry of Company Affairs approving the said agreement. The value of the said contract is estimated at Rs.7700lakhs.

Related Party Transactions

Related party transactions are given as notes to accounts in Auditors Report on page No. 59 of this Letter of Offer.

Currency of Presentation

In this Letter of Offer all references to “Rupees” and “Rs” are the legal currency of India.

6. Dividend policy

The declaration and payment of dividends will be recommended by the Board of Directors and approved by the shareholdersof the company, in their discretion, and will depend on a number of factors, including but not limited to our earnings, capital

requirements and overall financial condition.

The company has not declared any dividends during the past 5 years.

59

SECTION - V. FINANCIAL STATEMENTS

1. FINANCIAL INFORMATION OF THE COMPANY

AUDITOR’S REPORT

To

The Board of Directors,

M/s. Srinivasa Shipping and Property Development Ltd.,

‘EDEN GARDENS’, 8-2-595/3/6,

Road No 10, Banjara Hills,

Hyderabad - 500 034.

Andhra Pradesh

Dear Sirs,

Re: Proposed Rights Issue

Offer to issue and allot 86,19,500 Equity Shares of Rs.10/- each at a premium of Rs.8/- each on the Rights basis in the ratio of

2 Equity shares for every 1 Equity Share held.

We have examined the following financial information of M/s. SRINIVASA SHIPPING AND PROPERTY DEVELOPMENT

LIMITED (“the Company”) as attached to this report stamped and initialed by us for identification, which has been prepared

by the company in compliance with Securities Exchange Board of India (Disclosure and Investor Protection) Guidelines,

2000 as amended from time to time and in accordance with the requirements of Clause B of Part II of schedule II of Companies

Act, 1956, for the purpose of disclosure in the Letter of Offer being issued by the Company in connection with the Rights issue

of Equity shares.

1) Statement of Profit and Losses Annexure I

2) Statement of Assets and liabilities Annexure II

3) Details of Reserves & Surplus Annexure III

4) Details of other income Annexure IV

5) Statement of notes to the accounts Annexure V

6) Details of Secured & Unsecured loans Annexure VI

7) Details of age wise debtors Annexure VII

8) Cash Flow Statements Annexure VIII

9) Accounting ratios Annexure IX

10) Details of loans and advances Annexure X

11) Statement regarding quoted/unquoted investment Annexure XI

12) Capitalisation statement Annexure XII

13) Statement of Tax Shelters Annexure XIII

14) Related Party Disclosure Annexure XIV

15) Contingent Liabilities Annexure XV

In respect of financial information contained in this report, we have relied upon the financial statements for the years ended

31st March, 2002, 2003 & 2004 which were audited by M/s. CHANDRAKANT & SEVANTHILAL, Chartered Accountants.

The accounts for the year ended 31st March, 2005 & 2006 and for the period ended 31st December, 2006 have been audited by

us.

Based on the verification of the above with the respective audited financial statements, Submissions made by the company

subsequent to the inspection U/s.209A of the Companies Act, 1956 by the Deputy Director (Inspection), O/o the Regional

Director, Southern Region, Ministry of Company Affairs, Government of India, Chennai, and on the basis of information and

explanations given to us, we report as under:

60

a) In our opinion the above financial information of the company read with significant accounting policies attached in

Annexure V to this report, after making adjustments and re-grouping as considered necessary and appropriate has been

prepared out of audited financial statements for the years and in accordance with Part II of Schedule II of the Act and the

SEBI Guidelines.

b) all notes to the accounts and significant accounting policies and auditors qualifications have been incorporated and

further there is no other material note which has bearing on the financial status of the company

c) there are no changes in the activities of the company which may have had the material effect on the statement of

profitability of the company

This report is intended solely for your information and for inclusion in the Letter of Offer in connection with the specific

Rights Offer of equity shares of the Company and is not to be used, referred to or distributed for any other purpose, without our

written consent.

for KARVY & COMPANY


(K.AJAY KUMAR)

P A R T N E R

M.No. 21989

Place : Hyderabad

Date : 05-05-2007

61

Annexure - I

STATEMENT OF PROFITS AND LOSSES: (Rs. In Lakhs)

Period ended on 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

Income:

Contract Receipts & Other business related turnover 38.90 Nil Nil 193.38 191.58** 2765.65

Other Income (Rent + Others) 10.58 6.14 8.45 6.74 31.62 19.49

Increase (decrease) in inventory (122.28) (11.59) 1.42 (185.23) 506.07 272.10

Total Income (72.80) (5.45) 9.87 14.89 729.27 3057.24

Expenditure:

Construction, Selling & Administration Expenses 44.74 27.08 35.32 34.16 566.10 2530.73

Interest & Financial charges 3.70 3.12 2.76 0.22 2.27 61.33

Depreciation 2.76 1.93 1.67 2.32 2.44 9.00

Total expenditure 51.22 32.13 39.75 36.69 570.81 2601.06

Net Profit before tax and extraordinary items (124.02) (37.58) (29.88) (21.80) 158.46 456.18

Provision for Taxation -

- Current Nil Nil Nil Nil 13.79 52.82

- Deferred 15.51 11.87 16.28 3.54 53.60 31.04

Net Profit after tax & before extraordinary items (108.51) (25.71) (13.60) (18.26) 91.07 372.32

Extraordinary items 81.87 Nil Nil Nil Nil Nil

Provision for tax in respect of earlier years 0.03 0.01 Nil Nil Nil Nil

Net Profit after extraordinary items (26.67) (25.72) (13.60) (18.26) 91.07 372.32

Balance Profit/(Loss) Brought Forward 102.99 76.32 50.60 37.00 18.74 109.81

Appropriations:

Transfer to general reserve Nil Nil Nil Nil Nil Nil

Proposed dividend Nil Nil Nil Nil Nil Nil

Tax on proposed dividend Nil Nil Nil Nil Nil Nil

Balance carried to Balance sheet 76.32 50.60 37.00 18.74 109.81 482.13

Note : ** Includes Rs.100 lakhs received on account of relinquishment of rights in land, which the Officials of Ministry of Company Affairs opine that this

is not a regular business activity. The Company had furnished its reply to the same contending that it is a regular business Income, covered under its main

objects.

62

Annexure - II

STATEMENT OF ASSETS AND LIABILITIES: (Rs. In Lakhs)

PARTICULARS As On As On As On As On As On As On

31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

A. Assets

Fixed Assets- gross block 37.13 34.47 34.08 40.43 120.82 267.47

Less: Depreciation 16.30 17.01 18.57 15.99 16.73 25.74

Net Block 20.83 17.46 15.51 24.44 104.09 241.73


Net Block after adjustment for Revaluation Reserve (A) 20.83 17.46 15.51 24.44 104.09 241.73

B. Investments (B) 90.60 62.59 Nil Nil 5.07 21.95

C. Deferred Tax Asset (C) 0.00 55.22 71.51 75.05 21.45 (-)9.59

D. Current assets, loans and advances

Inventories 215.92 204.36 205.77 20.54 526.61 798.71

Receivables/Debtors Nil Nil Nil 2.47 87.44 28.29

Cash and bank balances 26.12 27.80 92.75 109.36 248.48 431.89

Other current assets 11.74 7.79 8.60 5.21 0.47 6.65

Loans and advances 198.79 160.96 106.13 253.31 1062.54 2097.69

TOTAL (D) 452.57 400.91 413.25 390.89 1925.54 3363.23

E Secured, Unsecured, Current liabilities and Provisions

Secured Loans Nil Nil Nil 7.78 4.54 2.02

Un secured Loans 25.24 25.00 Nil Nil 150.50* 1150.35

Sundry liabilities 16.98 13.84 15.36 14.85 53.17 256.09

Provisions 0.81 0.98 1.05 1.17 14.80 2.78

TOTAL (E) 43.03 39.82 16.41 23.80 223.01 1411.24

F NET WORTH (A+B+C+D-E) 520.97 496.36 483.86 466.58 1833.14 2206.08

REPRESENTED BY

Shareholders funds:

Share capital 300.00 300.00 300.00 300.00 398.20 398.20

Convertible Warrants Application Money Nil Nil Nil Nil 41.52 41.52

Reserves and surplus 224.16 198.44 184.84 166.58 1396.78 1769.09


Reserves (Net of Revaluation Reserve) 224.16 198.44 184.84 166.58 1396.78 1769.09

Less: miscellaneous expenditure not written off (3.19) (2.08) (0.98) 0.00 (3.36) (2.73)

Total 520.97 496.36 483.86 466.58 1833.14 2206.08

(*) Pursuant to the inspection carried u/s 209A of the Companies Act, 1956 by the Deputy Director (Inspection) , Office of the Regional Director, Ministry of

Company Affairs, Chennai, an amount of Rs.10 lakhs borrowed from M/s Sahiti Poultry Breeding Farm, a sole proprietary of Mr E.Bhaskar Rao one of the

Directors of the Company, which was wrongly classified under the head current liabilities has been rectified and shown under the head “Unsecured Loans”.

63

Annexure - III

DETAILS OF RESERVES & SURPLUS: (Rs. In Lakhs)

Sl. No Particulars 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

1. General Reserve 147.84 147.84 147.84 147.84 147.84 147.84

2. Profit & Loss Account 76.32 50.60 37.00 18.74 109.82 482.13

3. Share Premium Nil Nil Nil Nil 1139.12 1139.12

Total 224.16 198.44 184.84 166.58 1396.78 1769.09

Annexure - IV

DETAILS OF OTHER INCOME: (Rs. In Lakhs)

Sl. No Particulars 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

1 Rental Income 1.38 0.33 0.79 3.87 0.80 0.60

2 Interest on Deposits 3.86 1.40 3.98 2.87 12.99 8.32

3 Excess provision written back 0.59 1.36 Nil Nil Nil Nil

4 Interest on others 1.26 0.08 0.02 Nil 10.91 10.33

5 Dividend on mutual funds/ equity shares 1.51 1.44 Nil Nil Nil 0.20

6 Miscellaneous Income 1.98 0.02 Nil Nil 6.92 0.04

7 Profit on sale of investments Nil 1.51 3.66 Nil Nil Nil

Total 10.58 6.14 8.45 6.74 31.62 19.49

Annexure - V

SIGNIFICANT ACCOUNTING POLICIES & NOTES TO THE STATEMENT OF ASSETS AND LIABILITIES AND

PROFITS AND LOSSES AS STATED.

1 Accounting Policies

1.1 Financial statements are prepared on historical cost convention with generally accepted accounting principles on

accrual basis.

1.2 Fixed assets are stated at cost less depreciation.

1.3 Depreciation is charged for by the Straight Line Method at the rates and in the manner prescribed in Schedule

XIV of the Companies Act, 1956.

1.4 Investments are classified into current and long term investments. Current investments are stated at lower of cost

and fair value. Long term investments are stated at cost.

1.5 Revenue recognition

(a) In respect of construction contracts, the company follows the percentage of completion method.

(b) Dividend Income is accounted for in the year in which it is declared.

1.6 Inventories are valued as under:

a. Land - at cost less cost of undivided share of land transferred to customers.

b. In respect of construction contracts, the company follows the percentage of completion method of accounting.

However, in respect of contracts under which the work executed up to the end of the financial year is less than 25%

of the total estimated cost of contracts, work in progress is valued at cost.

64

c. Work in progress for contracts other than construction contracts, are valued at cost or net realizable value which-

ever is lower.

d. Finished properties are valued at lower of cost and net realizable value.

1.7 Miscellaneous Expenditure

Preliminary Expenses and Public Issue Expenses are being amortized over a period of ten years.

1.8 Retirement Benefits

Retirement benefit in the form of Gratuity & Leave encashment has been charged to Profit & Loss Account of the

period on estimation basis carried out at the close of period.

Retirement benefit in the form of Provident Fund is accounted on accrual basis and charged to Profit & Loss

Account.

1.9 Accounting for Taxes on Income

Deferred tax is recognized on timing differences keeping in view the matching concept and the principles of

prudence.

Deferred tax assets and liabilities are accounted for based on the difference between taxable income and accounting

income that originate in one period and are reasonably expected to reverse in the subsequent periods.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively

enacted as of the Balance Sheet date.

1.10 Impairment of Assets

Pursuant to Accounting Standard (AS-28) on - Impairment of Asset issued by the Institute of Chartered Accountants

of India (ICAI), the Company assessed its Fixed Assets for impairment as at the end of the period and there has

been no significant impaired fixed assets that need to be recognized in the books of accounts.

2. Contingent Liabilities not provided for

Contingent Liability not provided for in respect of Sales Tax demand pending before Appellate Authority Rs.3,20,340/- (Previous Year Rs.3,20,340/-).

3 Estimated amount of contracts remaining to be executed on Capital account and not provided as on 31.12.2006 (net ofadvances) Rs. NIL (Previous Year (as on 31.3.2006) Rs.NIL )

4. Notes on Segment Report

Since the company has only one Segment i.e., Property Development, separate disclosure on Segment reporting as perAccounting Standard 17 issued by the ICAI is not required.

5 Dues to Small Scale Industrial undertakings

As per the information available with company, no amounts are due to Small Scale industrial undertakings.

6 Related Party Disclosures

a) List of related parties

Associates:

1) M/s.Sri Satya Sai Constructions.- Partnership Firm

2) M/s.Sri Satya Sai Constructions.- Sole Proprietary Concern

3) SSPDL Ventures Private Limited

4) SSPDL Retreat Private Limited

5) Sri Krishnadevaraya Hatcheries Pvt Ltd (*)

6) Monisha Sri Durga Farms Pvt Ltd (*)

7) Sahiti Poultry Breeding (*)

65

Key Managerial Personnel:

1) Mr. Challa Prakash - Managing Director,

2) Mr. E. Bhaskar Rao - Director (*)

(*) Identified as related parties consequent to the submissions made by the company subsequent to Inspection U/s.209A

of the Companies Act, 1956.

b) Disclosure of transactions between the company and the related parties and the status of outstanding balances

(Rs in Lakhs)

Key Management Personnel Associates

2005-06 2004 - 05 2003-2004 2005-06 2004 - 05 2003-2004

Sitting fees 0.12 0.06 0.06 - - -

Remuneration 15.69 3.60 3.60

Rent Paid - - - 6.54 3.50 2.34

Brokerage Income 91.58 - -

Outstanding:

Rent deposits Receivable - - 5.00 5.00 5.00

Intercorporate loans (*) - - 140.50 - -

Loans from Directors (*) - - 10.00 - -

(*) Identified as related party transactions consequent to the submissions made by the company subsequent to Inspection

U/s.209A of the Companies Act, 1956.

7. Statement of Deferred Tax (Rs in Lakhs)

Particulars As at 31.03.2005 As at 31.03.2006 As at 31.12.2006

Deferred Tax Asset

Unabsorbed business loss 72.64 20.97 0.00

Unabsorbed depreciation loss 5.03 5.02 0.00

Employee benefits 0.39 0.54 0.56

Total Deferred Tax Asset 78.06 26.53 0.56

Deferred Tax Liability

Depreciation 3.01 5.08 10.15

Net Deferred Tax Asset/(Liability) 75.05 21.45 (9.59)

Based on the properties intended to be developed by the company for which the company has already invested certainamounts, it is of the view that the carry forward losses would be absorbed in near future.

8. Earnings per Share (EPS) (Rs in Lakhs)

Upto 31.12.2006 2005-06 2004-05 2003-04

a) Net profit \ (Loss) available for equityshareholders (Numerator used for 372.32 91.07 (18.26) (13.60)calculation)

b) Weighted average No. of shares equity 39.28 34.28 30.00 30.00shares used as denominator to calculateEarning per share.

c) Basic and Diluted earning per share 9.35 2.66 & 2.55 (0.61) (0.45)

d) Nominal Value of Equity Share 10.00 10.00 10.00 10.00

66

9. Payments to and provisions for employees includes (Rs in Lakhs)

Upto 31.12.2006 2005-06 2004-05 2003-04

Managerial Remuneration

Salary 9.00 15.69 3.60 3.60

Directors’ sitting fees 2.48 0.12 0.22 0.30

Total 11.48 15.81 3.82 3.90

10. Interest Expenses on (Rs in Lakhs)

Upto 31.12.2006 2005-06 2004-05 2003-04

Fixed Loans 0.11 0.34 0.22 2.71

Other Loans 60.30 0.69 - 0.05

Total 60.41 1.03 0.22 2.76

11. Audit fee shown under is towards (Rs in Lakhs)

2005-06 2004-05 2003-04

Audit Fee 0.55 0.50 0.50

Tax Audit Fee 0.27 0.25 0.00

Other Services 0.58 0.03 0.04

Total 1.40 0.78 0.54

12. Consequent to the inspection U/s 209A of the Companies Act,1956 the Company accepted that the transaction entered

into with ICICI Bank, comes under the purview of the AS-19 ‘ Accounting for Leases’ issued by the Institute of Chartered

Accountants of India (AS-19). Consequently, the additional details to be disclosed are as under:

a. Carrying cost of the Asset as on the date of Balance Sheet Rs.10,05,559/-

b. Financial Charges debited to the Profit & Loss Account during the year Rs.26,997/-

c. Future installments payable and their present value as on the date of the Balance Sheet.

Particulars Minimum Installments Payable Present Value of Minimum Installments

31-03-2006 31-03-2005 31-03-2006 31-03-2005

Not later than 1 year 3,38,124/- 3,23,979/- 3,23,652/- 3,10,113/-

Between 1 to 5 years 1,15,956/- 4,54,080/- 1,15,906/- 4,34,645/-

Above 5 years Nil Nil Nil Nil

13. Previous year figures have been regrouped / reclassified wherever considered necessary in order to conform to the

current year’s classifications.

Annexure - VI

DETAILS OF SECURED & UNSECURED LOANS:

a) Details of Secured Loans (Rs in Lakhs)

Particulars 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

ICICI Bank Vehicle Loan (Secured by

the Hypothecation of vehicle) Nil Nil Nil 7.78 4.54 2.02

67

b) Details of Un-Secured Loans (Rs in Lakhs)

Particulars 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

Fixed Deposits 25.24 25.00 Nil Nil Nil Nil

Unsecured Loans Nil Nil Nil Nil 150.50 (*) 1150.35

i) The company’s outstanding unsecured loans from Promoters/group companies/ Rs.1150.35

Associates/ affiliate companies as at 31st December, 2006

Terms & Conditions of these Loans :

* Rate of Interest - 12% p.a., to be compounded quarterly

* Repayable on Demand

ii) From Others NIL

The company has obtained Rs.150.50 (*) lakhs unsecured loans from Promoters/group companies/Associates/ affiliate

companies as at 31st March, 2006.

(*) Includes an amount Rs.10.00 lakhs, classified as unsecured loan subsequent to the inspection U/s.209A of the

Companies Act, 1956.

The Company has been regular in servicing of the loans availed.

c) Existing working capital facilities

The Company does not have any Working Capital facilities as at 31st December, 2006

Annexure - VII

DETAILS OF AGE WISE DEBTORS:

Age wise analysis of Sundry Debtors as at 31st December, 2006

Particulars 31.03.05 31.03.06 31.12.06

Outstanding for more than six months 2.48 — —

Others — 87.44 28.29 (*)

(*) Out of this an amount of Rs.27.28 lakhs is due from M/s. Sri Satya Sai Constructions, a partnership firm in which Mr.

Prakash Challa, Managing Director is a working partner having substantial interest

Annexure - VIII

CASH FLOW STATEMENT: (Rs in Lakhs)

31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

A. CASH FLOW FROM OPERATIONAL ACTIVITIES

Net Profit before Tax Extraordinary items (124.02) (37.58) (29.88) (21.80) 158.46 456.18

Depreciation 2.76 1.93 1.67 2.32 2.44 9.00

Interest Income (5.12) (1.40) (3.98) (2.87) (23.91) (18.65)

Dividend Income (1.51) (1.43) Nil Nil Nil (0.20)

Interest on borrowings 3.70 3.12 2.76 0.22 1.03 60.40

Loss on sale of assets Nil 1.45 0.28 0.10 0.67 Nil

Profit or Loss on sale of investments Nil (1.51) (3.66) Nil Nil Nil

Miscellaneous Expenses 1.10 1.10 1.10 0.99 0.84 0.64

Operating profit before Working capital changes (123.08) (34.31) (31.71) (21.05) (139.53) 507.37

68

Adjustments for:

Trade and other Receivables 18.32 (2.99) 53.78 (143.77) (889.45) (982.20)

Inventories 130.99 11.57 (1.41) 185.22 (506.07) (272.10)

Trade Payables and Other liabilities (43.96) (2.96) 1.61 (0.39) 51.95 180.89

(Increase)/Decrease in Net Current Assets 105.36 5.62 53.97 41.07 (1343.57) (1073.41)

Cash Generated from Operations (17.73) (28.69) 22.26 20.02 (1204.04) (566.04)

Adjustments for:

Direct Taxes Paid (1.48) (0.59) 1.08 (2.50) (13.75) (52.82)

Interest paid Nil Nil Nil Nil Nil Nil

Sub Total (1.48) (0.59) 1.08 (2.50) (13.75) (52.82)

Net cash Flow from Operating Activities (19.21) (29.27) 23.34 17.52 (1217.79) (618.86)

Cash Flow before Extraordinary items Nil Nil Nil Nil Nil Nil

Excess Provision for Regularisation fees Written Back Nil Nil Nil Nil Nil Nil

Refund of Regularisation fees 81.87 Nil Nil Nil Nil Nil

Net cash Flow from Operating Activities (A) 62.66 (29.27) 23.34 17.52 (1217.79) (618.86)

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Investments (90.61) (62.59) Nil Nil (5.07) (16.88)

Purchase of Fixed Assets (0.001) (0.12) Nil (12.06) (82.76) (146.65)

Sale of Investments Nil 92.12 66.24 Nil Nil Nil

Sale of Fixed Assets 0.07 0.11 Nil 71.00 Nil Nil

Dividend Received 1.51 1.42 Nil Nil Nil 0.20

Interest Received 3.46 3.40 3.13 2.87 23.91 18.65

Inter corporate deposit Nil Nil Nil Nil Nil Nil

Net Cash from/(used) in Investing Activities (B) (85.56) 34.35 69.38 61.81 (63.92) (144.68)

C. CASH FLOW FROM FINANCING ACTIVITIES

Increase in Share Capital Nil Nil Nil Nil 1278.84 Nil

Increase in Borrowings Nil Nil Nil 9.61 150.50 1150.35

Repayment of borrowings (14.22) (0.24) (25.00) (1.83) (3.24) (143.02)

Interest Paid on borrowings (3.72) (3.15) (2.76) (0.22) (1.03) (60.40)

Preferential expenses Nil Nil Nil Nil (4.20) Nil

Net Cash from /(used) in Financing Activities (C) (17.94) (3.39) (27.76) 7.56 1420.87 946.93

Net increase in Cash and Cash Equivalents (A+B+C){1} (40.84) 1.68 64.96 16.60 139.13 183.40

Cash and Cash Equivalents at the beginning of the year {2} 66.96 26.12 27.80 92.76 109.36 248.49

Cash and Cash Equivalents at the end of the year [1+2] 26.12 27.80 92.76 109.36 248.49 431.89

Note

The above Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard - 3 on Cash

Flow Statements issued by the Institute of Chartered Accountants of India.

69

Annexure - IX

MANDATORY ACCOUNTING RATIOS: (Rs in Lakhs)

31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

Earning per Share (EPS)

(Excluding Extra Ordinary and Exceptional Items)

Net Profit after Tax (A) (108.51) (25.71) (13.60) (18.26) 91.07 372.32

No of Equity shares 30 30 30 30 34.28 39.82

Earning per Share (EPS) (Rs) (3.62) (0.86) (0.45) (0.61) 2.66 9.35

Cash earning Per share

Net Profit before Extraordinary Items and after Tax (108.51) (25.71) (13.60) (18.26) 91.07 372.32

Plus: Depreciation 2.76 1.93 1.67 2.32 2.43 9.01

Non Cash Expenditure 1.10 2.55 1.38 1.09 1.52 0.63

Total (A) (104.65) (21.23) (10.55) (14.85) 95.02 381.96

No of Equity Shares (B) 30 30 30 30 34.28 39.82

Cash earning Per share (Rs) (A/B) (3.49) (0.71) (0.35) (0.49) 2.77 9.59

Return on Net Worth

Net Profit after Tax (108.51) (25.71) (13.60) (18.26) 91.07 372.32

Net worth 520.99 496.36 483.86 466.58 1833.13 2206.09

Return on net worth (%) (20.82) (5.18) (2.81) (3.91) 4.97 16.88

Net Asset Value per share

Equity Net worth (A) 520.97 496.36 483.86 466.58 1833.13 2206.09

No of Equity shares (B) 30 30 30 30 34.28 39.82

Net Asset Value per share (Rs) (A/B) 17.37 16.55 16.13 15.55 53.47 55.40

Notes :

Earnings Per Share (EPS) Earnings Per Share (EPS) is calculated by dividing Net Profit after Tax before ex-

traordinary items (PAT) with the weighted average of number of equity shares at

the end of the fiscal year.

Cash Earnings Per Share Cash EPS is arrived at by dividing PAT for the year plus non-cash expenditure with

the total number of weighted average of equity shares at the end of the fiscal year.

Non-cash expenditure comprise of depreciation, amortization of business development

expenses, loss on sale of fixed assets and loss on sale of investments etc.

Return on Net Worth Return on Net Worth is arrived at by dividing PAT by total shareholder’s funds (Net

Worth) at the end of the year

Net Assets value per share Net Assets value per share, computed as per net equity method, is arrived at by dividing

the Equity net worth at the end of the year with the total number of weighted average

of equity shares at the end of the fiscal year.

70

Annexure - X

DETAILS OF LOANS AND ADVANCES AS AT 31st December, 2006 (Rs. in Lakhs)

Sl. No Loans and advances are unsecured and good (unless otherwise stated) Amount

1. Advance to Aditya & Co 5.61

2. Advances for Property at Montieth Road 127.50

3. Advances for Property at Valasaravakkam 10.00

4. Advances for Alphacity Project 317.61

5. Advances to M.s G.B.Trading 600.00

6. Advances for Property at Perungudi 53.03

7. Advances for Property at Kollur Hyderabad 462.00

8. Refund receivable from CMDA 12.30

9. Advances for Property at Nanakramguda 25.00

10. Advances for Property at Solinganallur 122.14

11. Advances to Chennai Central Project 0.25

12. KARVY Investor Services Ltd 5.00

13. Kallar Velay Cardamom Estate 250.00

14. Advances given in Retreat Project, Bangalore 3.76

15. Sales Tax paid 0.44

16. Mobilisation advance - RD Associates 20.00

17. Mobilisation advance - RD Utracon 5.64

18. Vishnu Multicomm Pvt Ltd 27.00

19. Prepaid Expenses 0.36

20. Salary Advance 0.09

21. Anchor Malls Pvt Ltd 12.21

22. Mugdha Designers 4.00

23. Shelath Brothers 2.85

24. Travelling Advance 3.29

25. Other Sundry Advances 0.43

26. Tax Deducted at Source 21.06

27. Sundry Deposits 6.12

Total 2097.69

Note : None of the above loans & advances have been given to parties related to the promoters/directors of the company.

71

Annexure - XI

CERTIFICATE REGARDING QUOTED/UNQUOTED INVESTMENTS: (Rs. Lakhs)

Particulars 31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.12.06

QUOTED - (At Cost)

In Mutual Funds - (Non Trade)

201,883 Units of Rs 10 each in Liquid Fund of ZurichIndia Mutual Fund 20.30 Nil Nil Nil Nil Nil

202,724 Units of Rs 10 each in Liquid Fund ofHDFC Mutual Fund 20.31 Nil Nil Nil Nil Nil

244,978 Units of Rs 10 each in Birla Bond Plus ofBirla Sun Life Mutual Fund 25.00 Nil Nil Nil Nil Nil

96,339 Units of Rs 10 each in Gilt und HDFC Mutual Fund 10.00 Nil Nil Nil Nil Nil

143,116 Units of Rs 10 each in Gilt Fund KotakMahindra Mutual Fund 15.00 Nil Nil Nil Nil Nil

61,139 Units of Rs 10 each in JM Income FundGrowth Option of JM Mutual Fund Nil 15.00 Nil Nil Nil Nil

1,24,981Units of Rs 10 each in K Bond Short TermPlan - Fund Growth Option of Kotak Mahindra Mutual Fund Nil 12.80 Nil Nil Nil Nil

2,34,545 Units of Rs 10 each in Birla Bond Plus -Growth Option of Birla Sun Life Mutual Fund Nil 24.78 Nil Nil Nil Nil

90,685 Units of Rs 10 each in Prudential ICICI FlexibleIncome Plan - Growth Option of Prudential ICICI Mutual Fund Nil 10.00 Nil Nil Nil Nil

5631 Equity Shares in Andhra Bank of Rs.90 each Nil Nil Nil Nil 5.07 5.07

UNQUOTED (at Cost)

1,68,796 equity shares of Rs.10 each in M/s SSPDLProperties Private Limited Nil Nil Nil Nil Nil 16.88

TOTAL 90.60 62.59 Nil Nil 5.07 21.95

MARKET VALUE OF QUOTED INVESTMENTS 90.06 64.06 Nil Nil 4.55 4.88

UNQUOTED INVESTMENTS Nil Nil Nil Nil Nil NA

Note : If decline in market value of quoted investments is temporary in nature, being a long term investment, provision forsuch decline is not made.

Annexure - XII

CAPITALISATION STATEMENT: (Rs. in Lakhs)

Pre-issue as at 31st Post Rights IssueDecember, 2006

Borrowing

Short term debt 1150.35 1150.35

Long term debt Nil Nil

Total debt 1150.35 1150.35

Shareholders’ funds

Share Capital

-Equity 398.20 1292.92

Less: Calls in arrears Nil Nil

-Preference Nil Nil

Warrant Application Money 41.52 Nil

Share Premium 1139.12 2208.87

Reserves & surplus 629.97 629.97

Less: Miscellaneous Expenditure not written off 2.73 2.73

Total Shareholders’ funds 2206.09 4129.03

Long Term Debt/Equity Ratio -NIL- -NIL-

72

Annexure - XIII

STATEMENT OF TAX SHELTERS: (Rs in Lakhs)

31.3.2002 31.3.2003 31.3.2004 31.3.2005 31.3.2006 For the

period ended

31.12.2006

(see note)

Profit as per Profit & Loss Account

- before Tax (A) (42.14) (37.58) (29.88) (21.81) 158.46 456.18

Tax Rate (including surcharge) % 35.70% 36.75% 35.87% 36.59% 33.66% 33.66%

Tax at the above rate (B) - - - - 53.34 153.55

Adjustments:

Permanent Difference

- Net Effect of Section 80 IB - - - - - (365.71)

- Others - - - - - 0.74

Total Permanent Difference [ C ] - - - - - (364.97)

Timing Difference:

1) Adjustment of change in Depreciation 0.75 (0.05) 0.04 (1.27) (5.08) (15.06)

2) (Profit) /Loss on Sale of Assets (Different Treatment in tax) - 1.45 0.28 0.10 - -

3) Other Adjustments (25.36) (0.28) - - 0.63 1.61

4) B/f Losses adjusted - - - - (129.68) (77.23)

Total Timing Difference ( D ) (24.61) 1.12 0.32 (1.17) (134.13) (90.68)

Net Adjustments (E) = (C+D) (24.61) 1.12 0.32 (1.17) (134.13) (455.65)

Total Burden/(savings) thereon (F) - - - - 8.22 (153.37)

Taxable Income/(Loss) (G) = A+E - - - - 24.33 0.53

Tax as per Minimum Alternate Tax - - - - 13.30 51.18

Tax as per Income Tax Returned - - - - 3.09

MAT Credit utilized, if any - - - - - -

Interest u/s 234A, 234B & 234C - - - - 0.25

Net Tax payable as per return Nil Nil Nil Nil 13.55 Refer note 4

Notes:

1. The Company’s project, for which income is recognised in P & L Account (Alpha City) is registered under STPI under

infrastructure development and the Company is eligible for deduction u/s 80 IB; accordingly, the company did not

provide for provision as per regular provisions but as per MAT, for the period ended 31st December, 2006

2. The information pertaining to the year 31st March 2002 to 31st March 2006 is as per the Return of Income filed by the

company.

3. The Statement of Tax Shelter has been prepared based on Income Tax Returns filed by the company

4. The information pertaining to period 31st December 2006 has been based on statement of computation of taxable income

prepared by the company for the calculation of “Current Tax “ for the period ending 31st December ,2006. Under the

Income Tax laws income is assessable for the period from 1st April to 31st March

73

Rate of Dividend:

The company has not declared any dividends during the years 2001, 2002, 2003, 2004, 2005 & 2006.

Changes in Accounting Policies:

There has been no change in the Accounting Policies of the company for the last 5 years

Annexure - XIV

RELATED PARTY TRANSACTIONS:

List of related parties:

Associates:

1) M/s.Sri Satya Sai Constructions.- Partnership Firm

2) M/s.Sri Satya Sai Constructions.- Sole Proprietary Concern

3) SSPDL Ventures Private Limited

4) SSPDL Retreat Private Limited

5) Sri Krishnadevaraya Hatcheries Private Ltd (*)

6) Monisha Sri Durga Farms Private Ltd (*)

7) Sahiti Poultry Breeding Farm (*)

Key Managerial Personnel:

1) Mr. Challa Prakash - Managing Director,

2) Mr. E. Bhaskar Rao - Director (*)

(Rs in Lakhs)

Particulars 2001-02 2002-03 2003-04 2004-05 2005-06 31.12.2006

Associates :

Rent Paid 5.84 2.33 2.34 3.50 6.54 7.98

Out standings:

Rent Deposits Receivable 5.00 5.00 5.00 5.00 5.00 5.00

Amounts Payable 1.09 0.74 Nil Nil Nil Nil

Unsecured Loans Nil Nil Nil Nil (**)150.50 1150.35

Brokerage Income Nil Nil Nil Nil 91.58 Nill

Key Management Personnel

Sitting Fees 0.02 0.06 0.06 0.06 0.12 2.48

Remuneration 3.60 3.60 3.60 3.60 15.69 9.00

Professional charges 0.05 Nil Nil Nil Nil Nil

Commission Nil Nil Nil Nil Nil Nil

(*) Identified as related parties consequent to the submissions made by the company subsequent to Inspection U/s.209A of

the Companies Act, 1956.

(**) Includes an amount Rs.10.00 lakhs, classified as unsecured loan subsequent to the inspection U/s.209A of the Companies

Act, 1956.

74

Annexure - XV

CONTINGENT LIABILITIES:

1. The contingent liabilities for which no provisions have been made in the books of accounts of the company for period

ended 31st December, 2006.

(Rs in Lakhs)

Sl. No Particulars Amount


2. We have examined all the contracts, claims and litigations against the company and have analysed the likely impact of

the same as indicated above. We certify that apart from the contingent liabilities indicated above, the company does not

have any other contingent liabilities for the period ended 31st December, 2006.

for KARVY & COMPANY


(K.AJAY KUMAR)

P A R T N E R

M.No. 21989

Place: Hyderabad

Date: 05-05-2007

75

2. FINANCIAL INFORMATION OF GROUP COMPANIES/OTHER VENTURES PROMOTED BY THE

PROMOTERS

1. MONISHA SRI DURGA FARMS PVT. LTD ( MSDFPL)

MSDFPL was incorporated on July 7th, 1994 as a Private Limited Company with the main object to carry on the

business of poultry farming and producing and dealing poultry feeds, cattle feeds and all kinds of foods and feeds.


Mr. E. Bhaskar Rao

Mr. C. Jagapati Rao

Ms. E. Padmaja

Business activity: The main objective of MSDFPL is producing and dealing poultry feeds, cattle feeds farming and all

kinds of foods and feeds.


Name No. of Shares of % age

Rs.100/- each


Mr. C. Jagapati Rao 05 0.50

Ms. E. Padmaja 05 0.50

Mr. K. Somi Reddy 05 0.50

Total 1000 100.00

Financials for the last three years ended March 31st

(Rs. Lakhs)

Particulars 2004 2005 2006

Sales 2.50 2.50 2.00

Other Income - - 8.56

PBDIT 2.37 2.40 10.51

PBT 2.36 2.38 10.50

PAT 2.35 2.38 9.79


Share Application Money 10.45 7.80 5.65

Reserve & Surplus 9.07 11.46 21.25

Net Worth 20.47 20.26 27.90

EPS (in Rs) 235.42 238.33 979.02

Dividend — - - -

NAV (in Rs) 2046.67 2025.57 2789.77

2. MOJASA FRAGRANCES AND COSMETICS PRIVATE LIMITED (MFCPL)

MFCPL was incorporated on September 8, 2004 with the main objective of carrying on the business as manufacturers of

and dealers in cosmetics and other beauty preparations.


Mr. E. Bhaskar Rao

Ms. C. Jahnavi

76

Business activity:

MFCPL is in the business of manufacture of cosmetics and beauty preparations, etc.


Name No. of shares of % age

Rs.10/- each


Ms. C. Jahnavi 5000 50.00

Total 10000 100.00

Financials for the year Ended March 31st

(Rs. Lakhs)

PARTICULARS 2005 2006

Sales 34.06 2.99

Other Income - -

PBDIT (2.34) (13.33)

PBT (2.34) (13.33)

PAT (2.34) (13.54)

Share Capital 1.00 1.00

Reserve & Surplus - -

Net Worth (1.48) (14.98)

EPS(in Rs) (23.44) (135.36)

Dividend - -

NAV - -

3. SAHITI FARMS PRIVATE LIMITED (SFPL)

SFPL was incorporated on December 2, 2003 as a Private Limited Company with the main object to carry on the business of

poultry farming, dairy farm, garden products and all other kinds of foods and feeds.


Mr. E. Bhaskar Rao

Ms. E. Padmaja

Business activity: SFPL is the business of Poultry farming, dairy farm, garden products and all other kinds of foods and

feeds.

Shareholding pattern as on March 31,2006


Rs. 10/- each



Total 10000 100.00

77

Financials for the last two years ended March 31st

(Rs. Lakhs)


Sales - 0.04 0.06

Other Income - - -

PBDIT - (0.002) (0.24)

PBT - (0.002) (0.24)

PAT - (0.002) (0.24)


Share Application Money - - 26.29

Reserve & Surplus - - -

Net Worth (including share application money) 0.91 0.93 26.99

EPS (in Rs) - (0.019) (2.40)

Dividend - - -

NAV (in Rs) 9.10 9.30 269.91

Profit and Loss Account for the period ended March 31, 2004 has not been prepared as there were no operations.

4. SRI LAKSHMI NARASAMMA MINERALS PRIVATE LIMITED (SLNMPL)

SLNMPL was incorporated on December 03, 1998 as a Private Limited Company with the main object to carry on and to

purchase, take or lease or otherwise acquire any mining rights, mines and lands in India or else where to work mines or

quarries, and to find, win get, work, crush, smelt, manufacture or otherwise deal with all varieties of metals and minerals and

generally to carry on the business of mining in all branches.


Mr. E. Bhaskar Rao

Mr. K. Rajendra Prasad

Business activity: SLNMPL is carrying on mining business


Name No. of shares % age

Rs.10/- each of


Mr. K. Rajendra Prasad 4300 43.00

Total 10000 100.00


(Rs. Lakhs)


Sales 4.75 - —

Other Income 5.52 0.05 —

PBDIT (7.47) (1.99) (0.14)

PBT (10.47) (2.92) (0.53)

PAT (10.47) (2.92) (0.53)

78



Reserve & Surplus - - -

Net Worth ( inclusive of share application money) 9.86 6.94 6.41

EPS (in Rs) (104.66) (29.15) (5.30)

Dividend - - -

NAV (in Rs) 98.60 69.40 64.10

Notes to the Accounts

1. Taxes on Income

In the absence of convincing evidence regarding availability of sufficient taxable income in the near future against

which the deferred tax Asset can be adjusted, the company has not recognized the deferred tax Asset due to tax effect

of timing differences at present.

5. SRI JAGAPATHI FARMS PRIVATE LIMITED (SJFPL)

SJFPL was incorporated on December 13, 1993 as a Private Limited Company with the main objective of carrying on poultry

farming and all kinds of foods and feeds.


Mr. E. Bhaskar Rao

Ms. E. Padmaja

Business activity: SJFPL is in the business of poultry farming and all kinds of foods and feeds.



Rs. 10/- each



Dr. T Krishna Reddy 10 0.10

Total 10000 100.00


(Rs. Lakhs)


Sales 2.75 2.75 2.75

Other Income 1.08 1.08 1.08

PBDIT 3.61 3.70 3.75

PBT 2.95 3.10 3.21

PAT 2.82 3.03 2.94





EPS (in Rs) 28.20 30.30 29.41

Dividend - - -

NAV ( in Rs) 239.40 253.95 247.87

79

6. PALLAVI PERFUMES AND COSMETICS PRIVATE LIMITED (PPCPL)

PPCPL was originally incorporated on July 22, 1998 as a Private Limited Company with name Pallavi Parfumes Private

Limited the main object to carry on business as manufacturers of and dealers in all kinds of proprietary products, hair

skin, nail and other beauty preparations, deodorants, aerosol and pump spray products, baby products, chemicals and

alkalies, oils and other material or things capable of being used in connection with such manner.

The name was changed from Pallavi Parfumes Private Limited to Pallavi Parfumes and Cosmetics Private Limited on

August 21,2003 and subsequently to Pallavi Perfumes and Cosmetics Private Limited on July 26,2005.


Mr.C.Jagapati Rao

Mr. C. Ramakrishna

Mr. E. Bhaskar Rao

Ms. C. Pramila

Ms. E. Padmaja

Mr. Suresh Rayudu

Mrs. P. Usha Lakshmi

Mr. A.H. Manjunath

Ms. Helga Haerdter

Business activity: PPCPL is in the business of manufacturing proprietary products, hair skin, nail and other beauty

preparations, deodorants, aerosol and pump spray products, baby products, chemicals and alkalles, oils and other material

or things capable of being used in connection with such manner of poultry farming and all kinds of foods and feeds.



Mr. C. Ramakrishna 100 0.95


Ms. C. Pramila 100 0.95


Total 10500 100.00

Financials for the last 3 years ended March 31st

(Rs. Lakhs)


Sales - 12.48 98.43

Other Income - 0.50 0.85

PBDIT - (32.75) (67.01)

PBT - (33.36) (68.09)

PAT - (33.67) (70.02)



Reserve & Surplus — — —


EPS (in Rs) — (320.67) (666.90)


NAV (in Rs) 16.60 608.27 1165.81

80

Notes: The Profit & Loss account has not been prepared for the earlier years as commercial operations of PPCPL were

commenced during the year 2004-05.

7. JAAGRUTHI FOUNDATIONS PRIVATE LIMITED (JFPL)

Jaagrithi Foundations Private Limited was incorporated on October 1, 1996 as a Private Limited Company with the objective

of carrying on builders, designers, architects, decorators, developers, masonry and general construction contractors etc.; and

supply works, houses, buildings and erection and every kind and to carry on business in connection with the above mentioned.

The name was changed to Jaagruthi Foundations Private Limited with effect from November 21, 1996.


Mr. C. Jagapati Rao

Mr. E. Bhaskar Rao

Mr. Suresh Rayudu

Smt. E. Padmaja

Smt P. Usha Lakshmi

Mr. C. Siva Rama Prasad

Mr. K. Srinivasa Rao

Business activity: JFPL is carrying on the business of builders, designers, architects, decorators, developers, masonry and

general construction contractors etc.; and supply works, houses, buildings and erection and every kind and carrying on business

in connection with the above mentioned.

Shareholding pattern as on 31st March, 2006



Mr. C. Siva Rama Prasad 60010 12.00

Smt. E. Padmaja 65000 13.00

Smt P. Usha Laxmi 65000 13.00

Smt. C. Jahanavi 65000 13.00

Mr. K. Srinivasa Rao 60000 12.00

Mr. B. Srinivas 60000 12.00

Mr. D. Suresh 60000 12.00

Total 500020 100.00


(Rs. Lakhs)


Sales - 243.84 —


PBDIT (1.18) 0.03 (0.08)

PBT (4.05) (2.89) (4.10)

PAT (27.01) (2.12) (4.91)

Share Capital 50.00 50.00 50.00



Net Worth (inclusive of Share application money) 346.97 244.92 124.26

EPS (in Rs.) (5.40) (0.42) (0.98)


NAV (in Rs.) 69.39 48.98 24.85

81

8. SUNRISE HOMES LIMITED (SRHL) (Formerly known as B.P.R. Constructions Limited)

SRHL was incorporated on July 29, 1997 as B.P.R. Constructions Limited with the objective of carrying on business of

builders, contractors, developers and to undertake civil contracts and to acquire lands and buildings and other assets for the

purpose of carrying out the business.

The name was changed from B.P.R. Constructions Limited to Sunrise Homes Limited with effect from November 17, 2003.


Mr. Chandrapet Suresh

Mr. Challa Suresh

Mr. Badam Prabhakar Reddy

Business activity: The main objective of the company is to carry on business of builders, contractors, developers and to

undertake civil contracts and to acquire lands and buildings and other assets for the purpose of carrying out the business.



Rs. 10/- each

Mr. C. Suresh Kumar 374100 49.87

Mr. Challa Suresh 374100 49.87

Smt. Nandita Chandapeta 500 0.07

Smt. J. Nadev Goud 200 0.03

Smt. J. Nagamani 200 0.03

Smt. Sridevi Challa 500 0.07

Mr. Vellanki V. Rao 200 0.03

Smt. Vellanki Vijaya 200 0.03

Total 750000 100.00


(Rs. Lakhs)


Sales 288.94 76.92 32.92


PBDIT 101.55 21.82 13.81

PBT 100.82 16.69 7.67

PAT 62.45 10.65 3.17

Share Capital 75.00 75.00 75.00

Share Application Money 31.75 — —



EPS (in Rs) 8.33 1.42 0.42


NAV (in Rs) 22.64 19.84 20.27

82

9. INTELLIGENT SOFTWARE SOLUTIONS PRIVATE LIMITED (ISSPL) (Formerly known as Pisces Food Private

Limited)

ISSPL was originally incorporated on March 6, 1987 as Pisces Food Private Limited with an object to enter into joint venture

with Foreign companies, corporations and firms to acquire, take on charter Mechanized Fishing Trawlers of any length or

types of fishing boats within or without India, to catch Prawn, fish and for catching any variety of fish, prawn or sea foods and

purchase and sell in home markets and preserve prawns, fish, sea foods or any other food products by deep freezing or

ordinary storage.

The name Pisces Food Private Limited was changed to Intelligent Software Solutions Private with effect from August 04,

2000 with the insertion of new objective to carry on and provide customer service in Information Technology industry covering

computer feasibility studies, systems design, systems planning, systems development, project management, electronic commerce

planning and support, object orientation development, database management, network and system administration, computer

based MIS Online/Real time systems and to provide any other emerging areas of computer based services in India and abroad.


Mr. Challa Prakash

Smt. Challa Chinamma

Business activity: ISSPL is engaged in the business of providing services in Information technology.



Challa Prakash 180000 78.00

Challa Chinamma 50050 22.00

Total 230050 100.00


(Rs. Lakhs)

PARTICULARS 2004 2005 2006

Sales 52.61 40.11 7.58

Other Income — 8.34 0.27

PBDIT (4.96) 6.76 (16.69)

PBT (10.82) (1.81) (19.24)

PAT (10.82) (1.81) (19.24)

Share Capital 23.00 23.00 23.00


Reserve & Surplus 21.78 — —

Net Worth ( inclusive of Share Application money) (10.33) (12.14) 7.09

EPS (in Rs) (4.7) (0.79) (8.36)


NAV (in Rs) — — 3.08

10. SERENITY HOMES PRIVATE LIMITED (SHPL)

SHPL was incorporated on May 20, 2005 as a Private Limited with objective of carrying on the business of real estate

developers, commercial, official complexes, entertainment complexes, vocational institutions, sub-civil contractors either by

itself or in association with other entities.


Mr. Challa Suresh

Smt. C. Sri Devi

83

Business activity: SHPL is to carrying on business in real estates.




Smt. C. Sri Devi 5000 50.00

Total 10000 100.00

The Company is yet to finalise its Balance Sheet for the fiscal year 2005-06.

11. SSPDL VENTURES PRIVATE LIMITED

The company was incorporated on January 3, 2005 as a Private Limited with the objective of carrying on in all their respective

branches all or any of the business of builders, real estate developers, masonry and general construction contractors and

among other things to construct, develop and turn to account any land acquired or belonging to the SSPDL or in which it is

interested and the business of any lands, buildings, flats, residential or business purposes and other structures, works pertaining

to real estate.


Mr. Challa Suresh

Mr. Challa Prakash

Mr. E. Bhaskar Rao

Business activity: The main objective of the company is to carry on business in real estates.





Total 10000 100.00

Financials for year ended March 31st

PARTICULARS 2006

Sales —

Other Income —

PBDIT —

PBT —

PAT—

Share Capital 1.00

Reserve & Surplus —

Net Worth 0.94

EPS(in Rs) —

Dividend —

NAV 9.36

12. SSPDL RETREAT PRIVATE LIMITED

SSPDL Retreat incorporated on March 10, 2006 as a Private Limited with the objective of carrying on in all their respective




to real estate.

84


Mr. Challa Prakash

Mr. Vasantray Vadodaria

Mr. Ramesh Jogani

Mr. Khusru Jijina

Mr. E. Bhaskar Rao

Business activity: SSPDL is engaged in the business of real estates.



IL&FS Trust Company Ltd ( Trustee of IndiaReit Fund) 9999 99.99

IL&FS Trust Company Ltd ( Trustee of IndiaReit Fund jointly with Adrish Gosh) 1 0.01

Total 10000 100.00

As the company incorporated in the year 2006, there are no financial data available.

13. JAGRUTHI VENTURES PRIVATE LIMITED ( JVPL)

JVPL was incorporated on February 07, 2006 as a Private Limited with the objective of carrying on in all their respective




to real estate.


Mr. E. Bhaskar Rao

Ms. E. Padmaja

Business activity: JVPL is engaged in the business of real estates





Total 10000 100

Financial for the year ended March 31st 2006

(Rs. Lakhs)

PARTICULARS 2006

Sales —

Other Income —

PBDIT —

PBT —

PAT —

Share Capital 1.00

Share Application Money 0.32

Reserve & Surplus —

Net Worth ( inclusive of Share Application money) 0.79

EPS (in Rs) —

Dividend —

NAV (in Rs) 7.89

85

FIRMS

1. M/s SRI SATYA SAI CONSTRUCTIONS

Mr. E. Bhaskar Rao and Mr. Challa Prakash started this firm on April 18, 2004. However, the deed of partnership was entered

into by them on October 11, 2004.

The profits and losses of the business (including loss of capital) shall be divided and borne by the partners equally.

Business Activity: The firm is engaged in the business of real estate, Property development and Construction.

Financials for the year ended March 31

(Rs. Lakhs)

Particulars 2005 2006

Sales - 185.70

Other Income 0.46 3.89

PBDIT 16.93 122.24

PBT 0.46 102.94

PAT- 102.94

Partners Capital 118.79 201.35

Capital Reserve — —

2. M/s S.V.S REAL ESTATE TRADERS

The deed of partnership was signed by Mr. E. Bhaskar Rao and Mr. C. Suresh Rayudu, Ms. C. Usha Lakshmi and Mr. M.

Sharath Babu on January 04, 1997. As per this deed the partnership shall be deemed to have commenced from April 20, 1996.

Earlier the business of the firm was carried on by Mr. M.Kotaiah until the partnership deed was signed.

As per this deed Mr. E.Bhaskar Rao shall be the Managing Partner. The profits and losses of partnership after payment of all

expenses, charges, partners’ remuneration, interest and outgoings shall belong to and be borne by the partners, Mr. E. Bhaskar

Rao (HUF) Mr. C. Suresh Rayudu, Ms. C. Usha Lakshmi and Mr. M. Sharath Babu in the profit /loss sharing ratio of 70:5:15:10

respectively.

As there were no commercial operations during financial years 2003-2004, 2004-2005, 2005-2006, Profit and loss account

was not prepared.

3. M/s E. Bhaskar Rao & T. Krishna Reddy

The Partnership Firm M/s E.Bhaskar Rao & T.Krishna Reddy was formed by virtue of deed of Partnership dated 18th May,

1999.

The partnership was reconstituted on 17th October, 2001 with Mr.E.Bhaskar Rao, Ms. K. Anuradha, Mr.T.Rajsekhar and

Ms.E.Monisha Sridurga as partners.

The profits and losses of partnership after payment of all expenses , charges, partners’ remuneration, interest and outgoings

shall belong to and be borne by the partners in the profit sharing ratio of 25:25:25:25 and loss in the ratio of 33.33:33.33:33.33:0

respectively by Mr.E.Bhaskar Rao, Ms. K. Anuradha, Mr.T.Rajsekhar and Ms.E.Monisha Sridurga respectively.

Financials for the last three years ended on March 31st

(Rs. Lakhs)


Sales 484.61 465.86 456.08


PBDIT 4.15 17.32 10.51

PBT (3.84) 10.68 4.11

PAT (4.10) 8.01 2.12

Partners Capital 132.78 140.79 74.30

Capital Reserve 24.99 24.99 24.99

86

SOLE PROPRIETORY CONCERN

1. SRI SATYA SAI CONSTRUCTIONS

Mr. Challa Prakash has started this concern with an objective of entering into real estate and construction business.

Business Activity: The main objective of the firm is to carry on business in real estate, developers and Contractors.

Financials for the year ended March 31st

(Rs. Lakhs)


Income 439.83 1062.03 150.87

Other Income 45.15 37.46 137.91

PBDIT 67.11 70.62 115.71

PBT 25.35 16.39 76.53

PAT- - 76.53

Share Capital 344.89 319.60 544.14

Reserve & Surplus — — —

None of the above companies have become a sick company within the meaning of the Sick Industrial Companies

(Special Provisions) Act, 1995 or is under winding up.

Struck off from the register of Registrar of Companies

None of the Group Companies have been struck off from the register of the relevant Registrar of Companies.

Disassociation of Promoters

Promoters have not disassociated from any of the Companies/firms during preceding three years.

Common Pursuits

The individual promoters of the company are having interest in the following ventures, which are authorized by its main

object clauses to carry on the similar line of activities and can result in the possible conflict of business interest among these

ventures and the company:


(Shareholding %)








6 Jagruthi Ventures Pvt. Ltd. Mrs. E.Padmaja 50.00



(Sole Proprietory Concern)


(Partnership Concern) Mr. E Bhaskar Rao 50.00





In the above mentioned entities except, Sri Satya Sai Constructions (Firm) there are no major commercial transactions or

operations and some of them were incorporated recently and also they do not deal with the company in any manner which

could have conflict with company’s business interest. However in future once these companies begin commercial operations

there could be conflict of interest

87

3. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS AS REFLECTED IN FINANCIAL STATEMENTS

Investors should read the following discussion of financial condition and results of operations together with the restated

audited financial statements and the notes to those statements included in this Letter of Offer. The following discussion is

based on the company’s audited financial statements and on information available from other sources. The company’s fiscal

year ends on March 31st of each year, so all references to a particular fiscal year ends on March 31st of that year.

Overview

SSPDL is engaged in property development and construction business since its inception. The company was originally promoted

by Srinivasa Hatcheries Group and Mr. Challa Prakash. In 1995, the company made its maiden offer of Rs. 75 Lakhs.

The company has constructed buildings in Chennai - namely Capital Towers and FFE Towers with 1, 37,000 sq. ft at a value

of Rs. 5500 Lakhs and over 30,000 sq. ft. valued at Rs. 1125 Lakhs respectively. The Company also undertook a Rs. 1200

Lakhs wind farm project, which was divested subsequently with a ROI of over 20% to the company.

Company’s activities took a subdued tone in the subsequent years due to lack of investment opportunities during the IT slump

period .In the year 2002-2003 there was a change in the management / owner ship control with the Srinivasa Hatcheries Group

divesting their interest in the company in favour of Mr. Challa Prakash, Mr. E. Bhaskar Rao, Mr. Challa Suresh and Sri

Krishnadevaraya Hatcheries Private Limited.

The company currently has four projects in hand i.e., Alpha city-IT Park, Chennai Central, the Retreat (a residential villa

project at Bangalore) and an IT Park at Perungudi, Chennai.

Significant Developments subsequent to the Last Financial Year

I. The Company has entered into a MOU with Spire Realty Hyderabad Retreat Limited under FDI Scheme by US based


II. The Company has received Power of Attorney from M/s. Bhagyanagar Investments and Trading Private Limited, M/s. G

B Trading and Investment Private Limited, M/s. Infotech Infin and Trading Private Limited; M/s. Golkonda Finance and

Trading Private Limited and Sri P V Ramana Reddy to development a residential layout in acres 19.25 guntas at



III. Warrant-holders holding 3,27,750 warrants have opted for conversion of warrants into Equity Shares. Consequent upon

which, the Company’s share capital has increased to 43,09,750 Equity Shares.

Other than those mentioned above, no circumstances have arisen since the date of the last financial statements as disclosed in

the Letter of Offer and which materially and adversely affect or is likely to affect the trading or profitability of the company,

or the value of its assets or its ability to pay its liabilities within the next twelve months.

Key Factors influencing results of operations

The key factors influencing the results of operations, profitability and cash flow are listed below:

Seasonality and weather conditions.

The Company‘s business operations may be adversely affected by severe weather, which may require the Company to evacuate

personnel or curtail services and it may result in damage to a portion of its fleet of equipment or facilities resulting in the

suspension of operations and may prevent the Company from delivering materials to its jobsites in accordance with project

schedules or generally reduce its productivity.

Market price behaviour of key materials

The Company’s project cost mainly comprises of construction related materials i.e. steel and cement. These being commodities,

changes in prices during the execution of the project may alter profitability on contracts, which are not covered by escalation

provisions.

Growth in the economy.

The Company‘s business is significantly dependent on the general economic condition. Growing economy increases the

standard of living and demand for housing.

88

Financial comparison

The table below sets forth information regarding income, expenditure and profits for the indicated period.

Period ended on 31.03.03 31.03.2004 31.03.2005 31.03.2006

Amount Amount Increase / Amount Increase / Amount Increase/ Amount

(Rs. lakhs) (Rs. lakhs) (Decrease)% (Rs. lakhs) (Decrease)% (Rs. lakhs) (Decrease)% (Rs. lakhs)

Income

Contract Receipts & other - - - 193.38 - 191.58 (0.93%) 2765.65

business turnover

Other Income 6.14 8.45 37.62% 6.74 (20.24%) 31.63 369.29% 19.49

Increase /decrease in stocks (11.59) 1.42 112.25% (185.23) (13144.3%) 506.07 373.21% 272.10

Total Income (5.45) 9.87 281.10% 14.89 50.86% 729.28 4797.78% 3057.24

Expenditure

Construction, Selling &

Administration Expenses. 27.08 35.32 30.43% 34.16 (3.28%) 566.10 1557.20% 2530.73

Interest 3.12 2.76 (11.54%) 0.22 (92.03%) 2.27 931.82% 61.33

Total Expenditure 30.20 38.08 26.09% 34.38 (9.72%) 568.37 1553.20% 2592.06

Net Profit Before Depreciation,

Tax and prior period items (35.65) (28.21) 20.87% (19.49) 30.91% 160.91 925.60% 465.18

Depreciation 1.93 1.67 (13.47%) 2.32 38.92% 2.44 5.17% 9.00

Net Profit Before Tax &

Extraordinary items (37.58) (29.88) 20.49% (21.81) 27.01% 158.47 826.59% 456.18

Provision for Taxation (11.87) (16.28) (37.15%) (3.54) 78.26% 67.39 2003.67% 83.86

Net Profit after tax & before

Prior Period items (25.71) (13.6) 47.10% (18.27) (34.34%) 91.08 598.52% 372.32

EBITD (38.77) (30.97) 20.12% (19.71) 36.36% 163.18 927.90% 526.51

Comparison of Fiscal 2004 with 2005.

The company has not undertaken any new project during the previous financial year. This is the second consecutive year for

which the company has not undertaken any new project. Consequently, the company has incurred losses, as it cannot avoid all

of the operating costs, which are fixed in nature. However, with the Management’s renewed focus, the company was working

on identifying new projects for development.

Operating Income

During the financial year 2004-05, the company sold Rs. 193.38 worth of capital work in progress. The company did not earn

any revenue in the form of contract receipt, as the company did not have any project on hand.

Administrative and other expenses

The company incurred Rs. 34.16 lakhs towards general administrative expenses.

EBITDA

Earning Before Interest, Tax and Depreciation (EBITD) for the financial year 2004 was Rs. (19.17) lakhs, which increased by

36.36% over the previous financial year. This was due to sale of capital work in progress.

Comparison of Fiscal 2005 with 2006

The company undertook three projects during the financial year i.e., Alpha city-IT Park, Chennai Central, and the Retreat (a

residential villa project at Bangalore). The company is set to move ahead on the growth path.

89

Operating Income

During this period, the operating income of the company was Rs. 191.58 lakhs. The company profits have increased for the

financial year 2005-06 due to realization of income by way of relinquishment of rights in a property for Rs.100 lakhs and

Rs.91.58 lakhs by way of commission and brokerage.

Administrative and other expenses

The administrative, selling and other expenses increased to Rs. 566.10 lakhs owing to Advertisement expenses as the company

got few good projects during the year and had started working on it.

EBITDA

Earning Before Interest, Tax and Depreciation (EBITD) for the period was Rs. 163.18 lakhs, an increase of 927.90% over the

previous year.

Reserves and Surplus

During the year 2005-06 the company has allotted 9,82,000 equity shares of Rs.10/- each at a premium of Rs.116/- per share

and 3,29,500 convertible warrants at Rs.126/- each ( of which 10% was received on application upfront) Consequent upon

which there has been increase in share premium account.

Unsecured loans

The Company has borrowed Rs.140.50 lakhs as unsecured loans from various parties towards the projects of the company.

Comparison of Fiscal 2006 with 9 month period ended 31st December 2006

The company currently has four major projects in hand i.e., Alpha city-IT Park, Chennai Central, and the Retreat (a residential

villa project at Bangalore) and an IT Park at Perungudi, Chennai.

The Company has during this period received contract receipts towards the construction of Villas at The Retreat Bangalore.

Further the Company has completed construction of major portion of Alpha City (Gamma Block) for which the Company has

recognized turnover on percentage completion method. Accordingly the Company has recognized an amount of Rs.2765.65

lakhs towards contracts receipts. The Company has borrowed unsecured loans from venture promoted by the promoters

towards the projects of the company. Accordingly, there has been increase in unsecured loans by an amount of Rs.1009.85

lakhs.

Changes in Accounting Policies

There is no change in accounting policy, which have or is expected to have a material impact on the profitability of the

company.

Information required as per clause 6.10.5.5(A) of the SEBI guidelines

Unusual or infrequent events or transactions

Failure to undertake project on the part of the company can significantly impact the financials of the company. The company

did not have any project for a period of 3 consecutive years from 2002 to 2005. Consequently, the company incurred losses in

those years.

Significant economic changes that materially affected or are likely to affect income from continuing operations

Any major changes in policies of the government including taxation, FDI, etc. would have significant impact on the profitability

of the company.

Except the above, there are no significant economic changes that may materially affected or are likely to affect income from

continuing operations.

Known trends or uncertainties that have had or are expected to have a material impact on sales, revenues and income from

continuing operations

Apart from the risks as disclosed under heading ‘Risk Factors’ in the Letter of Offer, there are no other known or uncertainties

that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

Future changes in relationships between costs and revenues in case of events such as future increase in labour or material

cost or prices that will cause material change are known

The change in the prices of major raw material like cement and steel would materially affect cost and revenue and is expected

to have a positive impact on the industry as well as the company.

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Total turnover of each major industry segment in which the company operated

The company is operating in only one industry, i.e. property development segment in the construction industry

Status of any publicly announced new products or business segment

The company has not announced any new product and segment.

Seasonality

The company business is not seasonal.

Any significant dependence on a single or few suppliers or customer

The company does not depend on any single buyer for its revenue nor on any single supplier for its materials.

Competitive conditions

For details of competitive conditions please refer to section titled “Business Overview” starting on page 31 of this Letter of

Offer.

91

SECTION VI. LEGAL & OTHER INFORMATION

1. Outstanding litigations and material developments

There are no contingent liabilities not provided for, outstanding litigations, proceedings, disputes, non payment of statutory

dues including disputed/contested tax liabilities of any nature including government claims, overdues to banks/ financial

institutions, defaults including those against banks/ financial institutions, defaults in dues towards instrument holders like

debenture holders, fixed deposits, and arrears on cumulative preference shares issued by the Company or the companies/firms

promoted by the Company, defaults in creation of full security as per terms of issue/ other liabilities, proceedings initiated for

economic/ civil/ any other offences (including past cases where penalties may or may not have been awarded and irrespective

of whether they are specified under paragraph (i) of part 1 of Schedule XIII of the Companies Act, 1956) by / against Srinivasa

Shipping and Property Development Limited and its subsidiaries save and except the following:

Contingent liabilities not provided:

The contingent liabilities for which no provisions have been made in the books of accounts of the company for period ended

31st December 2006.

(Rs in Lakhs)

Sr. No Particulars Amount


Inspection by the Office of the Regional Director, Ministry of Company Affairs, Chennai

Deputy Director (Inspection), Office of the Regional Director, Ministry of Company Affairs, Southern Region, Chennai has

conducted an inspection of books of accounts, statutory registers and other documents of the Company U/s 209A of the

Companies Act, 1956 in August 2006. Consequent upon the inspection, the concerned Office has communicated vide their

letter dated 21st September 2006 to the Company requesting it to furnish the necessary replies/information with regards to the

following alleged violations of provisions of the Companies Act, 1956 and Accounting Standards issued by the Institute of

Chartered Accountants of India.

Violation of Section 211 read with the Schedule VI of the Companies Act,1956.

� Non disclosure of the transaction of Unsecured Loan from Director under specific head “Loan from Directors”.

� Wrongful disclosure of Secured loan as Hypothecation of vehicle instead of hire purchase.

� Unsecured loan from Directors was wrongfully classified as Sundry Creditors.

� Disclosure of income from relinquishing rights in a property was treated as regular business income which was not

reflecting the true and fair view of the Company.

� Brokerage income which was received from Sri Satya Sai Constructions was not shown under a separate head.

� The income received from relinquishment of rights in favour of M/s Anchor Malls Private limited was not disclosed

under a separate head “other Income”.

� Fees paid to the Statutory Auditors of the Company was not properly disclosed as required under schedule VI Part II para

4 B (a) & (b) of the Companies Act, 1956.

� Non disclosure of Loans granted separately under the head “Loans and Advances” which were clubbed together with

Advances made by the Company.

Violation of Section 291 read with Section 292 of the Companies Act, 1956.

The outstanding amount from Unsecured loan of Rs.1,45,00,000/- to M/s VIL International Pvt. Ltd carrying interest @ 18 %

p.a advanced by the company has continued beyond a period of two months without the authorization of the Board.

Violation of AS-18 read with Section 211 ( 3A)/(3C) of the Companies Act, 1956

Non disclosure of related party transaction of brokerage income from Associates in the prescribed format of AS 18.

Violation of AS-19 read with Section 211 (3A)/ (3C) of the Companies Act, 1956

Non disclosure of terms and conditions of Hire Purchase of vehicle as per the prescribed format of AS19.

92

Violation of Schedule VI Part II Para 4B of the Companies Act, 1956.

Fees paid to the Statutory Auditors of the Company was not properly disclosed as required under schedule VI Part II para 4 B

(a) & (b) of the Companies Act, 1956.

Violation of Section 217(1) of the Companies Act, 1956

Non disclosure of income received for a sum of Rs.1 Crore as income by way of relinquishment of Company’s rights in the

property in favour of M/s Anchor Malls Pvt Ltd , Mumbai in the directors report forming part of the Annual Report.

Violation of AS-5 Read with Section 211 (3A)/(3C) of the Companies Act, 1956.

- The income received from relinquishment of rights in favour of M/s Anchor Malls Private limited was not disclosed under a

separate head “other Income” and not categorized as Extraordinary Income.

Violation of Section 149(2A) of the Companies Act, 1956

Income received from brokerage and commission from M/s Satya Sai Constructions towards services rendered as Real Estate

agent which falls under the Other Objects of the Company for which the company did not pass a special resolution required

under 149 (2A) of the Companies Act, 1956.

Violation of Section 297 of the Companies Act, 1956

Non-obtainance of permission U/s 297 of the Companies Act, 1956 from the Central Government for entering into related

party transaction for service extended to M/s Sri Satya Sai Constructions, being a related party.

Violation of Section 291 of the Companies Act, 1956.

The Board in violation of Section 291 has acted beyond its scope and commenced the business of Real Estate Agent without

obtaining approval from the Members of the company as required under section 149 (2A) of the Companies Act, 1956.

The company has made its submission to the Office of Regional Director, Ministry of Company Affairs, Southern Region,

Chennai vide their letter dated 27th September 2006, which is yet to revert.

Cases filed by the Company

S. Case Parties Adjudicating Particulars Status Amount (Rs)

No. No Authority

1 Yet to be Dr. M. Transferred from C.S.No.479 of 1997 was Pending Rs.17,17,829.54 ps (As on

given Kuppuswamy High Court of filed by the company against date 18-03-2003)

Chennai to Sub Dr. M. Kuppuswamy for

Court, Poonamallee recovery of Rs.10 lakhs along

with interest. Suit was decreed

on 17.10.1999. Company filed

execution petition against

Dr.M.Kuppuswamy.

1. Litigation involving Criminal Offences: Nil

2. Litigation/Disputes involving Securities Related Offences, including penalties imposed by SEBI or any other securities

market regulator in India or abroad: Nil

3. Litigation involving Statutory and other offences, including penalties imposed by any regulatory authority in India or

abroad (Present or past): Nil

4. Litigation involving Civil and Economic Offences: Nil

5. Litigation in relation to labour laws, and employee related cases: Nil

6. Litigation involving revenue authorities (customs/excise/sales tax/income tax/service tax):

93

Cases filed against the Company

S. Case Parties Adjudicating Particulars Status Amount (Rs)

No. No Authority

1 Sales Tax The Commercial Sales Tax Appellate CTO Nandanam, issued re- Pending Fee levied : Rs.6,74,400/-

Appeal Tax Authority Tribunal, Chennai assessment proceeding for the Tax on fee levied @ 20% :

No.93 of year 1997-98 demanding Rs. Rs.1,34,880/- and

6,74,400/- along with penalty of Rs.2,02,320/-

Rs.2,02,320/-. Company succee-

ded in appeal before the Appellate Penalty.

Assistant Commissioner Relief claimed and

(Commercial Taxes) III Chennai received Rs.3,37,200/-

and has claimed a relief on tax on

fee levied of Rs. 1,34,880/- and

on penalty of Rs.202320 which

amounted to Rs.3,37,200/-.

Department filed second appeal

before the Sales Tax Appellate

Tribunal, Chennai. Appeal is

pending.

7. Litigation involving customers/suppliers/agents Nil

8. Litigation in the nature of winding up petitions/ liquidation/ bankruptcy / closure filed by / against the company: Nil

9. Other Litigation: Nil

Non payment of statutory dues or dues to Banks / Institutions: Nil

Overdue interest/ principal as on current date: Nil

There have been no defaults and there are no overdues in respect of bonds debentures and fixed deposits (placed through

public or private placement) and arrears in respect of cumulative preference shares or any other liabilities as on current date:

Nil

Further, there are no litigations/disputes/penalties or any proceedings known to be contemplated by government authorities

except as follow: Nil

Further, there are no cases in which penalties were imposed by the concerned authorities on the issuer company and its

subsidiaries or its directors.

No disciplinary action/investigation has been taken by the Securities and Exchange Board of India (SEBI)/Stock Exchanges

against the company, its Directors, Promoters and their other business ventures (irrespective of the fact whether or not they fall

under the purview of Sec 370(1B) of the Companies Act, 1956).

The company, promoters, directors or any of the company’s associates or Group companies or other ventures of the promoters

and companies with which the directors of Srinivasa Shipping and Property Development Ltd are associated as directors or

promoters have not been prohibited from accessing the capital markets under any order or direction passed by SEBI and no

penalty has been imposed at any time by any of the regulators in India or abroad.

No penalties were imposed by SEBI or any other regulatory body in India or abroad.

There are no pending proceedings initiated for economic offences against the issuer company.

Other than those mentioned above, there is no litigation against Srinivasa Shipping and Property Development Ltd.

The company does not owe sum exceeding 1 lakh outstanding for more than 30 days to small scale undertakings or any

creditor of Srinivasa Shipping and Property Development Ltd.

There are no adverse findings in respect of persons/entities connected with the issuer/promoter as regards compliance with the

securities law.

There are no litigations against any other company whose outcome could have materially adverse effect on the position of the

Company.

Litigation against Promoters

There are no pending litigations in which the promoters are involved. Further, no defaults were made to the financial institutions/

banks, non-payment of statutory dues and dues towards instrument holders like debenture holders, fixed deposits, and arrears

on cumulative preference shares by the promoters and the companies/ firms promoted by the promoters.

94

Further, there are no cases of pending litigations, defaults, etc. in respect of companies/ firms/ ventures with which the promoters

were associated in the past but are no longer associated.

Further, there are no litigations against the promoter involving violation of statutory regulations or alleging criminal offence.

There are no pending proceedings initiated for economic offences against the promoters, companies and firms promoted by

the promoters

There are no pending litigations, defaults, non-payment of statutory dues, proceedings initiated for economic offences/ civil

offences (including the past cases, if found guilty). Further, no disciplinary action was taken by the SEBI/ stock exchanges

against the promoters and their other business ventures (irrespective of the fact whether they are companies under the same

management with the issuer company as per section 370 (1B) of the Companies Act, 1956).

Litigation against Directors

There are no pending litigations against the directors involving violation of statutory regulations or alleging criminal offence.

There are no pending proceedings initiated for economic offences against the directors.

There are no past cases in which penalties were imposed by the concerned authorities on the issuer company or its directors.

There are no pending litigations, defaults, non payment of statutory dues, proceedings initiated for economic offences/ civil

offences (including the past cases, if found guilty), any disciplinary action taken by the SEBI / stock exchanges against the

issuer company or its Directors.

Litigation against Group Companies/Subsidiary Companies/ Ventures Promoted by the Promoters :

Group Companies

SSPDL Ventures Pvt. Ltd. Nil

SSPDL Retreat Pvt. Ltd. Nil

Subsidiary Companies

SSPDL Real Estates India Pvt. Ltd Nil

SSPDL Realty India Pvt. Ltd. Nil

SSPDL Infrastructure Developers Pvt. Ltd. Nil

SSPDL Infra Projects India Pvt. Ltd. Nil

SSPDL Matrix Towers Pvt. Ltd. Nil

SSPDL Resorts Pvt. Ltd. Nil

Ventures promoted by the promoters

a) Companies

Serenity Homes Pvt. Ltd. Nil

Sunrise Homes Ltd. Nil

Intelligent Software Solutions Pvt. Ltd. Nil

Sri Jagapathi Farms Pvt. Ltd. Nil

Monisha Sri Durga Farms Pvt. Ltd. Nil

Jaagruthi Foundations Pvt. Ltd. Nil

Pallavi Perfumes and Cosmetics Pvt. Ltd. Nil

Sri Lakshmi Narasamma Minerals Pvt. Ltd. Nil

Sahiti Farms Pvt. Ltd. Nil

Mojasa Fragrance and Cosmetics Pvt. Ltd. Nil

Jagruthi Ventures Pvt. Ltd. Nil

b) Firms

Sri Satya Sai Constructions Nil

E.Bhaskar Rao & T. Krishna Reddy Nil

SVS Real Estate Traders Nil

c) Sole Proprietorship Concern

Sri Satya Sai Constructions Nil

95

Further, there are no litigations/defaults /suits etc. pertaining to the Issuer Company, promoters, directors, all other Ventures of

Promoters including ventures with which the promoters were formerly associated during the last 5 years.

The promoters, their relatives (as per Companies Act, 1956), issuer, group companies, associate companies are not detained as

willful defaulters by RBI/ government authorities and there are no violations of securities laws committed by them in the past

or pending against them.

Material Developments

Other than the following, there are no material developments after the date of the last audited balance sheet as on March 31,

2006, which may materially affect the performance, or prospects of the Company.

i. The Company has entered into a MOU with Spire Realty Hyderabad Retreat Limited under FDI Scheme by US based


ii. The Company has received Power of Attorney from M/s. Bhagyanagar Investments and Trading Private Limited, M/s.

G B Trading and Investment Private Limited, M/s. Infotech Infin and Trading Private Limited; M/s. Golkonda Finance

and Trading Private Limited and Sri P V Ramana Reddy to development a residential layout in acres 19.25 guntas at



iii. Warrant-holders holding 3,27,750 warrants have opted for conversion of warrants into Equity Shares. Consequent upon

which, the Company’s share capital has increased to 43,09,750 Equity Shares.

As per the opinion of the Directors, no circumstances have arisen since the date of last financial statement disclosed in the

Letter of Offer that materially and adversely affect or are likely to effect the trading or profitability of the Company, the value

of its assets, or its ability to pay liabilities within the next twelve months.

2. Government Approvals

In view of the approvals listed below, the Company can undertake this issue and its current business activities. The Company

has received the necessary consents, licenses, permissions and approvals from the Government and various Government

agencies required for its present business and no further approvals are required for carrying on the present as well as the

proposed business:-

Investment Approvals (FIPB/ RBI, etc.)

As per Notification No. FEMA 20 / 2000 - RB dated 3rd May 2000, as amended from time to time, under automatic route of

Reserve Bank, the Company is not required to make an application for Issue of Equity Shares to NRIs/FIIs with repatriation

benefits. However, the allotment / transfer of the Equity Shares to NRIs/ FIIs shall be subject to prevailing RBI Guidelines.

Sale proceeds of such investments in Equity Shares will be allowed to be repatriated along with the income thereon subject to

the permission of the RBI and subject to the Indian tax laws and regulations and any other applicable laws.

CERTIFICATE FROM REGISTRAR OF COMPANIES

Date of Authority Approval/ Applicable Nature of

approval granting registration law Approval

approval number

17.10.1994 Registrar of Companies, 01-18540 Companies Act Certificate of

Andhra Pradesh Incorporation

04.11.1994 Registrar of Companies, -- Companies Act Certificate of

Andhra Pradesh Commencement

The company has obtained the following consents, licenses, permissions and approvals from the concerned authorities.

Company Specific

1. Permanent Account Number AADCS0821K.

2. Tamilnadu General Sales Tax Registration No.1581017/2006-07.

3. TAN No.HYDS07368E

4. Provident Fund Registration No.AP/32575.

5. TIN No. (Tax Payers Identification Number) under the Tamil Nadu Value Added Tax Act, 2006 - 33671581017

96

Project Specific

6. Approval from the director of town and country planning Chennai declaring the proposed site at Navalur village S.No.65/

1A2, 2A2B, 2B2B, 2C1B2, 65/1B part, 2A3 part, 2CICpart with an extent of 5.17 acres Tiruppur Panchayat Union, as

multi storeyed building area for the development of I.T.Park in accordance with Rule 4(a) of the Tamil Nadu Multi

Storied and Public Building Rules 1973.

7. Approval from ELCOT vide letter no. GM(IT P&D)/ELCOT/923/ITP-FSI/2005 dated 22nd August, 2005.confirming

that the company fulfills the conditions required for IT Buildings and the company is eligible for extra FSI as laid down

in the IT policy of Tamil Nadu 2002.

8. No Objection from Tamil Nadu Fire and Rescue Service Department vide letter no. R.c.No.2654/A/2005 dated 26th

August, 2005 for issuing planning permission for the proposed IT Park building at Navalur.

9. No objection from Inspector of factories for Planning permission for the proposed IT Park building at Navalur, Chennai,

dated 23th August, 2005.

10. No Objection from Department of General Health Chennai, vide letter dated 16th September, 2005 for issuing planning

permission for the proposed IT Park building at Navalur.

11. Planning permission from the Commissioner, Panchayat Union, Thirupporur vide their letter dated 11.07.2005.

The Company has made application for the following approvals for its Alpha City Project:-

1. Application to Tamil Nadu Pollution Control Board and Ministry of Environment and Forests for Environmental Impact

Assessment Report.

2. Application for final approval from Director Town and Country Planning (DTCP)

The Company expects the above approvals by July, 2007.

It must be specifically understood that the Central/State Government or RBI does not take any responsibility for

financial soundness of the statements made by the Company.

97

SECTION - VII. OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue

The Rights issue has been authorized by the Board of Directors at its meeting held on 20th August, 2005. Further, the Equity

Shareholders have approved the present rights issue in terms of Section 81(1A) of the Companies Act, 1956 vide special

resolution passed at the Extra Ordinary Meeting of the Company held on 10th October, 2005.

Prohibition by SEBI

The company, its associates, its directors, its promoters, other companies/entities promoted by the promoter and companies/

entities with which the company’s directors are associated as directors have not been prohibited from accessing/operating in

the capital markets under any order or direction passed by SEBI. None of the company’s directors or the persons in control of

the company has been prohibited from accessing the capital markets under any order or direction passed by SEBI. Further,

none of the Directors or Promoters of Sri Krishnadevaraya Hatcheries Private Limited have been prohibited from accessing

the capital markets under any order or direction passed by SEBI.

Eligibility of the Company to come out with the Issue

This Issue, being a rights issue, is exempt from the eligibility norms in terms of Clause 2.4.1 (iv) of the SEBI (Disclosure and

Investor Protection) Guidelines, 2000 and amendments thereto.

SEBI DISCLAIMER CLAUSE

AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE

DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THE DRAFT LETTER OF OFFER TO SEBI SHOULD

NOT, IN ANY WAY, BE DEEMED / CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY

SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY

SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE

CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT LETTER

OF OFFER. THE LEAD MANAGER, KARVY INVESTOR SERVICES LIMITED HAS CERTIFIED THAT THE

DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN

CONFORMITY WITH SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES IN FORCE FOR

THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED

DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT, WHILE THE ISSUER IS PRIMARILY RESPONSIBLE

FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE

DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO

ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND

TOWARDS THIS PURPOSE, THE LEAD MANAGER, KARVY INVESTOR SERVICES LIMITED HAS

FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 7TH JUNE 2006 IN ACCORDANCE WITH

SEBI (MERCHANT BANKERS) REGULATIONS, 1992, WHICH READS AS FOLLOWS:

1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE

COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER

MATERIALS IN CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER OF OFFER

PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS

DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE

STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE

JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS AND OTHER PAPERS FURNISHED BY

THE COMPANY,

WE CONFIRM THAT:

a) THE DRAFT LETTER OF OFFER FORWARDED TO SEBI IS IN CONFORMITY WITH THE

DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

b) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE

GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER

COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

98

c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE

TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT

IN THE PROPOSED ISSUE.

3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT

LETTER OF OFFER ARE REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATIONS ARE

VALID.

THE FILING OF THE DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM

ANY LIABILITIES UNDER SECTION 63 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF

OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF

THE PROPOSED ISSUE. SEBI, FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME,

WITH THE LEAD MANAGER ANY IRREGULARITIES OR LAPSES IN THE DRAFT LETTER OF OFFER.

The Board of Directors of the Company declare and confirm that no information/material likely to have a bearing on the

decision of investors in respect of the shares offered in terms of this Letter of Offer has been suppressed/withheld and/or

incorporated in the manner that would amount to mis-statement /mis-representation and in the event of its transpiring at any

point of time allotment/refund, as the case may be, that any information/material has been suppressed/with held and/or amounts

to a mis-statement /mis-representation, the promoters/directors undertake to refund the entire application monies to all the

subscribers within 7 days thereafter without prejudice to the provisions of Section 63 of the Companies Act.

General Disclaimer

The Company and Lead Manager accepts no responsibility for any statements made otherwise than in the Letter of Offer or in

the advertisement or any other material issued by or at the instance of the Company and that anyone placing reliance on any

other source of information would be doing so at his own risk.

All information shall be made available by the Lead Manager and the Issuer to the shareholders and no selective or additional

information would be made available for a section of the shareholders or investors in any manner whatsoever including at

presentations, research or sales reports, etc.

The Lead Manager and the Company shall keep the Shareholders informed of any material changes till the listing and trading

commencement.

Disclaimer in Respect of Jurisdiction

This Rights Issue is made in India subject to Indian laws. Any dispute arising out of this Offer will be subject to the jurisdiction

of appropriate court(s) in Hyderabad only.

No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose,

except that this Letter of Offer has been filed with SEBI for observations and SEBI has given its observations. Accordingly,

the Equity Shares represented thereby may not be offered or sold, directly or indirectly, and this Letter of Offer may not be

distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the

delivery of this Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been

no change in the Company’s affairs from the date hereof or that the information contained herein is correct as of any time

subsequent to this date.

Disclaimer Clause of BSE

BSE has scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid

permission to the Company. BSE has given its permission vide its letter dated 29th June, 2006 giving permission to this

Company to use the Exchange’s name in this Letter of Offer as one of the Stock Exchanges on which this Company’s securities

are proposed to be listed. The Exchange has scrutinized this Letter of Offer for its limited internal purpose of deciding on the

matter of granting the aforesaid permission to this Company.

BSE does not in any manner (a) warrant, certify, or endorse the correctness or completeness of any of the contents of this

Letter of Offer, or (b) warrant that the Company’s securities will be listed or will continue to be listed on the Exchange or (c)

take any responsibility for the financial or other soundness of this Company, its promoters, its management, or any scheme, or

project of this Company.

It should not, for any reason, be deemed or construed that the Letter of Offer has been cleared or approved by BSE. Every

person who desires to apply for or otherwise acquire any securities of this Company may do so pursuant to independent

inquiry, investigation and analysis and shall not have any claim against the BSE whatsoever by reason of any loss which may

be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything

stated or omitted to be stated herein or any other reason whatsoever.

99

Disclaimer Clause of HSE

HSE has scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid

permission to the Company. HSE has given its permission vide its letter no.: HSE: LIST:2006:187 dated 1st July, 2006.

HSE does not in any manner (a) warrant, certify, or endorse the correctness or completeness of any of the contents of this

Letter of Offer, or (b) warrant that the Company’s securities will be listed or will continue to be listed on the Exchange or (c)

take any responsibility for the financial or other soundness of this Company, its promoters, its management, or any scheme, or

project of this Company.

It should not, for any reason, be deemed or construed that the Letter of Offer has been cleared or approved by HSE. Every

person who desires to apply for or otherwise acquire any securities of this Company may do so pursuant to independent

inquiry, investigation and analysis and shall not have any claim against the HSE whatsoever by reason of any loss which may

be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything

stated or omitted to be stated herein or any other reason whatsoever.

Filing

A copy of the Letter of Offer has been filed with the Southern Regional Office of Securities and Exchange Board of India at D‘

Monte Building, 3rd Floor, 32 D‘ Monte Colony, TTK Road, Alwarpet, Chennai - 600018.

A copy of this Letter of Offer has been filed with BSE and HSE having attached thereto the Material Contracts and Documents

mentioned on page no. 138 of the Letter of Offer.

Listing

The Company’s existing equity shares are listed on Bombay Stock Exchange Limited (“BSE”) and The Hyderabad Stock

Exchange Limited (“HSE’). The Company proposes to get the proposed Rights Shares listed on BSE & HSE. The in-principle

approval for listing the rights equity shares has been obtained from BSE (Designated Stock Exchange) and HSE vide their

letters dated 29th June, 2006 and 1st July, 2006 respectively.

In case the permission to deal in and for an official quotation of the Equity Shares now being offered by the Company through

this Letter of Offer is not granted by BSE and HSE, the Company shall forthwith repay without interest all monies received

from applicants in pursuance of the Letter of Offer and if any such money is not repaid within eight days after the Company is

liable to repay (i.e. 42 days from the closure of the issue), The Company will pay interest as prescribed under Section 73 2/2A

of the Companies Act, 1956.

The Company has complied with the provisions of listing agreement more particularly Corporate Governance.

Consents

Consents in writing of the Directors, Auditors, Lead Manager to the Issue, Bankers to the Company, Bankers to the Issue,

Company Secretary and Compliance Officer, Legal Advisor, Registrars to the Issue to act in their respective capacities have

been obtained and filed along with copy of the Letter of Offer with the Designated Stock Exchange and none of them have

withdrawn the said consents upto the time of delivery of a copy of this Letter of Offer for registration with the Designated

Stock Exchange.

M/s. Karvy & Co, Chartered Accountants, Statutory Auditors of the Company have also given their consent to the inclusion of

their report as appearing hereinafter in the form and context in which it appears in this Letter of Offer and also of the tax

benefits accruing to the company and to the members of the company and such consent and report have not been withdrawn

upto the delivery of this Letter of Offer for registration with the Designated Stock Exchange.

Expert Opinion

Save and except the ‘Statement of Tax Benefits’ and ‘Report of the Auditor’ disclosed on page no. 22 and 59 respectively of

the Letter of Offer, the Company has not obtained any expert opinions.

Issue Expenses

The issue expenses are estimated at Rs.60.00 Lakhs comprise of fees and expenses payable to the Lead Managers to the issue,

Registrar to the issue, printing and stationery expenses, advertising expenses and all other expenses for listing the Equity

Shares on the Stock Exchanges.

100

(Rs. In Lakhs)

Particulars Amount % of Total size % of total

of the issue Issue Expenses

Lead Manager fees and out of pocket expenses 22.00 1.53 36.66

Advertising expenses 10.00 0.70 16.67

Postage, Printing and Stationery 10.00 0.70 16.67

Legal Advisor’s fee 1.00 0.07 1.67

Registrar fees 2.00 0.14 3.33

Others 15.00 1.05 25.00

Total 60.00 4.19 100.00

Previous rights and public issue if any (during the last five years)

The Company has not made any rights or public issue in the last five years.

Commission and brokerage on previous issues

The company has not made any rights or public issue in the last five years.

Previous issues for shares otherwise than for cash

The company has not made any issues other than cash.

Bonus shares details

The Company has not made any bonus issue in the last five years.

The listed companies under the same management as defined under Section 370(1) (B) of the Companies Act 1956, that

made any capital issue during the last three years.

No listed company under the same management which had made public issue during the last three years.

Promise vis a vis Performance

The Company came out with an initial public offer of 7,50,000 Equity Shares of Rs.10/- each aggregating Rs.75 lakhs in May,

1995. The objects of the issue were:-

(i) To finance the working capital requirements for the existing projects undertaken by the Company of developing a

commercial complex for housing a Multi- storeyed office complex with a shopping center.

(ii) To enlist the Company’s shares on the Stock Exchanges.

(iii) To meet expenses of the present issue.

The actual performance achieved by the Company against the projections specified, is shown in the table below.

(Rs in Lakhs)

Particulars 1994-1995 1995-1996 1996-1997

Projected Actual Deviation Projected Actual Deviation Projected Actual Deviation

Total Income 1014.01 0.54 (1013.47) 753.00 1434.13 681.13 718.49 3013.81 2295.32

PBIDT 100.22 (3.69) (103.91) 248.20 652.43 404.23 282.09 768.89 486.80

Profit Before Tax 15.86 (3.15) (19.01) 103.59 579.80 476.21 169.89 511.69 341.80

Profit After Tax 8.57 (3.15) (11.72) 55.94 509.80 453.86 91.74 438.99 347.25

Dividend ( %) 0.00 0.00 0.00 5 % 50 % 45 % 10 % 50 % 40 %

Earnings Per Share 0.29 (0.25) (0.54) 1.86 16.99 15.13 3.06 14.63 11.57

Book Value 10.29 9.66 (0.63) 12.15 22.50 10.38 15.21 31.58 16.37

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The company was not able to achieve the projections during the year 1994-95 as the work completed on the project was less

than 25% of the estimated value of work. However the company outperformed in the years 1995-96 and 1996-97 exceeding

the projections and was able to declare profits and dividend of 50% for these years.

The company has completed the above venture in the year June 1998

STOCK MARKET DATA

Bombay Stock Exchange Limited

The details of the share prices on the Bombay Stock Exchange Limited, during the last 3 years are as follows:

Years High (Rs.) Date of Volume Low (Rs.) Date of Volume Average of

High on date Low on date High & Low

of High of Low Market

Prices * (Rs.)

2004 15.00 02/01/04 100 4.18 31/05/04 101 9.59

2005 254.75 30/12/05 6741 8.76 01/02/05 400 131.76

2006 484.00 10/05/06 7253 200.00 22/12/06 28306 342.00

*Average calculated as mean of high and low of the closing prices.

(Source: Bombay Stock Exchange Limited, Mumbai official website: www.bseindia.com)

The details of the share prices on the Bombay Stock Exchange Limited during last 6 months are as follows:

Month High Date of Volume Low Date of Volume Total Average

(Rs.) High on date of (Rs.) Low on date of Volume in Price in

High Low the Month the Month*

November 2006 293.95 07/11/06 1755 262.05 30/11/06 8211 65078 278.00

December 2006 256.00 04/12/06 3794 200.20 22/12/06 28306 146311 228.10

January 2007 242.90 04/01/07 3831 211.45 24/01/07 2079 65383 227.18

February 2007 233.60 02/02/07 3829 181.20 28/02/07 3568 40411 207.40

March 2007 178.95 15/03/07 2157 144.00 30/03/07 8710 116894 161.47

April 2007 229.05 20/04/07 55935 93.25 24/04/07 17981 383937 161.15

*Average calculated as mean of closing high and low prices.

(Source: Bombay Stock Exchange Limited, Mumbai official website: www.bseindia.com)

The Hyderabad Stock Exchange Limited

The details of the share prices on the Hyderabad Stock Exchange Limited, during the last 3 years are as follows:

Years High (Rs.) Date of Volume Low (Rs.) Date of Volume Average of

High on date Low on date High & Low

of High of Low Market

Prices * (Rs.)

2004

2005 No Trading

2006

*Average calculated as mean of high and low of the closing prices.

(Source: The Hyderabad Stock Exchange Limited, Hyderabad)

The details of the share prices on the Hyderabad Stock Exchange Limited during last 6 months are as follows:

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Month High Date of Volume Low Date of Volume Total Average

(Rs.) High on date of (Rs.) Low on date of Volume in Price in

High Low the Month the Month*

November 2006

December 2006

January 2007 No Trading

February 2007

March 2007

April 2007

The closing share price on 22nd August 2005 on the Bombay Stock Exchange Limited being the first day of trading after the

Board Meeting approving the Rights Issue was

BSE Rs 88.75/-

HSE No trading

The Promoters/Directors have not directly or indirectly financed any transaction in the securities of the Company during the

preceding 6 months.

Working results (Unaudited) of the Company for the period 1st January, 2007 to 31st March, 2007.

S.no. Particulars Amount (Rs.in Lakhs)

1 Sales/Turnover 895.05

2 Other Income 11.48

3 Gross Profit 325.89

4 Provision for Depreciation 3.80

5 Provision for Tax 164.68

6 Net Profit 77.43

Material changes and commitments, if any

There are no material changes or commitments affecting the financial position of the Company.

Weekend prices for last four weeks on Bombay Stock Exchange Limited, Mumbai and the Hyderabad Stock Exchange Limited

is as follows:

Date Price per share (Rs.) on BSE Price per share (Rs.) on HSE

27.04.2007 106.25 No trading

04.05.2007 104.65 No trading

11.05.2007 87.05 No trading

18.05.2007 83.25 No trading

Procedure for handling investor Complaints

The Company has qualified and experienced staff in its secretarial department headed by the Company Secretary, which

closely monitors and co-ordinates with the R&T Agents, for attending to and resolving the complaints of its shareholders. The

Secretarial Department actively interacts with shareholders for expeditious redressal of investor grievances and takes care of

complaints received from statutory bodies such as SEBI, Stock Exchanges, Department of Company Affairs etc.

All grievances relating to the issue may be addressed to the Registrars to the Issue., Sathguru Management Consultants Private

Limited, giving full details such as folio number, DPID/ Client ID number, named and address of the first applicant, number

of Equity Shares applied for, CAF serial number, amount paid on application and the collection center where the application

was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the renouncee

should be furnished.

103

The average time taken by the Registrars for attending to routine grievances will be 10 days from the date of receipt of

complaints. In case of non-routine grievances where verification with other agencies is involved, it would be endeavor of the

Registrars to attend to them as expeditiously as possible. The Company undertakes to resolve its investor grievances in a

timely manner. Investors can also address their grievances to the Compliances, with the Registrars so that the same are

resolved expeditiously.

The Company has appointed Mr. Vishwanath Ganti as a Compliance Officer who may be contacted for any pre-issue/ post

issue related problems.

Complaint letters should be either type written or legibly hand written quoting folio number, DP ID number, client ID number,

serial number of the CAF, Number of shares applied for, name and address of the first applicant, name and address of the bank/

collection centers where the application was submitted with date thereof and the date of receipt by the Registrars to the issue,

in case application was sent by post. Envelopes containing such complaints should be addressed to :

Mr. Vishwanath Ganti, Srinivasa Shipping and Property Development Limited, Registered Office : 8-2-595/3/6, Eden Gardens,

Road No.10, Banjara Hills, Hyderabad - 500 034, Andhra Pradesh. Email : [email protected]

For the period 1st January, 2007 to 31st March, 2007, the company has received 5 complaints pertaining to change of address,

Query relating to NSDL operations, Request for transmission of shares among others and all the complaints have been redressed

to and no complaints are pending as on 31st March, 2007.

Changes in Auditors in the Last Three Years

Date of resolution Appointment Reason

29.09.2005 M/s Karvy & Company M/s Chandrakant & Sevantilal

Chartered Accountants, Expressed their unwillingness

No. 2, Bhooma, Plaza, to be re-appointed as statutory

St No. 4, Avenue 7, auditors, due to personal reasons.

Banjara Hills,

Hyderabad- 500 034

Capitalisation of reserves

The company has not capitalization any of its reserves or profits till date.

Revaluation Of assets

The Company has not revalued any of its assets since its incorporation.

104

SECTION - VIII. ISSUE INFORMATION

1. TERMS OF THE ISSUE

The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of this Letter of

Offer, the CAF, the Memorandum and Articles of Association of the Company, the approvals from the Government of India,

FIPB and RBI, if applicable, the provisions of the Act, guidelines issued by SEBI, guidelines, notifications and regulations for

issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from

time to time, Listing Agreements entered into by the Company with Stock Exchanges, terms and conditions as stipulated in the

allotment advise or letter of allotment or Security Certificate and rules as may be applicable and introduced from time to time,

the FEMA and the Letters of Allotment/Equity Shares to be issued. Over and above such terms and conditions, the Equity

Shares shall also be subject to applicable laws, guidelines, notifications and regulations relating to issue of capital and listing

of securities issued from time to time by SEBI, the Government of India, RBI and or other authorities.

Ranking of the Equity Shares

The Equity Shares shall be subject to the Memorandum and Articles of Association of the Company. The Equity Shares

allotted pursuant to this offer shall rank pari-passu in all respects with the existing Equity Shares of the Company including in

respect of dividends.

Mode of payment of Dividend

The declaration and payment of dividends will be paid in cash which will be recommended by the Board of Directors and its

shareholders, at their discretion, and will depend on a number of factors, including but not limited to Company’s earnings,

capital requirements and overall financial condition.

Principal Terms and Conditions of the Issue

Equity Shares Face value

Each Equity Share shall have the face value of Rs.10/-

Issue Price

Each equity share is of face value of Rs.10/- each and is being offered at a premium of Rs.8/- per share.

Entitlement Ratio

The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the ratio of two

Equity Share for every one equity share held as on the Record Date.

Rights to Equity Shareholders

Subject to the applicable laws, the Equity Shareholders shall have the following rights

� Right to receive dividend, if declared;

� Right to receive notices, annual reports and to attend general meetings and exercise voting powers, unless prohibited by

law;

� Right to vote on a poll either in person or by proxy;

� Right to receive offers for rights shares and be allotted bonus shares, if announced;

� Right to receive surplus on liquidation;

� Right of free transferability; and

� Such other rights, as may be available to a shareholder of a listed public company under the Companies Act and our

Memorandum and Articles.

Market lot

The Equity Shares of the Company are tradable only in dematerialized form. The market lot for the Equity Shares in

dematerialized mode is one. In case of physical certificates, the Company would issue one certificate for the Equity Shares

allotted to one folio (“Consolidated Certificate”).

105

In respect of the Consolidated Certificate, the Company will upon receipt of a request from the Equity Shareholder, be returning

the share certificates issued for the entire holding, duly split as desired by the shareholders within a week’s time from the

request of the Equity Shareholder. No fee would be charged by the Company for splitting the Consolidated Certificate.

INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE TRADED ON

THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM.

Terms of payment

100% of the issue price per Equity Share shall be payable on application.

Nomination Facility

In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate any

person by filling the relevant details in the CAF in the space provided for this purpose.

The sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders (being individual(s) may

nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall

become entitled to the Equity Shares. Person(s), being a nominee, becoming entitled to the Equity Shares by reason of the

death of the original Equity Shareholder(s), shall be entitled to the same rights to which he would be entitled if he/she were the

registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination

to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said

holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale/disposal of he Equity Share by

the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. When two or more

persons hold the Equity Share(s), the nominee shall become entitled to receive the shares only on the demise of all the holders.

Fresh nominations can be made only in the prescribed form available on request at the Registered Office of the Company

located at: 8-2-595/3/6, Eden Gardens, Road No.10, Banjara Hills, Hyderabad - 500 034. India or such other place at such

addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant portion in the

CAF.

Only one nomination would be applicable for one folio. Hence, in case the shareholder(s) has (have) already registered the

nomination with the Company, no further nomination need to be made for Equity Shares to be allotted in this Issue under the

same folio.

In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the

Equity Shares to be allotted in this Issue. Nominations registered with respective Depository Participant of the applicant

would prevail. If the applicant requires to change the nomination, they are requested to inform their respective Depository

Participant.

Minimum Subscription

If the Company does not receive the minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the

applicants within forty-two days from the date of closure of the Issue. If there is a delay in the refund of subscription by more

than 8 days after the Company becomes liable to repay the subscription amount, (i.e. forty two days after closure of the Issue),

the Company will pay interest for the delayed period, at prescribed rates in sub-section (2) and (2 A) of Section 73 of the Act.

This Rights Issue will become undersubscribed after considering the number of Equity Shares applied as per entitlement plus

additional Equity Shares by shareholders and renouncees. The undersubscribed portion can be applied for only after the close

of the issue.

Some members of the promoter group intend to subscribe to additional shares beyond their entitlement if the issue is under-

subscribed. The acquisition of additional securities in such an event shall be exempt from making an open offer in terms of

proviso to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997. Further this

acquisition will not result in change of control of the management of the Company.

The above is subject to the terms mentioned under the “Basis of Allotment”.

Impersonation

Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Act, which is

reproduced below:

106

Any person who -

a) makes in a fictitious name an application to a company for acquiring or subscribing for, any shares therein, or

b) otherwise induces a company to allot, or register any transfer of shares therein to him, or any other person in a

fictitious name,

shall be punishable with imprisonment for a term which may extend to five years.

Arrangement for Odd Lot Equity Shares

The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this Issue. The Company

will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity Shareholder.

Restriction on Transfer and Transmission of Shares.

Nothing contained in the Articles of Association of the Company shall prejudice any power of the Company to refuse to

register the transfer of any share.

No fee shall be charged for sub-division and consolidation of share certificates (physical form), debenture certificates and

detachable warrants and for sub-division of letters of allotment and split, consideration, renewal and pucca transfer receipts

into denomination corresponding to the market units of trading.

Basis of the Offer

The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as

beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the electronic form

and on the Register of Members of the Company in respect of Equity Shares held in the physical form at the close of business

hours on the Record Date. The Company has in consultation with the Designated Stock Exchange fixed the Record Date for

determining the shareholders who are entitled to receive this offer for Equity shares on a rights basis.

The shareholders whose names appear as beneficial owners as per the list furnished by the depositories in respect of the Equity

Shares held in electronic form and on the register of members of the Company in respect of the shares held in physical form on

3rd May 2007, at the close of business hours shall be entitled to the equity shares on the Rights basis in the ratio of two equity

shares for every one equity share held by them.

Option to subscribe

The Equity Shareholders are given the option to receive the share certificates or hold securities in dematerialised form with a

depository.

Option to subscribe in dematerialised form

The Investors have an option to subscribe to the shares of the Company either in the physical form or dematerialized form. The

Composite application form contains space for indicating number of shares subscribed for in demat mode and physical mode

or both.

Applicants must indicate in the application form the number of shares they wish to receive in dematerialised and physical form

out of the total number of shares applied for. In case of partial allotment, shares will be first allotted in dematerialised form and

the balance equity shares, in excess of the applicant’s request for equity shares in dematerialised form will be allotted in

physical form. Shareholders opting to receive equity shares in physical mode will be issued a consolidated equity share

certificate for all the equity shares allotted to them in this Offer.

Option to receive the Rights equity shares in Dematerialised form

Applicants have the option to hold the equity shares of the Company in the electronic form under the Depository System. The

Company has signed agreements with National Securities Depository Limited (NSDL) and Central Depository Services (India)

Limited (CDSL), which enable an investor to hold and trade in securities in dematerialized (Electronic) form, instead of

holding equity shares in the form of physical certificates.

In the Rights Issue, an option is being provided to the shareholders to receive their Rights equity shares in the form of an

electronic credit to their beneficiary account with any of the depository participant (NSDL/CDSL) instead of receiving these

equity shares in the form of physical certificates. Investor can opt for this facility by filling up the relevant particulars in the

CAF.

107

Trading in Dematerialized Form

The equity shares of the Company have been under compulsory dematerialized trading for all investors with effect from 25th

January, 2001. The Company has an agreement with National Securities Depository Limited (NSDL) and Central Depository

Services (India) Limited (CDSL) and its equity shares bear the ISIN No.INE838C01011. Trading of securities upon listing

shall only be in dematerialized form. However, the investors have an option to hold the shares in physical form or demat form.

Rights Entitlement

As your name appears as beneficial owner in respect of the shares held in the electronic form or appears in the register of

members as an equity shareholder of the Company on the Record Date, you are entitled to this Rights Offer. The number of

Equity Shares to which you are entitled is shown in Block I of Part A of the enclosed CAF and as shown in part A of the

enclosed CAF.

Joint-Holders

Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed (so far as the company is

concerned) to hold the same as joint-tenants with benefits of survivorship subject to provisions contained in the Articles.

Offer to Non-Resident Equity Shareholders/ Applicants

Applications received from NRIs and other NR shareholders for allotment of Equity Shares shall be, inter alia, subject to the

conditions imposed from time to time by the RBI under the FEMA in the matter of refund of application moneys, allotment of

Equity Shares, issue of Letter of Allotment / share certificates, payment of interest, dividends, etc. General permission has

been granted to any person resident outside India to apply shares offered on rights basis by an Indian Company in terms of

FEMA and the rules and regulations there-under. Vide notification dated June 18, 2003, bearing number FEMA 94/2003, RBI

has granted general permission to Indian companies to issue rights/bonus shares to existing non-resident shareholders. The

existing non-resident shareholders may apply for issue of additional shares and the Company may allot the same subject to the

condition that the overall issue of shares to nonresidents in the total paid up capital does not exceed the sectoral cap. In other

words, non-residents may subscribe for additional shares over and above shares offered on rights basis by the company and

renounce the shares offered in full or part thereof in favour of a person named by them. Residents may subscribe for additional

shares over and above the shares offered on rights basis by the Company and also renounce the shares offered either in full or

part thereof in favour of a person named by them.

The Equity Shares issued under the Rights Issue and purchased by NR shall be subject to the same conditions including

restrictions in regard to the repatriability as are applicable to the previously held Equity Shares against which Equity Shares

under the Rights Issue are issued. However, as per the provisions of AP DIR circular No. 14 dated September 16, 2003 (issued

by the RBI), such shareholders who have been allotted the Equity Shares as OCBs would not be permitted to participate in the

Rights Issue. Accordingly, shareholders/ applicants who are OCBs and wishing to participate in the Rights Issue would be

required to submit approvals in relation thereto from the FIPB and the RBI.

The Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while

approving the allotment of Equity Shares, payment of dividend etc. to the Equity Shareholders who are NR.

Notices

All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English national daily

with wide circulation, one Hindi national daily with wide circulation and one Telugu Newspaper daily with wide circulation/

or, will be sent by ordinary post to the registered holders of the Equity Share(s) from time to time.

Issue of Duplicate Equity Share Certificate

If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity Shares are fully

utilized, the Company against the surrender of such Certificate(s) may replace the same, provided that the same will be

replaced as aforesaid only if the Certificate numbers and the Distinctive numbers are legible.

If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the

satisfaction of the Company and upon furnishing such indemnity/ surety and/or such other documents as the Company may

deem adequate, duplicate Equity Share Certificate(s) shall be issued.

Printing of Bank Particulars on refund orders

As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars

of the applicant’s bank account are mandatorily required to be given for printing on refund orders. Bank account particulars

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will be printed on the refund orders / refund warrants, which can then be deposited only in the account specified. The Company

will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery

or fraud.

Option Available to the Equity Shareholders

The Composite Application Form clearly indicates the number of Equity Shares that the Equity Shareholder is entitled to. If

the Equity Shareholder applies for an investment in Equity Shares, then he can:

� Apply for his entitlement in part

� Apply for his entitlement in part and renounce the other part

� Apply for his entitlement in full

� Apply for his entitlement in full and also apply for additional Equity Shares

� Renounce the entire entitlement (or part of entitlement).

� Renouncees for Equity Shares can apply for the Equity Shares renounced to them and also apply for additional Equity

Shares.

For Resident Indian Shareholders

Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed inall respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead Managers orby the Registrar to the Issue or by the Company at any offices except in the case of postal applications as per instructions givenin the Letter of Offer.

All cheques/Bank drafts accompanying the CAFs should be crossed “A/C payee only” and made payable to “Bank - SSPDLRights Issue”.

Payment should be made in cash (not more than Rs.20,000) or by cheque/bank draft/ drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the bankers clearing house located at the centre wherethe CAF is submitted and which is participating in the clearing at the time of submission of the application. Outstationcheques/money orders/postal orders will not be accepted and CAFs accompanied by such cheques/money orders/postal ordersare liable to be rejected.

For Non-Resident Shareholders on Non-Repatriation basis

Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, besubject to the conditions as may be imposed from time to time by the Reserve Bank of India, in the matter of Refund ofapplication moneys, allotment of Equity Shares, issue of Letters of Allotment/ certificates/ payment of dividends etc.

For NRIs holding shares on non-repatriation basis, payment may also be made by way of cheque drawn on Non-ResidentOrdinary (NRO) Account maintained in Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere inIndia but payable at Hyderabad. In such cases, the allotment of shares will be on non-repatriation basis. If the payment is madeby a draft purchased from an NRO account, an Account Debit Certificate from the bank issuing the draft, confirming that thedraft has been issued by debiting the NRO account, should be enclosed with the CAF. In the absence of the above, theapplication shall be considered incomplete and is liable to be rejected.

All cheques/bank drafts accompanying the CAFs should be crossed “A/c Payee Only” and made payable to “SSPDL RightsIssue NR”. The CAF duly completed together with the amount payable on application must be deposited with the collectingbank/collection centers indicated on the reverse of the CAF, on or before the close of banking hours on or before the Issueclosing date. A separate cheque or bank draft must accompany each CAF. Reference number of CAF should be mentioned onthe reverse of the Cheque/Draft. New Demat account shall be opened for holders who have had a change of status fromResident Indian to NRI.

The CAF consists of four parts

Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares

Part B: Form for renunciation

Part C: Form for application for renounces

Part D: Form for request for split application forms

Acceptance of the Rights Issue

You may accept the Offer and apply for Equity Shares offered, either in full or in part by filling Block III of Part “A” of theenclosed CAF and submit the same along with the application money payable to the “Bankers to the Issue” or any of thebranches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing Date orsuch extended time as may be specified by the Board thereof in this regard. Applicants at centers not covered by the branches

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of collecting banks can send their CAF together with the cheque drawn on a local bank at Hyderabad /demand draft payable atHyderabad (net of demand draft charges and postal charges) to the Registrar to the Issue by registered post.

Renunciation

As an equity shareholder on the Record Date, you have the right to renounce your entitlement of the Equity Shares in full orin part in favour of any other person(s) including individuals non resident Indians, limited companies, statutory corporations/institutions, Trusts (registered under the Indian Trust Act, 1882) and societies (registered under the Societies Registration Act,1860 or other applicable laws) minors (through their legal guardians) provided that such Trusts, Societies or legal entities areauthorized under their constitution/ rules/ bye-laws to hold Equity Shares in the Company. Renouncee(s) need not be existingmembers of the Company. However, renunciation in favour partnership firms, and HUFs, foreign nationals (unless approvedby RBI or other relevant authorities) or any person situated or having jurisdiction where the offering in terms of this Letter ofOffer could be illegal or require compliance with securities laws of such jurisdiction or any other persons not approved by theBoard will not be accepted. Joint renunciation in favour of more than three individuals will not be accepted.

As per notification no. FEMA 20/2000-RB dated May 3, 2000 and notification no. FEMA 94/2003-RB dated June 18, 2003,issued by RBI, RBI has granted general permission to Indian companies to issue rights/ bonus equity shares to existing nonresident Indians and non-residents may apply for issue of additional shares and the investee company may allot the samesubject to the condition that the overall issue of shares to non residents in the total paid up capital does not exceed the sectoralcap. In other words, non-residents may subscribe for additional shares over and above shares offered on rights basis by thecompany and renounce the shares offered in full or part thereof in favour of a person named by them. Residents may subscribefor additional shares over and above, the shares offered on rights basis by the company and also renounce the shares offeredeither in full or part thereof in favour of person named by them. However, this facility would not be available to investors whohave been allotted such shares as OCBs.

Residents may subscribe for additional shares over and above the shares offered on rights basis by the Company and alsorenounce the shares offered either in full or part thereof in favour of a person named by them. The Board reserves the right toreject the request for allotment to renouncees in its sole and absolute discretion without assigning any reasons therefore. PartA of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this willrender the application invalid. Submission of the enclosed CAF to the Banker to the Issue at its collecting branches specifiedon the reverse of the CAF with the Form of Renunciation (Part B of the CAF) duly filled in shall be conclusive evidence infavour of the Company of the person(s) applying for Equity Shares in Part C to receive allotment of such Equity Shares. Therenouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Part ‘A’must not be used by the renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right torenounce any shares in favour of any other person.

Procedure for Renunciation

To renounce the whole offer in favour of one renouncee

If you wish to renounce this offer in whole, please complete Part B of the CAF. In case of joint holders, all joint holders mustsign this part of the CAF in the same order as per the specimen signatures recorded with the Company. The person in whosefavour renunciation has been made should complete and sign Part C of the CAF. In case of joint renouncees, all joint renouncesmust sign this part of the CAF.

To renounce in part/or renounce the whole to more than one person(s)

If you wish to either accept this offer in part and renounce the balance or renounce the entire offer in favour of two or morerenouncees, the CAF must be first split by applying to the Registrars to the Issue.

Please indicate your requirement for Split Forms in the space provided for this purpose in Part D of the CAF and return theentire CAF to the Registrars to the Issue so as to reach them latest by the close of business hours on July 20, 2007. On receiptof the required number of split forms from the Registrars, the procedure as mentioned in para (a) above shall have to befollowed.

In case the signature of the Equity Shareholder(s), who has/have renounced the Equity Shares, does not match with thespecimen signature(s) as per the records of the Company, the application is liable to be rejected.

Change and/or introduction of additional holders

If you wish to apply for Equity Shares jointly with any other person, or persons, not more than three, who is/are not alreadyjoint holders with you, it shall amount to renunciation and the procedure as stated above shall have to be followed. Even achange in the sequence of the joint holders shall amount to renunciation and the procedure for renunciation, as stated aboveshall have to be followed.

Renouncee(s)

The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part C of the Application Form andsubmit the entire Application Form to the Bankers to the Issue on or before the Issue Closing Date along with the applicationmoney. However, any right of renunciation is subject to the express condition that the Board/Committee of Directors of theCompany shall be entitled in its absolute discretion to reject the request for allotment from the renouncees without assigningany reasons therefore.

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Please note that:

(a) Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used,this will render the application invalid.

(b) Only the person to whom this Letter of Offer has been addressed to and not the renouncee(s) shall be entitled to renounceand to apply for Split Application Forms. Forms once split cannot be split again.

(c) Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.

Additional Equity Shares

You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to,provided that you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of anyother person(s). Applications for additional Equity Shares shall be considered and allotment shall be made in the mannerprescribed in the under the paragraph titled “Basis of Allotment” on Page no. 115 of this Letter of Offer. The renounceesapplying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares.

In case of application for additional Equity Shares by non-resident Equity Shareholders, the allotment of additional securitieswill be subject to the permission of the Reserve Bank of India.

Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment would bemade on a fair and equitable basis in consultation with the Designated Stock Exchange.

You may exercise any of the following options with regard to the Equity Shares offered to you, using the enclosed CAF.

Fill in and sign Part D of the CAF or Split Forms after

indicating the required number of Split Application

Forms and send the entire CAF to the Registrars to the

Issue so as to reach them on or before the last date for

receiving requests for Split Forms indicated in the CAF.

On receipt of the Split Forms take action as indicated

below:

i) For the Equity Shares, if any, which you want to

accept, fill in and sign ‘Part A’ of one Split

Composite Application Form.

ii) For the Equity Shares you want to renounce, fill

in and sign ‘Part B’ in the required number of Split

Composite Application Forms indicating the

number of Equity Shares renounced to each

renouncee.

iii) Each of the renouncee should then fill in and sign

‘Part C’ of the respective Split Composite

Application Form for the Equity Shares accepted

by the renouncee.

Sl.No. Options available Action required

1 Accept your entitlement to all the Equity Shares Fill in and sign ‘Part A’ of the CAF offered to you.

Accept your entitlement to all the Equity Shares offered

to you and apply for additional Shares

2 Fill in and sign ‘Part A’ of the CAF after indicating in

Block IV the number of additional Equity Shares applied

for.

3 Accept only a part of your entitlement of the Equity

Shares offered to you (without renouncing the balance).Fill in and sign ‘Part A’ of the CAF Mention in column

no. III the number of shares applied for

4 Renounce all the Equity Shares offered to you to one

person (Renouncee) (Joint Renouncees considered as

one renouncee) (Joint renouncee cannot exceed more

than three) without applying for any equity shares

offered to you.

Fill in and sign ‘Part B’ of the CAF indicating the number

of Equity Shares renounced and hand over the entire CAF

to the renouncee. The renouncee must fill in and sign

Part C of the CAF.

5 Accept a part of the Equity Shares offered to you and

then renounce the balance to one Renouncee or

renounce all the Equity Shares offered to you to more

than one renouncee.

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Applications for Equity Shares should be made only on the CAF, which are provided by the Company. The CAF should be

completed in all respects as explained under the head “INSTRUCTIONS” indicated on the reverse of the CAF before submission

to the Banker to the Issue at its collecting branches mentioned on the reverse of the CAF on or before the closure of the

subscription list. Non-resident shareholders/ Renouncee should forward their applications to Banker to the Issue as mentioned

in the CAF for Non Resident Equity Shareholders. No part of the CAF should be detached under any circumstances.

For applicants residing at places other than designated Bank Collecting branches.

Applicants residing at places other than the cities where the bank collection centers have been opened should send their

completed CAF by registered post to the Registrars to the Issue, Sathguru Consultants Private Limited, along with bank drafts

net of demand draft and postal charges payable at Hyderabad in favour of “Bank - SSPDL Rights Issue” crossed “A/c Payee

only” so that the same are received on or before Closure of the Issue on 20th July, 2007.

The Company will not be liable for any postal delays and applications received through mail after the closure of the Issue, are

liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other manner except as

mentioned above:

All application forms duly completed together with cash/cheque/demand draft for the application money must be submitted

before the close of the Subscription List to the Bankers to the Issue named herein or to any of its branches mentioned on the

reverse of the CAF. The CAF along with application money must not be sent to the Company or the Lead Managers to the

Issue or the Registrars to the Issue except as mentioned above. The applicants are requested to strictly adhere to these instructions.

Failure to do so could result in the applications being liable to be rejected with the Company, the Lead Managers and the

Registrar not having any liability to such applicants.

In case the original CAF is not received by the applicant or is misplaced by the applicant, the applicant may request the

Registrars to the Issue, Sathguru Consultants Private Limited, for issue of a duplicate CAF, by furnishing the registered folio

number, DP ID Number, Client ID Number and their full name and address. In case the original and duplicate CAFs are lodged

for subscription, allotment will be made on the basis of the duplicate CAF and the original CAF will be ignored.

Availability of Duplicate CAF

In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate CAF

on the request of the applicant who should furnish the registered folio number/ DP and Client ID no. and his / her full name and

address to the Registrar to the Issue. Please note that those who are making the application in the duplicate form should not

utilise the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the applicant

violates any of these requirements, he/ she shall face the risk of rejection of both the applications as well as forfeiture of

amounts remitted along with the applications.

Applications under Power Of Attorney

In case of applications made under a Power of Attorney or by limited companies or bodies corporate or registered societies or

mutual fund or trust, the relevant Power of Attorney or the relevant resolution or authority to make the application, as the case

may be, together with a certified true copy thereof along with a copy of the Memorandum and Articles of Association and/or

Bye-Laws must be attached to the CAF and the banks branch where the application has been submitted at the time of making

the application or lodged for scrutiny separately indicating the serial number of the CAF with the Registrars to the Issue after

submission of the CAF to the Bankers to the Issue or any of the designated branches as mentioned on the reverse of the CAF,

failing which the applications are liable to be rejected. Such authority should reach the Registrar to the issue within 10 days

from the date closure of the subscription list and such authority received be thereafter, may not be considered. The original(s)

will be returned to the applicant after retaining the certified copy thereof.

Sl.No. Options available Action required

6 Accept a part of the Equity Shares offered to and

renouncee the balance to more than one renouncee.

(Joint renouncees are considered as one)

Follow the procedures stated in (5) above for obtaining

the required number of Split Composite Application

Forms follow the procedure as stated in (5) (ii) and (iii)

above.

7 Introduce a joint holder or change the sequence This will be treated as a renunciation. Fill in and sign

Part B of joint holders and the renouncees must fill in

and sign Part C.

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Application on Plain Paper

An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make

an application to subscribe to the Rights Issue on plain paper, along with an Account Payee Cheque drawn on a local bank at

Hyderabad /Demand Draft payable at Hyderabad which should be drawn in favour of the Company and send the same by

registered post directly to the Registrar to the Issue.

The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen

recorded with the Company, must reach the office of the Registrar to the Issue before the Date of Closure of the Issue and

should contain the following particulars:

� Name of Issuer

� Name and address of the Equity Shareholder including joint holders

� Registered Folio Number/ DP and Client ID no.

� Number of Equity Shares held as on Record Date

� Number of Rights Equity Shares entitled

� Number of Rights Equity Shares applied for

� Number of additional Equity Shares applied for, if any

� Total number of Equity Shares applied for

� Total amount paid @ Rs.18 per Equity Share

� Particulars of Cheque/ Draft

� Savings/ Current Account Number and name and address of the bank where the Equity Shareholder will be depositing

the refund order

� PAN/GIR number and Income Tax Circle/Ward/District where the application is for Equity Shares of a total value of

Rs.50,000/- or more for the applicant and for each applicant in case of joint names, and

� Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company

Payments in such cases, should be through a cheque/ demand draft payable at Hyderabad be drawn in favour of the Bankers to

the Issue marked “A/c Payee” and marked “Bank - SSPDL Rights Issue”.

Please note that those who are making the application otherwise than on original CAF shall not be entitled to renounce their

Rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the

applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications as well as forfeiture

of amounts remitted along with the applications.

Last Date of Application

The last date for submission of CAF is 20th July, 2007 The Board/ Committee of Directors will have the right to extend the

said date for such period as it may determine from time to time but not exceeding sixty days from the date the Issue opens.

If the CAF together with the amount payable is not received by the Bankers to the Issue/ Registrar on or before the close of

banking hours on the aforesaid last date or such date as may be extended by the Board/ Committee of Directors, the offer

contained in this Letter of Offer shall be deemed to have been declined and the Board/ Committee of Directors shall be at

liberty to dispose off the Equity Shares hereby offered, as provided under the heading “Basis of Allotment”.

Few reasons for technical rejections

a) If the signature is not matching with the signatures already registered with the Company;

b) In case of joint holders, if the signatures are not made in the same order as registered with the Company;

c) If cash above Rs.20,000/- is remitted toward share application money;

d) PAN/GIR No. is not mentioned if the value of the application is more than Rs.50,000/-;

e) Amount paid does not tally with the amount payable for;

f) Bank account details are not given;

g) Applications not duly signed by sole/joint applicants

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General Instructions for Applicants

(a) Please read the instructions printed on the enclosed CAF carefully.

(b) Application should be made on the printed CAF, provided by the Company and should be completed in all respects. The

CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed

in conformity with the terms of this Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof

will be refunded without interest if refunded within stipulated period. The CAF must be filled in English and the names

of all the applicants, details of occupation, address, and father’s / husband’s name must be filled in block letters.

(c) The CAF together with cheque/demand draft should be sent to the Bankers to the Issue / Collecting Bank or to the

Registrar and not to the Company or Lead Managers to the Issue. Applicants residing at places other than cities where

the branches of the Bankers to the Issue have been authorised by the company for collecting applications, will have to

make payment by Demand Draft payable at Hyderabad (net of demand draft charges and postal charges) and send their

application forms to the Registrar to the Issue by REGISTERED POST. If any portion of the CAF is / are detached or

separated, such application is liable to be rejected.

(d) Applications for a total value of Rs. 50,000 or more, i.e. where the total number of securities applied for multiplied by

the Issue price, is Rs. 50,000 or more the applicant or in the case of application in joint names, each of the applicants,

should mention his/her PAN number allotted under the Income-Tax Act, 1961 and also submit a photocopy of the PAN

card(s) or a communication from the Income Tax authority indicating allotment of PAN (“PAN Communication”) along

with the application for the purpose of verification of the number. Applicants who do not have PAN are required to

provide a declaration in Form 60/Form 61 prescribed under the I.T. Act along with the application. Applications without

this photocopy/PAN Communication/declaration will be considered incomplete and are liable to be rejected.

(e) Applicants are advised to provide information as to their savings/ current account number and the name of the Bank with

whom such account is held in the CAF to enable the Registrar to print the said details in the Refund Orders, if any, after

the names of the payees. Application not containing such details is liable to be rejected.

(f) The payment against the application should not be effected in cash if the amount to be paid is Rs.20,000/- or more. In

case payment is effected in contravention of this, the application may be deemed invalid and the application money will

be refunded and no interest will be paid thereon. Payment against the application if made in cash, subject to conditions

as mentioned above, should be made only to the Bankers to the Issue.

(g) Signatures should be either in English or Hindi or in any other language specified in the 8th Schedule of the Constitution

of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a

Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen

signature recorded with the Company.

(h) In case of an application under power of attorney or by a body corporate or by a society, a certified true copy of the

relevant power of attorney or relevant resolution or authority to make investment and sign the application along with a

copy of the Memorandum & Articles of Association and / or bye laws must be lodged with the Registrar to the Issue

giving reference of the serial number of the CAF. In case these papers are sent to any other entity besides the Registrar

to the Issue or are sent after the Issue Closure Date, then the application is liable to be rejected.

(i) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen

signature(s) recorded with the Company. Further, in case of joint applicants who are renouncees, the number of applicants

should not exceed three. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all

communication will be addressed to the first applicant.

(j) Application(s) received from Non-Residents / NRIs, or persons of Indian origin residing abroad for allotment of Equity

Shares shall, interalia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the

matter of refund of application money, allotment of Equity Shares, subsequent issue and allotment of Equity Shares,

interest, export of Equity Share certificates, etc. In case a Non-Resident or NRI Equity Shareholder has specific approval

from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF.

(k) All communication in connection with application for the Equity Shares, including any change in address of the Equity

Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the

name of the first / sole applicant Equity Shareholder, folio numbers and CAF number. Please note that any intimation for

change of address of Equity Shareholders, after the date of allotment, should be sent to the Registrar and Transfer Agents

of the Company or Registrar to Issue (Sathguru Management Consultants Private Ltd.) in the case of equity shares held

in physical form and to the respective DP, in case of equity shares held in dematerialised form.

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(l) Split forms cannot be re-split.

(m) Only the person or persons to whom Equity Shares have been offered and not renouncee(s) shall be entitled to obtain

split forms.

(n) Applicants must write their CAF number at the back of the cheque / demand draft.

(o) Only one mode of payment per application should be used. The payment must be either in cash or by cheque / demand

draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of

the Bankers Clearing House located at the center indicated on the reverse of the CAF where the application is to be

submitted.

(p) A separate cheque /draft must accompany each CAF. Outstation cheques or post-dated cheques and postal /money orders

will not be accepted and applications accompanied by such cheques / demand drafts / money orders or postal orders will

be rejected. The Registrar will not accept payment against application if made in cash. (For payment against application

in cash please refer point (f) above)

(q) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank/ Registrar will

acknowledge receipt of the same by stamping and returning the acknowledgement slip at the bottom of the CAF.

(r) An applicant which is a mutual fund can make a separate application in respect of each scheme of the fund and such

applications shall not be treated as multiple applications. The application made by the asset management company or

custodians of a mutual fund shall clearly indicate the name of the concerned scheme for which application is being

made.

(s) Mode of payment for Resident Equity Shareholders/ Applicants All cheques / drafts accompanying the CAF should be

drawn in favour of the Collecting Bank (specified on the reverse of the CAF), crossed “A/c Payee only” and marked

“Bank - SSPDL Rights Issue”. Applicants residing at places other than places where the bank collection centers have

been opened by the Company for collecting applications, are requested to send their applications together with Demand

Draft, net of demand draft and postal charges, for the full application amount favouring the Bankers to the Issue, crossed

“A/c Payee only” and marked “Bank - SSPDL Rights Issue” payable at Hyderabad directly to the Registrar to the Issue

by registered post so as to reach them on or before the Issue Closing Date. The Company or the Registrar will not be

responsible for postal delays or loss of applications in transit, if any.

(t) Mode of payment for Non-Resident Equity Shareholders/ Applicants As regards the application by non-resident Equity

Shareholders, the following further conditions shall apply: Payment by Non-Residents must be made by demand draft

/ cheque payable at Hyderabad (net of demand draft charges and postal charges) or funds remitted from abroad in any of

the following ways:

1. Application with repatriation benefits

(a) By Indian Rupee drafts purchased from abroad and payable at Hyderabad or funds remitted from abroad (submitted

along with Foreign Inward Remittance Certificate); or

(b) By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Hyderabad; or

(c) By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable at Hyderabad; or

(d) FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.

2. Application without repatriation benefits

As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above,

payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Mumbai or Rupee

Draft purchased out of NRO Account maintained elsewhere in India but payable at Hyderabad. In such cases, the allotment of

Equity Shares will be on non-repatriation basis.

All cheques/drafts submitted by non-residents should be drawn in favour of the Bankers to the Issue and marked “Bank -

SSPDL Rights Issue-NR” payable at Hyderabad and must be crossed “A/c Payee only” for the amount payable. The CAF

duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the

reverse of the CAF before the close of banking hours on the Issue Closing Date. A separate cheque or bank draft must

accompany each CAF.

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Applicants may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts as the case may be,

an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/

FCNR/ NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable

to be rejected.

Note:

In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in Equity Shares

can be remitted outside India, subject to tax, as applicable according to Income Tax Act, 1961.

In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares cannot be

remitted outside India.

The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank

indicated on the reverse of the CAF before the close of banking hours on the aforesaid Issue Closing Date. A separate cheque

or bank draft must accompany each CAF.

In case application received from Non-Residents, allotment, refunds and other distribution, if any, will be made in accordance

with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to

necessary approvals.

Payment by Stock Invest

In terms of the Reserve Bank of India Circular No.DBOD No.FSC BC 42/27.47.00/2003-04 dated November 05,2003 the

option to use the Stock Invest instrument in lieu of cheques or bank drafts for payment of bid money has been withdrawn.

Hence, payment through Stock Invest would not be accepted in this issue.

Disposal of Application and Application Money

No acknowledgment will be issued for the application moneys received by the Company. However, the Bankers to the Issue /

Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at

the bottom of each CAF.

In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application

is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be

refunded to the applicant within six weeks from the close of the Issue.

Basis of Allotment

1. Subject to provisions contained in this Letter of Offer, the Articles of Association of the Company and approval of the

Designated Stock Exchange, the Board will proceed to allot the Equity Shares in the following order of priority:

a. Full allotment to those Equity Shareholders who have applied for their rights entitlement either in full or in part

and also to the renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part.

b. Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as rights and

have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be made as far

as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record

Date, provided there is an under-subscribed portion after making full allotment in (a) above. The allotment of such

Equity Shares will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated

Stock Exchange, as a part of the rights Issue and not preferential allotment.

c. Allotment to the renouncees, who having applied for the Equity Shares renounced in their favour have also applied

for additional Equity Shares, provided there is an under-subscribed portion after making full allotment in (a) & (b)

above. The allotment of such additional Equity Shares will be made on a proportionate basis at the sole discretion

of the Board/ Committee of Directors but in consultation with the Designated Stock Exchange, as a part of the

rights Issue and not preferential allotment.

2. The Company shall retain no over subscription.

3. The issue will become under subscribed after considering the number of shares applied as per entitlement plus additional

shares. The under subscribed portion shall be applied for only after the close of the issue. The promoters shall subscribe

to such under subscribed portion as per the relevant provisions of the law. If any person presently in control of the

company desires to subscribe to such undersubscribed portion and if disclosure is made pursuant to SEBI (Substantial

Acquisition of Shares and Takeover) Regulations, 1997, such allotment of the undersubscribed portion will be governed

by the provisions of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

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4. After taking into account the allotments made under 1(a), 1(b) and 1(c) above, if there is still any under subscription, the

Unsubscribed portion shall be disposed off by the Board or Committee of Directors authorised in this behalf by the

Board upon such terms and conditions, through such securities (Equity Shares) and to such person / persons and in such

manner as the Board/ Committee of Directors may in its absolute discretion deem fit, as a part of the rights Issue and not

preferential allotment.

Allotment to promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with

Clause 40A of the Listing Agreement.

Allotment and Refund Orders

The Company agrees that it shall pay interest at the rate of 15% per annum if the allotment has not been made and/or the equity

share allotment letters/share certificates/refund orders have not been dispatched/ refunds through the ECS facility or RTGS or

Direct Credit has not been done and relevant Equity Shares have not been credited to the beneficiary account of the investors

within 42 days from the date of closure of the issue. All the pay orders / refund orders and Letter(s) of Allotment / Share

Certificates will be despatched to the first named / sole applicant at his / her own risk. The Refund Orders will be payable at par

in India at all the centres where the applications were originally accepted. The instruments will be marked “Account Payee

Only” and in the name of the sole/ first applicant. Bank charges, if any, for encashing such refund orders / pay orders will be

payable by the applicants. The Company undertakes that the requisite funds will be made available to the Registrar for

complying with the requirement of despatch of refund orders / allotment letters. The Company shall ensure despatch of refund

orders of value over Rs.1,500/- by Registered Post only and adequate funds will be made available to the Registrar.

The Company undertakes to despatch share certificates/refund orders, complete demat credits and submit the allotment and

listing documents to the Stock Exchange within 2 working days of the finalisation of the basis of allotment. Further, the

Company undertakes to ensure that all steps for completion of the necessary formalities for listing and commencement of

trading at the Stock Exchange where the securities are to be listed are taken within 7 working days of finalisation of basis of

allotment.

Mode of making refunds

Applicants should note that on the basis of name of the Applicants, Depository Participant’s name, Depository Participant-

Identification number and Beneficiary Account Number provided by them in the CAF, the Registrar to the Issue will obtain

from the Depository the Applicant’s bank account details including nine digit MICR code. Hence, Applicants are advised to

immediately update their bank account details as appearing on the records of the depository participant. Please note that

failure to do so could result in delays in credit of refunds to Applicants at the Applicants sole risk and neither the Lead

Manager nor the Bank shall have any responsibility and undertake any liability for the same.

The payment of refund, if any, would be done through various modes in the following order of preference.

I. Direct Credit - For investors having their Bank Account with the Banker to the Issue, the refund amount would be

credited directly to their Bank Account with the Banker to the Issue.

II. RTGS - Investors desirous of taking direct credit of refund through RTGS, will have to provide the IFSC code in the

CAF.

III. ECS - Payment of refund would be done through ECS for applicants residing at one of the 15 centres, namely Ahmedabad,

Bangalore, Bhuvaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur,

New Delhi, Patna and Thiruvananthapuram, where clearing houses for ECS are managed by RBI. This would be subject

to availability of complete Bank Account Details including MICR code from the depository.

For all the other applicants except for whom payment of refund is possible through I, II and III, the refund orders would be

dispatched “Under Certificate of Posting” for refund orders less than Rs. 1500/- and through Speed Post/Registered Post for

refund orders exceeding Rs. 1500/-.

Interest in case of delay on Allotment/Despatch

The Company will issue and despatch Letter(s) of Allotment/Share Certificate(s) and/or Letter(s) of Regret along with the

Refund Orders, if any, credit the allotted securities to the beneficiary account within a period of 6 weeks from the date of

closure of the subscription list. Such refund orders, in the form of MICR warrants/cheque/pay order, marked “Account payee”

would be drawn in the name of a sole/first applicant and will be payable at par at all the centers where the applications were

originally accepted, risk, except for those who have opted to receive refunds through the ECS facility or RTGS or Direct

Credit. If such money is not repaid within 8 days from the day the Company becomes liable to pay it, the Company shall, as

stipulated under Section 73 (2) / (2A) of the Companies Act, 1956, pay that money with interest at the rate of 15% p.a.

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Letter(s) of Allotment/Refund Order(s) above the value of will be despatched by Registered Post to the sole/first applicant’s

address. However, Refund Orders for values not exceeding Rs.1,500/- shall be sent to the applicants under Certificate of

Posting at the applicant’s sole risk at his address. The Company would make adequate funds available to the Registrar to the

Issue for this purpose.

As regards allotment/ refund to Non-Residents, the following further conditions shall apply

In case of Non-Residents, who remit their application monies from funds held in NRE/ FCNR accounts, refunds and/ or

payment of interest/ dividend and other disbursement, if any, shall be credited to such accounts, details of which should be

furnished in the CAF. Subject to the approval of the RBI, in case of non-residents, who remit their application monies through

Indian Rupee draft purchased from abroad, refund and/ or payment of dividend/ interest and any other disbursement, shall be

credited to such accounts (details of which should be furnished in the CAF) and will be made net of bank charges/ commission

in US Dollars, at the rate of exchange prevailing at such time. The Company will not be responsible for any loss on account of

exchange fluctuations for converting the Indian Rupee amount into US Dollars. The Equity Share certificate(s) will be sent by

registered post at the Indian address of the non-resident applicant.

Letters of Allotment / Equity Share Certificates

Letter(s) of Allotment/ Equity Share certificates or Letters of Regret along with refund orders will be dispatched to the

registered address of the first named applicant or respective beneficiary accounts will be credited within six weeks, from the

date of closure of the subscription list. In case the Company issues Letters of Allotment, the relative Equity Share certificates

will be dispatched within three months from the date of allotment. Allottees are requested to preserve such Letters of allotment

(if any) to be exchanged later for Equity Share certificates. Export of Letters of Allotment (if any)/ Equity Share certificates to

non-resident allottees will be subject to the approval of RBI.

For non-resident applicants, refunds, if any, will be made as under:

Where applications are accompanied by Indian Rupee Drafts purchased abroad and payable at Hyderabad, India, refunds will

be made in convertible foreign exchange equivalent to Indian Rupees to be refunded. Indian Rupees will be converted into

foreign exchange at the rate of exchange, which is prevailing on the date of refund. The exchange rate risk on such refunds

shall be borne by the concerned applicant and the Company shall not bear any part of the risk.

Where the applications made are accompanied by NRE/ FCNR/ NRO cheques, refunds will be credited to NRE/ FCNR/ NRO

accounts respectively, on which such cheques were drawn and details of which were provided in the CAF.

Equity Shares in Dematerialised Form

Applicants to the Equity Shares of the Company issued through this Rights Issue shall be allotted the securities in dematerialized

(electronic) form at the option of the applicant. The Company and Karvy Computershare Private Limited, the Registrar &

Transfer Agents to the Company, have signed a tripartite agreement with CDSL and NSDL on 31st January 2001 and 8th

December 2000 respectively, which enables the investors to hold and trade in securities in a dematerialised form, instead of

holding the securities in the form of physical certificates.

In this Rights Issue, the allottees who have opted for Equity Shares in dematerialised form will receive their Equity Shares in

the form of an electronic credit to their beneficiary account with a depository participant. Investor will have to give the

relevant particulars for this purpose in the appropriate place in the CAF. Applications, which do not accurately contain this

information, will be given the securities in physical form. No separate applications for securities in physical and dematerialised

form should be made. If such applications are made, the application for physical securities will be treated as multiple applications

and is liable to be rejected. In case of partial allotment, allotment will be done in demat option for the shares sought in demat

and balance, if any, will be allotted in physical shares.

Procedure for availing this facility for allotment of Equity Shares in this Issue in the electronic form is as under:

1. Open a Beneficiary Account with any Depository Participant (care should be taken that the Beneficiary Account should

carry the name of the holder in the same manner as is exhibited in the records of the Company. In case of joint holding,

the Beneficiary Account should be opened carrying the names of the holders in the same order as with the Company). In

case of Investors having various folios in the Company with different joint holders, the investors will have to open

separate accounts for such holdings. Those Equity Shareholders who have already opened such Beneficiary Account (s)

need not adhere to this step.

2. For Equity Shareholders already holding Equity Shares of the Company in dematerialized form as on Record Date, the

beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their

accounts and wish to receive their Rights Equity Shares by way of credit to such account, the necessary details of their

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beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of securities

arising out of this Issue may be made in dematerialized form even if the original equity shares of the Company are not

dematerialized. Nonetheless, it should be ensured that the Depository Account is in the name(s) of the Equity Shareholders

and the names are in the same order as in the records of the Company.

3. Responsibility for correctness of applicant’s age and other details given in the CAF vis-à-vis those with the applicant’s

Depository Participant would rest with the applicant. Applicants should ensure that the names of the applicants and the

order in which they appear in CAF should be same as registered with the applicant’s Depository Participant.

4. If incomplete / incorrect Beneficiary Account details are given in the CAF the applicant will get Equity Shares in

physical form.

5. The Rights Equity Shares allotted to investors opting for dematerialized form, would be directly credited to the Beneficiary

Account as given in the CAF after verification. Allotment advice, Refund Order (if any) would be sent directly to the

applicant by the Registrar to the Issue but the applicant’s Depository Participant will provide to him the confirmation of

the credit of the Rights Equity Shares to the applicant’s Depository account.

6. Renouncees will also have to provide the necessary details about their Beneficiary Account for allotment of securities in

this Issue. In case these details are incomplete or incorrect, the applicant will get the Equity Shares in physical form.

Last Date for Submission of Composite Application Form

The last date for receipt of the CAF, by the Banker to the Issue and its Collecting Branches, together with the amount payable,

is on or before the close of banking hours, on 20th July 2007. If the CAF together with the amount payable is not received by

the banker to the Issue at its Collection Branches on or before the close of banking hours on or before 20th July 2007, the offer

contained in this Letter of Offer shall be deemed to have been declined, and the Board shall utilise this entitlement for allotting

the Equity Shares as mentioned under the heading “Basis of Allotment”.

Undertakings by the Company

The Company undertakes that:

a) The complaints received in respect of the Issue shall be attended to by the Company expeditiously and satisfactorily;

b) All steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges

where the securities are to be listed are taken within seven working days of finalisation of basis of allotment;

c) Funds required for dispatch of refund orders/allotment letters/certificates by registered post shall be made available to

the Registrar to the Issue by the Company.

d) Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant

within 30 working days of closure of the issue, giving details of the bank where refunds shall be credited along with

amount and expected date of electronic credit of refund.

e) Certificates of securities/refund orders of the Non-Resident/Non Resident Indians shall be dispatched within the specified

time subject to receipt of approval from RBI/FIPB, if required.

f) No further issue of shares shall be made till the shares offered through this LoO are listed or till the application moneys

are refunded on account of non-listing, under-subscription, etc.,

2. Utilisation of Proceeds

The Board of Directors of the Company certify that:

a) all monies received out of the issue shall be transferred to a separate bank account other than the bank account referred

to in sub-section (3) of Section 73 of the Companies Act;

b) details of all monies utilized out of the Issue shall be disclosed under an appropriate separate head in the balance sheet of

the Company indicating the purpose for which such monies have been utilized

c) details of all unutilized monies out of the Issue, if any, shall be disclosed under the appropriate separate head in the

balance sheet of the Company indicating the form in which such unutilized monies have been invested.

The application monies received will be kept in a separate bank account and the Company will not have access to such funds

unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90%

of the issue has been received.

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The Board of Directors declare that all moneys received out of issue of shares through the offer document shall be transferred

to separate bank account other than the bank account referred to in sub-section (3) of section 73. For further instruction, please

read the Composite Application Form carefully.

Important

Please read this Letter of Offer carefully before taking any action. The instructions contained in the accompanying CAF are an

integral part of the conditions of this Letter of Offer and must be carefully followed; otherwise the application is liable to be

rejected.

All inquiries in connection with this Letter of Offer or accompanying CAF and requests for Split Application Forms must be

addressed (quoting the Registered Folio Number/ DP and Client ID no., the CAF number and the name of the first Equity

Shareholder as mentioned on the CAF and superscribed “SSPDL -Rights Issue” on the envelope) to the Registrar to the Issue

at the following address:

Sathguru Management Consultants Private Limited,

Plot No. 15, Hindi Nagar, Panjagutta, Hyderabad - 500 034,

Tel: 91 040 2335 0586/ 2335 6507, Fax: 91 040 2335 4042

Email: [email protected], Website: www.sathguru.com

1. It is to be specifically noted that this Issue of Equity Shares is subject to Risk Factors appearing on Page no. iii of this

Letter of Offer.

2. The Rights Issue will not be kept open for more than 30 days unless extended, in which case it will be kept open for a

maximum 60 days.

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SECTION IX - MAIN PROVISIONS OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION

6. Capital

The Authorized Share capital of the Company shall be the capital as specified in clause V of the Memorandum of Association.

The company shall have power to increase, consolidate, sub-divide, realize or otherwise after its share capital, subject to the

provisions of the Act and these Articles.

7. Increase of capital by the company and how carried into effect

The Company in general meeting may, from time to time by special resolution, increase the capital by the creation of new

shares; such increase to be of such aggregate amount and to be divided into shares of such respective amounts, as the resolution

shall prescribe. Subject to the provisions of the Act and these Articles, any shares of the original or increased capital shall be

issued upon such terms and conditions and with such rights and privileges annexed thereto, as the General meeting resolving

upon the creation thereof, shall direct, and if no directions be given, as the directors shall determine. In the distribution, of

assets of the company, and with a right of voting at General Meeting of the Company in conformity with section 87 and 88 of

the Act. Whenever the capital of the company has been increased under the provisions of this Article, the directors shall

comply with the provisions of section 97 of the Act.

8. New Capital same as Existing Capital

Except so far as otherwise provided by the conditions of issue or by these presents, any capital raised by the creation of new

shares shall be considered as part of the original capital, and shall be subject to the provisions herein contained, with reference

to the payment of calls and installments, forfeiture, lien, surrender, transfer and transmission, voting and otherwise.

9. Redeemable Preference shares

Subject to the provisions of section 80 of the Act of the company shall have the power to issue preference shares which are, or

at the option of the company are liable, to be redeemed and the special resolution authorizing such issue shall prescribe the

manner, terms and conditions of their issue and redemption.

10. Cumulative convertible Preference shares

The company shall have the power to issue cumulative convertible preference shares subject to the special resolution authorizing

such issue which shall prescribe the manner, terms and conditions their issue and conversion.

11. Restriction on allotment

The Board shall observe the restrictions on allotment contained in section 69 and 70 of the Act, as the case may be and shall

cause to be made the returns as to allotment according to Section 75 of the Act.

12. Shares under control of Directors

Subject to the provisions of these Articles and of the Act, the shares (including any shares forming part of any increased capital

of the company) shall be under the control of the directors, who may allot or otherwise dispose of the same to such persons in

such proportion, on such terms and conditions and at such times as the directors think fit subject to the sanction of the

company in general meeting by special resolution and with full power, to give any person the option to call for or be allotted

shares of any class of the company either (subject to the provisions of section 78 and 79 of the Act) at a premium or at par or

at a discount and such option being exercisable for such time and for such consideration as the directors think fit. The board

shall cause to be filed the returns as to allotment provided for in section 75 of the Act.

13. Further issue of capital

(i) Where it is proposed to increase the subscribed capital of the company by allotment of further shares, whether out of un-

issued share capital or out of increased share capital, then

(a) Such further shares shall be offered to the persons who at the date of the offer, are holders of the equity shares of

the company, in proportion, as nearly as circumstances admit, to the capital paid up on these shares at that date.

(b) The offer aforesaid shall be made by a notice specifically the number of shares offered and limiting a time not

being less than thirty days from the date of the offer within which the offer, if not accepted, will be deemed to have

been declined.

(c) The offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares

offered to him or any of them in favour of any other person; and the notice referred to in sub - clause (b) shall

contain a statement of this right; but so that the person in whose favour any such shares may be renounced shall be

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such as the directors may in their absolute discretion approve of, and in case the directors may not so approve of

any such persons, the renunciation of any such shares in his favour shall not take effect.

(d) After the expiry of the time specified in the notice aforesaid or on receipt of earlier intimation from the person to

whom such notice is given that he declines to accept the shares offered, the board may dispose of them in such

manner as they think most beneficial to the company.

(ii) Not withstanding any thing contained in the preceding sub - clause, the company may

(a) by a special resolution; or

(b) where no such special resolution is passed. If the votes cast (whether on a show of hands, or on a poll, as the case

may be) in favour of the proposal contained in the resolution moved in that general meeting (including the casting

vote, if any, of the chairman) by members who, being entitled so to do, vote in person, or where proxies are

allowed, by proxy, exceed the votes, if any, cast against the proposal by members so entitled and voting subject to

the Central Government approval, if required, offer further shares to any person or persons, and such person or

persons may or may not include the persons who at date of the offer, are the holders of the equity shares of the

company.

(iii) Not withstanding any thing contained in sub-clause (a) above, but subject however to section 81(3) of the Act, the

Company may increase its subscribed capital on exercise of any option attached to the debentures issued or loans raised

by the Company to convert such debentures or loans into shares, or to subscribe for shares in the Company.

14. Directors may allot shares as fully paid-up

Subject to the provisions of the Act and these Articles, the directors may allot and issue shares in the capital of the Company

as payment or part payment for any property or assets of any kind what so ever sold or transferred, goods or machinery

supplied or for services rendered to the Company in the conduct of its business and any shares which may be so allotted may

be issued as fully paid up or partly paid up otherwise than in cash, and, if so issued, shall be deemed to be fully paid up or

partly paid up shares as the case may be.

15. Alternation of capital

The Company may in General Meeting alter the conditions of its Memorandum as follows:

(a) Consolidate divide all or any of its share capital into shares of larger amount than its existing shares.

(b) Sub - divide its shares or any of them into shares of smaller amounts than originally fixed by the Memorandum, subject

nevertheless to the provisions of the Act and of these Articles.

(c) Cancel shares which at the date of such General Meeting have not been taken or agreed to be taken by any person and

diminish the amount of its share capital by the amount of the shares so cancelled.

16. Modification of Rights attached to shares

(i) If at the time the capital, by reason of the issue of preference shares or debentures or otherwise, is divided into different

classes of shares, all or any of the rights and privileges attached to any class (unless otherwise provided by the terms of

issue of the shares of that class) may, subject to the provisions of sections 106 and 107 of the Act, and whether or not the

company is being wound up, be varied with the consent in writing of the holders of not less than three -fourths of the

issued shares of that class, or with the sanction of a special resolution passed at a separate general meeting of the holders

of the issued shares of that class.

(ii) To every such separate meeting, the provisions of these regulations relating to general meeting shall apply mutatis

mutandis.

17. Reduction of capital

The Company may (subject to the provisions of section 78, 80 and 100 to 105 of the Act) from time to time by special

resolution., reduce the capital, any capital redemption reserve account and share premium account in any manner the time

being authorized by law, and in particular, capital may be paid off on the footing that it may be called up again or otherwise.

This Article is not to derogate from any power the Company would have if it were omitted.

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SHARES AND CERTIFICATES

18. Register and Index of Members

The company shall cause to be kept a Register and Index of Members in accordance with sections 150 and 151 of the Act.

19. Branch Register of Members

The company shall be entitled to keep in any State or Country out side India a Branch Register of members resident in that

State or Country.

20. Shares to be numbered progressively and sub - divided under certain circumstances

The shares in the capital shall be numbered progressively according to their several denominations, and except in the manner

herein before mentioned, no share shall be sub - divided. Every forfeited or surrendered share shall continue to bear the

number by which the same was originally distinguished.

21. Acceptance of shares

Any application signed by or behalf of an applicant for shares in the company, followed by allotment of any share therein,

shall be an acceptance of shares within the meaning of these Article and every person who thus or otherwise accepts any shares

and whose name is on the Register Members shall, for the purpose of these Articles, be a member.

22. Deposit and call etc., to be debt payable immediately

The money (if any) which the Board shall on the allotment of any shares being made by them, require or direct to be paid by

way of deposit, call or otherwise, in respect of any shares allotted by them, shall immediately on the inscription of the name of

the allottee in the Register of Members as the name of the holder of such share, become a debt due to and recoverable by the

company from the allottee thereof, and shall be paid by him accordingly.

23. Installments on shares to be duly paid

If by the conditions of allotment of any share, the whole or part of the amount or issue price there shall be payable by

installment, every such installment shall when due be paid to the company by the person, who, for the time being and from

time to time shall be the registered holder of the share or his representative.

24. Liability of members

Every member, or his heirs, executors or administrators, shall pay to the company the portion of the capital represented by his

share or shares which may, for the time being, remain unpaid thereon, in such amounts, at such time or times and in such

manner as the Board shall, from time to time, in accordance with the company’s regulations, require or fix for the payment

thereof.

25. Share Certificates

(i) Every member or allottee of shares shall be entitled, without payment, to receive one certificate specifying the name of

the person in whose favour it is issued, the shares to which it relates, the number of the share certificate, the number of

the shares in respect of which it is issued and the amount paid - up thereon. Such certificates shall be issued only in

pursuance of a resolution passed by the Board and in such form as the directors shall prescribe or approve and on

surrender to the company of the letter of allotment or the fractional coupons of requisite value, save in case of issues

against letters of acceptance or of renunciation or in cases of issues of bonus shares.

(ii) Subject to the provisions of the companies (issue of share certificate) rules 1960 and any amendment thereof for the time

being in force, every such certificate shall be issued under the seal of the company, which shall be affixed in the presence

of and signed by:

(a) two directors or persons acting on behalf of the directors under a duly registered power of attorney, and

(b) the secretary or some other person appointed by the Board for the purpose, provided that if the composition of the

board of directors permits, at least one of the aforesaid two directors shall be a person other than managing director

or whole - time director, if any, of the company.

(iii) Any two or more joint allottees of a share shall, for the purpose of this Article, be treated as a single member and the

certificate of any share, which may be the subject of joint ownership, may be delivered to any one of such joint owners

on behalf of all of them. Particulars of every share certificate issued shall be entered in the Register of Members against

the name of the person to whom it has been issued, indicating the date of issue. For any further certificate the board shall

be entitled, but shall not be bound, to prescribe a charge not exceeding rupee one.

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The company shall comply with the provisions of section 113 of the Act.

(iv) A director may sign a share certificate by affixing his signature thereon by means of any machine, equipment or other

mechanical means, such as engraving in metal or lithography, but not by means of a rubber stamp, PROVIDED THAT

the directors shall be responsible for the safe custody of such machine, equipment or other material used for the purposes

(v) Notwithstanding any thing contained in the Articles of Association of the company, the directors of the company may, in

their absolute discretion, refuse sub - division of share certificates or debenture certificates into denominations of less

than the marketable lots except where such sub - division is required to be made to comply with statutory provisions or

any order of a competent court of law.

(vi) Share/Debenture certificates shall be issued in marketable lots and where share/ debenture certificates are issued for

either more or less than marketable lots, sub - division/ consolidation into marketable lots shall be done free of charge.

(vii) No fee shall be charged for issue of new share/debenture certificates in replacement of those, which are old, decrepit,

worn out or where the cages on the reverse for recording transfers have been fully utilized.

(viii) Every member shall be entitled, without payment, to one or more certificates in marketable lots, for all the shares of each

class or denomination registered in his name, or if the directors so approve (upon paying such fee as the directors may

from time to time determine) to several certificates, each for one or more of such shares and the company shall complete

and have ready for delivery such certificates within three months from the date of allotment, unless the conditions of

issue thereof otherwise provide, or within one month of the receipt of application for registration of transfer, transmission,

sub - division, consolidation or renewal of any of its shares shall be under the seal of company and shall specify the

numbers and distinctive numbers of shares in respect of which it is issued and amount paid-up thereon and shall be in

such form as the directors may prescribe or approve, provided that in respect of a share or shares held jointly by several

persons, the company shall not be bound to issue more than one certificate and delivery of a certificate of shares to one

of several joint holders shall be sufficient delivery to all such holders.

26. Renewals of share certificate

(i) No certificate of any share or shares shall be issued either in exchange for those which are sub - divided or consolidated

or in replacement of those which are defaced, torn or old decrepit, unless the certificate in lieu of which it is issued is

surrendered to the company.

(ii) When a new share certificate has been issued in pursuance of clause (i) of this Article, it shall state on the face of it and

against the stub or counterfoil to the effect that it is “issued in lieu of share certificate No._____ sub-divided /replaced/

on consolidation of shares”.

(iii) If a share certificate is lost or destroyed a new certificate in lieu thereof shall be issued only with the prior consent of the

board upon proof thereof to the satisfaction of directors on such indemnity as the directors deem adequate and on

payment of any such sums not exceeding that permitted under the Act and other relevant enactments prevailing at the

time of such issue, as also out -of - pocket expenses incurred by the company in investigating evidence, as the Board

thinks fit.

(iv) When a new share certificate has been issued in pursuance of clause (iii) of this Article, it shall state on the face of it and

against the stub or counterfoil to the effect that it is “duplicate issued in lieu of share certificate no._____. “ The word

“Duplicate” shall be stamped or punched in bold letters across the face of the share certificate.

(v) Where a new share certificate has been issued in pursuance of clause (ii) or clause (iii) of the Article, particulars of every

such share certificate shall be entered in a Register of Renewed and Duplicate certificate indicating against the names of

the persons to whom the certificate is issued, the number and date of issue of the share certificate in lieu of which the new

certificate is issued and the necessary change indicated in the Register of Members by suitable cross reference in the

“Remarks” column.

(vi) Notwithstanding any thing contained in the Articles of Association of the company, the directors of the company may, in

their absolute discretion, refuse sub - division of share certificates or debenture certificates into denominations of less

than the marketable lots except where such sub-division is required to be made to comply with statutory provisions or

any order of a competent court of law.

(vii) Notwithstanding any thing contained in the Articles of Association of the company, the Board of directors of the company

may at their discretion charge and recover the stamp duty payable on share certificates issued arising out of splitting or

consolidation or renewal or issue of duplicate certificate and such payments should be made by the shareholder receiving

the certificate prior to the issue of the share certificate.

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(viii) All blank forms to be used for issue of share certificates shall be printed and the printing shall be done only on the

authority of a resolution of the board. The blank forms shall be consecutively machine numbered and the forms and the

blocks, engravings, facsimiles and hues relating to the printing of such forms shall be kept in the custody of the secretary

or of such other person as the board may appoint for the purpose; and the secretary or the other person aforesaid shall be

responsible for rendering an account of these forms to the board.

(ix) The Managing director of the company for the time being or, if the company has no managing director, every director of

the company shall be responsible for the maintenance, preservation and safe custody of all books and documents r

elating to the issue of share certificates except the blank forms of share certificates referred to in Sub - Article (viii)

(x) All books referred to in sub - Article (ix) shall be preserved in good order permanently.

27. Joint Holders

(i) Where two or more persons are registered as the holders of any share, they shall be deemed to hold the same as joint

tenants with benefits of survivorship subject to the following and other provisions contained in these Articles.

(ii) The company shall be entitled to decline to register more than three persons as the joint - holders of any share.

(iii) The joint holders of any share shall be liable, severally as well as jointly, for and in respect of all calls and other

payments which ought to be made in respect of such share.

(iv) On the death of any such joint holder, the survivor or survivors shall be the only person or persons recognized by the

company as having any title of the share, but the directors may require such evidence of death as they may deem fit and

nothing herein contained shall be taken to release the estate of the deceased joint - holder from any liability on shares

held by him jointly with other person.

(v) Any of such joint holders may give effectual receipts for any dividends or other moneys payable in respect of such share.

(vi) Only the person whose name stands in the Register of Members as the first of the joint holders of any shares shall be

entitled to delivery of the certificate relating to such shares or receive documents or notices from the company, and any

document served on or sent to such person shall be deemed service on all the joint holders and any notice given to such

person shall be deemed proper notice to all joint holders.

(vii) Any one of two or more joint - holders may vote at any meeting either personally or by attorney or by proxy in respect

of such share as if he were solely entitled thereto and if more than one of such joint - holders be present at any meeting

personally or by attorney or by proxy then the holder whose name stands first or higher (as the case may be) on the

Register of Members in respect of such shares shall alone be entitled to vote in respect there of, PROVIDED always that

a person present at any meeting personally shall be entitled to vote in preference to a person present by proxy. Several

executors or administrators of a deceased member in whose (deceased Members) sole name any shares stands shall for

the purposes of this sub-clause be deemed joint-holders.

28. Company not bound to recognize any interest in shares

Except as ordered by a court of competent jurisdiction or as required by law, the company shall not be bound to recognize any

equitable, contingent, future or partial interest in any share, or (except only as is by these Articles otherwise expressly provided)

any right in respect of a share other than an absolute right thereto, in accordance with these Articles, in the person from time

to time registers as the holder there of but the board shall be at liberty at their sole discretion to register any share in the joint

names of two or more person or the survivor or survivors of them.

29. Funds etc. of company may not be applied in purchase of shares of the company

The company shall not give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of

security or otherwise, any financial assistance for the purpose of or in connection with the purchase or subscription made or to

be made by any person of or for any shares in the company except in conformity with the provisions of section 77 of the Act.

LIEN

45. Company’s lien on shares

(i) The company shall have a first and paramount lien on every share (other than fully paid - up shares) registered in the

name of any member (whether solely or jointly with others) for all moneys (whether presently payable or not) payable at

a fixed time in respect of such shares.

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PROVIDED THAT the board may, at any time, declare any share to be wholly or in part exempt from the previous of this

Articles.

(ii) The company’s lien, if any, on a share extend to all dividends payable thereon.

(iii) Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the company’ lien, if any on

such shares, as against the transferor.

(iv) The Directors may at any time declare any shares wholly or in part to be exempt from the provisions of this clause.

46. Enforcement of lien by sale

For the purpose of enforcing such lien as aforesaid, the directors may sell the shares subject thereto in such manner as they

shall think fit, but no sale shall be made:

(a) Unless a sum in respect of which the lien exists is presently payable; and

(b) Until a notice in writing, stating and demanding payment of such part of the amount in respect of which the lien exists

and as is presently payable, has been given to the registered holder for the time being of the share or to the person entitled

thereto by transmission, and default shall have been made by him in payment of the sum payable as a foresaid for seven

days after such notice.

47. Application of proceeds of sale

The net proceeds of any such sale shall be received by the company and applied in or towards payment of such part of the

amount in respect of which the lien exists as is presently payable and the residue, if any, shall (subject to a like lien for sums

not presently payable as existed upon the shares before the sale) be paid to the persons entitled to the shares at the date of the

sale.

FORFEITURE OF SHARES

48. Notice to be given if money payable on shares not paid.

If any member fails to pay the whole or any part of any call or installment or any money due in respect of shares either by way

of principal or interest on or before the day appointed for the payment of the same or any such extension thereof as aforesaid,

the Board may at any time thereafter, during such time as the call or installment or any part thereof or other moneys remain

unpaid or a judgment or decree in respect thereof remains unsatisfied in whole or in part, give notice to such member or on the

person if any, entitled to the share by transmission, requiring him to pay the same together with any interest that may have

accrued by the company by reason of such non-payment.

49. Form and terms of notice

The notice aforesaid shall name a day (not being less than fourteen days from the date of notice) and a place or places on and

at which the money (including the interest) is to be paid. The notice shall also state that in the event of the non-payment of such

money at or before the time and at the place appointed, the shares in respect of which the money is owing will be liable to be

forfeited.

50. Shares to be forfeited in default of payment

If the requirements of any such notice as aforesaid are not complied with, every or any share in respect of which such notice

has been given may, at any time thereafter, but before payment of all calls or installments, Interest be forfeited by a resolution

of the board to that effect. Such forfeiture shall include all dividends declared or any other moneys payable in respect of the

forfeited share and not actually paid before the forfeiture.

51. Notice of forfeiture to the member and entry in register

When any share have been so forfeited, notice of forfeiture shall be given to the member in whose name it stood immediately

prior to the forfeiture and an entry of the forfeiture, with the date thereof, shall forthwith be made in the Registrar of Members,

but no forfeiture shall be we in any manner invalidated by an omission or neglect to give such notice or to make any such entry

as aforesaid.

52. Forfeited share to be property of the company and may be sold etc.

Any share so forfeited shall be deemed to be the property of the company, and may be sold, re-allotted, or otherwise disposed

of, either to the original holder thereof or to any other person, upon such terms and in such manner as the Board shall think fit.

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53. Member still liable to pay calls owing at the time of forfeiture and interest

Any member whose shares have been forfeited shall, not withstanding the forfeiture, be liable to pay and shall forthwith pay

to the company, on demand, all calls, installments, interest or in respect of such shares at the time of the forfeiture, together

with the interest thereon from the time of the forfeiture until payment, at such rate as per annum as the Board may determine,

and the Board may enforce the payment thereof, if it thinks fit, but shall not be under any obligation to do so.

54. Effect of forfeiture

The forfeiture of a share shall involve extinction, at the time of the forfeiture, of all interest in and all claims and demands

against the company, in respect of the share and all other rights incidental to the share, except only such of those rights as by

those Articles are expressly saved.

55. Evidence of forfeiture

A declaration in writing that the declarant is a director or secretary of the company and that certain shares in the company have

been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all

persons claiming to be entitled to the shares.

56. Validity of sale under Articles 46 and 52

Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers here in before given, the board may

appoint some person to execute an instrument of transfer of the shares sold and cause the purchaser’s name to be entered in the

Register of Member in respect of the shares sold. The purchaser shall not be bound to see to the regularity of the proceedings,

or to the application of the purchase money, and after his name has been entered in the register in respect of such shares, the

validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by the sale shall be in

damages only and against the company exclusively.

57. Cancellation of share certificate

Upon the sale, re-allotment or other disposal under the provisions of the preceding Articles, the certificate or certificates

originally issued in respect of the relatives shares shall (unless the same on demand by the company have been previously

surrendered to it by the defaulting member) stand cancelled and become null and void and of no effect, and the directors shall

be entitled to issue a duplicate certificate or certificates in respect of the said shares to the person or persons entitled thereto.

58. Power to annual forfeiture

The Board may at anytime before any share so forfeited shall have been sold, re-allotted or otherwise disposed of, annul the

forfeiture thereof upon such conditions as it thinks fit.

TRANSFER AND TRANSMISSION OF SHARES AND DEBENTURES

59. Register of Transfers

The company shall maintain a “Register of Transfers” and therein shall be fairly and distinctly entered the particulars of every

transfer or transmission of any share.

60. Transfer not to be registered except on production of instrument of transfer

(i) The instrument of transfer shall be in writing and in such form as may be prescribed under relevant provisions of the Act

in that behalf. The company shall not charge any fee for registration of the transfer of shares.

(ii) Every instrument of transfer shall be in respect of only one class of shares.

(iii) The company shall not register a transfer of shares in the company unless a proper instrument of transfer duly stamped

and executed by or on behalf of the transferor and or on behalf of the transferee in the prescribed form and in accordance

with the requirements of Section 108 of the Act has been delivered to the company along with the certificate relating to

the shares, or if no such certificate is in existence, along with the letter of allotment of the shares. Provided that where on

an application in writing made to the company by the transferee and bearing the stamp required for an instrument of

transfer, it is proved to the satisfaction of the board of directors that the instrument of transfer, signed by or on behalf of

the transferee has been lost, the company may register the transfer on such terms as to indemnity as the board may thing

fit; Provided further that nothing in this Article shall prejudice any power of the company to register as shareholder any

person to whom the right to any shares in the company has been transmitted by operation of law.

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61. No transfer to persons of unsound mind

No transfer shall be made to the person of unsound mind.

62. Closure of Register of members or Debenture holders

The directors shall have power, on giving seven days notice by advertisement as required by Section 154 of the Act, to close

the transfer books, register of members or register of debenture holders of the company for such period of time not exceeding

in the whole 45 days in each year (but not exceeding 30 days at a time) as they may determine.

63. Director’s powers to refuse to register a transfer

Subject to the provisions of section 111 of the Act and section 22A of the Securities contracts (Regulation) Act 1956 or any

statutory modification of the said provisions for the time being in force, the directors may, at their own absolute and uncontrolled

discretion and with out assigning any reason, decline to register any transfer of shares to a person of whom they do not approve

not with standing that the proposed transferee is already a member of the company and may also decline to register any

transfer of shares of which the company has a lien. The directors may decline to recognize any instrument of transfer unless it

is accompanied by the certificate of shares to which it relates and such other evidence as the directors may reasonably require

to show the right of the transferor to make the transfer.

The registration of a transfer shall be conclusive evidence of the approval of the directors of the transferee. Provided that the

registration of a transfer shall not be refused on the ground of transferor being, either singly or jointly with any other person or

persons, indebted to the company on any account whatsoever except a lien.

64. Notice of refusal to be given to transferor and transferee

If the company refuses to register of any share or transmission of any right therein the company shall within one month from

the date on which the instrument of transfer or intimation of transmission was lodged with the company send notice of refusal

to the transferee and transferor or the person giving intimation of the transmission, as the case may be, and there upon the

provision of section 111 of the Act or any statutory modification of the said provisions for the time being in force and subject

to section 22A of the Securities Contracts (regulations) act, 1956 or any statutory modification of the said provisions for the

time being in force, shall apply.

65. Application for Transfer

(i) An application for the registration of transfer of the shares in the company may be made either by the transferor of the

transferee

(ii) Where, in the case of partly paid shares, an application for registration is made by the transferor, the transfer shall not be

registered unless the company gives notice of the application to the transferee in accordance with the provisions of

section 110 of the Act.

66. Instrument of transfer to be executed by transferor and transferee

Every instrument of transfer shall be signed both by or on behalf of the transferor and the transferee and transferor shall be

deemed to remain the holder of such share until the name of the transferees shall have been entered in the Register to members

in respect thereof.

67. Custody of instrument of transfer

The instrument of transfer shall after registration be retained by the company and shall remain in its custody. All instruments

of transfer, which the directors may decide to register, shall on demand be returned to the person depositing the same. The

directors may cause to be destroyed all transfer deeds lying with the company for a period of ten years or more.

68. Death of one or more joint holders of shares

In case of the death of any one of more of the persons named in the register of members as the joint holders of any share, the

survivor or survivors shall be the only persons recognized by the company as having any title to or interest in such share, but

nothing herein contained shall be taken to release the estate of a deceased joint holder from any liability on shares held by him

jointly with any other person.

69. Title of shares of deceased holder

The executors or administrators of a deceased member or the holder of a succession certificate in respect of the shares of a

deceased member (not being one or two or more joint holders) shall be the only persons whom the company will be bound to

recognize a having any title to the share registered in the name of such member and the company shall not be bound to

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recognize such executors or administrators or holders unless such executors, administrators or holders shall have first obtained

probate or letters of administration or succession certificate, as the case may be from a duly constituted court in India PROVIDED

THAT the directors may, at their absolute discretion, dispense with production of probate, letter of administration or succession

certificate upon such terms as to indemnity or otherwise as they think fit and may enter the name of the person who claims to

be absolutely entitled to the shares standing in the name of a deceased members, as a member, to be absolutely entitled to the

shares standing in the name of deceased members, as a member. The company shall not charge any fee for registration of any

power of attorney, probate, letter of administration or similar document. No fee shall be charged for effecting transfer/transmission

provided that the registration of a transfer shall not be refused on the grounds of the transferor being either alone or jointly with

any other person(s) indebted to the company on any account whatsoever.

70. Transmission clause

Subject to the provisions of the Act, this Article and Articles 68 and 69 any person becoming entitled to any share in consequence

of the death, lunacy or insolvency of any member or by any lawful means other than by a transfer in accordance with these

Articles, may, with the consent of the directors (which they shall be under no obligation to give) and upon producing such

evidence that he sustains the character in respect of which he proposes to act under this Article or of his title as the directors

may require, and upon giving such indemnity as the directors may require, either be registered as a member in respect of such

shares or elect to have some person nominated by him and approved by the directors registered as a member in respect of such

shares PROVIDED THAT if such person shall elect to have his nominee registered, he shall testify his election by executing

in favour of his nominee an instrument of transfer in accordance with these Articles, and until he does so he shall not be free

from any liability in respect of such share. This clause is hereinafter referred to as the “Transmission Clause”.

71. Refusal to register in case of transmission

The directors shall have the same right to refuse to register a person entitled by transmission to any shares or his nominee as

if he were the transferee named in the case of a transfer of share presented for registration.

72. Board may require evidence of transmission

Every transmission of a share be verified in such manner as the directors may require, and the company may refuse to register

any such transmission until the same be so verified, or until or unless an indemnity be given to the company with regard to

such registration which the board at their discretion shall consider sufficient; provided nevertheless that there shall be any

obligation on the company or the board to accept any indemnity.

73. The company is not liable for disregard of notice prohibiting registration of transfer

The company shall incur no liability or responsibility whatever in consequence of its registering or giving effect to any

transfer of shares made or purported to be made by any apparent legal owner thereof (as shown or appearing in the register of

members) to the prejudice of persons having or claiming any equitable right, title or interest to or interest or notice prohibiting

registration of such transfer, and may have entered such notice or referred to it in any book, or attended or given effect to any

notice which may have been given to it of any equitable right, title or interest or be under any liability whatsoever for refusing

or neglecting so to do though it may have been entered or referred to in some book of the company, but the company shall

nevertheless be at liberty to regard and attend to any such notice and give effect thereto, if the directors shall so think fit.

74. Rights of successors

A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to the same dividend’s

and other advantages to which he would be entitled if he were the registered holder of the shares, except that he shall not,

before being registered as a member in respect of the shares, be entitled to exercise any right conferred by membership in

relation to meetings of the company; PROVIDED THAT the directors shall, at the time, give notice requiring not complied

within ninety days the directors may thereafter withhold payment of all dividends, bonus or other moneys payable in respect

of the shares until the requirements of the notice have been complied with.

75. Transfer and Transmission of Debentures

The provisions in Regulations 59 to 74 shall apply mutates to transfer and transmission of debentures as if the words “ share”,

“shareholder” and Register to Members had been substituted in these regulations by the words “ debentures”, “debenture

holders” and “Register to the Debenture Holders”.

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BORROWING POWERS

77. Borrowing powers

Subject to the provisions of sections 292, 293 and 58A of the Act, and these Articles and without prejudice to the other powers

conferred by these Articles, the directors shall have power from time to time at its discretion to accept deposits from members,

either in advance of calls or otherwise and generally raise or borrow or secure the payment of any sum or sums of money for

the purpose of the company.

78. Payment or repayment of borrowed moneys

The payment and repayment of moneys borrowed as aforesaid may be secured in such manner and upon such terms and

conditions in all respects as the Board of directors may think fit, by resolutions passed at a meeting of the board (but not by

circulation) and in particular, by the issue of bonds, debentures or debenture stock of the company by a mortgage or charge

upon all or any part of the property of the company (both present and future) including its uncalled capital for the time being.

79. Securities may be assignable free from equities

Debentures, debenture stock, bonds or other securities may be made assignable free from any equities between the company

and the person to whom the same may be issued.

80. Terms of issue and Debentures

(i) Any debentures, debenture stock or other securities may be issued at a discount, premium or otherwise and may be

issued on condition that they shall be convertible into shares of any denomination, and with any privileges and conditions

as to redemption, surrender, drawing allotment of share and attending (but not voting) at general meetings, appointment

of directors and otherwise. Debentures with the right to conversion into or allotment of share shall be issued only with

the consent of the company in general meeting accorded by a special resolution.

(ii) Subject to, and in default of the terms of issue of debentures, the provisions in regulations 18A to 186 shall apply mutates

mutandis to debentures as if the words “share”, “member” and “dividend” have been substituted in these regulations by

the words “ debenture”, “debenture holder” and “interest”

81. Register of charges, Mortgages etc. to be kept

The board shall cause a proper Register to be kept in accordance with the provisions of section143 of the Act of all mortgages,

debentures and charges specifically affecting the property of the company, and shall clause the requirements of section 118,

125 and 127 to 144 (both inclusive) or the Act in that behalf to be duly complied with, so far as they are required to be

complied with by the company.

82. Register and Index of Debenture holder

The company shall, if at any time it issues debentures, keep a register and index of debenture holders in accordance with

section 152 of the Act. The company shall have the powers to keep in any state or country outside India a branch register of

Debenture holders resident in that state or country.

83. Mortgage of uncalled capital

If any uncalled capital of the company is included in or charged by any mortgage or other security, the directors shall subject

to the provisions of the Act and these Articles, make calls on the members in respect of such uncalled capital in trust for the

person in whose favour such mortgage of security is executed.

84. Indemnity may be given

Subject to provisions of the Act and these Articles, if the directors or any of them or any other person shall incur or be about

to incur any liability whether as principal or surety for the payment of any sum primarily due from the company, the directors

may execute or cause to be executed any mortgage, charge, or security over or affecting the whole or any part of the assets of

the company by way of indemnity to secure the directors or person so becoming liable as aforesaid from any loss in respect of

such liability.

GENERAL MEETINGS OF MEMBERS

87. Annual General Meeting and Extra Ordinary General Meeting

The company shall in each year hold a general meeting as its Annual General meeting in addition to any other meeting in that

year. All general meetings other than annual general meetings shall be called Extra Ordinary General meeting.

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88. Time limit for holding Annual General Meeting

An annual general meeting of the company shall be held within six months after the expiry of each financial year; PROVIDED

THAT not more than fifteen months shall elapse between the date of the one annual general meeting and that of the next.

Nothing contained in the foregoing provisions shall be taken as affecting the right conferred upon the Registrar under the

provisions of section 166(1) of the Act to extend the time within which any annual general meeting may be held.

89. Annual General Meetings when to be held

(i) Every annual general meeting shall be called for a time during business hours, on a day that is not a public holiday, and

shall be held at the registered office of the company or at some other place within the city, town or village in which the

registered office is situated as the board may determine and the notices calling the meeting shall specify it as the annual

general meeting.

(ii) The company may in any one annual general meeting fix the time for its subsequent annual general meeting.

90. Reports and Registers tabled at Annual General Meeting.

At every annual general meeting of the company there shall be laid on the table the director’s report and Audited statement of

Accounts, Auditor’s report (if not already incorporated in the audited statement of accounts), the proxy register with proxies

and the register of director’s shareholders which latter Register shall remain open and accessible during the continuance of the

meeting to any person having the right to attend the meeting.

91. Extra ordinary General Meeting

(i) The board may, whenever it thinks fit, call an Extra ordinary General meeting and it shall do so upon a requisition in

writing by a member or members holding in the aggregate not less than one-tenth of such of the paid-up capital as at that

date carries the right of voting in regard to the matter in respect of which the requisition has been made.

(ii) Any valid requisition so made by members must state the object or objects of the meeting proposed to be called, and

must be signed by the requisitionists and deposited at the office, PROVIDED THAT such requisition may consist of

several documents in like form, each signed by one or more requisitionists.

(iii) Upon the receipt of any such requisition, the board shall forthwith call an extra ordinary general meeting, and if they do

not proceed within twenty one days from the date of the requisition being deposited at the office to cause a meeting to be

called on a day not later than forty five days from date of deposit of the requisition, the requisitionists, or such of their

number as represent either a majority in value of the paid up share capital held by all of them or not less than one tenth

of such of the paid up share capital of the company as is referred to in section 169(4) of the Act, which ever less, may

themselves call the meeting, but in either cases, any meeting so called shall be held within three months from the date of

the deposit of the requisition as aforesaid.

(iv) Any meeting called under the foregoing sub-clause (iii) by the requisitionists shall be called in the same manner, as

nearly as possible, as that in which meetings are to called by the board.

92. Notice of Meeting

(i) A general meeting of the company may be called by giving not less than twenty-one day’s notice in writing.

(ii) However, a general meeting may be called after giving shorter notice than twenty-one day’s, if consent is accorded

thereof;

(i) In the case an annual general meeting by all the members entitled to vote thereat; and

(ii) In the case of any other meeting by all members of the company holding not less than ninety five percent of such part

of the paid up share of the company as gives a right to vote at that meeting.

Provided that where any member of the company are entitled to vote only on some resolution or resolutions to be moved

at the meeting and not on the others, those members shall be taken into account for the purpose of this sub-clause in

respect of the former resolution or resolutions but not in respect of the latter.

93. Contents of Notice

(i) Every notice of a meeting of the company shall specify the place, the day and hour of the meeting and shall contain a

statement of the business to be transacted thereat.

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PROVIDED THAT if on account of any unforeseen circumstances or events which are beyond the control of the directors

to prevent including but not limited to earthquake, fire typhoon, hurricane, flood, cyclone or natural calamities, war, war

like events, civil commotion, affray, riots, strike, lock-out, lay-off, go-slow, or any other agitation such as gherao or

bundh, by a group of people, and that after issuing the notice for holding any general meeting of the company the

directors are of the opinion that it will not be possible to hold and or continue the meeting at such place where the

meeting shall have been held, that meeting may be adjourned and/or reconvened at a new place which the directors may

consider appropriate and for this purpose any notice given, by the directors in any newspaper circulating at the place

where the meeting was to held originally, shall be sufficient compliance in regard to the issuance of any notice for

holding and / or continuing any meeting of the company at such new place.

(ii) In every notice there shall appear with reasonable prominence a statement that a member entitled to attend and vote is

entitled to appoint a proxy, to attend and vote instead of himself, and that proxy need not be member of the company.

95. Service of Notice of General Meeting

Notice of every meeting shall be given to every member of the company in any manner authorized by sub-sections (1) or (4)

of section 53 of the act and these articles. It shall be given to the persons entitled to a share in consequence of the death or

insolvency of a member, by sending it through the post in a prepaid letter addressed to them by name or by the title of the

representatives of the deceased or assignees of the insolvent, or by any like description, at the address, if any, in India supplied

for the purpose by the persons claiming to be so entitled, or until such an address has been so supplied, by giving notice in any

manner in which it might have been given if the death or insolvency had not occurred.

96. Omission to give notice not to invalidate a resolution passed

The accidental omission to give any such notice as aforesaid to any of the members, or the non-receipt thereof, shall not

invalidate any resolution passed at any such meeting.

Provided where the notice of a meeting is given by advertising the same in a newspaper circulation in the neighbourhood of

the registered office of the company under sub - section (3) of section 53 of the Act, the explanatory statement need not be

annexed to the notice as required by section 173 of the Act, but it shall be mentioned in the advertisement that the statement

has been forwarded to the members of the company.

97. Meeting not to transact business not mentioned in notice

No general meeting, annual or extra ordinary, shall be competent to enter upon, discuss or transact any business which has not

been mentioned in the notice or notices upon which it was convened.

98. Notice to be given to the auditors

Notice of every meeting of the company shall be given to the auditor or auditors for the time being of the company in any

manner authorized by section 53 of the Act, as in the case of any member or members of the company.

99. Resolution requiring special notice

Where by any provision contained in the Act or in these Articles, special notice is required of any resolution notice of intension

to move the resolution shall be given to the company, and by the company, to the members as provided in section 190 of the

Act, which section shall otherwise also be duly complied with.

100. Quorum for the General Meeting

The quorum for the meeting shall be as provided in section 174 of the Act.

101. Body corporate deemed to be personally present

A body corporate being a member shall be deemed to be personally present if it is represented in accordance with section 174

of the Act.

102. If quorum not present, meeting to be dissolved or adjourned.

If, at the expiration of half an hour from the time appointed for holding a meeting of the company, a quorum is not present, the

meeting, if convened by or upon the requisition of members, shall stand dissolved, but in any other case, the meeting shall

stand adjourned to the same day in the next week or, if that day is a public holiday, until the next succeeding day which is not

a public holiday at the same time and place, or to such other day and at such other time and place as the board may determine,

and if at such adjourned meeting a quorum is not present at the expiration of half and hour from the time appointed for holding

the meeting, the members present shall be a quorum, and may transact the business for which the meeting was called.

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103. Chairman of General meeting

The Chairman (if any) of the Board of Directors shall, preside as Chairman at every general meeting whether annual or extra

ordinary, but if there be no such chairman, or in case of his absence or refusal, the vice - chairman or in the case of his absence

of refusal one of the directors (if any be present) shall be chosen to be chairman of the meeting.

104. Circumstances in which a member may act as Chairman

If at any meeting a quorum of members shall be present, and the chair shall not be taken by the chairman of the board or by the

vice-chairman or by a director at the expiration of fifteen minutes from the time of appointed for holding the meeting or if

before the expiration of that time all the directors shall decline to take the chair, the members present shall on a show of hands

choose one of their number to be chairman of the meeting.

105. Business confined to election of chairman whilst chair is vacant

(i) No business shall be discussed at any general meeting except the election of a chairman, whilst the chair is vacant.

(ii) If a poll is demanded on the election of chairman, it shall be taken forthwith in accordance with the provisions of the Act

and these Articles, the chairman elected on a show of hands exercising all powers of the chairman under the Act and

these Articles.

(iii) If some other person is elected chairman as a result of the poll he shall be chairman for the rest of the meeting.

106. Chairman with consent may adjourn meeting

The chairman, with the consent of the members, may adjourn any meeting from time to time and from place to place, but no

business shall be transacted at any adjourned meeting other that the business left unfinished at the meeting from which the

adjournment took place.

107. Notice not be given where a meeting is adjourned

When a meeting is adjourned it shall not be necessary to give any notice of an adjournment or of the business to be transacted

at an adjourned meeting.

108. Question at General Meeting how decided

At any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before

or on the declaration of the result of the show of hands) demanded in accordance with section 179 of the Act, and unless a poll

is demanded, a declaration by the chairman that a resolution has on a show of hands, been carried or carried unanimously, or

by a particular evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against that

resolution.

109. Chairman to have a casting vote

In the case of an equity of votes both on a show of hands or at a poll (if any), the chairman shall have a casting vote in addition

to the vote or votes to which he may be entitled as a member.

110. Demand for poll

Before or on the declaration of the result of the voting on any resolution on a show of hands, a poll may be ordered to be taken

by the chairman of the meeting of his own motion, shall be ordered to be taken by him on a demand made in that behalf by any

member or members present in person or by proxy and holding shares in the company.

(a) Which confer a power to vote on the resolution not being less than one tenth of the total voting power in respect of the

resolution, or.

(b) On which an aggregate sum of not less than fifty thousand rupees has been paid up.

111. Time and manner of taking poll

If a poll is demanded as aforesaid, the same shall, subject to Article 108 be taken at such time (not later than forty eight hours

from the time when the demand was made) and place, and either by open voting or by ballot, as the chairman shall direct, and

either at once or after an interval or adjournment, or otherwise, and the result of the poll shall be deemed to be the resolution

of the meeting at which the poll was demanded. The demand of a poll may be withdrawn at any time by the persons who made

the demand.

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112. Scrutineers at poll

Where a poll is to be taken the chairman of the meeting shall appoint two scrutineers to scrutinize the votes given on the poll

and to report thereon to him. One of the scrutineers so appointed shall be a member (not being an officer or employee of the

company) present at the meeting, provided such a member is available and willing to be appointed. The chairman shall have

power at anytime before the result of the poll is declared to remove a scrutineer from office and fill vacancies in the office of

scrutineer arising from such removal or from any other cause.

113. In what case poll taken without adjournment

Any poll duly demanded on the election of a chairman of a meeting or on any question of adjournment shall be taken at the

meeting forthwith.

114. Demand for poll not to prevent transaction of other business

The demand for poll except on the question of the election of the chairman and of an adjournment shall not prevent the

continuance of a meeting for the transaction of any business other than the question on which the poll has been demanded.

VOTES OF MEMBERS

115. Members in arrears not to vote

No member shall be entitled to vote either personally or by proxy at any general meeting or Meeting of a class of shareholders,

either upon a show of hands or upon a poll in respect of any shares registered in his name on which any calls or other sums

presently payable by him have not been paid or in regard to which the company has, and has exercised, any right of lien.

116. Number of votes to which member entitled

Subject to the provisions of these articles and without prejudice to any special privileges or restrictions as to voting for the

time being attached to any class of shares for the time being forming part of the capital of the company, every member shall be

entitled to be present, and to speak and vote at such meeting. Every member present in person or by proxy shall on a show of

hands have one vote and upon a poll the voting right shall be in proportion to his share of the paid up equity share capital of the

company.

PROVIDED, however, if any preference shareholder be present at any meeting of the Company, save as provided in clause (b)

of sub-section (2) of Section 87 he shall have a right to vote only on resolutions placed before the meeting which directly affect

the rights attached to his preference shares.

117. Casting of votes by a member entitled to more than one vote

On a poll taken at a meeting of the company, a member entitled to more than one vote, or his proxy or other person entitled to

vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.

118. Vote of member of unsound mind or who is minor

A member of unsound mind or in respect of whom an order has been made by any court having jurisdiction, in lunacy, may

vote, whether on a show of hands, or on a poll, by his committee or other legal guardian, or by proxy of such committee or

other legal guardian. If any shareholder be a minor, the vote in respect of his share or shares shall be by his guardian, or anyone

of his guardians, if more than one to be selected in case of dispute by the chairman of the meeting.

119. Vote of joint members

If there be joint registered holders of any shares, any one of such persons may vote at any meeting or may appoint another

person (whether a member or not) as his proxy in respect of such shares, as if he were solely entitled thereto but the proxy so

appointed shall not have any right to speak at the meeting and, if more than one of such joint holders be present at any meeting,

that one of the said persons so present whose name stands higher on the Register shall alone be entitled to speak and to vote in

respect of such shares but the other or others of the joint holders shall be entitled to be present at the meeting. Several

executors or administrators of a deceased member in whose name shares stand still for the purpose of these articles be deemed

joint holders thereof.

120. Voting in person or by proxy

Subject to the provisions of these articles, votes may be given either personally or by proxy. A body corporate being a member

may vote either by proxy or by a representative duly authorized in accordance with section 187 of the Act and such representative

shall be entitled to exercise the same rights and powers (including right to vote by proxy) on behalf of body corporate which

he represents as that body exercise if it were an individual member.

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121. Votes in respect of shares of deceased and insolvent member

Any person entitled under the Transmission clause (Article 70) to transfer any shares may vote at any General meeting in

respect thereof in the same manner as if he were the registered holder of such shares, PROVIDED THAT at least forty-eight

hours before the time of holding the meeting or adjourned meeting, as the case may be, at which he proposes to vote he shall

satisfy the directors of his right to transfer such shares and give such indemnity (if any) as the directors may require unless the

directors shall have previously admitted his right to vote at such meeting in respect thereof.

122. Appointment of proxy

Every proxy (whether a member or not) shall be appointed in writing under the hand of the appointer or his attorney, or if such

appointer is body corporate under the common seal of such corporation, or be signed by an officer or any attorney duly

authorized by it, and any committee or guardian may appoint such proxy. The proxy so appointed shall not have any right to

speak at the meetings.

123. Proxy either for specified meeting or for period

An instrument of proxy may appoint a proxy either for the purpose of a particular meeting specified in the instrument and any

adjournment thereof or it may appoint for the purpose of every meeting of the company, or of every meeting to be held before

a date specified in the instrument and every adjournment of any such meeting.

124. Votes by members present of by proxy

A member present either in person or by proxy shall be entitled to vote both on show of hands and on a poll.

125. Deposit of instrument of appointment

(i) The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a

notarially certified copy of that power of attorney, shall be deposited at the office of the company or such places as may

be specified for that purpose in the notice convening the meeting at which the person named in the instrument proposes

to vote and in default the instrument of proxy shall not be treated as valid. Such deposit shall be made not later than forty-

eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote and in

default, the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the

expiration of twelve months from the date of its execution.

(ii) Not withstanding that a power of attorney or other authority has been registered in the records of the company, the

company may give notice in writing addressed to the member or the holder of the attorney given at least fourteen days

before the meeting requiring him to produce the original power of attorney or authority and unless the same is thereupon

deposited with company not less than forty eight hours before the time fixed for the meeting the attorney shall not be

entitled to vote such meeting unless the directors in their absolute discretion excuse such non - production and deposit.

126. Form or proxy

Every instrument of proxy whether for a specified meeting or otherwise shall, as nearly as circumstances will admit, be in any

of the forms set out in Schedule IX of the Act.

127. Proxy to be sent with notice

The proxy form shall be sent along with the notice convening any general meeting, to all the shareholders. Where the meeting

pertains to debenture holders, proxy forms shall be sent to all the debenture holders.

128. Custody of the instrument

If any such instrument of appointment be confined to the object of appointing an attorney or proxy if shall remain permanently

or such time as the directors may determine, in the custody of the company and if embracing other objects, a copy thereof ,

examined with the original shall be delivered to the company to remain in its custody.

129. Inspection of proxies

Every member entitled to vote at a meeting of the company according to the provisions of these articles on any resolution to

be moved thereat shall be entitled during the period beginning twenty four hours before the time fixed for the commencement

of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged at any time during the business

hours of the company, provided not less than three days notice in writing of the intention so to inspect is given to the company.

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130. Validity of votes given by proxy not withstanding death of member.

A vote given in accordance with the terms of an instrument of proxy shall be valid not withstanding the previous death or

insanity of the principal, or revocation of the proxy or of any power of attorney under which such proxy was signed, or the

transfer of the share in respect of which the vote is given: PROVIDED THAT no intimation in writing of the death or insanity,

revocation or transfer should have been received at the office before the meeting.

131. Time for objection to vote

No objection shall be made to the validity of any vote, except at the meeting or poll at which such vote shall be tendered, and

every vote whether given personally or by proxy, not disallowed at such meeting or poll, shall be deemed valid for all purposes

of such meeting or poll whatsoever.

132. Chairman of the meeting to be the judge of the validity of every vote

The chairman of any meeting shall be the sole judge of the validity of every vote tendered at such meeting. The chairman

present at the taking of a poll shall be the sole judge of the validity of every vote tendered at such poll.

DIVIDEND

179. Division of profits and dividends in proportion to amount paid-up

(i) The profits of the company, subject to any special rights relating thereto created or authorized to be created by these

articles and subject to the provisions of these articles, shall be divisible among the members in proportion to the amount

of capital paid-up or credited as paid-up on the shares held by them respectively.

(ii) All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares during

any portion or portions of the period in respect of which the dividend is paid, but if any share is issued on terms providing

that it shall rank for dividend as from a particular date, such share shall rank for dividend accordingly.

180. The company in General Meeting may declare a dividend

(i) The company in general meeting may declare dividends to be paid to members according to their respective rights and

interest in profits.

(ii) No dividends shall exceed the amount recommend by the board, but the company in general meeting may declare a

smaller dividend.

181. Dividends only to be paid out of profits

(i) No dividend shall be declared or paid by the company for any financial year except out of the profits arrived at in the

manner set out in section 205 of the Act and the declaration of the director’s as to the amount of the net profits of the

company shall be conclusive.

(ii) The board may also carry forward any profits, which it may think prudent not to divide, without setting them aside as a

reserve.

(iii) Where owing to inadequacy or absence of profits in any year, the company proposes to declare dividend out of the

accumulated profits earned by it in previous years and transferred to reserves, such declaration of dividend shall not be

made except in accordance with such rules as may be made in that behalf by the government, and where any such

declaration is not in accordance with such rules, it shall not be made except with the previous approval of the government.

182. Interim Dividend

The board may, from time to time, pay to the members such interim dividends as in their judgment the position of the company

justifies.

183. Capital paid-up in advance at interest not to earn dividend

Where capital is paid in advance of calls such capital may carry interest but shall not in respect thereof confer a right to

dividend or participate in profits.

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184. Retention of dividends until completion of transfer under Articles 69 and 70

Subject to the provisions of the Act, the Board may retain the dividends payable upon shares in respect of which any person is,

under Articles 69 and 70 entitled to become a member, or which any person under those articles is entitled to become a

member, or which any person under those articles is entitled to transfer, until such person shall become a member in respect of

such shares or shall duly transfer the same.

185. Dividend etc. to joint holders

Any one of several persons who are registered as the joint holders of any share may give effectual receipts for all dividends or

bonus and payments on account of dividends or bonus other moneys payable in respect of such shares.

186. No member to receive dividend whist indebted to the company and company’s right of reimbursement there out

No member shall be entitled to receive payment of any interest or dividend in respect of his share of shares, whilst any money

may be due or owing from him to the company in respect of such shares or shares or otherwise howsoever, either alone or

jointly with any other person or person; and the board may deduct from the interest or dividend payable to any member all

sums of money so due from him to the company.

187. Transfer of shares must be registered

A transfer of shares shall not pass the right to any dividend declared thereon before the registration of the transfer.

188. Time and manner of payment of dividend

(i) The company shall pay the dividend to the shareholder entitled to its payment, within forty-two days from the date of the

declaration unless:

(a) where the dividend could not be paid by reason of the operation of any law;

(b) where as shareholder has given directions regarding the payment of the dividend and those directions cannot be

complied with;

(c) where there is a dispute regarding the right to receive the dividend;

(d) where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder; or

(e) where for any other reason the failure to pay the dividend or to post the warrant within the period aforesaid was not

due to any default on the part of the company.

(ii) A dividend may be paid by cheque or warrant or by a pay slip or receipt having the force of a cheque or warrant sent

through the post to the registered address of the member or person entitled or in case of joint holders to that one of them

first named in the register of members. Every such cheque or warrant shall be made payable to the person to whom it is

sent. The company shall not be liable or responsible for any cheque or warrant or pay slip or receipt lost in transmission

or for any dividend loss to the members or person entitled thereto by the forged endorsement of any cheque or warrant

or the signature of any pay slip or receipt or the fraudulent recovery of the dividend by any other means.

189. No interest on unpaid dividends

Subject to the provisions of the Act, no unpaid dividend shall bear interest as against the company.

190. Set off of dividend and call

Any general meeting declaring a dividend may, on the recommendation of the directors, make a call on the members of such

amount as the meeting fixes but so that the call on each member shall not exceed the dividend payable to him and so that the

call be made payable at the same time as the dividend, and the dividend may, if so arranged between the company and the

member, be set off against the calls.

191. Unclaimed dividend

No unclaimed dividend shall be forfeited and all unclaimed dividends shall be dealt with in accordance with the provisions of

section 205A and section 205B or other provisions, if any, of the Act.

192. Rights to Dividend, rights shares to be held in abeyance pending registration of transfer of shares.

Where any instrument of transfer of shares has been delivered to the company for registration and the transfer of such shares

has not been registered by the company, it shall not withstanding any thing contained in any other provisions of the Act or of

these articles;

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a) transfer the dividend relation to such shares to the unpaid Dividend Account of the company as required under section

205A of the Act, unless the company is authorized by the registered holder of such shares in writing to pay such dividend

to the transferee specified in such instrument of transfer; and

b) keep in abeyance in relation to such shares any offer of rights shares under clause (1) of sub-section(2) of Section 81 and

any issue of fully paid up bonus shares in pursuance of sub-section (3) of section 205 of the Act.

WINDING UP

208. Distribution of assets

Upon the winding up of the company, the holders of the equity shares shall be entitled to be repaid the amount of capital paid

up or credited as paid up on such shares, and all surplus assets, therein after shall belong to the holders of the equity shares in

proportion to the amount paid up or credited as paid up on such equity shares respectively at the commencement of the

winding up. If the assets shall be insufficient to repay the whole of the paid up equity capital such assets, shall be distributed

so that as nearly as may be, the losses shall be borne by the members holding equity shares in proportion to the capital paid up

or which ought have been paid up on equity shares held by him respectively at the commencement of the winding up other that

the amounts paid by them in advance of calls.

209. Distribution is specie and kind

(i) If the company shall be wound up, the liquidator may with the sanction of a special resolution of the company and any

other sanction required by the Act, divide amongst the members, in specie or kind, the whole or part of the assets of the

company whether they shall consist of property of the same kind or not.

(ii) For the purpose aforesaid, the liquidator may set such value as he deems fair upon any property to be divided as aforesaid

and may determine how such divisions shall be carried out as between the members or different classes of members.

(iii) The liquidator may, with the like sanction, vest the whole or any of such assets in trustees upon such trusts for the benefit

of the contributories as the liquidator, with the like sanction shall think fit, but so that no member shall be compelled to

accept any shares or other securities whereon there is any liability.

INDEMINITY AND RESPONSIBILITY

210. Director’s and others right of indemnity

(i) Subject to provisions of section 201 of the Act, every director, managing director, manager, secretary and other officer or

employee of the company and the trustees (if any) for the time being acting in relation to any affairs of the company

against, and if shall be the duty of directors out of funds of the company to pay all costs, losses and expenses (including

traveling expenses) which any such Directors, managing director or officer or employee may incur or become liable to

by reason of any contract entered into act or deed done by them or him as such Directors, managing director or officer or

employee or in any way in the discharge of his duties.

(ii) Every officer or duly authorised agent for the time being of the company shall be indemnified out of the assets of the

company against all liability incurred by him in defending any proceeding arising out of his position as an officer or as

such agent of the company, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted

or discharged or in connection with any application under section 633 of the act in which relief is granted to him by the

court.

SECRECY CLAUSE

211. Secrecy clause

(i) Every director, manager, secretary, auditor, treasurer, Trustee, member of a committee, officer, servant, agent, accountant

or other person employed n the business of the company shall, if so required by the directors, before entering upon his

duties, sign a declaration pledging himself to observe strict secrecy respecting all transactions and affairs of the company

with the company customers and the state of the accounts with individuals in matters relating thereto, and shall by such

declaration pledge himself not to reveal any of the matters which may come to his knowledge in the discharge of his

duties except when required so to do by the directors or by law or by the person to whom such matters relate and except

so far as may be necessary in order to comply with any of the provisions in these presents contained.

(ii) No members shall be entitled to visit or inspect any work of the company without the permission of the directors or to

require discovery of or any information respecting any details of the company’s trading, or any matter which is or may

be in the nature of a trade secret process or any other matter which may relate to the conduct of the business of the

company and which in the opinion of the directors, it would be inexpedient in the interest of the company to disclose.

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SECTION - X OTHER INFORMATION

1. List of material contracts and documents for inspection.

The following contracts mentioned below (not being contracts entered into in the ordinary course of business carried on by the

Company) are or may be deemed to be material contracts. Copies of these contracts along with documents referred below may

be inspected at the Registered Office of the Company between 10.00 a.m. and 1.00 p.m. on any working day until the closing

of the subscription list.

A. Material Contracts

1. Memorandum of Understanding dated 31st December 2005 and addendum to the MOU dated 4th May, 2007

signed between the Company and Karvy Investor Services Limited for acting as Lead Manager to the Issue.

2. Memorandum of Understanding dated 3rd January 2006 signed between the Company and Sathguru Management

Consultants Private Limited for acting as Registrar to the Issue.

3. Letter dated 30th September, 2005 appointing Karvy Investor Services Limited, as Lead Manager.

4. Letter dated 2nd January, 2006 appointing Sathguru Management Consultants Private Limited as the Registrar to

the Issue.

5. Copies of quotations obtained and Purchase Orders issued for Capital Equipments.

B. Material Documents

1. Memorandum and Articles of Association of the Company as amended from time to time.

2. Certificate of Incorporation of the Company dated 17th October, 1994.

3. Certificate of commencement of business of the Company dated 4th November 1994

4. Copy of Board Resolution dated 20th August, 2005 for the proposed rights offer.

5. Copy of Resolution passed in the Annual General Meeting dated 29th September, 2005 regarding re-appointment

of Managing Director.

6. Copy of the Board Resolution dated 29th April, 2006 authorizing severally Mr. Challa Prakash, Managing Director,

Mr. Challa Suresh, Director and Mr. Vishwanath Ganti, Company Secretary to make necessary corrections to the

Draft Letter of Offer/Letter of Offer and to sign the same.

7. Copy of the special resolution passed by the members of the Company on 10th October 2005 for the proposed

rights offer.

8. Letter dated 05th May 2007 from M/s. Karvy & Co, the Statutory Auditors of the Company, regarding the tax

benefits available to the Company and its members.

9. Letter dated 5th May 2007 from M/s. Karvy & Co., the Statutory Auditors of the Company regarding financial

performance for the past five years adjusted as per SEBI guidelines.

10. Annual reports of the Company for the year ended March 31, 2002, 2003, 2004 , 2005 and 2006.

11. Consents from the Directors, Auditors, Lead Manager, Legal Advisors to the Issue, Company Secretary, Registrar,

Compliance Officer, Bankers to the Issue, Bankers to the Company to act in their respective capacities.

12. Copies of Power of Attorneys executed by all the Directors in favor of Mr. Challa Prakash, Managing Director and/

or Mr. Vishwanath Ganti, Company Secretary with respect to the present rights offer.

13. Legal Advisor’s due diligence report dated 30th December, 2006 and addendum to the report dated 31st March,

2007.

14. Resolution of the meeting of the Board of Directors held on 17th June 2004 for re-constitution of the company’s

Audit Committee and Investors Grievances Redressal & Share Transfer Committee and resolution of the meeting

of the Board of Directors held on 31st January 2006 reconstituting Remuneration Committee.

15. Agreement with NSDL dated 8th December 2000 for dematerialization of shares.

16. Agreement with CDSL dated 31st January 2001 for dematerialization of shares.

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17. Due Diligence Certificate dated 7th June, 2006 to SEBI from Karvy Investor Services Limited.

18. Copy of the members resolution dated 29th September 2005 appointing Karvy & Company, Chartered Accountants

as Statutory Auditors.

19. Certified copies of Form 5s along with relevant resolutions for increase in authorized Share capital.

20. Resolution dated 29th September, 2005 passed by the Shareholders authorizing increase in borrowing limits of the

Board of Directors.

21. Copy of Board Resolution dated 7th June, 2006 and 19th May, 2007 approving draft Letter of Offer and Final

Letter of Offer respectively.

22. Relevant extracts regarding Industry Information.

23. Copy of various Government Approvals obtained by the Company.

24. Statutory Auditors certificate dated 14th May, 2007 regarding sources and deployment of funds.

25. Legal Advisors certificate dated 3rd May 2007 regarding litigation.

26. Copy of ISO 9001 Certification dated 20th April 2006.

27. In principle approval dated 29th June, 2006 from BSE for listing of the securities offered in this issue.

28. In principle approval dated 1st July, 2006 from HSE for listing of the securities offered in this issue.

29. SEBI Observation Letter No. SRO/PMD/IMID/EIF/2006/5/1272 dated March 22, 2007

30. Listing agreement with the BSE and the HSE.

31. Letters of intent for the subscription to rights entitlement, received from the promoters.

32. Agreement for Joint Development entered into with Mrs. Rahila S and Mrs. Falila S for development of land in

Navalur Village, Kancheepuram District.

33. Memorandum of Understanding entered between the Company and Anchor Malls Private Limited dated 1st July,

2005 and the contract entered into between them as on 29th March 2006 for development of Chennai Central

34. Memorandum of Understanding dated 5th May, 2006 entered into with Glomac Berhad, Malaysia for formation of

Special Purpose Vehicle for submission of EOI to Government of Andhra Pradesh for Development of Integrated

Townships in Hyderabad.

35. Joint Development Agreement dated 17th February, 2006 entered into with M/s. Shelat Brothers, Chennai for

development of 1.08 acres of land situated at Perungudi, Chennai.

36. Copy of Construction agreement dated 6th May, 2006 entered into with Sri Satya Sai Constructions, a partnership

firm for construction of residential villas and club houses at Bangalore.

37. Copy of the approval under Section 297 of the Companies Act, dated 23rd March 2006, obtained from the Office

of the Regional Director, Southern Region, Chennai and Ministry of Company Affairs, Government of India for

entering into contract with Sri Satya Sai Constructions.

Any of the contracts or documents mentioned in this Letter of Offer may be amended or modified at any time, if so required,

in the interest of the company or if required by other parties, without reference to the shareholders, subject to compliance of

the applicable laws.

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2. DECLARATION

No statement made in the Letter of Offer contravenes any of the provisions of the Companies Act, 1956 and the rules made

there under. All the legal requirements connected with the said issue as also the guidelines, instructions etc., issued by SEBI,

Government and any other competent authority in this behalf have been duly complied with.

The company accepts no responsibility for statements made otherwise than in the Letter of Offer or in the advertisement or any

other material issued by or at the instance of the company and that any one placing reliance on any other source of information

would be doing so at their own risk.

The Directors, Chief Financial Officer and Company Secretary of the Issuer Company certify that all the disclosures made in

the Letter of Offer are true and correct.

Signed by

Mr. Challa Prakash, Managing Director

Mr. Challa Suresh, Director

Mr. C. Ramakrishna, Director

Mr. E. Bhaskar Rao, Director

Mr. K. Akmaluddin Sheriff, Director

Mr. S. Suryanarayana, Director

Mr. S. Sundar, Chief Financial Officer

Mr. Vishwanath Ganti, Company Secretary

Place : Hyderabad

Date : 19th May 2007