(Private & Confidential) - Schneider Electric President Systemsapwpresident.com/wp-content/uploads/2009/12/APW_LOF_DEC_09_… · (Private & Confidential) APW PRESIDENT SYSTEMS LIMITED

DRAFT LETTER OF OFFER (Private & Confidential)

APW PRESIDENT SYSTEMS LIMITED

The Company was originally incorporated as Stellar Modular Systems Private Limited in the state of Maharashtra on 22/10/1984 under the Companies Act, 1956. The name of the Company was changed to Stellar Modular Systems Limited upon conversion into Public Limited Company and a fresh certificate of incorporation was obtained on 02/04/1996. Subsequently, the name of the Company was changed to Vero President Systems Limited and fresh certificate of incorporation consequent to change of name was obtained on 10/05/1996. The name of the Company was again changed to APW President Systems Limited and a fresh certificate of incorporation was obtained on 12/10/2000.

Registered Office: R-2, Technopolis Knowledge Park, Mahakali Caves Road, Andheri (East), Mumbai 400 093.

Tel: +91-022- 66448888 ; Fax: +91-022- 66448899 ; Email: [email protected]; Website: www.apwpresident.com Contact person: Mr. K.K. Bhavsar, Company Secretary & Compliance Officer

ISSUE OF [•] EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PREMIUM OF RS. [•] PER SHARE (I.E. AT A PRICE OF RS. [•] PER SHARE) AGGREGATING RS. 605.00 LACS ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF [•] EQUITY SHARE FOR EVERY [•] EQUITY SHARES (I.E. [•]) HELD ON RECORD DATE I.E. [•].

THE ISSUE PRICE IS [•] TIMES 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 issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or the adequacy of this document. The attention of investors is drawn to the statement of Risk Factors beginning on page no. v of this 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 the Issuer and the Issue, which is material in 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.

LISTING The existing Equity shares of the Company are listed on Pune Stock Exchange Limited (PSE, The Designated Stock Exchange) ,Bangalore Stock Exchange Limited (BgSE) and are permitted to trade in the “BSE-INDONext” segment w.e.f. 07/01/2005. The Company has received in-principle approvals from PSE and BgSE vide their letter nos. [•] dated [•] respectively for listing of the equity shares being issued in terms of this Letter of Offer.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

KEYNOTE CORPORATE SERVICES LIMITED 4th Floor, Balmer Lawrie Building, 5, J. N. Heredia Marg, Ballard Estate, Fort, Mumbai – 400 001 Tel : +91-022-3026 6000-3 Fax: + 91-022-2269 4323 E-mail: [email protected] Website: www.keynoteindia.net SEBI Regn. No.: INM 000003606 AMBI Regn No: AMBI/040

MONDKAR COMPUTERS PRIVATE LIMITED 21, Shakil Niwas, Mahakali Caves Road, Andheri(East), Mumabi-400 093 Tel : 91-022- 28207203 Fax : 91-022-28207207 E-mail : [email protected] SEBI Regn No. INR000000114

ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR RECEIVING REQUESTS

FOR SPLIT FORMS ISSUE CLOSES ON

[•] [•] [•]

i

iii

iv

v


i

DEFINITIONS/ABBREVIATIONS CONVENTIONAL / GENERAL TERMS

Term Description Act The Companies Act, 1956 and subsequent amendments thereto Depositories Act The Depositories Act, 1996 as amended from time to time Depository A Depository registered with SEBI under the SEBI (Depositories &

Participant) Regulations, 1996 as amended from time to time FY/ Financial year or Fiscal Year The twelve months ended March 31st of a particular year Security Certificate Equity Share Certificate Security(ies) Equity Share(s) SE/ Stock Exchange(s) Bombay Stock Exchange Limited, Bangalore Stock Exchange Limited

and Pune Stock Exchange Limited

ISSUE RELATED TERMS

Term Description Articles Articles of Association of APW President Systems Limited ASBA Application Supported by Blocked Amount Board Board of Directors, of APW President Systems Limited BgSE Bangalore Stock Exchange Limited BSE Bombay Stock Exchange Limited CAF Composite Application Form Directors Directors on the Board of APW President Systems Limited Equity Shareholders Equity Shareholders of the Company whose name appear as:

Beneficial Owners as per the list furnished by the depositories in respect of Equity Shares held in electronic form and

On the Register of Members of the Company in respect of the Equity Shares held in Physical form

Equity Shares Equity Shares of the Company of Rs.10/- each Lead Manager/ LM Lead Manager to the Issue i.e. Keynote Corporate Services Limited Issue/ Rights Issue Issue of [•] equity shares of Rs. 10/- each at a premium of Rs. [•]/-

aggregating Rs. 605.00 lacs on rights basis to the existing equity shareholders of the Company in the ratio of [•] equity share for every [•]equity shares (i.e. [•]) held on [●] (record date) as per this Letter of Offer.

Issue Price The price at which the equity shares will be issued by the Company under this Letter of Offer.

Issuer/ Company/APW APW President Systems Limited Letter of Offer/ LOO/ Offer Document

This Letter of Offer dated [●] circulated to the Equity Shareholders and filed with the Stock Exchanges containing inter alia the Issue price and the number of equity shares to be issued and other incidental information.

Promoters of the Company Mr. Elijah A. Elias, Mr. Sudhir Seth, Mr. Ashok D. Kunte, APW Electronic Group PLC, M Rutty & Co. PTY Ltd.

PSE, Designated Stock Exchange Pune Stock Exchange Limited Statutory Auditors of the Company

Price Waterhouse, Chartered Accountants having its office located at 252, Veer Savakar Marg, Shivaji Park, Dadar, Mumbai – 400 028. The Registration Number of the Firm is 301112E

SCSBs Self Certified Syndicate Banks


ii

ABBREVIATIONS

Abbreviations Full Form AGM Annual General Meeting AY Assessment Year CDSL Central Depository Services (India) Limited CLB Company Law Board DCA Department of Company Affairs DIN Director Identification Number DP Depository Participant EGM Extraordinary General Meeting EPS Earnings Per Share FCNR Account Foreign Currency Non Resident Account FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 read with rules and

regulations there under and amendments thereto FI Financial Institution FII (s) Foreign Institutional Investors registered with SEBI under applicable

laws. GOI Government of India SEBI (ICDR) Regulations, 2009/ICDR

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009

NA Not Applicable NAV Net Asset Value NR Non Resident NRE Account Non Resident External Account NRI(s) Non Resident Indians NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited NOF Net Owned Funds MOU Memorandum of Understanding PAN Permanent Account Number PAT Profit After Tax PBDT Profit Before Depreciation and Tax PBIDT Profit Before Interest Depreciation and Tax PBT Profit Before Tax P/E Ratio Price/Earnings Ratio ROC Registrar of Companies, Maharashtra located at Mumbai ROI Return on Investment RBI Reserve Bank of India SCRR Securities Contracts (Regulations) Rules, 1957 as amended from time

to time. SEBI Securities and Exchange Board of India UREM Unregistered Equitable Mortgage


iii

CERTAIN CONVENTIONS; USE OF MARKET DATA

In this Letter of Offer, unless the context otherwise requires, all references to one gender also refers to another gender and the word "Lakh" or "Lac" means "one hundred thousand" and the word "million" means "ten lac" and the word "Crore" means "ten million" and the word “One hundred crore” means “Billion”. In this Letter of Offer, any discrepancies in any table between total and the sum of the amounts listed are due to rounding-off. Throughout this Letter of Offer, all figures have been expressed in Rupee(s), Lacs or crores as stated at appropriate places. All references to “India” contained in this Letter of Offer are to the Republic of India. For additional definitions used in this Letter of Offer, see the section “Definitions and Abbreviations” on page i of this Letter of Offer. Industry data used throughout this Letter of Offer has been obtained from industry publications and other authenticated published data. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Company believes that the industry data used in this Letter of Offer is reliable, it has not been independently verified. Similarly, internal Company reports, while believed by the Company to be reliable, have not been verified by any independent sources.

CURRENCY OF PRESENTATION In this Letter of Offer, all references to “Rupees” and “Rs.” are to the legal currency of India.


iv

FORWARD-LOOKING STATEMENTS This Letter of Offer contains certain “forward-looking statements”. These forward looking statements can generally be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe the objectives, plans or goals also are forward-looking statements. All forward looking statements are subject to risks, uncertainties and assumptions about the Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from the expectations include, among others:

General economic and business conditions in India and other countries. Regulatory changes relating to our industry / sector in India and our ability to respond to them; Fluctuation in operating costs; The ability to successfully implement the strategy, growth and expansion plans and technological

changes; Changes in laws and regulations that apply to the customers of the Company; Increasing competition in and the conditions of the customers of the Company; The monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest

rates, foreign exchange rates, changes in domestic and foreign laws, regulations and taxes. Occurrence of natural disaster or calamities; Changes in political conditions in India.

For further discussion of factors that could cause actual results to differ, please see the section titled “Risk Factors” beginning on page no. v 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. Neither the Company, the Directors, any member of the Lead Manager team nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, the Company and the Lead Manager will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges.


v

SECTION I - RISK FACTORS An investment in equity shares involves a high degree of risk. The investors should carefully consider all of the information in this Letter of Offer, in evaluating the Company and its business, including the risks and uncertainties described below, before making any investment decision. If any of the following risks actually occur, the business, financial condition and results of operations could suffer, the trading price of the Equity Shares could decline, and the investors might lose all or part of their investment.

Unless specified or quantified in the relevant risk factors below, the financial or other implications of any of the risks described in this section cannot be quantified

Materiality

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

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

The risk factors are as envisaged by the management. Wherever possible, the financial impact of the risk factors has been quantified. A. INTERNAL RISK FACTORS 1. Outstanding Litigations/disputes/cases against the Company

The Company is involved in certain legal proceedings, incidental to its business and operations, which if determined against the Company, could have an adverse impact on the results of its operations and financial condition. The Summary of the litigations is as follows:

For more information please refer to section “Legal and Other information” on page no. 117 of this letter of offer.

2. Contingent Liabilities and Capital Commitments The details of contingent liabilities and capital commitments as per the audited Balance Sheet for the period ended 31/03/2009 (on Standalone basis) is as follows:

(Rs. in lacs) Particulars For the Year

Ended March 31, 2009

(a) Contingent Liabilities Outstanding Bank Guarantees* 343.60

Sr. No

Particulars No. of cases/disputes/

claims

Approx. amount involved where

quantifiable (Rs. in lacs)

Against the Company 1 Income Tax Related 2 4.82 2. Civil Case 1 0.63 2 Labour/Employee Cases 2 0.26 3 Service Tax Claims 3 1.31 4 Excise Claims 3 1.52 5 Notices received by the Company 3 10.99


vi

Particulars For the Year Ended March 31,

2009 Claims against the Company not acknowledged as debits in respect of **

- Sales Tax Matters

105.58 (b) Capital Commitments Estimated Amount of Contracts remaining to be executed on Capital Account (net of advance)

557.84

* All Bank Guarantees are Performance Bank Guarantees ** The timing and the amount of cash flows, if any that may arise from the above matters will be determined only on Settlement of the cases.

For details of contingent liabilities and capital commitments as per the audited Balance Sheet for the period ended 31/03/2009 (on consolidated basis) and as per the Limited Review Report for the period from April 01, 2009 to September 30, 2009 (on standalone basis and consolidated basis) please refer to page nos. 78, 92 and 104 respectively.

In the event such contingent liabilities materialize it may have an adverse effect on the financial condition and future financial performance of the Company.

3. APW Electronics Group Limited (APWEG) UK, one of the Promoter of the Company is under Administrative Receivership.

APW Electronics Group Limited (APWEG) UK is under Administrative Receivership as per UK Laws. The Zolfo Cooper, UK has been appointed as an Administrative Receiver by Royal Bank of Scotland PLC in its capacity as Security Trustee. APWEG has pledged its entire holding of equity shares of APW President Systems Limited (APW) i.e. 17,64, 000 equity shares of Rs. 10/- each constituting 29.17% of the total paid up equity capital of APW. The same is pledged as collateral security for the guarantee obligations of APWEG to a consortium of lenders.

4. The distribution agreement with Vette Corp. USA vide which the Cooling Solution Division of the Company proposes to distribute the products is non exclusive in nature.

The Company is proposing to raise resources through this rights issue to finance the working capital requirements in respect of newly formed Cooling Solution Division at Bangalore. The division proposes to market multiple innovative products to its customers to handle higher heat loads providing substantial space and power saving. For this purpose the Company has signed agreement with Vette Corp. to market, distribute and service “Vette Liquicool Technology”. The said agreement is non exclusive distribution agreement whereby Vette Corp. is entitled to appoint one or more additional distributors to sell and market its products. Moreover, Vette Corp may also sell its products directly. In the event Vette Corp. appoints one or more additional distributor or choose to sell the products directly, the business of cooling solution division may affect which may have an adverse effect on the operations of the Company.

5. Loss Making Promoter Group Companies

The losses made by the promoter Group companies during one or more of the last three financial years is as given herein under:

(Rs. in Lacs) Losses for the Year Ended

Name of the Entity 2009 2008 2007 AWI Services India (P) Ltd. 0.25 0.56 0.12 Zipe Technologies (P) Ltd. 10.59 2.55 -


vii

6. Existing equity shares not listed on BSE The existing equity shares of the Company are “permitted to trade” in the “BSE-INDONext” segment w.e.f. 07/01/2005 and are not listed on Bombay Stock Exchange Ltd. (BSE). Since the equity shares are not listed on BSE and are only ‘permitted to trade’, there is no listing agreement between the Issuer Company and BSE. BSE may remove the name of the Company from ‘permitted to trade’ category depending on their policy decisions and there is no guarantee that the equity shares of the Company will continue to be traded on the BSE.

Management Proposal

The existing equity shares of the Company are listed on the PSE and BgSE. The scrip of the Company was selected for “permitted to trade” category by BSE at the time of launching of BSE-INDONext. BSE IndoNext is an initiative formulated by BSE and Federation of Indian Stock Exchanges, representing 20 Regional Stock Exchanges (RSE). BSE is a Central Participating Exchange and the RSEs, which have indicated their willingness to participate in the formation of BSE IndoNext are referred to as Participating RSEs. Eligible scrips from the participating RSEs are introduced in the ‘S’ group under the ‘permitted to trade’ category at BSE. The members of the BSE and the sub brokers of the subsidiaries which are members of the BSE will be allowed to trade in this market. The participating RSEs whose listed securities are permitted to be traded on BSE IndoNext shall ensure the compliance of all listing requirements. In terms of letter no. CRD/GEN/2005/039 dated 07/01/ 2005 received from BSE intimating inclusion of equity shares of the Company in the BSE-INDONEXT segment, the Company is requested to file all the price sensitive information, corporate announcement, corporate action etc with the BSE and simultaneously with RSE.

7. Working capital requirement not appraised.

The additional working capital requirement of the Company which is to be funded through the proceeds of this issue is not appraised. In the absence of such independent appraisal, the deployment of funds raised through this issue, as specified in the section titled “objects of the issue” is at the discretion of the management and the Board of Directors of the Company.

8. The Company is dependent on the expertise of its senior management team and key technical and managerial personnel

The Company is dependent on its senior management team for setting the strategic direction and managing its business, both of which are crucial to its success. Given the substantial experience of the senior management team, in the event any or all of them leave or are unable to continue to work with the Company, it may be difficult to find suitable replacements in a timely manner or at all. The Company’s ability to retain experienced personnel as well as senior management will also in part depend on the Company maintaining appropriate staff remuneration and associated benefits. The Company cannot be sure that the remuneration and benefits that are in place will be sufficient to retain the services of the senior management and skilled people. The loss of any of the members of the senior management or other key personnel may adversely affect the business, financial condition and results of operations of the Company.

9. The Company’s ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

The amount of future dividend payments of the Company, if any, will depend upon its future earnings, financial condition, cash flows, working capital requirements and capital expenditures. There can be no assurance that it will be able to pay dividends.


viii

10. Restrictive Covenants

There are restrictive covenants in the agreements with the Banks/ Institutions from whom we have borrowed, which among other things require the Company to obtain prior permission from them for change in Management, declaring dividend and undertaking of new project etc. which may limit Company’s discretion in these matters.

B. EXTERNAL RISK FACTORS

1. Globally competitive business environment

The Company operates in a globally competitive business environment. Growing competition may force it to reduce the price of its products which may reduce its revenues and margins and/ or decrease its market share, either of which could have a materially adverse effect on its business, financial condition and results of operations.

2. Changes in the Government of India policies

A significant change in the Indian governments or the state governments economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and the business and financial condition and prospects in particular of the Company.

3. Risk relating to changes in laws and regulations

Any change in the laws and regulations governing the industry may adversely affect the business and financial condition of the Company.

4. The Equity Shareholders will not be able to sell immediately on an Indian stock exchange any of

the Rights Equity Shares purchased in the Issue. The Equity Shares issued through this Rights Issue will be listed on the PSE, BgSE and shall be permitted to trade on BSE. Pursuant to Indian regulations, certain actions must be completed before the Rights Equity Shares can be listed and trading may commence. Investors’ book entry or “demat” accounts with depository participants in India are expected to be credited within two working days of the date of allotment. Thereafter, upon receipt of final approval from the stock exchanges, trading in the Rights Equity Shares is expected to commence within seven working days of the date on which the basis of allotment is approved by the Designated Stock Exchange. The Company cannot assure that the Rights Equity Shares will be credited to investors’ demat accounts, or that trading in the Rights Equity Shares will commence, within the time periods specified above.

5. Volatility of share price

After the Rights Issue, the price of the Equity Shares may be highly volatile and may fluctuate significantly due to many factors, including variations in the operations of the Company and changes in the regulatory environment. The prices of the Equity Shares may fluctuate as a result of several factors, including: volatility in the Indian and global securities market. results of operations and performance in terms of market share; contracts, acquisitions, strategic partnerships, joint ventures, or capital commitments; changes in the estimates of Company performance or recommendations by financial analysts; significant developments in India economic liberalization and deregulation policies; significant developments in India fiscal and environmental regulations;

6. Factors beyond Management Control

Wars, natural disasters and terrorist attacks may adversely affect the markets, investors confidence, exchange rates and world economy in general and may result in loss of business and assets.


ix

NOTES

1. The networth of the Company as on March 31, 2009 is Rs. 4685.88 lacs (on Standalone basis ) and Rs.4688.13 lacs (on Consolidated basis)

2. The Book value per share as on March 31, 2009 is Rs. 77.48 (on Standalone basis) and Rs. 77.52 (on Consolidated basis) per equity share

3. There is no interest of promoters/directors/ key management personnel other than reimbursement of expenses incurred or normal remuneration or benefits.

4. For details on Related party disclosures refer page nos. 56 (on Standalone basis) and 79 (on Consolidated basis) of this Letter of Offer.

5. There has been no financing arrangement whereby the Promoter Group, the Directors of the

Company and their relatives have financed the purchase by any other person of securities of the Company other than in the normal course of business of the financing entity during the period of six months immediately preceding the date of filing of the Draft Letter of Offer with SEBI.

6. All information shall be made available by the LM and the Company to the public and investors at large and no selective or additional information would be available only to a section of the investors in any manner whatsoever.

7. Investors are free to contact the Lead Manager for any complaints/ information/ clarification pertaining to this Issue. For contact details of the Lead Manager, please refer to the cover page of this Offer Document.

8 The Company satisfies the following conditions as prescribed under Regulation 57(2) (b) of Part E of Schedule VIII of the ICDR Regulations.

a. The Company has been filing periodic reports, statements and information in compliance with the

listing agreement for the last three years immediately preceding the date of filing this letter of offer with the designated stock exchange.

b. The reports, statements and information referred to sub-clause (a) above are available on the website of Bombay Stock Exchange Limited (BSE) one of the recognized stock exchange with nationwide trading terminals

c. The Company has investor grievance – handling mechanism which includes meeting of the Shareholder’s or Investor’s Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the Company as regards share transfer and have clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.

9. The Lead Manager and the Company shall update this Letter of Offer and keep the

shareholders/public informed of any material changes till the listing and trading commencement


1

PART I

SECTION II - INTRODUCTION

SUMMARY OF FINANCIAL DATA

Please read the following data in conjunction with the detailed Auditors’ Report commencing on page no. 34 under the heading ‘FINANCIAL INFORMATION’

Statement of Assets & Liabilities (Standalone)

BALANCE SHEET March 31, 2009 March 31, 2008

Rupees Rupees Rupees SOURCES OF FUNDS Shareholders' Funds Capital 60,480,000 60,480,000 Reserves and Surplus 408,108,097 337,213,048

468,588,097 397,693,048 Loan Funds Secured Loans 79,034,223 86,964,454 Unsecured Loans 13,320,000 22,200,000

92,354,223 109,164,454 Deferred Tax Liability (net) 35,664,426 36,348,571

Total 596,606,746 543,206,073

APPLICATION OF FUNDS Fixed Assets Gross Block 561,131,830 469,713,212 Less : Depreciation 158,590,471 134,684,065

Net Block 402,541,359 335,029,147 Capital Work-in-progress 10,847,930 5,703,071

413,389,289 340,732,218 Investments 1,754,713 1,754,713 Current Assets, Loans and Advances Inventories 106,247,278 94,621,352 Sundry Debtors 217,212,588 282,086,790 Cash and Bank Balances 37,693,557 20,661,515 Other Current Assets 482,377 555,277 Loans and Advances 51,995,275 39,602,313

413,631,075 437,527,247

Less : Current Liabilities and Provisions Liabilities 194,713,287 201,754,533 Provisions 37,455,044 35,053,572

232,168,331 236,808,105

Net Current Assets 181,462,744 200,719,142

Total 596,606,746 543,206,073


2

Statement of Profit and Loss (Standalone)

PROFIT AND LOSS ACCOUNT

Year Ended

Year Ended

March 31,

2009 March 31,

2008

Rupees Rupees INCOME Sales 1,560,471,884 1,478,308,631 Less: Excise Duty 143,799,559 125,681,895

1,416,672,325 1,352,626,736 Less: Sales Tax 56,223,888 65,841,689

1,360,448,437 1,286,785,047 Commission 12,720,410 18,074,122 Service Charges 1,119,401 538,148 Other Income 19,212,082 10,184,192

1,393,500,330 1,315,581,509 EXPENDITURE Cost of Materials 860,324,298 805,441,022 Employee Costs 147,042,253 131,216,666 Operating and Other Expenses 200,689,528 191,310,918 Financial Expenses 12,699,590 12,348,602 Depreciation 37,413,198 27,420,937

1,258,168,867 1,167,738,145 Profit before Taxation 135,331,463 147,843,364 Provision for Taxation -Current Year 42,251,000 45,200,000 -Fringe Benefit Tax 1,641,986 1,750,000 -Deferred (684,145) 9,588,976 Profit after Taxation 92,122,622 91,304,388

Profit and Loss Account Balance Brought Forward from Previous Year 226,351,173 166,074,358 Profit available for Appropriation 318,473,795 257,378,746 Appropriations Proposed Dividend 18,144,000 18,144,000 Corporate Tax on Dividend 3,083,573 3,083,573 Transfer to General Reserve 10,000,000 9,800,000 Profit and Loss Account Balance 287,246,222 226,351,173

318,473,795 257,378,746 Basic and Diluted Earnings Per Share 15.23 15.10


3

Statement of Assets & Liabilities (Consolidated)

CONSOLIDATED BALANCE SHEET

March 31, 2009 March 31, 2008

Rupees Rupees SOURCES OF FUNDS Shareholders' Funds Capital 60,480,000 60,480,000 Reserves and Surplus 408,333,003 336,672,374

468,813,003 397,152,374 Minority Interest 81,734 48,678

Loan Funds Secured Loans 79,034,223 86,964,454 Unsecured Loans 13,320,000 22,200,000

92,354,223 109,164,454

Deferred Tax Liability (Net) 35,664,426 36,348,571

Total 596,913,386 542,714,077

APPLICATION OF FUNDS Fixed Assets Gross Block 561,175,728 469,757,110 Less : Depreciation 158,618,522 134,698,657 Net Block 402,557,206 335,058,453 Capital Work-in-progress 10,847,930 5,703,071

413,405,136 340,761,524

Investments 18,000 18,000

Current Assets, Loans and Advances Inventories 106,656,557 94,621,352 Sundry Debtors 217,276,180 282,860,745 Cash and Bank Balances 39,172,947 21,372,603 Other Current Assets 482,377 509,825 Loans and Advances 52,136,695 39,006,005 415,724,756 438,370,530 Less : Current Liabilities and Provisions Liabilities 194,628,548 201,382,405 Provisions 37,605,958 35,053,572

232,234,506 236,435,977


Total 596,913,386 542,714,077


4

Statement of Profit and Loss (Consolidated)

CONSOLIDATED PROFIT AND LOSS ACCOUNT

March 31, 2009 March 31, 2008

Rupees Rupees INCOME Sales 1,561,634,721 1,478,308,631 Less : Excise Duty 143,799,559 125,681,895

1,417,835,162 1,352,626,736 Less : Sales Tax 56,223,888 65,841,689

1,361,611,274 1,286,785,047 Commission 13,221,483 18,596,418 Service Charges 1,119,401 538,148 Other Income 19,357,710 10,158,251

1,395,309,868 1,316,077,864 EXPENDITURE Cost of Materials 861,439,640 805,441,022 Employee Costs 151,302,967 133,854,146 Operating and Other Expenses 196,644,261 189,546,194 Financial Expenses 12,722,530 12,394,984 Depreciation 37,426,656 27,435,529

1,259,536,054 1,168,671,875

Profit before Taxation 135,773,814 147,405,989 Provision for Taxation - Current Year 42,251,000 45,200,000 - Fringe Benefit Tax 1,641,986 1,750,000 - Deferred (684,145) 9,588,976

Profit after Taxation and before share of Profit/ (Loss) of 92,564,973 90,867,013 Minority Shareholders Minority's Share of Profit/ (Loss) in Subsidiary Company 17,694 (18,606) Net Profit 92,547,279 90,885,619

Profit and Loss Account Balance Brought Forward from Previous Year 225,932,404 166,074,358

Profit available for Appropriation 318,479,683 256,959,977 Appropriations Proposed Dividend 18,144,000 18,144,000 Corporate Tax on Dividend 3,083,573 3,083,573 Transfer to General Reserve 10,000,000 9,800,000 Profit and Loss Account Balance 287,252,110 225,932,404

318,479,683 256,959,977

Basic and Diluted Earnings Per Share 15.30 15.03


5

THE ISSUE

Type of Issue Type of Instrument

No. of equity shares

Face Value (Rs.)

Issue Price (Rs.)

Consideration

Rights Issue Equity Shares [•] 10/- [•] Cash

ISSUE BREAK-UP

Particulars

Issue Size

Equity Shares offered (Issue Size) [•] Equity Shares aggregating to Rs. 605.00 Lacs Entitlement Ratio The Equity Shares are being offered on rights basis to

the existing Equity Shareholders of the Company in the ratio of [•] Equity Share for every [•] Equity Shares held as on the Record Date i.e. [•]

Market Lot

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”).

Equity shares outstanding prior to the Issue 60,48,000 Equity Shares Equity shares outstanding after the issue [•] Equity Shares

USE OF PROCEEDS:

Please see section titled “Objects of the Issue” on page no. 15 of this Offer Document

RECORD DATE & OTHER DETAILS

PARTICULARS DATE(S) Record Date [•] Purpose Rights entitlement ([•]) No Delivery Period [•] Ex-Right [•]

ISSUE SCHEDULE

ISSUE OPENS ON LAST DATE FOR RECEIVING REQUESTS FOR SPLIT FORMS

ISSUE CLOSES ON

[•] [•] [•]


6

GENERAL INFORMATION Dear shareholder(s), Pursuant to the resolutions passed by the Board of Directors of the Company at meeting held on October 30, 2009, it has been decided to make the following offer to the Equity Shareholders of the Company, with a right to renounce:

Issue of [•] Equity Shares of Rs. 10/- each for cash at a premium of Rs. [•] per equity share (Issue Price of Rs. [•]) aggregating about Rs. 605.00 lacs on rights basis to the existing Equity Shareholders of the Company in the ratio of [•] Equity Share for every [•] Equity Shares held on [•] (Record Date).

The ratio and number of shares will be decided by the Board prior to the issue at the appropriate time as per applicable rules/regulations.

Name of the Company : APW President Systems Limited Registered Office : R-2, Technopolis Knowledge Park, Mahakali Caves Road,

Andheri (East),Mumbai 400 093, Maharashtra, India

Tel: +91-022- 6644 8888 Fax: +91-022- 6644 8899 Email:[email protected] Website: www.apwpresident.com

Company Identification Number : L32109MH1984PLC034340 Registration Number : 034340 Contact person: : Mr. K .K .Bhavsar Company Secretary & Compliance Officer Registrar of Companies : 100, Everest, Marine Drive, Mumbai - 400 002, Maharashtra

India

For details of the Board of Directors of APW, please refer to the chapter titled “Management” on page no. 27 of this Letter of Offer Company Secretray and Compliance Officer Mr. K .K .Bhavsar

R-2, Technopolis Knowledge Park, Mahakali Caves Road, Andheri (East), Mumbai 400 093, Maharashtra, India

Tel: +91-022- 6644 8888 Fax: +91-022- 6644 8899 Email: [email protected] Investors can contact the Compliance Officer or the Registrar to the issue in case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allotment, credit of allotted Equity Shares in the respective beneficiary account or refund orders, etc.


7

ISSUE MANAGEMENT TEAM

Lead Manager to the issue Registrar to the issue

KEYNOTE CORPORATE SERVICES LIMITED 4th Floor, Balmer Lawrie Building, 5, J. N. Heredia Marg, Ballard Estate, Mumbai – 400 001 SEBI Regn No: INM 000003606 Tel : +91-022-3026 6000-3; Fax: + 91- 022 -22694323 Website: www.keynoteindia.net E-mail: [email protected] Contact Person: Mr. Bhavin Shah

MONDKAR COMPUTERS PVT. LTD

21, Shakil Niwas, Mahakali Caves Road, Andheri(East), Mumabi-400 093 Tel : 91-022-28207203 Fax : 91-022-28207207 E-mail : [email protected] SEBI Regn No. INR000000114 Contact Person: Mr. Karlekar/Mr. Ravi Uttekar

Legal Advisor to the Issue

DESAI DESAI CARRIMJEE & MULLA 2A/2B, Jeevan Jyot, 2nd Floor, 18/20, Cawasji Patel Street, Fort, Mumbai - 400 001 Tel: + 91-022- 22819901; Fax: + 91-022- 22819910 E-mail: [email protected] Contact Person: Mr. Kedar Desai

Bankers to the Company

SYNDICATE BANK Industrial Finance Branch, Manipal Centre, 204-205, North Block, Bangalore - 560 042 Tel: +91-080- 25582274; Fax: + 91-080- 25582273 Website: www.syndicatebank.in Contact Person: Mr. Prabhkar Shenoy

Bankers to the Issue [•]

SELF CERTIFIED SYNDICATE BANKS

As on date following banks are registered with SEBI for collection of ASBA forms:

For the details of list of controlling banks along with its branches for ASBA please visit the website of SEBI BSE and NSE at www.sebi.gov.in , www.bseindia.com and www.nseindia.com respectively.

1. Corporation Bank Limited 13. Yes Bank 2. ICICI Bank Limited 14. Citibank 3. HDFC Bank Limited 15. Bank of India 4. State Bank of India 16. State Bank of Hyderabad 5. Union Bank of India 17. HSBC Bank 6. IDBI Bank Limited 18. Vijaya Bank 7. Axis Bank Limited 19. State Bank of Travancore 8. Kotak Mahindra Bank 20 Bank of Maharashtra 9. State Bank of Bikaner & Jaipur 21 Andhra Bank

10. Bank of Baroda 22 Allahabad Bank 11. Punjab National Bank 23. Deutsche Bank 12. Federal Bank 24. Indian Bank


8

INTER SE ALLOCATION OF RESPONSIBILITIES

Keynote Corporate Services Limited is the sole Lead Manager to this issue, however the list of major responsibilities of Keynote Corporate Services Limited inter alia, is as follows:

Sr. No.

Activity

A. Capital Structuring with relative components and formalities such as composition of Structuring of the offer document.

B. Drafting and design of the offer document and of the advertisement or publicity material including newspaper advertisement and brochure or memorandum containing salient features of the offer document.

C. Selection of various agencies connected with issue, such as registrars to the issue, printers, advertising agencies, etc.

D. Marketing of the issue, which shall cover, inter alia, formulating marketing strategies, preparation of publicity budget, arrangements for selection of (i) ad-media, (ii) centres for holding conferences of shareholders, investors, etc., (iii) bankers to the issue, (iv) collection centres as per schedule III of ICDR, distribution of publicity and issue material, Letter of Offer.

E. Post-issue activities, which shall involve essential follow-up steps including follow-up with bankers to the issue and Self Certified Syndicate Banks to get quick estimates of collection and advising the issuer about the closure of the issue, based on correct figures, finalisation of the basis of allotment or weeding out of multiple applications, listing of instruments, despatch of certificates or demat credit and refunds and coordination with various agencies connected with the post-issue activity such as Registrar to the issue, Bankers to the issue, Self Certified Syndicate Banks, etc.

CREDIT RATING/DEBENTURE TRUSTEE

This being Rights Issue of equity shares, neither Credit Rating nor appointment of Debenture Trustee is required.

MONITORING AGENCY

Not Applicable

APPRAISING ENTITY

Not Applicable

MINIMUM SUBSCRIPTION

i. If the Company does not receive the minimum subscription of 90% of the issue, the entire subscription shall be refunded to the applicants within fifteen days from the date of closure of the issue.

ii. If there is delay in the refund of subscription by more than 8 days after the Company becomes liable

to pay the subscription amount (i.e. fifteen days) after closure of the issue, the Company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.

UNDERWRITING/ STANDBY SUPPORT

This issue of equity shares is not being underwritten and/or no standby support is being sought for the said issue.


9

CAPITAL STRUCTURE OF THE COMPANY

Details as on the date of Letter of Offer

Aggregate Value at Nominal Price (Rs.)

Aggregate Value at Issue Price (Rs.)

A. Authorized Capital

1,20,00,000 Equity Shares of Rs. 10/- each

12,00,00,000

12,00,00,000

B. Issued, Subscribed & Paid-up Capital

60,48,000 Equity Shares of Rs. 10/- each, fully paid – up

6,04,80,000

6,04,80,000

C. Present Rights Issue

[•] Equity shares of Rs. 10/- each for cash at premium of Rs. [•] /- per Equity Share

[•]

6,05,00,000

D. Post Issue Capital

[•] Equity shares of Rs. 10/- each

[•]

-

E. Share Premium Account

Before the offer After the offer

8,16,95,875

[•]

Notes to Capital Structure:

1. Promoters’ Contribution and Lock-in for the present issue

The present issue being a rights issue, provisions of promoters’ contribution and lock-in are not applicable.

2. The details of Locked-in, pledged and encumbered shares of Promoter and Promoter Group

* APW Electronics Group Limited (APWEG),UK is under Administrative Receivership as per UK Laws. The Zolfo Cooper, UK has been appointed as an Administrative Receiver by Royal Bank of Scotland PLC in its capacity as Security Trustee. APWEG has pledged its entire holding of equity shares of APW President Systems Limited (APW) i.e. 17,64, 000 equity shares of Rs. 10/- each constituting 29.17% of the total paid up equity capital of APW. The same is pledged as collateral security for the guarantee obligations of APWEG to a consortium of lenders.

3. Present Rights Issue:

Type of Instrument

Ratio Face Value (Rs.)

No. of shares

Issue Price (Rs.)

Consideration

Equity Shares

[•] ([•] Equity share for every [•] equity shares held)

10/- [•]

[•]

Cash

Name of the Promoter/Promoter Group

Lock in /Pledged/encumbered

Total Number of shares as on 30/09/2009

Number of shares locked in/pledged/encumbered as on 30/09/2009

APW Electronics Group Limited, United Kingdom*

Pledge of Equity shares 17,64,000 17,64,000


10

4. Pre & Post issue shareholding pattern of the Company assuming full subscription in the present rights issue is given below:-

Category of Shareholder

No. of shareholders

(Pre issue)

Pre-issue (As on 30/09/2009)

Post-issue

Number of Shares

% Number of Shares

%

(A) Shareholding of Promoter and Promoter Group 1 Indian

(a) Individuals/ Hindu Undivided Family 9 18,84,141 31.15 [•] [•] (b) Central Government/ State Government(s)/Government

company

(c) Bodies Corporate (d) Financial Institutions/ banks (e) Any Other (specify – Trust & Foundation)

Sub- Total (A)(1) 9 18,84,141 31.15 [•] [•] 2 Foreign

(a) Individuals (Non-Resident Individuals/ Foreign non Individuals)

(b) Bodies Corporate 2 24,27,360 40.14 [•] [•] (c) Institutions (d) Any other (specify)

Sub-Total (A)(2) 2 24,27,360 40.14 [•] [•] Total Shareholding of Promoter and Promoter Group (A)=

(A)(1)+(A)(2)

11

43,11,501

71.29

[•] [•]

(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 (specify)

( Foreign National) - - -

Sub-Total (B)(1) - - - 2 Non-institutions

(a) Bodies Corporate 70 95,230 1.57 [•] [•] (b) Individuals-

8,37,792

13.85

[•] [•]

[•] [•] i. Individual shareholders holding nominal share capital up to

Rs. 1 lakh.

2145 ii. Individual shareholders holding nominal share capital in

excess of Rs. 1 lakh. 13 7,90,756 13.08 [•] [•]

(c) Individuals (Non-Resident Individuals/ Foreign non Individuals)

- - -

(d) NRIs/Overseas Corporate Bodies 12 3,951 0.06 [•] [•] (e) Clearing Members 18 8,770 0.15 [•] [•] (f) Hindu Undivided Family - - - [•] [•]

Sub-Total (B)(2) 2258 17,36,499 28.71 [•] [•] Total public shareholding (B)= (B)(1)+(B)(2)

2258

17,36,499

28.71 [•] [•] TOTAL (A)+(B) 2269 60,48,000 100.00 [•] 100.00

(C) Shares held by Custodians and against which Depository Receipts have been issued

GRAND TOTAL (A)+(B)+(C) 2269 60,48,000 100.00 [•] 100.00

The total number of shareholders of the Company is 2,269.


11

5. The pre- issue and post issue shareholding of Promoter and Promoter Group are as follows:

Particulars

Present Post Rights No. of equity shares of Rs.

10/- each

% of present capital

No. of equity shares of Rs. 10/-

each

% of post issue capital

a) Promoters Mr. Ashok D. Kunte 3,72,981 6.17 [•] [•] Mr. Sudhir S. Seth 4,94,680 8.18 [•] [•] Mr. Elijah A. Elias 3,28,480 5.43 [•] [•] M. Rutty & Co. PTY Ltd 6,63,360 10.96 [•] [•]

APW Electronic Group Ltd. 17,64,000 29.17 SUB – TOTAL 36,23,501 59.41 [•] [•]

b) Immediate relatives of promoters/ directors (Spouse, Parent, Child, Brother, Sister):

Mr. Kunal Seth 30,000 0.50 [•] [•] Mr. Makrand A. Kunte 1,26,292 2.09 [•] [•] Ms. Rebecca E. Elias 2,44,320 4.04 [•] [•] Ms. Sarojini A. Kunte 1,39,148 2.30 [•] [•] Ms. Seema Seth 1,02,240 1.69 [•] [•] Ms. Ashiwini M. Kunte 46,000 0.76

SUB – TOTAL 6,88,000 11.38 [•] [•] c) Company in which 10% or

more of the share capital is held by the promoter/his immediate relative, firm or HUF in which the promoter or his immediate relative is a member.

[•]

[•]

d) Company in which the Company mentioned in (c) above holds 10% or more of the share capital

- -

[•]

[•] e) HUF in which aggregate share

of the promoter and his immediate relatives is equal or more than 10% of the total.

[•]

[•] GRAND TOTAL 43,11,501 71.29 [•] [•]


12

The following entities belonging to the Promoter/Promoter Group have undertaken to subscribe to their rights entitlement in full and collectively to subscribe to the entire unsubscribed portion from public/other shareholders if any in this rights issue in full.

1. Ashok D. Kunte 2. Elijah A. Elias 3. Kunal Seth 4. Makarand A. Kunte 5. Rebecca E. Elias 6. Sarojini A. Kunte

7. Seema Seth

8. Ashwini M. Kunte 9. Sudhir S. Seth 10. M Rutty & Company PTY Ltd

Presuming no subscription is received from other shareholders and promoters/promoter group as mentioned above subscribing to the entire unsubscribed portion, their shareholding may increase to [•] % of the post rights issue equity capital of the Company. As a result of this subscription and consequent allotment, the promoters/promoter group may acquire shares over and above their entitlement in the issue which may result in their shareholding in the Company being above their current holding. This subscription and acquisition of additional equity shares by the Promoters/Promoter Group, if any, will not result in change of control of the management of the Company and shall be exempt from the requirements of making a public offer in terms of provision to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

In the event the entities belonging to the Promoter/Promoter Group mentioned above subscribe to the unsubscribed portion over and above their entitlement the allotment to them shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous Listing requirements.

The Company has certified that if the public shareholding in the Company after the proposed rights issue falls below the permissible minimum level as specified in the Listing Agreement, the Company shall take necessary steps to facilitate the compliance with the provisions of Clause 40 A of the Listing Agreement within the time period stipulated therein. The Company further confirms that it will be in compliance with Clause 40 A of the Listing Agreement on a continuous basis

6. Details of shares acquired by promoters and promoter group in the last one year immediately

preceding the date of filing the letter of offer with the designated stock exchange and SEBI is as mentioned below:

S. No. Date of Allotment/Transfer

Nature of consideration No. of Equity Shares

Face Value (Rs.)

Issue/Acquisition Price (Rs.)

Ms. Sarojini A. Kunte 1. 11/12/2008 Market Purchase (Cash) 2,280 10 51.22 2 29/12/2008 Market Purchase (Cash) 2,000 10 52.90 3. 30/12/2008 Market Purchase (Cash) 1,000 10 53.15 4. 9/02/2009 Market Purchase (Cash) 1,000 10 52.10 5. 13/02/2009 Market Purchase (Cash) 1,000 10 57.20 6, 17/02/2009 Market Purchase (Cash) 3,200 10 51.40 7, 15/06/2009 Market Purchase (Cash) 100 10 70.75 8. 16/06/2009 Market Purchase (Cash) 100 10 70.15


13

S. No. Date of Allotment/Transfer

Nature of consideration No. of Equity Shares

Face Value (Rs.)

Issue/Acquisition Price (Rs.)

9. 17/06/2009 Market Purchase (Cash) 100 10 70.09 10. 23/06/2009 Market Purchase (Cash) 100 10 70.00 11. 25/06/2009 Market Purchase (Cash) 100 10 69.55

Total 10,980 Mr. Ashok D. Kunte

1. 21/11/2008 Market Purchase (Cash) 750 10 48.09 2. 11/12/2008 Market Purchase (Cash) 1,000 10 51.10 3. 15/12/2008 Market Purchase (Cash) 1,000 10 51.30 4. 29/12/2008 Market Purchase (Cash) 1,000 10 52.70 5. 30/12/2008 Market Purchase (Cash) 1,000 10 53.26 6. 13/02/2009 Market Purchase (Cash) 2,100 10 57.20

Total 6,850

7. The details of the shareholders holding more than one percent of the share capital of the Company as on 30th September, 2009 are as follows:

Sr. No. Name of the Shareholder No. of Shares

Shares as % of Total No. of Shares

1. APW Electronics Group Ltd. 17,64,000 29.17 2. M Rutty & Company PTY Ltd. 6,63,360 10.97 3. Sudhir Seth 4,94,680 8.18 4. Ashok Kumar Mehra 3,90,958 6.46 5. Ashok D. Kunte 3,72,981 6.17 6. Elijah A. Elias 3,28,480 5.43 7. Redecca E. Elias 2,44,320 4.04 8. Sarojini A. Kunte 1,39,148 2.30 9. Makarand A. Kunte 1,26,292 2.09 10. Bindu Mehra 1,09,471 1.81 11. Seema Seth 1,02,240 1.69 12. Aditya Kumar Mehra 99,384 1.64

Total 47,35,930 79.95

8. The Company has not issued any warrant, option, convertible loan, debenture or any other securities convertible at a later date into equity, which would entitle the holders to acquire further equity shares of the Company.

9. Equity shares of the Company are being traded in compulsory dematerialized mode. The market lot of the equity shares is 1 (one).

10. The Company/Promoters/Directors/Lead Manager has not entered into buy back or similar

arrangements for purchase of securities issued by the Company.

11. As on the date of filing the letter of offer there are no partly paid up shares in the Company. The entire issue price is to be paid on application hence there will be no partly paid up shares arising out of this issue.

12. The equity shares of the Company are of face value of Rs.10/- and marketable lot is 1 (one). At any given time there shall be only one denomination for the shares of the Company and the disclosures and accounting norms specified by SEBI from time to time will be complied with.


14

13. The Company shall not make any further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or public issue or in any other manner during the period commencing from the submission of the Draft Letter of Offer to SEBI for the Rights Issue till the equity shares referred in the Letter of Offer have been listed or application money refunded, if any.

14. Further, presently the Company does not have any proposal, intention, negotiation or consideration to alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of Equity Shares or any other securities within a period of six months from the date of opening of the present issue.


15

OBJECTS OF THE ISSUE

The object of the issue is to augment the capital base to supplement the working capital requirements in respect of new facility of cooling solution division by way of equity and for meeting the expenses of the issue. The main object clause of the Memorandum and Articles 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. Cost of project (Rs. in Lacs)

Augment the capital base to meet working requirements 625.00 Issue expenses 25.00

Total 650.00 Means of Finance (Rs. in Lacs)

Proceeds of the Rights Issue 605.00 Internal Accruals 45.00

Total 650.00

WORKING CAPITAL REQUIREMENT

APW President is one of the leading manufacturer and supplier of modular enclosure systems in India. The Company has its units located at Bangalore, Pune and Pudhucherry. The Company has started its new Cooling Solution Division at Bangalore which will have multiple innovative products to help the Data Center Managers to handle higher heat loads providing substantial space and Power saving. The Company has signed a Non-Exclusive Distribution Agreement with “Vette Corp” to Market, Distribute & Service “Vette LiquiCool Technology” in India on September 03, 2009. APW President Systems Limited will distribute, install and manage Annual Maintenance contracts with the clients.

The products under this agreement are: – Vette RDHx -Rear Door Heat Exchanger – Vette CDU - Coolant Distribution Unit

The Company will also undertake the Installation & Commissioning and Annual Maintenance Service Contract. This technology is patented by IBM and Vette Corp has been licensed to manufacture the same. This new product line added by the Company has lead to an increase in the working capital requirement since the products have to be imported and payment is to be made in advance. The proposed issue is to part finance the working capital requirements of “Cooling Solution Division”. The working capital requirement is not appraised by any Banks or Financial Institutions and the same has been estimated by the management.


16

Assumption for Assessment of Working Capital Requirement of Cooling Solution Division. As per the present terms of agreement, the Company will import from the Vette Corp its products of Cooling Solution by making payment in advance. Based on the order placed by the Company, Vette Corp will make the products as per the order and dispatch the same to the Company. The transit time to the Company and inventory holding period at the Company is estimated at 9 weeks time. Sales realization or collection from Debtors is expected to average at around 60 days. Additional Sales turnover for the first full year i.e. FY 2010-11 is estimated to be Rs. 2400.00 lacs. Working Capital is worked out based on assumption of two months Inventory Holding, Two months as average age of Debtors and One month for sundry creditors for expenses. The estimated working capital required for new business will be around Rs. 625.00 lacs.

Presently, the Company has Rs. 750.00 lacs working capital facilities sanctioned from the Syndicate Bank to meet its working capital requirements of the existing business. As at September 30, 2009 out of Rs. 750.00 lacs working capital, Rs. 733.00 lacs were utilized. The requirement of Working Capital for the new business is very high due to import of materials, reasonable holding time of inventory and allowing 60 days credit to the customers. Hence it is necessary to augment the working capital out of long term sources viz issue of fresh Equity Capital.

Out of Rs. 625.00 lacs of working capital, Rs 580.00 lacs will be augmented from the Rights Issue and balance from the internal accruals of the existing business.

The detailed calculation of the working capital requirement which is to be funded through the proceeds of the issue is as under:

(Rs. in lacs)

Particulars Estimates as on 31/03/2011

(A) Current Assets Inventory Transit and Storage of Finished Goods (Imported) 250.00 Sundry Debtors (Receivables) 400.00 Total (A) 650.00 (B) Current Liabilities Sundry Creditors (Expenses) 25.00 Total (B) 25.00 Working Capital Gap (WCG) (A)- (B) 625.00 To be Financed By Rights Issue 580.00 Internal Accruals 45.00

Basis of estimation of working capital requirement

Particulars No. of Months Inventory 2 Months Debtors 2 Months Creditors 1 Month

The lead time for the order will be 4 weeks and approximately 5 weeks will be taken for Transit and clearance of the goods from the customs. Stock holding time for the new business is estimated at one month. Sales realization or collection from Debtors is expected at an average of 60 days from date of invoice.


17

ISSUE EXPENSES

The breakup of estimated issue expenses is as under: (Rs. in Lacs)

Sr. No.

Particulars Amount

1 Fees to Intermediaries 15.50 2 Fees to SEBI and Stock Exchanges 0.70 3 Printing and Stationary (includes Postage and Desptach) 3.25 4 Advertisement 2.50 5 Legal Expenses 2.00 6 Miscellaneous Expenses 1.05 Total 25.00

Sources and Deployment of Funds

As per Certificate given by Chandrakant G. Doshi & Co, Chartered Accountants dated December 16, 2009 an amount of Rs. 41.59 lacs has been spent up to December 09, 2009. The details of the same are as under.

Deployment of Funds (Rs. in Lacs)

Particulars Amount

Working Capital for Cooling Services Division

39.59 Issue Expenses

2.00 Total 41.59

Sources of Funds

(Rs. in Lacs)

Particulars Amount

Internal Accruals 41.59 Total 41.59

BRIDGE LOAN

The company has not raised any bridge loan which will be repaid from the issue proceeds. INTERIM USE OF FUNDS

Pending utilization for the purposes described in “objects of the issue” above, we intend to temporarily invest the funds in high quality interest or dividend bearing liquid instruments including deposits with banks for the necessary duration. Such investments would be in accordance with any investment criteria approved by our Board of Directors from time to time.

BASIC TERMS OF THE ISSUE

The Equity shares being offered are subject to the provisions of the Companies Act, 1956, the Memorandum and Articles of Association of the Company, the terms of this Draft Letter of Offer and other terms and conditions as may be incorporated in the Allotment advice and other documents /certificates that may be executed in respect of the issue. The Equity shares shall also be subjected to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, GOI, RBI, ROC and /or other authorities as in force on the date of issue and to the extent applicable


18

STATEMENT OF TAX BENEFITS

To, The Board of Directors, APW President Systems Ltd Mumbai. We M/S Chandrakant Doshi & Co, Chartered Accountants are the Internal Auditor of APW President Systems Ltd, having its registered office at R-2,Technopolis Knowledge Park, Mahakali Kaves Road, Andheri (East), Mumbai-400093. We hereby certify that under the current tax laws, the following tax benefits inter-alia, will be available to the Company and the members of the Company. However a member is advised to consider in his/her/its own case the tax implications of an investment in the Equity Shares, particularly in view of the fact that certain recently enacted legislation may not have direct legal precedent or may have a different interpretation on the benefits, which an investor can avail. As per the existing provisions of the Income Tax Act 1961 and other laws as applicable for the time being in force, the following tax benefits and deductions are, inter-alia available to APW President Systems Ltd. and its shareholders. We believe that there are no special tax benefits available to the Company and its shareholders.

General tax benefits available: A. Benefits to the Company under Act 1. Dividends exempt under section 10(34) and 10(35) of the IT Act.

Dividend (whether interim or final) received by the Company from its investment in shares of another domestic company would be exempted in the hands of the Company as per the provisions of section 10(34) read with section 115-O of the IT Act. In terms of section 10(35) of the IT Act, any income received from units of a Mutual Fund specified under section 10(23D) of the IT Act is exempt from tax, subject to such income not arising from the transfer of units in such Mutual Fund.

2. Computation of capital gains

Capital assets are to be categorized into short-term capital assets and long-term capital assets based on the period of holding. All capital assets except shares held in a company or any other security listed in a recognised stock exchange in India or units of Unit Trust of India (‘UTI’) or Mutual Fund units specified under section 10(23D) of the IT Act or zero coupon bonds are considered to be long-term capital assets, if they are held for a period exceeding thirty-six months. Shares held in a company or any other security listed in a recognised stock exchange in India or UTI or Mutual Fund units specified under section 10(23D) of the IT Act or zero coupon bonds are considered as long-term capital assets, if these are held for a period exceeding twelve months. As per the provisions of section 10(38) of the IT Act, long term capital gain arising to the Company from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to Securities Transaction Tax (‘STT’).


19

As per the provisions of section 112 of the IT Act, long-term capital gains other than those covered under section 10(38) of the IT Act are subject to tax at a rate of 20% (plus applicable surcharge and cess). However, proviso to section 112(1) specifies that if the long-term capital gains other than those covered under section 10(38) of the IT Act arising on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit (plus applicable surcharge and education cess. However, from Assessment Year 2007-2008, such long-term capital gains will be included while computing book profits for the purpose of payment of Minimum Alternate Tax (“MAT”) under the provisions of section 115JB of the IT Act. As per provisions of section 111A of the IT Ac t, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable at the rate of 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004 and the transaction is chargeable to STT.

3. Securities Transaction Tax

In terms of STT, transactions for purchase and sale of the securities in the recognized stock exchange by the shareholder will be chargeable to STT. As per the said provisions, any delivery based purchase and sale of equity share in a company through the recognized stock exchange is liable to securities transaction tax @ 0.125% of the value payable by both buyer and seller individually. The non-delivery based sale transactions are liable to tax @ 0.025% of the value payable by the seller.

4. Exemption of capital gains arising from income tax

As per the provisions of section 54EC of the IT Act and subject to the conditions specified therein capital gains arising to a company on transfer of a long-term capital asset other than those covered under section 10(38) of the IT Act shall not be chargeable to tax to the extent such capital gains are invested in National Highway Authority of India (NHAI) or Rural Electrification Corporation (REC) notified bonds within six months from the date of transfer. If only part of such capital gain is invested, the exemption shall be proportionately reduced. The IT Act has restricted the maximum investment in such bonds up to Rs 5 million per assessee during any financial year, if such investment made on or after 1st April, 2007.

5. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money.

6. In accordance with and subject to the provisions of section 32 of the Income tax Act, the Company will

be allowed to claim depreciation on specified tangible and intangible assets as per the rates specified. Besides normal depreciation, the Company, in terms of section 32(1)(iia), shall be entitled to claim Additional depreciation @ 20% of actual cost on new plant and machinery for the period of one year after acquired on or after 31st March, 2005.

7. In accordance with and subject to the provisions of section 35D of the Income tax Act, the Company

will be entitled to amortise, over a period of five years, all expenditure in connection with the proposed public issue subject to the overall limit specified in the said section.


20

8. Under Section 115 JAA (1A) of the Act, tax credit shall be allowed of any tax paid (MAT) under Section 115 JB 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 shall not be available for set-off beyond 7 years succeeding the year in which the MAT becomes allowable.

9. Unabsorbed depreciation if any, for an Assessment Year (AY) can be carried forward and set off against

any source of income in subsequent AYs, as per section 32 of the Act, subject to the (2) of section 72 and sub-section (3) of section 73 of the Act.

Carry forward and Set off of Business Loss

10. Business losses if any, for any AY can be carried forward and set off against business profits for eight

subsequent AYs. 11. Section 48 of the 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.

12. As per section 71 read with section 74, Short-term capital loss arising during a year is allowed to be set-

off against short-term as well as long-term capital gains of the said year. Balance loss, if any, should be carried forward and set-off against short-term as well as long-term capital gains for subsequent 8 years.

13. As per section 71 read with section 74, Long-term capital loss arising during a year is allowed to be set-

off only against long-term capital gains. Balance loss, if any, should be carried forward and set-off against subsequent year’s long-term capital gains for subsequent 8 years.

B. Benefits to the Resident shareholders of the Company under the IT Act

1. Dividends exempt under section 10(34) of the IT Act

Dividend (whether interim or final) received by a resident shareholder from its investment in shares of a domestic company would be exempt in the hands of the resident shareholder as per the provisions of section 10(34) read with section 115-O of the IT Act.

2. Any income of minor children (Maximum two children) clubbed with the total income of the parent

under section 64(1A) of the Income Tax Act 1961, will be exempt from tax to the extent of Rs. 1500 per minor child under section 10(32) of the Income Tax Act 1961.


Capital assets are to be categorised into short-term capital assets and long-term capital assets based on the period of holding. All capital assets [except shares held in a company or any other security listed in a recognised stock exchange in India or units of UTI or Mutual Fund units specified under section 10(23D) of the IT Act and zero coupon bonds] are considered to be long-term capital assets, if they are held for a period exceeding thirty-six months. Shares held in a company or any other security listed in a recognised stock exchange in India or units of UTI or Mutual Fund units specified under section 10(23D) of the IT Act and zero coupon bonds are considered as long-term capital assets, if these are held for a period exceeding twelve months.


21

As per the provisions of section 48 of the IT Act, the amount of capital gain shall be computed by deducting from the sale consideration, the cost of acquisition and expenses incurred in connection with the transfer of a capital asset. However, in respect of long-term capital gains arising to a resident shareholder, a benefit is permitted to substitute the cost of acquisition/ improvement with the indexed cost of acquisition/ improvement. The indexed cost of acquisition/ improvement, adjusts the cost of acquisition/ improvement by a cost inflation index, as prescribed from time to time. As per the provisions of section 10(38) of the IT Act, long term capital gain arising to a resident shareholder from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to STT. As per the provisions of section 112 of the IT Act, long-term capital gains [other than those covered under section 10(38) of the IT Act] are subject to tax at a rate of 20% (plus applicable surcharge and cess). However, proviso to section 112(1) specifies that if the long-term capital gains [other than those covered under section 10(38) of the IT Act] arising on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit (plus applicable surcharge and education cess).

As per provisions of section 111A of the IT Act, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable @ 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004 and the transaction is chargeable to STT.

4. Exemption of capital gains arising from income tax

As per the provisions of section 54EC of the IT Act and subject to the conditions specified therein capital gains arising to a resident shareholder on transfer of a long-term capital asset other than those covered under section 10(38) of the IT Act 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. If only part of such capital gain is invested, the exemption shall be proportionately reduced. However, if the resident shareholder transfers or converts the notified bonds into money (as stipulated therein) within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable in such year. The bonds specified for this section are bonds issued on or after April 1, 2006 by NHAI and REC. The IT Act has restricted the maximum investment in such bonds up to Rs 5 million per assessee during any financial year, if such investment made on or after 1st April, 2007.

Further, as per the provisions of section 54F of the IT Act and subject to conditions specified therein, long-term capital gains other than a capital gains arising on sale of resident house and those covered under section 10(38) of the IT Act arising to an individual or Hindu Undivided Family (‘HUF’) on transfer of shares of the Company will be exempted from capital gains tax, if the net consideration from such shares are used for either purchase of residential house property within a period of one year before or two years after the date on which the transfer took place, or for construction of residential house property within a period of three years after the date of transfer.


22

However, if the resident shareholder transfers the residential house property within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable in such year.

C. Benefits to the Non-resident shareholders of the Company other than Foreign Institutional Investors

and Foreign Venture Capital Investors

1. Dividends exempt under section 10(34) of the IT Act

Dividend (whether interim or final) received by a non-resident shareholder from its investment in shares of a domestic company would be exempt in the hands of the non-resident shareholder as per the provisions of section 10(34) read with section 115-O of the IT Act.

2. Any income of minor children (Maximum two children) clubbed with the total income of the parent

under Section 64(1A) of the Income Tax Act 1961 will be exempt from tax to the extent of Rs. 1,500 per minor child per year in accordance with the provisions of section 10(32) of the Income Tax Act 1961.


Capital assets are to be categorised into short-term capital assets and long-term capital assets based on the period of holding. All capital assets [except shares held in a company or any other security listed in a recognised stock exchange in India or units of UTI or Mutual Fund units specified under section 10(23D) of the IT Act and zero coupon bonds] are considered to be long-term capital assets, if they are held for a period exceeding thirty-six months. Shares held in a company or any other security listed in a recognised stock exchange in India or units of UTI or Mutual Fund units specified under section 10(23D) of the IT Act and zero coupon bonds are considered as long-term capital assets, if these are held for a period exceeding twelve months.

As per the provisions of section 48 of the IT Act, the amount of capital gain shall be computed by deducting from the sale the consideration, the cost of acquisition and expenses incurred in connection with the transfer of a capital asset. Under first proviso to section 48 of the IT Act, the taxable capital gains arising on the transfer of capital assets being shares or debentures of an Indian company need to be computed by converting the cost of acquisition, expenditure in connection with such transfer and full value of the consideration received or accruing as a result of the transfer into the same foreign currency in which the shares were originally purchased. The resultant gains thereafter need to be reconverted into Indian currency. The conversion needs to be done at the prescribed rates prevailing on dates stipulated. Hence, in computing such gains, the benefit of indexation is not available to non-resident shareholders.

As per the provisions of section 10(38) of the IT Act, long term capital gain arising to a non-resident shareholder from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to STT. As per the provisions of section 112 of the IT Act, long-term capital gains (other than those covered under section 10(38) of the IT Act) are subject to tax at a rate of 20% (plus applicable surcharge and cess). However, proviso to section 112(1) specifies that if the long-term capital gains [other than those covered second proviso to section 48 and under section 10(38) of the IT Act] arising on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit (plus applicable surcharge and education cess.


23

As per provisions of section 111A of the IT Ac t, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable @ 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004 and the transaction is chargeable to STT.

4. Exemption of capital gain from income-tax

As per the provisions of section 54EC of the IT Act and subject to the conditions specified therein capital gains arising to a non-resident shareholder on transfer of a long-term capital asset (other than those covered under section 10(38) of the IT Act) 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. If only part of such capital gain is invested, the exemption shall be proportionately reduced. However, if the non-resident shareholder transfers or converts the notified bonds into money (as stipulated therein) within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable in such year. The bonds specified for this section are bonds issued on or after April 1, 2006 by NHAI and REC. The IT Act has restricted the maximum investment in such bonds up to Rs 5 million per assessee during any financial year. Further, as per the provisions of section 54F of the IT Act and subject to conditions specified therein, long-term capital gains (other than a capital gains arising on sale of resident house and those covered under section 10(38) of the IT Act) arising to an individual or HUF on transfer of shares of the company will be exempted from capital gains tax, if the net consideration from such shares are used for either purchase of residential house property (subject to prior approval from Reserve Bank of India) within a period of one year before or two years after the date on which the transfer took place, or for construction of residential house property within a period of three years after the date of transfer.

5. Non resident taxation

Under section 115-I of the IT Act, the non-resident Indian shareholder has an option to be governed by the provisions of Chapter XIIA of the IT Act viz. “Special Provisions Relating to Certain Incomes of Non-Residents” which are as follows: Under section 115E of the IT Act, where the total income of non-resident Indian, includes – a) Any income from long term capital gain of an asset other than a specified asset taxed @ 20 % b) Income by way of long term capital gains taxed @ 10%. Under provisions of section 115F of the IT Act, long-term capital gains [in cases not covered under section 10(38) of the IT Act] arising to a non-resident Indian from the transfer of shares of the company subscribed to in convertible foreign exchange will be exempt from income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is so reinvested, the exemption will be proportionately reduced. However the amount so exempted will be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition.

6. In accordance with the provisions of Section 115G of the Income Tax Act 1961, Non Resident Indians are

not obliged to file a return of income under Section 139(1) of the Income Tax Act 1961 if their only source of income is income from investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Income Tax Act 1961.

7. In accordance with the provisions of Section 115H of the Income Tax Act 1961, when a Non Resident Indian become assessable as a resident in India, he may furnish a declaration in writing to the Assessing


24

Officer along with his return of income for that year under Section 139 of the Income Tax Act 1961 to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.

8. As per the provisions of section 115 I of the I.T. 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 year under Section 139 of the Income Tax Act 1961, 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 Income Tax Act 1961.

9. Tax Treaty Benefits As per the provisions of Section 90(2) of the Income Tax Act 1961, the provisions of the Income Tax Act 1961 would prevail over the provisions of the tax treaty to the extent they are more beneficial to the Non-Resident.

D. Benefits to Foreign Institutional Investors (‘FII’)

1. Dividends exempt under section 10(34) of the Act

Dividend (whether interim or final) received by a FII from its investment in shares of a domestic company would be exempt in the hands of the FII as per the provisions of section 10(34) read with section 115-O of the Act.

2. Long term capital gains exempt under section 10(38) of the Act.

As per the provisions of section 10(38) of the Act, long term capital gain arising to the FII from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to STT.

3. Capital gains

As per the provisions of section 115AD of the Act, FIIs are taxed on the capital gains income at the following rates: Rate of tax

Nature of Income (%)* Long-term capital gains 10 Short-term capital gains 30

* Plus applicable surcharge and cess The benefits of foreign currency fluctuation protection and indexation as provided by section 48 of the Act are not available to a FII.

As per the provisions of section 10(38) of the Act, long term capital gain arising to FII from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to STT.


25

As per provisions of section 111A of the Act, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable at the rate of 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004and is chargeable to STT.

4. Tax Treaty Benefits

As per section 90(2) of the Act, Where the Central Government has entered into an agreement with the Government of any country outside India under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.

E. Benefits to the Mutual Funds


Dividend (whether interim or final) received by a Mutual Fund from its investment in shares of a domestic company would be exempt in the hands of the Mutual Fund as per the provisions of section 10(34) read with section 115-O of the Act.

2. As per the provisions of section 10(23D) of the Act

Any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 (‘SEBI’) or regulations made there under, Mutual Funds set up by public sector banks or public financial institutions or Mutual Funds authorised by the Reserve Bank of India, would be exempt from income tax, subject to the prescribed conditions.

F. Benefits to the Venture Capital Companies / Funds


Dividend (whether interim or final) received by a Venture Capital Company (‘VCC’)/ Venture Capital Funds (‘VCF’) from its investment in shares of another domestic company would be exempt in the hands of the VCC/VCF as per the provisions of section 10(34) read with section 115-O of the Act.

2. In case of a shareholder being a Venture Capital Company/ Fund, as per the provisions of Section

10(23FB) of the Income Tax Act 1961, any income of Venture Capital Companies/ Funds registered with the SEBI, would be exempt from Income Tax, subject to the conditions specified in the said subsection.

G. Benefits under the Wealth Tax Act, 1957

Asset as defined under section 2(ea) of the Wealth-tax Act, 1957 does not include shares in companies and hence, shares are not liable to wealth tax.

H. Benefits under the Gift Tax Act

As no Gift tax is leviable in respect of gifts made on or after October 1, 1998, but before April 1, 2006.As per amended section 56 (2) (vi) any gift received in money, the aggregate value of which exceeds Rs. 50,000/- is received without consideration, the whole of the aggregate value of such sum will be chargeable to tax. As per newly inserted section 56 (2) (vii) value of sum of money / immovable


26

property/ movable property received without consideration or for inadequate consideration is in exceed of Rs. 50,000/- than the whole of the aggregate value of such sum will be chargeable to tax with effect from Dt: 01.10.2009. Notes 1. All the above benefits are as per the current tax laws as amended by the Finance Act, 2009 and

will be available only to the sole/ first named holder in case the shares are held by joint holders. 2. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be

further subject to any benefits available under the double taxation avoidance agreements, if any, between India and the country in which the non-resident has fiscal domicile.

3. In view of the individual nature of tax consequences, each investor is advised to consult his/ her

own tax advisor with respect to specific tax consequences of his/ her participation in the scheme. 4. Tax implications of an investment in the Equity Shares, particularly in view of the fact that certain

recently enacted legislations may not have direct legal precedent or may have a different interpretation on the benefits which an investor can avail.

5. Our views expressed herein are based on the facts and assumptions indicated above. No assurance

is given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes.

For M/S. Chandrakant Doshi & Co.

Chartered Accountants

Sd/-

CA. Maheshwar M. Marathe (Partner ) Membership No. 212175 Place: Pune Date: 26/11/2009


27

SECTION III - ABOUT COMPANY

MANAGEMENT

The details of the board of directors of the company are given below:

Name, Age, Designation, Father’s name, Address, Occupation,

Qualification and DIN

Date of Appointment/

Re- Appointment

Date of Expiration of Appointment

Other Directorships

Mr. Lakshman Bhatia Age: 72 Years Chairman

S/o: Mr. Haridas Bhatia Address: 1202 B, Surya Apartments, 53, B. Desai Road, Mumbai – 400 026 Occupation: Business Qualification : B. Sc, B. Sc. (Engg.)

DIN No. 00080975

(Non Executive and Independent)

29/03/2003 AGM to be held in FY

2010-11

Nil

Mr. Elijah A. Elias Age: 66 Years Vice Chariman and Managing Director

S/o: Mr. Aaron Elias Address: 6, Jay Mahal, A Road, Churchgate, Mumbai – 400 020 Occupation: Business Qualification : B.E (Electrical) DIN No. 00088332

(Executive and Non- Independent)

22/10/1984 31/03/2012

Nil

Mr. Sudhir S. Seth Age: 66 Years Director

S/o: Mr. Shriram Seth Address: Sumangal, Bunglow 2, Silver Sands, Juhu Tara Road, Mumbai – 400 049

Occupation: Business Qualification : B.E (Mech.), Diploma in Business Management DIN No. 0078898

( Non Executive and Non Independent)

18/11/1985 AGM to be held in FY 2011-12

1. Powertec Supplies India Pvt. Ltd.

2. Inventum Engineering Co. Pvt. Ltd.

3. Avocent Networking Products Pvt. Ltd.

4. Cosmotec Systems Pvt. Ltd. 5. Zipe Technologies Pvt. Ltd.


28




Re- Appointment


Other Directorships

Mr. Ashok D. Kunte Age: 69 Years Director

S/o: Mr. Damodar Kunte Address: 801, Building No. 4, Wimbeldon Park, Near Cadbury Factory, Pokhran Road, Thane – 400 604 Occupation: Business Qualification : Diploma in Radio Engineering DIN No. 00081181



1. Makarand Electronics Pvt. Ltd.

2. AWI services (India) Pvt. Ltd. 3. Assenmacher Network Pvt.

Ltd.

Mr. Marc Rutty Age: 67 Years Director

S/o: Mr. Sydney Rutty Address: 155, Eastern Road, Wahroonga, New South Wales, Australia 2076 Occupation: Business Qualification : BBA DIN No. 01098024



2012-13

1. Powertec Supplies India Pvt. Ltd.

2. M. Rutty & Co. Pty. Ltd, Australia

Mr. Shailesh A. Hemani Age: 54 Years Director

S/o: Mr. Ansukhlal Hemani Address: A/403, Vastu Ridhi, Pump House, Andheri East, Mumbai – 400 093 Occupation: Practicing CA Qualification : B. Com,FCA

DIN No. 00082167



Nil


29




Re- Appointment


Other Directorships

Mr. Madhav S. Joshi Age: 69 Years Director

S/o: Mr. Sadashiv Joshi Address: 18, Shantiniketan, Kashinath dhuru Road, Dadar (w), Mumbai 400 028

Occupation: Management Consultant Qualification : B.E. (Elec.), B.E.(Mech.) MSIE. DIN No. 00081105



2010-11

1. DFX Systems Private Limited

Mr. Raj D. Bajaaj Age: 67 Years Director

S/o: Mr. Devraj Bajaaj Address: 2, Ajanta Apartment, 11th Floor, 75, Colaba Road, Mumbai 400 005

Occupation: Management Professional Qualification : B.Sc. LLB DIN No. 00419623



2010-11

1. GlaxoSmithkline Pharmaceuticals Ltd.

2. HDFC Asset Management Company

3. Lerch Bates Private Limited

Ms. Shefali R. Shah Age: 41 Years Director

D/o: R.A. Shah Address: Panorama, 203, Walkeshwar Road, Mumbai – 400 006 Occupation: Lawyer Qualification : B.Com, LLB DIN No. 00081245



1. Modicare Limited 2. Unique Space Developers

Limited 3. Indofeed Agencies Private

Limited 4. Amishef Investments Private

Limited 5. Wall Street Finance Limited 6. Goldman Securities Private

Limited


30

Number of equity shares held by the Board of Directors:

Name & Designation No. of shares held

Mr. Sudhir S. Seth 4,94,680 Mr. Ashok D. Kunte 3,72,981 Mr. Elijah A. Elias 3,28,480 Mr. Raj D. Bajaaj 9,307 Mr. Lakshman Bhatia 600 Mr. Shailesh A. Hemani 500

RELATIONSHIP AMONG DIRECTORS

There is no relationship among any of the directors in the Company with each other.

There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any of the directors were selected as director or member of senior management.

As on date of filing of the offer document there is no service agreement entered into by the directors with the Company providing benefits upon termination of employment except of Mr. Elijah A. Elias (Managing Director). The details of the service contract are as follows:

Remuneration Basic Salary Rs. 2,75,000/-per month House Rent Allowance House Rent Allowance of Rs. 45, 000/- per month Performance Bonus At the discretion of the Board depending upon performance of the

Company subject to a maximum Rs. 12, 00,000/- per annum for the FY 2007-08 . The said terms were revised with effect from 1st April 2008 to increase the performance bonus from Rs. 12,00,000/- to 24,00,000/-. Such revision was approved by the Shareholders of the Company in their meeting held on 8th September 2008.

Perquisites

Category ‘A’ a. Reimbursement of Medical Expenses subject to the ceiling of Rs. 1,20,000/- per annum b. Fully paid leave of 30 days per annum. (Accumulation upto 120 days with encashment

permitted only on retirement c. Leave Travel Allowance for self, spouse and dependent children subject to the ceiling of Rs.

1,20,000/- per annum Category ‘B’

a. Contribution to Provident Fund as per rules of Company (Subject to max. 12% of Basic Salary)

b. Contribution to Superannuation Scheme as and when it is introduced by the Company, (Subject to a maximum of 15% of basic salary)

Category ‘C’ Car The Company shall provide car with a driver for official and personal use. In case the

Company does not employ a driver, the Company will reimburse salary of the driver upto Rs. 7,000/- per month

Telephone Cell Phone for official use and a Telephone at residence. Long distance personal calls shall be charged to the Managing Director

Laptop Laptop for official use returnable at the end of the tenure


31

Credit Card

Company paid credit card for official use, Annual Charges to be borne by the Company

Other Amenities

Other such facilities and amenities (including Mediclaim Insurance Policy to cover his family) as may be granted to other senior employees of the Company.

Minimum Remuneration In the event of absence or inadequacy of profits, in any financial year the aforesaid remuneration shall be considered as the minimum remuneration payable to them.

DETAILS OF BORROWING POWER

Subject to the provisions of Section 292 and 293 of the Act, the Board may, from time to time, at its discretion and by means of the resolution passed at its meeting accept deposits from members either in advance of call or otherwise and generally, raise or borrow or secure the payment of, any sum or sums of Rs. 1700.00 lacs for the purpose of the Company. INTEREST OF PROMOTERS/ DIRECTORS

All the Directors of the Company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board and its committees and reimbursement of expenses. All the directors may also be deemed to be interested to the extent of equity shares, if any, already held by them and /or by their friends /relatives in the Company that may be subscribed for or allotted to them in the present offer and also to the extent of any dividend payable to them and other distributions in respect of the said equity shares. All the directors may also be deemed to be interested to the extent of normal transactions, if any, with the Company. The Directors may also be regarded as interested in the equity shares, if any, held or that may be allotted to the companies, firms and trust in which they are interested as directors, members, partners and or trustees.

Corporate Governance

The Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the listing agreement and circular no. SEBI/CFD/DIL/CG/2004/12/10 dated October 29, 2004 issued by Securities and Exchange Board of India (SEBI.) as amended from time to time.

Committees of the Board At present, there are Three committees constituted by the Board – the Audit Committee, the Shareholders/Investors' Grievance Committee and the Remuneration & Compensation Committee. The Board at the time of constitution of each committee fixes the terms of reference for each committee and also delegates powers from time to time. Various recommendations of the committees are submitted to the Board for approval.

1. Audit Committee

The primary role of the audit committee is overseeing the financial reporting process and disclosure of financial information, reviewing the financial statements before submission to the Board, reviewing adequacy of internal control systems and reviewing findings of internal investigations besides recommending appointment/ removal of statutory auditors, internal auditors and fixing their remuneration. The committee holds discussions with the statutory auditors and internal auditors periodically.


32

The following non-executive directors of the Company constitute the Audit Committee

Sr. No Name of the Director Designation 1 Mr. Shailesh Hemani Chairman 2 Mr. Lakshman Bhatia Member 3 Mr. Madhav Joshi Member 4 Mr. Ashok D. Kunte Member 5 Ms. Shefali Shah Member

The Company Secretary of the Company acts as Secretary of this committee.

Terms of Reference

The composition, powers, role and terms of reference of the Committee is in consonance with the requirements mandated under Section 292A of the Companies Act, 1956 and Clause 49 of the listing Agreement(s). In addition to this function, the responsibilities of the Board also include but are not limited to the following functions:

To oversee the financial reporting process and disclosures of financial information. To review quarterly/ half yearly and annual financial statements before submission to the Board

with special emphasis on accounting policies, compliance of Accounting Standards and other legal requirements relating to financial statements.

To review the findings of the internal investigation and periodic audit reports. To hold discussions with the external auditors about the scope of audit. To recommend appointment/removal of statutory auditors and fixing their remuneration. To review all issues which are required to be reviewed by the audit committee pursuant to the

listing agreement with the stock exchanges and the Companies Act, 1956 with the management and the internal and external auditors.

To review with the management the financial statements with reference to any related party transactions.

To review with the management, the statement of uses / application of funds raised through an issue, the statement of funds utilized for purposes other than those stated in the offer document/ notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a issue, and making appropriate recommendations to the Board to take up steps in this matter

To review the observations of internal and statutory auditors in relation to all areas of operation of the Company, including internal control systems.

To examine all taxation matters, including related legal cases and the Company’s asset/liability management strategy (ALCO).

To review the findings of any internal investigation by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

To review with the management the financial statements of the Subsidiary Companies. To ensure the independence and objectivity of the independent auditor. To ascertain the reasons for the defaults in the payment to the depositors, debenture holders,

shareholders and creditors. Any other terms of reference as may be included from time to time in Clause 49 of Listing

Agreement


33

2. Shareholders'/ Investors' Grievance/ Share Transfer Committee

Terms of reference The Shareholders'/Investors' Grievances Committee was constituted in order to redress the complaints of the shareholders and investors, related to transfer and transmission of shares, non-receipt of annual reports, dividends and other share related matters. The Committee also notes the requests to the Registrar and Share Transfer Agent made by the shareholders relating to transfer, transmission, consolidation, and replacement of share certificates, issue of duplicate certificates and dematerialization of share certificates. The Committee also reviews the certificates and reports submitted to the Stock Exchanges under the Listing Agreement/ ICDR Regulations. The Committee also observes the quarterly status of the number of shares in physical as well as dematerialized form. The Committee also reviews the periodicity and effectiveness of the share transfer process, statutory certifications, depository related issues and activities of the Registrar and Share Transfer Agent.

The following non-executive directors of the Company constitute the shareholders’/Investor’s Grievance Committee

Sr. No Name of the Director Designation

1 Mr. Lakshman Bhatia Chairman 2 Ms. Shefali Shah Member 3 Mr. Madhav Joshi Member 4 Mr. Ashok D. Kunte Member

3. Remuneration and Compensation Committee

Terms of reference The role of the committee includes, determining the Company's policy on specific remuneration packages for executive director(s) including pension, rights and any compensation payment and the remuneration package, including the periodic increments in salary of the executive director(s). The committee is also empowered to determine the annual commission /incentives of the executive director(s). The Committee is also empowered to recommend to the Board the appointment / reappointment of the executive / non-executive Directors, the induction of Board members into various Committees. The Committee also ensures that the overall remuneration payable to the Directors does not exceed the limits prescribed by the Companies Act, 1956 and is within the limits approved by the shareholders. The Remuneration Committee has been constituted as under:

Sr. No.

Name of the Director Designation

1 Mr. Raj Bajaaj Chairman 2 Mr. Lakshman Bhatia Member 3 Mr. Madhav Joshi Member 4 Mr. Sudhir S. Seth Member


34

PART II

SECTION IV - FINANCIAL INFORMATION

A. AUDITORS’ REPORT FOR THE YEAR ENDED 31/03/2009

Auditors’ Report to the members of APW President Systems Limited on Unconsolidated Financial Statements for the year ended 31/03/2009

1. We have audited the attached Balance Sheet of APW President Systems Limited (the “Company”), as at March 31, 2009, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies

(Auditor’s Report) (Amendment) Order 2004 (together the ‘Order’), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so

far as appears from our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with

by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on March 31, 2009 and

taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;


35

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2009;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Sd/-

Partha Ghosh Partner Membership No. F55913 For and on behalf of Price Waterhouse

Mumbai, May 19, 2009 Chartered Accountants


36

ANNEXURE TO AUDITORS’ REPORT

[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of APW President Systems Limited on the financial statements for the year ended March 31, 2009] 1. (a) The Company is maintaining proper records showing full particulars including quantitative

details and situation of fixed assets.

(b) The fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

(c) In our opinion, a substantial part of fixed assets has not been disposed-of by the Company during the year.

2. (a) The inventory has been physically verified by the Management during the year. In our opinion,

the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company is

maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. The Company has neither granted nor taken any loans, secured or unsecured, to/from companies,

firms or other parties covered in the register maintained under Section 301 of the Act. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of the Order are not applicable.

4. In our opinion, having regard to the explanation that certain items purchased are of special nature for

which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. Further, on the basis of the examination of the books and records of the Company, and according to the information and explanation given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of

contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions

made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Act and exceeding the value of Rupees Five Lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time, except in respect of certain transactions where prevailing market prices at the relevant time are not available as these transactions are of a special nature.

6. The Company has not accepted any deposits from the public within the meaning of Section 58A and

58AA of the Act and the rules framed there under.


37

7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

8. The Central Government of India has not prescribed the maintenance of cost records under clause (d)

of sub-section (1) of Section 209 of the Act for any of the products of the Company. 9. (a) According to the records of the Company examined by us, in our opinion, the Company is

generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) According to the records of the Company examined by us, there are no dues of excise duty,

customs duty, wealth-tax, service tax, sales tax and cess which have not been deposited on account of any dispute. The particulars of dues of income tax as at March 31, 2009 which have not been deposited on account of a dispute, are as follows –

Name of the statute

Nature of dues Amount Rs.

Period to which the amount

relates

Forum where the dispute is pending

Income Tax Act, 1961

Penalty under Section 271 (1) (c)

482,344 Assessment Year 2003 – 2004

Commissioner of Income Tax (Appeals)

10. The Company has no accumulated losses as at March 31, 2009 and it has not incurred any cash losses

in the financial year ended on that date or in the immediately preceding financial year. 11. The Company has not defaulted in repayment of dues to any financial institution or bank or

debenture holders as at the Balance Sheet date. 12. The Company has not granted any loans and advances on the basis of security by way of pledge of

shares, debentures and other securities. 13. The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/societies are

not applicable to the Company. 14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other

investments. 15. The Company has not given any guarantee for loans taken by others from banks or financial

institutions during the year. 16. In our opinion, and according to the information and explanations given to us, on an overall basis,

the term loans have been applied for the purposes for which they were obtained. 17. On the basis of an overall examination of the Balance Sheet of the Company, in our opinion, there are

no funds raised on a short-term basis which have been used for long-term investment. 18. The Company has not made any preferential allotment of shares to parties and companies covered in

the register maintained under Section 301 of the Act during the year.


38

19. The Company has not issued any debentures during the year. 20. The Company has not raised any money by public issues during the year. 21. During the course of our examination of the books and records of the Company, carried out in

accordance with the auditing standards generally accepted in India, and according to the information and explanations given to us, we have not come across any instance of fraud by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

Sd/- Partha Ghosh Partner Membership No. F55913 For and on behalf of Price Waterhouse

Mumbai, May 19, 2009 Chartered Accountants


39

BALANCE SHEET AS AT MARCH 31, 2009

March 31, 2009 March 31, 2008

Schedule Rupees Rupees Rupees SOURCES OF FUNDS Shareholders' Funds Capital 1 60,480,000 60,480,000

Reserves and Surplus 2 408,108,097 337,213,048

468,588,097 397,693,048 Loan Funds Secured Loans 3 79,034,223 86,964,454

Unsecured Loans 4 13,320,000 22,200,000

92,354,223 109,164,454

Deferred Tax Liability (net) 5 35,664,426 36,348,571

Total 596,606,746 543,206,073

APPLICATION OF FUNDS Fixed Assets 6 Gross Block 561,131,830 469,713,212

Less : Depreciation 158,590,471 134,684,065

Net Block 402,541,359 335,029,147

Capital Work-in-progress 10,847,930 5,703,071

413,389,289 340,732,218

Investments 7 1,754,713 1,754,713

Current Assets, Loans and Advances Inventories 8 106,247,278 94,621,352

Sundry Debtors 9 217,212,588 282,086,790

Cash and Bank Balances 10 37,693,557 20,661,515

Other Current Assets 11 482,377 555,277

Loans and Advances 12 51,995,275 39,602,313

413,631,075 437,527,247

Less : Current Liabilities and Provisions 13 Liabilities 194,713,287 201,754,533

Provisions 37,455,044 35,053,572

232,168,331 236,808,105


Total 596,606,746 543,206,073

Notes to Accounts 20 The Schedules referred to herein above form an integral part of the Balance Sheet.

This is the Balance Sheet referred For and behalf of the Board to in our report of even date.

E. A. Elias Sudhir Seth Partha Ghosh Managing Director Director Partner Membership No. F55913 For and behalf of Price Waterhouse A. D. Kunte Shailesh Hemani Chartered Accountants Director Director

K. K. Bhavsar

Company Secretary Mumbai, May 19, 2009 Mumbai, May 19, 2009


40

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

Year Ended

Year Ended

March 31, 2009 March 31, 2008

Schedule Rupees Rupees

INCOME Sales(ReferNote1(G)(a)onSchedule20) 14 1,560,471,884 1,478,308,631

Less: Excise Duty 143,799,559 125,681,895

1,416,672,325 1,352,626,736

Less: Sales Tax

56,223,888

65,841,689

1,360,448,437 1,286,785,047

Commission 12,720,410 18,074,122

Service Charges 1,119,401 538,148

Other Income 15 19,212,082 10,184,192

1,393,500,330 1,315,581,509

EXPENDITURE

Cost of Materials 16 860,324,298 805,441,022

Employee Costs 17 147,042,253 131,216,666

Operating and Other Expenses 18 200,689,528 191,310,918

Financial Expenses 19 12,699,590 12,348,602

Depreciation 37,413,198 27,420,937

1,258,168,867 1,167,738,145

Profit before Taxation 135,331,463 147,843,364

Provision for Taxation -Current Year 42,251,000 45,200,000

-Fringe Benefit Tax 1,641,986 1,750,000

-Deferred (684,145) 9,588,976

Profit after Taxation 92,122,622 91,304,388 Profit and Loss Account Balance Brought Forward from Previous Year 226,351,173 166,074,358

Profit available for Appropriation 318,473,795 257,378,746

Appropriations Proposed Dividend 18,144,000 18,144,000

Corporate Tax on Dividend 3,083,573 3,083,573

Transfer to General Reserve 10,000,000 9,800,000

Profit and Loss Account Balance 287,246,222 226,351,173

318,473,795 257,378,746

Basic and Diluted Earnings Per Share(ReferNote14onSchedule20) 15.23 15.10

Notes to Accounts 20 TheSchedulesreferredtohereinaboveformanintegralpartoftheProfitandLossAccount.

This is the Profit and Loss Account referred For and behalf of the Board To in our report of even date.

E. A. Elias

Sudhir Seth Partha Ghosh

Managing Director Director

Partner MembershipNo.F55913 For and behalf of A. D. Kunte Shailesh Hemani Price Waterhouse Director Director K. K. Bhavsar Company Secretary Mumbai,May19,2009 Mumbai,May19,2009


41

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009

March 31, 2009 March 31, 2008 Rupees Rupees

A) CASH FLOW FROM OPERATING ACTIVITIES : Net Profit Before Taxes 135,331,463 147,843,364 Adjustments for :

Depreciation 37,413,198 27,420,937 Loss on Sale/ Scrapping of Assets (net) 566,898 1,927,801 Bad Debts Written Off 1,298,590 975,113 Liabilities/ Provisions no longer required written back (1,418,643) (939,874) Wealth Tax 21,153 24,278 Interest Income - Gross (1,067,208) (1,607,085) Interest Expense 9,325,791 8,606,207

Operating Profit Before Working Capital Changes 181,471,242 184,250,741

Adjustments for : (Increase)/Decrease in Inventory (11,625,926) (40,059,229) (Increase)/Decrease in Debtors 63,575,612 (26,318,354) (Increase)/Decrease in Other Receivables (12,891,037) (14,634,135) Increase/(Decrease) in Trade payables (5,836,674) 38,803,225 Increase/(Decrease) in Provisions 3,159,687 3,606,415 Income Tax paid during the year (42,700,000) (39,500,000) Fringe Benefit Tax Paid (1,450,000) (1,800,000) Wealth Tax Paid (24,278) (14,563)

(A) Net Cash Generated from Operations 173,678,626 104,334,100

B) CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets (111,421,116) (88,377,023) Interest Received 1,140,108 1,160,902 Sale of Fixed Assets 783,949 4,134,455

(B) Net Cash (used in) /from Investing Activities (109,497,059) (83,081,666)

C) CASH FLOW FROM FINANCING ACTIVITIES : Secured and Unsecured Loans - Net (Payment)/ Receipts (16,810,231) (7,041,072) Interest Paid (9,325,791) (8,606,207) Payment of Dividend (21,013,503) (14,254,068)

(C) Net Cash (used in) / from Financing Activities (47,149,525) (29,901,347)

Net (Decrease)/Increase in Cash and Cash Equivalents (A+B+C) 17,032,042 (8,648,913)

Cash and Cash Equivalents as at the beginning of the year 20,661,515 29,310,428 Cash and Cash Equivalents as at the end of the year 37,693,557 20,661,515

17,032,042 (8,648,913)

Notes on Cash Flow Statement :

1 The above Cash flow statement has been prepared under the indirect method setout in AS-3 issued by the Institute of Chartered Accountants of India.

2 Purchase of fixed assets are shown inclusive of movements in capital work-in-progress. 3 Cash and Cash Equivalents represent Cash and Bank Balances only. 4 Previous year figures have been regrouped and recast wherever necessary to conform to the current year classification.

This is the Cash Flow Statement referred to in our report of even date. For and behalf of the Board

Partha Ghosh Partner E. A. Elias Sudhir Seth Membership No. F55913 Managing Director Director For and behalf of Price Waterhouse A. D. Kunte Shailesh Hemani Chartered Accountants Director Director

K. K. Bhavsar Company Secretary

Mumbai, May 19, 2009 Mumbai, May 19, 2009


42

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009

March 31, 2009 March 31, 2008

Rupees Rupees Rupees SCHEDULE 1 CAPITAL Authorised 12,000,000 Equity Shares of Rs. 10 each 120,000,000 120,000,000

Issued, Subscribed and Paid Up: 6,048,000 Equity Shares of Rs. 10 each fully paid up 60,480,000 60,480,000

(includes 1,243,500 Bonus Shares issued by capitalisation of reserves

and securities premium) 60,480,000 60,480,000

SCHEDULE 2 RESERVES AND SURPLUS Securities Premium Account 81,695,875 81,695,875

Capital Reserve (Represents Capital Profit on Equity Shares Forfeited) 166,000 166,000

General Reserve

As per last Balance Sheet 29,000,000 19,200,000

Add: Transfer from Profit and Loss Account 10,000,000 9,800,000

39,000,000 29,000,000

Profit and Loss Account 287,246,222 226,351,173

408,108,097 337,213,048

SCHEDULE 3

SECURED LOANS Cash Credit from Banks 1,425,358 38,702,169

(i) Primary Security -hypothecation of Raw Materials, Stock-in-Process, Finished Goods, Stores and Spares, Receivables and Fixed Deposits (ii) Collateral security - property, factory land and building and other fixed assets of the Company (Repayable on demand)

Term Loans from Banks 75,807,655 45,364,147

(i) Primary Security - Entire block of fixed assets. (ii) Collateral security - property, factory land and building and other fixed assets of the Company

(Repayable within one year Rs. 23,319,055; March 31, 2008 Rs. 19,351,953)

Hire Purchase Loans from Banks 1,801,210 2,898,138

(Refer Note 15 (i) on Schedule 20) (Secured against hypothecation of Vehicles) (Repayable within one year Rs. 975,267; March 31, 2008 Rs. 1,096,928)

79,034,223 86,964,454


43


March 31, 2009 March 31, 2008

Rupees Rupees

SCHEDULE 4 UNSECURED LOANS Sales Tax Deferral 13,320,000 22,200,000 (Payable within one year Rs. 8,880,000; March 31, 2008 Rs. 8,880,000)

13,320,000 22,200,000

SCHEDULE 5 DEFERRED TAX LIABILITIES (NET) (Refer Note 1(I) on Schedule 20)

Deferred Tax Liabilities on account of:

Timing Differences between book depreciation and

depreciation as per Income Tax Act, 1961, of India 40,358,819 40,049,643

Deferred Tax Assets on account of:

Timing Differences in

Provisions 4,533,079 3,459,101

Miscellaneous Expenditure 161,314 241,971

4,694,393 3,701,072

35,664,426 36,348,571


44

SCHEDULE ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009

SCHEDULE 6 FIXED ASSETS (Refer Notes 1 (B) and 1 (C) on Schedule 20)

(Amount in Rupees)

Particulars

Cost Depreciation Net Book Value

As at April 01,

2008

Additions during the

year

Deletions / Adjustments during the

year

As at March 31,

2009

Up to April 01,

2008

For the year

On Deletions /Adjustments

during the year

As at March 31,

2009

As at March 31,

2009

As at March 31,

2008

Tangible assets

Freehold Land 9,811,977 32,212,883 - 42,024,860 - - - - 42,024,860 9,811,977

Leasehold Land 5,091,974 - - 5,091,974 253,965 66,821 - 320,786 4,771,188 4,838,009

Buildings - Factory 102,739,336 - - 102,739,336 20,646,637 3,460,887 - 24,107,524 78,631,812 82,092,699

Building - Office * 874,659 - - 874,659 178,531 14,257 - 192,788 681,871 696,128

Plant and Machinery # 247,183,647 61,150,079 1,273,791 307,059,935 62,630,828 23,274,284 856,034 85,049,078 222,010,857 184,552,819

Tools, Dies and Jigs # 16,800,908 5,851,966 - 22,652,874 10,742,497 1,364,675 - 12,107,172 10,545,702 6,058,411

Computer Hardware # 16,587,281 664218 7,166,226 10,085,273 10,919,273 1,277,215 7,166,226 5,030,494 5,054,779 5,667,776

Vehicles ** 10,534,673 2,264,461 1,167,391 11,631,743 2,641,416 1,084,817 529,663 3,196,570 8,435,173 7,893,257

Office Equipment # 12,713,689 510,681 764,604 12,459,766 3,051,080 1,534,981 623,171 3,962,890 8,496,876 9,662,609

Furniture and Fixtures # 19,014,718 865,048 310,966 19,568,800 7,000,637 1,803,943 207,907 8,596,673 10,972,127 12,014,081

Intangible assets

Patent and Trademarks 129,719 - 89,719 40,000 128,310 762 89,719 39,353 647 1,409

Computer Software # 28,230,631 2,756,921 4,084,942 26,902,610 16,490,659 3,530,556 4,034,072 15,987,143 10,915,467 11,739,972

TOTAL 469,713,212 106,276,257 14,857,639 561,131,830 134,684,065 37,413,198 13,506,792 158,590,471 402,541,359 335,029,147

Previous Year 400,648,308 86,445,820 17,380,916 469,713,212 118,581,787 27,420,937 11,318,660 134,684,065

Capital Work-in-progress [including Capital Advances Rs. 5,005,177; (March 31, 2008 : Rs. 2,003,706)] 10,847,930 5,703,071

* Includes cost of shares in co-operative housing amounting to Rs. 500 (March 31, 2008: Rs. 500) 413,389,289 340,732,218

** Includes vehicles acquired on hire purchase Rs. 4,393,873 (March 31, 2008: Rs. 5,955,365)

# Depreciation for the year includes accelerated depreciation Rs.4, 878, 921 (March 31, 2008: Rs. Nil) on assets which have lesser useful life than estimated.



45


March 31, 2009 March 31, 2008

Rupees Rupees SCHEDULE 7

INVESTMENTS (Refer Note 1(D) on Schedule 20) Long Term (At Cost) In Subsidiaries

(Unquoted, Trade)

144 Equity Shares of DHS 1000 each fully paid up of APW Systems 1,736,713 1,736,713

MEA (FZC), a Free Zone Company with limited liability In Others (Quoted, Non Trade) Development Credit Bank Limited - 1,200 Equity Shares of Rs. 10 each 18,000 18,000

1,754,713 1,754,713

Aggregate of Unquoted Investments - At Book Value 1,736,713 1,736,713

Aggregate of Quoted Investments- At Book Value 18,000 18,000

- At Market Value 22,668

102,480

SCHEDULE 8 INVENTORIES (Refer Note 1(E) on Schedule 20) Raw Materials (including Packing Materials, Components and Processing Materials) 54,577,084 41,430,719 (includes Goods in Transit Rs. 2,681,925; March 31, 2008: Rs. 806,116) Work-in-Progress 31,220,977 33,033,048 Finished Goods (includes Goods in Transit Rs. 1,307,616; March 31, 2008: Rs. Rs. 809,670) 15,709,369 11,928,989

Traded Goods 4,739,848 8,228,596

106,247,278 94,621,352 SCHEDULE 9 SUNDRY DEBTORS (Unsecured, Considered Good) Outstanding for a period exceeding six months 18,014,887 15,981,034

Others 199,197,701 266,105,756

217,212,588 282,086,790

SCHEDULE 10 CASH AND BANK BALANCES

Cash on Hand 106,197 284,097

Balances with Scheduled Banks on

- Current Accounts 11,614,177 10,300,224

- Unclaimed Dividend Account 437,504 223,434

- Unclaimed Share Application Money on Rights Issue Account 5,160 5,160

- Deposit Accounts 25,530,519 9,848,600

(Includes deposits aggregating Rs. 9,848,600; (March 31, 2008: Rs. 9,848,600) pledged

with banks against bank guarantee)

37,693,557 20,661,515

SCHEDULE 11 OTHER CURRENT ASSETS

Interest Accrued on Fixed Deposits 482,377

509,825

Interest Accrued on Advance given to APW Systems MEA (FZC) - 45,452

482,377 555,277


46


Year Ended Year Ended

March 31, 2009 March 31, 2008

Rupees Rupees

SCHEDULE 12 LOANS AND ADVANCES Unsecured, Considered Good Advance to Subsidiary Company - APW Systems MEA (FZC) -

673,370

Advances Recoverable in Cash or in Kind or for Value to be Received 34,684,787 17,675,202

Deposits 14,009,486 10,960,614

Balances with Excise and Customs Authorities 3,174,562 9,974,701

Advance Fringe Benefit Tax (Net of Provision for Fringe Benefit 126,440 318,426

Tax Rs. 6,536,986; March 31, 2008: Rs. 4,895,000)

51,995,275 39,602,313

SCHEDULE 13 CURRENT LIABILITIES AND PROVISIONS Liabilities Dues to Micro and Small Enterprises (Refer Note 5 on Schedule 20) 5,795,579 12,066,864

Dues to Other than Micro and Small Enterprises 174,564,826 177,348,152

Unclaimed Dividend* 437,504 223,434

Unclaimed Excess Share Application Money on Rights Issue* 5,160 5,160

Other Liabilities 10,477,671

9,556,301

Advances from Customers 3,432,547 2,554,622 * There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at March 31, 2009

194,713,287 201,754,533

Provisions

Leave Entitlement (Refer Note 1(H)(c) on Schedule 20) 5,676,282 4,348,565

Gratuity (Refer Note 1(H)(b) and 16 on Schedule 20) 7,660,225 5,828,256

Taxation (Net of Advance Tax and Tax Deducted at Source 2,890,964 3,649,178

Rs. 190,069,248; March 31, 2008: Rs. 147,063,159) Proposed Dividend 18,144,000 18,144,000

Corporate Tax on Dividend 3,083,573 3,083,573

37,455,044 35,053,572

232,168,331 236,808,105


47

SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

March 31, 2009 March 31, 2008

Rupees Rupees Rupees

SCHEDULE 14 SALES Sales - Manufacturing (Tax Deducted at Source Rs. 80,351; Previous Year Rs. 186,504)

1,495,192,426

1,420,304,950

Sales - Trading 65,279,458 58,003,681

1,560,471,884

1,478,308,631

SCHEDULE 15 OTHER INCOME Interest on - Fixed Deposits - Gross 996,197 1,501,790

(Tax Deducted at Source Rs. 225,738; Previous Year Rs. 339,044) - Deposits (Tax Deducted at Source Rs.Nil; Previous Year Rs.4,953) - 22,074

- Others 71,011 83,221

1,067,208 1,607,085

Sale of Scrap 10,644,803 6,884,873

Liabilities/ Provisions No Longer Required Written Back 1,418,643 939,874

Exchange Gain (Net) 4,063,819 -

Miscellaneous 2,017,609 752,360

19,212,082 10,184,192

SCHEDULE 16

COST OF MATERIALS Raw Materials (including packing materials, components and processing materials) consumed

Opening Stock 41,430,719 28,031,797

Add : Purchases (Includes Job Work charges Rs.47,504,734; 829,253,462 800,868,669

Previous Year Rs. 67,667,789)

870,684,181

828,900,466

Less : Closing Stock (includes Goods in Transit Rs. 2,681,925; 54,577,084 41,430,719

March 31, 2008: Rs. 806,116) 816,107,097 787,469,747

(Increase)/ Decrease in Work in progress and Finished Goods

Opening Stock

Work-in-Progress 33,033,048 18,548,921

Finished Goods 11,928,989 958,422

44,962,037

19,507,343

Closing Stock

Work-in-Progress 31,220,977 33,033,048

Finished Goods (includes Goods in Transit Rs.1,307,616; March 31, 2008: 809,670) 15,709,369 11,928,989

46,930,346

44,962,037

(1,968,309) (25,454,694)

Traded Goods

Opening Stock 8,228,596 7,022,983

Add Purchases 42,696,762 44,631,582

50,925,358 51,654,565

Less : Closing Stock 4,739,848

8,228,596

46,185,510 43,425,969

860,324,298 805,441,022


48

SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

Year Ended Year Ended

March 31, 2009 March 31, 2008

Rupees

Rupees

SCHEDULE 17

EMPLOYEE COSTS

Salaries and allowances, Wages and Bonus 128,735,201

111,799,515 Contribution to Provident Fund and Other Funds 9,113,379

10,119,067

(Refer Notes 1(H) and 16 on Schedule 20)

Staff Welfare 9,193,673

9,298,084

147,042,253

131,216,666 SCHEDULE 18

OPERATING AND OTHER EXPENSES

Inward Freight 7,015,074 4,610,606 Casual Labour 17,378,775

20,290,541

Transportation 24,923,528

31,139,733 Consumables 8,103,383

8,071,010

Tools, Dies and Jigs for Replacements 3,477,382

4,503,669 Power, Fuel and Water 23,596,151

23,932,786

Insurance 2,487,915

3,225,197 Repairs and Maintenance

- Buildings 954,377

2,402,711

- Plant and Machinery 13,269,893

5,977,817 - Others 13,611,778

11,112,437

Rent 17,391,908

10,919,508 Rates and Taxes 1,591,446

1,935,607

Communication 8,142,721

7,133,169 Printing and Stationery 2,287,912

2,006,756

Legal and Professional Fees 12,457,433

10,081,760 Directors' Sitting Fees 995,000

537,500

Travelling, Vehicle and Conveyance 15,161,330

14,545,231 Exchange Loss (net) -

3,132,323

Commission 11,984,611

10,345,865 Selling and Marketing 11,310,899

10,601,128

Website Development Expenses 66,500

20,000 Bad Debts/ Advance Written Off 1,298,590 975,113 Loss on Sale/ Scrapping of Assets (net) 566,898

1,927,801

Miscellaneous 2,616,024

1,882,650

200,689,528

191,310,918 SCHEDULE 19

FINANCIAL EXPENSES

Bank Charges 3,373,799

3,742,395

Interest On

- Fixed Loans 4,835,522

5,997,190 - Others 4,490,269

2,609,017

12,699,590

12,348,602


49

20. NOTES TO ACCOUNTS

1. Significant Accounting Policies

A. Basis of Accounting The financial statements are prepared to comply in all material aspects with the applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3C) of the Companies Act, 1956, and the relevant provisions of the Companies Act, 1956. (the Act)

B. Fixed Assets Fixed Assets are stated at cost of acquisition (including incidental expenses relating to acquisition and installation of the asset and borrowing costs specifically relatable to the acquisition of the asset) less accumulated depreciation.

C. Depreciation Depreciation has been provided on straight line method at the rates prescribed under Schedule XIV to the Act except for demo stock capitalised which is depreciated @ 50% p.a. Assets individually costing Rs. 5,000 or less are depreciated fully in the year of acquisition.

D. Investments Long term investments are stated at cost less provision, if any, for permanent diminution in value. Current investments are carried at the lower of cost and fair value.

E. INVENTORIES (a) Raw materials are valued at cost arrived at on first-in, first-out basis. (b) Work-in-progress, finished goods and traded goods are valued at lower of cost (arrived at

on first-in, first-out basis) and estimated net realisable value.

F. Foreign Currency Transactions

(a) Foreign currency transactions are translated at the exchange rates prevailing on the date of the transactions.

(b) Realised gains and losses on settled foreign exchange transactions are recognised in the Profit and Loss Account.

(c) Monetary assets and liabilities denominated in foreign currency as at the Balance Sheet date are translated at the exchange rates prevailing at the date of the Balance Sheet and the resultant exchange difference is recognised in the Profit and Loss Account.

(d) In respect of forward contracts, other than forward contracts in respect of firm commitments and highly probable forecast transactions, the premium or discount arising at the inception of forward exchange contract, is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Profit and Loss Account in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the year.


50

G. Revenue Recognition (a) Sales are recognised based on the terms and conditions (mainly ex-works) agreed with the

customer and upon transfer of ownership, risk and rewards. Sales include insurance, freight, packing and octroi and are exclusive of excise duty and sales tax.

(b) In respect of commission and other heads of income, the Company follows the practice of recognising income on an accrual and prudent basis.

H. Employee Benefits

(a) Defined Contribution Plans

The Company contributes on a defined contribution basis to Employee’s Provident Fund, Employee’s State Insurance Fund and Employee’s Pension Scheme towards post employment benefits, all of which are administered by the respective Government authorities, and has no further obligation beyond making its contribution, which is expensed in the year to which it pertains.

(b) Defined Benefit Plans

The Company has a Defined Benefit Plan namely Gratuity for all its employees. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method. Gratuity Fund is recognised by the income tax authorities and is administered through trustees. The Company has taken a group gratuity policy with Life Insurance Corporation of India (‘LIC’).

Actuarial gains and losses which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account.

(c) Employee Leave Entitlement

The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilised leave balances is provided based on an actuarial valuation carried out by an independent actuary as at the year end and charged to the Profit and Loss Account. Leave balances to be utilised in short term is provided for on the basis of cost to company and charged to the profit & loss account.

I. Deferred Taxation (a) Deferred tax resulting from timing differences between book and tax profits is accounted for

under the Liability method at the current rate of tax to the extent that the timing differences are expected to crystallise/capable of reversal.

(b) In case there are carried forward losses and unabsorbed depreciation as per the Income Tax Act, 1961, of India, deferred tax assets are recognised only when there is a virtual certainty supported by convincing evidence that such assets will be realised.

J. Impairment of Assets The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable


51

amount of the asset. If such recoverable amount of the asset or recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

K. Provisions and Contingent Liabilities The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation but the likelihood of outflow of resources is remote, no provision or disclosure as specified in Accounting Standard 29 – “ Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of Chartered Accountants of India is made.

L. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialised.

2. Contingent Liabilities and Capital Commitments

As at

March 31, 2009 (Rupees)

As at March 31, 2008

(Rupees) (a) Contingent Liabilities

Outstanding Bank Guarantees * 34,360,127 42,803,024 Claims against the Company not acknowledged as debts in respect of** :

- Income Tax matters - 4,040,454 - Sales Tax matters 10,558,107 5,947,117

- Others - 42,056 * All Bank Guarantees are Performance Bank Guarantees. ** The timing and the amount of cash flows, if any that may arise from the above matters will

be determined only on settlement of the cases.

(b) Capital Commitments Estimated amount of contracts remaining to be executed on Capital Account (net of advances)

55,784,652 23,992,386

(c) In accordance with the EPCG Scheme, imports of capital goods are allowed to be made duty free subject to the condition that the Company will fulfil, in future, a specified amount of export obligation within a specified time. Based on the current operating plan, the Company would fulfil its export obligation within eight years of the date of the EPCG license, which is the specified time period. Amount of duty saved on imports of capital goods against which export obligation needs to be fulfilled as at March 31, 2009 aggregates Rs.10,642,791 (March 31, 2008: Rs.7,458,168).


52

Provisions for post retirement benefits which are based on actuarial valuation done on an overall company basis are excluded above.

5. Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) are given as follows:

Particulars Year ended

March 31,2009 (Rupees)

Year ended March 31,2008

(Rupees)

a Principal Amount due 5,795,579 12,066,864

Interest due on the above 747,171 760,325

b Principal Amount paid during the period beyond the appointed day

50,655,251 54,885,994

Interest paid during the period beyond the appointed day

- -

c Amount of interest due and payable for the period of delay in making payment without adding the interest specified under the Act

- -

d Amount of interest accrued and remaining unpaid at the end of the period

747,171 760,325

e Amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the Act

747,171 760,325

3. Auditors’ Remuneration (included under Legal and Professional fees)

Year Ended March 31, 2009

(Rupees)


(Rupees) As Auditors 650,000 650,000 Other matters 640,000 350,000 Out-of-Pocket Expenses 45,335 36,258

Total 1,335,335 1,036,258

4. Managerial Remuneration


(Rupees)


(Rupees) Salaries and Allowances 5,280,000 5,280,000 Company’s Contribution to Provident Fund 396,000 396,000 Perquisites 102,000 102,000

5,778,000 5,778,000 Directors other than Managing/Whole-time directors Sitting Fees 995,000 537,500 Total 6,773,000 6,315,500


53

6. Capacity Year Ended March 31, 2009

(Nos.)


(Nos.) Licensed

Capacity* Installed

Capacity^ Licensed Capacity*

Installed Capacity^

Enclosures 84,000 84,000 Card Frames 50,000 50,000 Instrument Case 35,000 35,000 Consoles 220 220

* As informed by the Management, manufacturing licence does not contain details of licensed capacity. ^ As certified by the Management and accepted by the Auditors.

Note (i) Enclosures includes Racks, Sub-racks, Cabinets for use in Telecom, Networking, Electrical and other industries and includes parts for ATMs.

(ii) Capacity for Enclosures includes capacity for components and accessories for contract manufacturing.

(iii) Capacity for various products is interchangeable as the machinery is common and processes are similar.


54

7. (a) Manufactured Goods



Quantity (Nos.)

Value (Rupees)

Quantity (Nos.)

Value (Rupees)

Enclosures Opening Stock 680 6,900,780 17 252,561 Production 47,644 57,171 Sales ** 47,649 720,294,735 56,508 675,510,609 Closing Stock 675 6,214,953 680 6,900,780 Card Frames Opening Stock 25 42,120 - - Production 13,202 23,358 Sales ** 13,227 26,579,160 23,333 36,866,978 Closing Stock - - 25 42,120 Others (including components and

accessories)*

Opening Stock 4,986,089 705,861 Sales ** 550,543,311 518,544,908 Closing Stock 9,494,416 4,986,089

*The relevant information is given in aggregate as individual items are too numerous to be conveniently grouped and are of a value less than 10% of the total.

** Sales are net of excise duty and sales tax. (b)(i) Consumption of Raw Materials,

Packing Materials, Components and Processing Materials *



Quantity (M.T.)

Value (Rupees)

Quantity (M.T.)

Value (Rupees)

CRCA Sheets 4220.908 237,584,665 4676.369 193,324,273 Aluminium Sheets 29.192 5,295,036 44.649 7,275,248 Aluminium Sections 145.598 25,713,233 190.007 32,547,590 Components and Packing Materials** 500,009,429 451,471,880 Outside Processing** 47,504,734 102,850,756 816,107,097 787,469,747

* The value of consumption of raw materials has been arrived at on the basis of Opening Stock

plus Purchases less Closing Stock. The consumption, therefore, includes adjustments for raw materials written-off, shortage/excess, etc.

** The relevant information is given in aggregate as individual items are too numerous to be conveniently grouped and are of a value less than 10% of the total.


55

(b)(ii) Value and percentage of

Imported and Indigenous Raw Materials, Packing Materials, Components and Processing Materials Consumed



Value (Rupees)

% of Total Consumption

Value (Rupees)

% of Total Consumption

Imported 78,843,865 9.66% 66,587,076 8.46% Indigenous 737,263,232 90.34% 720,882,671 91.54% Total 816,107,097 100.00% 787,469,747 100.00% (c) Traded Goods Year Ended

March 31, 2009 Year Ended

March 31, 2008 Quantity

(Nos.) Value

(Rupees) Quantity

(Nos.) Value

(Rupees) Switches with Accessories Opening Stock 1,245 8,228,596 1,493 7,022,983 Purchases (net of purchase return) 3,627 42,696,762 7,264 44,631,582 Sales (net of sales return and sales tax) 4,309 63,031,231 7,512 55,862,552 Closing Stock 563 4,739,848 1,245 8,228,596

8. Expenditure in foreign currency Year Ended March 31, 2009

(Rupees)


(Rupees) Travelling, Vehicle and Conveyance 1,520,943 1,744,180

Exhibition and Seminar - 723,298 Selling and Marketing 206,069 -

Commission 7,684,056 3,812,172 Miscellaneous 287,905 36,660

9. Value of Imports on CIF basis


(Rupees)


(Rupees) Raw Materials 72,212,457 61,100,919 Traded Goods (net of returns) 35,461,912 36,047,969 Maintenance Spares 1,232,959 143,034 Capital Goods 44,383,586 39,993,096 Tools, Dies & Jigs for replacements

2,993,061 -


56

10. Earnings in Foreign Exchange

Year Ended March

31, 2009 (Rupees)


(Rupees) F.O.B. value of Exports 130,571,630 92,380,925 Commission 12,720,414 18,074,122 Interest 32,533 45,452

11. Reimbursement of expenses in Foreign Exchange Year Ended March

31, 2009 (Rupees)


(Rupees) Exhibition and Seminar 601,854 -

12. Related Party Disclosures

a. Related Party Disclosures as required by Accounting Standard 18, “Related Party Disclosures”, issued by the Council of the Institute of Chartered Accountants of India are given below:

i) Subsidiary Company APW Systems MEA (FZC) LLC.

ii) Related Companies M. Rutty & Co. Pty. Ltd. APW Electronics Ltd. APW Enclosures Systems (UK) Ltd. APW Integrated Systems Ltd. APW Poland Ltd.

iii) Key Management Personnel E. A. Elias Sudhir Seth Ashok Kunte

This aforesaid list of related parties is limited to entities/persons with whom transactions have taken place. Other entities with whom there are no transaction have not been disclosed above.


57

SCHEDULE 20 : NOTES TO ACCOUNTS (b)Transactions entered into with related parties are as follows: (Amount in Rupees)

Subsidiary Company Related Companies Key Management Personnel

Particulars APW

Systems MEA (FZC)

M. Rutty & Co. Pty.

Ltd.

APW Electronics

Ltd.

APW Enclosures

Systems (UK) Ltd.

APW Poland

Ltd.

APW Integrated

Systems Ltd. E. A. Elias Sudhir

Seth Ashok Kunte

Transactions during the year Sales - 3,437,814 - - - - - - - - 6,991,529 - - - - - - - Purchases - - - - - - - - -

Commission 7,684,056 - - - - - - - - 3,812,172 - - - - - - - -

Expenses reimbursed to - - - - - - - - - 404,950 - - - - - - - - Investments / Advance against - - - - - - - - -

investment in previous year 1,736,713 - - - - - - - -

Interest on Advance 32,533 - - - - - - - - 45,452 - - - - - - - - Managerial Remuneration - - - - - - 5,778,000 110,000 185,000 - - - - - - 5,778,000 50,000 97,500 Liabilities/ Provisions No Longer Required Written Back - - 25,573 878,512 5,597 38,579 - - -

Year-end balances Payable 674,606 - 289,509 245,665 - - - - - 670,768 - 226,457 1,102,388 4,933 41,254 - - 7,500 Receivable - 988,478 - - - - - - - 1,881,902 - - - - - - -

Advances - - - - - - - - - 718,822 - - - - - - - -

Investments 1,736,713 - - - - - - - - 1,736,713 - - - - - - - -

Note: The figures in italics are in respect of the previous year ended March 31, 2008.


58

20. NOTES TO ACCOUNTS (Continued) 13. Segmental Reporting The business segment has been considered as the primary segment. The Company is organised into one main business segment, namely ‘Enclosures, Card Frames, Instrument Case and Consoles. The business segments have been identified considering the nature of services, the differing risks and returns, the organisation structure and the internal financial reporting system. Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis. (i)Primary Segment

(Amount in Rupees)

Particulars Enclosures, Card Frames, Instrument Case and Consoles Others Unallocable Total

April 1, 2008 to April 1, 2007 to April 1, 2008 to April 1, 2007 to April 1, 2008 to April 1, 2007 to April 1, 2008 to April 1, 2007 to March 31, 2009 March 31, 2008 March 31, 2009 March 31, 2008 March 31, 2009 March 31, 2008 March 31, 2009 March 31, 2008 Revenue

- External sales (including scrap sales) 1,308,062,009 1,237,807,368 63,031,231 55,862,552 1,371,093,240 1,293,669,920

- Commission and Service Charges - - 13,839,811 18,612,270 13,839,811 18,612,270

Total 1,308,062,009 1,237,807,368 76,871,042 74,474,822 1,384,933,051 1,312,282,190

Results

Segment Result – Profit/ (Loss) 251,897,318 242,213,758 20,957,123 24,972,005 272,854,441 267,185,763 - Unallocable corporate expenses net of income 128,697,497 110,415,477 128,697,497 110,415,477

Operating Profits

- (Gain)/Loss on sale of Fixed Assets 566,898 1,927,801 566,898 1,927,801

- Interest expense 9,325,791 8,606,207 9,325,791 8,606,207

- Interest income 1,067,208 1,607,085 1,067,208 1,607,085

Profit Before Taxation 135,331,463 147,843,364

- Income Taxes 42,251,000 45,200,000 42,251,000 45,200,000

- Fringe Benefit Tax 1,641,986 1,750,000 1,641,986 1,750,000

- Deferred Tax (684,145) 9,588,976 (684,145) 9,588,976

Net Profit 92,122,622 91,304,388









Other Information

- Segment assets 762,206,941 717,271,231 32,203,741 28,352,880 - - 794,410,682 745,624,111

- Unallocated corporate assets - - - - 34,364,395 34,390,067 34,364,395 34,390,067

Total assets 828,775,077 780,014,178

- Segment liabilities 186,474,580 287,654,822 19,026,979 5,705,649 - - 205,501,559 293,360,471

- Unallocated corporate liabilities - - - - 154,685,422 88,960,659 154,685,422 88,960,659

Total liabilities 360,186,981 382,321,130

Capital expenditure 107,819,112 83,046,600 - 14,793 3,602,004 7,556,226 111,421,116 90,617,619

Depreciation 32,899,738 24,269,322 48,410 39,280 4,465,050 3,112,335 37,413,198 27,420,937


59

20. NOTES TO ACCOUNTS (Continued) (ii) Geographical Segment

(Amount in Rupees) Particulars India Middle-East* Others** Total

April 1, 2008 to March 31,

2009


2008


2009


2008


2009


2008


2009


2008 Revenue

- External sales 1,240,351,400 1,200,285,146 81,633,843 63,229,834 49,107,997 30,154,940 1,371,093,240 1,293,669,920 - Commission and Service Charges 1,119,401 538,148 - - 12,720,410 18,074,122 13,839,811 18,612,270

Total 1,241,470,801 1,200,823,294 81,633,843 63,229,834 61,828,407 48,229,062 1,384,933,051 1,312,282,190

As at March

31, 2009 As at March







31, 2008 Other Information Carrying Amount of Segment Assets 808,178,834 747,258,809 5,735,830 15,599,865 14,860,413 17,155,504 828,775,077 780,014,178

Capital Expenditure 111,421,116 90,617,619 - - - - 111,421,116 90,617,619 * Represents United Arab Emirates, Kuwait and Oman. ** Represents Australia, United States of America, China, Singapore, Japan, Hong Kong, United Kingdom, Egypt, Israel and Tunisia. (iii) Notes:

(a) The Segment Revenue revenue in the geographical segments considered for disclosure are as follows:

- Revenue within India includes sales to customers located within India and earnings in India. - Revenue outside India includes sales to customers located outside India, earnings outside India and export benefits on sales made to customers located outside India.

(b) Segment revenue, results, assets and liabilities include the respective amounts identified to each of the segments and amounts allocated on a reasonable basis.


60

14. Earnings Per Share

Particulars March 31, 2009 March 31, 2008 Profit available to Equity Shareholders

- Profit after Tax (A) (Rupees) 92,122,622 91,304,388

Number of Equity Shares - Weighted Number of equity shares outstanding during the

year (B) 6,048,000 6,048,000

Basic and diluted earnings per share (A/B) (Rs.) 15.23 15.10 Nominal value of an equity share (Rupees) 10 10

15 (i) Hire Purchase /Lease Transactions

The Company has acquired Vehicles under Hire Purchase Scheme which expires on various dates up to September 5, 2011. The minimum lease payments and present value of minimum lease payments as at March 31, 2009 is as under:

(Rupees) Description Not later than 1 year Later than 1 year and

not later than 5 years Later than

5 years Total

MLP PV MLP PV MLP PV MLP PV Vehicles 976,347 805,871 1,080,455 995,339 - - 2,056,802 1,801,210

MLP: Minimum Lease Payments PV: Present Value Lease expenses recognised during the year as interest Rs. 273,731 (Previous year: Rupees 349,513).

(ii) Operating Lease Transactions

The Company has leased commercial facilities under non-cancellable operating lease. This lease expires on various dates upto September 11, 2011 and is renewable at the request of lessee by mutual agreement for a further period. The future minimum lease payments as at March 31, 2009 in respect of these are as follows:

Minimum Lease Payments Amount in (Rupees)

Not later than one year 7,089,000 Later than one year but not later than five years 900,000 Later than five years -

The lease expense incurred during the year amounts to Rs. 17,391,908 (Previous year: Rs.10,919,508).


61

16 The Company has classified the various benefits provided to employees as under :- I Defined Contribution Plans 2008-09 2007-08

a. Employers' Contribution to Provident Fund b. Employers' Contribution to Employee’s State Insurance c. Employers' Contribution to Employee’s Pension Scheme, 1995

During the year, the Company has recognised the following amounts in the Profit and Loss Account:*

- Employers' Contribution to Provident Fund 3,049,854 3,236,381

- Employers' Contribution to Employee’s State Insurance 469,301 895,553

- Employers' Contribution to Employee’s Pension Scheme 2,360,501 2,127,885

* Included in Contribution to Provident and Other Funds (Refer Schedule 17) II Defined Benefit Plan 2008-09 2007-08

Contribution to Gratuity Fund (% p.a.) (% p.a.)

a. Major Assumptions Discount Rate 7.10 7.80

Expected Rate of Return on Plan Assets 7.50 7.50

Salary Escalation Rate 10.00 10.00

@ The estimates for future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

b. Change in the Present Value of Obligation Opening Present Value of Obligation 15,350,143 11,111,131

Current Service Cost 1,455,078 1,254,077

Interest Cost 1,191,582 838,482

Benefit paid (737,591) (417,002)

Actuarial Losses on Obligations 788,773 2,563,455

Closing Present Value of Obligation 18,047,985 15,350,143

c. Change in Fair Value of Plan Assets Opening Fair Value of Plan Assets 9,521,887 8,628,718

Expected Return on Plan Assets 712,002 670,014

Actuarial Gain on Plan Assets 160,626 126,752

Contributions 730,836 513,405

Benefits paid (737,591) (417,002)

Closing Fair Value of Plan Assets 10,387,760 9,521,887

d. Reconciliation of Present Value of Defined Benefit Obligation and the Fair Value of Assets

Present Value of Funded Obligation 18,047,985 15,350,143

Fair Value of Plan Assets 10,387,760 9,521,887

Funded Status (7,660,225) (5,828,256)

Present Value of Unfunded Obligation 7,660,225 5,828,256

Unfunded Net Liability Recognised in the Balance Sheet disclosed under Current Liabilities and Provisions (Refer Schedule 13) 7,660,225 5,828,256

e. Amount recognised in the Balance Sheet Present Value of Obligation 18,047,985 15,350,143


Liability Recognised in the Balance Sheet and disclosed under Current Liabilities and Provisions (Refer Schedule 13) 7,660,225 5,828,256

f. Expenses Recognised in the Profit and Loss Account Current Service Cost 1,455,078 1,254,077

Interest Cost 1,191,582 838,482

Expected Return on Plan Assets (712,002) (670,014)

Net Actuarial Losses Recognised in the period 628,147 2,436,703

Total expenses Recognised in the Profit and Loss Account 2,562,805 3,859,248

Actual Return on Plan Assets 872,628 796,766

** Included in Contribution to Provident and Other Funds (Refer Schedule 17)


62

17. Amount remitted in foreign currency on account of Dividend

Year Ended March 31, 2009 (Rupees)


(Rupees) Dividend on Equity Shares (i) Dividend remitted (excluding dividend tax) 7,282,080 4,854,720 (ii) Number of non-resident shareholder 2 2 (iii) Number of shares held (equity shares of Rs. 10 each) 2,427,360 2,427,360

18. As required by the Clause 32 of the listing agreement, the following disclosures made:

Balance as at March 31,

2009

Maximum amount

outstanding during the year ended

March 31, 2009

Balance as at March 31, 2008

Maximum amount

outstanding during the year ended March

31, 2008 i. Loans and advances in the

nature of Advance to subsidiary, - APW Systems MEA(FZC) (Advance is with a repayment schedule)

-

731,340

731,340

752,250

ii. Loans and advances in the nature of loans to associates

- - - -

iii. Loans and advances in the nature of loans where there is no repayment schedule, or interest below rate specified as per Section 372A of the Companies Act, 1956.

- - - -

iv. Loans and advances in the nature of loans to firms/ companies in which directors are interested

- -

- -

v. Investments by the Loanee in the shares of the Company as at the year end

- -

- -

19. The Company uses forward contracts to hedge its risks of net exposure associated with foreign

currency fluctuations. The Company does not enter into any forward contract which is intended for trading or speculative purposes.


63

(a) Derivative Instruments – Outstanding as at year-end forward exchange contracts to hedge the foreign currency exposure for payments to be made against imports:

No. of Open Contracts as at March 31, 2009

Foreign Currency Denomination

Foreign Currency Amount

Indian Rupees equivalent

5 EURO 150,000 10,040,750

1 USD 25,000 1,251,000

(b) The foreign currency exposures that have not been hedged by any derivative instrument or otherwise as at March 31, 2009 are as follows:

Particulars Foreign Currency

Denomination Foreign currency Amount


Liabilities (Trade Payables)

USD 201,174.16 10,290,058 EURO 21,782.90 1,484,069 GBP 66,834.49 4,910,998

Total 16,685,125 Assets (Trade Receivables)

USD 262,672.13 13,314,850 EURO 97,115.00 6,499,907 GBP 13,343.00 964,966 AUS 28,053.72 973,745

Total 21,753,468

Refer Note 1(F) above for accounting policy on Foreign Currency Transactions. 20. Refer annexure for additional information pursuant to Part IV of Schedule VI to the Companies

Act, 1956 of India. 21. Previous year's figures have been regrouped and rearranged, wherever necessary.

Signatures to Schedules 1 to 20 forming part of the Accounts

For and on behalf of the Board Partha Ghosh E. A. Elias Sudhir Seth Partner Managing Director Director Membership No. F55913 For and on behalf of A. D. Kunte Shailesh Hemani Price Waterhouse Director Director Chartered Accountants K. K. Bhavsar Company Secretary Mumbai, May 19, 2009 Mumbai, May 19, 2009


64

Auditors’ Report to The Board of Directors of APW President Systems Limited on Consolidated Financial Statements for the year ended 31/03/2009

1. We have audited the attached consolidated Balance Sheet of APW President Systems Limited (the

“Company”) and its subsidiary company (refer Note 1B (ii) on Schedule 20 to the attached consolidated financial statements) (hereinafter referred to as the “Group”) as at March 31, 2009, the related consolidated Profit and Loss Account and the consolidated Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These consolidated financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of the aforesaid subsidiary company, whose financial

statements include the Company’s share of total assets, aggregating Rs. 2,045,937 as at March 31, 2009, total revenues, aggregating Rs. 1,663,910, and net cash inflows, aggregating Rs. 768,302, for the year ended on that date, which is considered in the attached consolidated financial statements. The financial statements of this subsidiary company have been audited by other auditors, whose report has been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of this subsidiary company, is based solely on the report of the other auditor.

4. We report that the consolidated financial statements have been prepared by the Company’s

Management in accordance with the requirements of Accounting Standard 21 - Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India.

5. On the basis of the information and explanations given to us and on consideration of the separate audit reports on individual audited financial statements of the Company and its aforesaid subsidiary, in our opinion, the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2009;

(b) in the case of the consolidated Profit and Loss Account, of the consolidated results of operations of the Group for the year ended on that date; and

(c) in the case of the consolidated Cash Flow Statement, of the consolidated cash flows of the Group for the year ended on that date.

Sd/-

Partha Ghosh Partner

Membership No. F55913 For and on behalf of

Price Waterhouse Chartered Accountants

Mumbai, May 19, 2009


65

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009

March 31, 2009 March 31, 2008

Schedule Rupees Rupees SOURCES OF FUNDS Shareholders' Funds Capital 1 60,480,000 60,480,000 Reserves and Surplus 2 408,333,003 336,672,374

468,813,003 397,152,374 Minority Interest 81,734 48,678

Loan Funds Secured Loans 3 79,034,223 86,964,454 Unsecured Loans 4 13,320,000 22,200,000

92,354,223

109,164,454

Deferred Tax Liability (Net) 5 35,664,426 36,348,571

Total 596,913,386 542,714,077

APPLICATION OF FUNDS

Fixed Assets 6 Gross Block 561,175,728 469,757,110 Less : Depreciation 158,618,522 134,698,657 Net Block 402,557,206 335,058,453 Capital Work-in-progress

10,847,930

5,703,071

413,405,136 340,761,524

Investments 7 18,000

18,000

Current Assets, Loans and Advances Inventories

8 106,656,557

94,621,352 Sundry Debtors 9 217,276,180 282,860,745 Cash and Bank Balances 10 39,172,947 21,372,603 Other Current Assets 11 482,377 509,825 Loans and Advances 12 52,136,695 39,006,005 415,724,756 438,370,530 Less : Current Liabilities and Provisions 13 Liabilities 194,628,548 201,382,405 Provisions

37,605,958

35,053,572

232,234,506 236,435,977


Total 596,913,386 542,714,077

Notes to Accounts 20

The Schedules referred to herein above form an integral part of the Consolidated Balance Sheet.

This is the Consolidated Balance Sheet referred For and behalf of the Board toin our report of even date. E. A. Elias Sudhir Seth Partha Ghosh Managing Director Director Partner Membership No. F55913 A. D. Kunte Shailesh Hemani For and behalf of Director Director Price Waterhouse Chartered Accountants K. K. Bhavsar Company Secretary Mumbai, May 19 , 2009 Mumbai, May 19 , 2009


66

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

March 31, 2009 March 31, 2008

Schedule Rupees Rupees INCOME Sales (Refer Note 1(H)(a) on Schedule 20) 14 1,561,634,721

1,478,308,631

Less : Excise Duty 143,799,559 125,681,895

1,417,835,162 1,352,626,736 Less : Sales Tax 56,223,888 65,841,689

1,361,611,274

1,286,785,047

Commission 13,221,483 18,596,418 Service Charges 1,119,401 538,148 Other Income 15 19,357,710 10,158,251

1,395,309,868 1,316,077,864 EXPENDITURE

Cost of Materials 16 861,439,640 805,441,022 Employee Costs 17 151,302,967 133,854,146 Operating and Other Expenses 18 196,644,261 189,546,194 Financial Expenses 19 12,722,530 12,394,984 Depreciation 37,426,656 27,435,529

1,259,536,054 1,168,671,875

Profit before Taxation 135,773,814 147,405,989 Provision for Taxation - Current Year 42,251,000 45,200,000 - Fringe Benefit Tax 1,641,986 1,750,000 - Deferred (684,145) 9,588,976

Profit after Taxation and before share of Profit/ (Loss) of 92,564,973 90,867,013 Minority Shareholders Minority's Share of Profit/ (Loss) in Subsidiary Company 17,694 (18,606) Net Profit 92,547,279 90,885,619

Profit and Loss Account Balance Brought Forward from Previous Year 225,932,404 166,074,358

Profit available for Appropriation 318,479,683 256,959,977 Appropriations Proposed Dividend 18,144,000 18,144,000 Corporate Tax on Dividend 3,083,573 3,083,573 Transfer to General Reserve 10,000,000 9,800,000 Profit and Loss Account Balance 287,252,110 225,932,404

318,479,683 256,959,977

Basic and Diluted Earnings Per Share (Refer Note 4 on Schedule 20) 15.30 15.03

Notes to Accounts 20

The Schedules referred to herein above form an integral part of the Consolidated Profit and Loss Account.

This is the Consolidated Profit and Loss Account referred For and behalf of the Board to in our report of even date.

E. A. Elias Sudhir Seth

Managing Director Director Partha Ghosh Partner Membership No. F55913 A. D. Kunte Shailesh Hemani For and behalf of Director Director Price Waterhouse Chartered Accountants K. K. Bhavsar

Company Secretary Mumbai, May 19 , 2009 Mumbai, May 19 , 2009


67

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009

March 31, 2009 March 31, 2008 Rupees Rupees

A) CASH FLOW FROM OPERATING ACTIVITIES : Net Profit Before Taxes 135,773,814 147,405,989 Adjustments for :

Depreciation 37,426,656 27,435,529 Loss on Sale/ Scrapping of Assets (net) 566,898 1,927,801 Bad Debts Written Off 1,298,590 975,113 Liabilities/ Provisions no longer required written back (1,418,643) (939,874) Wealth Tax 21,153 24,278 Interest Income - Gross (1,035,682) (1,562,260) Interest Expense 9,325,791 8,606,207

Operating Profit Before Working Capital Changes 181,958,577 183,872,783

Adjustments for : (Increase)/Decrease in Inventory (12,035,205) (40,059,229) (Increase)/Decrease in Debtors 64,285,975 (27,214,214) (Increase)/Decrease in Other Receivables (13,428,766) (13,970,543) Increase/(Decrease) in Trade payables (5,392,999) 38,431,097 Increase/(Decrease) in Provisions 3,310,602 3,606,415 Income Tax paid during the year (42,700,000) (39,500,000) Fringe Benefit Tax Paid (1,450,000) (1,800,000) Wealth Tax Paid (24,278) (14,563)

(A) Net Cash Generated from Operations 174,523,906 103,351,746

B) CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets (111,421,116) (88,420,921) Interest Received 1,063,130 1,161,529 Sale of Fixed Assets 783,949 4,134,455

(B) Net Cash (used in) /from Investing Activities (109,574,037) (83,124,937)

C) CASH FLOW FROM FINANCING ACTIVITIES : Secured and Unsecured Loans - Net (Payment)/ Receipts (16,810,231) (7,041,072) Interest Paid (9,325,791) (8,606,207) Payment of Dividend (21,013,503) (14,254,068)

(C) Net Cash (used in) / from Financing Activities (47,149,525) (29,901,347)

Net (Decrease)/Increase in Cash and Cash Equivalents (A+B+C) 17,800,344 (9,674,538)

Cash and Cash Equivalents as at the beginning of the year 21,372,603 29,310,428 Cash and Cash Equivalents as at the beginning of the year in - 1,736,713 APW Systems MEA (FZC), the Subsidiary Company Cash and Cash Equivalents as at the end of the year 39,172,947 21,372,603

17,800,344 (9,674,538) Notes on Cash Flow Statement : 1 The above Cash flow statement has been prepared under the indirect method setout in

AS-3 issued by the Institute of Chartered Accountants of India. 0

(0) 2 Purchase of fixed assets are shown inclusive of movements in capital work-in-progress. 3 Cash and Cash Equivalents represent Cash and Bank Balances only. 4 Previous year figures have been regrouped and recast wherever necessary to conform to the current year

classification.

This is the Consolidated Cash Flow Statement For and behalf of the Board referred to in our report of even date.

E. A. Elias Sudhir Seth Partha Ghosh Managing Directr Director Partner

Membership No. F55913 A. D. Kunte Director

Shailesh Hemani Director

For and behalf of Price Waterhouse K. K. Bhavsar Chartered Accountants Company Secretary

Mumbai, May 19 , 2009 Mumbai, May 19, 2009


68

SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009

March 31, 2009 March 31, 2008

Rupees Rupees

SCHEDULE 1 CAPITAL Authorised 12,000,000 Equity Shares of Rs. 10 each 120,000,000 120,000,000

Issued, Subscribed and Paid Up: 6,048,000 Equity Shares of Rs. 10 each fully paid up 60,480,000 60,480,000

(includes 1,243,500 Bonus Shares issued by capitalisation of reserves and securities premium) 60,480,000 60,480,000

SCHEDULE 2 RESERVES AND SURPLUS

Securities Premium Account 81,695,875 81,695,875

Capital Reserve (Represents Capital Profit on Equity Shares Forfeited) 166,000 166,000

General Reserve

As per last Balance Sheet 29,000,000 19,200,000

Add: Transfer from Profit and Loss Account 10,000,000 9,800,000

39,000,000 29,000,000

Foreign Exchange Translation Reserve 219,018 (121,905)

Profit and Loss Account 287,252,110 225,932,404

408,333,003 336,672,374

SCHEDULE 3 SECURED LOANS Cash Credit from Banks 1,425,358 38,702,169

(i) Primary Security -hypothecation of Raw Materials, Stock-in-Process,

Finished Goods, Stores and Spares, Receivables and Fixed Deposits

(ii) Collateral security - property, factory land and building and other

fixed assets of the Company

(Repayable on demand)

Term Loans from Banks:

(i) Primary Security - Entire block of fixed assets. 75,807,655 45,364,147

(ii) Collateral security - property, factory land and building and other

fixed assets of the Company

(Repayable within one year Rs. 23,319,055; March 31, 2008 Rs. 19,351,953)

Hire Purchase Loans from Banks: 1,801,210 2,898,138

(Refer Note 5 (i) on Schedule 20) (Secured against hypothecation of Vehicles) (Repayable within one year Rs. 975,267; March 31, 2008 Rs. 1,096,928)

79,034,223 86,964,454


69


March 31, 2009 March 31, 2008

Rupees

Rupees

SCHEDULE 4 UNSECURED LOANS

Sales Tax Deferral 13,320,000 22,200,000 (Payable within one year Rs. 8,880,000; March 31, 2008 Rs. 8,880,000 13,320,000 22,200,000

SCHEDULE 5 DEFERRED TAX LIABILITIES (NET) (Refer Note 1(J) on Schedule 20) Deferred Tax Liabilities on account of: Timing Differences between book depreciation and depreciation as per Income Tax Act, 1961, of India 40,358,819 40,049,643

Deferred Tax Assets on account of: Timing Differences in Provisions 4,533,079 3,459,101 Miscellaneous Expenditure 161,314 241,971

4,694,393

3,701,072

35,664,426 36,348,571


70

SCHEDULE ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2009

SCHEDULE 6 FIXED ASSETS (Refer Notes 1 (C) and 1 (D) on Schedule 20)

Rupees

Particulars

Cost Depreciation Net Book Value

As at April 01,

2008

Additions during the

year

Deletions during the

year

As at March 31,

2009

Up to April 01,

2008

For the year

On Deletions during the

year

As at March 31,

2009

As at March 31,

2009

As at March 31,

2008

Tangible assets

Freehold Land 9,811,977 32,212,883 - 42,024,860 - - - - 42,024,860 9,811,977

Leasehold Land 5,091,974 - - 5,091,974 253,965 66,821 - 320,786 4,771,188 4,838,009

Buildings - Factory 102,739,336 - - 102,739,336 20,646,637 3,460,887 - 24,107,524 78,631,812 82,092,699

Building - Office * 874,659 - - 874,659 178,531 14,257 - 192,788 681,871 696,128

Plant and Machinery # 247,183,647 61,150,079 1,273,791 307,059,935 62,630,828 23,274,284 856,034 85,049,078 222,010,857 184,552,819

Tools, Dies and Jigs # 16,800,908 5,851,966 - 22,652,874 10,742,497 1,364,675 - 12,107,172 10,545,702 6,058,411

Computers Hardware # 28,274,529 2,756,921 4,084,942 26,946,508 16,505,251 3,544,014 4,034,072 16,015,193 10,931,315 11,769,278

Vehicles ** 10,534,673 2,264,461 1,167,391 11,631,743 2,641,416 1,084,817 529,662 3,196,571 8,435,172 7,893,257

Office Equipment# 12,713,689 510,681 764,604 12,459,766 3,051,080 1,534,981 623,171 3,962,890 8,496,876 9,662,609

Furniture and Fixtures # 19,014,718 865,048 310,966 19,568,800 7,000,637 1,803,943 207,907 8,596,673 10,972,127 12,014,081

Intangible assets

Patent and Trademarks 129,719 - 89,719 40,000 128,310 762 89,719 39,353 647 1,409

Computer Software # 16,587,281 664,218 7,166,226 10,085,273 10,919,505 1,277,215 7,166,226 5,030,494 5,054,779 5,667,776

TOTAL 469,757,110 106,276,257 14,857,639 561,175,728 134,698,657 37,426,656 13,506,791 158,618,522 402,557,206 335,058,453

Previous Year 400,648,308 86,489,718 17,380,916 469,757,110 118,581,787 27,435,529 11,318,660 134,698,657

Capital Work-in-progress [including Capital Advances Rs. 5,005,177; (March 31, 2008 : Rs. 2,003,706)] 10,847,930 5,703,071

* Includes cost of shares in co-operative housing amounting to Rs. 500 (March 31, 2008: Rs. 500) 413,405,136 340,761,524

** Includes vehicles acquired on hire purchase Rs.4,393,873 (March 31, 2008: Rs. 5,955,365) # Includes Accelerated Depreciation Rs.4, 878, 921 (March 31, 2008: Rs. Nil) on assets which have lesser useful life than estimated.


71


March 31, 2009 March 31, 2008

Rupees Rupees

SCHEDULE 7 INVESTMENTS (Refer Note 1(E) on Schedule 20) Long Term (At Cost) (Quoted, Non Trade) Development Credit Bank Limited - 1,200 Equity Shares of Rs. 10 each 18,000 18,000

18,000 18,000

Aggregate of Quoted Investments - At Book Value

18,000

18,000

- At Market Value 22,668 102,480

SCHEDULE 8 INVENTORIES (Refer Note 1(F) on Schedule 20)

Raw Materials (including Packing Materials, Components and Processing Materials 54,577,084 41,430,719 (includes Goods in Transit Rs. 2,681,925; March 31, 2008: Rs. 806,116) Work-in-Progress 31,220,977 33,033,048 Finished Goods (includes Goods in Transit Rs. 1,307,616; March 31, 2008: Rs. 809,670) 15,709,369 11,928,989

Traded Goods 5,149,127 8,228,596

106,656,557 94,621,352 SCHEDULE 9 SUNDRY DEBTORS

(Unsecured, Considered Good) Outstanding for a period exceeding six months

18,078,478

15,981,034

Others 199,197,702 266,879,711

217,276,180

282,860,745 SCHEDULE 10 CASH AND BANK BALANCES Cash on Hand 115,277 291,271 Balances with Scheduled Banks on - Current Accounts 11,614,177 10,300,224

- Unclaimed Dividend Account

437,504

223,434

- Unclaimed Share Application Money on Rights Issue Account 5,160 5,160

- Deposit Accounts 25,530,519 9,848,600

(Includes deposits aggregating Rs. 9,848,600; (March 31, 2008: Rs. 9,848,600)

pledged with banks against bank guarantee) Balances with Others 1,470,310 703,914

39,172,947

21,372,603 SCHEDULE 11 OTHER CURRENT ASSETS Interest Accrued on Fixed Deposits 482,377 509,825

482,377 509,825


72


March 31, 2009 March 31, 2008

Rupees Rupees

SCHEDULE 12 LOANS AND ADVANCES Unsecured, Considered Good Advances Recoverable in Cash or in Kind or for Value to be Received 34,777,837 17,714,044

Deposits 14,057,856 10,998,834 Balances with Excise and Customs Authorities

3,174,562

9,974,701

Advance Fringe Benefit Tax (Net of Provision for Fringe Benefit 126,440 318,426 Tax Rs. 6,536,986; March 31, 2008: Rs. 4,895,000) 52,136,695 39,006,005

SCHEDULE 13 CURRENT LIABILITIES AND PROVISIONS Liabilities Dues to Micro and Small Enterprises 5,795,579 12,066,864 Dues to Other than Micro and Small Enterprises 174,480,087 176,976,024 Unclaimed Dividend* 437,504 223,434 Unclaimed Excess Share Application Money on Rights Issue*

5,160

5,160

Other Liabilities 10,477,671 9,556,301 Advances from Customers 3,432,547 2,554,622 * There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at March 31, 2009.

194,628,548

201,382,405 Provisions Leave Entitlement (Refer Note 1(I)(c) on Schedule 20) 5,676,282 4,348,565 Gratuity (Refer Note 1(I)(b) and 6 on Schedule 20) 7,811,139 5,828,256 Taxation (Net of Advance Tax and Tax Deducted at Source

2,890,964

3,649,178

Rs. 190,069,248; March 31, 2008: Rs. 147,063,159) Proposed Dividend 18,144,000 18,144,000 Corporate Tax on Dividend 3,083,573 3,083,573

37,605,958

35,053,572

232,234,506 236,435,977


73

SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

Year ended Year ended

March 31, 2009 March 31, 2008

Rupees Rupees SCHEDULE 14 SALES Sales - Manufacturing (Tax Deducted at Source Rs. 80,351; Previous Year Rs. 186,504) 1,495,192,426 1,420,304,950 Sales - Trading 66,442,295 58,003,681

1,561,634,721 1,478,308,631 SCHEDULE 15 OTHER INCOME Interest on - Fixed Deposits- Gross 996,197 1,501,790

(Tax Deducted at Source Rs. 225,738; Previous Year Rs. 339,044) - Deposits (Tax Deducted at Source Rs. Nil; Previous Year Rs.4,953) - 22,074 - Others 39,485 38,396

1,035,682 1,562,260 Sale of Scrap 10,644,803 6,884,873 Liabilities/ Provisions No Longer Required Written Back 1,418,643 939,874 Exchange Gain (Net) 4,063,402 - Miscellaneous 2,195,180 771,244

19,357,710 10,158,251 SCHEDULE 16 COST OF MATERIALS

Raw Materials (including packing materials, components and processing materials) consumed Opening Stock 41,430,719 28,031,797

Add : Purchases (Includes Job Work charges Rs. 47,504,734; Previous year Rs. 67,666,789) 829,253,462 800,868,669

870,684,181 828,900,466

Less : Closing Stock (includes Goods in Transit Rs. 2,681,925; Previous year Rs. 806,116) 54,577,084

41,430,719

816,107,097 787,469,747

(Increase) / Decrease in Work in progress and Finished Goods

Opening Stock Work-in-Progress 33,033,048 18,548,921

Finished Goods 11,928,989 958,422

44,962,037

19,507,343

Closing Stock Work-in-Progress 31,220,977 33,033,048

Finished Goods (includes Goods in Transit Rs.1,307,616; March 15,709,369 11,928,989

31, 2008: 809,670)

46,930,346 44,962,037

(1,968,309) (25,454,694) Traded Goods Opening Stock 8,228,596 7,022,983

Add Purchases 44,183,772 44,631,582

52,412,368 51,654,565

Less : Closing Stock 5,111,516

8,228,596

47,300,852 43,425,969

861,439,640 805,441,022


74

SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

Year ended Year ended

March 31, 2009 March 31, 2008

Rupees Rupees

SCHEDULE 17 EMPLOYEE COSTS Salaries and allowances, Wages and Bonus 132,801,401 114,436,995

Contribution to Provident Fund and Other Funds 9,250,425 10,119,067

(Refer Note 1(I) and 6 on Schedule 20) Staff Welfare 9,251,141 9,298,084

151,302,967 133,854,146

SCHEDULE 18 OPERATING AND OTHER EXPENSES Inward Freight 7,015,074 4,610,606

Casual Labour 17,378,775 20,290,541

Transportation 25,018,419 31,139,733

Consumables 8,103,383 8,071,010

Tools, Dies and Jigs for Replacements 3,477,382 4,503,669

Power, Fuel and Water 23,596,151 23,932,786

Insurance 2,487,915 3,239,501

Repairs and Maintenance - Buildings 954,377 2,402,711

- Plant and Machinery 13,269,893 5,977,817

- Others 13,621,226 11,229,835

Rent 17,941,184 11,341,120

Rates and Taxes

1,623,535

2,241,040

Communication 8,477,747 7,405,703

Printing and Stationery 2,292,599 2,011,709

Legal and Professional Fees 12,557,833 10,132,220

Directors' Sitting Fees

995,000

537,500

Travelling, Vehicle and Conveyance 15,614,218 14,962,224

Exchange Loss (net) - 3,136,332

Commission 4,121,436 6,533,692

Selling and Marketing 13,206,378 10,938,905

Website Development Expenses 66,500 20,000

Bad Debts 1,298,590 975,113

Loss on Sale/ Scrapping of Assets (net) 566,898 1,927,801

Miscellaneous 2,959,748 1,984,626

196,644,261 189,546,194

SCHEDULE 19

FINANCIAL EXPENSES Bank Charges 3,396,739 3,788,777

Interest On - Fixed Loans 4,835,522 5,997,190

- Others 4,490,269 2,609,017

12,722,530 12,394,984


75

20. NOTES TO ACCOUNTS


A. Basis of Accounting

The consolidated financial statements are prepared to comply in all material aspects with the applicable accounting principles in India and the applicable Accounting Standards issued by the Institute of Chartered Accountants of India.

B. Principles of Consolidation

(i) The consolidated financial statements relate to APW President Systems Limited (the Company) and its Subsidiary Company. The consolidated financial statements have been prepared on the following basis:

(a) The financial statements of the Company and its Subsidiary Company have been

combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances, intra-group transactions and resulting unrealised profits or losses on intra-group transactions.

(b) Minority Interest in the net assets of consolidated subsidiary consist of : - the amount of equity attributable to minorities at the date on which investment in a

subsidiary is made and - the minorities’ share of movements in equity since the date the parent subsidiary

relationship comes into existence (c) The consolidated financial statements have been prepared using uniform accounting

policies for like transactions and other events in similar circumstances and are prepared to the extent possible, in the same manner as the Company’s separate financial statements.

(ii) The Subsidiary Company considered in the consolidated financial statements is:

Name of the Company Relationship Country of Incorporation

% Voting power held as at March

31, 2009 APW Systems MEA (FZC) Subsidiary U. A .E- Dubai 96.00%

C. Fixed Assets

Fixed Assets are stated at cost of acquisition (including incidental expenses relating to acquisition and installation of the asset and borrowing costs specifically relatable to the acquisition of the asset) less accumulated depreciation.

D. Depreciation

Depreciation has been provided on straight line method at the rates prescribed under Schedule XIV to the Act except for demo stock capitalised which is depreciated @ 50% p.a. Assets individually costing Rs. 5,000 or less are depreciated fully in the year of acquisition.


76

E. Investments

Long term investments are stated at cost less provision, if any, for permanent diminution in value. Current investments are carried at the lower of cost and fair value.

F. Inventories

(a) Raw materials are valued at cost arrived at on first-in, first-out basis.

(b) Work-in-progress, finished goods and traded goods are valued at lower of cost (arrived at on first-in, first-out basis) and estimated net realisable value.

G. Foreign Currency Transactions




(d) In respect of forward contracts, other than forward contracts in respect of firm commitments and

highly probable forecast transactions, the premium or discount arising at the inception of forward exchange contract, is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Profit and Loss Account in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the year.

(e) In respect of non-integral foreign operation, assets and liabilities are translated using the exchange rates in effect at the balance sheet date, for revenue, cost and expenses using the average exchange rates prevailing during the reporting period and for share capital, using exchange rate at the date of transaction. The resultant translation exchange gain/loss has been disclosed as Foreign Exchange Translation Reserve under the head ‘Reserves and Surplus’.

H. Revenue Recognition

a. Sales are recognised based on the terms and conditions (mainly ex-works) agreed with the customer and upon transfer of ownership, risk and rewards. Sales include insurance, freight, packing and octroi and are exclusive of excise duty and sales tax.

b. In respect of commission and other heads of income, the Company follows the practice of recognising income on an accrual and prudent basis.

I. Employee Benefits

(a) Defined Contribution Plans The Company contributes on a defined contribution basis to Employee’s Provident Fund, Employee’s State Insurance Fund and Employee’s Pension Scheme towards post


77

employment benefits, all of which are administered by the respective Government authorities, and has no further obligation beyond making its contribution, which is expensed in the year to which it pertains.


The Company has a Defined Benefit Plan namely Gratuity for all its employees. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method.

Gratuity Fund is recognised by the income tax authorities and is administered through trustees. The Company has taken a group gratuity policy with Life Insurance Corporation of India (‘LIC’).

Actuarial gains and losses which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account.


The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilised leave balances is provided based on an actuarial valuation carried out by an independent actuary as at the year end and charged to the Profit and Loss Account. Leave balances to be utilised in short term is provided for on the basis of cost to company and charged to the profit & loss account.

J. Deferred Taxation

(a) Deferred tax resulting from timing differences between book and tax profits is accounted for

under the Liability method at the current rate of tax to the extent that the timing differences are expected to crystallise/capable of reversal.

(b) In case there are carried forward losses and unabsorbed depreciation as per the Income Tax

Act, 1961, of India, deferred tax assets are recognised only when there is a virtual certainty supported by convincing evidence that such assets will be realised.

K. Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

L. Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a


78

possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation but the likelihood of outflow of resources is remote, no provision or disclosure as specified in Accounting Standard 29 – “ Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of Chartered Accountants of India is made.

M. Use of Estimates

The preparation of consolidated financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialised.


(a) Contingent Liabilities

As at March 31,

2009 (Rupees)


(Rupees) Outstanding Bank Guarantees * 34,360,127

42,803,024

Claims against the Company not acknowledged as debts in respect of** :

- Income Tax matters - 4,040,454 - Sales Tax matters 10,558,107 5,947,117

- Others - 42,056 * All Bank Guarantees are Performance Bank Guarantees.

** The timing and the amount of cash flows, if any that may arise from the above matters will be determined only on settlement of the cases.

(b) Capital Commitments

Estimated amount of contracts remaining to be executed on Capital Account net of advances

55,784,652 23,992,386

(c) In accordance with the EPCG Scheme, imports of capital goods are allowed to be made duty

free subject to the condition that the Company will fulfill, in future, a specified amount of export obligation within a specified time. Based on the current operating plan, the Company would fulfill its export obligation within eight years of the date of the EPCG license, which is the specified time period. Amount of duty saved on imports of capital goods against which export obligation needs to be fulfilled as at March 31, 2009 aggregates Rs.10,642,791 (March 31, 2008: Rs.7,458,168).


79

3. Related Party Disclosures

(a) Related Party Disclosures as required by Accounting Standard 18, “Related Party Disclosures”, issued by the Council of the Institute of Chartered Accountants of India are given below:

i) Related Companies: M. Rutty & Co. Pty. Ltd. APW Electronics Ltd. APW Enclosures Systems (UK) Ltd. APW Integrated Systems Ltd. APW Poland Ltd. ii) Key Management Personnel E. A. Elias Sudhir Seth Ashok Kunte

This aforesaid list of related parties is limited to entities/persons with whom transactions have taken place. Other entities with whom there are no transaction have not been disclosed above.


80

SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009 AND CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2009

SCHEDULE 20 : NOTES TO ACCOUNTS

(b) Following are the transactions with related parties mentioned above and the year end balances (Amount in Rupees)

Particulars

Related Companies Key Management Personnel

M. Rutty & Co. Pty.

Ltd.

APW Electronics

Ltd.

APW Enclosures

Systems (UK) Ltd.

APW Poland

Ltd.

APW Integrated Systems

Ltd.

E. A. Elias

Sudhir Seth

Ashok Kunte

Transactions during the year Sales 3,437,814 - - - - - - -

6,991,529 - - - - - - -

Managerial Remuneration - - - - - 5,778,000

110,000

185,000

- - - - - 5,778,000 50,000

97,500

Liabilities/ Provisions No Longer Required Written Back - 25,573 878,512

5,597

38,579 - - -

- - - - - - - - Year-end balances

Payable - 289,509

245,665 - - - - -

- 226,457 1,102,388 4,933 41,254 - - 7,500

Receivable 988,478 - - - - - - -

1,881,902 - - - - - - -

Note : The figures in italics are in respect of the previous year ended March 31, 2008


81


Particulars As at March 31, 2009


Profit available to Equity Shareholders - Profit after Tax (A) (Rs.) 92,547,279 90,885,619

Number of Equity Shares

Weighted Number of equity shares outstanding during the year (B) 6,048,000 6,048,000

Basic and diluted earnings per share (A/B) (Rs.) 15.30 15.03 Nominal value of an equity share (Rs.) 10 10

5. (i) Hire Purchase /Lease Transactions

The Company has acquired Vehicles under Hire Purchase Scheme which expires on various dates upto September 5, 2011. The minimum lease payments and present value of minimum lease payments as at March 31, 2009 is as under:

(Rupees)

Description Not later than 1 year Later than 1 year and not later than 5 years

Later than 5 years

Total

MLP PV MLP PV MLP

PV MLP PV

Vehicles 976,347 805,871 1,080,455 995,339 - - 2,056,802 1,801,210 MLP: Minimum Lease Payments PV: Present Value

Lease expenses recognised during the year as interest Rs. 273,731 (Previous Year: Rs. 349,513).

(ii) Operating Lease Transactions

The Company has leased commercial facilities under non-cancellable operating lease. This lease expires on various dates upto September 11, 2011 and is renewable at the request of lessee by mutual agreement for a further period. The future minimum lease payments as at March 31, 2009 in respect of these are as follows:

Minimum Lease Payments Amount in

Rupees Not later than one year 7,089,000 Later than one year but not later than five years 900,000 Later than five years -

The lease expense incurred during the year amounts to Rs. 17,941,184 (Previous year: Rs. 11,341,120).


82

6

The Company has classified the various benefits provided to employees as under :-

I Defined Contribution Plans 2008-09 2007-08

a. Employers' Contribution to Provident Fund b. Employers' Contribution to Employee’s State Insurance c. Employers' Contribution to Employee’s Pension Scheme, 1995 During the year, the Company has recognised the following amounts in the Profit and Loss Account:* - Employers' Contribution to Provident Fund 3,049,854 3,236,381

- Employers' Contribution to Employee’s State Insurance 469,301 895,553

- Employers' Contribution to Employee’s Pension Scheme 2,360,501 2,127,885

* Included in Contribution to Provident and Other Funds (Refer Schedule 17) II Defined Benefit Plan 2008-09 2007-08

Contribution to Gratuity Fund (% p.a.) (% p.a.)

a. Major Assumptions Discount Rate 7.10 7.80

Expected Rate of Return on Plan Assets 7.50 7.50

Salary Escalation Rate 10.00 10.00

@ The estimates for future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

b. Change in the Present Value of Obligation Opening Present Value of Obligation 15,350,143 11,111,131

Current Service Cost 1,455,078 1,254,077

Interest Cost 1,191,582 838,482

Benefit paid (737,591) (417,002)

Actuarial Losses on Obligations 788,773 2,563,455

Closing Present Value of Obligation 18,047,985 15,350,143

c. Change in Fair Value of Plan Assets Opening Fair Value of Plan Assets 9,521,887 8,628,718

Expected Return on Plan Assets 712,002 670,014

Actuarial Gain on Plan Assets 160,626 126,752

Contributions 730,836 513,405

Benefits paid (737,591) (417,002)

Closing Fair Value of Plan Assets 10,387,760 9,521,887

d. Reconciliation of Present Value of Defined Benefit Obligation and the Fair Value of Assets

Present Value of Funded Obligation 18,047,985 15,350,143


Funded Status (7,660,225) (5,828,256)

Present Value of Unfunded Obligation 7,660,225 5,828,256

Unfunded Net Liability Recognised in the Balance Sheet disclosed under Current Liabilities and Provisions (Refer Schedule 13) 7,660,225 5,828,256

e. Amount recognised in the Balance Sheet Present Value of Obligation 18,047,985 15,350,143


Liability Recognised in the Balance Sheet and disclosed under Current Liabilities and Provisions (Refer Schedule 13)

7,660,225 5,828,256

f. Expenses Recognised in the Profit and Loss Account Current Service Cost 1,455,078 1,254,077

Interest Cost 1,191,582 838,482

Expected Return on Plan Assets (712,002) (670,014)

Net Actuarial Losses Recognised in the period 628,147 2,436,703

Total expenses Recognised in the Profit and Loss Account ** 2,562,805 3,859,248

Actual Return on Plan Assets 872,628 796,766

** Included in Contribution to Provident and Other Funds (Refer Schedule 17)


83

20. NOTES TO ACCOUNTS (Continued) 7. Segmental Reporting The business segment has been considered as the primary segment. The Company is organised into one main business segment, namely ‘Enclosures, Card Frames, Instrument Case and Consoles’. The business segments have been identified considering the nature of services, the differing risks and returns, the organisation structure and the internal financial reporting system. Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis. (i) Primary Segment (Amount in Rs.)


April 1, 2008 to

April 1, 2007 to April 1, 2008 to April 1, 2007

to April 1, 2008

to April 1, 2007

to April 1, 2008

to April 1, 2007

to

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

Revenue - External sales (including scrap sales) 1,308,062,009 1,237,807,368 64,194,068 55,862,552 1,372,256,077 1,293,669,920 - Commission and Service Charges - - 14,340,884 19,134,566 14,340,884 19,134,566 Total 1,308,062,009 1,237,807,368 78,534,952 74,997,118 1,386,596,961 1,312,804,486 Results Segment Result – Profit/ (Loss) 251,897,316 242,213,758 21,431,000 24,579,456 273,328,316 266,793,214 - Unallocable corporate expenses net of income 128,697,495 110,415,477 128,697,495 110,415,477

Operating Profits - (Gain)/Loss on sale of Fixed Assets 566,898 1,927,801 566,898 1,927,801 - Interest expense 9,325,791 8,606,207 9,325,791 8,606,207 - Interest income 1,035,682 1,562,260 1,035,682 1,562,260 Profit Before Taxation 135,773,814 147,405,989 - Income Taxes 42,251,000 45,200,000 42,251,000 45,200,000 - Fringe Benefit Tax 1,641,986 1,750,000 1,641,986 1,750,000 - Deferred Tax (684,145) 9,588,976 (684,145) 9,588,976 Net Profit 92,564,973 90,867,013









Other Information - Segment assets 762,206,941 717,271,231 32,576,556 27,488,756 794,783,497 744,759,987 - Unallocated corporate assets 34,364,395 34,390,067 34,364,395 34,390,067 Total assets 829,147,892 779,150,054 - Segment liabilities 186,474,580 287,654,822 19,174,887 5,382,199 205,649,467 293,037,021 - Unallocated corporate liabilities 154,685,422 88,960,659 154,685,422 88,960,659 Total liabilities 360,334,889 381,997,680 Capital expenditure 107,819,112 83,046,600 58,691 3,602,004 7,556,226 111,421,116 90,661,517 Depreciation 32,899,738 24,269,322 80,762 53,872 4,446,156 3,112,335 37,426,656 27,435,529


84

20. NOTES TO ACCOUNTS (Continued) (ii) Geographical Segment

Particulars India Outside India Total

April 1, 2008 to March 31, 2009

April 1, 2007 to March 31, 2008

April 1, 2008 to March 31, 2009

April 1, 2007 to March 31, 2008

April 1, 2008 to March 31, 2009

April 1, 2007 to March 31, 2008

Revenue

- External sales 1,240,351,400 1,200,285,146 131,904,677 93,384,774 1,372,256,077 1,293,669,920

- Commission and Service Charges 1,119,401 538,148 13,221,483 18,596,418 14,340,884 19,134,566

Total 1,241,470,801 1,200,823,294 145,126,160 111,981,192 1,386,596,961 1,312,804,486







Other Information

Carrying Amount of Segment Assets 806,521,561 744,803,272 22,626,332 34,346,781 829,147,892 779,150,054

Capital Expenditure 111,421,116 90,617,619 - 43,898 111,421,116 90,661,517

(iii) Notes:

(a) The Segment Revenue revenue in the geographical segments considered for disclosure are as follows:

- Revenue within India includes sales to customers located within India and earnings in India.

- Revenue outside India includes sales to customers located outside India, earnings outside India and export benefits on sales made to customers located outside India.



85

8. The Company uses forward contracts to hedge its risks of net exposure associated with foreign currency fluctuations. The Company does not enter into any forward contract which is intended for trading or speculative purposes.

(a) Derivative Instruments – Outstanding as at year-end forward exchange contracts to hedge the foreign currency exposure for payments to be made against imports:

No. of Open Contracts as at March 31, 2009

Foreign Currency Denomination



5 EURO 150,000 10,040,750

1 USD 25,000 1,251,000

(b) The foreign currency exposures that have not been hedged by any derivative instrument or otherwise as at March 31, 2009 are as follows:

Particulars Foreign Currency Denomination



Liabilities (Trade Payables)

USD 189,431.99 9,689,446 EURO 21,782.90 1,484,069 GBP 66,834.49 4,910,998

Total 16,384,513 Assets (Trade Receivables)

USD 262,672.13 13,314,850 EURO 97,115.00 6,499,907 GBP 13,343.00 964,966 AUS 28,053.72 973,745

Total 21,753,468

Refer Note 1(G) above for accounting policy on Foreign Currency Transactions.

9. Previous period figures have been regrouped and rearranged, whenever necessary.

Signatures to Schedules 1 to 20 forming part of the Accounts

For and on behalf of the Board Partha Ghosh E. A. Elias Sudhir Seth Partner Managing Director Director Membership No. F55913 For and on behalf of Price Waterhouse Chartered Accountants A. D. Kunte Shailesh Hemani Director Director K. K. Bhavsar Company Secretary Mumbai, May 19, 2009 Mumbai, May 19, 2009


86

B. LIMITED REVIEW REPORT FOR THE SIX MONTHS PERIOD ENDED 30/09/2009

Limited Review Report for the Period from April 1, 2009 to September 30, 2009 on the Interim Unconsolidated Financial Statements

For the kind attention of the Board of Directors APW President Systems Limited R-2, Technopolis Knowledge Park Mahakali Caves Road Andheri (East) Mumbai 400 093 1. We have reviewed the accompanying un-audited Condensed Balance Sheet of APW President Systems

Limited (the “Company”) as at September 30, 2009, and the related un-audited Condensed Profit and Loss Accounts and Condensed Cash Flow Statement for the six month ended on that date annexed thereto (all of which are hereinafter referred to as the ‘‘Statement’’), which we have initialled for identification purposes. The Statement is the responsibility of the Company’s management and has been approved by the Board of Directors. Our responsibility is to issue a report on the Statement based on our review of the Statement, which has been prepared by the Company’s management pursuant to Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 [“SEBI (ICDR) Regulations 2009”)], in accordance with Accounting Standard 25 (“AS 25”) on Interim Financial Reporting, and other applicable accounting standards, notified under the Companies (Accounting Standards) Rules, 2006.

2. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2400 -

Engagements to Review Financial Statements - issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A limited review of interim financial statements consists principally of applying analytical procedures to financial data and making enquiries of Company personnel responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards followed in India, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

3. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the

Statement, prepared fairly in all material respects in accordance with AS 25, has not disclosed the information required to be disclosed in terms of AS 25 read with Paragraph A (3) in Clause X in Part E of SEBI (ICDR) Regulations 2009, or that it contains any material misstatement.

4. This report is intended solely for the use of the Company for filing with Securities and Exchange Board of

India and Registrar of Companies in connection with the proposed rights issue of equity shares of the Company under SEBI (ICDR) Regulations 2009. We do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Sd/-

Neeraj Gupta Partner


Place: Mumbai Price Waterhouse Date: December 16, 2009 Chartered Accountants


87

UN-AUDITED CONDENSED BALANCE SHEET AS AT SEPTEMBER 30, 2009

September 30, 2009 March 31, 2009 SOURCES OF FUND Rupees Rupees Shareholders’ Funds Capital 60,480,000 60,480,000 Reserves & Surplus 455,161,322 408,108,097 515,641,322 468,588,097 Loan Funds Secured Loans 181,416,310 79,034,223 Unsecured Loans 8,880,000 13,320,000 190,296,310 92,354,223 Deferred Tax Liability (Net) 37,680,504 35,664,425 Total 743,618,136 596,606,746 APPLICATION OF FUNDS Fixed assets Gross Block 619,121,508 561,131,830 Less : Depreciation 176,151,415 158,590,471 Net Block 442,970,093 402,541,359 Capital Work-in-progress 9,640,266 10,847,930 452,610,359 413,389,289 Investments 1,754,713 1,754,713 Current Assets, Loans and Advances Inventories 140,191,906 106,247,278 Sundry Debtors 399,406,875 217,212,588 Cash and Bank Balances 12,607,679 37,693,557 Other Current Assets 167,025 482,377 Loans and Advances 74,930,520 51,995,275 627,304,005 413,631,075 Less: Current Liabilities and Provisions Liabilities 322,079,586 194,713,287 Provisions 15,971,355 37,455,044 338,050,941 232,168,331 Net Current Assets 289,253,064 181,462,744 Total 743,618,136 596,606,746 Notes to accounts annexed hereto from part of Condensed Balance Sheet and Condensed Consolidated Profit and Loss Account

For and behalf of the Board

Sd/- A.D. KUNTE Director Mumbai, December 16, 2009

Sd/-

For Identification Price Waterhouse


88

UN-AUDITED CONDENSED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 2009

Sr. No.

Particulars For the six month period ended

September 30, 2009 1 Net Sales 755,661,741 2 Other Operating Income 8,003,031 3 Total Income (1+2) 763,664,772 4 Total Expenditure: a) (Increase)/decrease in Stock in trade (16,031,357) b) Consumption of raw materials 481,825,395 c) Purchase of Traded Goods 24,673,925 d) Staff Cost 83,508,390 e) Depreciation (including amortization) 17,597,515 f) Other Expenditure 99,518,122 g) Total 691,091,990

5 Profit from Operations before Other Income, Interest and Exceptional Items (3-4) 72,572,782 6 Other Income 6,190,686 7 Profit before Interest and Exceptional Items (5+6) 78,763,468 8 Interest 6,119,165 9 Profit after Interest but before Exceptional Items (7-8) 72,644,303 10 Exceptional Items - 11 Profit (+)/Loss(-) from Ordinary Activities before tax (9-10) 72,644,303 12 Provision for Taxation

a. Current Tax 23,575,000 b. Deferred Tax 2,016,078 c. Fringe Benefit Tax - Total 25,591,078

13 Net Profit from Ordinary Activities after Tax (11-12) 47,053,225 14 Extraordinary Items (net of tax expenses) - 15 Net Profit (+) / Loss (-) for the period (13-14) 47,053,225 16 Earning Per Share (EPS) in Rs.

a. Basic and Diluted EPS before Extraordinary Items 7.78* b. Basic and Diluted EPS after Extraordinary Items 7.78* (*Not annualized) Notes to accounts annexed hereto from part of Condensed Consolidated Balance

Sheet and Condensed Consolidated Profit and Loss Account



Sd/-



89

UN-AUDITED CONDENSED CASHFLOW STATEMENT

FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 2009

Sr. No.

Particulars For the six month period ended September 30, 2009

1 Cash used in Operating activities (39,663,810) 2 Cash used in Investing activities (56,033,872) 3 Cash flow from Financing activities 70,611,804 4 Net Increase / (decrease) in cash and cash equivalents (1+2+3) (25,085,878) 5 Cash and cash equivalent at the beginning of period 37,693,557 6 Cash and cash equivalent at the end of period 12,607,679 Notes on Cash Flow Statement: 1. The above condensed Cash Flow Statement has been prepared in the manner setout in Accounting

Standard 25-Interim Financial Reporting specified in Companies (Accounting Standard) Rule, 2006. 2. Cash and Cash Equivalents represent Cash and Bank Balances only.



Sd/-



90

NOTES TO ACCOUNTS FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 2009


A. Basis of Preparation

The financial statements are prepared to comply in all material aspects with Accounting Standard 25 - Interim Financial Reporting, and other applicable accounting standards notified under Section 211(3C) of the Companies Act, 1956.

B. Fixed Assets


C. Depreciation

Depreciation is provided on straight line method at the rates prescribed under Schedule XIV to the Act, except for capitalised demo stock, which is depreciated @ 50% p.a. Assets individually costing Rs. 5,000 or less are depreciated fully in the year/ period of acquisition.

D. Investments Long term investments are stated at cost less provision, if any, for diminution other than temporary in the value of investment.

E. INVENTORIES

(a) Raw materials are valued at cost; arrived at on first-in, first-out basis.

(b) Work-in-progress, finished goods and traded goods are valued at lower of cost (arrived at on first-in, first-out basis) and estimated net realisable value.

F. Foreign Currency Transactions




(d) In respect of forward contracts, other than forward contracts in respect of firm commitments and highly probable forecast transactions, the premium or discount arising at the inception of forward exchange contract, is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Profit and Loss Account in the


91

reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the period.

(e) Any profit or loss arising on settlement or cancellation of other derivative contracts (forward contracts in respect of firm commitments and highly probable forecast transactions, swaps and currency options) is recognised as income or expense for the year. Pursuant to the Institute of Chartered Accountants of India’s announcement ‘Accounting for Derivatives’, the Company mark-to-market all such outstanding derivative contracts at the year-end and the resulting mark-to-market losses, if any, are recognised in the Profit and Loss Account.

G. Revenue Recognition

(a) Sales are recognised based on the terms and conditions (mainly ex-works) agreed with the customer and upon transfer of ownership, risk and rewards. Sales include insurance, freight, packing and octroi and are exclusive of excise duty and sales tax.

(b) In respect of commission and other heads of income, the Company follows the practice of recognising income as earned.

H. Employee Benefits

(a) Defined Contribution Plans

The Company contributes on a defined contribution basis to Employee’s Provident Fund, Employee’s State Insurance Fund and Employee’s Pension Scheme towards post employment benefits, all of which are administered by the respective Government authorities, and has no further obligation beyond making its contribution, which are expensed in the year/ period to which these pertain.


The Company has a Defined Benefit Plan, namely Gratuity, for all its employees. The liability for the defined benefit plan of Gratuity is determined on the basis of actuarial valuation by an independent actuary at the year/ period end, which is estimated using projected unit credit method. Gratuity Fund is recognised by the income tax authorities and is administered through trustees. The Company has taken a group gratuity policy with Life Insurance Corporation of India (‘LIC’).

Actuarial gains and losses, which comprise experience adjustment and the effect of changes in actuarial assumptions, are recognised in the Profit and Loss Account.


The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilised leave balances is provided based on actuarial valuation carried out by an independent actuary as at the year/ period end and charged to the Profit and Loss Account. Leave balances to be utilised in short term is provided for on the basis of cost to company and charged to the Profit and Loss Account.


92

I. Deferred Taxation (a) Deferred tax resulting from timing differences between book and tax profits is accounted for

under the liability method at the current rate of tax to the extent that the timing differences are expected to crystallise/capable of reversal.



J. Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

K. Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation but the likelihood of outflow of resources is remote, no provision or disclosure as specified in Accounting Standard 29 – Provisions, Contingent Liabilities and Contingent Assets is made.

L. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialised.


September 30, 2009 (Rupees)


(a) Contingent Liabilities Outstanding Bank Guarantees * 12,189,917 34,360,127

Claims against the Company not acknowledged as debts in respect of**

- Sales Tax matters 40,804,605 10,558,107 - Others 1,31,716 -

* All Bank Guarantees are Performance Bank Guarantees. ** The timing and the amount of cash flows, if any that may arise from the above matters will be determined only on settlement of the cases.


93


Estimated amount of contracts remaining to be executed on Capital Account (net of advances)

22,085,328

55,784,652

(c) In accordance with the EPCG Scheme, imports of capital goods are allowed to be made duty

free subject to the condition that the Company will fulfil, in future, a specified amount of export obligation within a specified time. The Company has fulfilled its export obligation within the specified time period of eight year of the date of the EPCG Licenses. Amount of duty saved on imports of capital goods against which export obligation needs to be fulfilled as at September 30, 2009 aggregates as Rs. NIL (March 31, 2009 : Rs. 10,642,791). The Company has filed the application for closure of the licences for which confirmation from the Director General of Foreign Trade (DGFT) is yet to be received.

Sd/-



94

NOTES TO ACCOUNTS FOR SIX MONTH PERIOD ENDED SEPTEMBER 30, 2009 3. Segmental Reporting The business segment has been considered as the primary segment. The Company is organised into one main business segment, namely ‘Enclosures, Card Frames, Instrument Case and Consoles’. The business segments have been identified considering the nature of services, the differing risks and returns, the organisation structure and the internal financial reporting system. Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis. (i) Primary Segment

(Rupees)


April 1, 2009 to

September 30, 2009 April 1, 2009 to



September 30, 2009 Revenue - External sales (including scrap sales) 733,148,407 26,890,662 760,039,069 - Commission and Service Charges - 3,625,703 3,625,703 Total 733,148,407 30,516,365 763,664,772 Results Segment Result – Profit/ (Loss) 141,294,097 3,852,172 145,146,269 - Unallocable corporate expenses net of income 66,852,162 66,852,162 Operating Profits - (Gain)/Loss on sale of Fixed Assets 114,060 114,060 - Interest expense 6,119,165 6,119,165 - Interest income 583,421 583,421 Profit Before Taxation 72,644,303 - Income Taxes 23,575,000 23,575,000 - Fringe Benefit Tax - - - Deferred Tax 2,016,078 2,016,078 Net Profit 47,053,225

As at September 30, 2009 As at September 30, 2009 As at September 30, 2009 As at September 30, 2009

Other Information - Segment assets 1,031,276,284 14,565,153 - 1,045,841,437

762,206,941 32,203,741 - 794,410,682 - Unallocated corporate assets - - 35,827,640 35,827,640

- - 34,364,395 34,364,395 Total assets 1,081,669,077

828,775,077 - Segment liabilities 335,025,634 (17,224,318) - 317,801,316

186,474,580 19,026,979 - 205,501,559 - Unallocated corporate liabilities - - 248,226,439 248,226,439

- - 154,685,422 154,685,422 Total liabilities 566,027,755

360,186,981 Capital expenditure 55,655,981 - 1,281,664 56,937,645

107,819,112 - 3,602,004 111,421,116 Depreciation 15,847,706 15,290 1,734,519 17,597,515


95

NOTES TO ACCOUNTS FOR SIX MONTH PERIOD ENDED SEPTEMBER 30, 2009 (ii) Geographical Segment

(Rupees)

Particulars India Middle-East* Others** Total

April 1, 2009 to




September 30, 2009 Revenue - External sales 676,302,998 33,942,787 49,793,284 760,039,069 - Commission and Service Charges 1,496,654 - 2,129,049 3,625,703 Total 677,799,652 33,942,787 51,922,333 763,664,772

As at September 30, 2009 As at September 30, 2009 As at September 30, 2009 As at September 30, 2009

Other Information Carrying Amount of Segment Assets 1,036,335,877 18,733,611 26,599,589 1,081,669,077

808,178,834 5,735,830 14,860,413 828,775,077

Capital Expenditure 56,937,645 - - 56,937,645

111,421,116 - - 111,421,116

* Represents United Arab Emirates, Kuwait and Oman ** Represents Australia, United States of America, China, Singapore, Japan, Hong Kong, United Kingdom, Egypt, Israel and Tunisia (iii) Notes:

(a) The Segment Revenue in the geographical segments considered for disclosure are as follows: - Revenue within India includes sales to customers located within India and earnings in India. - Revenue outside India includes sales to customers located outside India, earnings outside India and export benefits on sales made to

customers located outside India.


(c) The figures in italics represent the Balance Sheet amount of previous year ended March 31, 2009.


96


* Not Annualised

5. Comparative figures for previous period in respect of the Condensed Profit and Loss Account and Condensed Cash Flow statement have not been included as this is the first occasion that un-audited Condensed Financial Statements as per AS 25 have been presented by the Company.



Sd/-


Particulars September 30, 2009 Profit available to Equity

Shareholders

- Profit after Tax (A) (Rupees) 47,053,225

Number of Equity Shares - Weighted Number of equity shares outstanding during

the year (B) 6,048,000

Basic and diluted earnings per share (A/B) (Rs.) 7.78* Nominal value of an equity share (Rupees) 10


97

Limited Review Report for the Period from April 1, 2009 to September 30, 2009 on the Interim Consolidated Financial Statements

For the kind attention of the Board of Directors

APW President Systems Limited R-2, Technopolis Knowledge Park Mahakali Caves Road Andheri (East) Mumbai 400 093

1. We have reviewed the accompanying un-audited Condensed Consolidated Balance Sheet of APW President Systems Limited (the “Company”) and its subsidiary (hereinafter together referred to as the “Group”) as at September 30, 2009, and the related un-audited Condensed Consolidated Profit and Loss Account and un-audited Condensed Consolidated Cash Flow Statement for the six month ended on that date annexed thereto (all of which are hereinafter referred to as the ‘‘Consolidated Statement’’), which we have initialled for identification purposes. The Consolidated Statement is the responsibility of the Company’s management and has been approved by the Board of Directors. Our responsibility is to issue a report on the Consolidated Statement based on our review of the Consolidated Statement, which has been prepared by the Company’s management on the basis of separate financial statements and other financial information regarding components pursuant to Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 [“SEBI (ICDR) Regulations 2009”)], in accordance with Accounting Standard 25 (“AS 25”) on Interim Financial Reporting, and other applicable accounting standards, notified under the Companies (Accounting Standards) Rules, 2006.

2. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2400 - Engagements to Review Financial Statements - issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A limited review of interim financial statements consists principally of applying analytical procedures to financial data and making enquiries of Company personnel responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards followed in India, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

3. We did not review the financial statements of the subsidiary company, which reflect total assets of Rs. 3,798,614 as at September 30, 2009, and total revenues of Rs. 1,716,370 and net cash outflow aggregating Rs. 230,853 for the six month ended on that date, considered in the Consolidated Statement. The financial statements of the subsidiary has been audited by other auditors who expressed an unqualified opinion on those financial statements on October 27, 2009, and our review in so far as it relates to the amounts included in respect of the subsidiary is based solely on the report of other auditor.

4. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the Consolidated Statement, prepared fairly in all material respects in accordance with AS 25, has not disclosed the information required to be disclosed in terms of AS 25 read with Paragraph A (3) in Clause X in Part E of SEBI (ICDR) Regulations 2009, or that it contains any material misstatement.

5. This report is intended solely for the use of the Company for filing with Securities and Exchange Board of India and Registrar of Companies in connection with the proposed rights issue of equity shares of the Company under SEBI (ICDR) Regulations 2009. We do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Sd/-

Neeraj Gupta Partner


Place: Mumbai Price Waterhouse Date: December 16, 2009 Chartered Accountants


98

UN-AUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 2009

September 30, 2009 March 31, 2009 SOURCES OF FUND Rupees Rupees Shareholders’ Funds Capital 60,480,000 60,480,000 Reserves & Surplus 454,501,290 408,333,003 514,981,290 468,813,003 Minority Interest 44,887 81,734 Loan Funds Secured Loans 181,416,310 79,034,223 Unsecured Loans 8,880,000 13,320,000 190,296,310 92,354,223 Deferred Tax Liability (Net) 37,680,504 35,664,426 Total 743,002,991 596,913,386 APPLICATION OF FUNDS Fixed assets Gross Block 619,165,406 561,175,728 Less depreciation 176,183,702 158,618,522 Net Block 442,981,704 402,557,206 Capital Work-in-progress 9,640,266 10,847,930 452,621,970 413,405,136 Investments 18,000 18,000 Current Assets, Loans and Advances Inventories 140,656,850 106,656,557 Sundry Debtors 400,958,982 217,276,180 Cash and Bank Balances 13,856,216 39,172,947 Other Current Assets 167,025 482,377 Loans and Advances 74,872,061 52,136,695 630,511,134 415,724,756 Less: Current Liabilities and Provisions Liabilities 323,981,455 194,628,548 Provisions 16,166,658 37,605,958 340,148,113 232,234,506 Net Current Assets 290,363,021 183,490,250 Total 743,002,991 596,913,386 Notes to accounts annexed hereto from part of Condensed Consolidated Balance Sheet and Condensed Consolidated Profit and Loss Account



Sd/-



99

UN-AUDITED CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 2009

Sr. No

. Particulars

For the six month period ended

September 30, 2009 1 Net Sales 757,378,111 2 Other Operating Income 8,003,031 3 Total Income (1+2) 765,381,142 4 Total Expenditure: h) (Increase)/decrease in Stock in trade (16,087,022) i) Consumption of raw materials 481,825,395 j) Purchase of Traded Goods 26,315,187 k) Staff Cost 86,158,475 l) Depreciation (including amortization) 17,601,752 m) Other Expenditure 97,840,551 n) Total 693,654,338 5 Profit from Operations before Other Income, Interest and Exceptional Items (3-4) 71,726,804 6 Other Income 6,164,827 7 Profit before Interest and Exceptional Items (5+6) 77,891,631 8 Interest 6,119,165 9 Profit after Interest but before Exceptional Items (7-8) 71,772,466

10 Exceptional Items - 11 Profit (+)/Loss(-) from Ordinary Activities before tax (9-10) 71,772,466 12 Provision for Taxation

d. Current Tax 23,575,000 e. Deferred Tax 2,016,078 f. Fringe Benefit Tax - Total 25,591,078

13 Net Profit from Ordinary Activities after Tax (11-12) 46,181,388 14 Extraordinary Items (net of tax expenses) - 15 Net Profit (+) / Loss (-) for the period before Minority Interest (13-14) 46,181,388 16 Minority Interest (Loss) / Profit (33,726) 17 Net Profit / (Loss) for the period after Minority Interest 46,215,114 18 Earning Per Share (EPS) in Rs.

c. Basic and Diluted EPS before Extraordinary Items 7.64* d. Basic and Diluted EPS after Extraordinary Items 7.64* (*Not annualized) Notes to accounts annexed hereto from part of Condensed Consolidated Balance

Sheet and Condensed Consolidated Profit and Loss Account



Sd/-



100

UN-AUDITED CONDENSED CONSOLIDATED CASHFLOW STATEMENT FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 2009

Sr. No.

Particulars For the six month period ended September 30, 2009

1 Cash used in Operating activities (39,894,663) 2 Cash used in Investing activities (56,033,872) 3 Cash flow from Financing activities 70,611,804 4 Net Increase / (decrease) in cash and cash equivalents (1+2+3) (25,316,731) 5 Cash and cash equivalent at the beginning of period 39,172,947 6 Cash and cash equivalent at the end of period 13,856,216

Notes on Cash Flow Statement: 1. The above Condensed Consolidated Cash Flow Statement has been prepared in the manner setout in Accounting Standard 25-Interim Financial Reporting specified in Companies (Accounting Standard) Rule, 2006. 2. Cash and Cash Equivalents represent Cash and Bank Balances only.



Sd/-



101

NOTES TO ACCOUNTS FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 2009


A. Basis of Preparation

The consolidated financial statements are prepared to comply in all material aspects with Accounting Standard 25 - Interim Financial Reporting, and other applicable accounting standards notified under Section 211(3C) of the Companies Act, 1956.

B. Principles of Consolidation

(i) The consolidated financial statements relate to APW President Systems Limited (the Company) and its Subsidiary Company. The consolidated financial statements have been prepared on the following basis:

(a) The financial statements of the Company and its Subsidiary Company have been

combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances, intra-group transactions and resulting unrealised profits or losses on intra-group transactions.

(b) Minority Interest in the net assets of consolidated subsidiary consist of :

- the amount of equity attributable to minorities at the date on which investment in a subsidiary is made and

- the minorities’ share of movements in equity since the date the parent - subsidiary relationship comes into existence

(c) The consolidated financial statements have been prepared using uniform accounting

policies for like transactions and other events in similar circumstances and are prepared to the extent possible, in the same manner as the Company’s separate financial statements.

(ii) The Subsidiary Company considered in the consolidated financial statements is:

Name of the Company Relationship Country of Incorporation

% Voting power held as at September 30, 2009

APW Systems MEA (FZC) Subsidiary U. A .E- Dubai 96.00%

C. Fixed Assets


D. Depreciation

Depreciation is provided on straight line method at the rates prescribed under Schedule XIV to the Act, except for capitalised demo stock, which is depreciated @ 50% p.a. Assets individually costing Rs. 5,000 or less are depreciated fully in the year/ period of acquisition.


102

E. Investments

Long term investments are stated at cost less provision, if any, for diminution other than temporary in the value of investment.

F. INVENTORIES

(a) Raw materials are valued at cost; arrived at on first-in, first-out basis. (b) Work-in-progress, finished goods and traded goods are valued at lower of cost (arrived at

on first-in, first-out basis) and estimated net realisable value.

G. Foreign Currency Transactions




(d) In respect of forward contracts, other than forward contracts in respect of firm commitments

and highly probable forecast transactions, the premium or discount arising at the inception of forward exchange contract, is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Profit and Loss Account in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the period.

(e) Any profit or loss arising on settlement or cancellation of other derivative contracts (forward contracts in respect of firm commitments and highly probable forecast transactions, swaps and currency options) is recognised as income or expense for the year. Pursuant to the Institute of Chartered Accountants of India’s announcement ‘Accounting for Derivatives’, the Company mark-to-market all such outstanding derivative contracts at the year-end and the resulting mark-to-market losses, if any, are recognised in the Profit and Loss Account.

(f) In respect of non-integral foreign operation, assets and liabilities are translated using the exchange rates in effect at the balance sheet date, for revenue, cost and expenses using the average exchange rates prevailing during the reporting period and for share capital, using exchange rate at the date of transaction. The resultant translation exchange gain/loss has been disclosed as Foreign Exchange Translation Reserve under the head ‘Reserves and Surplus’.


103

H. Revenue Recognition

(a) Sales are recognised based on the terms and conditions (mainly ex-works) agreed with the customer and upon transfer of ownership, risk and rewards. Sales include insurance, freight, packing and octroi and are exclusive of excise duty and sales tax.

(b) In respect of commission and other heads of income, the Company follows the practice of recognising income as earned.

I. Employee Benefits

(a) Defined Contribution Plans The Company contributes on a defined contribution basis to Employee’s Provident Fund, Employee’s State Insurance Fund and Employee’s Pension Scheme towards post employment benefits, all of which are administered by the respective Government authorities, and has no further obligation beyond making its contribution, which are expensed in the year/ period to which these pertain.


The Company has a Defined Benefit Plan, namely Gratuity, for all its employees. The liability for the defined benefit plan of Gratuity is determined on the basis of actuarial valuation by an independent actuary at the year/ period end, which is estimated using projected unit credit method.

Gratuity Fund is recognised by the income tax authorities and is administered through trustees. The Company has taken a group gratuity policy with Life Insurance Corporation of India (‘LIC’).

Actuarial gains and losses, which comprise experience adjustment and the effect of changes in actuarial assumptions, are recognised in the Profit and Loss Account.


The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilised leave balances is provided based on actuarial valuation carried out by an independent actuary as at the year/ period end and charged to the Profit and Loss Account. Leave balances to be utilised in short term is provided for on the basis of cost to company and charged to the Profit and Loss Account.

J. Deferred Taxation

(a) Deferred tax resulting from timing differences between book and tax profits is accounted for

under the liability method at the current rate of tax to the extent that the timing differences are expected to crystallise/capable of reversal.




104

K. Impairment of Assets The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

L. Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation but the likelihood of outflow of resources is remote, no provision or disclosure as specified in Accounting Standard 29 – Provisions, Contingent Liabilities and Contingent Assets is made.

M. Use of Estimates The preparation of consolidated financial statements requires estimates and assumptions to

be made that affect the reported amounts of assets and liabilities on the date of consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialised.


* All Bank Guarantees are Performance Bank Guarantees. ** The timing and the amount of cash flows, if any that may arise from the above matters will be determined only on settlement of the cases.


(c) In accordance with the EPCG Scheme, imports of capital goods are allowed to be made duty free subject to the condition that the Company will fulfil, in future, a specified amount of export obligation within a specified time. The Company would fulfil its export obligation within eight years of the date of the EPCG license, which is the specified time period. Amount of duty saved on imports of capital goods against which export obligation needs to be fulfilled as at September 30, 2009 aggregates as NIL (March 31, 2009: Rs. 10,642,791). The Company has filed the application for closure of the Licence for which confirmation from Director General of Foreign Trade (DGFT) is yet to be received.

(a) Contingent Liabilities

September 30, 2009 (Rupees)


Outstanding Bank Guarantees * 12,189,917 3,436,0127 Claims against the Company not acknowledged as debts in respect of** :

- Sales Tax matters 40,804,605 1,0558,107 - Others 1,31,176 -

Estimated amount of contracts remaining to be executed on Capital Account (net of advances)

22,085,328 55,784,652


105

3. Segmental Reporting The business segment has been considered as the primary segment. The Company is organised into one main business segment, namely ‘Enclosures, Card Frames, Instrument Case and Consoles’. The business segments have been identified considering the nature of services, the differing risks and returns, the organisation structure and the internal financial reporting system. Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

(i) Primary Segment (Rupees)

Particulars Enclosures, Card Frames,

Instrument Case and Consoles

Others Unallocable Total

April 1, 2009 to September 30, 2009




Revenue - External sales (including scrap sales) 733,148,407 28,607,032 761,755,439 - Commission and Service Charges - 3,625,703 3,625,703 Total 733,148,407 32,232,735 765,381,142 Results Segment Result – Profit/ (Loss) 141,294,098 2,980,334 144,274,432 - Unallocable corporate expenses net of income 66,852,162 66,852,162

Operating Profits - (Gain)/Loss on sale of Fixed Assets 114,060 114,060 - Interest expense 6,119,165 6,119,165 - Interest income 583,421 583,421 Profit Before Taxation 71,772,466 - Income Taxes 23,575,000 23,575,000 - Fringe Benefit Tax - - - Deferred Tax 2,016,078 2,016,078 Net Profit 46,181,388


106

As at September 30, 2009 As at September 30, 2009

As at September 30, 2009

As at September 30, 2009

Other Information - Segment assets 1,031,276,283 16,047,182 - 1,047,323,465 762,206,941 32,576,556 - 794,783,497 - Unallocated corporate assets - - 35,827,639 35,827,639 - - 34,364,395 34,364,395 Total assets 1,083,151,104 829,147,892 - Segment liabilities 335,025,634 (17,224,318) - 317,801,316 186,474,580 19,174,887 - 205,649,467 - Unallocated corporate liabilities - - 250,323,611 250,323,611 154,685,422 154,685,422 Total liabilities 568,124,927 360,334,889 Capital expenditure 55,655,981 - 1,281,664 56,937,645 107,819,112 3,602,004 111,421,116 Depreciation 15,847,706 19,527 1,734,519 17,601,752


107

NOTES TO ACCOUNTS FOR SIX MONTH PERIOD ENDED SEPTEMBER 30, 2009

(ii) Geographical Segment (Rupees)

Particulars India Outside India Total




Revenue - External sales 676,302,998 85,452,441 761,755,439 - Commission and Service Charges 1,496,654 2,129,049 3,625,703 Total 677,799,652 87,581,490 765,381,142 As at September 30, 2009 As at September 30, 2009 As at September 30, 2009 Other Information Carrying Amount of Segment Assets 1,036,338,423 46,812,681 1,083,151,104 806,521,561 22,626,331 829,147,892 Capital Expenditure 56,937,645 - 56,937,645 111,421,116 - 111,421,116 (iii) Notes:

(a) The Segment Revenue revenue in the geographical segments considered for disclosure are as follows: - Revenue within India includes sales to customers located within India and earnings in India. - Revenue outside India includes sales to customers located outside India, earnings outside India and export benefits on sales made to

customers located outside India.


(c) The figures in italics represent the Balance Sheet amount of previous year ended March 31, 2009.


108


Particulars September 30, 2009 Profit available to Equity Shareholders

- Profit after Tax (A) (Rs.) 46,181,388

Number of Equity Shares Weighted Number of equity shares outstanding during the year (B) 6,048,000

Basic and diluted earnings per share (A/B) (Rs.) 7.64* Nominal value of an equity share (Rs.) 10

* Not Annualised

5. Comparative figures for previous period in respect of the Condensed Consolidated Profit and Loss Account and Condensed Consolidated Cash Flow statement have not been included as this is the first occasion that un- audited Condensed Consolidated Financial Statements as per AS 25 have been presented by the Company.



Sd/-



109

WORKING RESULTS

Information relating to the Company sales, gross profit etc., as required by the Ministry of Finance Circular No.F2/5/SE/ 76 dated February 5, 1977 read with the amendments of even no. dated March 8, 1977 is as under:

The Unaudited working results of the Company for the period from April 01, 2009 to November 30, 2009 are given hereunder: (Rs. in lacs)

Particulars For the period April 01, 2009 to

November 30, 2009 Sales 9,661.07 Other Income 191.28 Total Income 9,852.35 Estimated Gross Profit (Before Depreciation and Taxes) 978.24 Provision for Depreciation 238.95 Provision for Taxes 265.00 Estimated Net Profit 474.29

Material Changes and Commitments

There are no material changes and commitments affecting the financial position of the Company

ACCOUNTING RATIOS A. Standalone

Particulars


For the Half Year Ended September 30 ,2009

Earning Per share (Rs.) 15.23 7.78* Net Asset Value Per Share (Rs.) 77.48 85.26 Return on Net Worth (%) 19.66 9.13 Weighted average number of equity shares in the period (in Nos.) 60,48,000 60,48,000

*Not annualised

B. Consolidated

Particulars


For Half Year Ended September 30 ,2009

Earning Per share (Rs.) 15.30 7.64 Net Asset Value Per Share (Rs.) 77.52 85.15 Return on Net Worth (%) 19.74 8.97 Weighted average number of equity shares in the period (in Nos.) 60,48,000 60,48,000

Notes: Definition of Ratios

Earning Per Share (Rs)

(Net Profit attributable to Equity Shareholders) / (Weighted average number of Equity Shares outstanding during the Period)

Net Asset Value Per Share (Rs)

(Net Worth excluding revaluation reserve at the end of the Period) /(Weighted average number of Equity Shares outstanding during the Period)

Return on Net Worth (%) (Net Profit attributable to Equity Shareholders) / (Net Worth excluding Revaluation Reserve at the end of the Period )


110

CAPITALIZATION STATEMENT

Particulars

Pre- Issue As at September

30, 2009 (Rs. in lacs)

As Adjusted Post Issue

(Rs. in lacs)

Particulars Borrowings: Short-term Debt ** 1,090.23 1,090.23 Long-term Debt ** 812.73 812.73 Total Debt 1,902.96 1,902.96 Shareholders' funds : Share Capital 604.80 * Reserves 4,551.61 * Total Shareholders' Funds 5,156.41 * Total Capitalization 7,059.38 * Long-term Debt/Equity ratio 0.23:1 * Total Debt/Equity ratio 0.37:1 *

* Will be updated in the Final Letter of Offer. ** Debts repayable within one year are adjusted and are treated as Short Term Debts


111

PRINCIPAL TERMS OF LOAN

Sr. No.

Name of the Bank/Lender

Date of Sanction

Amount sanctioned

(Rs. in Lacs)

Amount Outstanding/availed

as on 30th

September, 2009

(Rs. in Lacs)

Rate of Interest

(%)

Repayment terms

Security

Primary Collateral

1 Syndicate Bank – Term Loan

18/9/2008 700 420.11 PLR – 2.5% (11.5% at present)

Repayment in 20 quarterly installments of Rs. 35 lakhs each after moratorium of 10 months. Periodic interest to be serviced at Monthly rests even during the repayment period.

UREM of land and building proposed to be purchased and constructed and Hypothecation of Plant and Machinery proposed to be purchased out of the Term Loan.

Fresh Mortgage of land to be created.

2. Syndicate Bank – Term Loan

4/9/2007 300 285.08 PLR – 2.5% (10.5% at present)

Repayment in 20 quarterly installments of Rs. 15 Lakhs after moratorium of 10 months.

Hypothecation of machinery to be purchased /imported /acquired at an estimated cost of Rs. 400 Lakhs.

(A) As per the letter dated 3rd January 2008 by the Bank, the Bank has waived the creation of additional mortgage by taking an undertaking that the UREM already created will not be extinguished till all the liabilities of the Bank are cleared in full

(B) Personal guarantee of Mr. E. A. Elias, waived pursuant to the letter dated 5th January 2008 issued by the Syndicate Bank.

Syndicate Bank – FCNR Sub-

300 Nil As modified by letter

Stock in trade and book debts of the Company.


112

Sr. No.


Date of Sanction

Amount sanctioned

(Rs. in Lacs)


as on 30th

September, 2009

(Rs. in Lacs)

Rate of Interest

(%)

Repayment terms

Security

Primary Collateral

Limit of SODH limit 750 Lakhs.

dated 3rd January 2008 the rate of interest shall be as prevailing at the time of availment and subject to the funds clearance from the Bank’s International Division

Syndicate Bank - PCL/FDBP/FUBP sub limit of SODH limit of Rs. 750 Lakhs

200 Nil Normal rates as applicable for PCL/FDBP/FUBP Limits

Hypothecation of stock in trade and Book Debts.

Syndicate Bank - Bank Guarantee

600* 121.90 Commission at 50% of the normal rates.

* The bank Guarantee Limits have full interchangeability with the FLC/ILC Limits of Rs. 200 Lakhs


113

Sr. No.


Date of Sanction

Amount sanctioned

(Rs. in Lacs)


as on 30th

September, 2009

(Rs. in Lacs)

Rate of Interest

(%)

Repayment terms

Security

Primary Collateral

3 Syndicate Bank 15/9/2005 400 165.96 10% (PLR - 1%) floating

Principal repayable in 60 months with a moratorium period of six months. Interest- Monthly rests, even during the period of moratorium.

(A) UREM of land proposed to be purchased (B) Plant & Machinery, furniture & fixture and other additions to the existing capital structure.

(A) (i) Plot 5 A & 5 C/1 , KIADB Industrial Area, Attibele, Bangalore

(ii) Plot No. S-73 MIDC , Bhosari, Pune

(iii) Electronic Sadan Gala & Guest House at Bhosari, Pune by M/s Janatha Service Agencies dated 27.01.2004

(iv) Two industrial Galas in New India Industrial Estate Premises Co-operative Society Ltd. II Floor, Plot No. 33, Mahakali Caves road, Andheri (E), Mumbai

(v) Existing plant & machinery and other fixed assets of the Company.

(B) Personal guarantee of Mr. E. A. Elias, waived pursuant to the letter dated 5th January 2008 issued by the Syndicate Bank


114

Sr. No.


Date of Sanction

Amount sanctioned

(Rs. in Lacs)


as on 30th

September, 2009

(Rs. in Lacs)

Rate of Interest

(%)

Repayment terms

Security

Primary Collateral

4 Syndicate Bank – Term Loan

28/6/2007 200 180.05 PLR – 2% presently being 11% p.a.

Repayment shall be paid in 20 quarterly installments of Rs. 10 Lakhs after moratorium of 9 months.

Hypothecation of machinery to be purchased/imported/acquired at an estimated cost of Rs. 270 Lakhs.

(A) As per the letter dated 3rd January 2008 by the Bank, the Bank has waived the creation of additional mortgage by taking an undertaking that the UREM already created will not be extinguished till all the liabilities of the Bank are cleared in full (B) Personal guarantee of Mr. E. A. Elias, waived pursuant to the letter dated 5th January 2008 issued by the Syndicate Bank.

5. Syndicate Bank (Working Capital)

28/7/2007 750 Sub Limit for

Branches a.) Mumbai -

50 lakhs b.)

Chinchwad, Pune – 50

733.90 PLR – 2.50% Stock in trade and book debts of the Company.


115

Sr. No.


Date of Sanction

Amount sanctioned

(Rs. in Lacs)


as on 30th

September, 2009

(Rs. in Lacs)

Rate of Interest

(%)

Repayment terms

Security

Primary Collateral

lakhs Syndicate Bank

- (FLC / ILC) 200 240.05* At 50% of the

normal rates. Hypothecation of stock in trade

and Book Debts.

* The FLC / ILC limit have full interchangeability with the Bank Guarantee Limit of Rs. 600 Lakhs. 6. Syndicate

Bank(OSL-II) 9th March, 2004

300 15.17 P.L.R +.0.50% i.e at 12%p.a.

The term Loan is repayable in 20 equal quarterly installments of Rs. 15 Lakhs each with 8 months moratorium from the date of first draw down

First charge on all fixed charges present and future

UREM of company’s properties of the following places: (i) Plot 5 A & 5 C/1 , KIADB Industrial Area, Attibele, Bangalore.

(ii) Plot No. S-73 MIDC , Bhosari, Pune (iii) Electronic Sadan Gala & Guest House at Bhosari, Pune

(iv) Two industrial Galas in New India Industrial Estate Premises Co-operative Society Ltd. II Floor, Plot No. 33, Mahakali Caves road, Andheri (E), Mumbai

(v) And any other land and building which is now mortgaged to the consortium Bankers and offered as security to them.


116

STOCK MARKET DATA FOR SHARES OF THE COMPANY

The equity shares of the Company are listed on Bangalore Stock Exchange Ltd. (BgSE), Pune Stock Exchange Ltd.(PSE) and are permitted to trade in the “BSE-INDONext” segment w.e.f. 07/01/2005. There has been no trading in the equity shares of the Company on the stock exchanges at BgSE, and PSE.

The stock market data for the equity shares on the BSE are as follows

Preceding 3 Years

Particulars

High Low Average Price (Rs.)

Total Volume (no. of shares)

High (Rs)

Date Volume on date of

high (no of

shares)

Low (Rs)

Date Volume on date of Low (no of

shares) 2006 184.30 27/01/2006 52344 92.00 09/10/2006 84191 138.15 2878969 2007 217.00 12/12/2007 78094 103.00 27/02/2007 1406 160.00 2450793 2008 194.00 01/01/2008 5037 42.00 02/12/2008 380 118.00 830406

Preceding 6 Months

Particulars

High Low Average Price (Rs.)

Total Volume (no. of shares)

High (Rs)

Date Volume on date of

high (no of

shares)

Low (Rs)

Date Volume on date of Low (no of

shares) June 2009 84.00 01/06/2009 9760 64.70 23/06/2009 160 74.35 55644 July 2009 75.35 24/07/2009 2688 60.00 17/07/2009 7428 67.67 30662 August 2009 113.10 31/08/2009 14540 70.00 05/08/2009 3704 91.55 70036 September 2009 115.00 01/09/2009 6012 88.00 22/09/2009 2274 101.50 35911 October 2009 128.00 22/10/2009 3126 92.15 06/10/2009 1488 110.07 66866 November 2009 113.00 25/11/2009 2412 97.50 20/11/2009 407 105.25 17421

Week end price of equity Shares of APW President Systems Limited on the BSE.

Week ended High Price (Rs.)

Low Price (Rs.)

Closing Price (Rs)

18/12/2009 138.00 135.00 135.25 11/12/2009 152.00 135.30 144.00 04/12/2009 112.00 105.00 105.60 27/11/2009 105.00 101.25 102.25

The current market price of the Company as on December 18, 2009 is Rs. 135.25 (BSE)

The market price of the equity shares of the Company as on October 30, 2009 (the date of meeting of Board of Directors where decision of proposed rights issue was taken ) was Rs. 103.25 on BSE.

The equity shares of the Company were in no delivery period from to [●] to [●]. The cum-rights closing price of the shares of the Company as on [●] was Rs. [●]on BSE The ex-rights

closing price of the shares of the Company as on [●] was Rs. [●] on BSE

The issue price of Rs. [●] has been arrived at in consultation between the Company and the Merchant Banker


117

SECTION V- LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATIONS AND DEFAULTS Except as described below, there are no outstanding litigations, suits or civil proceedings, or criminal proceedings, or prosecutions or tax liabilities, irrespective of whether specified in Schedule XIII of the Act, against the Company or the Directors, or the Subsidiary or the Promoters or group companies, and there are no defaults, non-payment or overdues of statutory dues, overdues to banks / financial institutions, defaults against banks / financial institutions, defaults in dues payable to holders of any debentures, bonds, or fixed deposits, and arrears on preference shares issued by the Company, defaults in creation of full security as per terms of issue/ other liabilities, proceedings initiated for economic/ civil/ and other offences (including past cases where penalty may or may not have been awarded) that would result in a material adverse effect on the business. None of the aforesaid persons/ companies is on RBI’s list of wilful defaulters. No disciplinary action has been taken by the SEBI/ Stock exchanges against the Company, Directors of the Company and Promoters. Further the company confirms that that there are no pending matters which have arisen in the immediately preceding 10 years involving issues of moral turpitude or criminal liability on the part of the company, material violations of statutory regulations by the company and economic offences where proceedings have been initiated against the company

Litigation involving the Company A. CASES FILED AGAINST THE COMPANY Income – Tax related

1) AY 2003 – 04

In the assessment proceedings for the assessment year 2003 – 04 certain additions /disallowances were made by the assessing officer. One such disallowance was a claim of the Company of Rs. 13,12,500/- under section 35B of the Income Tax Act, 1961 pertaining to the Technical Know-how Fees. Against such disallowance the Assessing Officer levied penalty of Rs. 4,82,344/- under section 271(1)(c). The Company appealed to the CIT (A) - VIII. The CIT (A) – VIII has passed an order confirming the penalty levied. Against the said order of CIT(A) – VIII, the Company has filed an appeal before the ITAT, Mumbai being ITA No. 182/M/09. This appeal by the Company is pending.

2) AY 2005 – 06

In the assessment proceedings for the Assessment year 2005 – 06 certain disallowances/additions were made on account of unutilised ModVat credit, late payments of ESIC & PF, Bad Debts, Interest on Capital Advance. Against such addition / disallowance the Company filed an appeal before the CIT (A) – VIII. The CIT (A) has partly allowed the appeal of the Company. Against the partial allowance by the CIT(A) – VIII, the assessing officer has filed an appeal in the ITAT. The appeal number has not yet been received by the Company.

Labour / Employee related 1) Mr. Shabas an employee working in the fabrication department of the Company was found to be

irregular in his duty by the management. An independent enquiry officer was appointed to enquire in the matter. On the basis of the finding of the enquiry submitted by the enquiry officer, the Company dismissed Mr. Shabas with effect from 23rd September 2007 with full and final settlement of Rs. 26,302/-. Mr. Shabas has challenged his dismissal in the labour court. The labour court has passed an interim order holding the enquiry to be fair and proper. The next date of hearing is on 26th December 2009.


118

2) According to the Company, Mr. B. K. Shivakumar, working in the capacity of a welder in the Company, indulged in misconduct and misbehavior with his superiors for which he was suspended. During the suspension the management conducted an enquiry by appointing an independent enquiry officer. Mr. B. K. Shivakumar never participated in the enquiry. Company also gave public notice of the matter in local newspaper, ‘Prajavani’. Based on the findings of the enquiry officer, the Company dismissed him from service vide letter dated 7th June 2006. Mr. B. K. Shivakumar later approached the Company for his reinstatement which was denied by the Company. He has challenged the dismissal and refusal to reinstate in the labour court. The next date of hearing is 08th January, 2010.

Service Tax Claims

The Excise Department has made the following demands on the Company:

The Company is considering steps to be taken in respect of the aforesaid demands.

Excise Claims

The Company has paid the following amount as Excise Duty on demand under protest / without prejudice for short supply of goods.

SCN SL No. OIO Date* Duty (Rs) 64/2008 31.03.2009 61876

(penalty of Rs. 500 levied) 04/2009 31.03.2009 77813 49/2009 31.03.2009 13109

* Order in Original

The final orders for the above levies are awaited by the Company.

Civil Case

A judgment and decree dated 24th March 2008 was passed in Regular Civil Suit (RCS) no. 56/2006 by Civil Judge Jr. Division Pimpri Chinchwad Municipal Corporation, Akurdi Pune (PCMC) against the company for payment of Rs. 62,920/- towards Octroi claimed by PCMC. The Company has filed an appeal being Civil Appeal No. 405/2008 in the District Court against the order of the Trial Court dismissing a suit filed by the Company against Pimpri Chinchwad Municipal Corporation. The next date of hearing is 19th December 2009.

Notices received by the Company

1) The Company has received a notice from the Income – tax Department u/s 148 re-opening the assessment for the Assessment Year 2004 – 05.

2) The Company has received a legal notice dated 11th November, 2009 from Ananth Technologies Limited for short supply of materials ordered after receiving the full payment from them. The claim against the short supply is Rs. 4,05,000/-

Issue Claim Amount (Rs.) Tax credit on Outward Freight 72,046 Availment of Service Tax on Rent paid for Delhi Office 33,619 Credit for Service Tax on input services (Courier Services) 26,051


119

3) The Company has received a notice dated 10th November 2009 under Section 433 and 434 of Companies Act, 1956 from Molex (India) Private Limited for recovery of outstanding amount of Rs.6,94,521/- in respect of goods delivered to the Company.

B. CASES FILED BY THE COMPANY

Civil 1) The Company has filed a summary suit being Summary Suit No. 1552 of 2003 against M/s Hi Tech

Engineering Co. for recovery of its outstanding dues of Rs. 3,44,382/- and interest Rs. 1,00,540/-. Vide an order dated 24.10.05, a decree was granted in favour of the Company for the sum of Rs. 3,44,382/-. The suit is pending for the interest amount of Rs. 1,00,540/-. The Company is taking steps to execute the said decree.

2) The Company has filed a winding – up petition against BPL Net. Com Pvt. Ltd. in the High Court of Karnataka for failure to pay outstanding dues of Rs. 91,001/-.

3) The Company has filed a recovery suit, being O.S. No. 1009/2008 before Civil Judge (Snr Dn) Anekal

against Zenith Diecast Private Limited for recovering a sum of Rs. 21,95,000/-, including interest paid as security deposit. The next date of hearing of the suit is 19th December, 2009.

The Company has also filed a suit for permanent injunction against Zenith Diecast Private Limited being O.S. No. 411/2008 before the Civil Judge (Jnr Dn) Anekal. The matter is now posted on 12th January 2010 for recording of evidence of the Company.


120

GOVERNMENT APPROVALS OR LICENSING ARRANGEMENTS

The Company has received the necessary consents, licenses, permissions and approvals from the Governments and various Governmental agencies required for our present business and except as mentioned below, no further materials approvals are required for our present business. On the basis of the indicative list of approvals below, the Company is permitted to carry on business activities and no further approvals from any Government authorities are required by us to undertake the business of the Company. It must be distinctly understood that, in granting these licenses, the Government of India does not take any responsibility for Company’s financial soundness or for the correctness of any of the statements made or opinions expressed in this behalf.

1. BANGALORE

1 Application dated 30th October 2009 for Factory License for new plot No.6A, KIADB Industrial Area at Attibele, Bangalore. This application is still in process.

2 Factory’s License No. MYB - 9232 for the existing unit at 5C /1 KIADB Industrial Area, Attibele, Bangalore expiring on 31st December 2009. Application dated 30th October 2009 has been made for renewal of the Factory License. This application is still in process.

3 Authorisation dated 20th July 2009 issued by the Karnataka State Pollution Control Board under Rule 5(4) of the Hazardous Waste (Management, Handling and Tranbounday Movement) Rules 2008 for handling hazardous waste at Plot No.5C/1, Attibele KIADB Industrial Area subject to condition specified therein. This authorisation is valid upto 30.06.2013.

4 Consent dated 16th December 2008 issued by the Karnataka State Pollution Control Board under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981 for establishment of new industry to carry out CNC Machining, Zinc Plating and Assembly of Sheet Metal Parts of Capacity 2,00,000 square feet/month at Plot 6A, Attibele Industrial Area subject to the conditions specified therein. This consent is valid upto 15th December 2011.

5 i) Sanction of 400KVA of Power by Bangalore Electricity Supply Company Limited vide its letter dated 29th August 2009. On the terms and conditions therein contained. ii) Sanction of additional load of 50 KVA by Bangalore Electricity Supply Company Limited vide its letter dated 24th September 2009. On the terms and conditions therein contained.

6 Service Tax Registration for transport of goods by road for the premises at 5C/1, KIADB, Industrial Area, Attibble, Bangalore. Registration no. AADCA1163GST002.

7 Provisional Karnataka VAT Registration dated 24th March 2003 for unit at 5C/1, KIADB Industrial Area Attibele, Bangalore effective from 1st April 2003. Registration No being 29880054042.

8 Registration under Central Sales Tax Act, being registration no. 10167444 for the State of Karnataka.

9 Registration certificate dated 23rd May 2002 under rule 9 of the Central Excise (No. 2) Rules 2001 framed under Central Excise Act, 1944 being registration No. AADCA1163G/XM/001 for manufacture of excisable goods from Plot No. 5C/1, KIADB Industrial Area, Attibele, Bangalore.

2. PUDUCHERRY 1 Revalidation dated 27th October 2009 of power feasibility certificate issued by Govt. of

Puducherry, Electricity Department for proposed factory at Vazhudavur Road, Kurumbapet, Sanction load is 42.5HP validated upto 17/02/2010.

2 Registration and license dated 23rd April 2008 to work as a factory for Puducherry Unit Workmen limit – 20 people. Installed motive power – 20 H.P valid upto 31/12/2010.


121

3.PUNE

1 Registration on 19th November 2008 as a Dealer under Section 16 of the Maharashtra Value Added Tax Act, 2002 being registration no. 27040000993 V. The registration is effective from 1st April 2006. The principal place of business registered is the premises at S-73, MIDC, Bhosari.

The additional places of business registered are as under: i) Electronic Sadan, 2/1, MIDC, Bhosari, Pune. ii) R2, Technopolis Knowledge Park, Mahakali Caves Road, Andheri (E), Mumbai. iii) National Paradise CHS, Shop No. 38, Plot No. 290/1, Takka, Panvel.

2 Registration on 19th November 2008 as a Dealer under Section 7(1) /7(2) of the Central Sales Tax Act, 1956 being registration no. 27040000993 C. The registration is effective from 1st April 2006. The principal place of business registered is the premises at S-73, MIDC, Pune for sale and resale of Plug In Models, Server Racks, Consoles, Instrument Cases, Kiosks, CRCA Sheet and Aluminium Sheet, Aluminium Profiles, Toughened Glass, Castors, Viptone Powder and Crating Paints.

The additional places of business registered are as under:

i) Electronic Sadan, 2/1, MIDC, Bhosari, Pune.

ii) R2, Technopolis Knowledge Park, Mahakali Caves Road, Andheri (E), Mumbai.

iii) National Paradise CHS, Shop No. 38, Plot No. 290/1, Takka, Panvel. 3 Consent to operate dated 30th April 2008 under Section 26 of the Water Prevention And Control of

Pollution Act, 1974 and under Section 21 of the Air Prevention and Control of Pollution Act, 1981 and Authorization/renewal of authorization under Rule 5 of the Hazardous Wastes Management and Handling Rules, 1989 for a period upto 28th February 2013 for the manufacture of powder Coating and Phosphating, on the terms and conditions therein contained.

4 Factory license No. 095785 dated 25th March 2007 for the premises at S-73 & S-74, MIDC, Bhosari, Pune. The said license is valid upto 31/12/2009.

5 Registration certificate dated 14th June 2006 under rule 9 of the Central Excise Rules 2002 framed under Central Excise Act, 1944 being registration No. AADCA1163G/XM/002 for manufacture of excisable goods from Plot No. S-73 & S – 74, MIDC, Bhosari, Pune.

6. Business License dated 2nd August 2008 from Pimpri Chinchwad Municipal Corporation for manufacturing electric and electronic products from S73 & S74, MIDC, Bhosari, Pune.

7. Service Tax Registration dated 1st August 2005 for transport of goods by road for the premises at S-73 MIDC Bhosari, Pune. Registration No. being GTA/RI/STC/APW/925/2005.

8. Sanction dated 4th August 2006 by Maharashtra State Electricity Distribution Co. Ltd. of additional load of 137 KW taking the total connected load to 337 KW.

4.JAIPUR

1 Registration dated 10th January 2009 under Rajasthan Value Added Tax Act, 2003 being Registration No.08662209316 for premises at Malhotra Farm, NH-8, Kunda, Amer, Jaipur.

2. Registration dated 10th January 2009 under Section 7(1)/7(2) of Central Sales Tax Act, 1956 being Registration No.08662209316 (Central) for resale of various products therein mentioned.

3. Registration dated 20th January 2009 under Central Excise Act, 1944 for operating a manufacture’s depot at Malhotra Farm, NH-8, Kunda, Amer, Jaipur.


122

5.CENTRAL

1 Registration under Section 69 of the Finance Act, 1994 being Service Tax Registration No. AADCA1163G ST001.

2 Permanent Account Number of the Company is AADCA1163G.

3 Tax Deduction Account Number of the Company is MUMA 14575 B for Mumbai and BLRA 05368 G for Bangalore.

4 Registration dated 7th May 2007 under Bombay Shops & Establishment Act, 1948 being Registration No. I – 30/59 and expiring in the year 2012.

5. Certificate dated 22nd March 2007 issued by Ministry of Commerce for the Importer – Exporter Code being Registration No.0388079282.

MATERIAL DEVELOPMENTS AFTER THE DATE OF THE LAST BALANCE SHEET

There are no material developments after the date of the latest balance sheet that are likely to materially affect the performance and the prospects of the Company. The Company has not discontinued any of its existing business nor commenced any new business during past year. ADVERSE EVENTS

There are no adverse events affecting the operations of the Company occurring within one year prior to the date of filing of the Letter of Offer with the Stock Exchange.


123

SECTION VI - REGULATORY AND STATUTORY DISCLOSURES

AUTHORITY FOR THE PRESENT ISSUE

The Board of Directors in their meeting held on October 30, 2009 decided to make the rights issue of equity shares to the extent of Rs.605.00 lacs. The details of the Rights Issue to the existing shareholders of the Company are as follows:

Issue of [•] Equity Shares of Rs. 10/- each at a premium of Rs. [•] per equity share (Issue Price of Rs. [•]) aggregating about Rs. 605.00 lacs on rights basis to the existing Equity Shareholders of the Company in the ratio of [•] Equity Share for every [•] Equity Share held on [•] (Record Date). The ratio and number of shares will be decided by the Board prior to the issue at the appropriate time as per applicable rules/regulations.

PROHIBITION BY SEBI The Company, its Promoters, Directors or any of the Company’s associates or group companies with which the Directors of the Company are associated as Directors or Promoters have not been prohibited from accessing the capital market under any order or direction passed by SEBI. ELIGIBILITY FOR THE ISSUE APW President Systems Limited is an existing listed Company. It is eligible to offer this Rights Issue in terms of Chapter IV of ICDR Regulations 2009. The promoters, their relatives, The Company, Group 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. The Company is in compliance as prescribed under Regulation 57(2) (b) of Part E of Schedule VIII of the ICDR Regulations. It satisfies the following conditions

a. The Company has been filing periodic reports, statements and information in compliance with the listing agreement for the last three years immediately preceding the date of filing this letter of offer with the designated stock exchange.

b. The reports, statements and information referred to sub-clause (a) above are available on the website of Bombay Stock Exchange Limited (BSE) one of the recognized stock exchange with nationwide trading terminals

c. The Company has investor grievance – handling mechanism which includes meeting of the Shareholder’s or Investor’s Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the Company as regards share transfer and have clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.

DISCLAIMER CLAUSE AS REQUIRED, A COPY OF THIS DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). “IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF DRAFT LETTER OF OFFER TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR 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


124

PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE OFFER DOCUMENT. LEAD MANAGER, KEYNOTE CORPORATE SERVICES LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 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 COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, 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 KEYNOTE CORPORATE SERVICES LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED DECEMBER 18, 2009 WHICH READS AS FOLLOWS :

1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO

LITIGATIONS LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIAL 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, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:

a) THE DRAFT LETTER OF OFFER FILED WITH THE BOARD IS IN CONFORMITY WITH

THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; b) ALL THE LEGAL REQUIREMENTS TO THE SAID ISSUE AS ALSO THE GUIDELINES,

INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

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 AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.

3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE SUCH REGISTRATION IS VALID EXCEPT THAT OF MONDKAR COMPUTERS PRIVATE LIMITED, REGISTRAR TO THE ISSUE WHOSE REGISTRATION WAS VALID TILL JULY 31, 2009 AND HAVE APPLIED FOR THE RENEWAL OF REGISTRATION VIDE THEIR LETTER DATED APRIL 15, 2009

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS TO

FULFIL THEIR UNDERWRITING COMMITMENTS – NOT APPLICABLE AS THE ISSUE IS NOT UNDERWRITTEN.


125

5. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED/ SOLD/ TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT LETTER OF OFFER WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF OFFER. – NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.

6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF

INDIA (ISSUES OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER – NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.

7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C ) AND

(D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE ISSUER ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. - NOT APPLICABLE AS THE PRESENT ISSUE IS RIGHTS ISSUE.

8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS

ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE “MAIN OBJECTS” LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT

THE MONIES RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONIES SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FORM ALL THE STOCK EXCHANGES MENTIONED IN THE DRAFT LETTER OF OFFER. WE FURHTER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION.

10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF OFFER

THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.

11. WE CERTIFY THAT ALL APPLICABLE DISCLOSURES MANDATED IN SECURITIES AND

EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN THE ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.


126

12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT

LETTER OF OFFER:

a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE SHARES OF THE COMPANY AND

b) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH

DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.

13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO THE

ADVERTISMENT IN TERMS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE.

14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN

EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OF THE ISSUER, SITUATION AT WHICH THE PROPOSED BUISNESS STANDS, THE RISK FACTORS, PROMOTERS’ EXPERIENCE, ETC.

15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATIONWISE COMPLIANCE WITH THE

APPLICABLE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.

THE FILING OF THE OFFER DOCUMENT DOES NOT, HOWEVER, ABSOLVE THE ISSUER FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 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 IRRREGULARITIES OR LAPSES IN OFFER DOCUMENT”. CAUTION STATEMENT / DISCLAIMER CLAUSE OF THE ISSUER AND THE LEAD MANAGER

The Issuer Company and the Lead Manager accept no responsibility for statements made otherwise than in this Offer Document or in the advertisement or in any other material issued by or at the instance of the Company and the Lead Manager and any one placing reliance on any other source of information would be doing so at his/her/their own risks.

DISCLAIMER IN RESPECT OF JURISDICTION

This offer is being made in India to persons resident in India (including Indian nationals resident in India who are majors, Hindu Undivided Families, companies, corporate bodies and societies registered under the applicable laws in India and authorized to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), Trusts registered under the Societies Registration Act, 1860, or any other Trust law and who are authorized under their constitution to hold and invest in shares), Foreign Collaborators and to NRIs, OCBs and FIIs as defined under the Indian laws. This Offer Document does not, however, constitute an offer to sell or an invitation to subscribe to securities issued hereby in any jurisdiction other than India. Any person into whose possession this Offer Document comes is required to inform himself about and to


127

observe any such restrictions. Any dispute arising out of this Offer will be subject to the jurisdiction of appropriate court(s) in Mumbai, State of Maharashtra, India only. No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that this Offer Document has been submitted to the SEBI. Accordingly, the equity shares represented thereby may not be offered or sold, directly or indirectly, and this Offer Document may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of Offer Document nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the APW President Systems Limited since the date hereof or that the information contained herein is correct as of any time subsequent to this date.

DISCLAIMER CLAUSE OF PUNE STOCK EXCHANGE (PSE)

[•] DISCLAIMER CLAUSE OF BANGALORE STOCK EXCHANGE (BgSE)

[•]

FILING

A copy of this Letter of Offer has been filed with SEBI at SEBI Bhavan, Plot No. C-4A, G-Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051., Pune Stock Exchange Limited (Designated Stock Exchange) at 4th Floor Shivleela Chambers,752 Sadashiv Peth, R.B.Kumathekar Marg. Pune – 411030, with Bangalore Stock Exchange Limited (BgSE) at Stock Exchange Towers No. 51, 1St Cross J. C. Road, Bangalore – 560 027 and with Bombay Stock Exchange Limited (BSE) at Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai.

EXPENSES OF THE ISSUE

The total expenses of the issue are estimated to be Rs. 25.00 Lacs. All expenses with respect to the issue would be met out of the proceeds of the issue. The split of issue expenses is as under: -

(Rs. in Lacs)

Sr. No.

Particulars Amount % of the issue expenses

% of the issue size

1 Fees to Intermediaries 15.50 62.00 2.56 2 Fees to SEBI and Stock Exchanges 0.70 2.80 0.12 3 Printing and Stationary (includes Postage

and Desptach) 3.25

13.00 0.54 4 Advertisement 2.50 10.00 0.41 5 Legal Expenses 2.00 8.00 0.33 6 Miscellaneous Expenses 1.05 4.20 0.17 Total 25.00 100.00 4.13

INVESTOR GRIEVANCE REDRESSAL SYSTEM The investor grievances against the Company are handled by the Registrars and Transfer Agent in consultation with the secretarial department of the Company. To handle the grievances received, the Company has appointed Mr. K.K. Bhavsar, as the Compliance Officer. He will supervise redressal of complaints received from the investors at the office of the Company as well as the Registrars to the Rights Issue and ensure timely settlement.


128

All grievances related to the offer may be addressed to the Registrar to the Rights Issue quoting the application No. (Including prefix), Number of equity shares applied for, amount paid on application, date, Bank and branch/ Collection center where application was submitted.

The normal time taken by the Company for redressal of investor grievance is given below:-

Sr. No Type of Request Normal Time Taken (No of Days)

1 Issue of Duplicate Share Certificate Within 30 days 2 Transfer of shares Within 30 days 3 Transmission of shares Within 30 days 4 Demat/remat of shares Within 30/21 days 5 Non receipt of dividend Within 15 to 30 days 6 Non receipt of Annual Report Within 7 to 15 days 7 Change of residential address/ Bank mandate Within 15 to 30 days 8 Consolidation/split of share certificates/ Remat Within 30 days


129

SECTION VII - OFFERING INFORMATION

A.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 advice 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 equity shares The new Equity Shares proposed to be issued shall rank in all respects pari-passu with existing fully paid up Equity Shares. Mode of payment of dividend The dividend is paid to all the eligible shareholders as per the provisions of Companies Act. Face value & issue price The Face Value of Equity Shares of the Company is Rs.10/-. The Equity Shares of Rs. 10/- each are being issued at a premium of Rs. [•] /- each i.e.; at a price of Rs. [•] /- in the present rights issue. Rights of equity shareholders The Shareholders are entitled to receive dividend, as and when declared and bonus and rights shares, as and when issued. Further, the rights of the above and other holders of shares are subject to the provisions of the Companies Act, 1956, the Memorandum and the Articles of Association of the Company, the terms of this Letter of Offer and other laws as applicable from time to time. Market lot The market lot for the Equity Shares held in the demat mode is one share. In case of physical certificate, the Company would issue one certificate for the Equity Shares allotted to one person (“Consolidated Certificate”). In respect of consolidated certificate, the Company will, only upon request from the equity shareholder, split & return such consolidated certificate into smaller denomination within 7 days time in conformity with the clause 3 of the Listing Agreement. No fee would be charged by the Company for splitting the consolidated certificate. Nomination 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-


130

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 the 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 office of the Company located at Mumbai 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 dematerialized 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 i) If the Company does not receive the minimum subscription of 90% of the issue, the entire subscription

shall be refunded to the applicants within fifteen days from the date of closure of the Issue. ii) If there is a delay in the refund of subscription by more than 8 days after the Company becomes liable

to pay the subscription amount (i.e. fifteen days after closure of the issue), the Company shall pay interest for the delayed period at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.

Disposal of odd lots 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.

Restrictions on transfer and transmission of shares and on their consolidation/ splitting

There are no restrictions on transfer and transmission and on their consolidation/splitting of shares issued pursuant to this issue.


131

B. ISSUE PROCEDURE

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 Equity Shares are being offered for subscription in the ratio of [•] Equity Share for every [•] Equity Shares held by the Equity Shareholders. 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 [•] at the close of business hours shall be entitled to the Equity Shares on the Rights basis in the ratio of [•] equity share for every [•] Equity Shares held by them. OPTION TO SUBSCRIBE 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 has signed a tripartite agreement with National Securities Depository Limited (NSDL) and Mondkar Computers Pvt. Limited, and with Central Depository Services (India) Limited (CDSL) and Mondkar Computers Pvt. Limited which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. 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. FRACTIONAL ENTITLEMENT

Fractional entitlement if any will be rounded off to the next higher integer and the share required for the same to be adjusted from one of the promoter’s entitlement. 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-holders 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 non-residents in the total paid up capital


132

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/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. OPTIONS AVAILABLE TO THE EQUITY SHAREHOLDERS

The Equity Shareholders will be having the following five options:

Apply for his entitlement in part Apply for his entitlement in part and renounce the other part Renounce his entire entitlement Apply for his entitlement in full Apply for his entitlement in full and apply for additional Equity Shares

IMPERSONATION Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below: "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."


133

HOW TO APPLY For Resident Indian Shareholders

Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead Managers or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications as per instructions given in the Letter of Offer. 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 where the CAF is submitted and which is participating in the clearing at the time of submission of the application. Outstation cheques/money orders/postal orders will not be accepted and CAFs accompanied by such cheques/money orders/postal orders are liable to be rejected. For Non-Resident Shareholders Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, be subject to the conditions as may be imposed from time to time by the RBI, in the matter of refund of application moneys, allotment of Equity Shares, issue of letters of allotment/certificates/ payment of dividends etc. Letter of Offer and CAF shall be dispatched to non-resident Equity Shareholders in India only. For Mutual Fund Shareholders A separate application can be made in respect of rights entitlement if any for each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications. The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made. Investment by FIIs

In accordance with the current regulations, the following restrictions are applicable for investment by FIIs:-

The Issue of Equity Shares under this Issue to a single FII should not exceed 10% of the post-issue paid up capital of the Company. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts the investment on behalf of each sub-account shall not exceed 5% of the total paid up capital of the Company.

Investment by NRIs Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. NRI Investors should note that applications by ineligible non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided are liable to be rejected.

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/speed post to the Registrars to the Issue Mondkar Computers Pvt. Ltd. along with demand drafts, net of demand draft and postal charges, payable at Mumbai in favour of “APW - Rights Issue” crossed “A/c Payee only” so that the same are received on or before closure of the Issue i.e. [•].


134

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 below. 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 alongwith application money must not be sent to the Company or the Lead Manager to the Issue or the Registrar to the Issue except as mentioned above. The applications are required to strictly adhere to these instructions. Failure to do so could result in the application being liable to be rejected by the Company, the Lead Manager and the Registrar not having any liabilities to such applicants. 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 renouncees Part D: Form for request for split application forms You may exercise any one of the following options with regard to the Equity Shares offered to you, using the enclosed CAF:

Sr. No Options available Action Required 1. Accept whole or part of the Equity Shares

offered to you without renouncing the balance

Fill in and sign Part A indicating in Block III of Part A the number of Equity Shares accepted. If you accept all the equity share offered in Block II of Part A you may apply for additional Equity Shares. Indicate in Block IV the additional Equity Shares applied for.

2. Renounce all the Equity Shares offered to you to one person (joint renouncees are deemed as one person) without your applying for any of the Equity Shares offered to you.

Fill in and sign Part B indicating the number of Equity Shares renounced in Block VII and handover the ENTIRE FORM to the renouncee. The renouncee/ joint renouncee(s) must fill in and sign Part C of CAF.

3. Accept a part of your entitlement and renounce the balance or part of it to one or more Renouncee(s).

Fill in and sign Part D for the Split Form and send the ENTIRE CAF to the Registrar to the Issue.

OR On receipt of Split Forms : 4. Renounce your entitlement or part of it to

one or more persons (joint renouncees are deemed as one person).

a b

For the Equity Shares you are accepting, fill in and sign Part A. For the Equity Shares you are renouncing fill in and sign Part B indicating the number of Equity Shares renounced in Block VII. Each of the renouncees should fill in and sign Part C.

Note: If application is made jointly with any other person(s) who is/are not already joint holders or change in the sequence of names of joint holders, it will amount to renunciation and the procedure mentioned in (2) above will have to be followed.

Acceptance of Offer You may accept the Offer and apply for the Equity Shares offered, either in full or in part by filling Block III of Part A of the enclosed CAF and submit the same along with the application money payable to the bankers to the Issue or any of the branches as mentioned on the reverse of the CAF before the close of the


135

banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board thereof in this regard. Applicants at centers not covered by the branches of collecting banks can send their CAF together with the demand draft, net of demand draft and postal charges, payable at Mumbai to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. You may apply for the Equity Shares offered wholly or in part by filling in the enclosed CAF and submitting the same along with the application money to the Bankers to the Issue or its designated branches on or before the closure of the subscription list. The CAF should be complete in all respects, as explained in the INSTRUCTIONS indicated in the CAF. The CAF should not be detached under any circumstances, otherwise the application(s) will be rejected forthwith. Application for additional Equity Shares You are also eligible to apply for additional Equity Shares over and above the number of Equity Shares offered to you provided you have applied for all the shares offered to you without renouncing them in full or in part. However, the additional Equity Shares cannot be renounced in full or in part, in favour of any other person(s). If you desire to apply for additional Equity Shares, you may fill in the number of additional Equity Shares in Part A of the CAF. The allotment of additional Equity Shares will be at the sole discretion of the Board on an equitable basis with reference to the number of Equity Shares held by you on the Record Date in consultation with The Designated Stock Exchange. In the case of requests for additional Equity Shares by Non Residents, the allotment will be subject to the approval of Reserve Bank of India. The Board may reject any application for additional Equity Shares without assigning any reasons thereof. The renounces can also make an application for additional shares. Renunciation You may renounce all or any of the Equity Shares, you are entitled to in favour of any individual, limited companies, or statutory corporations / institutions. However renunciation in favour of more than three persons as joint holders, trust or society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable trust laws and is authorized under its constitution to hold shares in a company), OCBs, minors (unless acting through natural or legal guardians), Partnership Firms, or their nominees, or any of them will not be accepted. Any renunciation from Resident(s) to Non- Resident(s) is subject to the renouncer(s)/ renouncee(s) obtaining requisite approval(s) of the Reserve Bank of India (RBI) and the said permission must be attached to the CAF. Procedure for renunciation (i) To Renounce in WHOLE If you wish to renounce this offer in whole, please complete PART 'B' of the CAF enclosed with the Letter of Offer for the number of Equity Shares renounced and deliver the CAF duly signed to the person(s) in whose favour the Equity Shares are so renounced. All joint holders must sign as per specimen signatures recorded with the Company at the place provided for the purpose and in the same order. The person(s), in whose favour the offer has been renounced (renouncees) should complete and sign PART C of the CAF. In case of joint renouncees, all joint renouncees must sign.


136

(ii) To Renounce in PART If you wish to either accept this offer in part and renounce the balance of this offer the CAF must first be split into the requisite number of forms, by applying to the Registrar to the Issue. Please indicate your requirement of split forms in the space provided for this purpose in PART D of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on or before the last date for receiving requests for split forms i.e. [•]. If you wish to apply for Equity Shares jointly with any person(s) who is/are not already joint holder(s) with you, then it would amount to renunciation and the procedure of renunciation as mentioned above shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure as stated above shall have to be followed. Further, this right of renunciation is subject to the express condition that the Board shall be entitled in its absolute and unqualified discretion to reject any such request for allotment of Equity Shares from renouncee(s) without assigning any reason thereof save where the Equity Shares have been renounced in favour of a person who is already a member of the Company. 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 and NOT the renouncees shall be

entitled to split forms. Forms once split cannot be resplit.

Request for split forms: Request for Split Forms should be addressed to the Registrar to the Issue so as to reach them on or

before the last date for receiving of request for split forms by filling in PART D of the CAF. Requests for Split Forms will be entertained only once. 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 number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue. Please note that those who are making the application in the duplicate form should not utilize 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. 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 a Demand Draft payable at Mumbai which should be drawn in favour of “APW- Rights Issue” crossed A/c Payee Only and send the same by registered post directly to the Registrar to the Issue.


137

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 Issue Closing Date (i.e. [•]) and should contain the following particulars: Name of Issuer, being APW President Systems Limited. Name and address of the Equity Shareholder including joint holders Registered Folio Number/ DP and Client ID no. Number of shares held as on [•], 2010 (Record Date). Certificate numbers and distinctive numbers, if held in physical form Number of Rights Equity Shares entitled Number of Rights Equity Shares applied for out of entitlement Number of additional Equity Shares applied for, if any Total number of Equity Shares applied for Total amount paid at the rate of Rs. [•]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 Each of the applicant should mention his/her Permanent Account Number (PAN) allotted under the IT

Act. In case of Non-Resident shareholders, NRE/FCNR/NRO Account No., name and address of the bank

and branch. Signature of Equity Shareholders to appear in the same sequence and order as they appear in the

records of the Company Payment in such cases, should be through a demand draft, net of demand draft and postal charges,

payable at Mumbai be drawn in favour of “APW - Rights Issue” crossed “A/c Payee only”. Please note that those who are making the application on plain paper 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. The Company shall refund such application amount to the applicant without any interest thereon. Quoting of PAN/GIR no. in the application forms

Pursuant to the circular MRD/DoP/Circ-05/2007 dated April 27, 2007, SEBI has mandated Permanent Account Number (PAN) to be the sole identification number for all participants transacting in the securities market, irrespective of the amount of the transaction with effect from July 2, 2007. Each of the applicants should mention his/her PAN allotted under the IT Act. Applications without this information will be considered incomplete and are liable to be rejected. It is to be specifically noted that applicants should not submit the GIR number instead of the PAN, as the Bid is liable to be rejected on this ground. Last date for submission of CAF The last date for receipt of CAF by the Bankers to the Issue together with the amount payable on application is [•], 2010. If the relevant CAF together with amount payable there under is not received by the Bankers/Registrar to the Issue on or before the close of banking hours on the aforesaid last date the offer contained in this Letter of Offer shall be deemed to have been declined and the Board shall be at liberty to dispose of the Equity Shares hereby offered as provided under "Basis of Allotment". Incomplete application CAFs which are not complete or are not accompanied with the application money amount payable are liable to be rejected.


138

TERMS OF PAYMENT The entire amount of Rs. [•]/- per share is payable on application by all shareholders/applicants. MODE OF PAYMENT For Resident Shareholders/Applicants Payment(s) must be made by cheque/demand draft and 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 where the CAF is submitted. A separate cheque/draft must accompany each CAF. Only one mode of payment should be used. Money orders, postal orders and outstation cheques will not be accepted and applications accompanied by any such instruments will be rejected.

Shareholders/Applicants residing at places other than those mentioned in the CAF and applicants who wish to send their applications but not having collection centers should send their application by Registered Post, ONLY to the Registrar to the Issue enclosing a demand draft drawn on a clearing Bank and payable at Mumbai ONLY net of bank charges and postal charges, before the closure of the issue. Such cheque/drafts should be payable to "APW - RIGHTS ISSUE". All cheques/ drafts must be crossed 'A/c Payee only’. No receipt will be issued for the application money received. However, the Collection Centre receiving the application will acknowledge receipt of the application by stamping and returning the acknowledgement slip at the bottom of each CAF. The Company is not responsible for any postal delay/ loss in transit on this account. For Non-Resident Shareholders/Applicants As regards the application by non-resident equity shareholders, the following further conditions shall apply: Application with repatriation benefits Payment by NRIs/ FIIs/ foreign investors must be made by demand draft/cheque payable at Mumbai or funds remitted from abroad in any of the following ways: By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad

(submitted along with Foreign Inward Remittance Certificate); or By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in

Mumbai; or By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable

in Mumbai; or FIIs registered with SEBI must remit funds from special non-resident rupee deposit account. All cheques/drafts submitted by non-residents applying on repatriable basis should be drawn in favour of "APW - RIGHTS ISSUE - NR" payable at Mumbai and crossed ‘A/c Payee only’ for the amount payable. A separate cheque or bank draft must accompany each application form. Applicants may note that where payment is made by drafts purchased from NRE/FCNR 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 account should be enclosed with the CAF. In the absence of the above the application shall be considered incomplete and is liable to be rejected.


139

In the case of NRIs who remit their application money from funds held in FCNR/NRE Accounts, refunds and other disbursements, if any shall be credited to such account details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their application money through Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in US Dollars at the rate of exchange prevailing at such time subject to the permission of RBI. The Company will not be liable for any loss on account of exchange rate fluctuation for converting the Rupee amount into US Dollars or for collection charges charged by the applicant’s Bankers.

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 Mumbai. In such cases, the allotment of Equity Shares will be on non-repatriation basis. All cheques/drafts submitted by non-residents applying on non-repatriation basis should be drawn in favour of "APW - RIGHTS ISSUE” payable at Mumbai 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 or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

If the payment is made by a draft purchased from an NRO account, an Account Debit Certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NRO account, should be enclosed with the CAF. In the absence of the above, the application shall be considered incomplete and is liable to be rejected. New demat account shall be opened for holders who have had a change in status from resident Indian to NRI.

“Non-resident Indian Applicants may please note that only such application as are accompanied by payment in free foreign exchange shall be considered for allotment. The non-resident Indians who intend to make payment through Non- Resident Ordinary (NRO) accounts shall mention the details of the Bank Account from their payment is being made.”

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 or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

In case of an 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.

PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (“ASBA”) PROCESS This section is for the information of Equity Shareholders proposing to subscribe to the Issue through the ASBA Process. The Company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this


140

Letter of Offer. Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and ensure that the number of Equity Shares applied for by such Shareholders do not exceed the applicable limits under laws or regulations. Shareholders applying under the ASBA Process are also advised to ensure that the CAF is correctly filled up, stating therein the bank account number maintained with the SCSB in which an amount equivalent to the amount payable on application as stated in the CAF will be blocked by the SCSB.

The list of banks who have been notified by SEBI to act as SCSB for the ASBA Process are provided on www.sebi.gov.in. For details on designated branches of SCSB collecting the CAF, please refer the above mentioned SEBI website.

ASBA Process

Equity Shareholders who are eligible to apply under the ASBA Process

The option of applying for Equity Shares in the Issue through the ASBA Process is only available to Shareholders of the Company on the Record Date and who: Is holding Equity Shares in dematerialized form and has applied for entitlements or additional

Securities in the Issue in dematerialized form; Has not renounced his/her entitlements in full or in part; Has not split the CAF; Is not making an application on plain paper; Is not a Renouncee to the Issue; Applies through a bank account with one of the SCSBs.

As per SEBI press release no.386/2009 dated December 10, 2009 the reach of ASBA has been extended to all categories of investors except Qualified Institutional Buyers. The applicants applying through ASBA facility shall be herein after called ASBA applicants which shall include retail individual investors, High Networth investors and corporate investors. CAF The Registrar will despatch the CAF to all Equity Shareholders as per their entitlement on the Record Date for the Issue. Those Equity Shareholders who wish to apply through the ASBA payment mechanism will have to select for this mechanism in Part A of the CAF and provide necessary details. Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF only. The method of applying under ASBA process will not be available for Investors applying on plain paper. The Equity Shareholder shall submit the CAF to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. Acceptance of the Issue

You may accept the Issue and apply for the Equity Shares offered, either in full or in part, by filling Part A of the respective CAFs sent by the Registrar, selecting the ASBA process option in Part A of the CAF and submit the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company in this regard. Mode of payment The Shareholder applying under the ASBA Process agrees to block the entire amount payable on application (including for additional Equity Shares, if any) with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB.


141

After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrars. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per Registrar’s instruction allocable to the Shareholders applying under the ASBA Process from bank account with the SCSB mentioned by the Shareholder in the CAF. This amount will be transferred in terms of the SEBI Guidelines, into the separate bank account maintained by the Company as per the provisions of section 73(3) of the Companies Act, 1956. The balance amount remaining after the finalization of the basis of allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Managers to the respective SCSB. The Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF. The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the application by the SCSB, the Company would have a right to reject the application only on technical grounds.

Options available to the Shareholder applying under the ASBA Process

The summary of options available to the Shareholders is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the respective CAFs received from Registrar:

Option Available

Action Required

1. Accept whole or part of your entitlement without renouncing the balance.

Fill in and sign Part A of the CAF (All joint holders must sign)

2. Accept your entitlement in full and apply for

additional Equity Shares Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

The Shareholder applying under the ASBA Process will need to select the ASBA option process in the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the SCSB with the relevant details required under the ASBA process option and SCSB blocks the requisite amount, then that CAF would be treated as if the Shareholder has selected to apply through the ASBA process option. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares that you are entitled too, provided that (i) you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under the section entitled ‘Basis of Allotment’ on page no. 148 of this Letter of Offer. If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF.


142

Renunciation under the ASBA Process

Renouncees cannot participate in the ASBA Process.

Application on Plain Paper Applications on plain paper cannot be made by Equity Shareholders availing of the ASBA Process. Last date of Application The last date for submission of the duly filled in CAF is [•]. The Issue will be kept open for a minimum of 15 (fifteen) days and the Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 (thirty) days from the Issue Opening Date. If the CAF together with the amount payable is not received by the Banker to the Issue/Registrar to the Issue or if the CAF is not received by the SCSB 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 “Basis of Allotment”.

Option to receive Securities in Dematerialized Form SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY UNDER THE ASBA PROCESS CAN ONLY BE ALLOTTED IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE BEING HELD ON RECORD DATE. General instructions for Shareholders applying under the ASBA Process (a) Please read the instructions printed on the respective CAF carefully. (b) Application should be made on the printed CAF only 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. The CAF must be filled in English.

(c) The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose

bank account details are provided in the CAF and not to the Bankers to the Issue/Collecting Banks (assuming that such Collecting Bank is not a SCSB), to the Company or Registrar or Lead Manager to the Issue.

(d) All applicants, and in the case of application in joint names, each of the joint applicants, should

mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.

(e) All payments will be made by blocking the amount in the bank account maintained with the SCSB.

Cash payment is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.


143

(f) Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to 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/or Depositories.

(g) 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. 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.

(h) 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.

(i) Only the person or persons to whom Securities have been offered and not renouncee(s) shall be eligible to participate under the ASBA process.

Do’s: a. Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are

filled in. b. Ensure that you submit your application in physical mode only. Electronic mode is only available

with certain SCSBs and not all SCSBs and you should ensure that your SCSB offers such facility to you.

c. Ensure that the details about your Depository Participant and beneficiary account are correct and the beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only.

d. Ensure that the CAFs are submitted at the SCSBs whose details of bank account have been provided in the CAF.

e. Ensure that you have mentioned the correct bank account number in the CAF. f. Ensure that there are sufficient funds (equal to {number of Equity Shares applied for} X {Issue

Price}] available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.

g. Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on application mentioned in the CAF, in the bank account maintained with the respective SCSB, of which details are provided in the CAF and have signed the same.

h. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form.

i. Each applicant should mention their Permanent Account Number (“PAN”) allotted under the I. T. Act.

j. Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF.

k. Ensure that the Demographic Details are updated, true and correct, in all respects. Don'ts: 1) Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the

SCSB. 2) Do not pay the amount payable on application in cash, by money order or by postal order.


144

3) Do not send your physical CAFs to the Lead Manager to Issue / Registrar / Collecting Banks (assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only.

4) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground.

5) Do not instruct their respective banks to release the funds blocked under the ASBA Process.

Grounds for Technical Rejection for ASBA Process: CAF in addition to the “Grounds of Technical Rejection” mentioned under [•] can be rejected on following additional grounds: a) Application on plain paper or on spilt form. b) Application for entitlements or additional shares in physical form. c) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available

with the Registrar. d) Sending CAF to a Lead Manager / Registrar / Collecting Bank (assuming that such Collecting Bank is

not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company. e) Renouncee applying under the ASBA Process. f) Insufficient funds are available with the SCSB for blocking the amount. g) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen

pursuant to regulatory orders. h) Account holder not signing the CAF or declaration mentioned therein. Depository account and bank details for Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Shareholders applying under the ASBA Process should note that on the basis of Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of these Shareholders such as address, bank account details and occupation (“Demographic Details”). Hence, Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF.

These Demographic Details would be used for all correspondence with such Shareholders including mailing of the letters intimating unblock of bank account of the respective Shareholder. The Demographic Details given by Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records.


145

Letters intimating allotment and unblocking would be mailed at the address of the Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of bank account may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of bank account. Note that any such delay shall be at the sole risk of the Shareholders applying under the ASBA Process and none of the Company, the SCSBs or the Lead Manager shall be liable to compensate the Shareholder applying under the ASBA Process for any losses caused to such Shareholder due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories that match three parameters, namely, name(s) of the Shareholder(s) (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected. Application will not be accepted by the Lead Manager or by the Company. Note on cash payment (section 269 SS) Having regard to the provisions of Section 269 SS of the Income Tax Act, 1961, subscriptions against applications for securities should not be effected in cash and must be effected only by ‘Account Payee’ cheques or ‘Account Payee’ bank drafts, if the amount payable is Rs. 20,000/- or more. In case payment is effected in contravention of this provision, the application is liable to be rejected. FORFEITURE The allotment shall be made only on receipt of full application money as mentioned in “Terms of Payment”. As such there will be no partly paid-up shares emerging from this issue and hence no requirement of any forfeiture. APPLICATION UNDER POWER OF ATTORNEY In case of applications under Power of Attorney or by Limited Companies or Bodies Corporate or Societies registered under the applicable laws, a certified copy of the Power of Attorney or the relevant authority, as the case may be, along with the certified copy of the Memorandum and Articles of Association or Bye-laws, as the case may be, must be lodged separately by registered post at the office of the Registrar to the Issue simultaneously with the submission of the CAF, indicating the serial number of the CAF and the name of the bank and the branch office where the application is submitted within 10 days of closure of the offer, failing which the application is liable to be rejected. In case the Power of Attorney is already registered with the Company, then the same need not be furnished again. However, the serial number of the Registration under which the Power of Attorney has been registered with the Company must be mentioned below the signature of the Applicant. BANK DETAILS OF THE APPLICANT The applicant must fill in the relevant column in the CAF giving particulars of Savings Bank/Current Account Number and the name of the Bank with whom such accounts is held, to enable the Registrar to the Issue to print the said details in the Refund Orders, if any, after the name of the payees. Please note that provision of Bank Account details has now been made mandatory and applications not containing such details are liable to be rejected.


146

APPLICATION NUMBER ON THE CHEQUE/DEMAND DRAFT To avoid any misuse of instruments, the applicants are advised to write the application number and name of the first applicant on the reverse of the cheque / demand draft.

GROUNDS FOR TECHNICAL REJECTIONS Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following: Amount paid does not tally with the amount payable for; In case of physical shareholders, bank account details (for refund) are not given; Age of first applicant not given in case of renouncee(s); PAN not stated. See the section titled “Issue Procedure – Permanent Account Number or PAN/

GIR; Cash applications for an amount exceeding Rs.20,000/-; In case of Application under power of attorney or by limited companies, corporate, trust, etc.,

relevant documents are not submitted; If the signature of the existing shareholder does not match with the one given on the Application

Form and for renouncees if the signature does not match with the records available with their depositories;

If the Applicant desires to have shares in electronic form, but the CAF does not have the Applicant’s depository account details;

CAFs are not submitted by the Applicants within the time prescribed as per the CAF and the Draft Letter of Offer;

Applications not duly signed by the sole/joint Applicants; Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs

to invest in the Issue; In case no corresponding record is available with the Depositories that matches three parameters,

namely, names of the Applicants (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity;

Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local laws) and where last available address in India has not been provided;

Multiple applications. GENERAL

(a) All applications should be made on the printed CAF provided by the Company and should be complete in all respects. Applications which are not complete in all respects or are made otherwise than as herein provided or not accompanied by proper application money in respect thereof will be refunded without interest.

(b) Please read the instructions in the enclosed CAF carefully. (c) ALL COMMUNICATIONS IN CONNECTION WITH YOUR APPLICATION FOR THE EQUITY

SHARES INCLUDING ANY CHANGE IN YOUR REGISTERED ADDRESS SHOULD BE ADDRESSED TO THE REGISTRAR TO THE ISSUE.

(d) Application Forms must be filled in ENGLISH in BLOCK LETTERS. (e) Signatures should be either in English or Hindi or the languages specified in the Eighth Schedule to

the Constitution of India. Signatures other than in the aforementioned languages or thumb impressions must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal.

(f) In case of Joint Holders, all joint holders must sign the relevant parts of the Application Form in the same order and as per the specimen signatures recorded with the Company.


147

(g) In case of joint applicants, refunds and all payments will be made to the person whose name appears first on the application form and all communications will be addressed to him/her. To prevent any fraudulent encashment of refund orders by third parties, the Sole/First Applicant must indicate Saving / Current Account number and the name of the bank and its branch with whom such account is held in the space provided in the CAF for the purpose so that Refund Orders are printed with these details after the name. Applications without this information are liable to be rejected.

(h) The Application Form should be presented to the Bank in its entirety. If any of the Part(s) A,B,C and D of the Application Form(s) is /are detached or separated, such application will forthwith be rejected.

(i) All shareholders must submit the CAF along with remittance only to the Bankers to the Issue mentioned elsewhere in this Letter of Offer and not to the Company, the Registrar or the Lead Manager.

(j) Any dispute or suit action or proceedings arising out of or in relation to this Letter of Offer or in respect of any matter or thing herein contained and claimed by either party against the other shall be instituted or adjudicated upon or decided solely by the appropriate Court where Registered Office of the Company is situated.

(k) The last date for receipt of CAF along with the amount payable is [•]. However, the Board will have the right to extend the same for such period as it may determine from time to time, but not exceeding 30 days from the date of opening of the subscription list. If the CAF together with the amount payable there under is not received by the bankers to the issue on or before the closure of the banking hours on the aforesaid date, or such date as may be extended by the Board, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board shall be at liberty to dispose the Rights hereby offered.

For further instructions please read CAF carefully. DEMATERIALISATION As per the provisions of the Depositories Act, 1996, the shares of a body corporate may be held in dematerialized form i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through electronic mode. The equity shares of APW are traded in the demat segment The Company has entered into a tripartite agreement dated January 25, 2001 with the National Securities Depository Ltd. (NSDL) for dematerialization of the equity shares of the Company. The Company has also entered into a tripartite agreement dated April 09, 2001 with the Central Depository Services Limited (CDSL) for dematerialization of the equity shares of the Company. The ISIN No. granted to the equity shares of the Company is INE155D01018. An applicant has the option to seek allotment in physical or demat mode. An applicant who seeks allotment in demat mode must have atleast one Beneficiary Account with any of the Depository Participants (DP) of NSDL or CDSL registered with SEBI, prior to the application. Such applicants must necessarily fill in the details (including the Beneficiary Account Number and Depository Participant’s ID Number) appearing under the head “Request for shares in electronic form” in the CAF. Applicant must indicate in the CAF, the number of shares they wish to receive in electronic form out of the total number of equity shares applied for. In case of partial allotment, shares will first be allotted in electronic form and the balance, if any, will be allotted in physical form. Names in the CAF should be identical to those appearing in the account details in the Depository. In case of joint holders, the name should necessarily be in the same sequence as they appear in the account details in the Depository.


148

No separate application for demat and physical shares is to be made. If such applications are made the application for physical shares will be treated as multiple applications and rejected accordingly. It may be noted that electronic shares can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL. Non-transferable allotment letters/ refund orders will be directly sent to the applicant by the Registrar to the Issue The applicant is responsible for the correctness of the applicant’s demographic details given in the share application form vis-à-vis those with his/her DP. Equity shares allotted in demat mode will be credited directly to the respective Beneficiary Account. DISPOSAL OF APPLICATION AND APPLICATION MONEY The Board reserves the right to reject applications in case the application concerned is not made in terms of this Letter of Offer. In case an application is rejected in full the whole of the application money received will be refunded to the first named applicant and where an application is rejected in part, the excess application money will be refunded to the first named applicant within 15 days from the date of closure of the subscription list in accordance with Section 73 of the Act. If there is delay of refund of application money by more than 8 days after the Company becomes liable to pay (i.e. forty-two days after the closure of Issue), the Company will pay interest for the delayed period at the rate prescribed under sub-Section (2) and (2A) of Section 73 of the Act. The subscription monies received in respect of this Issue will be kept in a separate bank account and the Company will not have access to nor appropriate the funds until it has satisfied the Stock Exchange with suitable documentary evidence that minimum subscription of 90% of the application money for the Issue has been received. No acknowledgment will be issued for the application monies received by the Company. However, the Bankers to the Issue at its collection branches to the Issue receiving the CAF as applicable as per the terms of this Letter of Offer, will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. Except for the reasons stated under “Grounds for Technical Rejections” on page 146 of this Letter of Offer and subject to valid application, acknowledgement of receipt of application money given by the collection agent shall be valid and binding on issuer and other persons connected with the Issue. BASIS OF ALLOTMENT In the event of the issue being oversubscribed, the basis of allotment will be made only within the overall size of the Rights Issue, as stated in the Letter of Offer and the Board will proceed to allot the Equity Shares in consultation with the designated stock exchange (i.e.; PSE) in the following order of priority: 1. Full allotment to the Shareholders who have applied for their Rights entitlement, either in full or in part

and also the renouncee(s) who have applied for Equity Shares renounced in their favour either in full or in part (subject to the other provisions contained under the paragraph titled “Renunciation”).

2. Allotment to the shareholders who have applied for additional Equity Shares provided that they have

applied for all the Equity Shares offered to them, provided there is a surplus after making full allotment under (1) above. The allotment of such additional Equity Shares will be made as far as possible on the basis of the Equity Shares held as on the Record Date.


149

3. Allotment to the renouncees who have applied for all the Equity Shares renounced in their favour and have applied for additional Equity Shares, as the Board may in its absolute discretion deem fit, provided there is a surplus after making full allotment (1) and (2) above.

4. Allotment to any other person as the Board may in their absolute discretion deem fit, provided there is

a surplus after making full allotment under (1), (2), (3) above. The issue will become undersubscribed after considering the number of shares applied as per the entitlement plus additional shares. The undersubscribed portion can be applied for only after the close of the Issue.

LETTERS OF ALLOTMENT OR REFUND ORDERS Company shall ensure dispatch of refund orders, if any, by under the Certificate of Posting or registered post or speed post or through modes as mentioned in section, Terms of the Issue clause “Mode of Payment” as stated below, as applicable, only at the sole or First Applicant’s sole risk within 15 days of closure of the Rights Issue, and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the issuer. In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialized form by electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately.

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

Mumbai, 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 are drawn and details of which are provided in the CAF.

MODE OF PAYMENT OF REFUND Applicants should note that on the basis of name of the applicant, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Composite Application Form, the Registrar to the Issue will obtain from the depositories 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 applicant at the applicant’s sole risk and neither the Lead Manager nor the Company shall have any responsibility and undertake any liability for the same. The payment of refund, if any, shall be undertaken in any of the following manners: 1. NEFT: Payment of refund shall be undertaken through National Electronic Fund Transfer (NEFT)

wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR) , if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the Demat


150

account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method.

2. ECS - Payment of refund shall be undertaken through ECS for applicants having an account at any of the following 68 centers: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram (managed by RBI); Baroda, Dehradun, Nashik, Panaji, Surat, Trichy, Trichur, Jodhpur, Gwalior, Jabalpur, Raipur, Calicut, Siliguri (Non-MICR), Pondicherry, Hubli, Shimla (Non-MICR), Tirupur, Burdwan (Non-MICR), Durgapur (Non-MICR), Sholapur, Ranchi, Tirupati (Non-MICR), Dhanbad (Non-MICR), Nellore (Non-MICR) and Kakinada (Non-MICR) (managed by State Bank of India); Agra, Allahabad, Jalandhar, Lucknow, Ludhiana, Varanasi, Kolhapur, Aurangabad, Mysore, Erode, Udaipur, Gorakpur and Jammu (managed by Punjab National Bank); Indore (managed by State Bank of Indore); Pune, Salem and Jamshedpur (managed by Union Bank of India); Visakhapatnam (managed by Andhra Bank); Mangalore (managed by Corporation Bank); Coimbatore and Rajkot (managed by Bank of Baroda); Kochi/Ernakulum (managed by State Bank of Travancore); Bhopal (managed by Central Bank of India); Madurai (managed by Canara Bank); Amritsar (managed by Oriental Bank of Commerce); Haldia (Non-MICR) (managed by United Bank of India); Vijaywada (managed by State Bank of Hyderabad); and Bhilwara (managed by State Bank of Bikaner and Jaipur). This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. One of the methods for payment of refund is through ECS for applicants having a bank account at any of the abovementioned 68 centers.

3. Direct Credit: Applicants having bank accounts with the Banker(s) to the Issue / Refund Banker(s), as appointed by the Company, shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Banker(s) to the Issue / Refund Banker(s) for the same would be borne by the Issuer.

4. RTGS: Applicants having a bank account at any of the abovementioned fifteen centers and whose refund amount exceeds Rs. 5 million, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the Banker(s) to the Issue / Refund Banker(s) for the same would be borne by such applicant opting for RTGS as a mode of refund. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant.

For all other applicants, including those who have not updated their bank particulars with the MICR code, the refund orders shall be dispatched under Certificate of Posting for value up to Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn on the refund banker as appointed by the Company, and payable at par. INTEREST IN CASE OF DELAY IN ALLOTMENT / DESPATCH If there is delay in the refund of subscription by more than 8 days after the Company becomes liable to pay the subscription amount (i.e. fifteen days) after closure of the issue, the Company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.


151

UNDERTAKING The Company undertakes that:

A) The complaints received in respect of the Issue shall be attended to by the issuer 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 finalization of basis of allotment.

C) Funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the issue by the issuer.

D) Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant after 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) Adequate arrangements shall be made to collect all Applications Supported by Blocked Amount

(ASBA) and to consider them similar to non-ASBA applications while finalizing the basis of allotment.

F) At any given time there shall be only one denomination for the shares of the Company G) It shall comply with such disclosure and accounting norms specified by SEBI from time to time.

The Issuer and Lead Manager shall update the Letter of Offer and keep the investors informed of any material changes till the listing and trading commences.

UTILISATION OF ISSUE PROCEEDS The Board of Directors declares that: (i) all monies received out of issue of shares or specified securities to public shall be transferred to

separate bank account; (ii) details of all monies utilized out of the issue referred to in sub-item(i) shall be disclosed under an

appropriate separate head in the balance sheet of the issuer company indicating the purpose for which such monies had been utilized; and

(iii) details of all unutilized monies out of the issue of specified securities referred to in clause (i) shall be

disclosed under an appropriate separate head in the balance sheet of the issuer indicating the form, if any, referred to in sub-item (i) shall be disclosed under an appropriate separate head in the balance sheet of the issuer company indicating the form in which such monies have been invested.

Utilization of funds raised in rights issue

The Company shall utilize the funds collected in rights issues after the finalization of the basis of allotment.


152

SECTION VIII - OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS The Contracts referred to in para (A) below (not being contracts entered into in the ordinary course of the business carried on by the Company which are or may be deemed material, have been entered into by the Company. The contracts together with the documents referred to in paragraph (B) below, copies of all of which have been attached to the copy of this Letter of Offer may be inspected at the Registered Office of the Company between 11.00 a.m. - 4.00 p.m. on any working day from the date of this Letter of Offer until the closing of the subscription list. A. MATERIAL CONTRACTS 1. Copy of Memorandum of Understanding dated December 04, 2009 between APW President Systems

Limited and Keynote Corporate Services Limited, Lead Manager to the Issue. 2. Copy of Memorandum of Understanding dated December 04, 2009 between APW President Systems

Limited and Mondkar Computers Pvt. Ltd., Registrar to the Issue. 3. Copy of tripartite agreement dated January 25, 2001 between APW President Systems Limited, National

Securities Depository Limited (NSDL) and Mondkar Computers Pvt. Ltd. 4. Copy of tripartite agreement dated April 09, 2001 between APW President Systems Limited, Central

Depository Services (India) Limited (CDSL) and Mondkar Computers Pvt. Ltd.

5. Copy of Non-Exclusive Distribution Agreement dated September 03, 2009 between Vette Corp. Datacom Facilities Division and APW President Systems Limited.

6. Copy of Service Agreement dated April 20, 2007 entered between APW President Systems Limited and

Mr. Elijah A. Elias (Managing Director of the Company).

B. DOCUMENTS FOR INSPECTION

1. Memorandum and Articles of Association of APW President Systems Limited as amended from time to time.

2. Board Resolution dated October 30, 2009 passed by the Board of Directors of the Company in respect of

the Rights Issue. 3. Copies of Annual Reports of the Company for the last 5 accounting periods i.e. 2004-05, 2005-06, 2006-

07, 2007-08 and 2008-09.

4. Audit Report dated May 19, 2009 issued by Price Waterhouse Chartered Accountants & Statutory Auditors of the Company on unconsolidated financial statements of the Company for the Financial Year ended March 31, 2009

5. Audit opinion dated May 19, 2009 issued by Price Waterhouse Chartered Accountants & Statutory Auditors of the Company on consolidated financial statements of the Company for the Financial Year ended March 31, 2009


153

6. Limited Review Report dated December 16, 2009 issued by Price Waterhouse Chartered Accountants & Statutory Auditors of the Company on the interim unconsolidated financial statements of the Company for the period from April 01, 2009 to September 30, 2009.

7. Limited Review Report dated December 16, 2009 issued by Price Waterhouse Chartered Accountants &

Statutory Auditors of the Company on the interim consolidated financial statements of the Company for the period from April 01, 2009 to September 30, 2009.

8. Copy of letter dated November 26, 2009 received from Chandrakant Doshi & Co. Chartered Accountants regarding tax benefits accruing to the Company and its shareholders.

9. Copy of certificate dated December 16, 2009 received from Chandrakant Doshi & Co. Chartered Accountants regarding sources and deployment of funds.

10. Copy of Letter of Offer dated September 20, 2005 in respect of the last Rights Issues made by APW

President Systems Limited.

11. Copy of letter no. CRD/GEN/2005/039 dated January 07, 2005 received from the BSE regarding inclusion of equity shares of APW President Systems Limited in BSE-INDONEXT segment along with the copy of notice bearing no. 2005106-9 regarding trading of securities under BSE-INDONEXT segment.

12. Legal Due Diligence report dated December 01, 2009 by Desai Desai Carrimjee and Mulla along with

certificate dated December 16, 2009 in respect of Draft Letter of Offer. 13. Due Diligence Certificate dated December 18, 2009 to SEBI from Keynote Corporate Services Limited,

Lead Manager to the Issue. 14. Consent letters from Directors, Lead Manager to the Issue, Statutory Auditors of the Company, Legal

Advisors to the Issue, Registrar to the Issue, Company Secretary and Compliance Officer to act in their respective capacities and for inclusion of their names in the Letter of Offer.

15. Copy of in-principle approval received from Pune Stock Exchange Limited vide letter no. [•] dated [•]. 16. Copy of in-principle approval received from Bangalore Stock Exchange Limited vide letter no. [•] dated

[•].

17. Copy of SEBI Observation letter no. [•] dated [•] and compliance thereof.


154

PART III

DECLARATION No Statement made in this Draft 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 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 Board of Directors further certify that all the disclosures in this Draft Letter of Offer are true and correct. By the Board of Directors APW President Systems Limited

Sd/- Lakshman Bhatia Chairman

Sd/- Elijah A. Elias Vice Chairman and Managing Director

Sd/- Sudhir Seth Director

Sd/- Ashok D. Kunte Director

Sd/- Marc Rutty * Director

Sd/- Shailesh Hemani Director

Sd/- Raj Bajaaj Director

Sd/- Madhav Joshi Director

Sd/- Shefali Shah Director

Place: Mumbai Date: December 18, 2009 * By his Constituted Attorney

Documents

(Private & Confidential) - Schneider Electric President Systemsapwpresident.com/wp-content/uploads/2009/12/APW_LOF_DEC_09_… · (Private & Confidential) APW PRESIDENT SYSTEMS LIMITED