DRAFT LETTER OF OFFER

GENERAL RISKS

Investors are advised to refer to the sectiontitled “Risk Factors” on page xi of this Draft Letter of Offer before making an investment in this Issue

ISSUER’S ABSOLUTE RESPONSIBILITY

LISTINGBSE NSE

MSE

LEAD MANAGER TO THIS ISSUE

Centrum Capital Limited

Tel:Fax:E-mail: Investor Grivence Id:Website: Contact Persons: SEBI Registration No.:

Cameo Corporate Services Limited

Tel:Fax:Email:Website:Contact Person:SEBI Registration Number:

REGISTRAR TO THIS ISSUE

FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF RAMCO SYSTEMS LIMITED ONLY

DRAFT LETTER OF OFFERISSUE OF [ ] EQUITY SHARES OF FACE VALUE OF 10/- EACH, FOR CASH AT A PRICE OF [ ] PER EQUITY SHAREINCLUDING A PREMIUM OF [ ] PER EQUITY SHARE AGGREGATING UPTO 400 MILLION BY RAMCO SYSTEMSLIMITED, TO THE EXISTING ELIGIBLE EQUITY SHAREHOLDERS OF THE COMPANY ON RIGHTS BASIS IN THE RATIO OF [ ]EQUITY SHARES FOR EVERY [ ] FULLY PAID UP EQUITY SHARES HELD ON THE RECORD DATE, i.e. [ ] (“THE ISSUE”). THEISSUE PRICE OF EACH EQUITY SHARE IS [ ] TIMES THE FACE VALUE OF THE EQUITY SHARE. FOR MORE DETAILS, PLEASEREFER TO THE SECTION TITLED “TERMS OF THE ISSUE” ON PAGE 166 OF THIS DRAFT LETTER OF OFFER.

RAMCO SYSTEMS LIMITED

Registered OfficeCorporate Office

Contact Person: Email: Website

LAST DATE FOR REQUEST FOR SPLITAPPLICATION FORMS

ISSUE PROGRAMME

ISSUE OPENS ON ISSUE CLOSES ON

TABLE OF CONTENTS

TITLE PAGE NO.

SECTION I – GENERAL i DEFINITIONS AND ABBREVATIONS i OVERSEAS SHAREHOLDERS viii PRESENTATION OF FINANCIAL INFORMATION AND CURRENCY OF PRESENTATION

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FORWARD LOOKING STATEMENTS x SECTION II – RISK FACTORS xi SECTION III – INTRODUCTION 26 THE ISSUE 26 GENERAL INFORMATION 27 CAPITAL STRUCTURE 36 OBJECTS OF THE ISSUE 42 STATEMENT OF TAX BENEFITS 46 OUR BUSINESS 54 SECTION IV – HISTORY AND CERTAIN CORPORATE MATTERS 60 SECTION V – MANAGEMENT 65 SECTION VI – FINANCIAL INFORMATION 76 FINANCIAL STATEMENTS 76 CERTAIN OTHER FINANCIAL INFORMATION 130 ACCOUNTING RATIOS AND CAPITALIZATION STATEMENT 131 MARKET PRICE INFORMATION 133 SECTION VII – LEGAL AND OTHER INFORMATION 135 OUTSTANDING LITIGATIONS AND OTHER DEFAULTS 135 GOVERNMENT AND OTHER APPROVALS 141 MATERIAL DEVELOPMENTS 142 OTHER REGULATORY AND STATUTORY DISCLOSURES 157 SECTION VIII – OFFERING INFORMATION 166 TERMS OF THE ISSUE 166 SECTION IX – STATUTORY AND OTHER INFORMATION 195 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 196 DECLARATION 197

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SECTION I – GENERAL DEFINITIONS AND ABBREVATIONS

Unless the context otherwise requires, the terms defined and abbreviations expanded herein below shall have the same meaning given below in this Draft Letter of Offer. The following list of defined terms is intended for the convenience of the reader only and is not exhaustive. Company Related Terms Term Description “RSL” or “the Company” or “our Company” or “we” or “us” or “our”

: Ramco Systems Limited, a public limited company incorporated under the provisions of the Companies Act, having its registered office at 47, PSK Nagar, Rajapalayam 626108, Tamil Nadu, India

Articles/Articles of Association/AoA

: Our Articles of Association

Associate : Redlex 47 Pty Limited, South Africa Auditor : Our Statutory Auditor, namely, M/s CNGSN & Associates, Chartered

Accountants, Chennai Board / Board of Directors : Our board of directors /or a committee thereof Compliance Officer

: Mr. R. Ravi Kula Chandran

Corporate Office : Our corporate office situated at No. 64, Sardar Patel Road, Taramani, Chennai 600 113

Director(s) : Any or all of our director(s) on the Board, as the context may require

ESOP 2000 : Our Employee Stock Option Plan, 2000 including the amendments made to the scheme from time to time

ESOS 2003 : Our Employee Stock Option Scheme, 2003 including the amendments

made to the scheme from time to time

ESOS 2004 : Our Employee Stock Option Scheme, 2004 including the amendments made to the scheme from time to time

ESOS 2008 : Our Employee Stock Option Scheme, 2008 including the amendments

made to the scheme from time to time

ESOS 2009 Plan A : Our Employee Stock Option Scheme, 2009 Plan A including the amendments made to the scheme from time to time

ESOS 2009 Plan B : Our Employee Stock Option Scheme, 2009 Plan B including the

amendments made to the scheme from time to time Equity Share(s) : Our equity share(s) having a face value of `10, inter alia including

such equity shares outstanding and fully-paid up, as on the Record Date, unless otherwise specified in the context thereof

Memorandum/Memorandum of Association/MoA

: Our Memorandum of Association, as amended form time to time

MCL : Madras Cements Limited, a company incorporated pursuant to the

Companies Act

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Term Description

Overseas Branches : Our branch offices in United Arab Emirates, United Kingdom, Germany and New Zealand

Promoter(s) : Mr. P.R. Ramasubrahmaneya Rajha and Mr. P.R. Venketrama Raja Promoter Group : Unless the context requires otherwise, the entities forming part of our

Promoter Group in accordance with the SEBI Regulations and which are disclosed by us to the Stock Exchanges from time to time

Registered Office : Our registered office is located at 47, PSK Nagar, Rajapalayam

626108, Tamil Nadu, India

Subsidiary or Subsidiaries : Our subsidiaries being, (i) Ramco Systems SDN BHD, Malaysia; (ii) Ramco Systems Pte Limited, Singapore; (iii) RSL Enterprise Solutions (Pty) Limited, South Africa; (iv) Ramco Systems Limited, Switzerland; (v) Ramco Systems Corporation, USA; and (vi) Ramco Systems Canada Inc. and the word “Subsidiary” shall be construed accordingly

RIL : Ramco Industries Limited, a company incorporated pursuant to the

Companies Act

Business related Terms Term Description BIS : Business Intelligence Solution

BFSI : Banking, Financial Services and Insurance BPO : Business Process Outsourcing EAM : Enterprise Asset Management ES : Enterprise Solutions EIM : Enterprise Information Management

EDM : Enterprise Data Management

EPM : Enterprise Performance Management

ERP : Enterprise Resource Planning HCM : Human Capital Management ICT : Information, Communication and Technology MRO : Maintenance Repair and Overhaul RODE : Ramco OnDemand ERP R&D : Research and Development SDLC : Software Development Life Cycle SMB : Small and Medium Business SaaS : Software as a Service SOA : Service Oriented Architecture

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Conventional and General Terms Term Description Companies Act : The Companies Act, 1956, as amended from time to time Copyright Act : The Copyright Act, 1955, as amended from time to time Depository : A depository registered with SEBI under the SEBI (Depository and

Participant) Regulations, 1996, as amended from time to time Depositories Act : The Depositories Act, 1996, as amended from time to time. Foreign Currencies : Any official currency of the countries other than India Financial Year/Fiscal : The period of 12 months beginning April 1 and ending March 31 of that

particular year, unless otherwise stated IFRS : International Financial Reporting Standards IT Act : The Income Tax Act, 1961, as amended from time to time Indian GAAP : The generally accepted accounting principles in India Industrial Policy : The industrial policy and guidelines issued by the Ministry of Industry,

GoI Listing Agreement : The equity listing agreements signed between us and the Stock

Exchanges Qualified Institutional Buyers or QIBs

: Public financial institutions as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual fund registered with SEBI, FII and sub-account registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual, multilateral and bilateral development financial institution, venture capital fund registered with SEBI, foreign venture capital investor registered with SEBI, state industrial development corporation, insurance company registered with Insurance Regulatory and Development Authority, provident fund with minimum corpus of ` 250 million, pension fund with minimum corpus of ̀ 250 million, National Investment Fund set up by resolution No. F.No.2/3/2005/DDII dated November 23, 2005 of the Government of India published in the gazette of India Government of India and insurance funds set up and managed by army, navy or air force of the Union of India

Rupees or Rs. or INR or `̀̀̀ : The lawful currency of the Republic of India SEBI Act : The Securities and Exchange Board of India Act, 1992, as amended

from time to time SEBI Regulations : The Securities and Exchange Board of India (Issue of Capital and

Disclosure Requirements) Regulations, 2009, as amended from time to time

Takeover Code : The Securities and Exchange Board of India (Substantial Acquisition of

Shares and Takeovers) Regulations, 1997, as amended from time to time Trademarks Act : The Trademarks Act, 1999, as amended from time to time

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Issue Related Terms Term Description Allottee(s) : The successful applicant(s) to whom Equity Shares are Allotted

pursuant to this Issue Abridged Letter of Offer : The abridged letter of offer to be sent to our Shareholders with respect

to this Issue in accordance with SEBI Regulations Allotment/Allotted : Unless the context otherwise requires, the allotment of Equity Shares

pursuant to this Issue to the Allottees ASBA/Application Supported by Blocked Amount

: Applications Supported By Blocked Amount, being an application (whether physical or electronic) used by a Shareholder to make an application authorizing the SCSB to block the amount payable on application in their specified bank account

ASBA Investor : Investors proposing to subscribe to this Issue through the ASBA process

and who; a) holds the shares of our Company in dematerialized form as on the Record Date and has applied for their Rights Entitlements and / or additional Equity Shares in dematerialized form; b) has not renounced his/her Rights Entitlements in full or in part; c) is not a Renouncee; d) is applying through a bank account maintained with SCSBs

Bankers to this Issue : [●] Business Day : Any day, other than Saturday or Sunday, on which commercial banks

are open for business Composite Application Form/CAF

: The form used by an Investor to make an application for Allotment of Equity Shares pursuant to this Issue

Consolidated Certificate : In case of holding of Equity Shares in physical form, we would issue

one consolidated certificate for the Equity Shares Allotted to one folio pursuant to this Issue

Controlling Branches : Such branches of the SCSBs which coordinate applications under this

Issue by the ASBA Investors with the Registrar to the Issue and the Stock Exchanges and a list of which is available at http:// www.sebi.gov.in

Designated Branches : Such branches of the SCSBs which shall collect CAF from ASBA Investors and a list of which is available on http:// www.sebi.gov.in

Designated Stock Exchange

: BSE

Draft Letter of Offer This draft letter of offer dated November 18, 2010, filed with SEBI for

its observations Eligible Equity Shareholder(s)/ Shareholder(s)

: A holder(s) of Equity Shares as on the Record Date

Issue : The issue of [●] Equity Shares of face value of`10/- each, for cash at a

price of ̀ [●] per Equity Share including a premium of ` [●] per Equity Share aggregating upto ̀ 400 Million to the Eligible Equity Shareholders on rights basis in the ratio of [●] Equity Share(s) for every

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Term Description [●] Equity Share(s) held as on the Record Date, i.e. [●]

Issue Closing Date : [●] Issue Opening Date : [●] Issue Price : ` [●] per Equity Share Issue Proceeds : Proceeds of this Issue received pursuant to Allotment Investor(s) : Our Equity Shareholders as on the Record Date i.e. [●] and Renouncees Lead Manager : Centrum Capital Limited Letter of Offer : The letter of offer to be filed with the Stock Exchanges after

incorporating SEBI’s observations on this Draft Letter of Offer Net Proceeds Issue Proceeds less the Issue related expenses. For further details please

refer to the section ‘Objects of the Issue’ on page 42 of this Draft Letter of Offer

Record Date : [●] Registrar to the Issue : Cameo Corporate Services Limited Renouncee(s) : Any person(s) who have/has acquired Rights Entitlements from Eligible

Equity Shareholders Rights Entitlement : The number of Equity Shares that an Eligible Equity Shareholder is

entitled to in proportion to his/ her shareholding in our Company as on the Record Date

SAF(s) : Split Application Form(s) Self Certified Syndicate Bank or SCSB

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

Stock Exchange(s) : The BSE, NSE and MSE where our Equity Shares are presently listed

and traded Abbreviations Term Description AGM : Annual General Meeting AS : Accounting Standards, as issued by the ICAI from time to time BSE : The Bombay Stock Exchange Limited BPLR : Benchmark Prime Lending Rate CAGR : Compounded Annual Growth Rate CDSL : Central Depository Services (India) Limited CIT : Commissioner of Income Tax

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Term Description DP : Depository Participant DSIR : Department of Scientific and Industrial Research EBIDTA : Earnings Before Interest, Depreciation, Taxes & Amortization EGM : Extraordinary General Meeting EPS : Earnings Per Share FDI : Foreign Direct Investment FEMA : Foreign Exchange Management Act, 1999, as amended from time to time

and any circulars, notifications, rules and regulations issued pursuant to the provisions thereof

FI : Financial Institution FII(s) : Foreign Institutional Investors registered with SEBI under applicable laws FIPB : Foreign Investment Promotion Board FY : Financial Year GDP : Gross Domestic Product GoI : Government of India HRD : Human Resource Development HUF : Hindu Undivided Family ICAI : Institute of Chartered Accountants of India ISIN : International Securities Identification Number ITA : Income Tax Appeal ITAT : Income Tax Appellate Tribunal IT : Information Technology MSE : Madras Stock Exchange Limited MICR : Magnetic Ink Character Recognition N.A. : Not Applicable NAV : Net Asset Value NECS : National Electronic Clearing Service NEFT : National Electronic Fund Transfer NR : Non Resident NRI(s) : Non Resident Indians, as defined in the Foreign Exchange Management

(Deposit) Regulations, 2000, as amended from time to time NSDL : National Securities Depository Limited

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Term Description NSE : The National Stock Exchange of India Limited OCB(s) : a company, partnership firm, society and other corporate body owned

directly or indirectly to the extent of at least sixty per cent by Non-Resident Indians and includes overseas trust in which not less than sixty percent beneficial interest is held by Nonresident Indians directly or indirectly but irrevocably

PAN : Permanent Account Number PAT : Profit after tax RBI : Reserve Bank of India RoC : Registrar of Companies, Tamil Nadu at Chennai

RTGS : Real Time Gross Settlement SEBI : Securities and Exchange Board of India STT : Securities Transaction Tax USD or US$ : United States Dollar VAT : Value Added Tax w.e.f. : With effect from WCDL : Working Capital Demand Loan

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OVERSEAS SHAREHOLDERS The distribution of this Draft Letter of Offer and the Issue of the Equity Shares by us on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. We are making this Issue of Equity Shares on a rights basis to our Equity Shareholders and will dispatch the Letter of Offer and Composite Application Form (“CAF”) to our overseas shareholders who have an Indian address. Equity Shareholders in foreign jurisdiction need to provide an Indian address, if not provided earlier, to receive the Letter of Offer. Our Equity Shares are listed only in India. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed, in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the Equity Shares or with the Rights Entitlements, distribute or send this Draft Letter of Offer in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights Entitlements referred to in this Draft Letter of Offer. Neither the delivery of this Draft Letter of Offer nor any sale hereunder shall under any circumstances create any implication that there has been no change in our affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date.

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PRESENTATION OF FINANCIAL INFORMATION AND CURRENCY OF PRESENTATION Unless stated otherwise, the financial information and data in this Draft Letter of Offer is derived from our audited financial statements as on and for the years ended March 31, 2010 and 2009 and from the unaudited financial results as on and for the six-month period ended September 30, 2010, in respect of which a limited review has been undertaken by our Statutory Auditor in accordance with Standard on Review Engagement (SRE) 2400, Engagements to Review Financial Statements issued by the Institute of Chartered Accountants of India. Our fiscal year commences on April 1 and ends on March 31 of the following calendar year, so all references to a particular fiscal year are to the twelve-month period ended March 31 of that calendar year. We are an Indian listed company and prepare our financial statements in accordance with Indian GAAP, the Companies Act and Indian Accounting Standards. Indian GAAP differs significantly in certain respects from International Financial Reporting Standards and US Generally Accepted Accounting Principles. Neither the information set forth in the financial statements nor the format in which it is presented should be viewed as comparable to information prepared in accordance with International Financial Reporting Standard or any accounting principles other than principles specified in the Indian Accounting Standards. We do not provide a reconciliation of our financial statements to IFRS to IFRS or US GAAP financial statements. In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off, and unless otherwise specified, all financial numbers in parenthesis represent negative figures. Currency of Presentation All references to “India” contained in this Draft Letter of Offer are to the Republic of India. All references to ‘Rupees”, “INR” or “Rs.” or “̀ ” are to Indian Rupees, the official currency of the Republic of India. In this Draft Letter of Offer, references to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words ‘Lakh” or “Lac” mean “100 thousand”; “10 lakhs” means a “million”, and; “10,000 lakhs” means a “billion”. Exchange Rates Unless stated otherwise, the following table sets forth, for each of the periods indicated, information concerning the number of Rupees for which one unit of the said currency could be exchanged at the reference rates published by the Reserve Bank of India. Additionally, disclosure in relation of other foreign currency such as CHF, SGD etc. have also been set out hereunder. The rows titled “Average” in the table below is the moving average rate of exchange applicable for the specified period. The rows titled “closing rate” give the closing rate of the reference rates of the said period. Similarly, the rows titled “low” and “high” give the lowest and highest reference rates during the said period.

Exchange rates Mar-10 Sep-10

Currency High Low Closing rate

Average rate

High Low Closing rate

Average rate

United States Dollar (USD)

50.53 44.67 44.67 47.33 46.56 44.00 44.44 45.53

Switzerland Franc (CHF) 45.84 41.65 41.65 44.19 45.35 39.64 45.35 42.29

Malaysian Ringgits (MYR) 14.03 13.53 13.83 13.73 15.06 13.83 14.60 14.32

Singapore Dollar (SGD) 33.43 31.79 31.79 32.92 34.24 31.79 33.66 32.88

South African Rand (ZAR) 6.25 5.12 5.93 5.86 6.25 5.85 6.25 5.98

Australian Dollar (AUD) 42.35 34.61 40.65 39.39 NA NA NA NA

Canadian Dollar (CAD) NA NA NA NA 43.82 43.04 43.04 43.79 Source: RBI website at www.rbi.org.in

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FORWARD LOOKING STATEMENTS We have included statements in this Draft Letter of Offer which contain words or phrases such as “may”, “will”, “aim”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “potential” and similar expressions or variations of such expressions, that are or may be deemed to be forward looking statements. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, factors affecting:

• Our ability to compete effectively in the industry in which we operate our business; • Our ability to meet substantial working capital requirements or maintain existing credit facilities; • Indian governmental policies regarding the information technology industry, various duties and taxes,

the monetary and interest rate policies and other policies affecting our business; • Our ability to meet the consistent quality requirements of customers or a change in customer

preferences; • Our ability to upgrade our products with change in technology; • Regulatory changes pertaining to the industries in India to which we cater and our ability to respond to

them; • Our ability to successfully implement our strategy; • Our ability to develop new products that appeal to consumers; • Our exposure to market risks; • General economic and political conditions in India and globally, which have an impact on our business

activities; • Our ability to attract and retain qualified personnel; • The monetary and fiscal policies of India; • Unanticipated turbulence in interest rates; • Equity prices or other rates or prices, the performance of the financial markets in India and globally; • Changes in foreign exchange control regulations in India; and • Currency fluctuation risks

For a further discussion of factors that could cause our actual results to differ, please refer to the section titled “Risk Factors” on page xi of this Draft 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 we, nor our Directors, the Lead Manager nor any of our respective affiliates nor affiliates of Lead Manager nor advisors 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 / Stock Exchanges’ requirements, we and the Lead Manager will ensure that Investors are informed of material developments until the time of the grant of listing and trading permission for the Equity Shares by the Stock Exchanges.

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SECTION II - RISK FACTORS An investment in Equity Shares involves a degree of risk. Prior to investing, investors should carefully consider the risks described below, in addition to the other information contained in this Draft Letter of Offer, before making any investment decisions relating to our Equity Shares. Investors should carefully consider all the information contained in the section titled “Financial Information” on page 76 of this Draft Letter of Offer, for the information related to our financial performance. The occurrence of any of the following events could have a material adverse effect on our business, results of operation, financial condition and prospects and cause the market price of our Equity Shares to fall significantly and you may lose all or part of your investment. Our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify or quantify the financial or other implications of any of the risks mentioned herein. You are advised to read the following risk factors carefully before making an investment in the Equity Shares offered in this Issue. You must rely on your own examination of the Company and this Issue, including the risks and uncertainties involved. The Equity Shares have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this Draft Letter of Offer. INTERNAL RISK FACTORS 1. Our Company has incurred losses in the past. We cannot assure you that the same would not continue

or occur in the future.

In Fiscal 2009 and 2008, our loss before tax on a consolidated basis (excluding exceptional items) and in Fiscal 2010, 2009 and 2008 our loss before tax on an unconsolidated basis (excluding exceptional items) aggregated as under. The losses were on account of various reasons including higher interests costs, higher fixed operational costs like employee and administrative expenses and due to market conditions. Our profit before tax on a consolidated basis (excluding exceptional items) for Fiscal 2010 is also stated below.

Particulars ( `̀̀̀ in million) Fiscal 2010

Fiscal 2009 Fiscal 2008

Consolidated Profit/(Loss ) 34.25 (391.02) (493.55)Unconsolidated Loss (0.47) (432.30) (368.18) There can be no assurance that we will not incur losses in the future. Our failure to generate profits may adversely affect the market price of our Equity Shares going forward, restrict our ability to pay dividends and impair our ability to raise capital and expand our business. 2. We have had negative cash flow from our operations, investments and financing activities (as per

consolidated financial statements) in the past. Any negative cash flow in the future would adversely affect our business, results of operations and financial condition.

We had negative cash flow from our operating, investing and financing activities in the past. Our cash flows from operating, investing and financing activities are detailed in the table below: Particulars Fiscal 2010

`̀̀̀ In Million Fiscal 2009 `̀̀̀ In Million

Fiscal 2008 `̀̀̀ In Million

Operating activities 119.88 (78.43) (31.69) Investing activities (271.04) 417.16 528.53 Financing activities 123.23 (404.98) (502.70) There can be no assurance that our cash flow will be positive in the future. Any negative cash flows in future would adversely affect our business, results of operations and financial condition. 3. We are involved in certain legal proceedings which, if determined against us may have an adverse

impact on business operations, profitability and financial condition We are party to various legal proceedings including suits, consumer related proceedings, tax disputes etc. These proceedings are pending at different levels of adjudication before the appropriate forums and if determined

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against us, may have an adverse impact on our business, financial condition and results of operations. The table below summarises the legal proceedings that are filed against us:

Category Company

No. Amount Involved in ̀ in Million (where quantifiable) Civil proceedings 1 ` 3.35 Tax proceedings 10 Nil* Consumer cases 1 ` 2.11 *Tax proceedings typically pertain to disallowance of expenses and not further tax claims. Should any of the Tax proceedings be decided against us, expenses or exemptions that we have claimed will not be allowed, hence reducing taxable loss claimed by us.

Should any new development arise, such as a change in the Indian law or rulings against us by appellate courts or tribunals, we may need to make provisions in our financial statements, which may increase our expenses and current liabilities. We can give no assurance that these legal proceedings will be decided in our favour. For further information relating to these proceedings, see “Outstanding Litigation and other Defaults” on page 135 of this Draft Letter of Offer. 4. We are presently in violation of Section 383A of the Companies Act, 1956. Non-compliance of the

same attracts consequences under the Companies Act, 1956 Consequent to resignation of our Company Secretary, our Company is presently not in compliance with the provisions of Section 383A of the Companies Act, since October 1, 2010. This non compliance may attract a liability as per the provisions of the Act. No show cause notice in respect of the above has been received by the Company from the office of Registrar of the Companies till date. We are in the process of identifying a suitable candidate for this position.

5. We incur substantial R&D costs which may not yield significant revenues. Further, if we are unable to

sustain our R&D efforts, our results of operations may be adversely affected. Our business strategy is based upon our ability to ensure that unique and competitive products and technologies are offered to customers on a regular basis. In order to develop and sell such products, we incur substantial R&D costs. In Fiscal 2010, 2009 and 2008 our R&D costs on an unconsolidated basis was ` 333.62 million, ̀ 328.36 million and ̀ 396.15 million representing 32.25%, 35.55% and 41.03% of our total revenues respectively. If we are unable to sustain our R&D efforts, our results of operations may be adversely affected. We have incurred substantial expenditure to develop our current technology platform, VirtualWorks and other products. We cannot assure you that the commercialization of this technology platform will be profitable or that our competitors will not develop a platform that is superior to VirtualWorks or an ERP superior to the products developed by us. We believe that we must continue to dedicate significant amount of resources to our R&D efforts to maintain our competitive position. However, we cannot assure you that our R&D efforts will yield significant revenues.

6. Our revenues are highly dependent on the business operations of our Subsidiaries. Our Subsidiaries

have incurred losses and had negative networth in the past, this may continue or occur in the future, which may adversely affect our revenues and results of operations

A substantial portion of our revenues arise on account of the business operations of our Subsidiaries. In Fiscal 2010, 2009 and 2008, the revenues earned by our Subsidiaries as a percentage of the total revenues earned on a consolidated basis was 49.52%, 62.48% and 68.92% respectively. Some of our Subsidiaries have incurred losses in the last three years as given below:

Profit/(Loss) after Tax (` in million) S. No. Subsidiaries Fiscal 2010 Fiscal

2009 Fiscal 2008

1. Ramco Systems Corporation, USA (including its subsidiary Ramco Systems Australia (Pty) Limited., Australia*)

50.54 38.25 (94.63)

2 Ramco Systems Limited, Switzerland (28.48) (13.02) (0.40) 3 Ramco Systems SDN. BHD, Malaysia 1.84 (1.20) 4.07 4 Ramco Systems Pte Limited, Singapore 15.62 4.97 (18.60)

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5 RSL Enterprise Solutions Pty Limited, South Africa

(9.29) 9.75 (8.04)

* Ramco Systems Australia (Pty) Limited has been de-registered vide de-registration certificate dated January 27, 2010 Some of our Subsidiaries have had negative Net Worth during the last three fiscal years (as per their respective financial statements), as set forth below:

Positive / (Negative) Networth (̀ in million) Sr. No. Company Fiscal 2010 Fiscal 2009 Fiscal 2008

1 Ramco Systems Pte Ltd, Singapore 3.59 (12.03) (17.01) 2 Ramco Systems Australia Pty Ltd,

Australia 0.00 (8.87) (2.45)

We cannot provide any assurance that these Subsidiaries will be profitable in future or that their revenue will sustain/continue to grow. Poor performance of these Subsidiaries may adversely affect our consolidated results of operation and financial conditions. 7. The unsecured loans taken by us can be recalled by the lenders at any time. In the event of the lenders

exercising their right to recall the said loans, our financial position would be adversely affected.

As on October 31, 2010, we have, on a consolidated basis, availed unsecured loans of ` 1400 million. Unsecured loan agreements contain a clause for repayment on demand and may be recalled by our lenders at any time without notice, or with short notice, upon default or otherwise. If the lenders of such loans exercise their right to recall the said loans, it could have an adverse affect on our financial position. 8. Some of our Promoter Group entities have negative networth as a result of losses incurred by them in

the past. Since the performance of our Promoter Group has an impact on our Promoters, continued losses by our Promoter Group entities may have an adverse impact on our performance

The following Promoter Group entities have incurred losses and have a negative networth:

Positive / (Negative) Networth (̀ in million)

Sr. No. Company

Fiscal 2010 Fiscal 2009

Fiscal 2008

1 Sri Harini Textiles Ltd (7.25) 8.02 30.99 2 Ramco Management P Ltd 82.77 2.62 (1.08) 3 Ramamandiram Agricaltural Estate P Ltd (0.13) (0.02) (0.24) 4 Sri Sandhya Farms (India) P Ltd 0.02 (0.03) 0.02 5 Sri Saradha Deepa Farms P Ltd (1.10) (1.06) (0.96)

Some of our Promoter Group entities have negative networth as a result of losses incurred by them in the past as stated above. Good performance by Promoter Group entities helps strengthen the position of the entire group and any continued losses by our Promoter Group entities may have an impact on our Promoters, which in turn may adversely impact our performance. 9. We intend to utilize [●] % of the Issue proceeds to meet marketing and publicity expenses (“Marketing

Expenses”) . We do not have any definitive agreement(s) for the Marketing Expenses which may lead to cost overruns. Further, we cannot assure you that such expenses would benefit us positively.

We intend to utilize [●] % of the Issue proceeds to meet the Marketing Expenses in relation to brand building activities including launch of our new product(s). We have not entered into any definitive agreement(s) for the Marketing Expenses. The terms obtained in future pursuant to any definitive agreement(s) may not be favourable and the same may also result in cost overruns requiring additional funding. Further, we cannot provide any assurance that such marketing and publicity would result in procuring clients or increase in our revenues, goodwill or market share or in any other manner, a benefit over our competitors and thereby impact our business and financial condition positively.

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10. We intend to utilize [●] % of the Issue proceeds for general corporate purposes including , prepayment or repayment of debt, meeting working capital requirements, etc. We cannot assure you that the proceeds earmarked for general corporate purposes may be utilized in a manner which may yield positive returns

We intend to use [●]% of the Issue Proceeds for general corporate purposes including but not limited to, prepayment or repayment of debt, meeting working capital requirements, funding project cost overruns (if any), investing in upgrading our technology, meeting R&D costs and /or meeting exigencies. The deployment of such funds is entirely at the discretion of our management. We cannot assure you that the proceeds earmarked for general corporate purposes may be utilized in a manner which may yield positive returns.

11. Our client contracts can be terminated with/without cause and with 30/60 days notice, which could

negatively impact our revenues and profitability. The clients usually retain us through non-exclusive service agreements. Most of our client project contracts can be terminated with or without cause, with 30 days/60 days notice and without termination related penalties. Our business is dependent on the decisions and actions of our clients, and there are a number of factors relating to our clients that are outside our control that might result in the termination of a project or the loss of a client. The clients may demand price reductions, change their outsourcing strategy by moving more work in-house or to our competitors. Any of these factors could adversely affect our revenues, result of operations and profitability. 12. High days of sales outstanding may increase our collection risk, which could adversely affect our

results of operations We have entered into significant number of transactions which are trade related with our customers. However the amount due in respect of trade related activities are unsecured, interest free and have no fixed terms of repayment. Further, we normally allow customers 15 to 60 days to pay amounts due from the invoice date. For Fiscal 2010 and 2009, our days of sales outstanding (which is the ratio of sundry debtors to total sales in a particular period multiplied by the number of days in that period) was approximately 96 days and 75 days, respectively. Our inability in future to accelerate the realisation of receivables could adversely impact our results of operations. 13. We have taken many properties on rent / lease / license and we are subject to the risks, including non-

renewal, termination and disputes, associated with such contracts which could adversely affect our business operations and financial condition

Currently we operate from leased / rented facilities including our Corporate Office which can be terminated for cause by the lessor / owner. These lease and license agreements may not be renewed on favourable terms or at all and in some events can be terminated prior to their expiration. Moreover, since the lease arrangements are subject to renewal from time to time, there may be an increase in lease rentals payable. In case of such termination, we may encounter delay in finding suitable alternative properties in required timeframe or may not find alternatives at all. Because of the nature of our business, continuity of operations and access to facilities and systems is of critical importance. Failure to renew the said lease agreements would adversely impact our revenues from business operations, financial condition and profitability. Further, as a result, termination, or threat of termination, may have a disruptive effect on our ongoing business, distract our management and employees and may increase our expenses. In the event of premature/unforeseen termination of leases, we will need to make alternate arrangements, which may adversely affect our operations in the interim. 14. The lease agreements pertaining to certain immovable properties are not adequately stamped or

registered in accordance with applicable laws. Consequently, the said lease deeds may be inadmissible as evidence in a court of law, unless the defects are rectified.

The lease documents pertaining to certain properties in our possession are neither registered under the provisions of the Registration Act, 1908 nor sufficiently stamped in accordance with the applicable stamp acts. The effect of inadequate stamping is that the document is not admissible as evidence in legal proceedings and parties to that agreement may not be able to legally enforce the same, except after paying a penalty for inadequate stamping. The effect of non-registration, in certain cases, would make the document inadmissible in legal proceedings. Any potential dispute vis-à-vis the said premises and our non-compliance of local laws relating to stamp duty and registration may adversely impact the continuance of our activity from such premises.

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15. We derive a significant portion of our revenue from a limited number of clients and from certain geographical area. The loss of, or a significant reduction in the revenues we receive from, one or more of these clients or one or more of these geographical areas , may adversely affect our business.

We derive a significant portion of our revenues on a consolidated basis from limited number of large corporate clients. In Fiscal, 2010, 2009 and 2008 our top ten clients accounted for 31%, 40% and 44%, respectively, of our revenues. In Fiscal 2010, our revenues from the largest customer amounted to 10% of our total revenues. Since there is significant competition for the services that we provide and typically we are not an exclusive service provider to our major clients, the level of revenues from the major clients could vary from period to period. Further, significant amount of our revenues are derived from operations in certain geographical areas. Some of the areas from where we derive significant portions of our revenues are India, USA and Middle East. The loss of, or a significant reduction in the revenues that we receive from, one or more of our major clients or any political instability or other such events occurring in these select geographical areas may adversely affect our business and profitability. 16. We face competition from global and Indian enterprise solution companies and any increase in global

competition or access to advanced technical knowhow or process by our competitors may adversely affect our business

We face competition from global and Indian enterprise solution companies who use their resources and experience in a competitive manner, including by making acquisitions and investing large amounts in R&D and pursuing aggressive marketing and sales initiatives. We may in the future not be able to provide similar or better technology solutions than our competitors. Should there be any significant increase in global competition or if we are unable to cope with the changing market conditions, our business and operating results could be adversely affected. Further, we cannot assure you that our competitors will not develop or gain access to manufacturing processes and/or technical knowhow which are similar to ours. The occurrence of any of those events could have an adverse effect on our business, results of operations and financial performance. 17. Our revenues are dependant on our ability to innovate and develop unique offerings that meet

customer expectations. Failure to predict customer preferences or industry changes or if we are unable to modify our products and services would adversely affect our financial condition and results of operations.

We operate in a market characterized by frequently changing customer requirements due to dynamic business environment. Our success depends largely on the timely introduction of new products and upgrades, as well as cost reductions on current products to address the operational speed, efficiency and cost requirements of our customers. If we are unable to predict customer preferences or industry changes or if we are unable to modify our products and services on a timely basis, we may lose customers. Further, if we experience technical errors or delays in releasing new products or new versions of products, we could lose revenues. Flaws in our software could also subject us to liability and warranty claims, which could adversely affect our business and operating results. 18. Our revenues are dependent on our Company and our Subsidiaries, Overseas Branches, partnerships,

alliances and other marketing arrangements ability to effectively market and implement our enterprise products and services. Failure to market and implement our products to multiple customers may adversely affect our results of operations

To market our products, we are dependent on our Subsidiaries, Overseas Branches, partnerships, alliances and other marketing arrangements. Based on our consolidated financial statements, our subsidiaries contributed 49.52 % of our sales in Fiscal 2010. If our Subsidiaries are not able to perform in the future it may have a material adverse effect on our business, results of operations and financial condition. Also the nature of our offerings is such that after they are deployed, we usually need to only provide maintenance services. Therefore, the quantum of repeat business for our offerings is low. Further, in view of the limited nature of the engagements and to ensure better revenues, we are highly dependent on our ability to effectively market our products and services to new customers on an ongoing basis through our Subsidiaries, Overseas Branches and other partnerships. We cannot assure you that we will be appointed by customers to

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implement our offerings on a regular basis. Failure to market and implement our products effectively to multiple customers may adversely affect our results of operations. 19. As on September 30, 2010 our contingent liabilities not provided for aggregated to ` 56.62 million and

in the event certain of these liabilities materialising, our financial condition may be adversely affected. As on September 30, 2010 contingent liabilities not provided for appearing in our consolidated financial statements, aggregated to ` 56.62 million. The following table gives the details of the nature of contingent liabilities:

Note: The Company is engaged in development of software products, which are marketed by the Company and its overseas subsidiaries. The intellectual property rights are held by the Company. There are in-built warranties for performance and support. Claims which may arise out of these are not quantifiable and hence not provided for. In the event certain of these liabilities materialising, it could have a material adverse effect on our business, financial condition and results of operations. For further information on such contingent liabilities, please refer the section “Financial Information” on page 76 of this Draft Letter of Offer. 20. We have earlier entered into and expect to continue to enter into Related Party Transactions in future.

There can be no assurance that such transactions, individually or in the aggregate will not have an adverse effect on our business, financial condition and results of operations.

We have entered into transactions with our Subsidiaries, Promoter group companies and certain directors. Summary of Related party transactions during the last 3 financial years on consolidated basis are as under:

Particulars Fiscal 2010 ` In

Million

Fiscal 2009 ` In

Million

Fiscal 2008 ` In

Million

Income from Sale of goods and services Madras Cements Limited Ramco Industries Limited Rajapalyam Mills Limited The Ramaraju Surgical Cotton Mills Limited Loans availed Madras Cements Limited Ramco Industries Limited Interest Expense Madras Cements Limited Ramco Industries Limited Rent Expense Madras Cements Limited Rent Income Ramco Industries Limited Sale of Assets Madras Cements Limited Corporate Guarantee given by the Group Companies

191.15 22.17 4.18 2.04

540.00 12.50

14.69 0.22

69.54

-

-

168.30

7.54 1.03 0.60

- 12.50

24.50 0.74

61.87

0.23

750.00

132.49

3.86 3.52

12.40

- -

20.06 -

-

0.28

901.25

Particulars Amount in ` Million

a) Estimated amount of contracts remaining to be executed on capital account and not provided for

6.00

b) Bank Guarantees 49.97 c) Letters of Credit 0.65

Total 56.62

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Madras Cements Limited Ramco Industries Limited Remuneration to Shri P. R. Venketrama Raja Sitting Fees paid to Shri P. R. Ramasubrahmaneya Rajha

950.00 280.00

1.17

0.03

527.59 337.50

1.27

0.04

700.00 100.00

1.27

0.04

Total 2087.69 1893.71 1875.17

Whilst, we believe that all such transactions have been conducted on an arms-length basis and contain commercial terms, there can be no assurance that we could not have achieved more favourable terms had such transactions not been entered into with related parties. Furthermore, it is likely that we will enter into related party transactions in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our financial condition and results of operations. 21. We have not declared any dividends in the past and we cannot assure you that we will be able to pay

dividends in future consequently not providing any returns on your investment In the past, we have not declared any dividends to our Shareholders. The declaration and payment of dividends will be recommended by our Board and approved by our Shareholders, in their discretion, and will depend on a number of factors, including but not limited to our earnings, capital requirements and overall financial condition. We cannot assure you that we will be able to pay dividends in future consequently not providing any returns on your investment.

22. The purposes for which the Issue Proceeds are to be utilized have not been appraised by any bank or

financial institution. In the event of any upward revision in the estimates there could be possible delays that could adversely affect our results of operations.

We intend to use the Net Proceeds that we receive from this Issue for the purposes described in “Objects of the Issue” on page 42 of this Draft Letter of Offer. The estimated use of such proceeds have not been appraised by any bank or financial institution. In view of the highly competitive nature of our industry we may have to revise our management estimates’ from time to time and consequently our funding requirements may also change. This may result in the re-allocation/rescheduling of use of such proceeds causing delays or increase in our proposed expenditure and our results of operations may be adversely impacted.

Further, the utilization of the Issue Proceeds and other financings will be monitored by our Board and is not subject to monitoring by any independent agency.

23. Our international operations expose us to complex management, legal, tax and economic risks and

breach of any international legal, tax or economic regulation could have material impact on our operations

We have Subsidiaries, Associate and branch offices in various countries and a number of our IT services professionals are assigned to projects outside India. As a result of our expanding international operations we are subject to risks inherent to establishing and conducting operations in international markets, including: •••• Cost structures, cultural and language factors, associated with managing and coordinating our global

operations; •••• Compliance with a wide range of foreign laws, including immigration, labour and tax laws; •••• Restrictions on repatriation of profits and capital; and •••• Potential difficulties with respect to protection of our intellectual property rights in some countries.

Consequences of breach of any international legal, tax or economic related regulations or rules could have material impact on our operations in such jurisdiction and on our financial conditions.

24. If we are unable to successfully protect our computer systems from security risks, our business could suffer

While we have implemented industry-standard security measures, our network may still be vulnerable to unauthorized access, computer viruses and other disruptive problems. A party that is able to circumvent security

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measures could misappropriate proprietary information and cause interruptions in our operations. We may be required to expend significant capital or other resources to protect against the threat of security breaches or to alleviate problems caused by such breaches. There can be no assurance that any measures implemented will not be circumvented in the future. Any disruption in our services or any misappropriation of data from our systems could hinder or affect our ability to complete client projects on time and may lead to client dissatisfaction and have material adverse effect on our business, results of operations and financial condition. 25. The appreciation of the Rupee, particularly against the USD, Singapore Dollars, Malaysian Ringgits,

Swiss Franc and South African Rand would have a material adverse effect on our results of operations We report our financial results in Rupees, but a significant portion of our income has been and may continue to be primarily denominated in USD, Singapore Dollars, Swiss Franc, Malaysian Ringgits and South African Rand, exposing us to foreign currency risks.

In Fiscal 2010, 2009 and 2008 our revenue denominated in foreign currencies amounted to ` 993.38 million, ̀ 1336.79 million and ̀ 1447.78 million which was approximately 59%, 71% and 74% of our total revenue respectively, while approximately 40%, 42% and 46%, of our total expenditures, was denominated in foreign currencies. We also incur expenditure in a number of currencies, including the U.S. Dollar, Switzerland Franc, Singapore Dollar, Malaysian Ringgit, South African Rand etc. Any change in foreign exchange control regulations may influence our results of operations and financial condition.

The currency exchange rate between the Rupee and the USD, Singapore Dollar, Swiss Franc, Malaysian Ringgit and South African Rand has changed substantially in recent years and may continue to do so in future. To the extent these currencies depreciate against the Indian Rupee, the revenue that we report in Indian Rupees will be negatively affected. Conversely, an appreciation of these currencies against the Indian Rupee would increase our revenue reported in the Indian Rupee and would also increase our expenses incurred in those currencies. In addition, conducting business in currencies other than the Indian Rupee subjects us to fluctuations in currency exchange rates that could have a negative impact on our reported operating results. Fluctuations in the value of the Indian Rupee relative to other currencies impact our revenue, cost of sales and services and operating margins and results in foreign currency translation gains or losses. We have currently not entered into any hedging arrangements to mitigate any foreign exchange fluctuation risk and cannot assure you that we will be able to mitigate the adverse impact of currency fluctuations on the results of our operations. 26. Agreements with our Subsidiaries are subject to transfer pricing regulations. These agreements may

be subject to regulatory challenges, which may subject us to higher taxes adversely affecting our earnings.

We have entered into agreements with our Subsidiaries to formalize the transfer of services between us and our Subsidiaries. In these agreements, we have determined transfer prices that we believe is the same as the prices that would be charged by unrelated parties dealing with each other at arm’s length. However, if the taxing authorities of India or other jurisdictions were to successfully challenge these agreements or past transactions undertaken pursuant to the terms of these agreements, or require changes in transfer pricing policies, we could be required to re-determine transfer prices, which may result in a higher overall tax liability to us and as a result our earnings would be adversely affected. In this regard, we are subject to risks not faced by other companies with international operations that do not create inter-company transfers. We believe that we operate in compliance with applicable transfer pricing laws in relevant jurisdictions. However, there can be no assurance that such laws will not be modified, which, as a result, may require changes to transfer pricing policies or operating procedures. Any modification of transfer pricing laws may result in a higher overall tax liability to us, adversely affecting our earnings and results of operations. 27. Increase in interest rates for loans availed by us from banks may adversely impact our results of

operations. We have availed term loans/ working capital loans from banks / financial institutions, from time to time to meet our working capital requirements. The loans availed by us are subject to payment of interest. We are exposed to the risk of increase in interest rates by the banks in respect of the loans availed by us. Any increase in expenses

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to be incurred by us while paying interest on the loans availed may have a material adverse effect on our business prospects, financial condition and result of operations.

28. We are subject to restrictive covenants in certain debt facilities provided to us by our lenders which

may affect our management decisions and have a potential impact on our results of operations There are restrictive covenants in agreements we have entered into with certain banks for borrowings. These restrictive covenants require us to seek the prior permission of the said banks for various activities such as effecting any change in the capital structure, declaration of dividends for any year except out of profits relating to that year, implementing any scheme of expansion or acquire fixed assets, enter into borrowing arrangements with any bank, Financial Institution, issuing new securities, changing the management, merger, consolidation, sale of assets, creating subsidiaries or making certain investments, and certain financial covenants may limit our ability to borrow additional money or to create additional liens. We have been able to in the past obtain required lender consents for desired actions, but there can be no assurance that such consents will be obtained in the future and this may restrict/ delay some of the actions / initiatives necessary to operate and grow our business and also impact us financially. Further, should we breach any financial or other covenants contained in any of our financing agreements, we may be required to immediately repay our outstanding loan(s) either in whole or in part, together with any related costs. Further, we are required to obtain the consent of our lenders before making this Issue. We have applied to the concerned lenders for their approval. There can be no assurance that we will be able to obtain such consents, on time or at all. In the event we are unable to obtain the said consents prior to the filing of the Letter of Offer, we will not be able to proceed with this Issue. 29. Our business is dependent on our intellectual property rights and any infringement or unauthorized

access to the same could adversely affect our business We have been granted 6 patents in respect of our products and have obtained registration for 37 of our trademarks. We have also submitted 6 applications for registration of our trademarks. We rely on a combination of patent, trademark and contractual commitments to protect our proprietary information. Despite our efforts, these measures can only provide limited protection. Unauthorized third parties may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property. Any intellectual property right owned by us may be invalidated, circumvented or challenged in the event of any possible infringement. Any of our pending or future intellectual property right applications, whether or not being currently challenged, may not be issued with the scope of the claims we seek. If we cannot protect our proprietary technology against unauthorized copying or use, we may not remain competitive. The source code of our software applications is a critical asset of our operations. We will lose our competitive edge if any of our competitors appropriate such intellectual property rights. Under certain contracts we are required to keep our source code in escrow or enter into specific secrecy/confidentiality agreements with our customers. However, we cannot assure you that there will be no unauthorized disclosures of our source code pursuant to such escrow arrangements. Further, given the complex nature of the software development involving human intellect, we cannot rule out the replication of similar products by our existing or ex-employees. Any infringement or unauthorized access or such similar instances pertaining to our intellectual property rights could adversely affect our business. 30. In the case of an inadvertent infringement by us of intellectual property rights of third parties, the

same may expose us to liabilities that are unquantifiable Claims of intellectual property infringement or trade secret misappropriation may be asserted against us or our customers in connection with their use of our products and the outcome of such claims may be uncertain. An unfavorable outcome in such a claim could require us to cease offering for sale of the products that are subject to such a claim or pay substantial monetary damages to a third party and/or make ongoing royalty payments to a third party. Certain of our customer contracts provide that in the event of a third party claim for intellectual property infringement, we shall either obtain permission from the third party to continue to use the offending intellectual property or find a substitute for the offending intellectual property. In the event that we are unable to provide either of these remedies to our customers, our customers’ contracts provide that we shall refund the license fee received, after deducting a reasonable charge for the time period during which the customers used the software. If we are not able to successfully challenge such claims, our business and results of operations could be materially affected.

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31. Our products may contain flaws, which could result in damage to our reputation and loss of customers We provide our customers with products and services that are critical to the operations of their business. Our software solutions may contain undetected flaws, which could result in a claim against us for substantial damages, regardless of our responsibility for such a failure or defect. Although we attempt to contractually limit our liability for damages, including consequential damages, we cannot assure you that the limitations on liability will be enforceable in all cases. Except in certain instances, we have not taken coverage for errors and omission insurance coverage. We cannot assure that the insurance covers taken by us will be fully adequate and any such occurrence on account of errors and omission could result in damage to our reputation and loss of customers, which would adversely affect our business, results of operations and financial condition. 32. Our insurance coverage may not adequately protect us against certain operating hazards. To the extent

that any uninsured risks materialize or we fail to effectively cover ourselves for any risks, we could be exposed to substantial costs and losses that would adversely affect results of operations.

We maintain general liability insurance coverage in relation to our employees, assets, stocks, properties etc. and to mitigate business risks. We believe that our insurance coverage is generally consistent with industry practice. However, to the extent that any uninsured risks materialize or if it fails to effectively cover us of any risks, we could be exposed to substantial costs and losses that would adversely affect results of operations. In addition, we cannot be certain that the coverage will be available in sufficient amounts to cover one or more large claims, or that our insurers will not disclaim coverage as to any claims. A successful assertion of one or more large claims against us that exceeds our available insurance coverage or that leads to adverse changes in our insurance policies, including premium increases or the imposition of a large deductible or co-insurance requirement, could adversely affect our results of operations.

33. Our success depends largely upon our skilled software professionals and our ability to attract and

retain these personnel. The industry where we operate is a highly employee intensive industry having a high rate of attrition

Our ability to execute projects, which meet the customer’s expectations, depends largely on our ability to attract, train, motivate and retain qualified and experienced professionals. Competition for specialized technical personnel in the technology industry is high. We also face competition for skilled professionals from international labour markets. Our attrition rates (attrition rate is calculated as the ratio of the number of employees who have left us during a defined period to the average of the total number of employees who are on our payroll at the beginning and end of such period) for Fiscal 2010, Fiscal 2009 and Fiscal 2008 were 28%, 43%, and 29% respectively. We do not maintain key-man life insurance for any of the senior members of our management team or other key managerial personnel. Competition for senior management in the IT industry is intense, and we may or may not be able to retain such senior management personnel or attract and retain new senior management personnel in the future unless we offer Industry best compensation packages, which will have impact on our profitability. Any increase in our attrition rates, particularly with respect to experienced software personnel will adversely affect our growth strategy and significantly impact our resource management. Apart from our employees, we also engage IT professionals provided by external agencies who are hired for particular projects. We may not be able to ensure that such external agencies continue to retain such personnel. Further, the industry in which we operate is dependent on the quality of people and our success depends largely upon our ability to attract, hire, train and retain qualified employees including our ability to attract employees with specialized domain related experience. The loss of any member of senior management or other senior professionals or specialized employees may adversely affect our business, results of operations and financial condition. 34. Entry barriers could limit our ability to expand our operations in international jurisdictions We derive a substantial portion of our revenues from onsite operations in the United States, Europe, Africa and Asia Pacific region. Immigration laws in these countries are subject to legislative change, political and economic conditions, particularly in relation to grant of work permits and business visas. Our ability to staff projects with software professionals who are not citizens of the country where the work is to be performed is constrained by such entry barriers, which could have a material impact on our business, financial condition and results of operations. 35. We face risks associated with investments, partnerships and alliances or other ventures.

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In order to enhance our capabilities, technical expertise and geographic coverage, we have in the past and may in the future enter into joint ventures, partnerships and alliances, which may prove to be difficult to integrate and manage or may not be successful. These difficulties may disrupt our ongoing business, affect our management and employees and increase our expenses. Any divestments, disassociation, withdrawal from such alliances, partnerships, joint ventures in future could adversely affect us. 36. We require certain approvals or licenses in the ordinary course of business, and the failure to obtain

them in a timely manner or at all may adversely affect our operations We require certain approvals, licenses, registrations and permissions for conducting our business in India and various foreign jurisdictions, which have currently been obtained for our business. However wherever applicable, if our approvals or licenses are not renewed on expiry or if the new approvals or licenses are not obtained in time, our business may be adversely affected. For more information, please refer to the section titled “Government and Other Approvals” on page 141 of this Draft Letter of Offer. 37. We have availed of loans from banks, financial institutions and since our Promoter Group entities

have guaranteed most of such loans we may not in the future, be able to raise any additional debt if our Promoter Group entities decline to provide such guarantees. A high level of debt, failure to meet the covenants in the loan agreement and poor business performance could materially affect our ability to fund the operations of our business

Our working capital requirements have been and are expected to continue to be extensive. In order to finance our business, we have incurred significant levels of debt. We may need to obtain additional sources of funding, which may include equity, debt or convertible debt financing, in the future. Further, since most of the loans obtained by us have been guaranteed by our Promoter Group entities i.e. MCL and RIL, we may not in the future, be able to raise any additional debt if our Promoter Group entities decline to provide such guarantees. A high level of debt, failure to meet the covenants in the loan agreement and poor business performance could materially affect our ability to fund the operations of our business. If operating cash flows are not sufficient to meet our expenses as they become due, we may be required to delay or reduce our capital expenditure programme or the development of new products or be forced to sell our assets or may have to forego potential business opportunities. 38. Our Promoters and Promoter Group entities will continue to control us and their interests may not

concur with the interests of the other Shareholders As at September 30, 2010 our Promoters and Promoter Group entities hold 61.33% of our pre-Issue equity capital. They currently exercise substantial control over us and inter alia have the power to elect and remove a majority of our Directors and/or determine the outcome of certain important proposals, which require the specific approval of our Shareholders. We cannot assure you that the interest of our Promoters and Promoter Group entities will not conflict with the interests of other Shareholders. 39. We may issue fresh shares, which may result in shareholding dilution for an Investor Any future equity offerings by us, sale by significant shareholders and/or the issue of Equity Shares pursuant to exercise of stock options under the various employee stock option schemes or by way of an induction of strategic investors, may lead to a dilution of Investor shareholding and/or affect the market price of our Equity Shares. 40. Valuations in the software / information technology industry may not be sustained in future and

current valuations may not be reflective of future valuations for the industry We are global providers of enterprise products and solutions. We believe that in India there are no directly comparable competitors in the product segment in which we operate, thus the financials of our Company may not be comparable with the other players in the industry. Valuations in the software/information technology industry in which we operate may presently high and may not be sustained in future and current valuations may not be reflective of future valuations for the industry. 41. Grants of stock options under our employee stock option schemes will result in a charge to our

profit and loss account.

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We have various employee stock option schemes in place, under which our eligible employees and Directors and those of our subsidiary companies are eligible to participate. As of the date of this Draft Letter of Offer, we have granted options to eligible employees and one Director pursuant to various schemes. Under Indian GAAP, the grant of stock options will result in a charge to the profit and loss account based on the difference between the fair value of shares determined at the date of grant and the exercise price. For details on the employee stock option schemes, see section titled “Capital Structure” on page 36 of this Draft Letter of Offer. EXTERNAL RISK FACTORS 42. A third party could be prevented from acquiring control of over us because of the takeover regulations

under Indian law There are provisions in Indian law that may discourage a third party from attempting to take control of us, even if it would result in the purchase of our Equity Shares at a premium to the market price or would otherwise be beneficial to our shareholders. Indian takeover regulations contain certain provisions that may delay, deter or prevent a future takeover or change in control so as to ensure that the interests of shareholders are protected. Any person acquiring either “control” or an interest (either on its own or together with parties acting in concert with it) over certain specified thresholds of voting equity shares must make an open offer to acquire at least another 20% of our outstanding voting Equity Shares. 43. Fluctuations in operating results and other factors may result in decrease in Equity Share price Stock markets have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Equity Shares. There may be significant volatility in the market price of our Equity Shares. If we are unable to meet market or investor expectations in relation to our financial performance, investors could sell our Equity Shares when it becomes apparent that the expectations of the market may not be realised, resulting in a decrease in the market price of our Equity Shares. In addition to our operating results, changes in financial estimates or recommendations by analysts, governmental investigations and litigation, speculation in the press or investment community, the possible effects of a war, terrorist and other hostilities, changes in general conditions in the economy or the financial markets, or other developments affecting the financial services industry, could cause the market price of Equity Shares to fluctuate substantially. 44. Political opposition to offshore outsourcing in the United States and other countries where we operate

could adversely affect our business Offshore outsourcing has been the subject of intense political debate, and has come under increased government scrutiny within the United States due to its perceived association with loss of jobs in the United States. Several United States state governments have implemented or are actively considering implementing restrictions on outsourcing by United States state government entities to offshore IT services providers. Any changes in the United States, Europe or other countries to their existing laws or the enactment of new legislation restricting offshore outsourcing, particularly by private companies, may impact our business, financial condition and results of operations. 45. We are subject to various Indian income tax benefits however tax benefits are subject to change from

time to time and hence we cannot assure you that we will continue to derive such tax benefits We are currently a loss making entity and therefore cannot avail of the Indian tax benefits. However, if we are able to generate profits, we may avail of such tax benefits, if they are still available. However, we cannot assure you that we will continue to derive such tax benefits. For more details on the tax benefits available in India, please refer to the section titled “Statement of Tax Benefits” on page 46 of this Draft Letter of Offer. 46. Applicability of certain labour laws may adversely affect our profitability India has stringent labour legislations that protect the interests of workers, including legislation that sets forth detailed procedures for dispute resolution and employee removal and legislation that imposes certain financial obligations on employers upon retrenchment. Our employees may form unions in the future. If the labour laws become applicable to our workers or if our employees unionize, it may become difficult for us to maintain flexible labour policies, discharge employees or downsize, and our profitability may be adversely affected. With respect to our employees located at customer premises overseas, we may be exposed to risks arising from

xxiii

contract labour legislations in such jurisdictions. Further, we cannot assure you that there will be no adverse change in the relevant labour legislations in the respective jurisdictions. 47. Any disruption in the supply of power, IT infrastructure and telecom lines could disrupt our business

process or subject us to additional costs Any disruption in basic infrastructure or the failure of the Government to provide appropriate infrastructure facilities could negatively impact our business since we may not be able to provide timely or adequate services to our clients. We do not maintain business interruption insurance and may not be covered for any claims or damages if the supply of power, IT infrastructure or telecom lines is disrupted. This may result in the loss of a client, impose additional costs on us and have an adverse effect on our business, financial condition and results of operations. 48. Remunerative pressures in India may result in increased costs and we may lose our competitive

advantage Remuneration for skilled professionals in India has historically been lower than remuneration costs in other jurisdictions, particularly the United States and Europe. However, remuneration in India is increasing at a faster rate than in the United States, which could result in increased costs for software professionals, particularly project managers and other mid-level professionals which may prevent us from sustaining competitive advantage in terms of personnel cost. We may be forced to increase the levels of remuneration paid to our employees to remain competitive and contain attrition. Compensation increases may result in a material adverse effect on our business, results of operation and financial condition. 49. Our ability to raise capital outside India is subject to Indian laws, which can change from time to time

and restrict us from accessing overseas markets for capital and investments/acquisitions, if any, by us in/of any foreign entities are subject to Indian and foreign regulatory approvals which we may not receive.

Indian laws constrain our ability to raise capital outside India through the issuance of equity or convertible debt securities. Generally, any foreign investment in an Indian listed company requires approval from the relevant government authorities in India, including the Reserve Bank of India. However, there are certain exceptions to this approval requirement for information technology companies on which we are able to rely. Changes to such policies may create restrictions on our capital raising abilities. If the Government of India does not approve the investment, or implements a limit on the foreign equity ownership of information technology companies, our ability to obtain investments, and/or enter into acquisitions with, foreign investors will be limited. In addition, making investments in and/or the strategic acquisition of a foreign company by us requires various approvals from the Government of India and the relevant foreign jurisdiction, and we may not be able to obtain such approvals. 50. Our operating results may be negatively impaired if there is an international economic slowdown A significant portion of our revenues are dependent on customers located in the United States, Europe and the Asia Pacific region. Economic slowdowns and other factors that affect the economic health of these regions may affect our business. If there is an economic downturn in these regions, our customers may reduce or postpone their contracts significantly, which may in turn lower the demand for our products and services and negatively affect our revenues and profitability. More generally, an increased volatility in the financial markets can have an adverse impact on the economies of India and other countries, including economic recession. 51. Terrorist attacks and other acts of violence or war involving India and other countries could adversely

affect the financial markets, result in loss of client confidence, and adversely affect our business, results of operations and financial condition

Terrorist attacks, such as the ones that occurred in New York and Washington, D.C., on September 11, 2001, New Delhi on December 13, 2001, London July 7, 2005, Mumbai July 7, 2006, Mumbai Nov 26, 2008 and other acts of violence or war, including those involving India, or other countries, may adversely affect Indian and worldwide financial markets. These acts may also result in a loss of business confidence and have other consequences that could adversely affect our business, results of operations and financial condition. 52. Natural calamities could have a negative impact on the Indian economy and cause our business to

suffer

xxiv

India has experienced natural calamities such as earthquakes, tsunami, floods, cyclones and drought in the past few years. The extent and severity of these natural disasters has an impact on the Indian economy. Any negative impact of natural disasters on the Indian economy could adversely affect our business and the market price of our Equity Shares 53. Our business may be disrupted by regional conflicts in South Asia South Asia has, from time to time-experienced instances of civil unrest and hostilities among neighbouring countries, such as between India and Pakistan. In the past there have been military confrontations along the India-Pakistan border. The potential for hostilities between the two countries is higher due to recent terrorist incidents in India, troop mobilisations along the border, and the aggravated geopolitical situation in the region. Military activity or terrorist attacks in the future could influence the Indian economy by disrupting communications and making travel more difficult. Such political tensions could create a greater perception that investments in Indian companies involve a higher degree of risk. This, in turn, could have a material adverse effect on the market for securities of Indian companies, including the Equity Shares and on the market of our products and services. 54. After the Issue, the price of our Equity Shares maybe highly volatile, or an active trading market for

our Equity Shares may not sustain The prices of our Equity Shares on the Indian stock exchanges may fluctuate after the Issue as a result of several factors, including: a. volatility in the Indian and global securities markets; b. our results of operations and financial condition; c. performance of our competitors, IT industry and the perception in the market about investments in the IT

industry; d. adverse media reports on us or the Indian IT industry; e. changes in the estimates of our performance or recommendations by financial analysts; f. significant developments in India's economic liberalisation and deregulation policies; and g. significant developments in India's Fiscal and environmental regulations. There can be no assurance that an active trading market for our Equity Shares will be sustained after the Issue. 55. We may be adversely affected by economic, regulatory, political and military uncertainties in India and

surrounding countries In the early 1990s, India experienced significant inflation, low growth in gross domestic product and shortages of foreign currency reserves. Since 1991, the Government of India has pursued policies of economic liberalisation, and has provided significant tax incentives and relaxed certain regulatory restrictions in order to encourage foreign investment in specified sectors of the economy, including in the IT sector. We cannot assure you that the liberalization policies will continue. Various factors, including a collapse of the present coalition government due to the withdrawal of support of coalition members, could trigger significant changes in India’s economic liberalization and deregulation policies, disrupt business and economic conditions in India generally and our business in particular. Our financial performance and the market price of the Equity Shares may be adversely affected by changes in inflation, exchange rates and controls, interest rates, Government of India policies (including taxation policies), social stability or other political, economic or diplomatic developments affecting India in the future. 62. There is no guarantee that the Equity Shares to be issued pursuant to this Issue will be listed on the

Stock Exchanges in a timely manner or at all, and any trading closures at the Stock Exchanges may adversely affect the trading price of our Equity Shares.

In accordance with Indian law and practice, permission for listing of the Equity Shares to be issued pursuant to this Issue will not be granted until after those Equity Shares have been issued and allotted. Approval will require all other relevant documents authorizing the issuing of Equity Shares to be submitted. There could be a failure or delay in listing the Equity Shares on the Stock Exchanges. Prominent Notes

xxv

1. This is an Issue of [●] Equity Shares of face value of ` 10 each, for cash at a price of `[●] per Equity share

including a premium of ̀ [●] per Equity Share for an amount aggregating upto `400 million on Rights basis to the Eligible Equity Shareholders of the Company in the ratio of [●] Equity Share(s) for every [●] Equity Share(s) held by the Eligible Equity Shareholders on the Record Date, i.e. [●].

2. As on March 31, 2010 our networth on a consolidated basis was ̀ 1647.97 million and on an

unconsolidated basis was ` 1636.66 million

3. For details of our transactions with our group companies or Subsidiaries, see “Financial Information – Related Party Transactions” on page 98 of this Draft Letter of Offer.

4. There is no financing arrangement whereby the Promoter Group, the directors of the Promoters, the

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

5. All information shall be made available by the Lead Manager and by us to the Eligible Equity Shareholders and no selective or additional information would be available only to a section of the Investors in any manner whatsoever.

6. Investors may contact Compliance Officer or the Lead Manager for any complaints pertaining to the Issue.

26

SECTION III – INTRODUCTION

THE ISSUE Our Board have pursuant to a resolution passed at their meeting held on August 2, 2010, authorized this offer of Equity Shares on a rights basis. The following is a summary of this Issue. This summary should be read in conjunction with, and is qualified in its entirety by, more detailed information in the section titled “Terms of the Issue” on page 166 of this Draft Letter of Offer. Rights Entitlement for Equity Shares

[●]Equity Shares for every [●] Equity Shares held on the Record Date

Record Date [●] Face Value per Equity Shares ` 10 Issue Price per Equity Share ` [●] at a premium of ̀ [●] per Equity Share Equity Shares outstanding prior to the Issue

15,477,973 Equity Shares

Equity Shares outstanding after the Issue (assuming full subscription for and allotment of the Rights Entitlement) #

[●] Equity Shares

Terms of the Issue Please refer to the section titled “ Terms of the Issue” on page 166 of this Draft Letter of Offer.

Use of proceeds Please refer to the section titled “ Objects of the Issue” on page 42 of this Draft Letter of Offer.

# As on the date of the Draft Letter of Offer,1,654,067 number of employee stock options are outstanding. Terms of Payment

Due Date Amount On Issue Application, i.e along with CAF

` [●], which constitute 100% of the Issue Price payable

27

GENERAL INFORMATION

Dear Eligible Equity Shareholder(s), Pursuant to the resolution passed by our Board at their meeting held on August 2, 2010 it has been decided to make the following offer to the Eligible Equity Shareholders, with a right to renounce:

ISSUE OF [●] EQUITY SHARES OF FACE VALUE OF `̀̀̀ 10/- EACH, FOR CASH AT A PRICE OF `̀̀̀ [●] PER EQUITY SHARE INCLUDING A PREMIUM OF `̀̀̀ [●] PER EQUITY SHARE AGGREGATING UPTO `̀̀̀ 400 MILLION BY RAMCO SYSTEMS LIMITED, TO THE EXIST ING ELIGIBLE EQUITY SHAREHOLDERS OF THE COMPANY ON RIGH TS BASIS IN THE RATIO OF [ ●] EQUITY SHARES FOR EVERY [ ●] FULLY PAID UP EQUITY SHARES HELD ON THE RECORD DATE, i.e. [●] (“THE ISSUE”). THE ISSUE PRICE OF EACH EQUITY SHARE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARE. For further details please refer to “Terms of the Issue” on page 166 of this Draft Letter of Offer. Our Registered Office Address: 47, PSK Nagar, Rajapalayam 626108 Tamil Nadu Tel.: +91-4563-235688 Fax: +91-4563-236773 Our Corporate Office Address: 64, Sardar Patel Road Taramani, Chennai – 600113 Tamil Nadu, India Tel.: +91-44-22354510 Fax: +91-44-22355078 Our Website: www.ramco.com Our Email: rightsissue2010@rsi.ramco.com Company Registration No.: 18-037550 of 1997 Corporate Identification Number: L72300TN1997PLC037550 Address of the RoC Registrar of Companies, Tamil Nadu Block No.6, B Wing 2nd Floor Shastri Bhawan 26, Haddows Road Chennai - 600034 Our Equity Shares are listed on the Stock Exchanges, namely the BSE, NSE and MSE. Board of Directors Sr. No. Name, Designation, Address, Occupation, Term and DIN 1 Mr. P. R.

Ramasubrahmaneya Rajha Chairman and Non-Executive Promoter Director Address: R/o “Ramamandiram” Tenkasi Road, Rajapalyam 626 117

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Sr. No. Name, Designation, Address, Occupation, Term and DIN

Occupation: Industrialist Term: Since Incorporation - until retirement by rotation DIN: 00331357

2 Mr. P. R. Venketrama Raja

Vice Chairman, Managing Director and Chief Executive Officer

Address: R/o “Ramamandiram” Tenkasi Road, Rajapalyam 626 117

Occupation: Industrialist

Term: February 23, 2010 – February 22, 2015 DIN: 00331406

3 Mr. S. S. Ramachandra Raja

Non Executive Director Address: R/o 58, PSK Nagar, Rajapalayam 626108 Occupation: Business Term: Since Incorporation - until retirement by rotation DIN: 00331491

4 Mr. N.K. Shrikantan Raja Independent Director Address: R/o Bhavanam 102, PSK Nagar, Rajapalayam 626108 Occupation: Business Term: Since Incorporation - until retirement by rotation DIN: 00350693

5 Mr. M. M. Venkatachalam

Independent Director Address: R/o 10 Valliammai Achi Street, Kotturpuram, Chennai 600 085

Occupation: Industrialist Term: April 5, 2001 – until retirement by rotation DIN: 00152619

6 Mr. V. Jagadisan

Independent Director Address: R/o 2, 1st Main Road, Gandhi Nagar, Adyar, Chennai 600 020 Occupation: Chartered Accountant Term: June 15, 2001 - until retirement by rotation DIN: 00058769

29

Sr. No. Name, Designation, Address, Occupation, Term and DIN 7 Mr. A. V. Dharmakrishnan

Non Executive Director, Address: R/o. No.55, Saravana Street, T Nagar, Chennai 600 017 Occupation: Corporate Executive

Term: January 31, 2008 – until retirement by rotation DIN: 00693181

8 Mr. R S Agarwal

Independent Director Address: A -102, Chaitanya Towers, Near Karur Vysya Company, Prabhadevi, Mumbai – 400 025 Occupation : Business Term: May 29, 2009 – until retirement by rotation DIN: 00012594

Company Secretary: [●] Compliance Officer: R. Ravi Kula Chandran General Manager – Finance Ramco Systems Limited 64, Sardar Patel Road, Taramani, Chennai – 600113 Tamil Nadu, India Note: Investors may contact the Registrar to the Issue or the Compliance Officer for any pre-issue/post-issue related matter. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue with a copy to the SCSB, giving full details such as name, address of the Applicant, number of Equity Shares applied for, amount blocked, ASBA account number and the designated branch of the SCSB where the CAF was submitted by the ASBA Investors. Lead Manager to the Issue Centrum Capital Limited Centrum House, Vidyanagari Marg CST Road, Kalina, Santacruz (East), Mumbai 400098, Maharashtra, India Tel: +91 22 4215 9000 Fax: +91 22 4215 9707 E-mail: ramco.rights@centrum.co.in Investor Grievance Id: igmbd@centrum.co.in Website: www.centrum.co.in Contact Persons: Ms. Rachna Nawhal/ Ms. Ritika Nichani SEBI Registration No.: INM000010445 Legal Advisor to the Issue

30

ALMT Legal Advocates & Solicitors 2, Lavelle Road Bangalore 560 001 Tel: +91 80 4016 0000 Fax: +91 80 4016 0001 E-mail: bangalore@almtlegal.com Website: www.almtlegal.com Contact Person: Ms. Dhanya Menon Auditors of the Company M/s CNGSN & Associates Chartered Accountants Firm Registration No. 004915S “Agastyar Manor”, No. 20, Raja Street, T.Nagar, Chennai - 600017 Tel: +91-44-24311480 Fax: +91-44-24311485 Email: ganga@cngsn.com Website: www.cngsn.com Registrar to the Issue Cameo Corporate Services Limited Subramanian Building, No. 1, Club House Road, Chennai - 600002 Tel: +91-44-2846 0390 Fax: +91-44-2846 0129 Email: investor@cameoindia.com Website: www.cameoindia.com Contact Person: Mr. R. D. Ramasamy SEBI Registration Number: INR000003753 Bankers to the Issue [●] Self Certified Syndicate Bankers: APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (ASBA): Eligible Equity Shareholders may apply through the ASBA process. ASBA can be availed by all the Eligible Equity Shareholders. The Eligible Equity Shareholders are required to fill the ASBA form and submit the same to their bank which in turn will block the amount in the account as per the authority contained in ASBA form and undertake other tasks as per the specified procedure. On allotment, amount will be unblocked and account will be debited only to the extent required to pay for allotment of shares. Hence, there will be no need of refunds etc. ASBA form can be submitted to several banks, the list of such banks are given in the ASBA form and is available on website of SEBI at www.sebi.gov.in For more details on the ASBA process, please refer to the details given in ASBA form and also please refer to the section “Terms of the Issue” on page 166 of this Draft Letter of Offer. The list of banks that have been notified by SEBI to act as SCSBs for the Applications Supported by Blocked Amount (“ASBA”) Process are available at the SEBI website (www.sebi.gov.in). Details relating to designated branches of SCSBs collecting the ASBA forms are available at the above mentioned link.

31

Credit Rating As this is a Rights Issue of Equity Shares, credit rating is not required for this Issue. Debenture Trustee Since we do not have any debentures outstanding, we do not have the requirement to have any debenture trustees Statement of Responsibilities Centrum Capital Limited is the sole Lead Manager to the Issue and all the responsibilities relating to coordination and other activities in relation to the Issue shall be performed by it. The various activities have been set forth below:

Sr. No Activities 1. Capital structuring with the relative components and formalities such as composition of debt and

equity, type of instruments, etc. in conformity with SEBI regulations. 2. Liaison with Stock Exchanges and SEBI, including obtaining in-principle listing approval and

completion of prescribed formalities with the Stock Exchanges and SEBI

3. Due diligence of our Company’s operations / management /legal/ business plans etc. Drafting & design of the offer document and of statutory advertisement/publicity material including newspaper advertisements and memorandum/ brochure containing salient features of the offer document.

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

5. Drafting and approval of all publicity material other than statutory advertisement (mentioned in (3) above) including corporate advertisement, brochure, corporate film, etc.

6. Assisting, together with other advisors and legal counsels in securing all necessary regulatory approvals for the Issue and assisting in filing of the Issue related documents with SEBI, Stock Exchanges or any other authority whatsoever.

7. Marketing of the Issue, which shall cover, inter alia, formulating marketing strategies, preparation of publicity budget, arrangements for selection of (i) ad-media, (ii) centers for holding conferences of stock brokers, investors, etc., (iii) bankers to the Issue, (iv) collection centers as per schedule III of the SEBI Regulations, (v) brokers to the Issue, and (vi) distribution of publicity and Issue material including application form, Draft Letter of Offer and brochure and deciding upon the quantum of Issue material.

8. Post-Issue activities, which shall involve essential follow-up steps including follow-up with bankers to the Issue and SCSBs 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, dispatch of certificates or de-mat credit and refunds and coordination with various agencies connected with the post-Issue activity such as registrars to the issue, bankers to the issue, SCSBs, etc.

Monitoring Agency Since the Issue size does not exceed ` 5,000 million, the appointment of a monitoring agency as per Regulation 16 of the SEBI Regulations is not required. Our Board will monitor the use of the Issue Proceeds. Underwriting This Issue is not being underwritten. Issue Schedule

32

Issue Opening Date [●] Last date for receiving requests for split forms [●] Issue Closing Date [●] Impersonation As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of subsection (1) of Section 68A of the Companies Act which is reproduced below: “Any person (a) who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or otherwise induces a Company to allot, or register any transfer of shares therein to him, or (b) any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years” Appraisal Reports The requirement and proposed utilisation of Issue Proceeds have not been appraised by any bank, financial institution or other independent agency. Principal Loans (Credit Facility) and Security provided as of October 31, 2010:

Particulars IDBI Bank Axis Bank TOTAL

Nature of Loan Cash Credit / Working Capital Demand Loan and Non Fund Based Limits

Cash Credit and Non Fund Based Limits

Object of the Loan Working Capital Working Capital

Nature of Interest Charge

Floating BPLR with fixed spread

Floating BPLR with fixed spread

Sanctioned Amount

Fund Based – Cash Credit / WCDL- ̀ 100.00 million Non Fund Based – ` 50.00 million

Fund Based – Cash Credit - ` 100.00 million Non Fund Based – ` 105.00 million (Out of above, Fresh Sanction of Non Fund Based – ̀ 50.00 million, documents under execution)

Fund Based – Cash Credit/WCDL: `200 million Non-Fund Based – `155.00 million (Out of above, Fresh Sanction of Non Fund Based – ̀50.00 million, documents under execution)

Disbursed Amount

Fund Based – WCDL – ̀ 100.00 million Non Fund Based – ` 50.00 million

Fund Based – Cash Credit- ` 100.00 million Non Fund Based – ` 55.00 million

Fund Based – Cash Credit/WCDL: `200 million Non-Fund Based – `105 million

Outstanding as at October 31, 2010

Fund Based – WCDL– ̀ 100.00 million Non Fund Based- `

Fund Based – Cash Credit- ̀ 55.49 million Non Fund based – `

Fund Based – Cash Credit/WCDL: `155.49 million Non-Fund Based –

33

Particulars IDBI Bank Axis Bank TOTAL 34.98 million 23.34 million `58.32 million

Rate of Interest on the Loan as per original sanction letter

Cash Credit: BPLR minus 1.50% (11.25 % p.a) WCDL: to be decided mutually at the time of draw down

BPLR minus 3.25% (11.50% p.a.)

Current Rate of Interest on the Loan

` 70.00 million @ 9.01% p.a (Fixed) ` 30 million @ 9.04% p.a (Fixed)

12.00% p.a

Security Pari Passu first charge on our current assets and Corporate Guarantee from RIL

Pari passu first charge on our current assets and pari passu first charge on our unencumbered fixed assets and Corporate Guarantee from RIL

Repayment Schedule ̀ 70 million due for repayment on December 6, 2010 and ̀ 30 million is due for repayment on December 17, 2010

On Demand

Hire Purchase – Car Loans and Security provided as of October 31, 2010:

Particulars Kotak Mahindra Prime Ltd

Kotak Mahindra Prime Ltd

ICICI Bank Ltd

HDFC Bank Ltd

TOTAL

Nature of Loan

Hire Purchase Finance

Hire Purchase Finance

Hire Purchase Finance

Hire Purchase Finance

Object of the Loan

Purchase of Car Purchase of Car Purchase of Car Purchase of Car

Number of Loans

1 10 1 1 13

Nature of Interest Charge

Fixed , reducing balance method

Fixed , reducing balance method

Fixed , reducing balance method

Fixed , reducing balance method

Sanctioned & Disbursed Amount

` 1.62 million ` 6.57 million ` 0.90 million ` 0.85 million ` 9.94 million

Outstanding as at October 31, 2010

` 1.51 million ` 6.29 million ` 0.31 million ` 0.68 million ` 8.79 million

Rate of Interest on the Loan as per original sanction letter

8.50% p.a. 9.00% p.a. 11.79% 10.50% p.a.

34

Particulars Kotak Mahindra Prime Ltd

Kotak Mahindra Prime Ltd

ICICI Bank Ltd

HDFC Bank Ltd

TOTAL

Current Rate of Interest on the Loan

8.50% p.a. 9.00% p.a. 11.79% 10.50% p.a.

Security Hypothecation of Car

Hypothecation of Car

Hypothecation of Car

Hypothecation of Car

Repayment Schedule

Equated Monthly

Instalments

Equated Monthly

Instalments

Equated Monthly

Instalments

Equated Monthly

Instalments

Obligations under finance lease and Security provided as of October 31, 2010:

Particulars Hewlett-Packard Financial Services (India) Private Limited

Nature of Loan Obligations under Finance Lease

Object of the Loan HP Neoview Equipment

Nature of Interest Charge Fixed

Sanctioned & Disbursed Amount ` 25.29 million

Outstanding as at October 31, 2010 ` 9.21 million

Rate of Interest on the Loan as per original sanction letter

12.76% p.a.

Current Rate of Interest on the Loan 12.76% p.a.

Security HP Neoview Equipment under Finance Lease

Repayment Schedule Quarterly Instalments

Principal Term Loans (Unsecured Short Term Loans) as on October 31, 2010:

Particulars IDBI Bank Punjab and Sindh bank

IndusInd Bank

Kotak Mahindra Bank Total

Object of the Loan

Short Term Loan –working capital

Short Term Loan to

meet corporate

requirements

Short Term Loan for

refinance of existing high

cost short term bank

finance

Short Term Loan for working capital/cash

flow mismatch

Sanction & Disbursed Amount

` 550.00 million ` 200.00 million

` 200.00 million

` 250.00 million `1200.00 million

Outstanding as at October 31, 2010

` 550.00 million ` 200.00 million

` 200.00 million

` 250.00 million `1200.00 million

Rate of Interest on

` 200 million – 8.50% p.a.

9.00% p.a. (fixed)

8.50 % p.a. ` 100 million – 9.40% p.a.

35

Particulars IDBI Bank Punjab and Sindh bank

IndusInd Bank

Kotak Mahindra Bank Total

the Loan as per original sanction letter

` 350 million – 8.40% p.a.

` 60 million– 8.65 % p.a. ` 40 million – 8.65 % p.a. ` 50 million - 9.00% p.a.

Current Rate of Interest on the Loan as on date

` 200 million – 8.50% p.a. ` 350 million –

8.40% p.a.

9.00% p.a. (fixed)

8.50 % p.a. ` 100 million – 9.40% p.a. ` 60 million– 8.65 % p.a. ` 40 million – 8.65 % p.a. ` 50 million - 9.00% p.a.

Security Corporate Guarantee of

MCL

Corporate Guarantee of

RIL

Corporate Guarantee of

MCL

Corporate Guarantee of MCL

Repayment Schedule

` 200 million – November 20, 2010 ` 50 million – February 02,2011 ` 50 million - February 05, 2011 ` 195 million – February 06, 2011 ` 55 million - February 15, 2011

October 01, 2011

March 08, 2011

` 50 million – December 28, 2010 ` 60 million – February 23, 2011 ` 40 million – February 24, 2011 ` 100 million – August 02, 2011

Inter Corporate Deposit (Unsecured Loan) as on October 31, 2010:

Particulars Madras Cements Limited

Object of the Loan Working Capital

Sanction & Disbursed Amount ` 200.00 million

Outstanding as at October 31, 2010 ` 200.00 million

Rate of Interest on the Loan 10.00% p.a. (fixed)

Repayment Schedule Not-Applicable

36

CAPITAL STRUCTURE

Our share capital as on the date of filing of this Draft Letter of Offer with SEBI is set forth below:

Aggregate nominal value

(In `̀̀̀)

Aggregate Value at Issue

Price (In `̀̀̀) Authorized share capital 50,000,000 Equity Shares of ` 10 each 500,000,000 Issued and Subscribed capital 15,827,151 Equity Shares of ` 10 each 158,271,510

Paid up Capital* 15,477,973 Equity Shares of ` 10 each 154,779,730 Add: 349,178 Forfeited shares (1178 @ ` 5/- and 348,000 @ ` 1/-) 353,890 155,133,620 Present Issue being offered to the Equity Shareholders through the Letter of Offer [●] Equity Shares of ̀ 10 each at a premium of ` [●]/-, i.e. at a price of ` [●]/- per share

[●] [●]

Issued and Subscribed capital after the Issue [●] Equity Shares of ̀̀̀̀ 10 each Paid up capital after the Issue [●] Equity Shares of ̀ 10 each [●] Share premium Account Before the Issue 1,947,905,687 After the Issue [●] * Paid up Capital of our Company has increased after September 30, 2010 due to conversion of Employee Stock Options into Equity Shares Notes to Capital Structure 1. The Promoters confirm that they themselves and/or through individuals/entities forming part of the

Promoter Group, subject to the provisions of the applicable laws, intend to subscribe to the full extent of their Rights Entitlement in this Issue. Our Promoters Mr. P. R. Ramasubrahmaneya Rajha and Mr. P. R. Venketrama Raja have provided undertakings dated November 16, 2010 confirming that they either themselves and/or through individuals/entities forming part of the Promoter Group also intend to subscribe to any unsubscribed portion of the Issue, such that the Issue is fully subscribed. The subscription and acquisition of additional Equity Shares by the Promoters and/or individuals/entities forming part of the Promoter Group, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1) (b) (ii) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 1997. Further, the Promoters acknowledge and undertake that their entitlement to subscribe the unsubscribed portion over and above their entitlement either by themselves and/or through individuals/entities forming part of the Promoter Group would be restricted, to ensure that the public shareholding in the Company after this Issue, does not fall below the permissible minimum level as specified in the listing conditions or listing agreement.

2. We are in compliance with Clause 40A of the Listing Agreement and as required, maintain a public

shareholding of at least 25% of the total number of the listed Equity Shares.

37

3. Our shareholding pattern as on September 30, 2010 was as follows:

Category of Shareholder

No. of Share-holders

Total No. of Shares

Total No. of Shares held in Dematerialized

Form

Total Shareholding as a % of total No. of

Shares

Shares pledged or

otherwise encumbered

As a % of (A+B)

As a % of

(A+B+C)

Number of

shares

As a % of Total No. of Shares

(A) Shareholding of Promoter and Promoter Group

(1) Indian Individuals / Hindu Undivided Family

13 2,416,959 2,399,634 15.67 15.67 - -

Bodies Corporate 6 6,958,165 6,954,174 45.12 45.12 - - Any Others (Specify)

- Trusts 1 84,125 - 0.55 0.55 - - Sub Total 20 9,459,249 9,353,808 61.33 61.33 - - (2) Foreign Total shareholding of Promoter and Promoter Group (A)

20 9,459,249 9,353,808 61.33 61.33 - -

(B) Public Shareholding (1) Institutions

Mutual Funds / UTI 2 300 - - - - - Financial Institutions / Banks

4 24,950 24,800 0.16 0.16 - -

Insurance Companies 1 314,133 314,133 2.04 2.04 - - Sub Total 7 339,383 338,933 2.20 2.20 - -

(2) Non-Institutions Bodies Corporate 398 1,568,141 1,567,582 10.17 10.17 - - Individuals - - Individual shareholders holding nominal share capital up to ̀ 1 lakh

8,047 2,252,831 2,109,884 14.61 14.61 - -

Individual shareholders holding nominal share capital in excess of ̀ 1 lakh

35 1,279,101 1,068,511 8.29 8.29 - -

Any Others (Specify) 457 523,711 504,794 3.40 3.40 - - • Trusts 2 580 580 - - - - • Foreign Nationals 3 4,100 - 0.03 0.03 - - • Directors & their

Relatives & Friends

11 231,769 216,952 1.50 1.50 - -

• Non Resident Indians

78 35,919 35,919 0.23 0.23 - -

• Clearing Members 108 51,580 51,580 0.33 0.33 - - • Hindu Undivided 255 199,763 199,763 1.30 1.30 - -

38

Category of Shareholder

No. of Share-holders

Total No. of Shares

Total No. of Shares held in Dematerialized

Form

Total Shareholding as a % of total No. of

Shares

Shares pledged or

otherwise encumbered

As a % of (A+B)

As a % of

(A+B+C)

Number of

shares

As a % of Total No. of Shares

Families Sub Total 8,937 5,623,784 5,250,771 36.47 36.47 - -

Total Public shareholding (B)

8,944 5,963,167 5,589,704 38.67 38.67 - -

Total (A)+(B) 8,964 15,422,416 14,943,512 100.00 100.00 - - (C) Shares held by Custodians and against which Depository Receipts have been issued

- - - - - - -

Total (A)+(B)+(C) 8,964 15,422,416 14,943,512 100.00 100.00 - - 4. The details of our Promoter and the Promoter Group’s shareholding in our Company as of

September 30, 2010 are as follows:

Total Shares held Shares pledged or otherwise encumbered

Sr. No.

Name of the Shareholder

Number As a % of grand total (A)+(B)+(C)

Number % of Total shares held

As a % of grand total (A)+(B)+(C)

1 P R Ramasubrahmaneya Rajha 362,469 2.35 - - - 2 P R Venketrama Raja 1,289,182 8.36 - - - 3 Ramco Industries Ltd 4,822,215 31.27 - - - 4 Madras Cements Ltd 2,117,810 13.73 - - - 5 Ramaraju Surgical Cotton Mills

Ltd 12,739 0.08 - - -

6 Nalina Ramalakshmi 234,032 1.52 - - - 7 Sarada Deepa 232,042 1.50 - - - 8 Srirama Raja S R 16,966 0.11 - - - 9 N R K Ramkumar Raja 12,623 0.08 - - - 10 Harish Krishnakumar 3,750 0.02 - - - 11 Jayanth Ramachandra Raja 3,750 0.02 - - - 12 Nithya Lakshmi 3,750 0.02 - - - 13 Sudarsanam R 103,125 0.67 - - - 14 Nirmala P V 7,935 0.05 - - - 15 Abhinav Ramasubramaniya Raja 73,555 0.48 - - - 16 Sri Sandhya 73,780 0.48 - - - 17 Ramco Agencies Pvt Ltd 1,388 0.01 - - - 18 Ramco Pvt Ltd 3,713 0.02 - - - 19 Ramco Management Pvt Ltd 300 0.00 - - - 20 RSL Employee Trust 84,125 0.55 - - - Total 9,459,249 61.33 - - -

As on date of this Draft Letter of Offer, none of the aforesaid shares have been pledged or locked in or encumbered.

39

5. The details of shareholders holding more than one percent of the share capital of our Company

as of September 30, 2010 are as follows:

Promoter and Promoter Group

No. Name of the Shareholder No. of Shares Shares as % of Total No. of Shares

1 P R Ramasubrahmaneya Rajha 362,469 2.35 2 P R Venketrama Raja 1,289,182 8.36 3 Ramco Industries Ltd 4,822,215 31.27 4 Madras Cements Ltd 2,117,810 13.73 6 Nalina Ramalakshmi 234,032 1.52 7 Sarada Deepa 232,042 1.50 Others No. Name of the Shareholder No. of Shares Shares as % of Total No.

of Shares 1 United India Insurance Company Ltd 314,133 2.04 2 Sonata Investments Ltd 335,000 2.17 3 Ravi Kumar Ramkishore Sanwalka 370,398 2.40 4 Mansan Investments Pvt Ltd 160,948 1.04 5 Indo Invest Vision Ltd 182,907 1.19 6 Darshana Haresh Jhaveri 178,752 1.16 7 Amluckie Investment Company Ltd 159,524 1.03 6. The details of the options granted and outstanding under ESOP 2000, ESOS 2003, ESOS 2004, ESOS

2008, ESOS 2009 – Plan A and ESOS 2009 – Plan B as of the date of this Draft Letter of Offer have been detailed in the table below:

Particulars ESOP 2000 ESOS 2003 ESOS

2004 ESOS 2008

ESOS 2009 - Plan A

ESOS 2009- Plan B

Total Options 160,000 500,000 1,200,000 1,200,000 500,000 750,000 Options Granted (Net of Employee Separations and cancellations, but including options exercised)

33,600

42,575

1,500

902,804

357,900

506,850

Exercise Price in ̀ - Pricing Formulae

11750 shares @ 254, 18900 shares @ 227, 1050 shares @

223

36350 shares @ 284, 1625 shares @ 266

All shares @ 177

All shares @ 53

20000 shares @

98, Balance shares @

94

All shares @

94

Options Vested

33,600

42,575

1,500

422,088

-

-

Options Exercised

31,700

37,975

1,500

119,987

-

-

Options Lapsed on

-

-

-

-

-

- Total Number of Shares arising as a result of exercise of options

31,700

37,975

1,500

119,987

-

-

40

Unvested Options - - - 480,716 357,900 506,850 Money realized by exercise of options

7,508,950

10,755,650

265,500

6,359,311

-

-

Details of options granted to: 1. Key Managerial Personnel NIL NIL NIL

178,450

20,560

30,840

2. Non Executive Directors NIL NIL NIL NIL

20,000 NIL

3. Who received a grant in one year of option amounting to 5% or more of option granted during the year. NIL NIL NIL 90,000 NIL NIL 4. Identified that, who were granted option, during one year equal to or exceeding 1% of the Issued Capital (excluding outstanding warrants and conversions) of the Company at the time of grant. NIL NIL NIL NIL NIL NIL

Vesting Schedule Over a period of three years

Over a period of three years

Over a period of

four years

Over a period of

four years

Over a period of

three years

Over a period of

three years

Lock – In NIL NIL NIL NIL NIL NIL

7. This Issue being a Rights Issue, provisions of Promoters’ contribution and lock-in are not applicable as per Regulation 34 (c) of SEBI Regulations.

8. Our Promoters, their relatives and associates, and entities belonging to the Promoter Group have

neither been allotted any equity shares nor have they purchased or sold directly or indirectly, any equity shares during a period of one year preceding the date of Draft Letter of Offer:

9. Save and except for issuance of shares pursuant to exercise of employee stock options, no further issue of capital by way of issue of bonus shares, preferential allotment, rights issue or public issue or in any other manner which will affect our equity share capital, shall be made during the period commencing from the filing of the Draft Letter of Offer with the SEBI till the date on which the Equity Shares are listed or application moneys are refunded on account of the failure of this Issue.

10. We have not revalued any of our assets nor have we issued any Equity Shares out of revaluation

reserves.

11. Further, save and except for issuance of shares pursuant to exercise of employee stock options, we have no intention to alter the equity capital structure by way of split/consolidation of the denomination of the shares, or issue of shares on a preferential basis or issue of bonus or rights or pubic issue of shares or any other securities for a period of six months from the date of opening of this Issue.

12. This Issue will remain open for 15 days. However, our Board will have the right to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.

13. If we do not receive the minimum subscription of 90% of this Issue, or the subscription level falls

below 90%, after the Issue Closing Date on the account of cheques being returned unpaid or

41

withdrawal of applications, we shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after we become liable to pay the said amount (i.e., 15 days after the Issue Closing Date), we will pay interest for the delayed period, as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.

14. As on September 30, 2010, the total number of members of the Company was 8,964.

15. The Directors or the Lead Manager to this Issue have not entered into any buy-back, standby or similar

arrangements for any of the securities being issued through this Draft Letter of Offer.

16. The Company undertakes that at any given time, there shall be only one denomination of Equity Shares and the Company shall comply with such disclosure and accounting norms as may be prescribed by the SEBI.

17. Except as disclosed in the Draft Letter of Offer, the Equity Shareholders of the Company do not hold

any warrant, option or convertible loan or debenture, which would entitle them to acquire further Equity Shares in the Company.

42

OBJECTS OF THE ISSUE The Objects of the Issue are: • Repayment/Pre-payment of debt; • Meeting of marketing and publicity expenses pertaining to our products • General corporate purposes. The main objects clause and objects incidental or ancillary to the main objects clause set out in the Memorandum of Association enables us to undertake the existing activities and the activities for which funds are being raised by this Issue. Further, we confirm that the activities carried out by us to the date have been in accordance with the objects clause of our Memorandum of Association. Proceeds of the Issue The details of the Net Proceeds are set forth in the following table:

Sr. No. Description Amount ( `̀̀̀ in million) 1. Gross Proceeds [●] 2. Issue related expenses [●] 3. Net Proceeds of the Issue (“Net Proceeds”) [●] Funds Requirement The details of the Net Proceeds of this Issue are summarized in the table below: Particulars Amount (` in million) Repayment/Pre-payment of debt 195.00 Meeting of marketing and publicity expenses pertaining to our products 150.00 General Corporate Purposes [●]

Total [●] The fund requirement and deployment of funds are based on internal management estimates and have not been appraised by any bank or financial institution. These are based on the current status of our business and are subject to change in light of variations in external circumstances or costs, or in our financial condition, business or strategy. Our management, in response to the competitive and dynamic nature of the industry, will have the discretion to revise the business plan from time to time and consequently our funding requirements and deployment of funds may also change. This may also include reallocating/rescheduling the proposed utilization of the Net Proceeds and increasing or decreasing expenditure for a particular object vis-a-vis the utilization of the Net Proceeds. Means of Finance The objects of this Issue are proposed to be financed entirely out of the Net Proceeds of this Issue. The Net Proceeds, after deduction of all Issue expenses, is estimated to be approximately ` [●]. The details in relation to Objects of this Issue are set forth herein below. No part of the Issue proceeds will be paid by us as consideration to Promoters, Directors, our key management personnel or the Promoter Group companies. 1. Repayment/Pre-payment of debt We have entered into various financial arrangements with banks. Arrangements entered into by us include borrowings in form of working capital and term loans. In order to reduce the leverage and allow flexibility in financial management of our operations, we intend to repay outstanding loans to the extent of ` 195.00

43

million. The repayment of loan through equity infusion will reduce interest outflow on the loans and improve financials of our Company. We have availed certain short-term loan facilities from IDBI Bank Limited. The following table provides the details of the Unsecured credit facility availed of by us from IDBI Bank Limited,, a portion of which we intend to repay/ prepay from the Net Proceeds of this Issue. Principal Terms of the Loan from IDBI Bank:Unsecured Loans

Particulars Details

Nature of Loan Unsecured Short Term Loan

Object of the Loan Working Capital

Nature of Interest Charge As per the sanction letter

Sanction & Disbursed Amount ` 350.00 million

Outstanding as at October 31, 2010 ` 350.00 million

Rate of Interest on the Loan as per original sanction letter

` 350 million – 8.40% p.a. payable monthly

Current Rate of Interest on the Loan Same as above

Security Corporate Guarantee of MCL

CNGSN & Associates., Chartered Accountants have vide their certificate dated November 16, 2010 confirmed that the above loan has been used for the purposes for which it was availed. Please refer to the section titled “Material Contracts and Documents for Inspection” on page 196 of this Draft Letter of Offer. We propose to repay/prepay part of the aforesaid loans out of the Net Proceeds of the Issue. In case of delay in receipt of the Issue proceeds, we would meet our debt obligations from internal accruals and / or fresh debts and the same shall be recovered from the Net proceeds of the Issue. The aforesaid loan does not carry any pre-payment penalty. The repayment/pre-payment of the borrowings will be done during the Fiscal 2011. 2. Meeting of marketing and publicity expenses pertaining to our products We are a software company focused on consulting, products, and managed services business. We undertake marketing and publicity activities to promote our products and services. These activities are integral to maintain and enhance brand visibility and market share of our products. We intend to invest a substantial portion of the marketing expenditure for the launch and sustained visibility of our products and services. Our marketing efforts include brand-building activities through mass communications using various media including print in dailies / business magazines / trade magazines, outdoor campaigns, internet/digital search campaigns and banners. We have developed a comprehensive marketing and publicity strategy towards our brand-building activities through print in dailies/business magazines /trade magazines, Television Ads, internet search campaigns, outdoor campaign, events, agency retainer etc pertaining to our products aggregating to an amount of ` 150.00 million (total marketing and publicity expenses) to be incurred from the Net Proceeds. The break-up of our proposed marketing and publicity expenditure is given below: Fiscal `̀̀̀ in million 2011 72.5 2012 77.5

Total 150

44

Out of total marketing and publicity expenses planned to be incurred in Fiscal 2011, we have raised purchase orders towards various marketing and publicity activities as detailed below:

` in mn Medium Purchase

Order Amount

Purchase Order No. reference

Date of the PO Name of the Party

1.51 RSPO/MAR/10-11/012 11 August 2010 Group M Media Pvt Ltd

Print: Dailies 45.46 RSPO/MAR/10-11/039

01 November 2010

Group M Media Pvt Ltd

Print: Magazines 4.46 RSPO/MAR/10-11/040 12 November 2010 Group M Media Pvt Ltd

0.40 RS/SASMAR/011/1011 06 July 2010

Group M Media Pvt Ltd

0.31 RSPO/MAR/10-11/031 05 October 2010 Group M Media Pvt Ltd Internet

0.96 RSPO/MAR/10-11/037 26 October 2010

Group M Media Pvt Ltd

Outdoor 5.99 RSPO/MAR/10-11/032 06 October 2010 Group M Media Pvt Ltd

Total 59.09 The expenditure provided above is in addition to our normal expenditure on marketing which will be out of our internal accruals. Apart from the aforelisted purchase orders raised to the tune of ` 59.09 million,,we intend to incur further marketing and publicity expenditure of ` 13.41 million in Fiscal 2011 and ` 77.5 million in the Fiscal 2012 towards this brand building and enhancement exercise using various media including television, press, hoardings, , internet, on-premise advertisements etc.

3. General Corporate Purposes

We intend to deploy the balance Net Proceeds aggregating ` [●] million for general corporate purposes, including but not limited to, pre-payment or repayment of debt, meeting working capital requirements, funding project cost overruns(if any), investing in upgrading our technology and /or meeting exigencies or any other purposes as may be approved by the Board of Directors. Deployment of Net Proceeds towards Objects of the Issue As on the date of this Draft Letter of Offer, we have not deployed any funds towards any of the purposes where the Net Proceeds are proposed to be deployed. However, in case we receive any advance share application money from our Promoter/ Promoter Group entities we will deploy the same towards the objects stated above. Issue Related Expenses The Issue expenses include, amongst others, management fees, printing and distribution expenses, legal fees, statutory advertisement expenses, registrar and depository fees and listing fees. The estimated expenses of the Issue are as follows:

Particulars Expense* (` millions)

Expense* (% of the total expenses)

Expense* (% of the Issue size)

Fees of Lead Manager, Registrars to the Issue, Bankers to the Issue, Legal

[●] [●] [●]

45

advisor, etc Statutory Advertising and marketing

[●] [●] [●]

Printing & Distribution [●] [●] [●] Contingency, Stamp Duty, Listing Fees etc

[●] [●] [●]

Total estimated Issue expenses

[●] [●] [●]

*Amounts will be finalized at the time of filing of Letter of Offer and determination of Issue Price and other details. Bridge Loan We have not entered into any bridge loan facility that will be repaid from the Net Proceeds. Interim use of proceeds Our management, in accordance with the policies formulated by it from time to time, will have flexibility in deploying the proceeds received from the Issue. Pending utilization of the Issue Proceeds for the purposes described above, we intend to temporarily invest the funds in interest bearing liquid instruments including investments in mutual funds and other financial products, such as principal protected funds, derivative linked debt instruments, other fixed and variable return instruments, listed debt instruments, rated debentures or deposits with banks or to temporarily deposit the funds on cash credit accounts / WCDL with banks for reducing the overdraft as may be approved by the Board. Such investments would be in accordance with the investment policies approved by the Board or the Investment Committee from time to time. We may also apply a part of the Net Proceeds, pending utilization for the purposes described above, towards our working capital financial arrangements. Should we utilize the funds towards our working capital requirements, we undertake that we will ensure consistent and timely availability of the Net Proceeds so temporarily used to meet the fund requirement for the objects of the Issue contained herein. Monitoring of Utilisation of Funds

Our Board will monitor the utilization of the Net Proceeds. We will disclose the utilization of the Net Proceeds under a separate head in our financial statements for such fiscal periods as required under the SEBI Regulations and the listing agreements with the Stock Exchanges, clearly specifying the purposes for which such Net Proceeds have been utilized. Pursuant to Clause 49 of the Listing Agreement, we shall on a quarterly basis disclose to the Audit Committee the uses and applications of the proceeds of the Issue. On an annual basis, we shall prepare a statement of funds utilised for purposes other than those stated in this Draft Letter of Offer and place it before the audit committee. Such disclosure shall be made by us only until such time that all Issue Proceeds have been utilised in full. The statement will be certified by our statutory auditors. Further, we shall, on a quarterly basis, prepare a statement indicating material deviations, if any, in the use of Issue Proceeds. Such statement shall be furnished by us to the Stock Exchanges along with the interim and / or annual financial statements and shall be published in the newspapers simultaneously with the interim or annual financial results, after placing it before our audit committee.

46

STATEMENT OF TAX BENEFITS

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS

Auditor’s Report To The Board of Directors, Ramco Systems Ltd., 64, Sardar Patel Road, Chennai 600 113.

We hereby report that the enclosed annexure states the possible income-tax benefits available to the Ramco Systems Ltd ("Company”) and its shareholders under the current tax laws in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill.

The benefits discussed below are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether: • the Company or its shareholders will continue to obtain these benefits in future; or • the conditions prescribed for availing the benefits have been / would be met with. The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and the current tax laws in force in India. The shareholders are advised to consult in their own case, the tax implications of investment in the equity shares of the Company. This certificate is provided solely for the purpose of assisting the addressee Company, in discharging its responsibilities under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. For CNGSN & Associates Chartered Accountants Registration No.004915S CN Gangadaran Partner Membership No.: 11205 Chennai Date: November 16, 2010

47

A. BENEFITS AVAILABLE TO THE COMPANY:

i) Special Benefits available under the Income Tax Act, 1961(“Act”) : The Company has one Unit registered under the Software Technology Parks (‘STP’) Scheme from 2000. Under the provisions of section 10A of the Act, an STP Unit which is engaged in the business of export of articles or things or computer software and which satisfies the prescribed conditions is eligible to claim a deduction of ninety percent of the profits derived by its undertaking/s from the export of articles or things or computer software for a period of ten consecutive assessment years, beginning with the assessment year relevant to the previous year in which the undertaking/s begin to manufacture or produce such articles or things or computer software. The eligible deduction would be the amount which bears to the profits of the undertaking/s the same proportion as the export turnover of the undertaking/s bears to the total turnover of the undertaking/s. Profits on domestic turnover would get taxed. The benefit under this section is not available for the assessment year beginning on the 1st day of April 2012 and subsequent years. Apart from that, we believe that there are no other special tax benefits available either to the Company.

ii) General Tax Benefits available to the Company under the Income Tax Act, 1961(“Act”) : 1. Exemption in respect of dividend: Dividends (whether interim or final) declared, distributed or paid by a domestic company for any assessment year commencing on or after April 1, 2003 are exempt in the hands of the Company, in its capacity as shareholder, as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act. 2. Taxation of capital gains Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset, being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax. In accordance with the section 48 of the Act, capital gains arising out of sale of long-term capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. As per section 111A of the Act, short term capital gain arising from transfer of an equity share in a company listed on a recognized stock exchange or a unit of an equity oriented fund would be taxable at 15 percent (subject to surcharge and education cess as applicable), in cases where securities transaction tax has been paid as per Chapter VII of the Finance (No.2) Act, 2004. As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising to the Company on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if the Company transfers or converts such specified assets into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier

48

would become chargeable to tax as long term capital gains in the year in which such specified assets are transferred or converted into money. 3. Expenditure on Scientific Research In accordance with and subject to the provisions of section 35(1) and section 35(2), the Company would be entitled to 100% deduction in respect of revenue and capital expenditure (not being expenditure in the nature of cost of any land) incurred on Scientific Research related to the business. In accordance with and subject to the provisions of section 35(2AB), the Company would be entitled to deduction of one and half times of the revenue and capital expenditure (not being expenditure in the nature of cost of any land or building) incurred on Scientific Research related to the business incurred till 31st March 2010 and two times of the said revenue and capital expenditure till 31st March 2012. Such deduction is eligible either under section 35(1) and (2) or under section 35(2AB) and not cumulatively.

iii) Benefits available to the Company under Indirect tax Laws The Company has one unit registered under the Software Technology Parks (‘STP’) Scheme. The key benefits that could be available under indirect tax laws to a STP unit, subject to satisfaction of the specified conditions, are as under: Customs duty on Specified goods, which are in the nature of capital goods, office equipment, components etc., procured by a STP unit are exempt from customs duty. All goods, other than prohibited goods under the EXIM Policy are exempt from customs duty and Excise duty. Specified goods such as capital goods, office equipment and consumables etc procured from local manufacturers are exempt from excise duty. All goods procured from local manufacturers are exempt from excise duty. Further, in order to avail the above benefits, the unit will be required to meet prescribed export obligations. Sales tax Concessions under the State Sales Tax legislations (depending upon the relevant State where the unit is set-up) and under the Central Sales Tax Act could also be available in respect of goods procured by a STP unit. Further, export sales made by the Company would qualify as ‘exempted sale’ for the purpose of Sales Tax Concessions under the State Sales Tax legislations (depending upon the relevant State where the unit is set-up). No service tax will be leviable on the information technology services if the proceeds are received in convertible foreign exchange in India and the same are not repatriated outside India. B. BENEFITS AVAILABLE TO SHAREHOLDERS: I. Resident shareholders 1. Dividends exempt under section 10(34) Dividends (whether interim or final) declared, distributed or paid by the Company for any assessment year commencing on or after April 1, 2003 are exempt in the hands of shareholders as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act. 2. Taxation of capital gains Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset, being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax.

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In accordance with the section 48 of the Act, capital gains arising out of sale of long-term capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. As per section 111A of the Act, short term capital gain arising from transfer of an equity shares in a company listed on a recognized stock exchange or a unit of an equity oriented fund would be taxable at 15 percent (subject to surcharge and education cess as applicable), in cases where securities transaction tax has been paid as per Chapter VII of the Finance (No.2) Act, 2004. As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if such specified assets are converted into money 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 such specified assets are transferred or converted into money. Under section 54F of the Act, long-term capital gains (in cases not covered under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain tax subject to certain conditions, if the net consideration from such shares are used for purchase of residential house property within a period of one year before and 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. II. Benefits available to Non-Resident Indian shareholders 1. Dividends exempt under section 10(34) Dividends (whether interim or final) declared, distributed or paid by the Company for any assessment year commencing on or after April 1, 2003 are exempt in the hands of shareholders as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act. 2. Taxation of capital gains Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset, being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax. In accordance with the section 48 of the Act, capital gains arising out of sale of long-term capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. As per section 111A of the Act, short term capital gain arising from transfer of an equity shares in a company listed on a recognized stock exchange or a unit of an equity oriented fund would be taxable at 15

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percent (subject to surcharge and education cess as applicable), in cases where securities transaction tax has been paid as per Chapter VII of the Finance (No.2) Act, 2004. As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if such specified assets are converted into money 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 such specified assets are transferred or converted into money. Under section 54F of the Act, long-term capital gains (in cases not covered under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain tax subject to certain conditions, if the net consideration from such shares are used for purchase of residential house property within a period of one year before and 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. Capital gains tax - Options available under the Act (a) Where shares have been subscribed in convertible foreign exchange: Non-resident Indians investing in the equity of Indian companies are given concession to pay tax on long term capital gains @ 10% as per conditions specified and in which case, indexation of cost of acquisition and other deductions are not available in computing tax on long term capital gains. Under section 115-I of the Act, the non-resident Indian shareholder has an option to be governed by the provisions of Chapter XIIA of the Income Tax Act, 1961 viz. “Special Provisions Relating to Certain Incomes of Non-Residents” which are as follows: - • As per the provisions of section 115D read with section 115E of the Act and subject to the conditions

specified therein, long term capital gains arising on transfer of an Indian company’s shares, will be subject to tax at the rate of 10 percent (subject to surcharge and education cess as applicable), without indexation benefit.

• Under provisions of section 115F of the Act, long-term capital gains (in cases not covered under

section 10(38) of the Act) arising to a non-resident Indian from the transfer of shares of the company subscribed to in convertible Foreign Exchange shall 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 shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition.

• As per the provisions of section 115G of the Act, Non-Resident Indians are not obliged to file a return

of income under section 139(1) of the Act, if their only source of income is income from investments or long term capital gains or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act.

• Under section 115H of the Act, where the Non-Resident Indian becomes assessable as a resident in

India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under section 139 of the Act to the effect that the provisions of the Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.

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• As per the provisions of section 115I of the Act, a Non-Resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that assessment year under section 139 of the Act, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Act.

(b) Where the shares have been subscribed in Indian Rupees: In accordance with the section 48 of the Act, capital gains arising out of sale of long-term capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. 3. Provisions of the Act vis-à-vis provisions of the tax treaty As per section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the relevant tax treaty to the extent they are more beneficial to the non-resident. III. Benefits available to other Non-Residents 1. Dividends exempt under section 10(34) of the Act Dividends (whether interim or final) declared, distributed or paid by the Company for any assessment year commencing on or after April 1, 2003 are exempt in the hands of shareholders as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act. 2. Computation of capital gains Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset, being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax. In accordance with the section 48 of the Act, capital gains arising out of sale of long-term capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. As per section 111A of the Act, short term capital gain arising from transfer of an equity shares in a company listed on a recognized stock exchange or a unit of an equity oriented fund would be taxable at 15 percent (subject to surcharge and education cess as applicable), in cases where securities transaction tax has been paid as per Chapter VII of the Finance (No.2) Act, 2004. As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if such specified assets are converted into money within a period of three years from the date of

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its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified assets are transferred or converted into money. Under section 54F of the Act, long-term capital gains (in cases not covered under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain tax subject to certain conditions, if the net consideration from such shares are used for purchase of residential house property within a period of one year before and 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. 3. Provisions of the Act vis-à-vis provisions of the treaty As per section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the relevant tax treaty to the extent they are more beneficial to the non-resident. IV. Benefits available to Foreign Institutional Investors (“FIIs”) 1. Taxability of capital gains • As per the provisions of section 115AD of the Act, FIIs will be taxed on the capital gains income at

the following rates: Nature of income Rate of tax Long term capital gains 10 percent Short term capital gains 30 percent / 15 percent under section 111A The above tax rates would be increased by the applicable surcharge. The benefits of indexation and foreign currency fluctuation protection as provided by section 48 of the Act are not available to FIIs. • As per section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the tax

treaty to the extent they are more beneficial to the non-resident. • Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset,

being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax.

• As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital

gains arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if such specified assets are converted into money 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 such specified assets are transferred or converted into money.

• Dividends (whether interim or final) declared, distributed or paid by the Company for any assessment

year commencing on or after April 1, 2003 are exempt in the hands of shareholders as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act.

V. Benefits available to Mutual Funds As per the provisions of section 10(23D) of the Act, any income (including dividend from and income from sale of shares of the company) of Mutual Funds registered under the Securities and Exchange Board of

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India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorized by the Reserve Bank of India, would be exempt from income tax, subject to such conditions as may be prescribed in this behalf. VI. Benefits available to Venture Capital Companies / Funds As per section 10(23FB) of the Act, all Venture capital companies/funds registered with Securities and Exchange Board of India, subject to the conditions specified, are eligible for exemption from income tax on all their income, including dividend from and income from sale of shares of the company. VII. Benefits available to the Members of the Company under Wealth Tax Act, 1957 Shares of the Company held by the shareholder will not be treated as an asset within the meaning of section 2(ea) of Wealth Tax Act, 1957 and hence in this respect, Wealth Tax Act will not be applicable. We believe that there are no other special tax benefits available either to the shareholders. Notes: • All the above benefits are as per the current tax law as amended by the Finance Act, 2010. • The stated benefits will be available only to the sole / first named holder in case the shares are held by

joint holders. • 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.

• 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 consequence of his / her participation in the scheme.

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OUR BUSINESS

The information in this chapter is qualified in its entirety by, and should be read together with, more detailed information included in this Draft Letter of Offer, including the information contained in the chapters entitled “Risk Factors” and “Financial Information” on pages xi and 76, respectively of this Draft Letter of Offer. In this chapter, descriptions of contracts and agreements are not, nor do they purport to be, complete summaries of all terms customarily found in such contracts and agreements. The terms ‘we’, ‘our’, ‘us’ etc used in this chapter refer to the Company.

Overview:

We are one of the leading software company focused on consulting, products, and managed services business. We are a part of the USD 876 million Ramco Group, a diversified industrial conglomerate. We are a global provider of Enterprise Solutions (ES) and services in key industries such as manufacturing, aviation, logistics, banking and financial services. We offer rich functionality, cost effective seamless integration and fully web-integrated services, which helps our customers close the gap between business objectives and IT capabilities. Our offerings include Enterprise Solutions, OnDemand ERP and BPO & Consulting. We focus on providing innovative and quality business solutions that can be delivered fast and cost-effectively. We have over 100,000 users from 800+ customer organizations, globally since its inception.

We commenced operations as a software business division of Ramco Industries in 1989 and incorporated Ramco Systems Limited as a public limited company in 1997. Pursuant to a scheme of arrangement sanctioned by the High Court of Judicature, at Madras on December 24, 1999, the software undertaking of Ramco Industries Limited was demerged and transferred to us with effect from April 1, 1999 (the Demerger Scheme). We have a 98% owned subsidiary in USA and 4 wholly owned subsidiaries located at Switzerland, Malaysia, Singapore, South Africa. We also have one step down subsidiary in Canada and an associate in South Africa. We have 4 branch offices each at Germany, United Kingdom, United Arab Emirates and New Zealand.

We are a research driven organization and believe in constant innovation through continuous interaction with our customers. We have a well-equipped R&D Centre at Chennai. to develop new products, technologies and applications for our target industries. We are able to provide enterprise software and solutions that can deliver larger, complex, web based enterprise class solutions on any Technology Platform. VirtualWorks, developed by us is a process-to-application creation and delivery platform that confers strong advantages in the entire Software Development Life Cycle (SDLC). Our offerings can be tailored to suit unique individual business requirements.

Leveraging on our strong domain expertise, sound business practices and customer-centric focus, we have built significant global relationships with several multinational corporations and government entities thus demonstrating our ability to manage large customer relationships. We have tie-ups/ partnership arrangements with process consultants, business domain consultants and partners for sales co-operation;

Our Competitive strengths

Part of the Ramco Group We are part of the Ramco Group, which is a diversified industrial conglomerate. The Ramco Group is well respected in India and we benefit from the confidence that consumers, lenders, vendors from whom we seek vendor financing and other financial institutions place in members of the Group. Our relationship with the Ramco Group provides scope for exploiting synergies to create value for our business. We are a professionally managed Company that requires the commitment and expertise of our employees to successfully execute our growth strategies. Our association with the Ramco Group enhances our ability to attract talented employees from premier institutions and elsewhere. We believe the combination of our management structure and supportive relationship with the Group enables us to effectively manage a dynamic business and to respond quickly to rapidly changing market situations.

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Deep Domain Knowledge

Our focus on Manufacturing, Asset Management, Aviation, Banking & Financial services, Human Capital Management, Insurance etc industries has enabled us to develop domain knowledge that spans the breadth of functionality and solutions that companies in these industries require. This has in turn allowed us to steadily advance our offerings from provision of conventional ERP vendor to a high end enterprise class solutions provider offering a suite of products and value added services through multiple delivery options such as on-premise, on demand and managed services. We have also been able to help our customers to adapt to the various technological changes in the industry, and have the ability to provide sustainable solutions to our customers.

Unique product offerings

We are one of the few companies offering a portfolio of ERP solutions meeting diverse requirement of various industries and for both SMB as well as large enterprises. We enjoy a first mover advantage in Cloud ERP by successfully launching our product RODE two years back. We are the only vendor in the market providing a high end and comprehensive ERP meeting the unique and complex requirements of the Aviation MRO industry. We have invested in developing a Analytics solution for the banking industry which has been chosen by two leading nationalized banks.

Focus on R&D, expansion and innovation.

Our emphasis on R&D has enabled us to offer a choice of product suites to meet the diverse needs of both Small and Medium as well as large enterprises. We believe that continued focus on R&D will enable us to further develop new software, solutions and novel applications, which we believe will help us to enter into new lines of business and broaden our intellectual property base. In Fiscal 2010, 2009 and 2008 our R&D costs was ` 333.62 million, ` 328.36 million and ̀ 396.15 million respectively.

Strong Customer Base

We have continuously received repeat business from many of our customers. This customer trust has been built on the foundation of our commitment to quality, providing end to end solution from design to delivery and good human resource practices. We emphasize on providing innovative solutions to our customers and nurture relationships to drive our business growth. We partner with our customers and address the constantly changing consumer needs and trends. We have been able to retain our customers and have grown along with them.

Qualified and experienced management and motivated employee base

We are professionally-managed and led by a team of qualified and experienced managers, engineers, and other personnel with domestic and international experience in our business. We believe that our management team possesses a good understanding of our business and customer requirements, and is well positioned to focus on the continued growth of our business. We believe that a motivated and empowered employee base is important to our future growth. To better manage the rapid growth of our business, our employees are encouraged to take significant client responsibility and focus directly on the challenges that each project faces. As of September 30, 2010, we had a global workforce of 1433 employees. We intend to continue to invest in the development and training of our employees to ensure that they are well-equipped to meet our diverse project needs and execution capabilities.

Our Business Strategy We intend to maintain and enhance our position as a leading provider of high end enterprise software products and solutions to various industries. We also offer a comprehensive portfolio of services to enable our customers to realize business benefits and transform their business using our products and solutions. The key elements of our business strategy include:

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Grow and enhance our business from existing clients

We intend to increase our business from existing clients by cross selling of value added products and services from the enhanced portfolio of solutions from Ramco. This involves increasing the scope of engagements with our clients by expanding the breadth of products and services we offer and addressing new areas within clients’ organizations.

Diversify client base and expand into new geographies

We are one of the few companies offering a portfolio of ERP solutions meeting diverse requirement of various industries and for both SMB as well as large enterprises. We want to expand to those geographies and verticals that are underserved by conventional ERP vendors by providing innovative delivery options such as Software as a Service (SaaS) and Managed Services apart from the typical on-premise model of delivering solutions. This includes expanding to new regions such as Africa and new verticals such as Insurance, health care and education.

Achieve leadership position in Cloud ERP

We want to leverage the first mover advantage of successfully launching RODE two years back and exploit huge untapped potential in the growing SMB segment. The SMB segment is the fastest growing segment in many industries and they need a comprehensive ERP solution at an affordable price that is easy to implement and run their operations. The RODE on a SaaS model is the perfect solution for this need and the growing customer base is a proof of success of this offering. The recent launch of RODE 2.0 takes this to the next level of offering ERP for even large enterprises that are looking at reducing their ICT investments.

Opportunities in Power, Aviation and Banking We have been traditionally strong in Enterprise Asset Management solutions which is best suited for Power Utilities. Power sector is one of the high growth sectors in the country with huge investments through government and private players in setting up power plants and improving the efficiency of transmission and distribution. IT plays a major role in this segment and we are uniquely positioned to grow business in this segment with our comprehensive and competitive EAM solutions.

We are the only vendor in the market offering componentized, web-based ERP, meeting the unique and complex requirements of the Aviation MRO industry. We want to leverage our leadership position in the Aviation market to grab opportunities arising out of the growing aviation MRO sector globally. We have invested in developing a Business Intelligence solution for the banking industry which has been chosen by two leading nationalized banks. We will be growing our business by expanding our customer base from this segment.

Increase reach and penetration through focus on market initiatives.

We propose to increase our reach and expand our market share by effectively marketing our products and services to all tiers of customers. We plan to expand our customer base by constructively utilizing our extensive network of Subsidiaries, Associate and Branches located in 10 countries. We intend to exploit the power of our technology, by increasing the reach in terms of geographical spread and penetration and in terms of sales volumes of our products and services. We believe that we can achieve the same by strengthening our marketing efforts through streamlining of marketing activities, setting up of requisite infrastructure / processes and recruiting additional sales and marketing personnel. This coupled with appropriate branding and positioning of our offerings, will help us in expanding our reach globally and establish leadership position in the ES space.

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Strengthen our brand name in the Indian and global IT services market

We intend to continue to enhance our brand recognition in the ERP space through brand building efforts, communications and promotional initiatives such as advertising and promotions in business and trade magazines/dailies, sponsorship of events /conferences, interaction with industry research organizations, participation in industry events, public relations and investor relations efforts. We also intend to focus on our sales and marketing initiatives and establish our presence in the various geographies in which we plan to expand. We believe that these initiatives, will enhance the visibility of our brand name, contribute to our recruitment and retention initiatives and strengthen our recognition as a leader in the Indian IT services industry. We have put in place an integrated marketing and advertising expenses to enhance the visibility of our Company and our products. Our efforts are focused primarily on creating visibility through advertisement in business magazines/ dailies and hoardings in premium locations such as airports apart from sponsoring corporate events, seminars, webinars, analyst briefings, and other relevant activities. We intend to utilize [●] % of the Net proceeds from this issue towards our marketing and advertising plan.

Increase productivity and efficiency We plan to increase our profitability by increasing our productivity and efficiency by adopting innovative methodologies for development such as Agile methodology apart from continuous enhancement of Ramco VirtualWorks platform for faster delivery of products and solutions, which would enhance the project profitability. We intend to maintain our expenses at optimal levels. We also plan to optimally vary the composition of our employee resource pool, in terms of seniority and location, to maximize our productivity and efficiency.

Description of our Business

We deliver solutions that address business complexities with flexible enterprise applications that can be delivered quickly and cost-effectively into complex environments. It also gives companies the agility they need to stay competitive by enabling fast, flexible deployment and change on demand of business applications. Ramco VirtualWorks ensures maximum flexibility to execute a business process strategy - so when business needs change, systems change automatically. We are a global provider of ES and services in key industries such as manufacturing, aviation, logistics, banking / financial services including insurance.

The growing complexities and varying nature of businesses, irrespective of their size require IT Infrastructure to keep a track of their growth. Traditionally, this objective was met by implementing complex ERP Software. Typical attributes that describe an ERP include the massive efforts to develop the application, expensive expertise to implement, and increasing investments in repetitive training of users. Our vast experience in this domain enables us to address the challenges, which are to ease the process of investments necessary and hide the complexities associated with ERP maintenance.

We have also invested into Cloud computing to addresses the above issues effectively. As early as 2005, we initiated our efforts towards delivering a multi-tenant solution by investing into honing this capability which has enabled us to make our applications cloud ready. The main advantage of cloud computing is that businesses/ clients are relived of the traditional burdens of software installation, configuration, maintenance, infrastructural maintenance, and services to ensure continued business relevance.

Customers with diversified businesses and / or singular needs may choose to use their solutions over a private cloud. Private clouds allow the customer of choice selecting relevant pre-built business components from us and develop their custom components to create a solution that meets all standards and their unique requirements. These solutions can adapt itself to the changing business and technology requirements thereby giving a competitive advantage to our client.

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Others with standardized needs may access the full power of an ERP through our public cloud. The public cloud environment permits extensions to the ERP through a sandbox model and productivity tool kits. Cloud ready applications are like convergence of powerful technological concepts such as multi-tenancy, Service Oriented Architecture, model based development. The in depth experience that we have gained by such work with world-renowned customers has given us the learning and insight to deliver the most powerful cloud ready applications in the global marketplace which are made easy, simple, and quick to implement. The application’s architecture and technology ensures that the customer is not burdened with the technical complexity. It is accompanied with a set of productivity tools which facilitates and also has provisions for flexibility.

Technology:

Our products are developed on two technology platforms – Ramco VirtualWorks™ and Ramco DecisionWorks™. The platform permits the composition of custom solutions and stringing them together with the base ERP.

Ramco VirtualWorks™ is a tested, proven development platform that allows organizations to simply compose rather than laboriously code solutions. Based on SOA, Ramco VirtualWorks™ delivers model-based applications, which are composed, not coded, using existing or newly created business assets that adapt and scale with IT infrastructure.

Ramco DecisionWorks™ is a comprehensive, smart, easy-to use and web architected Business Intelligence Solution for Enterprise Performance Management (Covering Strategic, Tactical and Operational Business Intelligence), Enterprise Information Management and Enterprise Data Management, offering superior reporting, comprehensive querying, and analysis.

For large customers, these platforms are an enabler of the ability to compose solutions to their singular business problems. Some of our large customers have deployed these solutions in a private cloud in order to get complete and flexible control over their operations. These components can co-exist with third party applications or work with our ERP.

Our ERP Products are cloud ready, fully-powered, rich in functionality, and easy to deploy. They can be accessed over a public cloud and customers need not be concerned with infrastructural maintenance, upgrades, and most importantly large, upfront capital investments.

Our Products Profile:

We have seven major product suites – Ramco Enterprise Suite, Ramco Enterprise Asset Management Suite, Ramco Aviation, Ramco OnDemand ERP (ERP on SaaS), Ramco Business Information Management Suite, Ramco Enterprise Process Suite, and Ramco Mine Management Suite.

Product lines:

• Ramco Enterprise Suite (RES) of ERP solutions have been delivered to customers around the world for over a decade. Built on Ramco VirtualWorks™, RES has specialized solutions for major verticals such as Manufacturing, Logistics, Services, HCM, EAM, Aviation, BFSI &Healthcare.

• Ramco Enterprise Asset Management is designed and developed to address the needs of mid to large-sized asset-intensive organizations such as Utilities and Process Plants and Rail / Road / Air Fleet Operators. Ramco EAM enables enterprises to effectively manage the complete asset life-cycle encompassing Asset Planning, Acquisition, Installation, Operation, Maintenance, and Disposal.

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• Ramco Aviation Suite is an end-to-end Aviation Maintenance & Engineering (M&E) / Maintenance Repair & Overhaul (MRO) software that is all-encompassing, and yet easy to use. The software is web-centric and has been designed and developed ground-up for the Aviation industry.

• Ramco OnDemand ERP (RODE) is the first full-fledged ERP delivered on the cloud. Designed and developed to suit a wide spectrum of growing ERP needs, RODE offers multiple benefits such as flexibility, scalability, simplicity & speed.

• Ramco Business Information Management Suite Ramco Business Analytics is built and delivered on our model-driven platform, Ramco DecisionWorks™. Ramco Business Analytics provides business intelligence through the use of dashboards, key performance indicators, and a balanced scorecard framework. Ramco Master Data Management can identify challenges in data adequacy, data accuracy, and data availability across the organization, and provide ways to overcome these challenges.

Ramco Governance, Risk & Compliance offers a comprehensive framework that enables organizations to not only define corporate governance initiatives, but also monitor and control the actions performed across the organization to achieve these initiatives.

• Ramco Enterprise Process Suite Ramco OPTIMA is a world-class process optimization solution that improves plant productivity and efficiency in manufacturing/utilities industries such as cement, power, chemical and fertilizers. Ramco Optima also has two sub-product lines specially designed for the cement industry - Ramco Optima Kiln Information System and Ramco Optima Blending Control System. Ramco Real Time Integrator is a middleware for process and discrete industries, providing the link between business applications and real time automation systems.

• Ramco Mine Management Suite is a cost effective, flexible, and innovative enterprise application for mining or mineral industries.

We also have specialized solutions for key verticals such as Manufacturing, Real Estate & Construction, Energy & Utilities, Logistics, Service, BFSI, Aviation, Government, and Defense.

Ramco Consulting: Our consulting division works towards identifying opportunities that create business value for clients through Business Value Delivery, Balanced Scorecard, Shared Services, Business Process Improvement, Risk and Compliance Management, Customer Relationship Management, Portfolio Analysis, Legacy Transformation, and SOA Consulting among others.

Ramco Managed Services is a proven end-to-end solution for efficient and effective payroll processing. This combines the power of Business Analytics and Workflow with the user-friendliness of the browser, to deliver a world-class solution. The end-to-end solution addresses all payroll needs, from strategic to operational, and helps improve information management and decision-making.

Business Model: We typically provide our Enterprise Solutions services offerings to our customers either (i) directly or (ii) through our Subsidiaries and Associate.

Typically our engagements with customers acquired directly are either by way of contractual arrangements or by way of purchase orders for the purchase of specific licenses. We enter into software licensing agreements, professional services agreements and support services agreements with certain customers depending on their requirements and the scope of work. Under these arrangements, our revenues comprise of license fees, annual maintenance fees and customization fees.

We enter into professional services agreements, license agreements and/or master annual maintenance agreements with the relevant Subsidiaries or Associate, which provides us the business based on its independent sales and marketing efforts.

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SECTION IV - HISTORY AND CERTAIN CORPORATE MATTERS

Our Company was incorporated as Ramco Systems Limited, a public company limited by shares under the Companies Act on February 19, 1997 in the State of Tamil Nadu with registration number 18-037550. We commenced our business pursuant to a Certificate of Commencement of Business dated June 19, 1997 issued by the Registrar of Companies, Tamil Nadu. Our registered office is situated at 47, PSK Nagar, Rajapalayam 626 108, Tamil Nadu. Our business was originally undertaken by the ‘software business’ undertaking of Ramco Industries Limited since 1989. The said ‘software business’ undertaking of Ramco Industries Limited along with the assets and liabilities at book value was transferred to us with effect from April 1, 1999 pursuant to a scheme of arrangement (“Demerger Scheme”) approved by the Honorable High Court of Madras vide their order dated December 24, 1999. The shareholders of Ramco Industries Limited were allotted one share of our Company for every one share held by them in Ramco Industries Limited. In Fiscal 2000, we had also acquired all investments of Ramco Industries Limited in their overseas subsidiary companies. The sale was duly approved by the shareholders of Ramco Industries Limited at the EGM held on November 10, 1999 and also by the Reserve Bank of India pursuant to its letter dated December 18, 1999. Pursuant to receipt of permission for listing, our shares were listed on MSE, NSE and BSE with effect from March 29, 2000, April 12, 2000 and October 9, 2000 respectively. Further, on August 4, 2005, the Honorable High Court of Madras sanctioned the Scheme of Arrangement (“Scheme of Arrangement”) filed by us in relation to the adjustment of an amount not exceeding ` 2,000.00 million out of the balance outstanding in our share premium account as on March 31, 2005 (the appointed date), in respect of (i) write-off of trade receivables due from Ramco Systems Corporation, USA, Ramco Systems Limited, Switzerland and Ramco Systems Limited, Singapore amounting to ` 880.20 million and (ii) accumulated losses as on the appointed date. Further, we also received sanctions from RBI for waiving royalty and writing down capital with respect to Ramco Systems Corporation, USA and Ramco Systems Limited, Switzerland, to strengthen the financial position of those Subsidiaries. Ramco Infotech Solutions Limited (“RITS”), our erstwhile wholly owned subsidiary was divested entirely pursuant to a Share Purchase Agreement dated July 14, 2007 to and in favour of NSM Finance Limited, a subsidiary of TVS Interconnect Systems Limited. We have incorporated a subsidiary in South Africa, being RSL Enterprises Solutions (Pty) Limited, South Africa in the year 2002 and incorporated a subsidiary in Canada, being Ramco Systems Canada Inc, Canada in the year 2010. Also, one of our subsidiaries, being Ramco Systems Australia Pty Limited, Australia was wound up early this year. Main Objects of our Company The main objects of our Company as contained in our Memorandum of Association are: 1. To carry on the business pertaining to or connected with and involving information technology,

computer data processing, computerized information retrieval systems, computer software, development and management feasibility studies, analysis and design or turnkey systems for scientific, mathematical, statistical, engineering, statutory, financial, banking, commercial, and business application, data base management, software techniques, word processing software, electronic funds, transfer systems, on-line acquiring systems, transactional processing systems, data capture, data logging, data preparation, computer graphics, plotting and charting software, process control software, simulation and modelling.

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2. To import, export, purchase or sell, manufacture and deal in all kinds of computer peripherals and accessories equipment’s and systems including digital, analogue, hybrid, main-frame computer, super-mini, super micro, micro computers, dumb and intelligent computer terminals, specialized financial, retail engineering, receipting terminal and controller systems, electronic fuel transistor, Automatic Tele Machines, Post of sale equipments, data entry and capture equipment, distributive and processing networks data communications equipment, monitors, emulators, floppy, mini-floppy disc drives, diskettes, mini diskettes drives, data cassette recorders, card readers, card punchers, optical character recogniser, magnetic ink readers, Winchester technology, hard disk, cartridge hard disks, matrix character, impact, non-impact, thermal ink jet, laser printing systems, electric sensitive wheel and ball printers, oscillatory and graphic printers, plotters X-Y recorders, strip chart recorders, micro processor kit, computer game sets and build-up systems, computer clips and components, computer stationeries, forms, other original equipment manufacturer products and spare parts for all these equipment and to repair, refurbish and perform remedial services to the above mentioned equipments.

3. To carry on as advisors, consultants, contractors, to any persons, firms, corporations requiring

knowledge, expertise or know-how in the field of computers, data processing, information, retrieval, modern scientific techniques of information and all things used in connection therewith and to organize, run and give seminars, training, general and specific courses on computer system software, hardware and applications.

4. To carry on business of imparting training in computers and software for clients in India and abroad. 5. To establish, provide, maintain and conduct or otherwise subsidise research laboratories, experimental

stations, workshops and libraries for scientific, industrial, commercial and technical research and experiments; to undertake and carry on scientific, industrial, commercial, economic, statistical and technical research, surveys and investigations; to promote studies, research, investigation and invention, both scientific and technical by providing subsidising endowing or assisting laboratories, colleges, universities, workshops, libraries, lectures, meetings, exhibitions and conferences and by providing for the remuneration to the scientists, scientific or technological professors or teachers and the award of scholarship, grants and prizes, generally to encourage, promote, and reward studies, research, investigation, experiments, tests and inventions of any kind.

6. To carry on the business as importer, exporter, buyers, lessors and sellers of and in dealers in all types

of electronic components and equipments necessary for attaining the above objects. Amendments to our Memorandum of Association Sr. No

Date Amendments

1. June 16, 1999 Increase in authorised share capital from ` 500,000 to ̀ 150,000,000. 2. July 22, 2005 Increase in authorised share capital from ` 150,000,000 to ̀ 300,000,000. 3. September 18, 2008 Increase in authorised share capital from ` 300,000,000 to ̀ 500,000,000. Our Corporate Structure We have five direct subsidiaries, one step down subsidiary and one associate company as at September 30, 2010. Details of our Subsidiaries The details of our Subsidiaries being (i) Ramco Systems Corporation, USA; (ii) Ramco Systems Limited, Switzerland; (iii) Ramco Systems SDN BHD, Malaysia; (iv) Ramco Systems Pte Limited, Singapore; (v)

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RSL Enterprise Solutions (Pty) Limited, South Africa; and vi) Ramco Systems Canada Inc (step down subsidiary through Ramco Systems Corporation, USA) (i) Ramco Systems Corporation, USA (“Ramco USA”) Ramco USA, was incorporated on October 1, 1992 as a Subsidiary of Ramco Industries Limited. Thereafter, in 1999, Ramco USA became our Subsidiary pursuant to our acquisition of their shares held by Ramco Industries Limited. The registered office of Ramco USA is located at 18510, Decatur Road, Monte Sereno, California, 95030 USA. We own 98% of Ramco USA while the remaining shareholding is held by certain individuals. Ramco USA operates mainly through its principal office at New Jersey, with another office in Milpitas (California) and is engaged in marketing our products and services and providing software development and related business activities. (ii) Ramco Systems Limited, Switzerland (“Ramco Switzerland”) Ramco Switzerland was incorporated on July 26, 1995 as a joint venture partnership between Ramco Industries Limited and Univag AG of Switzerland. In 1996, Ramco Industries Limited acquired all the shares held by Univag AG and converted the joint venture into a wholly owned subsidiary. Subsequently, in 1999 Ramco Switzerland became our Subsidiary, pursuant to our acquisition of their shares held by Ramco Industries Limited. The registered office of Ramco Switzerland is located at Lange Gasse 90, Postfach CH- 4020 Basel, Switzerland. Ramco Switzerland is engaged in marketing our products and services and providing software development and related business activities. (iii) Ramco Systems SDN BHD, Malaysia (“Ramco Malaysia”) Ramco Malaysia was incorporated on May 3, 1995 as a wholly owned subsidiary of Ramco Industries Limited. Thereafter, in 1999, Ramco Malaysia became our Subsidiary pursuant to our acquisition of the shares of Ramco Malaysia held by Ramco Industries Limited. The registered office of Ramco Malaysia is located at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia. Ramco Malaysia is engaged in marketing our products and services in Malaysia. In 1997, Ramco Malaysia was awarded the Multimedia Super Corridor (MSC) status enabling it to derive certain tax benefits (till November 2007) from the Government of Malaysia. (iv) Ramco Systems PTE. Limited, Singapore (“Ramco Singapore”) Ramco Singapore was incorporated on October 17, 1995, as a wholly owned subsidiary of Ramco Industries Limited. Thereafter, in 1999, Ramco Singapore became our Subsidiary pursuant to our acquisition of the shares of Ramco Sinagpore held by Ramco Industries Limited. The registered office of Ramco Singapore is located at 78, Shenton Way # 26-02A, Singapore. Ramco Singapore is engaged in marketing our products and services and providing software development and related business activities in Singapore and certain other countries in the South East Asian region. (v) RSL Enterprise Solutions Pty Limited, South Africa (“Ramco RSA”) Ramco RSA was incorporated in South Africa on October 10, 2002 as Exclusive Access Trading 8 (Pty) Limited. In 2003, it became our wholly owned subsidiary, and its name was changed to RSL Enterprise Solutions Pty Limited. The registered office of Ramco RSA is located at 20 Kingsmead, Boulevard, Kingsmead Office Park, Durban 4001. Ramco RSA is engaged in marketing our products and services and providing software development and related business activities. (vi) Ramco Systems Canada Inc (step down subsidiary through Ramco Systems Corporation, USA) Ramco Canada was incorporated on September 30, 2010, as a wholly owned subsidiary of Ramco USA a JV of Ramco Systems Limited, India. The registered office of Ramco Canada is located at 1150-45 – World Exchange Plaza O’Connor St. Ottawa, Ontario, Canada – K1P 1A4. Ramco Canada is engaged in

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marketing our products and services and providing software development and related business activities. Details of our Associate Redlex 47 Pty Limited, South Africa (“Redlex”) Redlex was incorporated by way of a shareholders agreement between RSL Enterprise Solutions Pty Limited and Dream World Investments 48, Pty. Limited (“Dream World”) on February 5, 2004. For more details on the Shareholders Agreement, please refer to page 64 of this Draft Letter of Offer. The registered office of Redlex is located at 4th Floor Walnut Grove, Walnut Road, Durban, 4001. Redlex is engaged in marketing our products and services and providing software development and related business activities. Details of erstwhile Subsidiary Ramco Systems Australia Pty Limited, Australia (“Ramco Australia”) Ramco Australia was incorporated on December 4, 2007 as a wholly owned subsidiary of Ramco Systems Corporation, USA. Ramco Australia was registered with the objective of carrying out the marketing of our software products and services and also providing software development and related business activities. Ramco Australia, was wound up and in this regard, the Australian Securities & Investments Commission, has issued a certificate of Deregistration of Ramco Systems Australia Pty Ltd dated January 27, 2010. History and Major Events Year Key Events, Milestones and Achievements 1997 - Ramco Systems Limited incorporated as a public limited company; 1999 - Demerger Scheme sanctioned by the Honorable High Court of Madras

- Launch of web-enabled ERP, e.Applications 3.1 2001 - Release of Ramco Virtual Works™ 1.0, Enterprise Application Framework 2002 - Ramco Enterprise Solutions Pty Limited, South Africa incorporated;

- Development Centres assessed at SEI-CMM Level 4; - Release of Ramco Business Decisions (Business Intelligence Solution)

2003 - Release of Ramco DecisionWorks (CPM platform); - ISO 9001 : 2000 certified; - ASP Gold Award in category “Most innovative solution” at CEBIT in Hannover for

Triamun solution - Rights issue of 3,872,511 equity shares aggregating to ̀ 774,502,200/-

2004 - Release of Ramco VirtualWorks 2.0, Virtual Software Factory; - Virtual Shoring Operations commenced with eThekwini Municipality in South Africa

2005 - Microsoft Gold Certified Partner - SEI CMM Level 5 accredition - Rights issue of 3,070,757 equity shares aggregating to ̀ 644,858,970/-

2006 - Adjudged second year in a row as No. 1 in customer satisfaction in the Enterprise Solutions market by Dataquest-IDC.

2007 - Launched Ramco Enterprise Series- Basic. - Ramco Flexi launched

2008 - Launched Ramco Virtual works 3.0 - Joined Open compliance and Ethics Group (OCEG). - Entry into the BPO space - Launch of Ramco On Demand ERP

2009 - Release of Aviation M&E / MRO Enterprise Product Suite Series 5.1 2010 - Release of Aviation M&E / MRO Enterprise Product 5.2

- Release of EDK (Extension Development Kit), ITK (Implementation Tool Kit, and PDK (partner Development Kit)

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Strategic Partners We have not entered into any strategic partnership agreements. Financial Partners We have not entered into any financial partnership agreements. Shareholders Agreement There is no subsisting shareholders’ agreement among our shareholders in relation to, to which we are a party or otherwise has notice of the same. However, our wholly owned Subsidiary, Ramco Enterprise Solutions Pty Limited has entered into a shareholders agreement with Dream World Investments 48 (Proprietary) Limited (“Dream World”) on February 5, 2004, to form an Associate company, being Redlex 47 Pty Limited (Redlex), to provide information technology solutions, primarily in South Africa. Ramco Enterprise Solutions Pty Limited has the option over time to reduce its current shareholding of 30% in Redlex to a mutually acceptable minimum level. The salient features of this shareholders agreement are: Services: Redlex shall provide services such as software code writing/generation, blue printing and other services towards implementation of the IT solutions, technical support, updates, marketing, consultancy on hardware procurement, networking, and security in connection with networking, other technical support, training support and supply of competent personnel. We are also required to host our proprietary Ramco VirtualWorks platform at the premises of Redlex’s clients. Directors and Management: There shall be a minimum of four directors out of which Ramco Enterprise Solutions Pty Limited and Dream World shall appoint two directors each. As long as the shareholding of Ramco Enterprise Solutions Pty Limited, in Redlex does not fall below 15% it shall have the right to appoint two directors. In the event that the shareholding falls below 15% but, not below 5% then they shall have the right to appoint one director. The first chairperson to the board of directors shall be appointed by Dream World, for a period of two years and thereafter the chairperson shall alternate between the directors appointed by Ramco Enterprise Solutions Pty Limited and Dream World. Disposal of Shareholding: Any shareholder intending to sell, transfer or in any manner alienate any portion or all of its equity shall give not less than three months written notice to the directors of Redlex. Termination: The agreement may be terminated at any time in writing by all the shareholders and shall terminate automatically without notice on the date when all the shares are beneficially owned by one shareholder. Further in case of a default or breach of the agreement, a non-defaulting shareholder may terminate the Agreement, by notice in writing to the defaulting shareholder. Intellectual Property: Upon the termination of the agreement for any reason, the right of Redlex to use and exploit intellectual property of Ramco Systems Limited or Ramco RSA shall also terminate. All intellectual property in relation to RamcoVirtualWorks and other pre built components in relation to Ramco RSA or Ramco Systems Limited will always belong to Ramco Systems Limited. Governing Laws: The agreement shall be governed by the laws of South Africa. Further, RSL Enterprise Solutions (Proprietary) Limited has entered into a Share Sale Agreement with Redlex 47 Pty Limited, Dream World Investments 48 (Proprietary) Limited, Gigatype Properties (Propriety) Limited in December 2009. Pursuant to the said agreement, the parties had agreed that RSL Enterprise along with Dream World Investments shall sell 30% of the share capital in Redlex 47 Pty Limited, comprising of 15% each, by each of them to and in favour of Gigatype Properties for a total consideration of South African Rand 600. However, the said transaction was not consummated.

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SECTION V - MANAGEMENT

The following chart illustrates the management structure of our Company as on the date of this Draft Letter of Offer: Management Organisation Chart

Board of Directors As per our Articles of Association we cannot have less than 3 and not more than 12 Directors. Our Board presently comprises 8 Directors, which consists of 7 non-executive Directors, 4 of which are independent Directors. Our Chairman is a non-executive Promoter Director.

Sr No.

Name, Designation, Address, Occupation and Term

Nationality Age (years)

Other Directorships

1

Mr. P R Ramasubrahmaneya Rajha, Chairman and non-executive promoter director,

Indian

75

Listed Companies

� Madras Cements Limited � Rajapalayam Mills Limited � Ramco Industries Limited � The Ramaraju Surgical Cotton

Shyamala Jayaraman Head - Technology

Nambi MMT Head- Business

Consulting & Aviation

Ananthasayanam NC Head – Corporate Strategic

Alliances

Kamesh Ramamoorthy (KKR) Chief Operating Officer

Jim Fitzgerald Global President

Aviation Solutions & Geo Head – Non

Aviation - USA

Sandeep Bhattacharya Geo Head - Asean

Shankar R Geo Head –India,

ME & Africa

Frutig Lars Geo Head – Sales,

Europe

Rajasekar D Head- Decision Works, RODE –

Delivery, Implementation &

Support

Subramanian R Head- KM, RM, QMG

TRG, INIMP, PCO, IMG, ADMIN

Ravi Kula Chandran Head – Finance & Accounts, Legal

Shivakumar J S Head - HR

P.R. Venketrama Raja (PRV) VCMD & CEO

Garima Sinha Head –Corporate Marketing

Prince Sudersanam E Head –ES- Product

Development

Sankara Narayanan S

Head –ES- Projects

66

Sr No.

Name, Designation, Address, Occupation and Term

Nationality Age (years)

Other Directorships

Address: R/o “Ramamandiram” Tenkasi Road, Rajapalyam 626 117 Occupation: Industrialist Term: Since Incorporation - until retirement by rotation DIN: 00331357

Mills Limited � Thanjavur Spinning Mill Limited

Unlisted Companies

� Sri Vishnu Shankar Mill Limited � Sandhya Spinning Mill Limited � Sudharsanam Investments

Limited � Madras Chip Board Limited � Sri Harini Textiles Limited; � Sri Sandhya Farms (India) Private

Limited; � Sri Saradha Deepa Farms Private

Limited � Ramamandiram Agricultural

Estate Private Limited � Nalina Agricultural Farms Private

Limited � RCDC Securities and Investments

Private Limited; � Nirmala Shankar Farms & Estates

Private Limited � Sri Nithyalakshmi Farms Private

Limited � Ram Sandhya Farms Private

Limited � Rajapalayam Spinners Private

Limited � Ramco Management Private Ltd. � Sri Ramco Lanka (Private) Ltd.,

Srilanka Subsidiaries � Ramco Systems Corporation,

USA

2 Mr. P R Venketrama Raja, Vice Chairman, Managing Director and Chief Executive Officer

Address: R/o “Ramamandiram” Tenkasi Road, Rajapalyam 626 117

Occupation: Industrialist

Term: February 23, 2010 – February 22, 2015 DIN: 00331406

Indian 51 Listed Companies � Ramco Industries Limited � Madras Cements Limited � Rajapalayam Mills Limited � The Ramaraju Surgical Cotton

mills Limited � Thanjavur Spinning Mill limited

Unlisted Companies � Sri Vishnu Shankar Mill Limited � Sandhya Spinning Mill Limited � Sudharsanam Investments

67

Sr No.

Name, Designation, Address, Occupation and Term

Nationality Age (years)

Other Directorships

Limited; � Sri Harini Textiles Limited � Sri Sandhya Farms (India) Private

Limited � Sri Saradha Deepa Farms Private

Limited � Ramamandiram Agricultural

Estates Private Limited � Nalina Agricultural Farms Private

Limited � RCDC Securities and Investments

Private Limited � Nirmala Shankar Farms & Estates

Private Limited � Sri Nithyalakshmi Farms Private

Limited � Ram Sandhya Farms Private

Limited � Rajapalayam Spinners Private

Limited � Sri Ramco Lanka (Private) Ltd.,

Srilanka Subsidiaries

� Ramco Systems Corporation, USA

� Ramco Systems Limited, Switzerland

� Ramco Systems Sdn Bhd., Malaysia

� Ramco Systems Pte. Ltd., Singapore

� RSL Enterprise Solutions (Pty) Ltd., South Africa

� Ramco Systems Canada Inc., Canada

3 Mr. S. S. Ramachandra Raja Non Executive Director,

Address: R/o 58, PSK Nagar, Rajapalayam 626108 Occupation: Business Term: Since Incorporation - until retirement by rotation DIN: 00331491

Indian 75 Listed Companies

� Ramco Industries Limited � Rajapalayam Mills Limited

Unlisted Companies � Sri Vishnu Shankar Mill Limited � Sri Sethu Ramasamy Farms

Private Limited � Ramco Management Private

Limited

4 Mr. N.K. Shrikantan Raja, Independent Director,

Indian 62 Listed Companies

� Ramco Industries Limited

68

Sr No.

Name, Designation, Address, Occupation and Term

Nationality Age (years)

Other Directorships

Address: R/o Bhavanam 102, PSK Nagar, Rajapalayam 626108

Occupation: Business Term: Since Incorporation - until retirement by rotation DIN: 00350693

� The Ramaraju Surgical Cotton Mills Limited

Unlisted Companies � Sandhya Spinning Mill Limited � Sri Vishnu Shankar Mill Limited � Sri Yannarkay Servicers Limited � Sudharsanam Investments

Limited � N R K Construction Systems

Private Limited � N R K Infra System Private

Limited 5 Mr. M. M. Venkatachalam,

Independent Director,

Address: R/o 10 Valliammai Achi Street, Kotturpuram, Chennai 600 085

Occupation: Industrialist Term: April 5, 2001 – until retirement by rotation DIN: 00152619

Indian 51 Listed Companies

� Coromandel Engineering Company Limited

Unlisted Companies

� Parry Agro Industries Limited � Parry Enterprises India Limited � USV Limited � Cholamandalam Factoring

Limited � Polutech Limited � Ambadi Enterprises Limited � Laserwords Private Limited � M M Muthiah Sons Private

Limited � New Ambadi Estates Private

Limited � Parry Murray and Company

Furnishings & Floor Coverings (India) Private Limited

� Parry Murray & Co. Ltd., UK � Coramandel International Ltd.

6 Mr. V Jagadisan, Independent Director, Address: R/o 2, 1st Main Road, Gandhi Nagar, Adyar, Chennai 600 020 Occupation: Chartered Accountant Term: June 15, 2001 - until retirement by rotation DIN: 00058769

Indian 78 Listed Companies

� KG Denim Limited Unlisted Companies

� PEC Potentiometers Limited

7 Mr. A V Dharmakrishnan, Non Executive Director,

Indian 53 Listed Companies

69

Sr No.

Name, Designation, Address, Occupation and Term

Nationality Age (years)

Other Directorships

Address: R/o. No.55, Saravana Street, T Nagar, Chennai 600 017 Occupation: Corporate Executive

Term: January 31, 2008 – until retirement by rotation DIN: 00693181

� Rajapalayam Mills Limited

Unlisted Companies

� Ontime Transport Company Limited

8 Mr. R S Agarwal, Independent Director, Address: A -102, Chaitanya Towers, Near Karur Vysya Company, Prabhadevi, Mumbai – 400 025 Occupation : Business Term: May 29, 2009 – until retirement by Rotation DIN: 00012594

Indian 68 Listed Companies

� Madras Cements Limited � Ramco Industries Limited � Videocon Industries Limited � NRC Limited � Surya Lata Spinning Mills

Limited � Suryalakshmi Cotton Mills

Limited � Elegant Marbles & Grani

Industries Limited. � Unimers India Limited � Deccan Cements Limited Unlisted Companies � GVK Jaipur Expressway Private

Limited

Brief Biography of our Directors Mr. P.R. Ramasubrahmaneya Rajha, 75 years, Chairman and Director is the son of late Mr. P.A.C. Ramasamy Raja, the founder of the Ramco group of industries. Mr. P. R. Ramasubrahmaneya Rajha obtained a bachelors degree in Physics from the University of Madras in 1955. After the expiry of Mr. P.A.C. Ramasamy Raja in 1962, Mr. P.R. Ramasubrahmaneya Rajha began managing the Ramco group of industries. The Ramco Group has interests in businesses of Cotton Yarn, Cement, Fibre Cement Products, Software and Bio Technology. As a mentor of the Group, he has been instrumental in raising the Group to become one of India’s most respected Industrial Groups, achieving international recognition for its quality products and service. Mr. P.R. Ramasubrahmaneya Rajha is also a member of the Executive Committee of the Tamil Nadu Chamber of Commerce & Industry and President of the Rajapalayam Chamber of Commerce & Industry. Mr. P. R. Venketrama Raja, 51 years, Vice Chairman, Managing Director and CEO of our Company, is the son of Mr. P R Ramasubrahmaneya Rajha. He was awarded a Bachelor’s degree in Chemical Engineering from University of Madras in 1981 and a Masters in Business Administration from University of Michigan, USA in 1983. An astute businessman with a passion for technology, Shri P R Venketrama Raja, is a founder member of M/s. Ramco Systems Limited. He is a member on the Board of several companies of well diversified Ramco Group of industries including Madras Cements Limited and Ramco Industries Limited. With a diverse business interests, Shri P R Venketrama Raja, brings with him

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a Wealth of business experience and management skills. He is an active member of Young President’s Organization (YPO). Mr. S.S. Ramachandra Raja, 75 years, Non Executive Director, holds a degree in Science from the University of Madras in 1956. He is on the board of several companies, including Ramco Industries Limited, Rajapalayam Mills Limited, and Sri Vishnu Shankar Mill Limited. He has been on our Board since February 19, 1997. Mr. N.K. Shrikantan Raja, 62 years, Independent Director, holds a degree in Commerce from University of Madras in 1971. He is on the board of several companies, including Ramco Industries Limited, Sri Vishnu Shankar Mill Limited. He has been on our Board since February 19, 1997. Mr. M.M. Venkatachalam, 51 years, Independent Director, was awarded a graduate degree in agriculture from the University of Agricultural Sciences in Bangalore in 1980 and a Masters in Business Administration from the George Washington University, USA in 1985. Mr. M.M. Venkatachalam is the son of Late Mr. M.M. Muthiah of the Murugappa Group of companies. He was the Vice Chairman of The Planters’ Association of Tamilnadu and the past president of The Employers’ Federation of Southern India. He has been on our Board since April 5, 2001. Mr. V. Jagadisan, 78 years, Independent Director, is a senior Chartered Accountant and a Tax Consultant in Chennai. He is also a director on the board of several companies including KG Denim Limited. He has been on our Board since June 15, 2001. Mr. A. V. Dharmakrishnan, 53 years, Non Executive Director, is a member of Institute of Chartered Accountants of India. He is currently the Executive Director - Finance of MCL and has been associated with MCL for 28 years since May 1982. Shri. A. V. Dharmakrishnan is also a director on the Board of Rajapalayam Mills limited and Ontime Transport Company Limited. He has been on the Board since January 31, 2008. Shri R S Agarwal, 68 years, Independent Director is a Bachelor of Science and holds a Degree in Chemical Engineering. He started his career in 1965 and after serving in various capacities with a leading paper Mill of Northern India for 9 years and with Industrial Development Company of India (IDBI) for 28 years, retired as an Executive Director of IDBI. While in service with IDBI, he had dealt with many subjects and projects including Member of "Satyam Committee" set up by Government of India in 1999-2000 for formulation of policy for textile industry, involvement in preparation of policy notes, detailed guidelines and implementation of "Technology Upgradation Fund (TUF)" introduced by the Ministry of Textiles, Government of India in April 1999, involvement in preparation of policy paper and guidelines on development of "Special Economic Zone" in the country for the Ministry of Commerce, Government of India in January 2002.He has headed the Infrastructure Finance Department and Project Appraisal Department of IDBI from February 1999 to March 2002, during which period about 30 large size power projects in the range of 250MW to 500MW were evaluated and sanctioned under assistance by IDBI.

Each of our Directors have confirmed that none of the shares of the listed companies, in which they are/were directors, have been/were suspended from being traded on the Bombay Stock Exchange Ltd. and/or National Stock Exchange of India Ltd and/or any other stock exchanges at any period during the last five years from the date of this DLOF. Each of our Directors have confirmed that none of the shares of the listed companies, in which they are/were directors have been/ were delisted on the Bombay Stock Exchange Ltd. and/or National Stock Exchange of India Ltd and/or any other stock exchanges, except as disclosed hereunder:

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S.No

Name of Director

Name of the Company

Name of the Stock Exchange listed on

Date of delisting

Compulsory or Voluntary Delisting

Reason for delisting

Date of relisting (if relisted)

Name of the Stock Exchange relisted on

Date of Appointment as Director

Term of Directorship

1 Mr. M. M. Venkatachalam

Parry Agro Industries Limited

Cochin BSE, MSE & NSE

2008 2008

Voluntary Voluntary

Due to insignificant trading Delisting post open offer

N.A N.A

N.A N.A

November 19, 2003

Retirement by rotation

Bangalore Stock Exchange, Mangalore Stock Exchange and Calcutta Stock Exchange

2003-2004

Voluntary

Due to insignificant trading

N.A N.A

Ahmedabad Stock Exchange and Hyderabad Stock Exchange

2004-2005

Voluntary

Due to insignificant trading

N.A N.A

2

Mr. P. R. Ramasubrahmaneya Raja

Madras Cements Limited

Delhi Stock Exchange

2005-2006

Voluntary

Due to insignificant trading

N.A N.A

March 20, 1958

Re-appointment as Managing Director for a period of 5 years w.e.f April 2, 2010

3

Mr. P. R. Venkatrama Raja

Madras Cements Limited

Bangalore Stock Exchange, Mangalore Stock Exchange and Calcutta Stock

2003-2004

Voluntary

Due to insignificant trading

N.A N.A May 23, 1985

Retirement by rotation

72

Exchange Ahmedabad Stock Exchange and Hyderabad Stock Exchange

2004-2005

Voluntary

Due to insignificant trading

N.A N.A

Delhi Stock Exchange

2005-2006

Voluntary

Due to insignificant trading

N.A N.A

Bangalore Stock Exchange, Mangalore Stock Exchange and Calcutta Stock Exchange

2003-2004

Voluntary

Due to insignificant trading

N.A N.A

Ahmedabad Stock Exchange and Hyderabad Stock Exchange

2004-2005

Voluntary

Due to insignificant trading

N.A N.A

Madras Cements Limited

Delhi Stock Exchange

2005-2006

Voluntary

Due to insignificant trading

N.A N.A

January 30, 2006

Retirement by rotation

Hyderabad Stock Exchange

2006-07

4

Mr. R. S. Agarwal

Suryalakshmi Cotton Mills Limited Delhi

Stock Exchange

2004-05

Voluntary

Due to insignificant trading

N.A N.A July 31, 2003

Retirement by rotation

73

Borrowing Powers of Directors

Pursuant to a resolution approved by our Shareholders at an EGM held on February 18, 2000, the current borrowing powers of the Directors pursuant to section 293(1)(d) of the Companies Act is ` 2,500 million (apart from temporary loans obtained from the Company’s bankers in the ordinary course of business), in excess of the Company’s paid up share capital and free reserves, that is to say, reserves not set apart for any specific purpose. Compensation to our Directors

In the Board meeting held on June 15, 2001, it was resolved to pay only sitting fees to directors other than Executive directors for attending Board /Committee meetings, as follows:

Sr. No. Meeting of Directors Sitting Fees payable 1. Board Meeting `5,000/- 2. Audit Committee `5,000/- 3. Shareholders Committee `2,500/-

All our Directors, including Independent Directors, may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under the our Articles of Association. Compensation to our Chairman Mr. P.R. Ramasubrahmaneya Rajha was appointed as our Chairman and director since Incorporation. Our Chairman is entitled to sitting fees of ` 5,000/- per meeting of the Board and `2,500 for every meeting of the Shareholders Committee . Apart from the sitting fees, we are not paying him any kind of remuneration/compensation. Compensation payable to our Whole-Time Directors/Managing Director Shri P R Venketrama Raja

Pursuant to AGM dated August 2, 2010, P R Venketrama Raja has been re-appointed as Managing Director with effect from February 23, 2010 for a period of 5 years. The following resolution was passed pertaining to his remuneration:

(A) Salary, Allowances, Perquisites And Commission:

1. Not exceeding 5% of the Net Profits of the Company, computed in the manner laid down in the

Companies Actand payable by way of Salary/ Allowances/ other Perquisites / benefits and/or Commission, as determined by the Remuneration Committee from time to time.

2. The Remuneration Committee is authorized to fix, alter, determine or vary from time to time the

quantum and/or the composition of the Remuneration payable to the MD, including the modes of payment, in such manner and to such extent not exceeding the limits specified in the Companies Actand/or Schedule XIII thereto or such other provisions as may be applicable in this regard, as in force from time to time.

3. Provided that that in accordance with the provisions of Section III of the Part II of the Schedule XIII to

the Companies Act, the total remuneration payable by the Company and RIL, of which also Shri P R Venketrama Raja is the Vice-Chairman and Managing Director, shall not exceed 5% of the Net Profits of the Company or the Net Profits of RIL whichever is higher.

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(B) Minimum Remuneration:

Where in any financial year during the currency of the tenure of the MD, we have Nil Profits or the Profits are inadequate, MD shall be paid remuneration as under:

1. Remuneration payable not exceeding the maximum remuneration payable under Section II (subject to

Section III) of Part II of Schedule XIII to the Companies Act, 1956, based on the effective capital of the Company and in accordance with the approval of the Remuneration Committee at the relevant point of time.

2. Contributions to Provident Fund, Superannuation Fund or Annuity Fund to the extent singly or taken

together are not taxable under the Income Tax Act, 1961;

3. Gratuity payable at a rate not exceeding half a month’s salary for each completed year of service; and

4. Encashment of Leave at the end of the tenure.

(C) General:

1. The perquisites shall be valued in terms of the actual expenditure. However, where such actual expenditure cannot be ascertained, such perquisites shall be valued as per the Income Tax Rules.

2. MD shall not be entitled to any sitting fees for attending the meetings of the Board or of the

Committee(s) of which he is a member.

3. MD shall be subject to all other service conditions and employee benefit schemes, as applicable to any other employee of the Company.

Break up of Managing Director’s remuneration for the year 2009-10 Sr No. Particulars Remuneration 1. Salary

Basic Pay: Total:

` 7,20,000 /- Per Annum `̀̀̀ 7,20,000/- Per Annum

Perquisites 2. House Rent Allowance 3,60,000/- Per Annum 3. Provident Fund 86,400/- Per Annum The above remuneration has been adjusted in the overall maximum of ̀ 36,070,426/-payable by Ramco Industries Limited at 5% of its net profits computed in accordance with the said provisions of the said Act. Family Relationship between our Directors None of our Directors are related to each other except Mr. P.R. Ramasubrahmaneya Rajha and Mr. P. R. Venketrama Raja who are father and son respectively Shareholding of Board of Directors in our Company as of September 30, 2010

Name of Director No. of Equity Shares held (Pre-Issue)

P.R. Ramasubrahmaneya Rajha 362469 P. R. Venketrama Raja 1289182 S.S. Ramachandra Raja 30158 N.K. Shrikantan Raja 6702 M.M. Venkatachalam NIL

75

V. Jagadisan NIL A. V. Dharmakrishnan 2484 R S Agarwal NIL Interest of Directors Except as stated in Related Party Transactions appearing in the “Financial Information” on page 76 of this Draft Letter of Offer, and to the extent of shareholding, our Directors do not have any other interest in our business. Our Directors do not have any interest in us other than to the extent of the remuneration or benefits to which they are entitled as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business and to the extent of the Equity Shares held by them, or funds controlled by them, if any, and options granted to them under the ESOP/ESOS. Except for a grant of 20,000 stock options to Mr. A.V. Dharmakrishnan under the ESOS 2009 Plan A, there are no outstanding options granted to our Directors under ESOP 2000, ESOS 2003, ESOS 2004, ESOS 2008, ESOS 2009 Plan A or ESOS 2009 Plan B. Except as stated otherwise in this Draft Letter of Offer, we have not entered into any contract, agreement or arrangement during the preceding 2 years from the date of this Draft Letter of Offer in which the Directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangements or are proposed to be made to them. Changes to the Board in the last three years There have been no changes to our Board during the last 3 years except as mentioned below: Name Date of Appointment Date of Cessation Reasons for Change Mr. A.V.Dharmakrishnan Jan 31, 2008 Not Applicable Appointment Mr. R. S. Agarwal May 29, 2009 Not Applicable Appointment

76

SECTION VI - FINANCIAL INFORMATION

AUDITOR’S REPORT TO THE MEMBERS OF RAMCO SYSTEMS LIMITED We have audited the attached Balance Sheet of Ramco Systems Limited, as at 31st March, 2010 the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date, annexed thereto. 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. We conducted our audit in accordance with 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 from any 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.

1. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Sub-section (4-A) of Section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to 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 the 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 the Cash Flow Statement dealt with by

this report comply with the Accounting Standards referred to in sub-section (3C) of Sec.211 of the Companies Act, 1956.

e) On the basis of written representation received from the directors, as on 31st March, 2010 and taken on

record by the Board of Directors, we report that none of the Directors is disqualified, as on 31st March, 2010 from being appointed as a Director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said

accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(1) in case of the balance sheet, of the state of affairs of the Company as at 31st March 2010. (2) in the case of the Profit and Loss account, of the loss for the year ended on that date.; and (3) in the case of cash flow statement, of the cash flows for the year ended on that date.

For M/s. CNGSN & ASSOCIATES

Chartered Accountants Registration No.004915S

Place: Chennai C.N.GANGADARAN Date : 24th May 2010 Partner

Membership No.11205

77

ANNEXURE TO THE AUDITOR’S REPORT Referred to in paragraph 3 of our report of even date

(i) (a) The company has maintained proper records showing full particulars, including quantitative details and situations of Fixed Assets.

(b) Most of the assets have been physically verified by the management during the year. The company has a phased programme of verification which in our opinion is reasonable having regard to the size of the company. No material discrepancies have been noticed on such verification. (c) During the year, the company has not disposed off substantial part of fixed assets.

(ii) (a) The inventory has been physically verified during the year by the management.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory. No material discrepancies were noticed at the time of physical verification.

(iii) (a) The Company has taken loans of Rs.55,25,00,000 during the year from a party listed in the Register maintained under Section 301 of the companies Act 1956. The year end balance is Rs.8,50,00,000 and the maximum outstanding during the year is Rs.21,25,00,000. No loans have been granted to any such parties.

(b) In our opinion rates of interest and other terms and conditions are not prejudicial to the interest of the company.

(c) The repayment of the principal amounts and interest wherever applicable are regular.

(d) The loans taken by the company are repayable on demand and therefore the question of overdue amounts does not arise.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal

control procedures commensurate with the size of the company and the nature of its business, with regard to the purchase of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) (a) The company has transactions with Section 301 companies. The transactions have been entered in the register maintained under Section 301 of the Companies Act, 1956.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 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 prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and

nature of its business.

(viii) The company does not come under section 209(1)(d) of the Companies Act, 1956.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, investor education protection fund, Employees’ State Insurance, income tax, wealth tax, Sales tax, Service tax, Customs duty, excise duty, Cess and other material statutory dues as applicable to it.

78

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, customs duty, excise duty and cess were in arrears as at 31st March 2010 for a period of more than six months from the date they became payable.

(c) Further there are no disputed taxes.

(x) In our opinion, the accumulated losses of the Company are not more than 50% of its net worth. The company has not incurred cash losses during the financial year covered by our audit. However, in the immediately preceding financial year the company has incurred cash loss before exceptional items.

(xi) In our opinion and according to the information and explanations given to us, the company has not

defaulted in repayment of dues to a financial institution or bank or debenture holders. (xii) The Company has not granted any loans and advances on the basis of security by way of pledge of

shares, debentures and other securities. (xiii) In our opinion, the company is not a chit fund or nidhi / mutual benefit fund / society. Therefore, the

provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other

investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xv) The company has not given any guarantees for loans taken by others from bank or financial institutions. (xvi) In our opinion, the term loans have been applied for the purpose for which they were raised. (xvii) According to the information and explanation given to us and on an overall examination of the balance

sheet of the company, we report that no funds raised on short term basis have been used for long term investment.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties and

companies covered in the Register maintained under Section 301 of the Companies Act, 1956. (xix) According to the information and explanations given to us, during the period covered by our audit

report, the Company has not issued any debentures. (xx) There has been no public issue during the year and hence the question of end use of money does not

arise. (xxi) According to the information and explanations given to us, no fraud on or by the Company has been

noticed or reported during the course of our audit.

For M/s. CNGSN & ASSOCIATES Chartered Accountants

Registration No.004915S Place: Chennai C.N.GANGADARAN Date: 24 May 2010 Partner

Membership No.11205

79

Ramco Systems Limited, INDIA BALANCE SHEET AS AT 31ST MARCH 2010 Schedule As at 31.03.2010 As at 31.03.2009 Rs. Rs. I. SOURCES OF FUNDS 1. Shareholders' Funds

a) Share Capital I 153,933,750 153,933,750 b) Reserves & Surplus II 1,942,746,246 1,942,746,246

2,096,679,996 2,096,679,996 2. Loan Funds

a) Secured Loans III 94,652,914 216,991,841 b) Unsecured Loans IV 1,235,000,000 870,085,616

1,329,652,914 1,087,077,457 TOTAL 3,426,332,910 3,183,757,453 II. APPLICATION OF FUNDS 1. Fixed Assets V

Gross Block 2,353,199,668 2,102,544,841 Less : Depreciation 921,572,157 722,320,263 Net Block 1,431,627,511 1,380,224,578

2. Investments VI 1,222,089,434 1,222,084,896 3. Current Assets, Loans & Advances

a) Inventories VII 482,309 149,706 b) Sundry Debtors VIII 362,273,438 383,098,455 c) Cash & Bank Balances IX 42,108,917 62,244,586 d) Loans & Advances X 249,296,840 201,166,015 e) Other Current Assets XI 39,301,994 17,600,276

693,463,498 664,259,038 Less: Current Liabilities and Provisions

a) Current Liabilities XII 332,547,377 476,067,029 b) Provisions XIII 48,319,186 55,781,003

380,866,563 531,848,032 Net Current Assets 312,596,935 132,411,006 4. Profit & Loss account 460,019,030 449,036,973 TOTAL 3,426,332,910 3,183,757,453 Significant Accounting Policies and Notes on accounts XX Schedules, Accounting Policies and Notes form an integral part of the accounts

As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA Chairman

For CNGSN & Associates Chartered Accountants Registration No.004915S

P.R. VENKETRAMA RAJA C.N. GANGADARAN Vice Chairman, Managing Director & CEO

Partner Membership No. 11205 Place: Chennai SUBRAMANIAN NARAYANAN Date : 24th May 2010 Company Secretary

S.S. RAMACHANDRA RAJA

N.K. SHRIKANTAN RAJA

V. JAGADISAN M.M.

VENKATACHALAM A.V.

DHARMAKRISHNAN R.S. AGARWAL

Directors

80

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2010 Schedule Year ended Year ended 31.03.2010 31.03.2009 Rs. Rs. INCOME Sales XIV 1,034,615,551 923,544,143 Other Income XV 50,887,991 45,476,416 1,085,503,542 969,020,559 EXPENDITURE Cost of Resale Material 40,351,645 30,447,887 Employee Compensation & Benefits XVI 376,442,993 563,166,492 Sales & Marketing Expenses XVII 76,679,029 82,013,838 Administrative & Other Expenses XVIII 258,434,821 289,345,083 751,908,488 964,973,300 Profit / (Loss) before Interest, Depreciation, Exceptional

Items & Tax 333,595,054 4,047,259

Interest & Finance Charges XIX - For R&D activities 98,722,257 87,242,524 - For Others 19,740,981 94,195,043

118,463,238 181,437,567 Profit / (Loss) before Depreciation, Exceptional Items &

Tax 215,131,816 (177,390,308)

Depreciation -on Technology Platform & Product Software 153,247,018 195,520,822 -on other fixed assets 62,352,152 59,384,684 215,599,170 254,905,506 Profit / (Loss) before Exceptional items & Tax (467,354) (432,295,814) Exceptional Income / (Expense) (Refer Note No.16) (10,514,703) 421,780,758 Profit / (Loss) before Tax (10,982,057) (10,515,056)

Provision for Taxation (Refer Note No.7) Current Taxation - - Deferred Taxation - -

Fringe Benefit Tax - (5,095,810) Profit / (Loss) after Tax (10,982,057) (15,610,866) Balance in profit & Loss Account brought forward from

previous year (449,036,973) (433,426,107)

Balance in Profit & Loss Account (460,019,030) (449,036,973) Earnings Per Share - Basic & Diluted (Face value of shares @ Rs.10/- each) (Refer Note No.10) (0.72) (1.02) Significant Accounting Policies and Notes on accounts XX Schedules, Accounting Policies and Notes form an integral part of the accounts As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA

Chairman For CNGSN & Associates Chartered Accountants Registration No.004915S

P.R. VENKETRAMA RAJA C.N. GANGADARAN Vice Chairman, Managing Director & CEO Partner Membership No. 11205 Place: Chennai SUBRAMANIAN NARAYANAN

S.S. RAMACHANDRA RAJA N.K. SHRIKANTAN RAJA

V. JAGADISAN M.M. VENKATACHALAM A.V. DHARMAKRISHNAN

R.S. AGARWAL Directors

81

Date : 24th May 2010 Company Secretary CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010 Year ended Year ended 31.03.2010 31.03.2009 Rs. Rs. A. Cash Flow From Operating Activities:

Net Profit / (Loss) before tax & exceptional items (467,354) (432,295,814) Adjustments for:

Depreciation 215,599,170 254,905,506 Interest & Finance Charges 118,463,238 181,437,567 Unrealised foreign exchange fluctuation (gain) / loss 7,188,893 (5,695,051) (Profit) / Loss on sale of fixed assets (other than those mentioned

in Note No.16(A))- Net 731,939 3,988,395

Interest Income (390,197) (328,447) Dividend income (4,538) (7,128)

Operating Profit /(Loss) before Working Capital Changes 341,121,151 2,005,028

Working Capital Changes: (Increase) / Decrease in Trade and Other receivables (14,935,388) (41,528,047)

(Increase) / Decrease in Inventories (332,603) 1,721,997 (Increase) / Decrease in Other current assets [other than Cash and Bank]

(21,701,718) 28,823,207

Increase / (Decrease) in Current liabilities and Provisions (150,385,659) (10,778,929)

Cash generated from operations 153,765,783 (19,756,744)

Fringe Benefit Tax paid (595,810) (4,932,780) Cash Flow before exceptional items 153,169,973 (24,689,524)

Overseas withholding tax (10,514,703) (8,017,560) Net Cash (used in) / generated from operating activities 142,655,270 (32,707,084)

B. Cash Flow from Investing Activities:

Purchase of Fixed assets - for R&D activities (194,119) (14,505,248) Purchase of Fixed assets - for Others (39,350,436) (82,545,068) Investment in R&D activities (229,489,119) (220,664,877) Investment in Mutual Funds - Net (4,538) (7,128) Loans to subsidiaries – Net (12,370,420) - Proceeds from sale of fixed assets mentioned in Note No.16 (A) - 750,000,000 Proceeds from Sale of other fixed assets 1,299,632 1,710,750 Interest income 390,197 328,447 Dividend income 4,538 7,128

Net cash (used in) /generated from Investing Activities (279,714,265) 434,324,004

82

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH , 2010 Year ended Year ended 31.03.2010 31.03.2009 Rs. Rs. C. Cash Flow from Financing Activities:

Proceeds from long term borrowings 850,000 245,290,967 Proceeds from short term borrowings 1,802,500,000 1,880,085,616 Repayment of long term borrowings (228,188,927) (255,109,955) Repayment of short term borrowings (1,217,585,616) (2,107,500,000) Working capital changes – Net (115,000,000) 25,025,459 Interest & Finance Charges (118,463,238) (181,437,567) Rights issue expenses - (5,468,383)

Net Cash (used in) / generated from financing activities 124,112,219 (399,113,863) Net Increase / (Decrease) in cash and cash equivalents (A+B+C) (12,946,776) 2,503,057 Cash and Cash equivalents at the beginning of the year 62,244,586 54,046,478 Effect of Unrealised foreign exchange fluctuation gain / (loss) (7,188,893) 5,695,051 Cash and Cash equivalents at the end of the year 42,108,917 62,244,586

As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA

Chairman For CNGSN & Associates Chartered Accountants Registration No.004915S

P.R. VENKETRAMA RAJA C.N. GANGADARAN Vice Chairman, Managing Director & CEO Partner Membership No. 11205

Place: Chennai SUBRAMANIAN NARAYANAN Date : 24th May 2010 Company Secretary

S.S. RAMACHANDRA RAJA N.K. SHRIKANTAN RAJA

V. JAGADISAN M.M. VENKATACHALAM A.V. DHARMAKRISHNAN

R.S. AGARWAL Directors

83

SCHEDULE TO BALANCE SHEET AS AT 31ST MARCH, 2010 As at 31.03.2010 As at 31.03.2009

Rs. Rs.

Schedule I Share Capital

Authorised Share Capital

50,000,000 equity Shares of Rs.10/- each 500,000,000 500,000,000 (Previous year 50,000,000 of Rs.10/- each)

Issued Share Capital

15,707,164 equity shares of Rs.10/- each 157,071,640 157,071,640 (Previous year 15,707,164 of Rs.10/- each)

Subscribed Share Capital

15,707,164 equity shares of Rs.10/- each 157,071,640 157,071,640 (Previous year 15,707,164 of Rs.10/- each)

Paid up Capital

15,357,986 Equity shares of Rs.10/- each (Previous year 15,357,986 of Rs.10/- each) fully paid up

153,579,860 153,579,860

Add: Forfeited Shares 353,890 353,890 153,933,750 153,933,750 Of the above 4,333,153 equity shares of face value Rs.10/- each have been allotted to the shareholders of Ramco Industries Limited credited as fully paid up pursuant to the approval of the scheme of arrangement (Demerger) for the transfer of software business undertaking of Ramco Industries Limited with Ramco Systems Limited by the Honorable High Court of Madras, vide order dated 24th December 1999. 2,376,719 equity shares have been allotted to Ramco Industries Limited as fully paid up shares of face value of Rs. 10/- each at a premium of Rs.293/- per share pursuant to a contract for the transfer of its entire investment in the overseas Subsidiary Companies without payment being received in cash. The above allotment has been duly approved by the Shareholders of the company in the EGM held on 10th November 1999 and by the Reserve Bank of India. As at 31.03.2010 As at 31.03.2009

Rs. Rs.

Schedule II Reserves & Surplus Share Premium 1,942,634,336 1,942,634,336 Add: Forfeited Shares 111,910 111,910 1,942,746,246 1,942,746,246 Schedule III Secured Loans

a) Bank Borrowings 80,000,000 195,000,000 b) Obligations under Finance Lease (Refer Note No.17) 13,410,197 21,044,414 c) Hire Purchase Loans 1,242,717 947,427

(For security details, refer Note No.2) 94,652,914 216,991,841 Schedule IV Unsecured Loans

Long Term Loans - from Banks - 220,000,000 Short Term Loans - from Banks 1,150,000,000 200,000,000

84

Short Term Loans - from Others 85,000,000 450,085,616 (For security details, refer Note No.2) 1,235,000,000 870,085,616

85

SCHEDULES TO BALANCE SHEET AS AT 31ST MARCH, 2010

Schedule V - Fixed Assets Rs. Gross Block Depreciation Block Net Block

Asset Description As at 01.04.09 Additions Withdrawals As at 31.03.10 Up to

01.04.09 For the

year Withdrawals Up to 31.03.10 As at 01.04.09 As at 31.03.10

Technology Platform 512,032,697 55,087,392 - 567,120,089 159,235,405 51,203,270 - 210,438,675 352,797,292 356,681,414

Product Software 1,020,437,481 174,401,727 - 1,194,839,208 245,097,389 102,043,748 - 347,141,137 775,340,092 847,698,071 Patents - 6,889,023 - 6,889,023 - 279,423 - 279,423 - 6,609,600 Building 3,116,859 - - 3,116,859 1,143,887 104,103 - 1,247,990 1,972,972 1,868,869 Plant & Machinery

EDP 268,079,296 5,240,678 15,267,134 258,052,840 146,177,891 30,283,379 15,030,545 161,430,725 121,901,405 96,622,115 Software 222,666,230 21,972,285 - 244,638,515 141,612,730 27,315,481 - 168,928,211 81,053,500 75,710,304 Others 49,395 - - 49,395 29,523 2,346 - 31,869 19,872 17,526

Furniture Furniture 31,002,371 824,594 576,270 31,250,695 14,314,704 1,880,347 105,510 16,089,541 16,687,667 15,161,154 Office Equipments 878,830 - - 878,830 488,201 38,722 - 526,923 390,629 351,907

Electrical Items 39,004,222 3,316,845 861,926 41,459,141 12,208,331 1,973,109 118,610 14,062,830 26,795,891 27,396,311 Vehicles 5,277,460 1,301,130 1,673,517 4,905,073 2,012,202 475,242 1,092,611 1,394,833 3,265,258 3,510,240

Total 2,102,544,841 269,033,674 18,378,847 2,353,199,668 722,320,263 215,599,170 16,347,276 921,572,157 1,380,224,578 1,431,627,511

Previous Year 2,553,511,714 317,715,193 768,682,066 2,102,544,841 915,664,378 254,905,506 448,249,621 722,320,263 1,637,847,336 1,380,224,578

Notes: 1) For policy on fixed assets and depreciation refer significant accounting policy No. III 2) Gross Block includes assets purchased under Hire Purchase Rs.2,716,490/- (Previous year Rs.1,972,530/-) Net Block as on 31.03.2010 Rs.2,095,875/-(Previous Year Rs.2,309,149) 3) Gross Block Includes assets purchased under Finance Lease Rs.25,290,967/- (Previous year Rs.25,290,967/-) Net Block as on 31.03.2010 Rs.19,540,203/-(Previous Year Rs.23,639,869)

86

As at 31.03.2010 As at 31.03.2009

Rs. Rs.

Schedule VI

Investments

1. Investments in Subsidiaries -Long Term ( Trade - Unquoted): 192,729,550 Shares in Ramco Systems Corporation, USA of face value of USD 0.0145 each (Previous year 192,729,550 shares @ USD 0.0145 each) 743,412,072 743,412,072 1,400,000 Shares in Ramco Systems Ltd., Switzerland of face value of CHF 1 each (Previous year 1,400,000 Shares @ CHF 1 each) 441,702,040 441,702,040 725,000 Shares in Ramco Systems Pte. Ltd., Singapore of face value of SGD 1 each (Previous year 725,000 Shares @ SGD 1 each) 18,616,100 18,616,100 1,280,000 Shares in Ramco Systems Sdn. Bhd., Malaysia of face value of RM 1 each (Previous year 1,280,000 Shares @ RM 1 each) 18,217,054 18,217,054

100 Shares in RSL Enterprise Solutions (Pty.) Ltd., South Africa of face value of ZAR 1 each (Previous year 100 Shares @ ZAR 1 each) 701 701

2. Investment in Mutual Fund Units - Short Term (non-trade - Unquoted)

141,467

136,929 141.437 units purchased under Standard Chartered Liquidity Manager - Plus Daily Dividend Plan (Previous year 136.900 units) 1,222,089,434 1,222,084,896 Schedule VII Inventories Resale Hardware & Software Materials 482,309 149,706

(Valued at Cost or Net realisable value whichever is lower and as certified by management) Schedule VIII

Sundry Debtors

(Unsecured, Considered Good) a) Debts Outstanding for period exceeding six months (i) From Subsidiaries 59,183,536 126,102,367 (ii) Others 57,392,457 31,407,717 b) Other debts (i) From Subsidiaries 17,037,780 92,265,706 (ii) Others 228,659,665 133,322,665 (Unsecured, Considered doubtful)

Debts - (out of (a)(ii) above) 4,664,675

4,664,675

Less: Provision for doubtful debts

(4,664,675)

(4,664,675) 362,273,438 383,098,455

87

As at 31.03.2010 As at 31.03.2009 Rs. Rs.

Schedule IX

Cash and Bank Balances

Cash on hand

83,991 128,734 Balances with Scheduled Banks in

a) Current Accounts

21,903,839 58,183,339

b) Deposit Accounts

825,939 825,939 Balance with other Banks in Current Accounts

a) Dresdner Bank, Germany (Maximum balance Rs.1,573,828)(Previous Year Rs.2,465,205)

899,629 414,384

b) HSBC, Bank, United Kingdom (Maximum balance Rs.131,969)(Previous Year Rs.143,308)

121,253 130,663

c) State Bank of India, united Kingdom (Maximum balance Rs.5,295,571)(Previous Year Rs.7,728,562)

1,813,774 2,314,549

d) Citi Bank, Dubai (Maximum balance Rs.2,504,447)(Previous Year Rs.899,378)

232,585 246,978

e) National Bank of Dubai, Dubai (Maximum balance Rs.16,227,907)(Previous Year Nil)

16,227,907 -

42,108,917 62,244,586 Schedule X Loans and Advances (Unsecured, Considered Good) Advance recoverable in Cash or kind or value to be received

From Subsidiaries

12,370,420 -

From Others

120,059,328 106,029,149

Tax deducted at Source

106,143,818 84,129,549

Deposits with Government Departments and Others

10,723,274 11,007,317 (Unsecured, Considered doubtful )

Advance recoverable in Cash or kind or value to be received

706,164 706,164

Less: Provision for doubtful advances

(706,164)

(706,164) 249,296,840 201,166,015 Schedule XI Other Current Assets Software Work In Progress 27,596,194 4,881,316 Prepaid expenses 11,538,572 12,599,798 Interest Accrued 167,228 119,162 39,301,994 17,600,276 Schedule XII Current Liabilities

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For Purchases 12,706,767 18,180,919 For Expenses To Subsidiaries 156,455,039 313,805,620 To Others 163,108,998 143,653,825 Interest accrued but not due on loans 276,573 426,665 332,547,377 476,067,029 Schedule XIII Provisions

Provision for staff benefit schemes (Refer Note No.18)

48,319,186 55,185,193 Provision for Taxation (Refer Note No.7) - 595,810 48,319,186 55,781,003

SCHEDULE TO PROFIT & LOSS ACCOUNT FOR THE YEAR ENDE D 31ST MARCH , 2010 Year ended

31.03.2010 Rs.

Year ended 31.03.2009

Rs. Schedule XIV Sales Software Revenues (Licensing & Services) 922,308,201 781,901,153 Value Added Resale Software & Hardware Materials 84,765,477 97,256,600 Royalty 27,541,873 44,386,390 1,034,615,551 923,544,143 Schedule XV Other Income

Interest Income (TDS Rs9,514/- (Previous year Rs.10,059/-)) 390,197

328,447

Profit on sale of Fixed assets 864,809

312,187 Rent Income 45,483,252 34,970,327 Dividend from investment in mutual fund units 4,538 7,128 Miscellaneous Income 4,145,195 9,858,327 50,887,991 45,476,416 Schedule XVI Employee Compensation & Benefits Salaries, Bonus etc. 313,862,366 483,249,622 Gratuity & Superannuation 11,753,904 20,493,432 Provident Fund 23,424,611 28,457,128 Staff Welfare 27,402,112 30,966,310 376,442,993 563,166,492 Schedule XVII Sales & Marketing Expenses Advertisement & Sales Promotion 69,542,119 74,159,491 Sales Commission 7,136,910 7,854,347 76,679,029 82,013,838 Schedule XVIII Administrative & Other Expenses Consultancy Charges 9,888,290 12,821,424 Bank Charges 1,953,965 4,078,714 Insurance 1,044,010 2,434,157 Loss on sale of Fixed assets 1,596,748 4,300,582 Communication Expenses 14,578,048 15,530,738 Power & Fuel 9,836,401 13,535,379

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Printing & Stationery 2,184,833 2,442,492 Rates & Taxes 2,848,188 2,936,516 Rent 120,249,863 116,967,963 Repairs & Maintenance - Buildings 2,255,395 51,352 Repairs & Maintenance - Plant & Machinery 12,089,619 16,286,265 Repairs & Maintenance - Others 6,494,358 3,293,844 Travel & Conveyance 62,884,900 61,740,642 Bad Debts Written off 5,765,000 19,926,004 Provision for Doubtful Advances - 138,953 Foreign Exchange Fluctuation (11,192,045) (6,738,420) Miscellaneous Expenses 15,957,248 19,598,478 258,434,821 289,345,083 Schedule XIX Interest & Finance Charges Interest on loans taken for R&D activities 98,722,257 87,242,524 Interest on other loans - Hire Purchase & Finance Charges 1,566,413 7,353,664 - Others 18,174,568 86,841,379 118,463,238 181,437,567

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Schedule XX

SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES

I. Basis of Preparation

The financial statements are prepared under the historical cost convention in accordance with the Generally Accepted Accounting Principles (GAAP) and materially comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis.

II. Revenue Recognition A. Software and related services i) License Fees

License Fee revenue is recognized on delivery of the software.

ii) Software development / Implementation Fees Software development / Implementation Contracts are either fixed price based or time and

material based. In case of fixed price contracts, revenue is recognized in accordance with percentage of completion method of accounting. In case of time and material contracts, revenue is recognized based on billable time spent in the project, priced at the contractual rate.

iii) Annual Maintenance Contract Revenue from Maintenance services is recognized on a pro-rata basis over the period of the

contract.

B. Value Added Resale Hardware & Software Revenue from sales is recognized upon despatch of goods to customers.

C. Other Income

Interest on bank deposits and rental income are recognized on accrual basis. III. Fixed Assets and Depreciation

A. Tangible Assets Fixed Assets are capitalized at historical cost and includes freight, installation cost, finance cost, net of taxes and duties wherever applicable and other incidental expenses incurred during the installation stage. Depreciation is charged on a pro-rata basis on the Straight Line Method as per the rates prescribed under Schedule XIV of the Companies Act, 1956. Individual assets not exceeding Rs.5,000/- are depreciated in full in the year of purchase. Assets acquired on Hire Purchase are capitalized at the gross value and interest thereon charged to Profit & Loss A/c. In respect of Assets leased prior to 1st April 2001, the lease rentals paid during the year are charged to Profit & Loss A/c. In respect of assets leased on or after 1st April 2001, the accounting treatment prescribed by Accounting Standard 19 on “Leases” is followed.

B. Intangible Assets

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a) Costs incurred in the development of ERP product, together with repository of new business components, upon completion of the development phase, have been classified and grouped as “Product Software” under Fixed Assets. Similarly, costs incurred in the development of technology platform framework, which would enable the company to provide solutions - both standard and customized – in an efficient manner, have been classified and grouped as “Technology Platform” under Fixed Assets, once the same is available for use. b) Costs incurred for filing the patent application like consultancy and filing fees are capitalized upon grant of Patents. The useful life of the above assets is estimated as ten years and depreciation is charged accordingly.

IV. Investments Long term investments are stated at cost and short term investments are valued at lower of cost and net realizable value.

V. Inventories Inventories are valued at lower of cost and net realizable value. Cost includes cost incurred in bringing the inventories to their present location and condition and is determined based on FIFO method.

VI. Foreign Currency Transactions The functional currency of the Company is Indian Rupee. Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction. The monetary items denominated in the foreign currency at the year end are translated at the exchange rates prevailing on the date of the balance sheet or wherever forward contracts are booked, at the respective rates as per such forward contracts and the loss or gain arising out of such transactions is adjusted in the Profit & Loss A/c. Exchange difference in respect of foreign currency liabilities incurred for acquiring fixed assets on or before accounting period commencing after December 7, 2006 is added to the cost of respective fixed assets.

VII. Translation of Financial Statements of Foreign Branch All income and expenditure transactions during the year are reported at a monthly moving average exchange rate for the respective periods. Monetary assets and liabilities are translated at the rate prevailing on the balance sheet date. Non-monetary assets and liabilities are translated at the rate prevailing on the date of the transaction and the balance in ‘head office account’ whether debit or credit, is reported at the amount of the balance in the ‘branch account’ in the books of the head office, after adjusting for un responded transactions. Net gain / loss on foreign currency translation is recognized in the Profit & Loss A/c.

VIII. Employee Benefits

Short-term employee benefits, salaries, wages and other benefits are recognized as expenses at the actual value as per contractual terms and such amounts are charged as expenses in the profit and Loss account for the year in which the related service is rendered. Other benefits are treated as below: Gratuity In accordance with the Indian law, the company provides for gratuity, a defined benefit plan (“The Gratuity Plan”), covering all employees. These employees are covered under the Group Gratuity Scheme of the Life Insurance Corporation of India. The contribution to the said scheme are

92

charged to the Profit and Loss account. The liability for Gratuity is ascertained as at the Balance Sheet date based on independent actuarial valuation in accordance with Accounting Standard 15(revised) and the charge for current year arrived at. Accordingly, the difference between such charge and contribution is provided in the accounts by a debit to the Profit and Loss Account.

Superannuation Apart from being covered under the Gratuity Plan described above, the senior officers of the Company have been given an option to participate in a defined contribution plan (“The Superannuation Plan”) maintained by Life Insurance Corporation of India. For those who opt to participate, the company makes contributions not exceeding Rupees One Lakh per annum, based on a specified percentage of basic salary of each covered employee. For those who do not opt to participate, an amount equivalent to the contribution determined at the time of exercise of option is paid along with salary. The company has no further obligation under the plan beyond its contributions/payments.

Provident Fund

In addition to the above benefits, all employees receive benefits from a Provident fund, which is a defined contribution plan. Both the employee and employer each make monthly contributions to the plan equal to 12% of the covered employee’s basic salary. These contributions are made to the employees’ provident fund maintained by the Government of India. The Company has no further obligations under the plan beyond its monthly contributions.

Leave Encashment Leave encashment liability is ascertained as at the Balance Sheet date based on independent actuarial valuation in accordance with Accounting Standard 15(revised) and is provided for in the books of accounts.

IX. Earnings per share Profit after tax is adjusted for prior period adjustments, if any and divided by the weighted average number of equity shares outstanding during the period.

X. Taxes on income

Current Tax is determined as the amount of tax payable in respect of the taxable income for the period. Deferred tax asset or deferred tax liability is considered for timing differences in accordance with Accounting Standard 22. Deferred tax asset arising on account of carry forward of losses is not considered.

XI. 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 the 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 recognized 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 subject to a maximum of depreciated historical cost.

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NOTES ON ACCOUNTS

1. Contingent Liabilities (Rs. ’000)

As at 31.03.2010

As at 31.03.2009

(a)

Estimated amount of contracts remaining to be executed on capital account and not provided for 7,675 655

(b) Bank Guarantees 18,738 10,773

(c) Letters of Credit Nil 720 Note: The Company is engaged in development of software products, which are marketed by the Company and its overseas subsidiaries. The intellectual property rights are held by the company. There are in-built warranties for performance and support. Claims which may arise out of these are not quantifiable and hence not provided for.

2. Secured & Unsecured Loans Borrowings from the banks for working capital amounting to Rs.10,000 thousands are secured by a pari-passu first charge on current assets including stocks and book debts and fixed assets of the Company except assets given as exclusive charge and assets acquired on hire purchase or lease and supported by a Corporate Guarantee from Ramco Industries Limited. Borrowings from the banks for working capital amounting to Rs.70,000 thousands are secured by a pari-passu first charge on the current assets including stocks and book debts and supported by a Corporate Guarantee from Ramco Industries Limited.

Borrowings from the banks for working capital amounting to Rs.1,95,000 thousands during the previous year were secured by a first charge on the current assets including stocks and book debts and fixed assets of the Company except assets given as exclusive charge and assets acquired on hire purchase or lease and supported by a Corporate Guarantee from Madras Cements Limited and Ramco Industries Limited. Obligations under finance lease are secured against fixed assets procured under finance lease arrangement. Assets acquired under Hire Purchase Finance are hypothecated to the Hire Purchase financial institutions as security. Of the total unsecured loans of Rs.1,235,000 thousands (Previous year Rs. 870,086 thousands), Rs. 950,000 thousands (Previous year Rs.470,086 thousands) are supported by a Corporate Guarantee from Madras Cements Limited and Rs.200,000 (Previous year Rs.200,000 thousands) are supported by a Corporate Guarantee from Ramco Industries Limited.

3. Current Liabilities

There are no Micro and Small Enterprises, to whom the Company owes dues as at 31st March 2010 and as on 31st March 2009. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

94

4. Additional information as required by Schedule VI of the Companies Act, 1956

(Rs. ’000)

Year ended 31.03.2010

Year ended 31.03.2009

A)

CIF Value of Imports Resale Materials Capital goods TOTAL

2,962

705 3,667

9,069

20,061 29,130

B) Expenditure in Foreign Currency on account of Professional / consultation fees Traveling Patents Remittance to overseas subsidiaries Remittance to overseas branch Others TOTAL

6,869 23,129 5,057

129,359 27,019 1,395

192,828

604 23,309 10,728 32,951 16,932 3,970

88,494 C)

Number of Non-resident shareholders

87

93

D) Value of consumption of imported and Indigenous raw materials and spare parts

Year ended 31.03.2010 Year ended 31.03.2009

Raw Materials (Rs. ‘000) % (Rs. ‘000) % Imported 2,963 7.34 9,069 29.79 Indigenous 37,389 92.66 21,379 70.21 E) Earnings in Foreign Exchange

Export of goods & Services on F.O.B basis 320,159 339,447

Royalty 27,542 44,386

TOTAL 347,701 383,833

5. Fees paid to Statutory Auditors (Excluding service tax) (Rs. ‘000)

SI. No Particulars

Year ended 31.03.2010

Year ended 31.03.2009

(a) Statutory Audit 750 750

(b) Tax Audit 150 150

(c) Independent Auditor’s report under AS-21 200 200

(d) Rights issue certification - 300

95

(e) Other certification 380 130

(f) Reimbursement of out of pocket expenses 46 141

Total 1,526 1,671

6. Managerial Remuneration The Board of Directors of the Company in its meeting held on 28th January, 2010, after considering

the recommendations of the Remuneration Committee, re-appointed Shri P R Venketrama Raja as the Managing Director (MD) of the Company for a further period of five years effective 23rd February, 2010, on the same terms and conditions as were applicable before the reappointment. The Central Government had also accorded its approval for the same.

Computation of Profits as per Sec. 349 of the Companies Act, 1956 for remuneration to VCMD & CEO for the year ended 31.03.2010:

(Rs.)

Profit / (Loss) before Tax (10,982,057) Add: Directors Sitting Fees 195,000

Vice Chairman, Managing Director & CEO’s Remuneration 1,166,400 ________ 1,361,400 _____________ Loss arrived for the purpose of Managerial Remuneration (9,620,657) 5% of the above – Rs. Nil The Company’s VCMD & CEO is also the Vice Chairman & Managing Director of Ramco Industries Limited. As per the provisions of the Companies Act, 1956 read with Schedule XIII thereto, the total remuneration payable should not exceed maximum limit admissible from any one of the Companies of which he is the Managing Director.

96

The details of his remuneration, paid by way of monthly remuneration as per the terms of appointment, are given below: (Rs.) 2009-10 2008-09

Basic pay 720,000 720,000 House Rent Allowance 360,000 360,000 Contribution to Provident Fund 86,400 86,400 Contribution to Superannuation Fund Nil 108,000 ________ ________ Total 1,166,400 1,274,400 This remuneration has been adjusted in the overall maximum remuneration of Rs.36,070,426/- (Previous Year Rs.24,774,862/-) payable by Ramco Industries Limited at 5% of its net profits computed in accordance with the provisions of the said Act.

7. Taxation No provision for current Income Tax for the Company has been made in view of absence of taxable profits. The company has net deferred tax assets as on 31st March 2010 which arise mainly on account of carry forward losses. However the company has not taken credit for such net deferred tax assets.

8. Research and Development a) R&D Accounts: Profit and Loss Account, Balance Sheet and Schedules, based on separate books maintained in respect of the Research & Development Activities, are enclosed. b) R&D Asset classification: In line with the Company’s stated policy on Intangible Assets, the research and development efforts are classified and capitalized into “Product Software” and “Technology Platform” as below: (Rs. ’000) Total research & development expenditure Year ended Year ended capitalized during the year, as per Schedules 3 & 31.03.2010 31.03.2009

4 to R&D Accounts Employee compensation 209,651 195,107 Administrative & other expenses 19,838 25,558 ---------- ----------- Total 229,489 220,665 ---------- ---------- Of the above, Shown as “Technology Platform” under Fixed Assets 55,087 80,944 Shown as “Product Software” under Fixed Assets 174,402 139,721 ----------- ---------- Total 229,489 220,665 ----------- ----------

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9. Sundry Debtors and Loans & Advances

These include dues from overseas subsidiaries as given below:

Sl No Subsidiary Outstanding as on 31.03.2010 Maximum amount due during the year

Sundry Debtors

A Ramco Systems Corporation, USA

Rs.25 thousands (Previous year Rs. 50,855 thousands)

Rs. 191 thousands (Previous year Rs. 82,206 thousands)

B Ramco Systems Limited, Switzerland

Rs. 182 thousands (Previous year Rs.85,116 thousands)

Rs.107,607 thousands (Previous year Rs.85,116 thousands)

C Ramco Systems Sdn., Bhd., Malaysia

Nil (Previous year Nil )

Rs. Nil (Previous year Rs.5,539 thousands)

D Ramco Systems Pte Ltd., Singapore

Rs.4,178 thousands (Previous year Rs.55,331 thousands)

Rs.55,331 thousands (Previous year Rs.70,360 thousands)

E RSL Enterprise Solutions (Pty.) Ltd., South Africa

Rs.71,836 thousands (Previous year Rs.27,066 thousands)

Rs.71,836 thousands (Previous year Rs.60,003 thousands)

Total Rs.76,221 thousands (Previous year Rs.2,18,368 thousands)

Loans & Advances

A RSL Enterprise Solutions Rs.12,370 thousands Rs.12,370 thousands (Pty.) Ltd., South Africa (Previous year Nil) (Previous year Nil)

10. Earnings per share (EPS) Year ended Year ended

31.03.2010 31.03.2009

Profit / (Loss) after tax (Rs.) (A) (10,982,057) (15,610,866) and prior period expenses

Weighted average Equity (No) (B) 15,357,986 15,357,986 Shares outstanding

EPS - Basic & diluted (Rs.) (A/B) (0.72) (1.02) (per share of Rs.10/- each)

11. The Company’s shares are listed on Madras Stock Exchange Limited, Bombay Stock Exchange

Limited and The National Stock Exchange of India Limited. The Listing Fees payable to these stock exchanges have been paid.

12. The Company has branches in United Kingdom, Germany and Dubai. The United Kingdom

branch has made a turnover of Rs.5,587 thousands for the year ended 31st March 2010

98

(previous year Rs. 6,585 thousands) , Germany branch has made a turnover of Rs.18,429 thousands for the year ended 31st March 2010 (previous year Rs.9,286 thousands) and the Dubai branch has made a turnover of Rs.108,335 thousands for the year ended 31st March 2010(previous year Nil).

13. Amounts recovered from Subsidiaries towards expenses incurred on account of on-site

employees to the extent of Rs.30,975 thousands (Previous year Rs.49,949 thousands) have been netted of from expenses.

14. Related Party Transactions:

As per Accounting Standard (AS 18) issued by the Institute of Chartered Accountants of India, the Company’s related parties are given below:

a. Subsidiary Companies: 1. Ramco Systems Corporation, USA 2. Ramco Systems Ltd., Switzerland 3. Ramco Systems Pte Ltd., Singapore 4. Ramco Systems Sdn Bhd., Malaysia 5. RSL Enterprise Solutions (Pty) Ltd., South Africa

b. Key Management Personnel and Relatives: 1. Shri.P.R.Ramasubrahmaneya Rajha 2. Shri.P.R.Venketrama Raja

c. Enterprises over which the above persons exercise significant influence and with

which the company has transactions during the year (Group): 1. Rajapalayam Mills Limited 2. Madras Cements Limited 3. Ramco Industries Limited 4. The Ramaraju Surgical Cotton Mills Limited The Company’s transactions with the above Related Parties are given below: (Rs. ’000)

Particulars Transaction during 2009-

2010 Outstanding as at

31.03.2010 Transaction during

2008-009 Outstanding as at

31.03.2009 Income from Sale of goods & services Ramco Systems Corporation, USA 86,944 25 24,309 - Ramco Systems Limited, Switzerland 34,986 182 33,761 59,286 Ramco Systems Sdn. Bhd., Malaysia 5,086 - 12,457 - Ramco Systems Pte. Ltd., Singapore 26,059 4,178 42,769 43,594 RSL Enterprise Solutions (Pty) Ltd., South Africa 40,009 71,836 111,813 27,066 Madras Cements Limited 191,151 5,083 168,302 2,717 Ramco Industries Limited 22,170 - 7,535 469 Rajapalayam Mills Limited 4,176 - 1,027 176 The Ramaraju Surgical Cotton Mills Limited 2,037 - 601 141

99

(Rs. ‘000)

Notes: a) Details of corporate guarantees given by the Group are given in Note No.2 above. b) Details of transactions with Key Mananagement Personnel and Relatives:

(i) Remuneration paid to Shri P.R. Venketrama Raja is furnished in Note No.6 above (ii) Sitting fees paid to Shri P.R. Ramasubrahmaneya Rajha Rs.25 thousands (Previous year Rs. 43 thousands)

Particulars

Transaction during 2009-

2010 Outstanding as at

31.03.2010 Transaction during

2008-009 Outstanding as at

31.03.2009 Income from royalty Ramco Systems Corporation, USA 7,375 - 5,632 50,855 Ramco Systems Limited, Switzerland 2,423 - 16,540 25,830 Ramco Systems Sdn. Bhd., Malaysia 7,012 - 8,123 - Ramco Systems Pte. Ltd., Singapore 10,732 - 14,091 11,737 Cost of services availed

Ramco Systems Corporation, USA

10,697 1,05,025 36,264 142,276 Ramco Systems Limited, Switzerland 4,097 34,679 3,997 148,024 Ramco Systems Sdn. Bhd., Malaysia - 16,751 - 13,215 Ramco Systems Pte. Ltd., Singapore - - - 10,291 Loans availed Madras Cements Limited 540,000 85,000 - 200,000 Ramco Industries Limited 12,500 - 12,500 - Loans given

RSL Enterprise Solutions (Pty) Ltd., South Africa

17,726 12,153 - - Interest – Expense Madras Cements Limited 14,690 - 24,504 - Ramco Industries Limited 221 - 743 - Interest - Income RSL Enterprise Solutions (Pty) Ltd., South Africa 323 217 - - Rent - Expense Madras Cements Limited 69,536 61,869 - Rent - Income Ramco Industries Limited - - 225 - Sale of assets Madras Cements Limited - - 750,000 -

100

15. Segmental Revenue:

The company currently operates only in one segment, viz., Software Solutions & Services and hence the segment reporting as required by AS-17, issued by The Institute Chartered Accountants of India does not apply.

16. Exceptional Income / (Expense) comprises of the following: (Rs. ’000)

Sl. No. Description 2009-2010 2008-2009 A Profit on sale of Land and Building of the company at 86C,

Santhome High Road, R.A Puram, Chennai -

6,64,769

B Impairment of Assets written off-Technology Platform and Product Software

- (229,503)

C Overseas withholding tax written off (10,515) (8,017) D Rights issue Expenses - (5,468) Total (10,515) 421,781

17. Obligations towards finance leases: (Rs. ’000) 2009-2010 2008-2009 Reconciliation between total minimum lease payments at the Balance Sheet date and their Present Value: Total minimum lease payments at the Balance Sheet Date 14,940 24,899 Present Value of the minimum lease payments at the Balance Sheet date 13,410 21,044 ------- -------- 1,530 3,855 -------- -------- Difference being:

• Interest accrued, but not due at the Balance Sheet Date 277 427 • Future interest payable during the balance lease term 1,253 3,428

Minimum Lease Payments: Less than one year 9,960 9,960 One to five years 4,980 14,939 Later than five years - - --------- -------- Total 14,940 24,899 --------- -------- Present value of minimum Lease Payments: Less than one year 8,656 7,634 One to five years 4,754 13,410 Later than five years - - ---------- --------- Total 13,410 21,044 ---------- ---------

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18. Disclosure of Employee Benefits as per Accounting Standard 15(Revised 2005):

A Defined Contribution Plan: (Rs. ‘000)

2009-10 2008-09

Employer’s Contribution to Provident Fund 23,425 28,457

Employer’s Contribution to Superannuation Fund 9,864 12,960

(Rs. ‘000)

As at 31.03.2010 As at 31.03.2009

B) Defined Benefit Plan: Gratuity

(Funded)

Leave encashment (unfunded)

Gratuity

(Funded)

Leave encashment (unfunded)

Reconciliation of opening and closing balances of defined benefit plan:

Defined Benefit obligation as on 01st April 62,869 42,181 59,821 47,628

Current Service Cost 9,038 3,390 10,165 3,376

Interest Cost 4,754 3,134 4,461 3,413

Actuarial (gain) / loss (7,529) 913 (3,459) (2,310)

Benefits paid (6,876) (5,992) (8,119) (9,926)

Defined Benefit obligation as on 31st March 62,256 43,626 62,869 42,181

Reconciliation of opening and closing balances of fair value of plan assets:

Fair value of plan assets as on 01st April 49,865 - 43,411 -

Expected return on plan assets 4,122 - 3,583 -

Actuarial (gain) / loss 252 - 48 -

Employer contribution 10,200 - 10,939 -

102

Benefits paid (6,876) - (8,119) -

Fair value of plan assets as on 31st March 57,563 - 49,865 -

Actual return on plan assets 4,374 - 3,634 -

Reconciliation of fair value of assets and obligations:

Fair value of plan assets 57,563 - 49,865 -

Present value of obligation (62,256) (43,626) (62,869) (42,181)

Amount recognized in Balance Sheet (4,693) (43,626) (13,004) (42,181)

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As at 31.03.2010 As at 31.03.2009

Expense recognized during the year: Gratuity

(Funded)

Leave

encashment

(unfunded) Gratuity

(Funded)

Leave

encashment

(unfunded)

Current Service Cost 9,038 3,390 10,165 3,376

Interest Cost 4,754 3,134 4,461 3,413

Expected return on plan assets (4,122) - (3,585) -

Actuarial (gain) / loss (7,781) 913 (3,507) (2,309)

Net Cost 1,889 7,437 7,534 4,480

Investment Details

GOI Securities - -

State Government Securities - -

High Quality Corporate Bonds - -

Funds with LIC 100% 100%

Others - -

Actuarial assumptions

Attrition rate 6% 6% 6% 6%

Discount rate p.a 8% 8% 8% 8%

Expected rate of return on plan assets p.a 8% - 8% -

Rate of escalation in salary p.a 10% 10% 10% 10%

19 The figures have been rounded off to the nearest rupee / thousand and previous year’s figures have been regrouped / recast where ever necessary to conform to the current year classifications.

As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA

Chairman For CNGSN & Associates Chartered Accountants Registration No.004915S

P.R. VENKETRAMA RAJA

S.S. RAMACHANDRA RAJA N.K. SHRIKANTAN RAJA

V. JAGADISAN M.M. VENKATACHALAM A.V. DHARMAKRISHNAN

R.S. AGARWAL

104

C.N. GANGADARAN Vice Chairman, Managing Director & CEO Partner Membership No. 11205

Place: Chennai SUBRAMANIAN NARAYANAN Date : 24th May 2010 Company Secretary

Directors

105

Research and Development Activities (Refer Sl.No.8 of Notes on Accounts) BALANCE SHEET AS AT 31ST MARCH, 2010 As at 31.03.2010 As at 31.03.2009 Schedule Rs. Rs. I. SOURCES OF FUNDS 1. Loan Funds 1,054,720,000 820,230,000 2. Head Office Contra Account 2,163,509,848 2,064,173,538 TOTAL 3,218,229,848 2,884,403,538 II. APPLICATION OF FUNDS 1. Fixed Assets 1 Gross Block 1,886,343,931 1,671,410,125 Less : Depreciation 665,490,498 521,834,657 Net Block 1,220,853,433 1,149,575,468 2. Current Assets - - Less: Current Liabilities and Provisions - 202,153 Net Current Assets / (Liabilities) - (202,153) 3. Revenue Expenditure relating to Research 2 1,997,376,415 1,735,030,223

TOTAL 3,218,229,848 2,884,403,538

As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA

Chairman For CNGSN & Associates Chartered Accountants Registration No.004915S

P.R. VENKETRAMA RAJA C.N. GANGADARAN Vice Chairman, Managing Director & CEO Partner Membership No. 11205

Place: Chennai SUBRAMANIAN NARAYANAN Date : 24th May 2010 Company Secretary

S.S. RAMACHANDRA RAJA N.K. SHRIKANTAN RAJA

V. JAGADISAN M.M. VENKATACHALAM A.V. DHARMAKRISHNAN

R.S. AGARWAL Directors

106

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH , 2010 Year ended Year ended 31.03.2010 31.03.2009 Schedule Rs. Rs. INCOME Profit on sale of fixed assets 864,809 123,973 EXPENDITURE Employee Compensation & Benefits 3 2,298,823 2,196,576 Administrative & Other Expenses 4 3,784,665 3,872,633 Interest 98,722,257 87,242,524 Depreciation

-on Technology Platform & Product Software 153,247,018 195,520,822 -on other R&D fixed asset 5,158,238 6,648,969

Total Expenditure 263,211,001 295,481,524 Profit / (Loss) before Exceptional Items (262,346,192) (295,357,551) Exceptional Income / (Expense) - (229,502,920)

Net profit / (Loss) (262,346,192) (524,860,471)

As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA Chairman

For CNGSN & Associates Chartered Accountants Registration No.004915S

P.R. VENKETRAMA RAJA C.N. GANGADARAN Vice Chairman, Managing Director & CEO Partner Membership No. 11205

Place: Chennai SUBRAMANIAN NARAYANAN Date : 24th May 2010 Company Secretary

S.S. RAMACHANDRA RAJA N.K. SHRIKANTAN RAJA

V. JAGADISAN M.M. VENKATACHALAM A.V. DHARMAKRISHNAN

R.S. AGARWAL Directors

107

SCHEDULE TO BALANCE SHEET AS AT 31ST MARCH, 2010

Schedule 1 - Fixed Asset Rs.

Asset Gross Block Depreciation Block Net Block

Description As at

01.04.09 Additions

Withdrawals

As at

31.03.10 Upto

01.04.09 For the year

Withdrawals

Upto

31.03.10 As at

01.04.09 As at

31.03.10

Technology Platform 512,032,697 55,087,392 - 567,120,089 159,235,405 51,203,270 - 210,438,675 352,797,292 356,681,414 Product Software 1,020,437,481 174,401,727 - 1,194,839,208 245,097,389 102,043,748 - 347,141,137 775,340,092 847,698,071

Plant & Machinery

-EDP 98,395,365 - 14,749,432 83,645,933 78,997,880 4,606,816 14,749,415 68,855,281 19,397,485 14,790,652 -Software 40,425,582 194,119 - 40,619,701 38,438,999 545,769 - 38,984,768 1,986,583 1,634,933

Electrical Items 119,000 - - 119,000 64,984 5,653 - 70,637 54,016 48,363

Total 1,671,410,125 229,683,238 14,749,432 1,886,343,931 521,834,657 158,405,256 14,749,415 665,490,498 1,149,575,468 1,220,853,433

Previous year 2,111,957,329 235,170,125 675,717,329 1,671,410,125 765,856,508 202,169,791 446,191,643 521,834,657 1,346,100,821 1,149,575,468

108

As at 31.03.2010 As at 31.03.2009 Rs. Rs. Schedule 2 : Revenue Expenditure relating to Research

Transferred from Profit & Loss Account (262,346,192) (524,860,471) Balance brought forward from previous year (1,735,030,223) (1,210,169,752) (1,997,376,415) (1,735,030,223) SCHEDULE TO PROFIT & LOSS ACCOUNT FOR THE YEAR END ED 31ST MARCH, 2010 Year ended Year ended 31.03.2010 31.03.2009 Rs. Rs. Schedule 3 : Employee compensation & benefits Salaries , Bonus, contributions etc., 209,651,491 195,107,137

Staff welfare 2,298,823 2,196,576

Gross cost 211,950,314 197,303,713 Less: Product Research and Development Expenditure Capitalised (209,651,491) (195,107,137) 2,298,823 2,196,576 Schedule 4: Administrative and other expenses Communication Expenses 2,178,024 2,610,538 Power & Fuel 19,837,628 21,503,260 Rent - 4,054,480 Travel & Conveyance 52,789 202,383 Loss on sale of fixed assets 454,337 22,470 Miscellaneous Expenses 1,099,515 1,037,242 Gross cost 23,622,293 29,430,373 Less: Product Research and Development Expenditure Capitalised (19,837,628) (25,557,740) 3,784,665 3,872,633 Schedule 5: Calculation of Total R&D Expenditure

i) Captial Expenditure for R&D (exclusive of Product Research & Development Expenditure capitalised) Refer Schedule 1 194,119 14,505,248 ii) Recurring R&D Expenditure:

Employee Compensation & benefits-gross (Refer Schedule 3) 211,950,314 197,303,713 Administrative & Other Expenses-gross (Refer Schedule 4) 23,622,293 29,430,373 Interest (Refer Profit & Loss Account) 98,722,257 87,242,524 Profit on sale of fixed assets (Refer Profit & Loss Account) (864,809) (123,973) Sub-total 333,430,055 313,852,637

Total R&D expenditure (i) + (ii) 333,624,174 328,357,885

109

AUDITOR’S REPORT TO THE BOARD OF DIRECTORS OF RAMCO SYSTEMS LIMITED ON

THE CONSOLIDATED FINANCIAL STATEMENTS OF RAMCO SYSTEMS LIMITED AND

ITS SUBSIDIARIES

We have examined the attached Consolidated Balance Sheet of Ramco Systems Limited and its Subsidiaries as at 31st March 2010, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year then ended. These financial statements are the responsibility of Ramco Systems Limited’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Generally Accepted Auditing Standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material aspects, in accordance with identified financial reporting framework and 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 includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of Rs. 153,581,663/- as at 31st March 2010 and total revenues of Rs. 343,860,538/- for the year then ended. These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on the report of the other auditors. We report that the consolidated financial statements have been prepared by the company in accordance with the requirements of Accounting Standard 21 – Consolidated Financial Statements and Accounting Standard 23 – Accounting for Investments in Associates in Consolidated Financial Statements issued by the Institute of Chartered Accountants of India, and on the basis of the separate audited financial statements of Ramco Systems Limited and its Subsidiaries in the Consolidated financial statements.

On the basis of the information and explanations given to us and on the consideration of the separate audit reports on individual audited financial statements of Ramco Systems Limited and its aforesaid Subsidiaries, we are of the opinion that,

a) the Consolidated Balance Sheet gives a true and fair view in conformity with the accounting principles generally accepted in India of the consolidated state of affairs of Ramco Systems Limited and its Subsidiaries as at 31st March 2010;

b) the Consolidated Profit and Loss Account gives a true and fair view in conformity with the

accounting principles generally accepted in India of the consolidated results of operation of Ramco Systems Limited and its Subsidiaries for the year then ended;

c) the Consolidated Cash flow statement gives a true and fair view in conformity with the

accounting principles generally accepted in India of the consolidated cash flow of Ramco Systems Limited and its Subsidiaries for the year then ended.

For CNGSN & Associates Chartered Accountants

Registration No.004915S Place : Chennai C.N.GANGADARAN Date: 24th May, 2010 Partner

Membership Number: 011205

110

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH 2010 SCHEDULE As at 31.03.2010 As at 31.03.2009 Rs. USD Rs. USD I. SOURCES OF FUNDS 1. Share Holders' Funds a) Share Capital I 153,933,750 3,527,920 153,933,750 3,527,920 b) Reserves & Surplus II 1,968,382,997 43,766,305 1,988,413,633 39,836,451 2,122,316,747 47,294,225 2,142,347,383 43,364,371 2. Minority Interest 3,144,009 75,267 1,880,134 48,562 3. Loan Funds a) Secured Loans III 94,652,914 2,118,937 216,991,841 4,294,318 b) Unsecured Loans IV 1,235,000,000 27,647,191 870,085,616 17,219,189 1,329,652,914 29,766,128 1,087,077,457 21,513,507 TOTAL 3,455,113,670 77,135,620 3,231,304,974 64,926,440 II. APPLICATION OF FUNDS 1. Fixed Assets V Gross Block 3,515,904,261 78,708,401 3,276,786,960 64,848,347 Less : Depreciation 1,074,072,816 24,044,610 879,611,531 17,407,710 Net Block 2,441,831,445 54,663,791 2,397,175,429 47,440,637 2. Investments VI 1,795,013 40,184 3,690,376 73,034 3. Deferred Tax Asset 1,519,804 34,022 1,384,973 27,409 4. Current Assets, Loans & Advances a) Inventories VII 482,309 10,797 149,706 2,963 b) Sundry Debtors VIII 424,976,482 9,513,690 412,939,844 8,172,173 c) Cash & Bank Balances IX 70,180,646 1,571,091 105,298,728 2,083,886 d) Loans & Advances X 362,562,499 8,116,465 258,686,255 5,119,459 e) Other Current Assets XI 107,758,210 2,412,317 37,443,381 741,013 965,960,146 21,624,360 814,517,914 16,119,494 Less: Current Liabilities and Provisions a) Current Liabilities XII 323,612,428 7,244,513 378,116,140 7,483,003 b) Provisions XIII 81,094,345 1,815,410 74,845,600 1,481,212 404,706,773 9,059,923 452,961,740 8,964,215 Net Current Assets 561,253,373 12,564,437 361,556,174 7,155,279 5. Profit & Loss Account 448,714,035 9,833,186 467,498,022 10,230,081 TOTAL 3,455,113,670 77,135,620 3,231,304,974 64,926,440 Significant Accounting Policies and Notes on Accounts XX Schedules, Accounting Policies and Notes form an integral part of the accounts

As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA Chairman

For CNGSN & Associates Chartered Accountants Registration No.004915S

P.R. VENKETRAMA RAJA C.N. GANGADARAN Vice Chairman, Managing Director & CEO Partner

S.S. RAMACHANDRA RAJA N.K. SHRIKANTAN RAJA

V. JAGADISAN M.M. VENKATACHALAM A.V. DHARMAKRISHNAN

R.S. AGARWAL Directors

111

Membership No. 11205

Place: Chennai SUBRAMANIAN NARAYANAN Date : 24th May 2010 Company Secretary

112

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR END ED 31ST MARCH 2010

SCHEDULE Year Ended 31.03.2010 Year ended 31.03.2009 Rs. USD Rs. USD

INCOME Sales XIV 1,680,302,974 35,503,885 1,876,500,148 41,542,879 Other Income XV 75,321,536 1,591,503 76,419,031 1,691,802 1,755,624,510 37,095,388 1,952,919,179 43,234,681 EXPENDITURE Cost of Resale Material 40,620,935 858,298 38,938,273 862,035 Employee Compensation & Benefits XVI 792,336,796 16,741,644 1,129,845,872 25,013,080 Sales & Marketing Expenses XVII 95,039,996 2,008,143 156,831,828 3,472,020 Administrative & Other Expenses XVIII 449,534,157 9,498,411 571,535,186 12,652,926 1,377,531,884 29,106,496 1,897,151,159 42,000,061 Profit/(Loss) before Interest, Depreciation, Exceptional Items & Tax

378,092,626 7,988,892 55,768,020 1,234,620

Interest & Finance Charges XIX 119,350,404 2,521,809 182,362,514 4,037,231 Profit/(Loss) before Depreciation, Exceptional Items & Tax

258,742,222 5,467,083 (126,594,494) (2,802,611)

Depreciation On Technology Platform & Product Software 153,247,018 3,238,025 195,520,822 4,328,536 On other fixed assets 71,250,051 1,505,475 68,906,372 1,525,483 224,497,069 4,743,500 264,427,194 5,854,019 Profit/(Loss) before Tax & Exceptional Item & Tax

34,245,153 723,583 (391,021,688) (8,656,630)

Exceptional Income / (Expense) (Refer Note No.10)

(10,514,703) (222,172) 421,780,758 9,337,589

Profit/(Loss) before Tax 23,730,450 501,411 30,759,070 680,959 Provision for Taxation

Current Taxation (Refer Note No.3) (1,698,852) (35,896) (2,345,293) (51,921) Deferred Taxation (Refer Note No.4) (83,351) (1,761) (170,371) (3,772) Fringe Benefit Tax - - (5,095,810) (112,814)

Minority Interest (1,263,873) (26,705) (825,228) (18,269) Equity in Earnings /( Losses) of Affiliates (1,900,387) (40,154) (2,114,707) (46,816) Profit/(Loss) after Tax 18,783,987 396,895 20,207,661 447,367 Balance in Profit & Loss Account brought forward from previous year

(467,498,022) (10,230,081) (487,705,683)

(10,677,448)

Balance in Profit & Loss Account (448,714,035) (9,833,186) (467,498,022) (10,230,081) Earnings Per Share - Basic & Diluted (Face value of shares Rs.10/- each) (Refer Note No.6) - Basic EPS 1.22 0.03 1.32 0.03

- Diluted EPS 1.19 0.03 1.32 0.03 Significant Accounting Policies and Notes on Accounts

XX

Schedules, Accounting Policies and Notes form an integral part of the accounts

As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA Chairman For CNGSN & Associates Chartered Accountants Registration No.004915S P.R. VENKETRAMA RAJA C.N. GANGADARAN Vice Chairman, Managing Director & CEO

S.S. RAMACHANDRA RAJA N.K. SHRIKANTAN RAJA V. JAGADISAN M.M. VENKATACHALAM A.V. DHARMAKRISHNAN R.S. AGARWAL Directors

113

Partner Membership No. 11205 Place: Chennai SUBRAMANIAN NARAYANAN Date : 24th May 2010 Company Secretary

114

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010 Year ended Year ended Year ended Year ended 31.03.2010 31.03.2010 31.03.2009 31.03.2009 Rs. USD Rs. USD A. Cash Flow From Operating Activities Net Profit / (Loss) before tax & exceptional items 34,245,153 723,583 (391,021,688) (8,656,630) Adjustments for: Depreciation 224,497,069 4,743,500 264,427,194 5,854,019 Preliminary expenses written off - - 4,071,386 90,134 Interest & Finance Charges 119,350,404 2,521,809 182,362,514 4,037,231 Unrealised foreign exchange fluctuation (gain) / loss 7,188,893 151,897 (5,695,051) (126,080) (Profit) / Loss on sale of fixed assets (other than those mentioned in Note No. 10 (a) ) - Net 731,939 15,465 3,988,395 88,297 Interest income (557,948) (11,789) (1,314,990) (29,112) Dividend income (28,540) (603) (81,408) (1,802) Operating Profit before Working Capital Changes 385,426,970 8,143,862 56,736,352 1,256,057

Working Capital Changes: (Increase) / Decrease in Trade and Other receivables (137,539,027) (6,377,028) 67,321,331 9,726,711 (Increase) / Decrease in Inventories (332,603) (7,834) 1,721,997 44,398 (Increase) / Decrease in Other current assets [other than Cash and Bank] (70,314,829) (1,671,304) 30,608,685 980,952 Increase / (Decrease) in Current liabilities and Provisions (48,056,963) 98,047 (218,681,686) (8,026,361)

Cash generated from operations 129,183,548 185,743 (62,293,321) 3,981,757 Tax paid (including Dividend Distribution Tax) 1,215,868 19,312 (8,118,523) (211,789) Cash Flow before exceptional items 130,399,416 205,055 (70,411,844) 3,769,968 Overseas withholding tax (10,514,703) (222,172) (8,017,560) (177,496) Net Cash (used in)/generated from operating activities 119,884,713 (17,117) (78,429,404) 3,592,472 B. Cash Flow from Investing Activities: Purchase of Fixed assets - for R&D activities (194,119) (4,346) (14,505,248) (287,062) Purchase of Fixed assets - for Others (43,492,137) (973,633) (96,729,784) (1,914,305) Investment in R&D activities (229,489,119) (5,137,433) (220,664,877) (4,367,007) Net Investment in Companies / Mutual Funds 1,895,363 32,850 2,107,362 73,671 Proceeds from Sale of fixed assets mentioned in Note No.10(a) - - 750,000,000 14,842,668 Proceeds from Sale of other fixed assets 1,554,956 35,731 1,759,085 1,586,502 Interest income 557,948 11,789 1,314,990 29,112 Dividend income 28,540 603 81,408 1,802 Equity in Earnings /( Losses) of Affiliates (1,900,387) (40,154) (2,114,707) (46,816) Miscellaneous Expenditure - - (4,084,772) (103,360) Net cash (used in) /generated from Investing Activities (271,038,955) (6,074,593) 417,163,457 9,815,205

115

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010 Year ended Year ended Year ended Year ended 31.03.2010 31.03.2010 31.03.2009 31.03.2009 Rs. USD Rs. USD C. Cash Flow from Financing Activities Proceeds from long term borrowings 850,000 26,108 245,290,967 4,854,363 Proceeds from short term borrowings 1,802,500,000 40,351,466 1,880,085,616 37,207,315 Repayment of long term borrowings (228,188,927) (4,487,155) (255,109,955) (6,437,022) Repayment of short term borrowings (1,217,585,616) (25,569,615) (2,112,440,000) (46,670,922) Working capital changes - Net (115,000,000) (2,068,183) 25,025,459 (441,881) Interest & Finance Charges (119,350,404) (2,521,809) (182,362,514) (4,037,231) Rights Issue expenses - - (5,468,383) (121,063) Net cash (used in) /generated from financing activities 123,225,053 5,730,812 (404,978,810) (15,646,441) Net Increase/(Decrease) in cash and cash equivalents (A+B+C) (27,929,189) (360,898) (66,244,757) (2,238,764) Cash and Cash equivalents at the beginning of the year 105,298,728 2,083,886 165,848,434 4,196,570 Effect of Unrealised foreign exchange fluctuation gain / (loss) (7,188,893) (151,897) 5,695,051 126,080 Cash and Cash equivalents at the end of the year 70,180,646 1,571,091 105,298,728 2,083,886

As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA

Chairman For CNGSN & Associates Chartered Accountants Registration No.004915S

P.R. VENKETRAMA RAJA C.N. GANGADARAN Vice Chairman, Managing Director & CEO Partner Membership No. 11205

Place: Chennai SUBRAMANIAN NARAYANAN Date : 24th May 2010 Company Secretary

S.S. RAMACHANDRA RAJA N.K. SHRIKANTAN RAJA

V. JAGADISAN M.M. VENKATACHALAM A.V. DHARMAKRISHNAN

R.S. AGARWAL Directors

116

SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH 2010 Rs. USD Rs. USD Schedule I Share Capital

Authorised Share Capital 50,000,000 equity Shares of Rs.10/- each 500,000,000 500,000,000 (Previous year 50,000,000 of Rs.10/- each)

Issued Share Capital 15,707,164 equity shares of Rs.10/- each 157,071,640 3,601,260 157,071,640 3,601,260 (Previous year 15,707,164 of Rs.10/- each)

Subscribed Share Capital 15,707,164 equity shares of Rs.10/- each 157,071,640 3,601,260 157,071,640 3,601,260 (Previous year 15,707,164 of Rs.10/- each)

Paid up Share Capital 15,357,986 (Previous year 15,357,986) Equity shares of Rs.10/- each fully paid up

153,579,860 3,519,652 153,579,860 3,519,652

Add: Forfeited Shares 353,890 8,268 353,890 8,268 Of the above 153,933,750 3,527,920 153,933,750 3,527,920

4,333,153 equity shares of face value Rs.10/- each have been allotted to the shareholders of Ramco Industries Limited credited as fully paid up pursuant to the approval of the scheme of arrangement (Demerger) for the transfer of software business undertaking of Ramco Industries Limited with Ramco Systems Limited by the Honorable High Court of Madras, vide order dated 24th December, 1999. 2,376,719 equity shares, have been allotted to Ramco Industries Limited as fully paid up shares of face value of Rs.10/- each at a premium of Rs.293/- per share pursuant to a contract for the transfer of its entire investment in the overseas Subsidiary Companies without payment being received in cash. The above allotment has been duly approved by the shareholders of the company in the EGM held on shareholders of the company in the EGM held on 10th November 1999 and by the Reserve Bank of India. Schedule II Reserves & Surplus Share Premium 1,942,746,246 44,951,173 1,942,746,246 44,951,173 Translation Reserve a/c 25,636,751 (1,184,868) 45,667,387 (5,114,722) (Refer Accounting Policy No III) 1,968,382,997 43,766,305 1,988,413,633 39,836,451 Schedule III Secured Loans a) Bank Borrowings 80,000,000 1,790,911 195,000,000 3,859,094 b) Hire Purchase Loans 1,242,717 27,820 947,427 18,750 c) Oligations under Finance Lease (Refer Note No.11) 13,410,197 300,206 21,044,414 416,474 (For security details, refer Note No.2) 94,652,914 2,118,937 216,991,841 4,294,318 Schedule IV Unsecured Loans Long Term Loans - From Banks - - 220,000,000 4,353,849 Short Term Loans - From Banks 1,150,000,000 25,744,347 200,000,000 3,958,045 Short Term Loans - From Others 85,000,000 1,902,844 450,085,616 8,907,295 (For security details, refer Note No.2) 1,235,000,000 27,647,191 870,085,616 17,219,189

117

Schedule V - Fixed Assets Gross Block

Depreciation Block

Net Block

Asset Description

As at 01.04.2009 Additions/Reserv

e Adjustments Withdrawals As at

31.03.2010 Upto

01.04.2009

Additions/Reserve

Adjustments

Withdrawals

Up to 31.03.2010

As at 01.04.2009

As at 31.03.2010

Rs. USD Rs. USD Rs. USD Rs. USD Rs. USD Rs. USD Rs. USD Rs. USD Rs. USD Rs. USD

Goodwill

994,508,

931

19,681,

554

-

2,581,910

-

-

994,508

,931

22,263

,464

-

-

-

-

-

-

-

- 994,508,

931 19,681

,554

994,508,

931

22,263

,464

Technology Platform

512,032,

697

10,133,

242

55,087,

392

2,562,529

-

-

567,120

,089

12,695

,771

159,235

,405

3,151,

304

51,203,

270

1,559,

658

-

-

210,438,

675

4,710,

962 352,797,

292 6,981,

938

356,681,

414

7,984,

809

Product Software

1,020,43

7,481

20,194,

686

174,401

,727

6,553,449

-

-

1,194,839,208

26,748

,135

245,097

,389

4,850,

532

102,043,748

2,920,

705

-

-

347,141,

137

7,771,

237 775,340,

092 15,344

,154

847,698,

071

18,976

,898

Patents

-

-

6,889,0

23

154,220

-

-

6,889,0

23

154,22

0

-

-

279,42

3

6,255

-

-

279,423

6,255

-

-

6,609,60

0

147,96

5

Building

3,116,85

9

61,683

-

8,092

-

-

3,116,8

59

69,775

1,143,8

87

22,638

104,10

3

5,300

-

-

1,247,99

0

27,938 1,972,97

2 39,045

1,868,86

9

41,837 Plant & Machinery

-EDP

369,030,

695

7,303,2

02

(1,535,8

10)

923,682

15,702

,921

351,5

32

351,791

,964

7,875,

352

231,209

,175

4,575,

683

27,851,

284

1,223,

745

15,210

,986

340,5

19

243,849,

473

5,458,

909 137,821,

520 2,727,

519

107,942,

491

2,416,

443

-Software

247,992,

868

4,907,8

33

20,634,

654

1,105,767

-

-

268,627

,522

6,013,

600

165,032

,565

3,266,

031

27,078,

606

1,034,

644

-

-

192,111,

171

4,300,

675 82,960,3

03 1,641,

802

76,516,3

51

1,712,

925

-Others

9,911,98

8

196,159

(239,33

8)

20,377

-

-

9,672,6

50

216,53

6

9,315,1

78

184,34

9

(901,65

2)

3,999

-

-

8,413,52

6

188,34

8 596,810 11,810

1,259,12

4

28,188 Furniture

118

-Furniture

63,046,5

95

1,247,7

07

(1,739,7

70)

124,732

576,27

0

12,90

1

60,730,

555

1,359,

538

45,300,

338

896,50

4

(229,75

7)

112,4

63

105,51

0

2,362

44,965,0

71

1,006,

605 17,746,2

57 351,20

3

15,765,4

84

352,93

3

-Office Equipments

12,209,7

81

241,634

(218,30

8)

26,812

-

-

11,991,

473

268,44

6

8,871,4

58

175,56

8

1,045,4

55

46,43

6

-

-

9,916,91

3

222,00

4 3,338,32

3 66,066

2,074,56

0

46,442

ElectricalItems

39,221,6

05

776,205

3,351,2

36

176,847

861,92

7

19,29

5

41,710,

914

933,75

7

12,393,

934

245,27

9

2,039,2

80

77,82

8

118,61

0

2,655

14,314,6

04

320,45

2 26,827,6

71 530,92

6

27,396,3

10

613,30

5

Vehicles

5,277,46

0

104,442

1,301,1

30

42,829

1,673,

517

37,46

4

4,905,0

73

109,80

7

2,012,2

02

39,822

475,24

2

15,86

3

1,092,

611

24,46

0

1,394,83

3

31,225 3,265,25

8 64,620

3,510,24

0

78,582

Total

3,276,786,960

64,848,

347

257,931

,936

14,281,24

6

18,814

,635

421,1

92

3,515,904,261

78,708

,401

879,611

,531

17,407

,710

210,989,002

7,006,

896

16,527

,717

369,9

96

1,074,07

2,816

24,044

,610

2,397,17

5,429

47,440

,637

2,441,83

1,445

54,663

,791

Previous year

3,684,815,367

93,239,

255

360,701

,991

(13,177,5

63)

768,730,398

15,213,345

3,276,786,960

64,848

,347

1,037,355,109

26,248

,865

290,506,046

29,80

3

448,249,624

8,870,958

879,611,

531

17,407

,710

2,647,46

0,258

66,990

,390

2,397,17

5,429

47,440

,637 Notes: 1. Gross Block includes assets purchased under Hire Purchase Rs.2,716,590/- USD 60,815 (Previous year Rs.1,972,530/- USD 39,037) Net Block as on 31-03-2010 Rs.2,095,875/- USD46,919(Previous Year Rs.2,309,149 USD 45,699)

2. Additions in Gross Block and Depreciation Block include the following on account of Reserve Adjustment:

Gross Block (Rs.15,243,439) USD 8,165,835 (Previous year Rs.28,802,082 (USD 19,745,939))

Depreciation Block (Rs.13,508,067) USD 2,263,396 (Previous year Rs.26,078,852 (USD 5,824,216)) 3. Gross Block includes assets purchased under Finance Lease Rs.25,290,967/- USD 566,173 (Previous year 25,290,967 USD 491,523) . Net Block as on 31.03.2010 Rs.19,540,203 USD437,435 ( Previous Year Rs.23,639,869/- USD 467,838)

119

Schedule VI As at 31.03.2010 As at 31.03.2009 Rs. USD Rs. USD Investments Trade -Unquoted (Long Term) 300 shares of face value ZAR 1 each in 1,653,546 37,017 3,553,447 70,324 Redlex 47 (Pty) Limited, South Africa Non-Trade -Unquoted (Short Term) Investments In Mutual Funds 141,467 3,167 136,929 2,710 (141.437 units (Previous Year 136.900 units) purchased under Standard Chartered Liquidity Manager Plus - Daily Dividend Plan) 1,795,013 40,184 3,690,376 73,034 Schedule VII Inventories Resale Hardware & Software Materials 482,309 10,797 149,706 2,963 (Valued at Cost or Net realisable value whichever is lower and as certified by management) Schedule VIII Sundry Debtors (Unsecured) a) Debts Outstanding for period exceeding six months 95,114,431 2,129,269 57,248,553 1,132,962 Less: Provision for Bad & Doubtful Debts (5,705,925) (127,734) (5,763,175) (114,054) 89,408,506 2,001,535 51,485,378 1,018,908 b) Other debts considered good 335,567,976 7,512,155 361,454,466 7,153,265 424,976,482 9,513,690 412,939,844 8,172,173 Schedule IX Cash and Bank Balances Cash on hand 192,187 4,302 364,104 7,206 Balances with Scheduled Banks in

a) Current Accounts 21,903,839 490,349 58,183,337 1,151,461 b) Deposit Accounts 825,939 18,490 825,939 16,346

Balances with Other Banks in Current Account

Bank of America, USA 10,097,808 226,053 14,938,383 295,634 Commerce Bank, USA 200,224 4,482 1,814,867 35,917 CIBC Bank of Canada 108,343 2,425 122,555 2,425 UBS AG,Switzerland 4,426,350 99,090 4,935,800 97,681 Credit Suisse, Switzerland 119,129 2,667 133,557 2,643 ABN Amro Bank, Singapore 3,509,013 78,554 4,493,884 88,935 Bumiputra Commerce Bank Berhad, Malaysia 5,092,761 114,009 7,474,882 147,930 ABN Amro Bank Berhad, Malaysia 2,868,346 64,212 4,009,984 79,358 Bank of Baroda, South Africa 248,990 5,574 2,225,044 44,034 The Standard Bank, South Africa 1,292,569 28,936 2,669,818 52,836 Dresdner Bank, Germany 899,629 20,139 414,384 8,201

HSBC, Bank, United Kingdom 121,253 2,714 130,663 2,586 State Bank of India, united Kingdom 1,813,774 40,604 2,314,549 45,805 Citi Bank, Dubai 232,585 5,207 246,978 4,888

120

National Bank of Dubai, Dubai 16,227,907 363,284 - - 70,180,646 1,571,091 105,298,728 2,083,886

121

Schedule X As at 31.03.2010 As at 31.03.2009 Rs. USD Rs. USD Loans and Advances (Unsecured, Considered Good) Advance recoverable in Cash or in Kind or for value to be received 124,064,105

2,777,347

112,131,973

2,219,117

Tax deducted at Source 106,143,818

2,376,177

84,129,549

1,664,943

Deposits with Government Departments and Others 132,354,576

2,962,941

59,093,828

1,169,480

Advance Tax - -

3,330,905

65,919 (Unsecured, Considered doubtful ) Advance recoverable in Cash or in Kind or for value to be received 706,164

15,808

706,164

13,975

Less: Provision for doubtful advances (706,164)

(15,808)

(706,164)

(13,975)

362,562,499

8,116,465

258,686,255

5,119,459 Schedule XI Other Current Assets

Prepaid expenses 79,994,788

1,790,794

32,442,903

642,053

Interest Accrued 167,228

3,744

119,162

2,358

Software Work in Progress 27,596,194

617,779

4,881,316

96,602

107,758,210

2,412,317

37,443,381

741,013 Schedule XII Current Liabilities

For Purchases 25,500,738

570,869

43,003,008

851,039

For Expenses 297,835,117

6,667,453

334,686,467

6,623,520

Interest accrued but not due on loans 276,573

6,191

426,665

8,444

323,612,428

7,244,513

378,116,140

7,483,003 Schedule XIII Provisions

Provision for Taxation 609,375

13,642

807,379

15,978

Provision for staff benefit schemes 80,484,970

1,801,768

74,038,221

1,465,234

81,094,345

1,815,410

74,845,600

1,481,212

122

SCHEDULES TO CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2010

Year ended 31.03.2010 Year ended 31.03.2009 Rs. USD Rs. USD

Schedule XIV

Sales

Software Revenues (Licensing & Services) 1,595,537,497 33,712,837 1,779,243,548 39,389,765 Value Added Resale Software & Hardware Materials 84,765,477 1,791,048 97,256,600 2,153,114 1,680,302,974 35,503,885 1,876,500,148 41,542,879

Schedule XV

Other Income Rental Income 45,483,252 961,036 34,970,327 774,190 Dividend Income 28,540 603 81,408 1,802 Interest Income 557,948 11,789 1,314,990 29,112 Profit on sale of Fixed assets(other than those mentioned in(Note No.10(A))) 864,809 18,273 312,187 6,912 Miscellaneous Income 28,386,987 599,802 39,740,119 879,786 75,321,536 1,591,503 76,419,031 1,691,802

Schedule XVI

Employee Compensation & Benefits Salaries, Bonus etc. 683,134,657 14,434,263 982,625,681 21,753,848 Gratuity & Superannuation 27,073,677 572,052 51,850,843 1,147,899 Provident Fund & others 26,327,386 556,283 30,982,753 685,911 Staff Welfare 55,801,076 1,179,046 64,386,595 1,425,422 792,336,796 16,741,644 1,129,845,872 25,013,080

Schedule XVII

Sales & Marketing Expenses Advertisement & Sales Promotion 82,420,593 1,741,502 107,973,034 2,390,360 Sales commissiion 12,619,403 266,641 48,858,794 1,081,660 95,039,996 2,008,143 156,831,828 3,472,020

123

Year ended 31.03.2010 Year ended 31.03.2009 Rs. USD Rs. USD

Schedule XVIII

Administrative & Other Expenses Consultancy Charges 24,883,494 525,775 36,409,706 806,056 Bank Charges 3,247,915 68,627 5,409,327 119,754 Insurance 8,777,715 185,468 9,881,328 218,758 Loss on sale of fixed assets 1,596,748 33,738 4,300,582 95,208 Communication Expenses 39,046,016 825,021 46,918,771 1,038,711 Power & Fuel 11,311,321 239,002 15,098,993 334,269 Printing & Stationery 2,910,035 61,487 3,494,664 77,367 Rates & Taxes 5,560,605 117,493 6,048,886 133,913 Rent 147,988,809 3,126,923 145,040,169 3,210,970 Repairs & Maintenance - Buildings 2,255,395 47,655 51,352 1,137 Repairs & Maintenance- Plant & Machinery 12,089,619 255,447 16,286,265 360,553 Repairs & Maintenance- Others 6,461,522 136,528 3,349,998 74,164 Travel & Conveyance 143,313,562 3,028,137 192,883,199 4,270,143 Bad Debts Written off 17,050,763 360,273 44,396,973 982,882 Provision for Doubtful advances - - 138,953 3,076 Foreign Exchange Fluctuation (3,982,910) (84,157) 6,321,134 139,941 Miscellaneous Expenses 27,023,548 570,994 35,504,886 786,024 449,534,157 9,498,411 571,535,186 12,652,926

Schedule XIX

Interest & Finance Charges Hire Purchase & Finance Charges 1,566,413 33,098 7,930,155 175,562 Others 117,783,991 2,488,711 174,432,359 3,861,669 119,350,404 2,521,809 182,362,514 4,037,231

124

Schedule XX

SIGNIFICANT ACCOUNTING POLICIES AND NOTES O N ACCOUNTS TO CONSOLIDATED FINANCIAL STATEMENTS OF RAMCO SYSTEMS LIMITED, INDI A AND ITS SUBSIDIARIES:

SIGNIFICANT ACCOUNTING POLICIES : I. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements are prepared under the historical cost convention and the accounts are prepared in accordance with the Generally Accepted Accounting Principles, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 as adopted consistently by the Company.

II. PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements have been prepared on the following basis: The Financial Statements of Subsidiaries have been combined on a line by line basis by adding together the book values of like item of assets, liabilities, income and expenditure after eliminating intra-group balances and intra-group transactions resulting in unrealized profits or losses. The Financial Statement of the affiliate has been consolidated using the Equity Method as prescribed by Accounting Standard 23 issued by the Institute of Chartered Accountants of India. The consolidated financial statements are prepared by adopting uniform accounting policies for like transactions or other events in similar circumstances and are presented to the extent possible, in the same manner as the Parent Company’s financial statements.

III. TRANSLATION TO INDIAN RUPEES:

The functional currency of the Parent Company is Indian Rupee. The functional currencies of the subsidiaries are their respective local currencies. Their accounts are converted from their local currency to Indian Rupees in the following manner:

All income and expense items are translated at the moving average rate of exchange applicable for the year. All monetary and non-monetary assets and liabilities are translated at the closing rate as on Balance Sheet date. The equity share capital is stated at the exchange rate at the date of investment. The exchange difference arising out of the year end translation is debited or credited to Translation Reserve account and is being classified under Reserves and Surplus Account.

IV. OTHER SIGNIFICANT ACCOUNTING POLICIES: These are set out in the notes to accounts under “Significant Accounting Policies” of the financial statements of Ramco Systems Limited, India.

125

NOTES ON ACCOUNTS:

The Consolidated Financial Statements cover Ramco Systems Limited, India (the Parent company), its Subsidiaries and Affiliates as given below:

S.No. Name Country % holding Year ending

on Subsidiaries 1 Ramco Systems Corporation USA 98% 31st March 2 Ramco Systems Limited Switzerland 100% 31st March 3 Ramco Systems Sdn. Bhd. Malaysia 100% 31st March 4 Ramco Systems Pte. Limited Singapore 100% 31st March 5 RSL Enterprise Solutions (Pty) Limited South Africa 100% 31st March 6 Ramco Systems Australia Pty Limited

(100% Subsidiary of Ramco Systems Corporation, USA) Ramco Systems Australia Pty Limited, Australia has been de-registered on 27th January 2010

Australia 98% 31st March

Affiliates 1 Redlex 47 (Pty) Limited South Africa 30% 28th February 1. Contingent Liabilities Particulars As at

31.03.2010 (Rs.’000)

As at 31.03.2010 (USD mln)

As at 31.03.2009 (Rs. ’000)

As at 31.03.2009 (USD mln)

(a) Estimated amount of contracts remaining to be executed on capital account 7,675 0.17 655 0.01

(b) Bank Guarantees 18,738 0.42 10,773 0.21 (c) Letters of Credit Nil Nil 720 0.01

Note: The Company is engaged in development of software products, which are marketed by the Company and its overseas subsidiaries. The intellectual property rights are held by the company. There are in-built warranties for performance and support. Claims which may arise out of this are not quantifiable and hence not provided for.

2. Secured and Un-secured Loans

Ramco Systems Limited, India Borrowings from the banks for working capital amounting to Rs.10,000 thousands (USD 0.22 million) are secured by a pari-passu first charge on current assets including stocks and book debts and fixed assets of the Company except assets given as exclusive charge and assets acquired on hire purchase or lease and supported by a Corporate Guarantee from Ramco Industries Limited. Borrowings from the banks for working capital amounting to Rs.70,000 thousands (USD 1.57 million) are secured by a pari-passu first charge on the current assets including stocks and book debts and supported by a Corporate Guarantee from Ramco Industries Limited.

Borrowings from the banks for working capital amounting to Rs.1,95,000 thousands (USD 3.86 million) during the previous year were secured by a first charge on the current assets including stocks and book debts and fixed assets of the Company except assets given as exclusive charge and assets

126

acquired on hire purchase or lease and supported by a Corporate Guarantee from Madras Cements Limited and Ramco Industries Limited. Obligations under finance lease are secured against fixed assets procured under finance lease arrangement. Assets acquired under Hire Purchase Finance are hypothecated to the Hire Purchase Financilal Institutions as security. Of the total unsecured loans of Rs.1,235,000 thousands (USD 27.65 million) (Previous year Rs. 870,086 thousands) (USD 17.22 million), Rs. 950,000 thousands (USD 21.27 million) (Previous year Rs.470,086 thousands (USD 9.30 million)) are supported by a Corporate Guarantee from Madras Cements Limited and Rs.200,000 thousands (USD 4.48 million) (Previous year Rs.200,000 thousands (USD 3.96 million) are supported by a Corporate Guarantee from Ramco Industries Limited. In the case of subsidiaries, there are no secured and un-secured loans outstanding as on 31.03.2010.

3. Taxation Ramco Systems Limited, India No provision for current tax for the Company has been made in view of absence of taxable profits. No provision for taxation has been made by subsidiaries, other than Ramco Systems Pte., Ltd., Singapore in the absence of taxable profit.

4. Deferred Tax Ramco Systems Limited, India

The Company has net deferred tax assets as at 31st March 2010, which arise mainly on account of carry forward losses. However, the Company has not taken credit for such net deferred tax assets.

In the case of subsidiaries, deferred tax asset / liability to the extent provided in their accounts, has been considered.

5. Research & Development

R&D Asset classification-Ramco Systems Limited, India: In line with the Company’s stated policy on Intangible Assets, the research and development efforts are classified and capitalised into “Product Software” and “Technology Platform” as below:

Year ended 31.03.2010 Year ended 31.03.2009 Research & Development expenditure capitalized during the year, as per Schedule 5 to R & D Accounts

Rs. ’000 USD Mln Rs.’000 USD Mln

Employee compensation Administrative and other expenses

209,651 19,838

4.43 0.42

195,107 25,558

4.32 0.57

Of the above: Shown as “Technology Platform” under Fixed Assets Shown as “Product Software” under Fixed Assets

55,087

174,402

1.16

3.69

80,944

139,721

1.79

3.10

127

6. Earnings per share [EPS]

Particulars Year ended 31.03.2010 Year ended 31.03.2009

A Profit/(Loss) after tax Rs. 18,783,987 USD 396,895 Rs. 20,207,661 USD 447,367 B Weighted Average Equity Shares outstanding (No.) 15,357,986 15,357,986 15,357,986 15,357,986 C EPS-Basic A/B (per share of Rs.10/- each) Rs.1.22 USD 0.03 Rs.1.32 USD 0.03 D Diluted Equity Shares (No.) 15,846,567 15,846,567 15,357,986 15,357,986 E EPS-Diluted (per share of Rs.10 each) A/D Rs.1.19 USD 0.03 Rs.1.32 USD 0.03

7. Proportionate equity in the earnings of the Affiliate Redlex 47 (Pty) Limited for the year Mar 2009-Feb 2010 is recognized in the Profit and Loss Account.

8. Related Party Transactions: As per Accounting Standard (AS 18) issued by the Institute of Chartered Accountants of India, the Company`s related parties are given below:

a. Key Management Personnel and Relatives 1. Shri.P.R.Ramasubrahmaneya Rajha 2. Shri.P.R.Venketrama Raja b. Enterprises over which the above persons exercise significant influence and with which

the Company has transactions during the year (Group) 1. Rajapalaiyam Mills Limited 2. Madras Cements Limited 3. Ramco Industries Limited 4. The Ramaraju Surgical Cotton Mills Limited

The Company’s transactions with the above Related Parties are given below:

Particulars Transaction during 2009-2010

Rs. ‘000 USD Mln.

Outstanding as at 31.03.2010 Rs. ‘000 USD Mln.

Transaction during 2008-009

Rs. ‘000 USD Mln.

Outstanding as at 31.03.2009

Rs. ‘000 USD Mln.

Income from Sale of goods & services

Madras Cements Limited

191,151 4.04

5,083 0.11

168,302 3.73

2,717 0.05

Ramco Industries Limited

22,170 0.47

- -

7,535 0.17

469 0.01

Rajapalayam Mills Limited

4,176 0.09

- -

1,027 0.02

176 -

The Ramaraju Surgical Cotton Mills Ltd

2,037 0.04

- -

601 0.01

141 - Loans availed

Madras Cements Limited

540,000 12.09

85,000 1.90

- -

200,000 3.96

Ramco Industries Limited

12,500 0.28 - -

12,500 0.25

- - Interest - Expense

Madras Cements Limited

14,690 0.31 - -

24,504 0.54

- - Ramco Industries Limited - - - 0.02 -

128

221 743 - Rent - Expense

Madras Cements Limited

69,536 1.47 - - -

61,869 1.37 - - -

Rent - Income

Ramco Industries Limited

- -

- -

225 -

- - Sale of assets

Madras Cements Limited

- -

- -

750,000 14.84

- -

Notes: a) Details of corporate guarantees given by the Group are given in Note No.2 above. b) Details of transactions with Key Management Personnel and Relatives:

(i) Remuneration paid to Shri P.R. Venketrama Raja is furnished in Note No.6 to India accounts (ii) Sitting fees paid to Shri P.R. Ramasubrahmaneya Rajha Rs.25 thousands (Previous year Rs. 43 thousands)

9. Segment Revenue

The company currently operates only in one segment, viz., Software Solutions & Services and hence the segment reporting as required by AS-17, issued by The Institute Chartered Accountants of India does not apply.

10. Exceptional Income / (Expense) comprises of the following: Sl. No.

Description Year ended 31.03.2010 Year ended 31.03.2009

Rs. ‘000 USD Mln Rs. ’000 USD Mln

A Profit on sale of Land and Building at No 86C, Santhome High Road,R.A.Puram Chennai

- - 664,769 14.72

B Impairment Loss written off – Technology Platform and Product software

- - (229,503) (5.08)

C Overseas withholding tax written off (10,515) (0.22) (8,017) (0.18) D Rights Issue Expenses charged off - - (5,468) (0.12) Total (10,515) (0.22) 421,781 9.34

11. Obligations towards finance leases:

2009-10 2008-09 2009-10 2008-09 Rs. '000 Rs.’000 USD Mln. USD Mln.

Reconciliation between total minimum lease payments at the Balance Sheet date and their Present Value: Total minimum lease payments at the Balance Sheet date 14,940 24,899 0.33 0.50 Present Value of the minimum lease payments at the 13,410 21,044 0.30 0.42

129

Balance Sheet date 1,530 3,855 0.03 0.08 Difference being: Interest accrued, but not due at the Balance Sheet Date 277 427 0.01 0.01 Future interest payable during the balance lease term 1,253 3,428 0.02 0.07 Minimum Lease Payments:

Less than one year 9,960 9,960 0.22 0.20 One to five years 4,980 14,939 0.11 0.30 Later than five years - - - - Total 14,940 24,899 0.33 0.50 Present value of minimum lease payments: Less than one year 8,656 7,634 0.19 0.15 One to five years 4,754 13,410 0.11 0.27 Later than five years - - - - Total 13,410 21,044 0.30 0.42

12. Minority Interest: The share of Minority Interest in Ramco Systems Corporation, USA, has been shown separately

in the Balance Sheet.

13. For translating local currency of subsidiaries into Indian Rupees the exchange rate applied is as per serial number III of the accounting policies given above. The figures in the US Dollars given alongside the Indian Rupees are provided by way of additional information and are obtained by converting the assets and liabilities at the exchange rates in effect at the balance sheet date, except share capital and share premium which are converted at the exchange rate prevailing on the date of transaction and the revenues, costs and expenses at the moving average exchange rate prevailing during the reporting period. The resultant gains or losses are taken to the translation reserve.

14. The figures have been rounded off to the nearest Rupee/ USD, thousand/mln. and previous year’s figures have been regrouped / recast wherever necessary to conform to the current year’s classification.

As per our Report Annexed P.R. RAMASUBRAHMANEYA RAJHA Chairman For CNGSN & Associates Chartered Accountants Registration No.004915S P.R. VENKETRAMA RAJA C.N. GANGADARAN Vice Chairman, Managing Director & CEO Partner Membership No. 11205 Place: Chennai SUBRAMANIAN NARAYANAN Date : 24th May 2010 Company Secretary

S.S. RAMACHANDRA RAJA N.K. SHRIKANTAN RAJA V. JAGADISAN M.M. VENKATACHALAM A.V. DHARMAKRISHNAN R.S. AGARWAL Directors

130

CERTAIN OTHER FINANCIAL INFORMATION

Our Working Results for the period between April 1, 2010 and September 30, 2010

Particulars Consolidated basis

` in Millions Standalone basis ` in Millions

Sales 951.53 668.82 Other Income 33.95 24.81 Estimated Gross Profit excluding Depreciation 132.66 107.56 Provision for Depreciation 123.21 119.24 Provision for Taxation 0.59 - Minority Interest 0.93 -

Equity in earnings / (losses) of affiliates - -

Estimated Net Profit/Loss 7.93 (11.68) Material changes and commitments, if any affecting our financial position Except as disclosed in the section titled “Material Developments” on page 142 of this Draft Letter of Offer there are no Material changes and commitments, if any affecting our financial position. Week-end prices for the last four weeks, current market price; and highest and lowest prices of Equity Shares during the period with the relative dates For details in connection with the week-end prices for the last four weeks, current market price, and highest and lowest prices of the Equity Shares, please refer to the section titled “Market Price Information” on page 133 of this Draft Letter of Offer.

131

ACCOUNTING RATIOS AND CAPITALIZATION STATEMENT

The following table presents certain accounting and other ratios derived from our audited financial statements as at March 31, 2010, included in the section titled “Financial Information” on page no.76 of this Draft Letter of Offer. Unconsolidated basis Particulars 31-Mar-10 31-Mar-09 Weighted average number of equity shares outstanding during the period for basic EPS (in Millions) 15.36 15.36 Weighted average number of equity shares outstanding during the period for diluted EPS (in Millions) 15.36 15.36 Basic EPS (̀ per Share) (0.03) (28.15) Diluted EPS (̀ per Share) (0.03) (28.15) Return on Networth (%) (0.00) (0.26) NAV per Share (̀ per Share) 106.57 107.28 Consolidated basis Particulars 31-Mar-10 31-Mar-09 Weighted average number of equity shares outstanding during the period for basic EPS (` in Millions) 15.36 15.36 Weighted average number of equity shares outstanding during the period for diluted EPS (̀ in Millions) 15.85 15.36 Basic EPS (̀ per Share) 1.91 (26.15) Diluted EPS (̀ per Share) 1.85 (26.15) Return on Networth (%) 0.02 (0.25) NAV per Share (̀ per Share) 107.30 106.08 The above ratios have been computed as below: Basic EPS: Net profit attributable to Equity Shareholders (excluding extraordinary items, if any) / Number of Equity Shares outstanding at the end of the year Diluted EPS : Net profit attributable to Equity Shareholders (excluding extraordinary items, if any) / Number of diluted Equity Shares outstanding at the end of the year. Return on Networth: Net profit attributable to Equity Shareholders (excluding extraordinary items, if any) / Net Worth at the end of the year (excluding revaluation reserves) NAV per Share: Net worth at the end of the year (excluding revaluation reserves) / Number of Equity Shares outstanding at the end of the year

` in million

Capitalization Statement Pre-Issue as on September 30, 2010

As adjusted for the Issue

Loan Funds Short Term Loans 127.56 [●] Long Term Loans 1385.00 [●] Total debt 1512.56 Shareholders Fund

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Share Capital 154.58 [●] Reserves 1945.52 [●] Profit and loss account (471.70) Total Shareholders Funds 1628.40 [●] Long Term Debt/Equity 0.93 [●]

Since September 30, 2010 (which is the last date as of which financial information has been given above) share capital was increased from `154.58 million to `155.13 million due to allotment of 55,557 Equity Shares pursuant to exercise of options granted under ESOS 2008.

The Issue price of ̀ [●]/- has been arrived at in consultation between us and the Lead Manager.

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MARKET PRICE INFORMATION

Our Equity Shares are currently listed on the BSE, the NSE and the MSE. Stock market data for our Equity Shares has been given separately for the BSE and NSE. For details of listing of our Equity Shares, please see the section “History and Other Corporate Matters” on page 60 of this Draft Letter of Offer. As our Equity Shares are actively traded on both the BSE and the NSE, stock market data has been given separately for each of these Stock Exchanges. The high, low and average market prices of our Equity Shares during the preceding three years were recorded, as stated below:

BSE

Year Date of High High (`)

Volume traded on date of High (No. of Equity

Shares)

Date of Low Low (`) Volume traded on Date of low (No. of Equity Shares)

Average price for the year (`)

2009-2010 08-Sep-09 130.05 2892 01-Apr-09 46.60 722 88.33 2008-2009 20-May-08 140.65 35251 12-Mar-09 40.75 2219 90.7 2007-2008 31-Dec-07 245.65 364681 24-0Mar-08 109.9 6729 177.775 (Source: www.bseindia.com)

NSE

Year Date of High High (`̀̀̀)

Volume traded on date of High (No. of Equity

Shares)

Date of Low Low (`̀̀̀) Volume traded on Date of low (No. of Equity Shares)

Average price for the year (`̀̀̀)

2009-2010 26-Aug-09 130.7 8929 01-Apr-09 45.8 835 88.25 2008-2009 21-May-08 140.55 19356 12-Mar-09 40.5 4766 90.525 2007-2008 31-Dec-07 245.35 387404 24-Mar-08 109.9 5749 177.625 (Source: www.nseindia.com) Notes • High, low and average prices are of the daily closing prices. • In case of two days with the same closing price, the date with higher volume has been considered. Monthly high and low prices and trading volumes on the Stock Exchanges for the six months preceding the date of filing of the Draft Letter of Offer is as stated below:

BSE Month Date of High High

(`) Volume traded on date of High (No. of Equity

Shares)

Date of Low Low (`)

Volume traded on Date

of low (No. of Equity

Shares)

Average price for

the Month

(`) October, 2010 15-10-10 146.5 372162 08-Oct-10 114 3637 130.25 September, 2010 27-Sep-10 127.35 169788 01-Sep-10 98.8 20379 113.08

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BSE Month Date of High High

(`) Volume traded on date of High (No. of Equity

Shares)

Date of Low Low (`)

Volume traded on Date

of low (No. of Equity

Shares)

Average price for

the Month

(`) August, 2010 02-Aug-10 113.7 6697 31-Aug-10 99.9 8095 106.80 July, 2010 14-Jul-10 124.65 121745 05-Jul-10 101.95 2732 113.30 June, 2010 04-Jun-10 106.7 9118 01-Jun-10 99.2 5928 102.95 May,2010 04-May-10 128.2 53533 25-May-10 95.65 11314 111.93 (Source: www.bseindia.com)

NSE

Month Date of High High (`)

Volume traded on date of High (No. of Equity

Shares)

Date of Low Low (`)

Volume traded on Date

of low (No. of Equity

Shares)

Average price for

the Month

(`) October, 2010 15-Oct-10 147.15 697255 08-Oct-10 114.2 9449 130.68 September, 2010 27-Sep-10 126.95 256150 01-Sep-10 98.3 55483 112.63 August, 2010 02-Aug-10 114.2 9018 31-Aug-10 99.95 10091 107.08 July, 2010 14-Jul-10 124.2 209052 05-Jul-10 102 15967 113.10 June, 2010 04-Jun-10 106.85 36275 01-Jun-10 99.85 14505 103.35 May,2010 04-May-10 127.9 97116 25-May-10 95.45 27068 111.68 (Source: www.nseindia.com) Notes • High, low and average prices are of the daily closing prices. • In case of two days with the same closing price, the date with higher volume has been considered. The closing prices of Equity Shares as on August 3, 2010 (the trading day immediately following the day on which the resolution of the executive committee of the Board was passed approving the Rights Issue) on the BSE and the NSE were ` 111.80 and ̀ 111.40, respectively. The market capitalization of the Equity Shares as on November 16, 2010 was ` 1889.0 million on the BSE based on a market price of ` 122.05, and the market capitalization of the Equity Shares on the NSE was ` 1875.9 million based on a market price of ` 121.2.

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SECTION VII - LEGAL AND REGULATORY INFORMATION

OUTSTANDING LITIGATIONS AND OTHER DEFAULTS

Except as described below, there are no outstanding litigations, suits, civil or criminal prosecutions, proceedings before any judicial, quasi-judicial, arbitral or administrative tribunals, including pending proceedings for violation of statutory regulations or, alleging criminal or economic offences or tax liabilities or any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of Part 1 of Schedule XIII of the Companies Act) against us and/or our Directors that would have a material adverse effect on our business. Further there are no defaults, non-payments or overdue of statutory dues, institutional/bank dues and dues payable to holders of debentures, bonds and arrears of cumulative preference shares that would have a material adverse effect on our business. Further, none of our directors are on the RBI’s list of willful defaulters. A. Cases filed against us

Details of the Case/Dispute

No. Complaint/ Case No./ filed

before Parties Nature of

Petition/Complaint Brief Facts and Status

1. District Consumer Forum, Bandra, Mumbai (Consumer Complaint No.502 of 2009)

Ciba India Limited, Complainant Vs. Ramco Systems Limited, Respondent

Consumer Complaint

Ciba India Limited filed this consumer complaint against us before the District Consumer Forum, Bandra, Mumbai under Section 12 of the Consumer Protection Act, 1986, alleging deficiency in our services in respect of implementation of Ramco E.Application Payroll System in 2005. The total consideration payable by Ciba was ` 0.5 million of which an amount of ̀ 0.44 million has been paid. The complainant has now prayed for interalia refund of the amounts paid along with interest @ 18% p.a and also for a compensation of ` 1,537,500/- plus legal costs of ` 50,000/-. We have filed our version to the complaint. The matter is pending adjudication and is posted for hearing in January 2011.

2 Civil Suit in the Delhi High Court (C.S.O.S. No.1781/2009)

Indication Instrument Limited, Plaintiff Vs. M/s Cosmic Softech Limited, Defendant 1

Suit for recovery Indication Instruments Limited has instituted this suit against Cosmic Softech Limited (Defendant 1), a third party dealer, and us (Defendant 2) for recovery of a sum of ̀ 2,840,735/- together with interest @ 18% p.a. on account of non performance of obligations by Defendant 1. We have filed our written statement in the matter seeking dismissal of the suit against us. The matter is currently pending adjudication.

136

Details of the Case/Dispute

No. Complaint/ Case No./ filed

before Parties Nature of

Petition/Complaint Brief Facts and Status

And Ramco Systems Limited, Defendant 2

B. Cases filed by us No. Details of the Case/Dispute Brief Facts and Status

Complaint/ Case No./

filed before

Parties Nature of Petition/Complaint

1. Criminal Complaint No. 12297 of 2003 and 13924 of 2003 before the Court of the V Metropolitan Magistrate, Hyderabad

Ramco Systems Limited – Complainant Vs. Srimata Cyber Service (P) Limited and Mr. Surya Narayana Murthy, Chairman & CEO of Srimata Cyber Services (P) Limited – Accused

Criminal Complaints These criminal complaints have been filed by us against Srimata Cyber Services (P) Limited and Mr. Surya Narayana Murthy, Chairman & CEO of Srimata Cyber Services (P) Limited for an offence under Section 138 of the Negotiable Instruments Act, 1882 in relation to the dishonor of cheques for a total amount of ̀ 60,000/- issued by them for settlement of our invoice for materials supplied by us. The matter is pending adjudication.

2. Company Petition No. 256 of 2002 before the High Court of Karnataka

Ramco Systems Limited – Vs. Deldot Systems Limited, Bangalore

Winding Up Petition We had filed a winding up petition against Deldot Systems Limited for default in payment of ̀ 186,637 for supplies made to them by us. The Hon’ble Court was pleased to pass orders in June 2004 directing the respondent company be wound up. The official liquidator is in the process of winding up the said company.

3.

Execution Petition in Civil Suit No. 65 of 2002 before ADJ, New Delhi

Ramco Systems Limited – Decree Holder Vs.

Execution Petition We had instituted a recovery suit in the Court of the District and Sessions Judge, New Delhi against Net Savvy Technologies, a dealer, for defaults in payment against supplies made by us. The judgment has been granted in our favor and the execution proceedings are

137

No. Details of the Case/Dispute Brief Facts and Status Complaint/

Case No./ filed before

Parties Nature of Petition/Complaint

Net Savvy Technologies, New Delhi – Defendants

in progress. The execution petition is made for an order for attachments of immovable properties and goods lying at the defendants premise and its sale for realization of decree amount and also attachments of certain bank accounts. The amount prayed for recovery is to the extent of ̀ 420,593.68/- which includes the decree amount, costs and interest.

4.

Original Suit No. 2075 of 2003 in the City Civil Court, Bangalore Company Petition No. 780 of 2009 before the High Court of Bangalore

Ramco Systems Limited – Applicant Vs. India Paging Services Limited Bangalore

Suit for recovery and petition for leave to prosecute suit

We had been filed this suit in the City Civil Court, Bangalore against India Paging Services Limited, Karnataka Bank and HDFC Bank Limited for recovery of an amount of ` 413,722.26. Further, a company petition was filed before the High Court of Bangalore seeking leave under Section 446 of the Companies Act to prosecute the above suit O.S.No.2075/2003 against India Paging Services Ltd. which was ordered to be wound up by the High Court by order dated 29-6-2006 in Company Petition No.48/2002. The Court passed orders allowing the application and granted leave to prosecute the above suit. The Official Liquidator has been impleaded as a party Defendant to the suit. The case is pending.

5. Original Suit No. 2809 of 2003 in the City Civil Court, Bangalore

Ramco Systems Limited – Plaintiff Vs. Cross Matrix Technologies (P) Limited, Bangalore – Defendant

Money Recovery Suit

We have filed this recovery suit before the City Civil Court, Bangalore against Cross Matrix Technologies (P) Limited, a dealer, for default in payment against supplies. The amount sought to be recovered is ̀ 269,954.80 including principal amount and future interests. The matter was decreed in our favor in the month of June 2010.

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C. Tax litigations and Notices 1. The Company has filed an Appeal under Section 260 A of the Income Tax Act, 1961 in Tax Case

(Appeal) against order of Income Tax Appellate Tribunal, Chennai ‘D’ bench dated 16.09.2008 in ITA No. 2653 of 2005 pertaining to certain disallowances for Assessment Year 2000-2001. Originally the Assessment Officer disallowed the claim of weighted deduction under Section 35 (2AB) of expenditure relating to R&D on the only ground that necessary approval from the DISR had not been obtained. Thereafter based on appeal filed with CIT (Appeals) and his order dated 30.08.2005 in ITA No. 54/2003-2004, the Company was allowed claim of weighted deduction under Section 35(2AB) to the extent approved by DSIR. The total expenditure (weighted) claimed under Section 35(2AB) was Rs. 26,86,37,173 (weighted) and the amount allowed by the CIT (Appeals) under the said section was Rs. 17,39,26,218 (weighted). The Company claimed the difference between claimed expenditure and expenditure approved by DSIR pertaining to ‘revenue’ expenditure to the extent of Rs. 7,57,68,764 as a business expenditure in terms of Section 35(1) read with Section 28 of the Income Tax Act. Since the CIT (Appeals) did not adjudicate on the alternative claim and only directed Company to file a rectification petition with Assessing Officer, the Company filed an appeal against the order of CIT (Appeals) with the Income Tax Appellate Tribunal which vide its order dated 16.09.2008 disallowed the alternate claim. Aggrieved by the order of the ITAT, this appeal has been filed. The matter is presently pending.

2. The Company has filed an Appeal under Section 260 A of the Income Tax Act, 1961 in Tax Case (Appeal) against order of Income Tax Appellate Tribunal, Chennai ‘D’ bench dated 16.09.2008 in ITA No. 2654 of 2005 pertaining to certain disallowances for Assessment Year 2001-2002. Originally the Assessment Officer disallowed the claim of weighted deduction under Section 35 (2AB) of expenditure relating to R&D on the only ground that necessary approval from the DISR had not been obtained. Thereafter based on appeal filed with CIT (Appeals) and his order dated 31.08.2005 in ITA No. 27/2004-2005 stated that the Assessing Officer was bound to allow deduction once approval from DRIR is received, however the CIT (Appeals) denied the alternate claim of Company for claim of expenditure at normal rate since approval of DSIR is pending. The total expenditure (weighted) claimed under Section 35(2AB) was Rs. 34,45,59,201 (weighted) and the amount approved by DSIR was Rs. 30,11,92,434 (weighted). The Company claimed the difference between claimed expenditure and expenditure approved by DSIR pertaining to ‘revenue’ expenditure to the extent of Rs. 2,89,11,177 as a business expenditure in terms of Section 35(1) read with Section 28 of the Income Tax Act. Since the CIT (Appeals) did not adjudicate on the alternative claim and only directed Company to file a rectification petition with Assessing Officer, the Company filed an appeal against the order of CIT (Appeals) with the Income Tax Appellate Tribunal which vide its order dated 16.09.2008 disallowed the alternate claim. Aggrieved by the order of the ITAT, this appeal has been filed. The matter is presently pending.

3. The Company has filed an Appeal under Section 260 A of the Income Tax Act, 1961 in Tax Case (Appeal) against order of Income Tax Appellate Tribunal, Chennai ‘D’ bench dated 16.09.2008 in ITA No. 2655 of 2005 pertaining to certain disallowances for Assessment Year 2002-2003. Originally the Assessment Officer disallowed the claim of weighted deduction under Section 35 (2AB) of expenditure relating to R&D on the only ground that necessary approval from the DISR had not been obtained. Thereafter based on appeal filed with CIT (Appeals) and his order dated 31.08.2005 in ITA No. 87/2005-2006 stated that the Assessing Officer was bound to allow deduction once approval from DRIR is received, however the CIT (Appeals) denied the alternate claim of Company for claim of expenditure at normal rate since approval of DSIR is pending. The total expenditure (weighted)

139

claimed under Section 35(2AB) was Rs. 44,98,79, 107 (weighted) and the amount approved by DSIR was Rs. 39,49,98,279 (weighted). The Company claimed the difference between claimed expenditure and expenditure approved by DSIR pertaining to ‘revenue’ expenditure to the extent of Rs3,65,87,219 as a business expenditure in terms of Section 35(1) read with Section 28 of the Income Tax Act. Since the CIT (Appeals) did not adjudicate on the alternative claim and only directed Company to file a rectification petition with Assessing Officer, the Company filed an appeal against the order of CIT (Appeals) with the Income Tax Appellate Tribunal which vide its order dated 16.09.2008 disallowed the alternate claim. Aggrieved by the order of the ITAT, this appeal has been filed. The matter is presently pending.

4. The Company has filed an Appeal with the CIT (Appeals) II, Madurai against re-assessment order made under Section 143 (3) read with Section 147 of Income Tax Act dated 13.04.2010 pertaining to Assessment Year 2006-2007. The appeal was filed on the ground that the re-assessment and reasons recorded for re-opening of the assessment were not legal, disallowance of claim under Section 35(2AB) is not legal (Rs. 46,64,62,021), dividend from Malaysian subsidiary held taxable (Rs. 62,00,528), disallowance under Section 40(a)(i) (Rs. 12,09,222) and omission to grant refund and interest thereon (Rs. 87,46,292) and further refund on TDS credit (Rs. 23,81,580). The Company has also by way of additional grounds of appeal sought revision to the original claim to the following extent – Rs. 25,21,81,382 as the claim under Section 35 (2AB) and further the amount of Rs. 14,28,53,759 which DSIR has not considered for weighted deduction should be considered as allowable deduction in terms of Section 35(1) of the Income Tax Act. The matter is presently pending.

5. The Company has filed an Appeal with CIT (Appeals) II, Madurai against re-assessment order made under Section 143 (3) read with Section 147 dated 13.04.2010, of Income Tax Act pertaining to Assessment year 2005-2006. The appeal was filed on ground that the re-opening of the assessment is not legal, the re-opening for the purpose of considering that dividend from Malaysian subsidiary is taxable (Rs. 77, 70, 828), re-opening for disallowing write off of trade receivable of Rs. 88,02,04,034. The matter is presently pending.

6. The Company has filed an appeal with CIT (Appeals) II, Madurai in ITA 130/09-10 pertaining to Assessment Year 2006-2007 against order of intimation date 28.03.2009 accepting the income returned but omitting to give credit for TDS of Rs. 89,27,897 filed along with return of income plus Rs. 21,95,217 TDS certificates filed on 23.12.2008 plus Rs. 4,758 TDS certificates filed on 20.08.2009 – total TDS credit Rs. 1,11,27,872. The matter is presently pending.

7. The Company has filed an appeal with the CIT (Appeals) II, Madurai pertaining to Assessment Year 2007-2008 against order of assessment dated 30.12.2009 made under Section 143(3) of the Income Tax Act. The Company has objected to the additional, disallowances and other issues pertaining to disallowance under Section 35(2AB) – Rs. 29,33,99,030, disallowance under Section 40(a)(i) – Rs. 24,10,996, claim of exemption for dividend from foreign subsidiary denied – Rs. 4,66,40,000, incorrect credit for TDS – Rs. 14, 17, 234 and denial of refund due to the Company – Rs. 1,19,27,978. Revised claim sought for Rs. 23,53,48,308 under Section 35(2AB) and Rs. 3,87,00,481 under Section 35(1) of the Income Tax Act by filing the additional grounds of appeal on 01.07.2010 The matter is presently pending.

8. The Company has filed an appeal with CWT (Appeals) II, Madurai pertaining to Assessment Year 2006-2007 against order dated 31.12.2009 made under Section 16(3) of the Wealth Tax Act stating that the issue of notice under Section 17 that net wealth tax escaped is not correct, the assessment is time barred as no order was served on assessee before 31.12.2009 and that the re-assessment was not

140

justified as the assessing officer omitted to consider the detailed objections set out in letter dated 24.12.2009. The matter is presently pending.

9. The Company has filed an appeal with the CIT (Appeals) II, Madurai pertaining to Assessment Year 2008-2009 against order of assessment dated 21.09.2009 made under Section 143(3) of the Income Tax Act. The Company has objected to disallowances made to income returned with respect to dividend from Malaysian subsidiary to the extent of Rs. 83,39,766, disallowance under section 40(a)(i) of the Income Tax Act to the extent of Rs. 20,55,053 and omission to grant refund to the extent of Rs. 2,71,13,084.

10. ITAT in Appeal no. 2699 of 05 by IT Department, has remanded the matter back to CIT (A) with direction to decide the matter afresh. This matter pertained to appeal by IT dept for deletion of addition of Rs. 3,87,61,141/- claimed by Company towards road shows, advertisements, sales promotion, entry study, consultancy training cost and branch set up in USA, UK and Germany. This matter is presently pending.

D. Criminal Proceedings against our Directors None

E. Notices received by us

None

141

GOVERNMENT AND OTHER APPROVALS

On the basis of the existing approvals, we may undertake this Issue and our current business activities and except as stated below, no further major approvals from any government authority are required in respect of the same. We have no new lines of activity/projects.

Pending regulatory and government approvals and renewal of licenses 1. We have, in respect of our branch office in New Delhi submitted an application dated December 28,

2006, bearing reference No. 1350029217for registration under the Delhi Shops and Establishments Act, 1954. The registration of the same is pending.

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MATERIAL DEVELOPMENTS

Recent Developments In accordance with circular no. F.2/5/SE/76 dated 5 February 1977 issued by the Ministry of Finance, Government of India, as amended by Ministry of Finance, Government of India through its circular dated 8 March 1977 and in accordance with sub-item (B) of item X of Part E of the SEBI Regulations, the information required to be disclosed for the period between the last date of financial statements provided to the shareholders and upto the end of the last but one month preceding the date of Draft Letter of Offer is provided below: 1. Working results of the Company on a stand-alone basis for the period from April 1, 2010 to September

30, 2010:

Particulars Consolidated basis

` in Millions Standalone basis ` in Millions

Sales 951.53 668.82 Other Income 33.95 24.81 Estimated Gross Profit excluding Depreciation 132.66 107.56 Provision for Depreciation 123.21 119.24 Provision for Taxation 0.59 - Minority Interest 0.93 -

Equity in earnings / (losses) of affiliates - -

Estimated Net Profit/Loss 7.93 (11.68) 2. Material changes and commitments, if any, affecting the financial position of the Company

a. Details of Equity Shares issued upon exercise of Employee Stock Options:

Date of Allotment

Number of Equity Shares

Issue price per Equity

Share of face value Rs. 10

each (̀̀̀̀ )

Consideration (cash, bonus, consideration

other than cash)

Reasons for

Allotment /

Forfeiture

Cumulative Paid –up Capital (In `̀̀̀)

Securities Premium (In `̀̀̀)

April 16, 2010

16215 53 Cash Exercise of options granted under ESOS 2008

153,742,010 697,245

April 30, 2010

12420 53 Cash Exercise of options granted under ESOS 2008

153,866,210 534,060

143

Date of Allotment

Number of Equity Shares

Issue price per Equity

Share of face value Rs. 10

each (̀̀̀̀ )

Consideration (cash, bonus, consideration

other than cash)

Reasons for

Allotment /

Forfeiture

Cumulative Paid –up Capital (In `̀̀̀)

Securities Premium (In `̀̀̀)

May 18, 2010

10980 53 Cash Exercise of options granted under ESOS 2008

153,976,010 472140

June 3, 2010

1185 53 Cash Exercise of options granted under ESOS 2008

153,987,860 50,955

July 5, 2010

7125 53 Cash Exercise of options granted under ESOS 2008

154,059,110 306,375

August 4, 2010

11248 53 Cash Exercise of options granted under ESOS 2008

154,171,590 483,664

September 6, 2010

5257 53 Cash Exercise of options granted under ESOS 2008

154,224,160 226,051

October 4, 2010

14492 53 Cash Exercise of options granted under ESOS 2008

154,369,080 623,156

144

Date of Allotment

Number of Equity Shares

Issue price per Equity

Share of face value Rs. 10

each (̀̀̀̀ )

Consideration (cash, bonus, consideration

other than cash)

Reasons for

Allotment /

Forfeiture

Cumulative Paid –up Capital (In `̀̀̀)

Securities Premium (In `̀̀̀)

November 10, 2010

41,065 53 Cash Exercise of options granted under ESOS 2008

154, 779, 730 1,765,795

Total 119,987

b. Ramco Canada was incorporated on September 30, 2010, as a wholly owned subsidiary of Ramco

USA a JV of Ramco Systems Limited, India. 3. The Company has filed its audited financial results for the year ended March 31, 2010 with the Stock

Exchanges in accordance with the requirements under the Listing Agreement. 4. The financial results of the Company for the quarter ended September 30, 2010, duly approved by the

Board of Directors in its meeting held on October 25, 2010, have been filed with the Stock Exchanges and are also posted in the website of the Company. Investors desirous of viewing the same can access the Company’s website, www.ramco.com or on the websites of BSE (www.bseindia.com) or NSE (www.nseindia.com).

145

LIMITED REVIEW REPORT ON THE UN-AUDITED (PROVISIONA L) FINANCIAL RESULTS OF THE COMPANY FOR THE QUARTER ENDED 30 th SEPTEMBER, 2010.

We have reviewed the accompanying statement of unaudited financial results of M/s. Ramco Systems Limited for the period ended 30th September, 2010, except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter and Promoter Group Shareholding’ which have been traced from disclosures made by the management and have not been audited by us. This 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 these financial statements based on our review. 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 review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying statement of unaudited financial results prepared in accordance with applicable accounting standards and other recognized accounting practices and policies has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement. For CNGSN & ASSOCIATES Chartered Accountants Registration No.004915S C N GANGADARAN Partner Membership No: 011205 Place: Chennai Date: 25th October, 2010

146

Ramco Systems Limited Registered Office : 47, PSK Nagar, Rajapalayam – 626 108. Corporate Office : No. 64, Sardar Patel Road, Taramani, Chennai-600 113. Unaudited Standalone Financial Results for the Quarter Ended September 30, 2010 Sl. No.

Particulars Unaudited for the Quarter Ended

Unaudited for the Half Year Ended

Previous Accounting Year Ended

(Audited) 30.09.2010 30.09.2009 30.09.2010 30.09.2009 31.03.2010 Rs. Mln. Rs. Mln. Rs. Mln. Rs. Mln. Rs. Mln. 1 Net Sales / Income from Operations 351.04 252.00 668.82 496.81 1034.62 2 Other Operating Income 12.81 13.40 24.81 25.19 50.89 3 Total Income 363.85 265.40 693.63 522.00 1085.51 4 Expenditure: a) Cost of Resale Materials 15.03 11.79 48.49 32.01 40.35 b) Employees Cost 165.85 100.31 274.94 205.71 376.44 c) Depreciation – Technology Platform &

Product Software 44.41 37.17 88.34 76.83 153.25 d) Depreciation – Others 15.49 16.10 30.91 30.21 62.35 e) Selling & Marketing Expenses 29.91 15.80 42.14 26.05 76.68 f) Administration & Other Expenses 80.42 63.09 158.44 108.70 258.44 Total Expenditure 351.11 244.26 643.26 479.51 967.51 5 Profit (+) / Loss (-) from Operations

before Other Income, Interest & Exceptional Items (3-4) 12.74

21.14 50.37 42.49 118.00

6 Other Income - - - - - 7 Profit (+) / Loss (-) before Interest &

Exceptional Items (5+6) 12.74

21.14 50.37 42.49 118.00 8 Interest 32.30 27.48 62.06 59.34 118.46 9 Profit (+) / Loss (-) after Interest but

before Exceptional Items (7-8) (19.56)

(6.34) (11.69) (16.85) (0.46) 10 Exceptional Items – Expenditure /

(Income) -

3.96 - 4.55 10.52 11 Profit (+) / Loss (-) from Ordinary

Activities Before Tax (9-10) (19.56)

(10.30) (11.69) (21.40) (10.98) 12 Tax Expense: Current Taxation - - - - - Deferred Taxation - - - - - Fringe Benefit Tax - - - - -

13 Net Profit (+) / Loss (-) from Ordinary Activities After Tax (11-12) (19.56)

(10.30) (11.69) (21.40) (10.98)

14 Extraordinary Items (net of tax expenses) - - - - - 15 Net Profit (+) / Loss (-) for the period

(13-14) (19.56)

(10.30) (11.69) (21.40) (10.98) 16 Paid – up Equity Share Capital – Face

value of Rs.10/- each

154.41

153.93

154.41

153.93

153.93 17 Reserves excluding revaluation reserves 1482.73 18 Earnings per Share - Basic & Diluted

before & after extraordinary items – (in Rs. )

(1.27) (0.67) (0.76) (1.39) (0.72)

(Not Annualized)

(Not Annualized)

(Not Annualized)

(Not Annualized)

(Annualised)

147

19 Public Shareholding (a) Number of Shares 5,963,167 5,898,737 5,963,167 5,898,737 5,898,737 (b) Percentage of Shareholding 38.67% 38.41% 38.67% 38.41% 38.41%

20 Promoters and promoter group Shareholding

(a) Pledged/Encumbered: - Number of Shares - - - - - - Percentage of shares (as a % of the total

shareholding of promoter and promoter group)

-

-

-

-

-

- Percentage of shares (as a % of the total share capital of the company)

-

- - - -

(b) Non-encumbered: - Number of Shares 9,459,249 9,459,249 9,459,249 9,459,249 9,459,249 - Percentage of shares (as a % of the total

shareholding of promoter and promoter group) 100.00% 100.00% 100.00% 100.00% 100.00%

- Percentage of shares (as a % of the total share capital of the company) 61.33% 61.59% 61.33% 61.59% 61.59%

148

Notes: (The amounts in brackets in the notes denote the figures for the previous period)

1 The financial results of the Company for the quarter ended September 30, 2010, duly approved by the Board of Directors in its meeting held on October 25, 2010, have been filed with the Stock Exchanges and are also posted in the website of the the Company. Investors desirous of viewing the same can access the Company’s website, www.ramco.com or on the websites of BSE (www.bseindia.com) or NSE (www.nseindia.com).

2 Other Operating income for the quarter includes rental income of Rs.11.18 Mln. (Rs.11.37 Mln.).

3 Administration and other expenses for the current quarter includes rent expense of Rs.32.97 Mln.

(Rs.29.80 Mln.).

4 During the period from April 01, 2010 to the date of reporting, the Company has allotted 78,922 equity shares of Rs.10/- each, under Employees Stock Option Scheme, 2008, on various dates. Accordingly, as at the date, the paid up capital of the Company has increased from Rs. 153.93 Mln. To Rs. 154.72 Mln.

5 The company currently operates only in one segment, viz., Software Solutions & Services and hence the segment reporting as required by AS-17, issued by the Institute of Chartered Accountants of India does not apply.

149

6 Status of Investor grievance:

Description

Pending as on 01.07.2010

Received during the

current quarter

Redressed during the

current quarter

Pending as on

30.09.2010

Number of Complaints Nil 2 2 Nil

7 Statement of Assets and Liabilities (Standalone)

Particulars As at 30.09.2010 (Unaudited)

Rs. Mln.

As at 30.09.2009 (Unaudited)

Rs. Mln. Shareholders’ Funds

a) Capital 154.58 153.93 b) Reserves & Surplus 1945.52 1942.75

Loan Funds 1512.56 1135.58 Total 3612.66 3232.26 Fixed Assets 1476.50 1398.02 Investments 1221.95 1221.95 Current Assets, Loans and Advances

a) Inventories 0.75 0.45 b) Sundry Debtors 525.02 508.67 c) Cash and Bank Balances 13.72 12.17 d) Other Current Assets 37.49 60.15 e) Loans and Advances 422.28 185.66 Less: Current Liabilities and Provisions a) Current Liabilities (497.17) (547.67) b) Provisions (59.58) (77.57)

Miscellaneous Expenditure (Not written off or adjusted) - - Profit and Loss Account 471.70 470.43 Total 3612.66 3232.26 8 Figures for the previous period have been regrouped / restated wherever necessary to make them

comparable with the figures for the current period. Place :Chennai Date : October 25, 2010

150

Ramco Systems Limited Registered Office : 47, PSK Nagar, Rajapalayam - 626 108. Corporate Office : No. 64, Sardar Patel Road, Taramani, Chennai-600 113. Unaudited Global Consolidated Financial Results (under AS-21) for the Quarter Ended September 30, 2010 Sl. No

Particulars

Unaudited for the Quarter Ended Unaudited for the Half Year Ended Previous Accounting Year Ended (Audited)

30.09.2010 30.09.2009 30.09.2010 30.09.2009 31.03.2010 USD

mln. Rs.

Mln. USD mln.

Rs. Mln.

USD mln.

Rs. Mln.

USD mln.

Rs. Mln.

USD mln.

Rs. Mln.

1 Net Sales / Income from Operations

11.04

508.50

8.98

428.64

20.90

951.53

17.83

862.42

35.50

1680.31

2 Other Operating Income 0.40 18.34 0.44 20.81 0.75

33.95 0.80

38.54 1.59 75.32

3 Total Income 11.44 526.84 9.42 449.45 21.65 985.48 18.63 900.96 37.09 1755.63

4 Expenditure:

a) Cost of Resale Materials 0.32 14.90 0.25 11.85 1.07 48.62 0.67 32.40 0.86 40.62

b) Employee Cost 5.54 255.31 4.40 209.73 9.90 450.69 9.00 435.12 16.74 792.34

c) Depreciation - Technology Platform & Product Software

0.96

44.41

0.78

37.17

1.94

88.34

1.59

76.83

3.24

153.25

d) Depreciation - Others 0.38 17.46 0.38 18.46 0.77 34.87 0.72 34.81 1.51 71.25

e) Selling & Marketing Expenses 0.86 39.39 0.42 19.99 1.34 60.94 0.76 36.61 2.00 95.04

f) Administration & Other Expenses

2.54

116.89

2.40

114.69

5.06

230.44

4.28

207.27

9.50

449.53

Total Expenditure 10.60 488.36 8.63 411.89 20.08 913.90 17.02 823.04 33.85 1602.03

5 Profit (+) / Loss (-)

0.84

38.48

0.79

37.56

1.57

71.58

1.61

77.92

3.24

153.60

151

from Operations before Other Income, Interest & Exceptional Items (3-4)

6 Other Income - - - - - - - - - -

7 Profit (+) / Loss (-) before Interest & Exceptional Items (5+6)

0.84

38.48

0.79

37.56

1.57

71.58

1.61

77.92

3.24

153.60

8 Interest 0.71 32.33 0.58 27.64 1.36 62.13 1.23 59.57 2.52 119.35 9 Profit (+) /

Loss (-) after Interest but before Exceptional Items (7-8)

0.13

6.15

0.21

9.92

0.21

9.45

0.38

18.35

0.72

34.25

10 Exceptional Items - Expenditure / (Income)

-

-

0.08

3.97

-

-

0.09

4.55

0.22

10.52

11 Profit (+) / Loss (-) from Ordinary Activities Before Tax (9-10)

0.13

6.15

0.13

5.95

0.21

9.45

0.29

13.80

0.50

23.73

12 Tax Expense:

Current Taxation - 0.01 - (0.07) 0.02 0.59 - (0.06) 0.04 1.70

Deferred Taxation - - - - - - - - - 0.08

Fringe Benefit Tax - - - - - - - - -

-

13 Net Profit (+) / Loss (-) from Ordinary Activities After Tax (11-12)

0.13

6.14

0.13

6.02

0.19

8.86

0.29

13.86

0.46

21.95

152

14 Extraordinary Items (net of tax expenses)

-

-

-

-

-

-

-

-

-

-

15 Net Profit (+) / Loss (-) for the period (13-14)

0.13

6.14

0.13

6.02

0.19

8.86

0.29

13.86

0.46

21.95

16 Minority Interest (0.01) (0.70) (0.01) (0.70) (0.02) (0.93) (0.03) (1.27) (0.02) (1.27)

17 Equity in Earnings / (Losses) of Affiliates - net of Foreign Exchange Translation Adjustment

(0.01)

-

(0.01)

-

-

-

-

-

(0.04)

(1.90)

18 Net Profit (+) / Loss (-) for the period (15+16+17)

0.11

5.44

0.11

5.32

0.17

7.93

0.26

12.59

0.40

18.78

153

Sl. No

Particulars Unaudited for the Quarter Ended Unaudited for the Half Year Ended Previous Accounting Year Ended (Audited)

30.09.2010 30.09.2009 30.09.2010 30.09.2009 31.03.2010 USD

mln. Rs. Mln. USD

mln. Rs. Mln. USD

mln. Rs. Mln. USD

mln. Rs. Mln. USD

mln. Rs.

Mln. 19

Paid - up Equity Share Capital - Face value of Rs.10/- each

3.54

154.41

3.53

153.93

3.53

154.41

3.53

153.93

3.53

153.93

20

Reserves excluding revaluation reserves

35.12

1494.0

3 21

Earnings per Share - before & after extraordinary items (In USD and in Rs.)

0.01

0.35

(0.18)

(7.25)

0.01

0.52

0.02

0.82

0.03

1.22

Basic EPS 0.01 0.35 0.01 0.35 0.01 0.51 0.02 0.82 0.03 1.22 Diluted EPS 0.01 0.34 0.01 0.34 0.01 0.49 0.02 0.81 0.03 1.19 (Not

annualised)

(Not annualise

d)

(Not annualise

d)

(Not annualise

d)

(Not annualise

d)

(Not annualise

d)

(Not annualise

d)

(Not annualise

d) (Annualised)

(Annualised)

22

Public Shareholding

(a) Number of Shares

5,963,167

5,898,737

5,963,167

5,898,737

5,898,737

(b) Percentage of Shareholding 38.67% 38.41% 38.67% 38.41%

38.41%

23

Promoters and promoter group Shareholding

(a) Pledged/Encumbered: - Number of Shares

- - - -

- - Percentage of shares (as a % of the total

shareholding of promoter and promoter group) - - - -

- - Percentage of shares (as a % of the total share

capital of the company)

-

-

-

-

-

154

(b) Non-encumbered: - Number of Shares

9,459,24

9 9,459,24

9 9,459,24

9 9,459,24

9 9,459,

249 - Percentage of shares (as a% of the total

shareholding of promoter and promoter group) 100.00% 100.00% 100.00% 100.00% 100.00

% - Percentage of shares (as a % of the total share

capital of the company) 61.33% 61.59% 61.33% 61.59% 61.59

%

155

Notes: 1

The financial results of the Company for the quarter ended September 30, 2010, duly approved by the Board of Directors in its meeting held on October 25, 2010, have been filed with the Stock Exchanges and are also posted in the website of the Company. Investors desirous of viewing the same can access the Company's website, www.ramco.com or on the websites of BSE (www.bseindia.com) or NSE (www.nseindia.com).

2

During the period from April 01, 2010 to the date of reporting, the Company has allotted 78,922 equity shares of Rs.10/- each, under Employees Stock Option Scheme, 2008, on various dates. Accordingly, as at the date, the paid up capital of the Company has increased from Rs. 153.93 Mln. USD 3.53 Mln. to Rs. 154.72 Mln. USD 3.54 Mln.

3 The company currently operates only in one segment, viz., Software Solutions & Services and hence the segment

reporting as required by AS-17, issued by the Institute of Chartered Accountants of India does not apply.

156

4 Status of Investor grievance: Description Pending as

on 01.07.2010

Received during the current

quarter

Redressed during the current

quarter

Pending as on 30.09.2010

Number of Complaints Nil 2 2 Nil 5. Statement of Assets and Liabilities (Consolidated) Particulars As at 30.09.2010

(Unaudited) As at 30.09.2009

(Unaudited) USD Mln. Rs. Mln. USD Mln. Rs. Mln. Shareholders' Funds

a) Capital 3.54 154.58 3.53 153.93 b) Reserves & Surplus 44.19 1977.16 41.97 1991.06

Minority Interest 0.07 4.07 0.07 3.15 Loan Funds 34.04 1512.56 23.88 1135.59 Total 81.84 3648.37 69.45 3283.73 Fixed Assets 55.88 2483.38 50.69 2410.62 Investments 0.04 1.65 0.07 3.55 Deferred Tax Asset 0.04 1.65 0.03 1.69 Current Assets, Loans and Advances

a) Inventories 0.02 0.75 0.01 0.45 b) Sundry Debtors 11.62 516.51 9.60 456.37 c) Cash and Bank Balances 0.86 38.18 0.88 41.89 d) Other Current Assets 3.32 147.62 2.60 123.79 e) Loans and Advances 13.29 590.54 5.98 285.28

Less: Current Liabilities and Provisions a) Current Liabilities (10.81) (480.37) (8.34) (397.70) b) Provisions (2.08) (92.33) (2.04) (97.12)

Miscellaneous Expenditure (Not written off or adjusted) - - - - Profit and Loss Account 9.66 440.79 9.97 454.91 Total 81.84 3648.37 69.45 3283.73

Statement of Standalone Financials Unaudited for the quarter ended

Unaudited for the half year ended

Audited for the year

ended Particulars 30.09.2010 30.09.2009 30.09.2010 30.09.2009 31.03.2010 Rs. Mln. Rs. Mln. Rs. Mln. Rs. Mln. Rs. Mln. Turnover (Operating income including other income) 363.85 265.40 693.63 522.00 1085.51 Profit / (Loss) before tax (19.56) (10.30) (11.69) (21.40) (10.98) Profit / (Loss) after tax (19.56) (10.30) (11.69) (21.40) (10.98) Figures for the previous period have been regrouped / restated wherever necessary to make them comparable with the figures for the current period. Place: Chennai Date: October 25, 2010

157

OTHER REGULATORY AND STATUTORY DISCLOSURES Authority for the Issue Pursuant to the resolution passed by our Board of Directors at its meeting held on August 2, 2010, it has been decided to make the offer to the Eligible Equity Shareholders, with a right to renounce. Prohibition by SEBI Neither us, nor our Promoters, Promoter group, Directors or person(s) in control of the Promoter, have been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. Further neither us, nor our Directors, Promoters, Group Companies, the relatives (as per Companies Act) of Promoters have been declared as willful defaulters by RBI or any other governmental authority and there have been no violations of securities laws committed by them in the past or no such proceedings are pending against them for violation of securities laws. Securities Related Business None of our Directors/ Group/ Associate company/ entity, and/ or any company/ entity with which any of the above is associated as promoter/ director/ partner/ proprietor that is/ was associated with securities related business and registered with SEBI. Further, the SEBI has not initiated any action against the aforesaid entities. There are no other entities related to us or the Directors with which any of the above are associated as promoter/ director/ partner/ proprietor that is/ was associated with securities related business and registered with SEBI. Eligibility for the Issue We have an existing company registered under the Companies Act and its Equity Shares are listed on the BSE, NSE and MSE. We are eligible to make this rights issue in terms of Chapter IV of the ICDR Regulations. Compliance with Part E of Schedule VIII of the ICDR Regulations We are in compliance with the provisions specified in Clause 1 of Part E of Schedule VIII of the SEBI Regulations. (a) We have been filing periodic reports, statements and information in compliance with the listing agreement for the last three years; (b) The reports, statements and information referred to in sub-clause (a) above are available on the website of any recognised stock exchange with nationwide trading terminals or on a common e-filing platform specified by the Board; (c) We have an investor grievance-handling mechanism which includes meeting of the Shareholders Committee at frequent intervals, appropriate delegation of power by the board of directors of the issuer as regards share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances. Disclaimer Clause of SEBI AS REQUIRED, A COPY OF THIS DRAFT LETTER OF OFFER H AS BEEN SUBMITTED TO

158

SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SU BMISSION OF THIS DRAFT LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE D EEMED / CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPOSIBILITY EITHER FOR THE FINANCIAL SOUNDNES S OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THIS DRAFT LETTER OF OFFER. THE LEAD MANAGER, CENTRUM CAPITAL LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LE TTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE S EBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2 009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVES TORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROP OSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT T HE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BE HALF AND TOWARDS THIS PURPOSE THE LEAD MANAGER, CENTRUM CAPITAL LIMI TED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED NOVEMBER 18, 2010 WHICH READS AS FOLLOWS: 1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING

TO LITIGATION LIKE COMMERCIAL DISPUTES ETC. AND O THER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE DRA FT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIO NS WITH THE ISSUER, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNI NG THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE C ONTENTS OF THE DOCUMENTS AND OTHER PAPERS FURNISHED BY THE ISSUER, 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 RELATING TO THE I SSUE AS ALSO THE REGULATIONS GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY C OMPLIED 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 T HE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SECURI TIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLI CABLE LEGAL REQUIREMENTS.

3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE I NTERMEDIARIES

NAMED IN THE DRAFT LETTER OF OFFER ARE REGISTER ED WITH THE BOARD AND THAT TILL DATE SUCH REGISTRATION IS VALID .

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE

159

UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMEN TS. – NOT APPLICABLE

5. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTER S HAS BEEN OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECU RITIES 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 D ATE OF FILING THE DRAFT LETTER OF OFFER WITH THE BOARD TILL THE D ATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE LET TER OF OFFER. – NOT APPLICABLE

6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQ UIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECUR ITIES 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 LET TER OF OFFER. – NOT APPLICABLE

7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITA L AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSUR E 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 ES CROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEA SED TO THE ISSUER ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. – NOT APPLICABLE

8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSU ER FOR WHICH THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FAL L WITHIN THE ‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE M EMORANDUM 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 MA DE TO ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISS UE 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 MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE LETTER OF OFFER. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CO NTAINS THIS CONDITION. – IN ACCORDANCE WITH CLAUSE 56 THE ISSUE R SHALL UTILISE FUNDS COLLECTED IN RIGHTS ISSUE AFTER FINALISATION OF BASIS OF ALLOTMENT IN ACCORDANCE WITH ICDR REGULATION AND AP PLICABLE LAWS;

10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE D RAFT LETTER OF

160

OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION T O GET THE SHARES IN DEMAT OR PHYSICAL MODE;

11. WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MAND ATED IN THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CA PITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEE N MADE IN ADDITION TO DISCLOSURES WHICH, IN THE VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.

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 EQ UITY SHARES OF THE ISSUER; AND

(b) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BO ARD FROM TIME TO TIME.

13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE RE QUIREMENTS) 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 CURRE NT BUSINESS BACKGROUND OR THE ISSUER, SITUATION AT WHICH THE PR OPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE, ETC.

15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE C OMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE SECURITIES AN D EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQ UIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE R EGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NU MBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND THE COMMENTS, IF ANY.

THE FILING OF THIS DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECT ION 63 OR SECTION 68 OF THE COMPANIES ACT OR FROM THE REQUIRE MENT 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 LE AD MANAGER ANY IRREGULARITIES OR LAPSES IN THIS DRAFT LETTER OF OF FER.

Caution Disclaimer from the Company and the Lead Manager We and the Lead Manager accept no responsibility for statements made otherwise than in this Draft Letter of Offer or in any advertisement or other material issued by us or by any other persons at our instance and anyone placing reliance on any other source of information would be doing so at his own risk. The Lead Manager and us shall make all information available to the Eligible Equity Shareholders and no selective or additional information would be available for a section of the Eligible Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of the Draft

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Letter of Offer with SEBI. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this document. You must not rely on any unauthorized information or representations. The Draft Letter of Offer is an offer to sell only the Equity Shares and rights to purchase the Equity Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in the Draft Letter of Offer is current only as of its date. Investors who invest in the issue will be deemed to have been represented by us and Lead Manager and the respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire our equity shares, and are relying on independent advice / evaluation as to their ability and quantum of investment in this Issue. Disclaimer with respect to jurisdiction This Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and regulations there under. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Chennai, Tamil Nadu India only. Designated Stock Exchange The Designated Stock Exchange for the purpose of the Issue will be the BSE Disclaimer Clause of the BSE As required, a copy of the Draft Letter of Offer has been submitted to the BSE. The Disclaimer Clause as intimated by BSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to the Stock Exchange filing. Disclaimer Clause of the NSE As required, a copy of the Draft Letter of Offer has been submitted to the NSE. The Disclaimer Clause as intimated by NSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to the Stock Exchange filing. Disclaimer Clause of the MSE As required, a copy of the Draft Letter of Offer has been submitted to the MSE. The Disclaimer Clause as intimated by MSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to the Stock Exchange filing. Filing The Draft Letter of Offer has been filed with SEBI, Southern Regional Office, D’Monte Building, 3rd Floor, 32 D’Monte Colony. TTK Road, Alwarpet, Chennai 600 018, India for its observations. After SEBI gives its observations, the Letter of Offer will be filed with the Designated Stock Exchange as per the provisions of the Companies Act. Selling restrictions The distribution of this Draft Letter of Offer and the Issue of Equity Shares to persons in certain jurisdictions outside India may be restricted by the legal requirements prevailing in those jurisdictions. Persons into whose possession the Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. We are making this Issue of Equity Shares to the Eligible Equity Shareholders and will dispatch the Draft Letter of Offer / Abridged Letter of Offer and CAFs to the Eligible

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Equity Shareholders who have provided an Indian address. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the Equity Shares represented thereby may not be offered or sold, directly or indirectly, and the Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Receipt of the Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, under those circumstances, the Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of the Draft Letter of Offer should not, in connection with the Issue of the Equity Shares or the Rights Entitlements, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If the Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights Entitlements referred to in the Draft Letter of Offer. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the our affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date. For further details please refer to the section entitled “Overseas Shareholders” on page viii of this Draft Letter of Offer. Impersonation As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of subsection (1) of section 68A of the Companies Act which is reproduced below: “ Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or 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” Consents Consents in writing of the Directors, the Auditors, the Lead Manager, the Legal Counsels, the Registrar to the Issue, the Monitoring Agency and the Bankers to the Issue and experts to act in their respective capacities have been obtained and such consents have not been withdrawn up to the date of the Draft Letter of Offer. [�], the Auditors of the Company, have given their written consent for the inclusion of their report in the form and content appearing in this Draft Letter of Offer and such consent and report have not been withdrawn up to the date of this Draft Letter of Offer. Expert Opinion, if any Except in the sections titled “Financial Information” and “Statement of Tax Benefits” on page 76 and 46 of this Draft Letter of Offer, respectively, no expert opinion has been obtained by us in relation to this Draft Letter of Offer. Issue related expenses The other expenses of the Issue payable by us including printing and distribution expenses, publicity, listing fees, stamp duty and other expenses are estimated at ̀ [●] millions (around [●] % of the total Issue size) and will be met out of the proceeds of the Issue. The following table provides a break up of estimated issue expenses:

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Particulars Expense* (̀ millions)

Expense* (% of the total expenses)

Expense* (% of the Issue size)

Fees of Lead Manager, Registrars to the Issue, Bankers to the Issue, Legal advisor, etc

[●] [●] [●]

Statutory Advertising and marketing

[●] [●] [●]

Printing & Distribution [●] [●] [●] Contingency, Stamp Duty, Listing Fees etc

[●] [●] [●]

Total estimated Issue expenses

[●] [●] [●]

* Amounts will be finalized at the time of filing of Letter of Offer and determination of Issue Price and other details. Previous Issues by the Company The Company has not undertaken any public or rights issue during the last five years other than the rights issue conducted in 2005. Outstanding Debentures/Bonds and Preference Shares The Company has not issued any debentures, bonds or preference shares Option to Subscribe Other than as disclosed in the chapter “Capital Structure” on page 36 the Company has not given any person any option to subscribe for the Equity Shares. Fees Payable to the Lead Manager to the Issue The fees payable to the Lead Manager to the Issue are set out in the engagement letter issued by the Company to the Lead Manager entered into by the Company with the Lead Manager, a copy of which is available for inspection at the Registered Office of the Company. Fees Payable to the Registrar to the Issue The fees payable to the Registrar to the Issue are set out in the engagement letter issued by the Company to the Registrar. Investor Grievances and Redressal System We have adequate arrangements for redressal of Investor complaints as well as a well-arranged correspondence system developed for letters of routine nature. Our share transfer and dematerialization is being handled by the Registrar and Share Transfer Agent, Cameo Corporate Services Limited. Letters are filed category wise after being attended to. The Redressal norm for response time for all correspondence including shareholders complaints is within 15 days.

The Shareholders Committee consists of 3 directors comprising of Mr. P R Ramasubrahmaneya Rajha as Chairman of the committee, Mr. N K Shrikantan Raja and Mr. P R Venketrama Raja as members of the said committee. All investor grievances received by us has been handled by the Registrar and Share Transfer agent in consultation with the Compliance Officer

The contact details of the Registrar and Share Transfer agent to the company are as follows: Cameo Corporate Services Limited Subramanian Building, No. 1, Club House Road, Chennai - 600002 Tel: +91-44-2846 0390

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Fax: +91-44-2846 0129 Email: investor@cameoindia.com Website: www.cameoindia.com Contact Person: Mr. R. D. Ramasamy SEBI Registration Number: INR000003753 Status of Complaints (a) No. of shareholders complaints outstanding as of September 30, 2010: Nil (b) Total number of complaints received during the period from June, 2007 to September, 2010: 13

(Thirteen) (c) Status of the complaints: Resolved all the complaints. (d) Time normally taken for disposal of various types of investor grievances: 7 days Investor Grievances arising out of this Issue The investor grievances arising out of the Issue will be handled by Mr. R. Ravi Kula Chandran, Compliance Officer, and Cameo Corporate Services Limited., the Registrars to the Issue. The Registrar to the Issue will have a separate team of personnel handling only the post-Issue correspondence. The agreement between us and the Registrar to the Issue will provide for retention of records with the Registrars for a period of at least one year from the last date of dispatch of letter of allotment/ share certificates / warrant/ refund order to enable the Registrars to redress grievances of Investors. All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio no., name and address, contact telephone / cell numbers, email id of the first Investors, number and type of shares applied for, application form serial number, amount paid on application and the name of the bank and the branch where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the details of the Renouncees should be furnished. The average time taken by the Registrar to the Issue for redressal of routine grievances will be 7 days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrar to the Issue to attend to them as expeditiously as possible. We undertake to resolve the Investor grievances in a time bound manner. Investors may contact the Compliance Officer / Registrar to the Issue in case of any pre-Issue/ post -Issue related problems such as non-receipt of letters of allotment/share certificates/demat credit/refund orders etc. There contact details are as follows: Mr. R. Ravi Kula Chandran Compliance Officer 64, Sardar Patel Road, Taramani, Chennai - 600113 Tel: +91-44-22354510 Fax: +91-44-22352884 Email: rightsissue2010@rsi.ramco.com Web site: www.ramco.com The contact particulars of the Registrar to the Issue are as under: Cameo Corporate Services Limited Subramanian Building, No. 1, Club House Road, Chennai - 600002

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Tel: +91 44-28460390 Fax: +91 44-28460129 Contact Person: Mr. R. D. Ramasamy Email: investor@cameoindia.com Website: www.cameoindia.com SEBI Reg. No.: INR000003753 Changes in Auditors during the last three years There have been no changes in the Auditors of the Company in the last three years. Minimum Subscription If the Company does not receive the minimum subscription of 90% of the Issue, or the subscription level falls below 90%, after the Issue Closing Date on account of cheques being returned unpaid or withdrawal of applications, the Company shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after the Company becomes liable to pay the subscription amount (i.e.,15 days after the Issue Closing Date), the Company and every Director of the Company who is an officer in default shall be jointly and severally liable to pay interest for the delayed period, as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.

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SECTION VIII – OFFERING INFORMATION

TERMS OF THE ISSUE

The Equity Shares proposed to be issued on a rights basis, are subject to the terms and conditions contained in this Draft Letter of Offer, the enclosed Composite Application Form (“CAF”), the Memorandum and Articles of Association, the provisions of the Companies Act, approvals from the RBI, guidelines or regulations issued by SEBI, approvals from the Stock Exchanges where Equity Shares are listed, FEMA, 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, terms and conditions as stipulated in the allotment advice or letter of allotment or security certificate, the provisions of the Depositories Act, to the extent applicable and any other legislative enactments and rules as may be applicable and introduced from time to time. Authority for the Issue This Issue is being made pursuant to a resolution passed by our Board of Directors under section 81(1) of the Companies Act at their meeting held on August 2, 2010. Ranking of Equity Shares The Equity Shares being issued shall be subject to the provisions of our Memorandum of Association and Articles of Association. The Equity Shares allotted pursuant to this Issue shall rank pari passu with the existing Equity Shares in all respects including dividend. Basis for the Issue The Equity Shares are being offered for subscription for cash to the Eligible 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 electronic form and on the Register of Members of our Company in respect of the Equity Shares held in the physical form at the close of business hours on the Record Date i.e. [●], fixed in consultation with the Stock Exchanges. The Equity Shares are being offered for subscription in the ratio of [●] Rights Share for every One (1) Equity share held by the Equity Shareholders. Offer to Non-Resident Equity Shareholders/Applicants Applications received from NRIs for allotment of Equity Shares shall be, inter alia, subject to the conditions imposed from time to time by the RBI under the Foreign Exchange Management Act, 1999 (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. The Equity Shares purchased by NRIs shall be subject to the same conditions including restrictions in regard to the repatriation as are applicable to the original shares against which Equity Shares are issued. By virtue of Circular No. 14 dated September 16, 2003 issued by the RBI, overseas corporate bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs) Regulations, 2003. The circular stipulates that an OCB shall not be eligible to purchase equity or preference shares or convertible debentures offered on right basis by an Indian company, and no Indian company shall offer equity or preference shares or convertible debentures on right basis to an OCB. Accordingly, OCBs shall not be eligible to subscribe to the Equity Shares. The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated non-resident

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entities in terms of Regulation 5(1) of RBI Notification No.20/2000-RB dated May 3, 2000 under FDI Scheme with the prior approval of Government if the investment is through Government Route and with the prior approval of RBI if the investment is through Automatic Route on case by case basis. Thus, OCBs desiring to participate in this Issue must obtain prior approval from the RBI. On providing such approval to the Bank at its registered office, the OCB shall receive this Letter of Offer and the CAF. Applications received from the NRIs for the allotment of Equity Shares shall, among other things, be subject to 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. Rights Entitlement As your name appears as a beneficial owner in respect of the Equity Shares held in electronic form or appears in the Register of Members as an Equity Shareholder on the Record Date, you are entitled to the number of Equity Shares shown in Block I of Part A of the enclosed CAF. The Eligible Equity Shareholders are entitled to [●] Equity Shares for every One Equity Shares held on the Record Date. The distribution of the Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. The Company is making the issue of Equity Shares on a rights basis to the Equity Shareholders and the Letter of Offer, Abridged Letter of Offer and the CAFs will be dispatched only to those Equity Shareholders who have a registered address in India. Any person who acquires Rights Entitlements or Equity Shares will be deemed to have declared, warranted and agreed, by accepting the delivery of the Letter of Offer, that it is not and that at the time of subscribing for the Equity Shares or the Rights Entitlements, it will not be, in the United States. Principal Terms of the Equity Shares Face value Each Equity Share shall have a face value of ` 10. Issue Price Each Equity Share is being offered at a price of ` [●] /- (including a premium of ̀ [●]/- per Equity Share). The Issue Price has been arrived at after consultation between the Company and the Lead Manager. Payment terms All Investors shall have to make the full payment of the Issue Price of ` [●] per Equity Share at the time of making an Application.

For Equity Shareholders wishing to apply through the newly introduced ASBA process for issues, kindly refer section titled “Procedure for Applicat ion through the Applications Supported by Blocked Amounts (“ASBA”) Process on page 170 of this Draft Letter of Offer.

Entitlement Ratio The Equity Shares are being offered on a rights basis to the Eligible Equity Shareholders in the ratio of [●] Equity Shares for every One Equity Shares held on the Record Date.

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Fractional Entitlements For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the Equity Shareholders is less than [●] Equity Shares or not in the multiple of [●], the fractional entitlement of such Equity Shareholders shall be ignored. Equity Shareholders whose fractional Rights Entitlements are being ignored would be given preferential consideration for the Allotment of one additional Equity Share each if they apply for additional Equity Shares over and above their rights entitlement, if any. For example, if an Equity Shareholder holds between [●] and [●] Equity Shares, he will be entitled to [●] Equity Shares on a rights basis. He will also be given a preferential consideration for the Allotment of one additional Equity Share if he has applied for the same. Those Equity Shareholders holding less than [●] Equity Shares will therefore be entitled to zero Equity Shares under this Issue and shall be despatched a CAF with zero entitlement. Such Equity Shareholders are entitled to apply for additional Equity Shares. However, they cannot renounce the same in favour of third parties. CAFs with zero entitlement will be non-negotiable/non-renounceable. For example, if an Equity Shareholder holds between one and [●] Equity Shares, he will be entitled to zero Equity Shares on a rights basis. He will be given a preference for Allotment of [●] additional Equity Share if he has applied for the same. Rights of the Equity Shareholders • Right to receive dividend, if declared; • Right to attend general meetings and exercise voting powers, unless prohibited by law; • Right to vote on a poll in person or by proxy; • Right to receive offers for rights shares and be allotted bonus shares, if announced; • Right to receive surplus on liquidation; • Right to free transferability of shares; and • Such other rights as may be available to a shareholder of a listed public company under the

Companies Act and Memorandum and Articles of Association. Arrangements for Disposal of Odd Lots Our shares will be traded in dematerialized form only and therefore the marketable lot is one share. General terms of the Issue Market Lot Our Equity Shares are tradable only in dematerialized form. The market lot for Equity Shares in dematerialized mode is 1 Equity Share. In case of holding of Equity Shares in physical form, we would issue to the allottees 1 (one) certificate for the Equity Shares allotted to each folio (“Consolidated Certificate”). In respect of consolidated certificates, we will upon receipt of a request from the respective holder of Equity Shares, split such consolidated certificates into smaller denominations within three weeks time from the receipt of the request in respect thereof. Joint Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint tenants with the benefit of survivorship subject to the provisions contained in the Articles of Association. Nomination:

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In accordance with Section 109A of the Companies Act, only individuals applying as sole applicants/ joint applicants can nominate, non-individuals including society, trust, body corporate, partnership firm, holder of power of attorney cannot nominate. In accordance with Section 109A of the Companies Act, the sole or first holder, along with other joint holders, may nominate any one person in whom, in the event of the death of sole holder or in case of joint holders, death of all the holders, as the case may be, the Equity Shares allotted, if any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale/ transfer/ alienation of equity share(s) by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the prescribed form available on request at our Registered Office or to our Registrar and Transfer Agents. The Applicant can make the nomination by filling in the relevant portion of the CAF. In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, 1956, shall upon the production of such evidence as may be required by the Board, elect either:

• to register himself or herself as the holder of the Equity Shares; or • to make such transfer of the Equity Shares, as the deceased holder could have made

Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the Equity Shares, until the requirements of the notice have been complied with. Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already registered the nomination with us, no further nomination needs 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 the respective Depository Participant (“DP”) of the Investor would prevail. Any Investor desirous of changing the existing nomination is requested to inform its respective DP. Notices All notices to the Eligible Equity Shareholders required to be given by us shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and one Tamil daily newspaper in Rajapalyam with wide circulation and / or, will be sent by ordinary post / registered post / speed post to the registered holders of the Equity Shares from time to time. Listing and trading of the Equity Shares proposed to be issued Our existing Equity Shares are currently listed on the BSE, NSE and MSE under the ISIN INE692B01014. The fully paid up Equity Shares proposed to be issued shall be listed and admitted for trading on the BSE, NSE and MSE under the existing ISIN for our fully paid up Equity Shares. The Equity Shares allotted pursuant to this Issue will be listed as soon as practicable but in no case later than 7 working days from the date of finalization of basis of allotment. We have made an application for “in-principle” approval for listing of the Equity Shares in accordance with clause 24(a) of the Listing Agreement to the BSE, NSE and MSE through letters dated November 18, 2010 and has received such approval from the BSE through letter no. [●], dated [●], NSE through letter no. [●], dated [●] and MSE through letter no. [●], dated [●].

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The distribution of the Draft Letter of Offer and the Issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. We are making this Issue of Equity Shares on a rights basis to the Eligible Equity Shareholders and will dispatch the Letter of Offer / Abridged Letter of Offer and the CAF to the Eligible Equity Shareholders who have provided an Indian address. Minimum Subscription If we do not receive the minimum subscription of 90% of the Issue, we shall forthwith refund the entire subscription amount received within 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day we become liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier) we and every one of our Directors who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under sub-section (2) and (2A) of Section 73 of the Companies Act. Additional Subscription by our Promoter and Promoter Group Our Promoters and Promoter Group entities have confirmed that they would subscribe to their respective entitlements in this Issue in full. Further, our Promoters have confirmed that they will also subscribe to such number of additional Equity Shares as may be required, beyond their entitlement such that this Issue is fully subscribed. Subscription by our Promoters to the extent of their entitlement in this Issue and acquisition of additional Equity Shares by, if any, by the Promoters, will not result in change of control of the management and shall be exempted in terms of proviso to Regulation 3(1) (b) (ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section “Objects of the Issue” on page 42 of this Draft Letter of Offer, we have no other intention/purpose for this Issue, including any intention to delist ourselves, even if, as a result of any allotments in this Issue to our Promoters, the shareholding of our Promoters and Promoter Group exceeds their current shareholding. Our Promoters intend to subscribe for any such unsubscribed portion as per the relevant provisions of the applicable law. Further, the subscription of the unsubscribed portion over and beyond their Rights Entitlement would be restricted to ensure that the public shareholding in our Company after this Issue, does not fall below the permissible minimum level as specified in the listing conditions or listing agreement. Procedure for Application For Equity Shareholders wishing to apply through the newly introduced ASBA process for rights issues, kindly refer section titled “Procedure for Application through the Applications Supported By Blocked Amount (“ASBA”) Process on page 176 of this Draft Letter of Offer. The CAF for the Equity Shares would be printed in [•] ink for all the Eligible Equity Shareholders. In case the original CAF is not received by the Investor or is misplaced by the Investor, the Investor may request the Registrar to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. In case the signature of the Equity Shareholder(s) does not match with the specimen registered with the Company, the application is liable to be rejected. 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 enclosed CAF and submit the same along with the application money payable to the Bankers to the Issue or any of the collection branches as mentioned on the reverse of the CAF 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 the Company in this regard. Investors at centers not covered by the branches of collecting banks can send their CAF together with the cheque drawn at par on a local bank at [●]/ demand draft payable at [●] to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the

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Issue are liable to be rejected. For further details on the mode of payment, see “Mode of Payment for Resident Equity Shareholders/Investors” and “Mode of Payment for Non-Resident Equity Shareholders/Investors” on pages 188 and 189 of this Draft Letter of Offer, respectively. Options available to the Eligible Equity Shareholders The CAF will clearly indicate the number of Equity Shares that the Eligible Equity Shareholder is entitled to. If the Eligible Equity Shareholder applies for an investment in Equity Shares, then he can: • Apply for his Rights Entitlement of Equity Shares in part; • Apply for his Rights Entitlement of Equity Shares in part and renounce the other part of the

Equity Shares; • Apply for his Rights Entitlement of Equity Shares in full; • Apply for his Rights Entitlement in full and apply for additional Equity Shares; • Renounce his Rights Entitlement in full. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to, provided that you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of 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, if necessary, with the Designated Stock Exchange and in the manner prescribed in the paragraph titled “Basis of Allotment” on page 175 of this Draft 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. The Renouncee applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange. Renunciation This Issue includes a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favour of any other person or persons. Your attention is drawn to the fact that the Company shall not allot and / or register the Equity Shares in favour of more than 3 persons (including joint holders), partnership firm(s) or their nominee(s), minors, HUF, any trust or society (unless the same is registered under the Societies Registration Act, 1860 or the Indian Trust Act or any other applicable law relating to societies or trusts and is authorized under its constitution or bye-laws to hold Equity Shares). Any renunciation from Resident Indian Shareholder(s) to Non-resident Indian(s) or from Non-resident Indian Shareholder(s) to Resident Indian(s) or from Non-resident Indian shareholder(s) to other Nonresident Indian(s) is subject to the Renouncer(s) / Renouncee(s) obtaining the necessary approvals including the permission of the RBI under the FEMA and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid approvals are liable to be rejected. By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs) Regulations, 2003. Accordingly, the Eligible Equity Shareholders of the Company who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of renouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). Part ‘A’ of the CAF must not be used by any person(s) other than those in whose favour this offer has been

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made. If used, this will render the application invalid. Submission of the enclosed CAF to the Bankers to the Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (Part ‘B’ of the CAF) duly filled in shall be conclusive evidence for the Company of the person(s) applying for Equity Shares of the CAF to receive allotment of such Equity Shares. The Renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Part ‘A’ of the CAF must not be used by the Renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any Equity Shares in favour of any other person. The right of renunciation is subject to the express condition that the Board shall be entitled in its absolute discretion to reject the request for Allotment to Renouncee(s) without assigning any reason thereof. Procedure of renunciation To renounce all the Equity Shares offered to an Eligible Equity Shareholder in favour of one Renouncee If you wish to renounce the offer indicated in Part ‘A’, in whole, please complete Part ‘B’ of the CAF. In case of joint holding, all joint holders must sign Part ‘B’ of the CAF. The person in whose favour renunciation has been made should complete and sign Part ‘C’ of the CAF. In case of joint renouncees, all joint renouncees must sign this part of the CAF. To renounce in part/or renounce the whole to more than one person(s) If you wish to either accept this offer in part and renounce the balance or renounce the entire offer under this Issue in favour of two or more Renouncees, the CAF must be first split into the requisite number of forms. 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 the last date of receiving requests for split forms, [●] . On receipt of the required number of split forms from the Registrar, the procedure as mentioned in the paragraph above shall have to be followed. In case the signature of the Eligible Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the specimen registered with the Company, the application is liable to be rejected. Renouncee(s) The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part ‘C’ of the CAF and submit the entire CAF to the Bankers to the Issue on or before the Issue Closing Date along with the application money in full. The Renouncee cannot further renounce. Change and/ or introduction of additional holders If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is / are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation 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. However, this right of renunciation is subject to the express condition that the Board shall be entitled in its absolute discretion to reject the request for allotment from the Renouncee(s) without assigning any reason thereof. Application by Mutual Funds In case of a mutual fund, a separate application can be made in respect of each scheme of the mutual fund registered with SEBI and such application in respect of more than one scheme of the mutual fund will not be treated as multiple applications provided that the applications clearly indicate the scheme concerned for

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which the application has been made. Applications made by AMCs or custodians of a mutual fund shall clearly indicate the name of the concerned scheme for which the application is being made. Instructions for options The summary of options available to the Equity Shareholder is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the enclosed CAF: Sr. No. Options Available Action Required

1. Accept the whole or part of your Rights Entitlement without renouncing the balance.

Fill in and sign Part A (All joint holders must sign).

2. Accept your Rights Entitlement in full and apply for additional Equity Shares.

Fill in and sign Part A including Block III relating to the acceptance of Rights Entitlement and Block IV relating to additional Equity Shares (All joint holders must sign).

3. Renounce your Rights Entitlement in full to one person (Joint Renouncees are considered as one).

Fill in and sign Part B (all joint holders must sign) indicating the number of Equity Shares renounced and hand it over to the Renouncee. The Renouncee must fill in and sign Part C (All joint Renouncees must sign).

4. Accept a part of your Rights Entitlement and renounce the balance to one or more Renouncee(s). OR Renounce your Rights Entitlement to all the Equity Shares offered to you to more than one Renouncee.

Fill in and sign Part D (all joint holders must sign) requesting for Split Application Forms. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for Split Application Forms. Splitting will be permitted only once. On receipt of the Split Application Form take action as indicated below. For the Equity Shares you wish to accept, if any, fill in and sign Part A. For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand it over to the Renouncee. Each of the Renouncees should fill in and sign Part C for the Equity Shares accepted by them.

5. Introduce a joint holder or change the sequence of joint holders

This will be treated as a renunciation. Fill in and sign Part B and the Renouncee must fill in and sign Part C.

Investors must provide information in the CAF as to their savings bank / current account number and the name of the bank with whom such account is held, to enable the Registrar to print the said details in the refund orders after the names of the payee(s). Failure to comply with this may lead to rejection of the application. Bank account details furnished by the Depositories will be printed on the refund warrant in case of Equity Shares held in electronic form.

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Please note that: • Part ‘A’ of the CAF must not be used by any person(s) other than the Eligible Equity Shareholders to

whom the Letter of Offer has been addressed. If used, this will render the application invalid. • A request for split forms should be made for a minimum of [●] Equity Shares or, in multiples thereof

and one split form for the balance Equity Shares, if any. • A request by the Investor for the split Application form should reach the Company on or before [●] • Only the Eligible Equity Shareholders to whom the Letter of Offer has been addressed shall be entitled

to renounce and to apply for split application forms. Forms once split cannot be split further. • Split form(s) will be sent to the Investor(s) by post at the Investors’ risk. Investors must write their CAF Number at the back of the cheque/demand draft. Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the Investor, the Registrar to the Issue will issue a duplicate CAF on the request of the Investor 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 a duplicate CAF should reach the Registrar to the Issue within 7 (seven) days from the Issue Opening Date. Please note that those who are making the application in the duplicate CAF should not utilize the original CAF for any purpose including renunciation, even if it is received / found subsequently. If the Investor violates any of these requirements, he / she shall face the risk of rejection of both the CAFs. Application on Plain Paper An Eligible 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 Issue on plain paper, along with a demand draft, net of bank and postal charges payable at [●] which should be drawn in favor of ‘Ramco Systems Limited – Rights Issue” and the Eligible Equity Shareholders should send the same by registered post directly to the Registrar to the Issue. The envelope should be superscribed ‘Ramco Systems Limited– Rights Issue’ and should be postmarked in India. The application on plain paper, duly signed by the Investors 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 and should contain the following particulars: • Name of the Issuer, being Ramco Systems Limited; • Name and address of the Eligible Equity Shareholder including joint holders; • Registered Folio Number / DP and Client ID no.; • Number of Equity Shares held as on Record Date; • Number of Equity Shares entitled; • Number of Equity Shares applied for; • Number of additional Equity Shares applied for, if any; • Total number of Equity Shares applied for; • Total amount paid at the rate of ` [●] /- per Equity Share ; • Separate cheques / DDs are to be attached for amounts to be paid for Equity Shares; • Particulars of cheque / demand draft / Savings / Current Account Number and name and address of the

bank where the Eligible Equity Shareholder will be depositing the refund order; • PAN of the Investor, and for each Investor in case of joint names, irrespective of the total value of the

Equity Shares applied for pursuant to the Issue; • Signature of the Equity Shareholders to appear in the same sequence and order as they appear in the

records of the Company.

Please note that those who are making an application otherwise than on an original CAF shall not be

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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 Investor violates any of these requirements, he / she shall face the risk of rejection of both the applications. Separate cheque / DDs are to be attached for amounts to be paid for Equity Shares. The Company shall refund such application amount to the Investor without any interest thereon. Last date for Application The last date for submission of the duly filled in CAF is [●]. If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue 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 invitation to offer contained in the Letter of Offer shall be deemed to have been declined and the Board/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under the chapter “Terms of the Issue – Basis of Allotment” on page 175 of this Draft Letter of Offer. Basis of Allotment Subject to the provisions contained in the Letter of Offer, the Articles of Association of the Company and the approval of the Designated Stock Exchange, the Board will proceed to Allot the Equity Shares in the following order of priority:

(a) Full Allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full or in part and also to the Renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part.

(b) Allotment pertaining to fractional entitlements in case of any shareholding other than in multiples of [●].

(c) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as part of the Issue and have also applied for additional Equity Shares. The Allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full Allotment in (a) and (b) above. The Allotment of such Equity Shares will be at the sole discretion of the Board / Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and will not be a preferential Allotment.

(d) Allotment to Renouncees who having applied for all the Equity Shares renounced in their favour, have applied for additional Equity Shares provided there is surplus available after making full Allotment under (a), (b) and (c ) above. The Allotment of such Equity Shares will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential Allotment. After taking into account Allotment to be made under (a) to (d) above, if there is any unsubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code. The Promoters have confirmed that they intend to subscribe to the full extent of their Rights Entitlement in the Issue. The Promoters of our Company Mr. P. R. Ramasubrahmaneya Rajha and Mr. P. R. Venketrama Raja have provided an undertaking dated November 16, 2010 to our Company to apply for additional Equity Shares in the Issue, to the extent of the unsubscribed portion of the Issue. Subject to compliance with the Takeover Code, the Promoter and Promoter Group reserve their right to subscribe for Equity Shares in this Issue by subscribing for renunciation, if any, made by any other Promoters or Promoter Group or any other shareholders. As a result of this subscription and consequent Allotment, the Promoters and Promoter Group may acquire Equity Shares over and above their Rights Entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the Rights Entitlement. Such subscription and acquisition of additional Equity Shares by the Promoters and/or Promoter Group through this Issue, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the chapter “Objects of the Issue” on page 42, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of Allotments to the Promoters and Promoter Group, in this Issue, the Promoters’

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shareholding in the Company exceeds their current shareholding. The Promoters and/or Promoter Group shall subscribe to such unsubscribed portion as per the relevant provisions of the law. The Promoters shall subscribe to, and/or make arrangements for the subscription of, such unsubscribed portion as per the relevant provisions of law and in compliance with the listing agreement.

PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (“ASBA”) PROCESS SEBI, by its circular dated August 20, 2009, introduced in rights issue - application supported by blocked amount wherein the application money remains in the ASBA Account until allotment. Mode of payment through ASBA in Rights Issue became effective on August 20, 2009. Since this is a new mode of payment in Rights Issues, set forth below is the procedure for applying under the ASBA procedure, for the benefit of the shareholders. This section is only to facilitate better understanding of aspects of the procedure which is specific to ASBA Investors. ASBA Investors should nonetheless read this document in entirety. 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 Shareholder do not exceed the applicable limits under laws or regulations 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 Draft Letter of Offer. Equity 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 Equity Shareholders do not exceed the applicable limits under laws or regulations. The lists of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on http://www.sebi.gov.in/pmd/scsb.pdf. For details on designated branches of SCSBs collecting the CAF, please refer the above mentioned link. ASBA Process An ASBA Investor can submit his application through CAF/plain paper, either in physical or electronic mode, to the SCSB with whom the bank account of the ASBA Investor or bank account utilised by the ASBA Investor is maintained. The SCSB shall block an amount equal to the application amount in the ASBA Account specified in the CAF, physical or electronic, on the basis of an authorisation to this effect given by the account holder at the time of submitting the CAF. The application data shall thereafter be uploaded by the SCSB in the web enabled interface of the Stock Exchanges as prescribed under circular issued by SEBI -SEBI/CFD/DIL/DIP/38/2009/08/20 dated August 20, 2009 or in such manner as may be decided in consultation with the Stock Exchanges. The amount payable on application shall remain blocked in the ASBA Account until finalisation of the Basis of Allotment and consequent transfer of the amount against the allocated Equity Shares to the separate account opened by the Company for Rights Issue or until failure of the Issue or until rejection of the ASBA application, as the case may be. Once the basis of Allotment is finalized, the Registrar to the Issue shall send an appropriate request to the Controlling Branch for unblocking the relevant ASBA Accounts and for transferring the amount allocable to the successful ASBA Investors to the separate account opened by the Company for Rights Issue. In case of withdrawal/failure of the Issue, the blocked amount shall be unblocked on receipt of such information from the Registrar to the Issue. The Lead Manager, the Company, its directors, affiliates, associates and their respective directors and officers and the Registrar to the Issue shall not take any responsibility for acts, mistakes, errors, omissions and commissions etc. in relation to applications accepted by SCSBs, Applications uploaded by SCSBs, applications accepted but not uploaded by SCSBs or applications accepted and uploaded without blocking funds in the ASBA Accounts. It shall be presumed that for applications uploaded by SCSBs, the amount payable on application has been blocked in the relevant ASBA Account. Equity Shareholders who are eligible to apply under the ASBA Process:

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The option of applying for Equity Shares in the Issue through the ASBA Process is only available to Equity Shareholders of the Company on the Record Date and who: i. Are holding Equity Shares in dematerialized form and have applied towards their rights entitlements or additional shares in the Issue in dematerialized form; ii. Have not renounced their entitlements in full or in part; iii. Have not split the CAF; iv. Are not Renouncees; and v. Who apply through a bank account with one of the SCSBs. CAF The Registrar will dispatch the CAF to all Equity Shareholders as per their entitlement on the Record Date for the Issue. 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. Application in electronic mode will only be available with such SCSB who provides such facility. The Equity Shareholder shall submit the CAF/plain paper application 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. The Equity Shareholder shall submit the CAF to the SCSB for authorizing such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. Equity 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. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain a duplicate CAF and wanting to apply under ASBA process may make an application to subscribe for the Issue on plain paper. 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 be submitted at a designated branch of a SCSB on or before the Issue Closing Date and should contain the following particulars: • Name of the Issuer, being Ramco Systems Limited; • Name and address of the Eligible Equity Shareholder including joint holders; • Registered Folio Number / DP and Client ID no.; • Number of Equity Shares held as on Record Date; • Number of Equity Shares entitled; • Number of Equity Shares applied for; • Number of additional Equity Shares applied for, if any; • Total number of Equity Shares applied for; • Total amount paid at the rate of ` [●] /- per Equity Share ; • Separate cheques / DDs are to be attached for amounts to be paid for Equity Shares; • Particulars of cheque / demand draft / Savings / Current Account Number and name and address of the

bank where the Eligible Equity Shareholder will be depositing the refund order; • PAN of the Investor, and for each Investor in case of joint names, irrespective of the total value of the

Equity Shares applied for pursuant to the Issue; • Signature of the Equity Shareholders to appear in the same sequence and order as they appear in the

records of the Company.

Please note that those who are making an application otherwise than on an original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the Investor violates any of these requirements, he / she

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shall face the risk of rejection of both the applications. Separate cheque / DDs are to be attached for amounts to be paid for Equity Shares. The Company shall refund such application amount to the Investor without any interest thereon. 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 CAF 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. 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 Registrar. 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 ICDR Regulations 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 finalisation of the basis of allotment shall be either unblocked by the SCSBs or refunded to the investors by the Registrar on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Manager 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 CAF received from Registrar:

Sr. No. 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 details as mentioned therein. 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

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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 The Equity Shareholder is eligible to apply for additional Equity Shares over and above the number of Equity Shares that he is entitled too, provided that he have applied for all the shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional 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 “Basis of Allotment” on page 175 of this Draft Letter of Offer. If you desire to apply for additional shares, please indicate your requirement in the place provided for additional Securities in Part A of the CAF. Renunciation under the ASBA Process Renouncees cannot participate in 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 i.e. [●]. If the CAF together with the amount payable 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 of Directors, the offer contained in this Draft Letter of Offer shall be deemed to have been declined and the Board of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under “Basis of Allotment” on page 175 of this Draft Letter of Offer. 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 DEP OSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE BEING HELD ON RECORD DA TE. General instructions for Equity 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. Except for applications on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, CAFs without PAN will be considered incomplete and are liable to be rejected. With effect from 16 August 2010, the demat accounts for Investors for which PAN details have not been verified shall be “suspended credit” and no allotment and credit of Equity Shares pursuant to the Issue shall be made into the accounts of such Investors.

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.

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

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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 the Equity Shares have been offered and not renouncee(s) shall be eligible to participate under the ASBA process.

j. Only persons outside the United States and who are eligible to subscribe for Rights Entitlement and Equity Shares under applicable securities laws are eligible to participate.

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 and details of the correct bank account have been provided

in the CAF. e. Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied for} X

{Issue Price of Equity Shares, as the case may be}) 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.

f. 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.

g. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form.

h. Except for CAFs submitted on behalf of the Central or State Government and the officials appointed by the courts, each applicant should mention their PAN allotted under the I. T. Act.

i. 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.

j. Ensure that the Demographic Details are updated, true and correct, in all respects. Don’ts: a. Do not apply if you are in the United States or are not eligible to participate in the Issue under the securities

laws applicable to your jurisdiction. b. Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB. c. Do not pay the amount payable on application in cash, by money order or by postal order. d. 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.

e. Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground. f. Do not instruct your respective banks to release the funds blocked under the ASBA Process. Grounds for Technical Rejection under the ASBA Process In addition to the grounds listed under “Grounds for Technical Rejection” on page 188, applications under the ABSA Process are liable to be rejected on the following grounds: a. Application for Rights Entitlements or additional shares in physical form. b. DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available with

the Registrar.

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c. 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.

d. Renouncee applying under the ASBA Process. e. Insufficient funds are available with the SCSB for blocking the amount. f. Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen

pursuant to regulatory orders. g. Account holder not signing the CAF or declaration mentioned therein. h. CAFs that do not include the certification set out in the CAF to the effect that the subscriber does not have a

registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the securities in compliance with all applicable laws and regulations.

i. CAFs which have evidence of being executed in/dispatched from the United States. Depository account and bank details for Equity Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE EQUITY SHAREHOLDERS APP LYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIA LISED FORM. ALL EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPA NT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. E QUITY 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 DEPOSI TORY 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 N AMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Equity Shareholders applying under the ASBA Process should note that on the basis of name of these Equity Shareholders, 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 Equity Shareholders such as address, bank account details for printing on refund orders and occupation (“Demographic Details”). Hence, Equity 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 Equity Shareholders including mailing of the letters intimating unblock of bank account of the respective Equity Shareholder. The Demographic Details given by the Equity Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Equity 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. Letters intimating Allotment and unblocking or refu nd (if any) would be mailed at the address of the Equity Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. Refunds, if any, will be made directly to the bank account linked to the DP ID. Equity 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 Equity 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 Equity Shareholders applying under the ASBA Process and none of the Company, the SCSBs or the Lead Manager shall be liable to compensate the Equity Shareholder applying under the ASBA Process for any losses caused 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 matches three parameters, (a) names of the Equity Shareholders (including the order of names of joint holders), (b) the DP ID and (c) the beneficiary account number, then such applications are liable to be rejected. Issuance of Intimation Letters

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Upon approval of the basis of Allotment by the Designated Stock Exchange, the Registrar to the Issue shall send the Controlling Branches, a list of the ASBA Investors who have been allocated Equity Shares in the Issue, along with:

• The number of Equity Shares to be allotted against each successful ASBA; • The amount to be transferred from the ASBA Account to the separate account opened by the

Company for Rights Issue, for each successful ASBA; • The date by which the funds referred to in para above, shall be transferred to separate

account opened by the Company for Rights Issue; and • The details of rejected ASBAs, if any, along with reasons for rejection to enable SCSBs to

unblock the respective ASBA Accounts. Disposal of Investor Grievances All grievances relating to the ASBA may be addressed to the Registrar to the Issue, with a copy to the SCSB, giving full details such as name, address of the applicant, number of Equity Shares applied for, Amount blocked on application, account number of the ASBA Bank Account and the Designated Branch or the collection centre of the SCSB where the CAF / plain paper application was submitted by the ASBA Investors. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES CA N BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM. Basis of Allotment Subject to the provisions contained in the Letter of Offer, the Articles of Association of the Company and the approval of the Designated Stock Exchange, the Board will proceed to allot the Equity Shares in the following order of priority: (a) Full allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full

or in part and also to the Renouncee(s) who has / have applied for Equity Shares renounced in their favour, in full or in part.

(b) For the Equity Shares being offered under this Issue, if the shareholding of any of the Eligible Equity Shareholders is less than [●] Equity Shares or is not in the multiple of [●] the fractional entitlement of such Eligible Equity Shareholders shall be ignored. Eligible Equity Shareholders whose fractional entitlements are being ignored would be given preference in allotment of one additional Equity Share each if they apply for additional Equity Shares. Allotment under this head shall be considered if there are any unsubscribed Equity Shares after allotment under (a) above. If the number of Equity Shares required for allotment under this head are more than the number of Equity Shares available after allotment under (a) above, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.

(c) Allotment to the Eligible Equity Shareholders who having applied for all the Equity Shares offered to

them as part of the Issue and have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full allotment in (a) and (b) above. The allotment of such additional Equity Shares will be at the sole discretion of the Board in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential allotment.

(d) Allotment to Renouncees who having applied for all the Equity Shares renounced in their favour, have

applied for additional Equity Shares provided there is surplus available after making full allotment under (a), (b) and (c) above. The allotment of such Equity Shares will be on a proportionate basis at the sole discretion of the Board in consultation with the Designated Stock Exchange, as a part of the

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Issue and not preferential allotment. (e) Allotment to any other person as the Board may in its absolute discretion deem fit provided there is

surplus available after making full allotment under (a), (b), (c) and (d) above. After taking into account allotment to be made under (a) and (b) above, if there is any unsubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code which would be available for allocation under (c), (d) and (e) above. After considering the above Allotment, any additional Equity Shares shall be disposed off by the Board, in such manner as they think most beneficial to the Company and the decision of the Board in this regard shall be final and binding. In the event of oversubscription, Allotment will be made within the overall size of the Issue. The Company expects to complete the allotment of Equity Shares within a period of 15 days from the date of closure of the Issue in accordance with the listing agreement with the BSE, NSE and MSE. In case of delay in allotment the Company shall, as stipulated under Section 73(2A) of the Act, be required to pay interest on the same at a rate of 15 per cent p.a. Allotment / Refund The Company will issue and dispatch letter of allotment / share certificates / demat credit and / or letters of regret along with refund orders or credit the allotted Equity Shares to the respective beneficiary accounts, if any, within a period of fifteen (15) days from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated under Section 73 of the Companies Act. Investors residing in the 68 cities specified by SEBI pursuant to its circular dated February 1, 2008, will get refunds through ECS (Electronic Clearing Service) only except where Investors are otherwise disclosed as applicable / eligible to get refunds through direct credit and RTGS provided the MICR details are recorded with the Depositories or the Company. In case of those Investors who have opted to receive the Equity Shares in dematerialized form using electronic credit under the depository system, an advice regarding their credit of the Equity Shares shall be given separately. Investors to whom refunds are made through electronic transfer of funds will be sent a letter through certificate of posting intimating them about the mode of credit of refund within a period of fifteen (15) days from the Issue Closing Date. In case of those Investors who have opted to receive the Equity Shares in physical form, the Company will issue the corresponding share certificates under Section 113 of the Companies Act or other applicable provisions, if any. Any refund order exceeding ` 1,500 would be sent by registered post / speed post to the sole / first Investor’s registered address. Refund orders up to the value of ̀ 1,500 would be sent under certificate of posting. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole / first Investor. Adequate funds would be made available to the Registrar to the Issue for this purpose.

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Payment of Refund Mode of making refunds The payment of refund, if any, would be done through various modes in the following order of preference: 1. NECS (National Electronic Clearing Service) – Payment of refund would be done through ECS for

Investors having an account at any centre where such facility has been made available. 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. The payment of refunds is mandatory for Investors having a bank account at the centers where ECS facility has been made available by the RBI (subject to availability of all information for crediting the refund through ECS), except where the Investor, being eligible, opts to receive refund through NEFT, direct credit or RTGS.

2. NEFT (National Electronic Fund Transfer) – Payment of refund shall be undertaken through NEFT

wherever the Investors’ 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 Investors have registered their nine digit MICR number and their bank account number while opening and operating the demat 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 Investors through this method. The Company in consultation with the Lead Manager may decide to use NEFT as a mode of making refunds. The process flow in respect of refunds by way of NEFT is at an evolving stage and hence use of NEFT is subject to operational feasibility, cost and process efficiency. In the event that NEFT is not operationally feasible, the payment of refunds would be made through any one of the other modes as discussed herein.

3. Direct Credit – Investors having bank accounts with the Bankers to the Issue shall be eligible to

receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by the Company.

4. RTGS (Real Time Gross Settlement) – Investors having a bank account at any of the centres where

such facility has been made available and whose refund amount exceeds ` 1 lakh, have the option to receive refund through RTGS. Such eligible Investors 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 Refund Bank(s) for the same would be borne by the Company. Charges, if any, levied by the Investors’ bank receiving the credit would be borne by the Investor.

5. For all other Investors, including those who have not updated their bank particulars with the MICR

code, the refund orders will be dispatched under certificate of posting for value up to ` 1,500 and through speed post / registered post for refund orders of ̀ 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole / first Investor and payable at par.

Printing of Bank Particulars on Refund Orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the Investor’s bank account are mandatorily required to be given for printing on the refund orders. Bank account particulars will be printed on the refund orders/refund warrants which can then be deposited only in the account specified. The Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Allotment advice / Share Certificates / Demat Credit Allotment advice / share certificates / demat credit will be dispatched to the registered address of the first

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named Investor or respective beneficiary accounts will be credited within 15 (fifteen) days, from the Issue Closing Date. Option to receive the Equity Shares in Dematerialized Form The Investors have an option to get the Equity Shares in physical or demat form. The Company has signed a tripartite agreement dated July 3, 2001 with NSDL and the Registrar to the Company and a tripartite agreement dated June 20, 2001 with CDSL and the Registrar to the Company, which enables the Equity Shareholders to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of physical certificates In this Issue, the allottees who have opted for the Equity Shares in dematerialized form will receive the Equity Shares in the form of an electronic credit to their beneficiary account with a Depository Participant. The CAF shall contain a space for indicating the number of Equity Shares applied for in demat and physical from or both. Investors will have to give the relevant particulars for this purpose appropriately in the CAF. Applications, which do not accurately contain this information, will be given the Equity Shares in physical form. No separate applications for Equity Shares in physical and / or dematerialized form should be made. If such applications are made, the application for physical Equity Shares will be liable to be rejected. The Equity Shares will be listed on the BSE, NSE and MSE. The procedure for availing of the facility for allotment of the Equity Shares in this Issue in the electronic form is as under: • Open a beneficiary account with any Depository Participant (care should be taken that the beneficiary

account should carry the name of the holder in the same manner as is exhibited in the records of the Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as with the Company). In case of Investors having various folios in the Company with different joint holders, the Investors will have to open separate accounts for such holdings. Those Investors who have already opened such beneficiary account (s) need not adhere to this step.

• For the Eligible Equity Shareholders already holding Equity Shares of the Company in dematerialized

form as on the Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Equity Shares pursuant to this Issue by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of Equity Shares arising out of this Issue may be made in dematerialized form even if the original Equity Shares of the Company are not dematerialized. Nonetheless, it should be ensured that the Depository Account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of the Company.

• Responsibility for correctness of information (including Investor’s age and other details) filled in the

CAF vis-à-vis such information with the Investor’s depository participant, would rest with the Investor. Investors should ensure that the names of the Investors and the order in which they appear in the CAF should be the same as registered with the Investor’s Depository Participant.

• Equity Share allotted to an Applicant in the electronic account form will be credited directly to the

Applicant’s respective beneficiary account(s) with depository participant. • Applicants should ensure that the names of the Applicants and the order in which they appear in the

CAF should be the same as registered with the Applicant’s depository participant.

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• Non-transferable allotment advice/refund orders will be directly sent to the Applicant by the Registrar

to this Issue. • If incomplete / incorrect beneficiary account details are given in the CAF the Investor will get the

Equity Shares in physical form. • The Equity Shares pursuant to this Issue allotted to Investors opting for dematerialized form, would be

directly credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any) would be sent directly to the Investor by the Registrar to the Issue but the Investor’s depository participant will provide to him the confirmation of the credit of such Securities to the Investor’s depository account.

• Renouncees will also have to provide the necessary details about their beneficiary account for

allotment of Equity Shares in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected.

• It may be noted that Equity Shares in electronic form can be traded only on the Stock Exchanges

having electronic connectivity with NSDL or CDSL. • Dividend or other benefits with respect to the Equity Shares held in dematerialized form would be paid

to those Equity Shareholders whose names appear in the list of beneficial owners given by the Depository Participant to the Company as on the date of the book closure.

General instructions for Investors (a) Please read the instructions printed on the enclosed CAF carefully. (b) Applications should be made on the printed CAF, provided by the Company and should be completed

in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and / or which are not completed in conformity with the terms of the Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the Investors, details of occupation, address, father’s / husband’s name must be filled in block letters.

(c) The CAF together with the cheque / demand draft should be sent to the Bankers to the Issue /

Collecting Banks or to the Registrar to the Issue and not to the Company or the Lead Manager to the Issue. Investors residing at places other than cities where the branches of the Bankers to the Issue have been authorised by the Company for collecting applications, will have to make payment by Demand Draft payable at [●] of an amount net of bank and postal charges and send their application forms to the Registrar to the Issue by Registered Post. If any portion of the CAF is / are detached or separated, such application is liable to be rejected.

(d) Applications for any value made by the Investor, or in the case of joint names, each of the joint

Investors, should mention his / her Permanent Account 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) Investors are advised that it is mandatory to provide information as to their savings / current account

number and the name of the bank with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Applications not containing such details are liable to be rejected. For Eligible Equity Shareholders holding Equity Shares in dematerialized form, such bank details will be drawn from the demographic

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details of the Eligible Equity Shareholder in the records of the Depository. (f) All payments should be made by cheque / DD only. 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.

(g) 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 Eligible Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company or the Depositories.

(h) In case of an application under power of attorney or by a body corporate or by a society, a certified true

copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Issue and to sign the application and a copy of the memorandum and articles of association and / or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference to the serial number of the CAF and folio numbers / DP ID and Client ID Number. In case the above referred documents are already registered with the Company, the same need not be furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue.

(i) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and

as per the specimen signature(s) recorded with the Company. Further, in case of joint Investors who are Renouncees, the number of Investors should not exceed three. In case of joint applicants, reference, if any, will be made in the first Investor’s name and all communication will be addressed to the first Investor.

(j) Application(s) received from Non-Resident / NRIs, or persons of Indian origin residing abroad for

allotment of Equity Shares shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of application money, allotment of equity shares, subsequent issue and allotment of equity shares, interest, export of share certificates, etc. In case a Non-Resident or NRI Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF.

(k) All communications in connection with applications for the Equity Shares, including any change in

addresses of the Eligible 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 Investor, folio numbers and CAF number. Please note that any intimation for change of address of the Eligible Equity Shareholders, after the date of allotment, should be sent to the Registrar to the Issue, in the case of Equity Shares held in physical form and to the respective Depository Participant, in case of Equity Shares held in dematerialized form.

(l) Split forms cannot be re-split. (m) Only the person or persons to whom the Equity Shares have been offered and not Renouncee(s) shall

be entitled to obtain split forms. (n) Investors must write their CAF number at the back of the cheque / demand draft. (o) Only one mode of payment per application should be used. The payment must be by cheque / demand

draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub-member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted.

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(p) A separate cheque / demand draft must accompany each CAF. Outstation cheques / demand drafts or postdated cheques and postal / money orders will not be accepted and applications accompanied by such cheques / demand drafts / money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in cash. (For payment against application in cash please refer point (f) above)

(q) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank /

Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.

Grounds for Technical Rejections Investors 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; • Bank account details (for refund) are not given and the same are not available with the DP (in the case

of dematerialized holdings) or the Registrar (in the case of physical holdings); • Age of first Investor not given while completing Part C of the CAFs; • PAN not mentioned for application of any value; • 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 on the CAF does not match with the records available with

the Company and/or the Depositories and in case of application by Renouncees, if the signature of the Renouncers do not match with the records available with their Depositories;

• If the Investor desires to have Equity Shares in electronic form, but the CAF does not have the Investor’s depository account details;

• Application forms are not submitted by the Investors within the time prescribed as per the application form and the Letter of Offer;

• Applications not duly signed by the sole / joint Investors; • Applications by OCBs unless accompanied by specific approval from RBI permitting the OCBs to

participate in the Issue. • In case no corresponding record is available with the Depositories that matches three parameters,

namely, names of the Investors (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity;

• Applications that do not include the certification set out in the CAFs to the effect that the subscriber is not a US person, and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the Securities in compliance with all applicable laws and regulations;

• Applications which have evidence of being dispatched from the US; • 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; • Applications where the Company believes that the CAF is incomplete or acceptance of such CAFs

may infringe applicable legal or regulatory requirements; • Multiple applications • Applications by renouncees who are persons not competent to contract under the Indian Contract Act,

1872, including minors; and • Duplicate Applications, including cases where an Investor submits CAFs along with a plain paper

application. Mode of payment for Resident Eligible Equity Shareholders / Investors • All cheques / demand drafts accompanying the CAFs should be crossed ‘A/c Payee only’ and drawn in

favour of ‘Ramco Systems Limited-Rights Issue’.

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• Investors residing at places other than places where the bank collection centres have been opened by the Company for collecting applications, are requested to send their applications together with Demand Draft for the full application amount, net of bank and postal charges crossed ‘A/c Payee only’ and drawn in favour of ‘Ramco Systems Limited -Rights Issue’ payable at [●] directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

Mode of payment for Non-Resident Eligible Equity Shareholders / Investors The Company is making this Issue of Equity Shares on a rights basis to the Eligible Equity Shareholders of the Company and will dispatch the Letter of Offer / Abridged Letter of Offer and the CAF to the Eligible Equity Shareholders who have provided an Indian address. Further, please refer to the paragraphs titled ‘Availability of duplicate CAF’ and ‘Application on Plain Paper’. As regards the application by non-resident Eligible Equity Shareholders / Investors, the following conditions shall apply: Application with repatriation benefits Payment by NRIs/ FIIs/ foreign investors must be made by demand draft / cheque payable at [•]or funds remitted from abroad in any of the following ways: • By Indian Rupee drafts purchased from abroad and payable at [•] or funds remitted from abroad

(submitted along with Foreign Inward Remittance Certificate); or • By cheque / demand draft on a Non-Resident External Account (NRE) or FCNR Account maintained

in [●] ; or • By Rupee draft purchased by debit to NRE / FCNR Account maintained elsewhere in India and

payable in [●]; or • FIIs registered with SEBI must remit funds from special non-resident rupee deposit account. • All cheques / demand drafts submitted by non-residents applying on repatriable basis should be drawn

in favour of ‘Ramco Systems Limited -Rights Issue - NR’ payable at [•] and crossed ‘A/c Payee only’ for the amount payable.

A separate cheque or bank draft must accompany each application form. Investors 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. In the case of non-residents 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 Investor’s Bankers.

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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 [●] or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at [●]. In such cases, the allotment of Equity Shares will be on non-repatriation basis. All cheques / demand drafts submitted by non-residents applying on non-repatriation basis should be drawn in favour of ‘Ramco Systems Limited -Rights Issue’ payable at [•] 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 accounts shall be opened for Eligible Equity Shareholders who have had a change in status from resident Indian to NRI. Note: • In cases 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.

The Company is not responsible for any postal delay / loss in transit on this account and applications received through mail after closure of the Issue are liable to be rejected. Applications through mail should not be sent in any other manner except as mentioned above. The CAF along with the application money must not be sent to the Company or the Lead Manager or the Registrar except stated otherwise. The Investors are requested to strictly adhere to these instructions. Renouncees who are NRIs / FIIs / Non Residents should submit their respective applications either by hand delivery or by registered post with acknowledgement due to the Registrar to the Issue only at the below mentioned address alongwith the cheque / demand draft payable at [•] so that the same are received on or before the closure of the Issue. Disposal of application and application money No acknowledgment will be issued for the application moneys received by the Company However, the Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF.

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The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on the Equity Shares allotted, will be refunded to the Investor within 15 days from the close of the Issue. Mode of payment for Resident Equity Shareholders/ Investors

� All cheques / drafts accompanying the CAF should be drawn in favour of the Collecting Bank (specified on the reverse of the CAF), crossed ‘A/c Payee only’ and marked “[●]”;

� Investors residing at places other than places where the bank collection centres have been opened by the Company for collecting applications, are requested to send their CAFs together with Demand Draft for the full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed ‘A/c Payee only’ and marked “[●]” payable at [●] directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

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. Applications will not be accepted from FIIs in the United States or its territories and possessions, or any other jurisdiction where the offer or sale of the Rights Entitlements and Equity Shares may be restricted by applicable securities laws. 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. Applications will not be accepted from FIIs in the United States or its territories and possessions, or any other jurisdiction where the offer or sale of the Rights Entitlements and Equity Shares may be restricted by applicable securities laws. Procedure for Applications by Mutual Funds A separate application can be made in respect of 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. Application with repatriation benefits

• By Indian Rupee drafts purchased from abroad and payable at [●] 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 [●]; or • By Rupee draft purchased by debit to NRE/FCNR Account maintained elsewhere in India and payable

in [●]; or FIIs registered with SEBI must remit funds from special non-resident rupee deposit account. • Non-resident investors applying with repatriation benefits should draw cheques/drafts in favour of ‘[●]’

and must be crossed ‘account payee only’ for the full application amount, net of bank and postal charges.

Application without repatriation benefits

• As far as non-residents holding Equity Shares on non-repatriation basis are 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 [●] or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at [●]. In such cases, the Allotment of Equity Shares will be on non-repatriation basis.

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• All cheques/drafts submitted by non-residents applying on a non-repatriation basis should be drawn in favour of ‘Ramco Systems – Rights Issue - NR’ and must be crossed ‘account payee only’ for the full application amount, net of bank and postal charges. The CAFs duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

• Investors may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR/ NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected.

• New demat account shall be opened for holders who have had a change in status from resident Indian to NRI.

Notes:

• 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 the IT Act.

• In case Equity Shares are allotted on a 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 CAFs 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.

Impersonation As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of subsection (1) of section 68A of the Companies Act which is reproduced below: “ Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or 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”. Dematerialized dealing The Company has entered into agreements dated 24 May 2000 and 28 October 1999 with NSDL and CDSL, respectively, and its Equity Shares bear the ISIN INE692B01014. Payment by Stockinvest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003- 04 dated 5 November 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue. Disposal of application and application money No acknowledgment will be issued for the application moneys received by the Company. However, the Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the Investor within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to repay it, the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the Companies Act.

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For further instructions, please read the CAF carefully. Utilization of Issue Proceeds The Board of Directors declares that: (i) The funds received against this Issue will be transferred to a separate bank account other than the

bank account referred to sub-section (3) of Section 73 of the Companies Act. (ii) Details of all moneys utilized out of the Issue shall be disclosed under an appropriate separate

head in the balance sheet of the Company indicating the purpose for which such monies have been utilized and the form in which such unutilized moneys have been invested.

(iii) The funds received against this Issue will be kept in a separate bank account and the Company

will not have any access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90% of the Issue has been received by the Company.

(iv) The Company may utilize the funds collected in the Issue only after the basis of Allotment is finalized. Undertakings by the Company The Company undertakes:

1. that the complaints received in respect of the Issue shall be attended to expeditiously and satisfactorily.

2. that 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 will be taken within seven working days of finalization of basis of allotment.

3. that the funds required for making dispatch of refund orders/allotment letters/certificates as per

the mode(s) disclosed shall be made available to the Registrar to the issue.

4. that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 15 days of closure of the issue, as the case may be, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund.

5. Adequate arrangements shall be made to collect all ASBA applications and to consider them

similar to Non-ASBA applications while finalizing the basis of allotment

6. that the certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within the specified time.

7. that no further issue of securities affecting equity capital of the Company shall be made till the

securities issued/offered through the Draft Letter of Offer Issue are listed or till the application money are refunded on account of non-listing, under-subscription etc.

8. The Company accepts full responsibility for the accuracy of information given in this Draft Letter

of Offer and confirms that to best of its knowledge and belief, there are no other facts the omission of which makes any statement made in this Draft Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts.

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9. All information shall be made available by the Lead Manager and the Issuer to the Investors at large and no selective or additional information would be available for a section of the Investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc.

10. The Company shall comply with such disclosure and accounting norms specified by SEBI from

time to time. Important • Please read this Draft Letter of Offer, Letter of Offer carefully before taking any action. The

instructions contained in the accompanying Composite Application Form (CAF) are an integral part of the conditions of this Draft Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected.

• All enquiries in connection with this Draft Letter of Offer, Letter of Offer or accompanying CAF and

requests for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and super scribed ‘Ramco Systems Limited - Rights Issue’ on the envelope) to the Registrar to the Issue at the following address: Cameo Corporate Services Limited Subramanian Building, No. 1, Club House Road, Chennai - 600002 Tel: +91-44-2846 0390 Fax: +91-44-2846 0129 Email: investor@cameoindia.com Website: www.cameoindia.com Contact Person: Mr. R. D. Ramasamy SEBI Registration Number: INR000003753

• It is to be specifically noted that this Issue of Equity Shares is subject to the section titled ‘Risk Factors’ on page xi of this Draft Letter of Offer.

• The Issue will remain open for at least 15 days. However, the Board will have the right to extend the

Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.

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SECTION IX – STATUTORY AND OTHER INFORMATION Option to subscribe Other than the present Issue, and except as disclosed in the section “Terms of the Issue” on page 166 of this Draft Letter of Offer, we have not given any person any option to subscribe to our Equity Shares. The Investors shall have an option either to receive the security certificates or to hold the securities in dematerialized form with a depository.

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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The contracts referred to below (not being contracts entered into in the ordinary course of business carried on by us or entered into more than two years prior to the date of this Draft Letter of Offer) which are or may be deemed material have been entered into by us or are to be entered into by us. Copies of these contracts, together with the copies of the documents referred to below, may be inspected at the Registered Office of the Company situated at 47, PSK Nagar, Rajapalayam 626108 from 10.00 A.M. to 3.00 P.M. on any working days, from the date of this Draft Letter of Offer until the Issue Closing Date. Material Contracts 1. Issue Agreement between the Company and the Lead Manager to the Issue dated November 16, 2010. 2. Memorandum of Understanding between the Company and the Registrar to the Issue dated September

29, 2010. Material Documents / Documents for Inspection 1. The Memorandum and Articles of Association of the Company; 2. Certificate of Incorporation of the Company dated February 19, 1997; 3. Certificate of Commencement of Business dated June 19, 1997 4. Copy of the Board resolution dated August 2, 2010 authorising this Issue, constitution of Rights Issue

2010 Committee and appointment of Mr. R. Ravi Kula Chandran, General Manager – Finance as Compliance Officer ;

5. Copy of resolution of Rights Issue 2010 Committee dated November 18, 2010 approving this Draft Letter of Offer;

6. Copy of the order dated December 24, 1999 passed by the Honourable High Court of Judicature of Tamil Nadu approving the Demerger Scheme;

7. Copy of the order dated August 4, 2005 passed by the Honourable High Court of Judicature of Tamil Nadu approving the Scheme of Arrangement;

8. Copy of Shareholders’ resolution passed at the AGM held on August 2, 2010 appointing CNGSN & Associates, Chartered Accountants as Statutory Auditors of the Company;

9. Consents of the Directors, the Auditors, the Lead Managers, the Legal Advisor to the Issue, the Registrar to the Issue and the Compliance Officer, to include their names in this Draft Letter of Offer, in their respective capacities;

10. Letter dated November 16, 2010 from the Auditors of the Company confirming the Statement of Tax Benefit as disclosed in this Draft Letter of Offer;

11. The Report of the Auditors of the Company dated May 24, 2010 as set out herein in relation to the audited financials of the Company for the Fiscal March 31, 2010;

12. Annual Reports of the Company for the Fiscal March 31, 2006, 2007, 2008, 2009 and 2010; 13. Due Diligence Certificate dated November 18, 2010 from the Lead Manager; 14. Certificate dated November 16, 2010 issued by CNGSN & Associates ,Chartered Accountants

confirming that the loan of IDBI Bank Limited of Rs. 350 million has been utilized for the purpose for which it was raised;

15. Tripartite agreement dated June 20, 2001 between us, Cameo Corporate Services Limited and CDSL. 16. Tripartite agreement dated July 3, 2001 between us, Cameo Corporate Services Limited and NSDL. 17. Letter of Offer dated November 16, 2005 for the right issue of 3,070,777 Equity Shares of face value

of ` 10 each of the Company (being the last Issue). 18. In-principle listing approval dated [●], [●] and [●] received from BSE, NSE and MSE respectively.

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DECLARATION

We hereby certify that no statement made in this Draft Letter of Offer contravenes any of the provisions of the Companies Act, 1956 and the rules made thereunder. We further certify that all the legal requirements connected with the said Issue as also the guidelines, instructions etc. issued by SEBI, Government and any other competent authority in this behalf have been duly complied with. We further certify that all disclosures made in this Draft Letter of Offer are true and correct. Signed by the Directors of the Company:

1. P.R. Ramasubrahmaneya Rajha Chairman, Non Executive ______________________

2. P.R. Venketrama Raja Vice-Chairman, Managing Director & CEO ______________________

3. S.S. Ramachandra Raja Non-Independent, Non Executive ______________________

4. N.K. Shrikantan Raja Independent, Non Executive ______________________

5. M.M. Venkatachalam Independent, Non Executive ______________________

6. V. Jagadisan Independent, Non Executive ______________________

7. A.V. Dharmakrishnan Non-Independent, Non Executive ______________________

8. R. S. Agarwal Independent, Non Executive ______________________

______________________ R. Ravi Kula Chandran

General Manager – Finance and Compliance Officer Place: Chennai Date: November 18, 2010