Draft Prospectus

Dated August 23, 2012

Shriram City Union Finance Limited

A Public Limited Company incorporated under the Companies Act, 1956 (Registered as a Non-Banking Financial Company within the meaning of the Reserve Bank of India Act, 1934 (2 of 1934))

Registered Office: 123, Angappa Naicken Street, Chennai- 600 001, Tamil Nadu; Corporate Office: 144,Santhome High Road, Mylapore, Chennai 600 004, Tamil Nadu; Tel. No.: + 91 44 4392 5300; Fax: +91 44 4392 5430; Website: www.shriramcity.in Compliance Officer and Contact Person: Mr. C. R. Dash; E-mail: sect@shriramcity.in

Public Issue by Shriram City Union Finance Limited, (“Company” or “Issuer”) of Secured Non-Convertible Debentures of face value of `̀̀̀ 1,000 each, (“NCDs”), aggregating upto

`̀̀̀ 25,000 lacs with an option to retain over-subscription up to `̀̀̀ 25,000 lacs for issuance of additional NCDs aggregating to a total of up to `̀̀̀ 50,000 lacs, hereinafter referred to as the “Issue”.

The Issue is being made pursuant to the provisions of Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended (the “Debt Regulations”).

GENERAL RISK Investors are advised to read the risk factors carefully before taking an investment decision in the Issue. For taking an investment decision, the investors must rely on their own examination of the Issuer and the Issue including the risks involved. Specific attention of the investors is invited to the section titled “Risk Factors” on pages 1 to 19 of this Draft Prospectus.

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

CREDIT RATING

The NCDs proposed to be issued under this Issue have been rated ‘CARE AA’ by CARE for an amount of upto ` 50,000 lacs vide its letter dated August 10, 2012, and ‘CRISIL AA-/Stable’ by CRISIL for an amount of upto ` 50,000 lacs vide its letter dated August 14, 2012. The rating of the NCDs by CARE indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The rating of NCDs by CRISIL indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The ratings provided by CARE and/or CRISIL may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions. Please refer to page 25 of this Draft Prospectus for the rationale for the above ratings.

PUBLIC COMMENTS This Draft Prospectus has been filed with the Designated Stock Exchange pursuant to the provisions of the Debt Regulations. This Draft Prospectus is open for public comments. All comments on this Draft Prospectus are to be forwarded to the attention of Mr. C.R. Dash, Compliance Officer at: 144,Santhome High Road, Mylapore, Chennai 600 004, Tamil Nadu; Tel. No.: + 91 44 4392 5300; Fax: +91 44 4392 5430; E-mail: sect@shriramcity.in. All comments MUST be received by the Issuer within 7 working days of the date on which this Draft Prospectus is filed with the Designated Stock Exchange and by no later than 5 p.m. on such seventh Working Day. Comments by post, fax and email shall be accepted.

LISTING The NCDs offered through this Draft Prospectus are proposed to be listed on the National Stock Exchange of India Limited (“NSE”) and the BSE Limited, (“BSE”). Our Company has obtained ‘in-principle’ approvals for the Issue from the NSE vide their letter dated [●] and from BSE vide their letter dated [●]. For the purposes of the Issue, NSE shall be the Designated Stock Exchange.

LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE

JM Financial Institutional Securities Private Limited^ 141 Maker Chambers III, Nariman Point Mumbai - 400 021 Tel: +91 22 6630 3030 Fax: +91 22 2204 2137 Email: scuf.ncd@jmfil.in Investor Grievance Email: grievance.ibd@jmfl.com Website: www.jmfl.com Contact Person: Ms. Lakshmi Lakshmanan SEBI Registration No.: INM000010361

A. K. Capital Services Limited 30-39, Free Press House, Free Press Journal Marg, 215 Nariman Point, Mumbai - 400 021 Tel: +91 22 6754 6500 Fax: +91 22 6610 0594 Email: scufncd2012@akgroup.co.in Investor Grievance Email: investor.grievance@akgroup.co.in Website: www.akcapindia.com Contact Person: Ms.Akshata Tambe/ Mr. Yashesh Thakkar SEBI Registration No: INM000010411

Edelweiss Financial Services Limited Edelweiss House, 14th Floor, Off C.S.T. Road, Kalina Mumbai – 400 098 Maharashtra, India Tel: +91 22 4086 3535 Fax: +91 22 4086 3610 Email: scufbondissue@edelcap.com Investor Grievance Email: customerservice.mb@edelcap.com Website:www.edelweissfin.com Contact Person: Mr. Chitrang Gandhi / Mr. Viral Shah SEBI Registration No:INM0000010650

Integrated Enterprises (India) Limited 2nd Floor, Kences Towers, No. 1, Ramakrishna Street, North Usman Road, T. Nagar, Chennai - 600 017 Tel: + 91 44 2814 0801, +91 44 2814 0802, +91 44 2814 0803 Fax:+91 44 2814 2479 Email:scuf@integratedindia.in Investor Grievance Email: sureshbabu@integratedindia.in Website: www.integratedindia.in Contact Person: Mr. K Balasubranium and Mr. Sriram S SEBI Registration No: INR000000544

ISSUE PROGRAMME*

ISSUE OPENS ON : [●] ISSUE CLOSES ON : [●]

^ JM Financial Institutional Securities Private Limited has made an application on May 14, 2012, with SEBI for renewal of its certificate of registration.

* The subscription list for the Issue shall remain open for subscriptions during banking hours for the period indicated above, except that the Issue may close on such earlier date or extended date as may be decided at the discretion of the duly authorised committee of Directors of our Company subject to necessary approvals. In the event of such early closure or extension of the Issue, our Company shall ensure that notice of the same is provided to the prospective investors, on or before such early date of closure or the initial Closing Date, as the case may be, through advertisement/s in a leading national daily newspaper.

GDA Trusteeship Limited has by its letter dated August 11, 2012 given its consent for its appointment as Debenture Trustee to the Issue and for its name to be included in this Draft Prospectus and in all the subsequent periodical communications sent to the holders of the Debentures issued pursuant to this Issue.

A copy of the final Prospectus shall be filed with the Registrar of Companies, Chennai, Tamil Nadu, in terms of section 56 and section 60 of the Act, along with the requisite endorsed/certified copies of all requisite documents. For further details please refer to the section titled “Material Contracts and Documents for Inspection” beginning on page 237 of this Draft Prospectus.

TABLE OF CONTENTS

SECTION I : GENERAL ................................................................................................................................................................................ i

Definitions / Abbreviations ................................................................................................................................................................................ i

Forward Looking Statements.......................................................................................................................................................................... xii

Presentation of Financial and Other Information ........................................................................................................................................... xiv

SECTION II : RISK FACTORS .................................................................................................................................................................... 1

SECTION III : INTRODUCTION .............................................................................................................................................................. 20

General Information ........................................................................................................................................................................................ 20

Summary of Business, Strength & Strategy .................................................................................................................................................... 28

The Issue ......................................................................................................................................................................................................... 33

Summary Financial Information ...................................................................................................................................................................... 36

Capital Structure .............................................................................................................................................................................................. 45

Objects of the Issue ......................................................................................................................................................................................... 61

Statement of Tax Benefits ............................................................................................................................................................................... 62

SECTION IV : ABOUT THE ISSUER COMPANY AND THE INDUSTRY ......................................................................................... 69

Industry ............................................................................................................................................................................................................ 69

Our Business.................................................................................................................................................................................................... 99

History, Main Objects And Key Agreements ................................................................................................................................................ 115

Our Management ........................................................................................................................................................................................... 126

Our Promoter ................................................................................................................................................................................................. 140

Our Subsidiary ............................................................................................................................................................................................... 145

SECTION V : FINANCIAL INFORMATION ......................................................................................................................................... 146

Disclosures on Existing Financial Indebtedness ............................................................................................................................................. 147

Material Developments ................................................................................................................................................................................. 153

SECTION VI : ISSUE RELATED INFORMATION .............................................................................................................................. 158

Terms of The Issue ........................................................................................................................................................................................ 158

Issue Structure ............................................................................................................................................................................................... 162

Issue Procedure .............................................................................................................................................................................................. 177

SECTION VII : LEGAL AND OTHER INFORMATION ..................................................................................................................... 205

Pending Proceedings and Statutory Defaults ................................................................................................................................................. 205

Other Regulatory and Statutory Disclosures ................................................................................................................................................. 209

Regulations and Policies ................................................................................................................................................................................ 226

Summary of Key Provisions of Articles of Association ................................................................................................................................ 234

Material Contracts And Documents For Inspection ...................................................................................................................................... 237

Declaration .................................................................................................................................................................................................... 239

i

SECTION I : GENERAL

DEFINITIONS / ABBREVIATIONS This Draft Prospectus uses certain definitions and abbreviations which, unless the context indicates or implies otherwise, have the meaning as provided below. References to any legislation, act, regulation, guideline, rule or circular shall be to such term as amended from time to time. Company related terms

Term Description

"SCUFL", "Issuer", “the Company” and “our Company”

Shriram City Union Finance Limited, a company incorporated under the Companies Act, 1956, registered as a Non-Banking Financial Company with the Reserve Bank of India under Section 45-IA of the Reserve Bank of India Act, 1934, and having its Registered Office at 123, Angappa Naicken Street, Chennai-600001, Tamil Nadu, India

AOA/Articles / Articles of Association Articles of Association of our Company

Board / Board of Directors The Board of Directors of our Company and includes any duly authorised Committee thereof constituted or reconstituted from time to time

DIN Director Identification Number

ESOP 2006 Our Company’s Employee Stock Option Scheme as approved by the shareholders of our Company vide a special resolution passed at their EGM held on October 30, 2006, namely, “SCUFL Employee Stock Option Scheme 2006”

ESOP 2008 The Company Employee Stock Option Scheme as approved by the shareholders of our Company vide a special resolution passed at their EGM held on May 3, 2008, namely, “SCUFL Employee Stock Option Scheme 2008”

Equity Shares Equity shares of face value of ` 10/- each of our Company

Fitch Fitch Ratings India Private Limited

Group Shriram City Union Finance Limited and its subsidiary namely Shriram Housing Finance Limited

Loan Assets Assets under financing activities

Memorandum / MOA Memorandum of Association of our Company

NAV Net Asset Value

NBFC Non-Banking Financial Company as defined under Section 45-IA of the RBI Act, 1934

Net Interest Margins/NIM Interest income net off the amount of outgoing interest paid by the Company on its liabilities

Net Loan Assets Assets under financing activities net of provision for non-performing assets

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Term Description

NPA Non Performing Asset

Promoter(s) Shriram Enterprise Holdings Private Limited and Shriram Retail Holdings Private Limited

` / Rs./ INR/ Rupees The lawful currency of the Republic of India

Reformatted Consolidated Summary Financial Statements

The statement of reformatted consolidated assets and liabilities of the Group as at March 31, 2012 and March 31, 2011 and the related statement of reformatted consolidated statement of profit and loss and the related statement of reformatted consolidated cash flow for the financial years ended March 31, 2012 and March 31, 2011 as examined by our Company’s Statutory Auditors, M/s. Pijush Gupta & Co, Chartered Accountants.

The audited consolidated financial statements of the Group as at and for the years ended March 31, 2012 and March 31, 2011 and the books of accounts underlying such financial statements form the basis for such Reformatted Consolidated Summary Financial Statements

Reformatted Unconsolidated Summary Financial Statements

The statement of reformatted unconsolidated assets and liabilities of our Company, and the related statement of reformatted unconsolidated statement of profit and loss of our Company and the related statement of reformatted unconsolidated cash flow of our Company as at and for the years ended March 31, 2012, 2011, 2010, 2009 and 2008, as examined by our Company’s Statutory Auditors, M/s. Pijush Gupta & Co, Chartered Accountants

The audited unconsolidated financial statements of our Company as at and for the years ended March 31, 2012, 2011, 2010, 2009 and 2008 and the books of accounts underlying such financial statements form the basis for such Reformatted Unconsolidated Summary Financial Statements

SCL Shriram Capital Limited

SEHPL Shriram Enterprise Holdings Private Limited

SHFL Shriram Housing Finance Limited

Shriram Chits Entities operating under the brand name of “Shriram Chits” namely, Shriram Chits Private Limited, Shriram Chits Tamil Nadu Private Limited, Shriram Chits Karnataka Private Limited, and Shriram Chits Maharashtra Private Limited

Shriram Group Entities operating under the “Shriram” brand name

SRHPL Shriram Retail Holdings Private Limited

Statutory Auditor Our statutory auditor being M/s Pijush Gupta & Co

Subsidiary Subsidiary of our Company namely Shriram Housing Finance Limited

“We”, “us” and “our” Our Company and/or its Subsidiary, unless the context otherwise requires

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Issue related terms

Term Description

Allotment / Allotted Unless the context otherwise requires, the allotment of the NCDs pursuant to the Issue to the Allottees

Allotment Advice Written communication, advice or intimation of Allotment, sent to each successful Applicant who has been or is to be Allotted NCDs in accordance with the Basis of Allotment.

Allottee The successful applicant to whom the NCDs are being/have been allotted

Applicant(s) / Investor(s) Eligible Individuals or entities who apply for NCDs pursuant to the Issue, and unless otherwise stated or implied, includes an ASBA Applicant and eligible individuals or entities making Direct Online Applications using the Online Payment Facility of the Stock Exchange

Application(s) An application to subscribe to NCDs offered pursuant to the Issue by submission of a valid Application Form and payment of the Application Amount by any of the modes as prescribed under this Draft Prospectus

Application Amount(s) The aggregate application monies equal to the full face value of the NCDs payable by the Applicant at the time of submission of the Application Form

Application Form(s) The form used by an Applicant for applying for NCDs under the Issue through Direct Online Application, ASBA or non-ASBA process for NCDs being offered pursuant to this Issue

Application Supported by Blocked Amount / ASBA / ASBA Applications

A process of submitting the Application Form, whether physical or electronic, used by Applicants to make an Application authorizing an SCSB to block the Application Amount in their specified bank account maintained with the SCSB

ASBA Applicant(s) / ASBA Investor(s)

Any Applicant who intends to apply for NCDs through ASBA

ASBA Account An account maintained by the ASBA Applicant with the SCSBs, which will be blocked by such SCSB to the extent of the appropriate Application Amount in relation to a Application by an ASBA Applicant

Bankers to the Issue/Escrow Collection Bank(s)

The bank(s) with whom Escrow Accounts will be opened as specified on page 22 of this Draft Prospectus

Base Issue

Public Issue of NCDs by our Company aggregating upto ` 25,000 lacs, without the inclusion of the option to retain over-subscription upto ` 25,000 lacs for issuance of additional NCDs

Basis of Allotment The basis on which NCDs will be allotted to successful applicants under the Issue and which is described in “Issue Procedure – Basis of Allotment” on page 197 of this Draft Prospectus

CARE Credit Analysis and Research Limited

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Term Description

CRISIL CRISIL Limited

Debentures / NCDs Secured, Redeemable, Non-Convertible Debentures offered through this Draft Prospectus aggregating upto ` 25,000 lacs with an option to retain over-subscription upto ` 25,000 lacs for issuance of additional NCDs aggregating to a total of upto ` 50,000 lacs

Debenture Holder (s) The holders of the NCDs

Debt Listing Agreement The listing agreement entered into/to be entered into between our Company and the relevant stock exchange(s) in connection with the listing of debt securities of our Company

Debt Regulations SEBI (Issue and Listing of Debt Securities) Regulations, 2008, issued by SEBI, effective from June 6, 2008 as amended from time to time

Debenture Trust Agreement Agreement dated August 17, 2012 entered into between our Company and the Debenture Trustee wherein the appointment of the Debenture Trustee to the Issue, is agreed as between our Company and the Debenture Trustee, and the time frame within which appropriate security for ensuring 100% asset cover for the NCDs issued pursuant to the Issue are created in favour of the Debenture Trustee

Debenture Trust Deed Deed and/or Indenture of Trust to be entered into between our Company and the Debenture Trustee which shall be executed within three months of the closure of the Issue, for creating appropriate security, in favour of the Debenture Trustee for the NCD Holders on the assets adequate to ensure 100% asset cover for the NCDs issued pursuant to the Issue

Deemed Date of Allotment The Deemed Date of Allotment for the NCDs shall be the date of issue of the Allotment Advice / Regret or such date as may be determined by the Board of our Company and/or a duly authorized committee thereof and notified to the Stock Exchanges

Demographic Details Details of the investor such as address, occupation, category, PAN of applicants and bank account details for printing on refund orders, which are based on the details provided by the Applicant in the Application Form

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

Depository(ies) National Securities Depository Limited (NSDL) and /or Central Depository Services (India) Limited (CDSL)

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

Designated Stock Exchange National Stock Exchange of India Limited

Designated Branches Such branches of the SCSBs which shall collect the Application Forms used by ASBA Applicants and a list of which is available on the website of SEBI (http://www.sebi.gov.in/cms/sebi_data/attachdocs/1329804263009.html)

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Term Description

Designated Date The date on which the Escrow Collection Banks transfer the funds from the Escrow Accounts and the Registrar to the Offer issues instruction to SCSBs for transfer of funds from the ASBA Accounts to the Public Issue Account(s).

Direct Online Applications Applications made using the online application platform provided by the Stock Exchange by duly filling in the Application Form available on such online platform and submitting the Application Amount using the Online Payment Facility

Draft Prospectus / Draft Offer Document

This draft prospectus dated August 23, 2012 filed with the Designated Stock Exchange for receiving public comments in accordance with the provisions of the Act and the Debt Regulations

Escrow Account Accounts opened in connection with the Issue with the Escrow Collection Banks and in whose favour the applicant, applying through non ASBA, will issue cheques or bank drafts or RTGS transfers (only available to Applicants who are Institutional Investors applying other than through the ASBA or Direct Online Application route) in respect of the application amount while submitting the application

Escrow Agreement Agreement dated [●] entered into amongst our Company, the Registrar, the Escrow Collection Bank(s) and the Lead Managers for collection of the application amounts and for remitting refunds, if any, of the amounts collected, to the applicants (excluding the ASBA Applicants) on the terms and conditions contained therein

Individual(s) All categories of persons who are individuals or natural persons (including Hindu Undivided Families acting through their Karta) including without limitation Non Reserved Individual Investors and Reserved Individual Investors who are eligible under applicable laws to hold the NCDs

Institutional Investor Public financial institutions, statutory corporations, commercial banks, co-operative banks and regional rural banks incorporated in India and authorized to invest in the NCDs, Indian Provident funds, pension funds, superannuation funds and gratuity funds, authorized to invest in the NCDs, Indian venture capital funds registered with SEBI, Indian insurance companies registered with the IRDA, National Investment Fund, and Indian Mutual Funds registered with SEBI

Institutional Portion Applications received from Institutional Investors grouped together across all Series I, Series II, Series III and/or Series IV NCDs

Issue Public Issue by our Company of NCDs aggregating upto ` 25,000 lacs with an option to retain over-subscription upto ` 25,000 lacs for issuance of additional NCDs aggregating to a total of upto ` 50,000 lacs

Issue Opening Date [●]

Issue Closing Date* [●]

Lead Brokers [●]

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Term Description

Lead Managers JM Financial Institutional Securities Private Limited, A. K. Capital Services Limited and Edelweiss Financial Services Limited

Limited Liability Partnership A limited liability partnership formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No. 6 of 2009), as amended from time to time

Market Lot One NCD

NCD Holder(s) The holders of the NCDs whose name appears in the database of the Depository (in case of NCDs in the dematerialized form) and/or the register of NCD holders maintained by our Company (in case of NCDs held in the physical form)

Non ASBA / Non-ASBA Applications other than through the ASBA mechanism including Direct Online Applications and Applications not using ASBA through the Lead Managers, Lead Brokers, sub-brokers and/or Trading Members of the Stock Exchange(s)

Non Individual(s) All categories of entities, associations, organizations, societies, trusts, funds, partnership firms, Limited Liability Partnerships, bodies corporate, statutory and/or regulatory bodies and authorities and other forms of legal entities who are NOT individuals or natural persons and are eligible under applicable laws to hold the NCDs including without limitation Institutional Investors and Non Institutional Investors

Non Institutional Investors Companies, bodies corporate and societies, registered under the applicable laws in India, and authorized to invest in the NCDs; Trusts settled under the Indian Trusts Act, 1882, public/private charitable/religious trusts settled and/or registered in India under applicable laws, which are authorized to invest in the NCDs; Resident Indian scientific and/or industrial research organizations, authorized to invest in the NCDs; Partnership firms formed under applicable laws in India in the name of the partners, authorized to invest in the NCDs; and Limited Liability Partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No. 6 of 2009), authorized to invest in the NCDs

Non Institutional Portion Applications received from Non Institutional Investors grouped together across all Series I, Series II, Series III and/or Series IV NCDs

Non Reserved Individual Investors Resident Indian individuals who apply for NCDs aggregating to a value more than ` 5 Lacs, across all Series of NCDs and Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value more than ` 5 Lacs, across all Series I, Series II, Series III and/or Series IV NCDs, eligible to apply for the NCDs pursuant to the Issue

Non Reserved Individual Portion Applications received from Non Reserved Individual Investors grouped together across all Series I, Series II, Series III and/or Series IV NCDs

Non-Syndicate ASBA Physical or electronic ASBA Applications through SCSBs or their Designated Branches

vii

Term Description

Online Payment Facility The facility for making online payments through a secured gateway as available on the online platform provided by the Stock Exchange for making Direct Online Applications

Prospectus / Offer Document The Prospectus dated [●] to be filed with the ROC in accordance with the Debt Regulations containing inter alia the coupon rate for the NCDs and certain other information

Public Issue Account An account opened with the Bankers to the Issue to receive monies from the Escrow Accounts and/or from the SCSBs on the Designated Date

Record Date The record date (a) in connection with Series [●] and Series [●] NCDs shall be [●] ([●]) days prior to the date on which interest is due and payable, or the date of redemption, or as may be prescribed by the relevant stock exchange(s), and (b) in connection with Series [●] and Series [●] NCDs shall be [●] ([●]) days prior to the date of redemption of the Series [●] and Series [●] NCDs, as the case may be, being the record date for payment of interest in connection with the NCDs or repayment of principal along with premium amount, if any, or as may be prescribed by the relevant stock exchange(s)

Refund Account(s) The account opened with the Escrow Collection Bank(s), from which refunds (excluding the ASBA Bidders), if any, of the whole or part of the Bid Amount shall be made

Registrar to the Issue Integrated Enterprises (India) Limited

Reserved Individual Investors Resident Indian individuals who apply for NCDs aggregating to a value not more than ` 5 Lacs, across all Series I, Series II, Series III and/or Series IV NCDs and Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value not more than ` 5 Lacs, across all Series I, Series II, Series III and/or Series IV NCDs, and eligible to apply for NCDs pursuant to the Issue

Reserved Individual Portion Applications received from Reserved Individual Investors grouped together across all Series I, Series II, Series III and/or Series IV NCDs

Self Certified Syndicate Bank(s) or SCSB(s)

The banks registered with SEBI under the Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994 offering services in relation to ASBA, including blocking of an ASBA Account, and a list of which is available on http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901673613.html or at such other web-link as may be prescribed by SEBI from time to time. A list of the branches of the SCSBs where ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or the trading members of the Stock Exchange only in the Specified Cities, will be forwarded by such Lead Managers, Lead Brokers, sub-brokers or the trading members of the Stock Exchange is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html or at such other web-link as may be prescribed by SEBI from time to time

Series Collectively the Series I, Series II, Series III and Series IV NCDs being offered to the applicants as stated in the section titled ‘Issue Related

viii

Term Description

Information’ beginning on page 158 of this Draft Prospectus

Specified Cities Centres at Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bengaluru, Hyderabad, Pune, Vadodara and Surat where the Lead Managers, Lead Brokers, sub-brokers or the trading members of the Stock Exchange shall accept ASBA Applications in terms of the SEBI Circular No. CIR/CFD/DIL/1/2011 dated April 29, 2011

Stock Exchange(s) National Stock Exchange of India Limited and/or BSE Limited

Syndicate ASBA ASBA Applications through the Lead Managers, Lead Brokers, sub-brokers or the trading members of the Stock Exchange only in the Specified Cities.

Trading Member Intermediaries registered with a Broker or a Sub-Broker under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 and/or with the NSE or the BSE under the applicable byelaws, rules, regulations, guidelines, circulars issued by the relevant Stock Exchanges from time to time

Tripartite Agreement(s) Agreements entered into between the Issuer, Registrar and each of the Depositories under the terms of which the Depositories have agreed to act as depositories for the securities issued by the Issuer

TRS/ Transaction Registration Slip The slip or document issued by a Lead Manager, Lead Broker, sub-broker, trading member or the SCSB (only on demand), as the case may be, to the Applicant as proof of registration of the Application

Trustees / Debenture Trustee Trustees for the Debenture Holders in this case being GDA Trusteeship Limited

Working Days All days excluding Sundays and bank holidays

∗ The subscription list for the Issue shall remain open for subscriptions during banking hours for the period indicated above, except that the Issue may close on such earlier date or extended date as may be decided at the discretion of the duly authorised committee of Directors of our Company subject to necessary approvals. In the event of such early closure or extension of the Issue, our Company shall ensure that notice of the same is provided to the prospective investors, on or before such early date of closure or the initial Closing Date, as the case may be, through advertisement/s in a leading national daily newspaper.

Technical & Industry Terms

Term Description

AFC Asset Finance Company

ALCO Asset - Liability Committee

ALM Asset Liability Management

CAR Capital Adequacy Ratio computed on the basis of applicable RBI requirements

CV Commercial Vehicle

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Term Description

KYC Norms Customer identification procedure for opening of accounts and monitoring transactions of suspicious nature followed by NBFCs for the purpose of reporting it to appropriate authority

LCV(s) Light Commercial Vehicles

LFO(s) Large Fleet Operators

LTV Loan to value

MSME Micro Small and Medium Enterprises

Non-Deposit Accepting NBFC Directions

Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007

NBFC-D NBFC registered as a deposit accepting NBFC

NBFC-ND NBFC registered as a non-deposit accepting NBFC

Prudential Norms Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007

Public Deposit Directions The Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998

SFO(s) Small Fleet Operators

SME Small and Medium Enterprises

UV(s) Utility Vehicles

Conventional / General Terms

Term Description

Act The Companies Act, 1956, as amended from time to time

AGM Annual General Meeting

AS Accounting Standard

BSE BSE Limited

CAGR Compounded Annual Growth Rate

CDSL Central Depository Services (India) Limited

DRR Debenture Redemption Reserve

EGM Extraordinary General Meeting

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Term Description

EPS Earnings Per Share

FDI Policy FDI in an Indian company is governed by the provisions of the FEMA read with the FEMA Regulations and the Foreign Direct Investment Policy

FEMA Foreign Exchange Management Act, 1999, as amended from time to time

FEMA Regulations Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended from time to time

FII/FIIs Foreign Institutional Investor(s)

Financial Year / FY Financial Year ending March 31

GDP Gross Domestic Product

GoI Government of India

HUF Hindu Undivided Family

IFRS International Financial Reporting Standards

IFSC Indian Financial System Code

Indian GAAP Generally Accepted Accounting Principles in India

IRDA Insurance Regulatory and Development Authority

IT Act The Income Tax Act, 1961, as amended from time to time

MCA Ministry of Corporate Affairs, Government of India

MICR Magnetic Ink Character Recognition

MSE Madras Stock Exchange Limited

NECS National Electronic Clearing Services

NEFT National Electronic Funds Transfer

NRI Non Resident Indian

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

PAN Permanent Account Number

RBI The Reserve Bank of India

RBI Act The Reserve Bank of India Act, 1934, as amended from time to time

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Term Description

ROC Registrar of Companies

RTGS Real Time Gross Settlement

SBI State Bank of India

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

SCRR The Securities Contracts (Regulation) Rules, 1957, as amended from time to time

SEBI

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

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

Securities Act U.S. Securities Act of 1933

TDS Tax Deducted at Source

WDM Wholesale Debt Market

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FORWARD LOOKING STATEMENTS

Certain statements contained in this Draft Prospectus that are not statements of historical fact constitute “forward-looking statements.” Investors can generally identify forward-looking statements by terminology such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “objective”, “plan”, “potential”, “project”, “pursue”, “shall”, “should”, “will”, “would”, or other words or phrases of similar import. All statements regarding our Company’s expected financial condition and results of operations and business plans and prospects are forward-looking statements. These forward-looking statements include statements as to our Company’ business strategy, revenue and profitability, planned projects and other matters discussed in this Draft Prospectus that are not historical facts. These forward-looking statements and any other projections contained in this Draft Prospectus (whether made by our Company or any third party) are predictions and involve known and unknown risks, uncertainties, assumptions and other factors that may cause our Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. All forward-looking statements are subject to risks, uncertainties and assumptions about our Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our Company’s expectations include, among others:

• General economic and business conditions in India and globally;

• Our ability to successfully implement our strategy, our growth and expansion plans and technological changes;

• Our ability to compete effectively and access funds at competitive cost;

• Changes in the value of Rupee and other currency changes;

• Unanticipated turbulence in interest rates, equity prices or other rates or prices; the performance of the financial and capital markets in India and globally;

• Availability of funds and willingness of our lenders to lend;

• Changes in political conditions in India;

• The rate of growth of our Loan Assets;

• The outcome of any legal or regulatory proceedings we are or may become a party to;

• Changes in Indian and/or foreign laws and regulations, including tax, accounting, banking, securities, insurance and other regulations; changes in competition and the pricing environment in India; and regional or general changes in asset valuations;

• Any changes in connection with policies, statutory provisions, regulations and/or RBI directions in connection with NBFCs, including laws that impact our lending rates and our ability to enforce our collateral;

• Performance of the sectors and industries that our financial products cater to namely the automobile industry, the small enterprises finance sector etc.

• Changes in the value of gold prices in connection with our loans against gold.

• Emergence of new competitors;

• Performance of the Indian debt and equity markets;

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• Occurrence of natural calamities or natural disasters affecting the areas in which our Company has operations; and

• Other factors discussed in this Draft Prospectus, including under the section titled “Risk Factors” beginning on page 1 of this Draft Prospectus.

All forward-looking statements are subject to risks, uncertainties and assumptions about our Company that could cause actual results and valuations to differ materially from those contemplated by the relevant statement. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under the sections titled “Industry” and “Our Business”. The forward-looking statements contained in this Draft Prospectus are based on the beliefs of management, as well as the assumptions made by and information currently available to management. Although our Company believes that the expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure investors that such expectations will prove to be correct or will hold good at all times. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties materialise, or if any of our Company’s underlying assumptions prove to be incorrect, our Company’s actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent forward-looking statements attributable to our Company are expressly qualified in their entirety by reference to these cautionary statements. Neither our Company, our Directors and Officers nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

General In this Draft Prospectus, unless the context otherwise indicates or implies, references to “you,” “offeree,” “purchaser,” “subscriber,” “recipient,” “investors” and “potential investor” are to the prospective investors in this Offering, references to our “Company”, the “Company” or the “Issuer” are to Shriram City Union Finance Limited. In this Draft Prospectus, references to “US$” is to the legal currency of the United States and references to “Rs.”, “`” and “Rupees” are to the legal currency of India. All references herein to the “U.S.” or the “United States” are to the United States of America and its territories and possessions and all references to “India” are to the Republic of India and its territories and possessions, and the "Government", the "Central Government" or the "State Government" are to the Government of India, central or state, as applicable. Unless otherwise stated, references in this Draft Prospectus to a particular year are to the calendar year ended on December 31 and to a particular “fiscal” or “fiscal year” are to the fiscal year ended on March 31. Unless otherwise stated all figures pertaining to the financial information in connection with our Company are on an unconsolidated basis. Presentation of Financial Information Our Company publishes its financial statements in Rupees. Our Company’s financial statements are prepared in accordance with Indian GAAP and the Companies Act. The Reformatted Unconsolidated Summary Financial Statements and the Reformatted Consolidated Summary Financial Statements are included in this Draft Prospectus and collectively referred to hereinafter as the “Reformatted Summary Financial Statements”. The examination reports on the Reformatted Summary Financial Statements, as issued by our Company’s Statutory Auditor, M/s Pijush Gupta & Co, are included in this Draft Prospectus in the section titled “Financial Information” beginning at page 146. Any discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding off.

Unless stated otherwise, macroeconomic and industry data used throughout this Draft Prospectus has been obtained from publications prepared by providers of industry information, government sources and multilateral institutions. Such publications generally state that the information contained therein has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Issuer believes that industry data used in this Draft Prospectus is reliable, it has not been independently verified.

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SECTION II : RISK FACTORS

Prospective investors should carefully consider the risks and uncertainties described below, in addition to the other

information contained in this Draft Prospectus before making any investment decision relating to the NCDs. The risk

factors set forth below do not purport to be complete or comprehensive in terms of all the risk factors that may arise in

connection with our business or any decision to purchase, own or dispose of the NCDs. If any of the following risks or

other risks that are not currently known or are now deemed immaterial, actually occur, our business, financial condition

and result of operation could suffer, the trading price of the NCDs could decline and you may lose your all or part of your

interest and / or redemption amounts. 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. The ordering of the

risk factors is intended to facilitate ease of reading and reference and does not in any manner indicate the importance of

one risk factor over another.

This Draft Prospectus contains forward looking statements that involve risk and uncertainties. Our Company’s actual

results could differ materially from those anticipated in these forward looking statements as a result of several factors,

including the considerations described below and elsewhere in this Draft Prospectus.

Investors are advised to read the following risk factors carefully before making an investment in the NCDs offered in this

Issue. You must rely on your own examination of our Company and this Issue, including the risks and uncertainties

involved.

INTERNAL RISK FACTORS

Risks relating to our Company and its Business

1. Our financial performance is particularly vulnerable to interest rate volatility. Accordingly our operations

and/or profitability may be adversely affected by any adverse fluctuations in interest rates.

Our results of operations are substantially dependent upon the level of our Net Interest Margins. Income from our financing activities is the largest component of our total income, and constituted 92.77% and 85.18% of our total income in fiscal 2011 and fiscal 2012, respectively. As at March 31, 2012, our assets under management were `13,43,103.98 lacs on an unconsolidated basis. We borrow funds on both fixed and floating rates. Volatility in interest rates can materially and adversely affect our financial performance. In a rising interest rate environment, if the yield on our interest-earning assets does not increase simultaneously with or to the same extent as our cost of funds, or, in a declining interest rate environment, if our cost of funds does not decline simultaneously or to the same extent as the yield on our interest-earning assets, our net interest income and net interest margin would be adversely impacted. Additional risks arising from increasing interest rates, among others, include:

• increases in the rates of interest charged on various loans in our loan portfolio, which could result in the extension of loan maturities and higher monthly installments due from borrowers which, in turn, could result in higher rates of default;

• reductions in the volume of product finance loans, auto loans, personal loans, loans against gold and/or loans to small enterprise finance segment as a result of clients' inability to service high interest rate payments; and

• reduction in the value of fixed income securities held in our investment portfolio. Accordingly, our operations are susceptible to fluctuations in interest rates. Interest rates are highly sensitive and fluctuations thereof are dependent upon many factors which are beyond our control, including the monetary policies of the RBI, de-regulation of the financial services sector in India, domestic and international economic and political conditions, inflation and other factors. Rise in inflation, and consequent changes in Bank rates, Repo rates and Reverse Repo rates by the RBI has led to an increase in interest rates on loans provided by banks and financial institutions, and market interest rates in India have been volatile in recent periods.

2. Our business requires substantial capital, and any disruption in funding sources would have a material

adverse effect on our liquidity and financial condition.

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As a finance company, our liquidity and ongoing profitability are, in large part, dependent upon our timely access to, and the costs associated with, raising capital. Our funding requirements historically have been met from a combination of term loans from banks and financial institutions, issuance of redeemable non-convertible debentures, public deposits, the issue of subordinated bonds and commercial paper. Thus, our business depends and will continue to depend on our ability to access diversified funding sources. Our ability to raise funds on acceptable terms and at competitive rates continues to depend on various factors including our credit ratings, the regulatory environment and policy initiatives in India, developments in the international markets affecting the Indian economy, investors' and/or lenders' perception of demand for debt and equity securities of NBFCs, and our current and future results of operations and financial condition. Changes in economic and financial conditions or continuing lack of liquidity in the market could make it difficult for us to access funds at competitive rates. As an NBFC, we also face certain restrictions on our ability to raise money from international markets which may further constrain our ability to raise funds at attractive rates. Such conditions may occur again in the future and may lead to a disruption in our primary funding sources at competitive costs and would have a material adverse effect on our liquidity and financial condition. And our ability to borrow from various banks may be restricted on account of directions issued by RBI, imposing restrictions on banks in relation to their exposure on bank finance to NBFCs.

3. High levels of customer defaults could adversely affect our business, financial condition and results of

operations.

Our business involves lending money and accordingly we are subject to customer default risks including default or delay in repayment of principal or interest on our loans. Customers may default on their obligations to us as a result of various factors including bankruptcy, lack of liquidity, lack of business and operational failure. If borrowers fail to repay loans in a timely manner or at all, our financial condition and results of operations will be adversely impacted. In addition, our customer portfolio principally consists of the under-banked community which does not typically have easy access to financing from commercial banks or other organized lenders and often have limited credit history. Such borrowers generally are less financially resilient than larger corporate borrowers, and, as a result, they can be more adversely affected by declining economic conditions. In addition, a significant majority of our client base belongs to the low or middle income group. In addition, we may not receive updated information regarding any change in the financial condition of our customers or may receive inaccurate or incomplete information as a result of any fraudulent misrepresentation on the part of our customers. Furthermore, unlike several developed economies, a nationwide credit bureau has only recently become operational in India, so there is less financial information available about the creditworthiness of our customers. It is therefore difficult to carry out precise credit risk analyses on our clients. Although we follow certain procedures to evaluate the credit profile of our customers at the time of sanctioning a loan, we generally rely on the referrals from the current or past customers of our Company or those of other entities in the Shriram Group. Although we believe that our risk management controls are sufficient, we cannot be certain that they will continue to be sufficient or that additional risk management policies for individual borrowers will not be required. Failure to continuously monitor the loan contracts, particularly for individual borrowers, could adversely affect our credit portfolio which could have a material and adverse effect on our results of operations and financial condition.

4. We may not be able to recover, on a timely basis or at all, the full value of collateral or amounts which are

sufficient to cover the outstanding amounts due under defaulted loans. A failure or delay to recover the

expected value from sale of collateral security could expose us to a potential loss. Any such losses could

adversely affect our financial condition and results of operations.

For our two-wheeler and other vehicle loans, the two-wheeler/vehicle is typically hypothecated in favour of our Company for the tenure of the loan. The value of the vehicle, however, is subject to depreciation, deterioration, and/or reduction in value on account of other extraneous reasons, over the course of time. Consequently, the realizable value of the collateral for the credit facility provided by us, when liquidated, may be lower than the outstanding loan from such customers. The hypothecated vehicles, being movable property, may be difficult to

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locate or seize in the event of any default by our customers. There can also be no assurance that we will be able to sell such vehicles provided as collateral at prices sufficient to cover the amounts under default. In addition, there may be delays associated with such process. In connection with loans against gold provided by us, the gold jewellery and/or ornaments are provided as security. An economic downturn or sharp downward movement in the price of gold could result in a fall in collateral values. In the event of any decrease in the price of gold, customers may not repay their loans and the collateral gold jewellery securing the loans may have decreased significantly in value, resulting in losses which we may not be able to support. No assurance can be given that if the price of gold decreased significantly, our financial condition and results of operations from this business product would not be adversely affected. The impact on our financial position and results of operations of a hypothetical decrease in gold values cannot be reasonably estimated because the market and competitive response to changes in gold values is not pre-determinable. Additionally, we may not be able to realise the full value of our collateral, due to, among other things, defects in the quality of gold or wastage on melting gold jewellery into gold bars. In addition, failure by our employees to properly appraise the value of the collateral provides us with no recourse against the borrower. For the personal loans and loans to small enterprise businesses, in connection with a customer who is also an existing customer of ‘Shriram Chits’ we typically create a lien over the chit deposits of such customer. If the value of the chit deposits is insufficient to cover the entire loan amount, we typically also require immovable or movable property to be provided for the remaining value of the loan amount. In cases where the customer is unable to provide such immovable or movable property as security, the applicant is also required to furnish a guarantee from typically an existing or a former customer. Any deterioration in the value of such additional security or our failure to enforce such guarantees or to enforce such charges in a timely manner or at all could adversely affect our operations and profitability. Any default in repayment of the outstanding credit obligations by our customers may expose us to losses. A failure or delay to recover the expected value from sale of collateral security could expose us to a potential loss. Any such losses could adversely affect our financial condition and results of operations. Furthermore, enforcing our legal rights by litigating against defaulting customers is generally a slow and potentially expensive process in India. Accordingly, it may be difficult for us to recover amounts owed by defaulting customers in a timely manner or at all.

5. Our significant indebtedness and the conditions and restrictions imposed by our financing arrangements

could restrict our ability to conduct our business and operations in the manner we desire.

As at June 30, 2012, we had outstanding secured debt of ` 9,64,644.76 lacs and unsecured debt of ` 1,25,329.96 lacs on an unconsolidated basis, and we will continue to incur additional indebtedness in the future. Most of our borrowings are secured by our immovable and other assets. Our significant indebtedness could have several important consequences, including but not limited to the following:

• a portion of our cash flow may be used towards repayment of our existing debt, which will reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate requirements;

• our ability to obtain additional financing in the future at reasonable terms may be restricted or our cost of borrowings may increase due to sudden adverse market conditions, including decreased availability of credit or fluctuations in interest rates;

• fluctuations in market interest rates may affect the cost of our borrowings as some of our indebtedness are at variable interest rates;

• there could be a material adverse effect on our business, financial condition and results of operations if we are unable to service our indebtedness or otherwise comply with financial and other covenants specified in the financing agreements; and

• we may be more vulnerable to economic downturns, may be limited in our ability to withstand competitive pressures and may have reduced flexibility in responding to changing business, regulatory and economic conditions.

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Some of our financing agreements also include various conditions and covenants that require us to obtain lender consents prior to carrying out certain activities and entering into certain transactions. Failure to meet these conditions or obtain these consents could have significant consequences on our business and operations. Specifically, under some of our financing agreements, we require, and may be unable to obtain, consents from the relevant lenders for, among others, the following matters: entering into any scheme of merger; spinning-off of a business division; selling or transferring all or a substantial portion of our assets; making any change in ownership or control or constitution of our Company; making amendments in our Memorandum and Articles of Association; creating any further security interest on the assets upon which the existing lenders have a prior charge; and raising funds by way of any fresh capital issue. Our financing agreements also typically contain certain financial covenants including the requirement to maintain, among others, specified debt-to-equity ratios, debt-to-net worth ratios, or Tier I to Tier II capital ratios that may be higher than statutory or regulatory requirements. These covenants vary depending on the requirements of the financial institution extending the loan and the conditions negotiated under each financing document. Such covenants may restrict or delay certain actions or initiatives that we may propose to take from time to time. A failure to observe the covenants under our financing arrangements or to obtain necessary consents required there under may lead to the termination of our credit facilities, acceleration of all amounts due under such facilities and the enforcement of any security provided. Any acceleration of amounts due under such facilities may also trigger cross default provisions under our other financing agreements. If the obligations under any of our financing documents are accelerated, we may have to dedicate a substantial portion of our cash flow from operations to make payments under such financing documents, thereby reducing the availability of cash for our working capital requirements and other general corporate purposes. Further, during any period in which we are in default, we may be unable to raise, or face difficulties raising, further financing. Any of these circumstances could adversely affect our business, credit rating and financial condition and results of operations. Moreover, any such action initiated by our lenders could result in the price of our NCDs being adversely affected.

6. Our entire customer base comprises of individual and/or small enterprise segment borrowers, who generally

are more likely to be affected by declining economic conditions than larger corporate borrowers, which could

have a material and adverse affect on our credit portfolio.

Individual and small enterprise segment borrowers generally are less financially resilient than larger corporate borrowers, and, as a result, they can be more adversely affected by declining economic conditions. In addition, a significant majority of our customer base belongs to the low to medium income group and/or the small enterprises finance sector. Furthermore, unlike several developed economies, a nationwide credit bureau has only recently become operational in India, so there is less financial information available about individuals, particularly our focus customer segment from the low to medium income group who typically have limited access to other financing sources. It is therefore difficult to carry out precise credit risk analyses on our customers. Although we believe that our risk management controls are sufficient, we cannot be certain that they will continue to be sufficient or that additional risk management policies for individual borrowers will not be required. Failure to maintain sufficient credit assessment policies, particularly for individual borrowers, could adversely affect our credit portfolio which could have a material and adverse effect on our results of operations and financial condition.

7. We are involved in various legal and other proceedings which if determined against us or our interests could

have a material adverse effect on our financial condition and results of operations.

We are currently involved in a number of legal proceedings arising in the ordinary course of our business. These proceedings are pending at different levels of adjudication before various courts and tribunals, primarily relating to civil suits and tax disputes. For further information relating to certain significant legal proceedings that we are involved in, please refer to the section titled “Pending Proceedings and Statutory Defaults” beginning on page 205 of this Draft Prospectus. An adverse decision in these proceedings could materially and adversely affect our business, financial condition and results of operations.

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8. Since we handle high volume of cash and gold jewellery in a dispersed network of branches, we are exposed to

operational risks, including employee negligence, fraud, petty theft, burglary and embezzlement, which could

harm our results of operations and financial position.

Our transactions in connection with loans against gold, personal loans and loans to the small enterprises finance segment involve cash and gold jewellery. Large cash and gold jewellery transactions expose us to the risk of fraud by employees, agents, customers or third parties, theft, burglary and misappropriation or unauthorized transactions by our employees. Our insurance policies, security systems and measures undertaken to detect and prevent these risks may not be sufficient to prevent or deter such activities in all cases, which may adversely affect our operations and profitability. Further, we may be subject to regulatory or other proceedings in connection with any unauthorized transaction, fraud or misappropriation by our representatives and employees, which could adversely affect our goodwill. The nature and size of the items provided as collateral allow these items to be misplaced or mis-delivered, which may have a negative impact on our operations and result in losses.

9. We may not be able to successfully sustain our growth strategy.

We have demonstrated consistent growth in our business and in our profitability. Our Assets Under Management have grown by a compounded annual growth rate, or CAGR, of 41.30% from ` 3,36,889.78 lacs as at March 31, 2008 to ` 13,43,103.98 lacs as at March 31, 2012. Our capital adequacy ratio as at March 31, 2012 computed on the basis of applicable RBI requirements was 17.40 %, compared to the RBI stipulated minimum requirement of 15.00%. Our Tier I capital as at March 31, 2012 was ` 1,56,514.87 lacs. Our Gross NPAs as a percentage of Total Loan Assets were 1.55 % as at March 31, 2012. Our Net NPAs as a percentage of Net Loan Assets was 0.38 % as at March 31, 2012. Our total income increased from ` 62,399.78 lacs in fiscal 2008 to ` 2, 05,641.43 lacs in fiscal 2012 at a CAGR of 34.74 % on an unconsolidated basis. Our net profit after tax increased from ` 8,763.50 lacs in fiscal 2008 to ` 34,253.12 lacs in fiscal 2012, at a CAGR of 40.61% on an unconsolidated basis. Our growth strategy includes growing our loan book and expanding our customer base. There can be no assurance that we will be able to sustain our growth strategy successfully or that we will be able to expand further or diversify our product portfolio. If we grow our loan book too rapidly or fail to make proper assessments of credit risks associated with new borrowers, a higher percentage of our loans may become non-performing, which would have a negative impact on the quality of our assets and our financial condition. We also face a number of operational risks in executing our growth strategy. We have experienced growth in each of our lines of business particularly in connection with loans to the small enterprises segment and loans against gold businesses. Our branch network has expanded significantly, we are entering into new, smaller towns and cities within India as part of our growth strategy and gradually introducing all our products in each of our branches. Our rapid growth exposes us to a wide range of increased risks, including business risks, such as the possibility that a number of our impaired loans may grow faster than anticipated, as well as operational risks, fraud risks and regulatory and legal risks. Moreover, our ability to sustain our rate of growth depends significantly upon our ability to manage key issues such as selecting and retaining key managerial personnel, maintaining effective risk management policies, continuing to offer products which are relevant to our target base of clients, developing managerial experience to address emerging challenges and ensuring a high standard of client service. We will need to recruit new employees, who will have to be trained and integrated into our operations. We will also have to train existing employees to adhere properly to internal controls and risk management procedures. Failure to train our employees properly may result in an increase in employee attrition rates, require additional hiring, erode the quality of customer service, divert management resources, increase our exposure to high-risk credit and impose significant costs on us.

10. We face asset-liability mismatches which could affect our liquidity and consequently may adversely affect our

operations and profitability.

We face potential liquidity risks due to varying periods over which our assets and liabilities mature. As is typical for NBFCs, a portion of our funding requirements is met through short-term funding sources such as bank loans, working capital demand loans, cash credit, short term loans and commercial papers. However, each of our products differs in terms of the average tenor, average yield, average interest rates and average size of loan. The

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average tenor of our products may not match with the average tenor of our liabilities. Consequently, our inability to obtain additional credit facilities or renew our existing credit facilities, in a timely and cost-effective manner or at all, may lead to mismatches between our assets and liabilities, which in turn may adversely affect our operations and financial performance. Further, mismatches between our assets and liabilities are compounded in case of pre-payments of the financing facilities we grant to our customers.

11. We face increasing competition in our business which may result in declining margins if we are unable to

compete effectively.

We face competition in all our lines of businesses. Our primary competitors are other NBFCs, public sector banks, private sector banks, co-operative banks and foreign banks and the unorganized financiers who principally operate in the local markets. Over the past few years, the retail financing area has seen the entry of banks, both nationalized as well as foreign. Banks have access to low cost funds which enables them to enjoy higher margins and / or offer finance at lower rates. NBFCs do not have access to large quantities of low cost deposits, a factor which can render them less competitive. In addition, interest rate deregulation and other liberalization measures affecting the retail and small enterprises finance sector, together with increased demand for capital by individuals as well as small enterprises, have resulted in an increase in competition. All of these factors have resulted in us facing increased competition from other lenders in each of our lines of businesses, including commercial banks and other NBFCs. Our ability to compete effectively will depend, to some extent, on our ability to raise low-cost funding in the future. Furthermore, as a result of increased competition in the finance sector, finance products are becoming increasingly standardized and variable interest rate and payment terms and lower processing fees are becoming increasingly common in the finance sector in India. There can be no assurance that we will be able to react effectively to these or other market developments or compete effectively with new and existing players in the increasingly competitive finance industry. Increasing competition may have an adverse effect on our net interest margin and other income, and, if we are unable to compete successfully, our market share may decline. If we are unable to compete effectively with other participants in the finance sector, our business, future financial performance and the trading price of the NCDs may be adversely affected.

12. We have no prior operating experience in the housing finance business and accordingly, we may not be able

to successfully implement our growth strategy to foray into the housing finance business.

Our Company incorporated a wholly owned subsidiary namely Shriram Housing Finance Limited in November 2010, with a view of entering the housing finance sector, which recently received a certificate of registration dated August 4, 2011 from the National Housing Bank, to operate as a housing finance company and has commenced operations in the last financial year pursuant thereto. Shriram Housing Finance Limited seeks to typically target middle-income customers in semi-urban locations. We cannot assure that our foray into the housing finance business would yield favorable or expected results as our overall profitability and success will be subject to various factors including, among others, our ability to obtain necessary statutory and/or regulatory approvals and licenses in connection with the said business, our ability to effectively recruit, retain and motivate appropriate managerial talent, our inexperience in the housing finance sector and ability to compete with banks, housing finance companies and other financial institutions that are already well established in this market segment as well as our ability to effectively absorb additional infrastructure costs. Our housing finance business will require significant capital investments and commitments of time from our senior management, there also can be no assurance that our management will be able to develop the skills necessary to successfully manage these new business areas. Our inability to effectively manage any of these issues could materially and adversely affect our business and impact our future financial performance.

13. We may experience difficulties in expanding our business into new regions and markets in India and

introducing our complete range of products in each of our branches, which may adversely affect our business

prospects, financial conditions and results of operations.

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As part of our growth strategy, we continue to evaluate attractive growth opportunities to expand our business into new regions and markets in India. Factors such as competition, culture, regulatory regimes, business practices and customs and customer requirements in these new markets may differ from those in our current markets and our experience in our current markets may not be applicable to these new markets. In addition, as we enter new markets and geographical regions, we are likely to compete not only with other banks and financial institutions but also the local unorganized or semi-organized private financiers, who are more familiar with local regulations, business practices and customs and have stronger relationships with customers. As a part of our growth strategy, we propose to target establishing our operations through new branches in cities and towns where we historically had relatively limited operations, such as in eastern and northern parts of India, and to further consolidate our position and operations in western and southern parts of India. We target to gradually introduce our entire range of product offerings, namely (i) product finance loans, (ii) pre-owned and new vehicles loans, (iii) personal loans, (iv) loans against gold, and (v) loans to small enterprises at each of our existing branches across India. Our business may be exposed to various additional challenges including obtaining necessary governmental approvals, identifying and collaborating with local business and partners with whom we may have no previous working relationship; successfully gauging market conditions in local markets with which we have no previous familiarity; attracting potential customers in a market in which we do not have significant experience or visibility; being susceptible to local taxation in additional geographical areas of India and adapting our marketing strategy and operations to different regions of India in which different languages are spoken. Our inability to expand our current operations may adversely affect our business prospects, financial conditions and results of operations.

14. A large number of our branches are located in southern India, and any downturn in the economy in the states

in India where we operate, or any change in consumer preferences in that region could adversely affect our

results of operations and financial condition.

We have a strong concentration of our business in south India with 249 of our 575 branches as on June 30, 2012, located in the states of Tamil Nadu, Andhra Pradesh and Karnataka. Any adverse change in the political and/or economic environment in the states of Tamil Nadu, Andhra Pradesh and Karnataka or any unfavourable changes in the regulatory and policy regime in the said region could adversely affect our manufacturing operations, financial condition and/or profitbility. Further, any changes in consumer preferences in the said region could also affect our operations and profitability.

15. Any downgrade of our credit ratings would increase borrowing costs and constrain our access to capital and

lending markets and, as a result, would negatively affect our net interest margin and our business.

In relation to our long-term debt instruments, we currently have ratings of ‘CARE AA’ from CARE RATINGS,‘CRISIL AA-/STABLE’ from CRISIL RATINGS and ‘FITCH AA- (IND)/STABLE’ from FITCH RATINGS. In relation to our short-term debt instruments, we have also received ratings of “[CARE A1+]” from CARE RATINGS, “CRISIL A1+” from CRISIL RATINGS, and “FITCH A1+ (IND)” from FITCH RATINGS. Our fixed deposit programme has been rated as ‘CARE AA (FD)’ by CARE RATINGS, FAA/STABLE BY CRISIL RATINGS and ‘FITCH tAA- (IND)’ by FITCH RATINGS. The NCDs proposed to be issued under this Issue have been rated ‘CARE AA’ by CARE for an amount of upto ` 50,000 lacs vide its letter dated August 10, 2012, and ‘CRISIL AA-/Stable’ by CRISIL for an amount of upto ` 50,000 lacs vide its letter dated August 14, 2012. The rating of the NCDs by CARE indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The rating of NCDs by CRISIL indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The ratings provided by CARE and/or CRISIL may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. Any downgrade of our credit ratings would increase borrowing costs and constrain our access to capital and debt markets and, as a result, would negatively affect our net interest margin and our business. In addition, downgrades of our credit ratings could increase the possibility of additional terms and conditions being added to any additional financing or refinancing arrangements in the future. Any such adverse development could adversely affect our business, financial condition and results of operations. A large number of our branches are

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located in southern India and any downturn in the economy of southern India or adverse change in consumer preferences in that region could adversely affect our results of operations

16. If we are unable to manage the level of NPAs in our Loan Assets, our financial position and results of

operations may suffer.

Our Gross NPAs as a percentage of Total Loan Assets were 1.55 % and 1.86 % as at March 31, 2012 and March 31, 2011 respectively, while our Net NPAs as a percentage of Net Loan Assets were 0.38 % and 0.43 % as at March 31, 2012 and March 31, 2011, respectively. We cannot be sure that we will be able to improve our collections and recoveries in relation to our NPAs or otherwise adequately control our level of NPAs in future. Moreover, as our loan portfolio matures, we may experience greater defaults in principal and/or interest repayments. Thus, if we are not able to control or reduce our level of NPAs, the overall quality of our loan portfolio may deteriorate and our results of operations may be adversely affected. Furthermore, our current provisions may not be adequate when compared to the loan portfolios of other financial institutions. Moreover, there also can be no assurance that there will be no further deterioration in our provisioning coverage as a percentage of Gross NPAs or otherwise, or that the percentage of NPAs that we will be able to recover will be similar to our past experience of recoveries of NPAs. In the event of any further deterioration in our NPA portfolio, there could be an even greater, adverse impact on our results of operations.

17. A decline in our capital adequacy ratio could restrict our future business growth.

As per RBI notification dated February 17, 2011, all deposit taking NBFCs have to maintain a minimum capital adequacy ratio, consisting of Tier I and Tier II capital, which shall not be less than 15.00% of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items w.e.f. March 31, 2012. Our capital adequacy ratio computed on the basis of applicable RBI requirements was 17.40% as at March 31, 2012, with Tier I capital comprising 15.00 %. If we continue to grow our loan portfolio and asset base, we will be required to raise additional Tier I and Tier II capital in order to continue to meet applicable capital adequacy ratios with respect to our business. There can be no assurance that we will be able to raise adequate additional capital in the future on terms favorable to us or at all and this may adversely affect the growth of our business.

18. System failures or inadequacy and security breaches in computer systems may adversely affect our business.

Our business is increasingly dependent on our ability to process, on a daily basis, a large number of transactions. Our financial, accounting or other data processing systems may fail to operate adequately or become disabled as a result of events that are wholly or partially beyond our control including a disruption of electrical or communications services. Our ability to operate and remain competitive will depend in part on our ability to maintain and upgrade our information technology systems on a timely and cost-effective basis. The information available to and received by our management through our existing systems may not be timely and sufficient to manage risks or to plan for and respond to changes in market conditions and other developments in our operations. We may experience difficulties in upgrading, developing and expanding our systems quickly enough to accommodate our growing customer base and range of products. Our operations also rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. Our computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code and other events that could compromise data integrity and security. Any failure to effectively maintain or improve or upgrade our management information systems in a timely manner could materially and adversely affect our competitiveness, financial position and results of operations. Moreover, if any of these systems do not operate properly or are disabled or if there are other shortcomings or failures in our internal processes or systems, it could affect our operations or result in financial loss, disruption of our businesses, regulatory intervention or damage to our reputation. In addition, our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the localities in which we are located.

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19. We are subject to supervision and regulation by the RBI as a deposit-taking NBFC, and changes in RBI’s

regulations governing us could adversely affect our business.

We are subject to the RBI’s guidelines on financial regulation of NBFCs, including capital adequacy, exposure and other prudential norms. The RBI also regulates the credit flow by banks to NBFCs and provides guidelines to commercial banks with respect to their investment and credit exposure norms for lending to NBFCs. The RBI’s regulations of NBFCs could change in the future which may require us to restructure our activities, incur additional costs or could otherwise adversely affect our business and our financial performance. The RBI, from time to time, amends the regulatory framework governing NBFCs to address, inter-alia, concerns arising from certain divergent regulatory requirements for banks and NBFCs. Pursuant to two notifications dated December 6, 2006, (Notifications No. DNBS. 189 / CGM (PK)-2006 and DNBS.190 / CGM (PK)-2006), the RBI amended the NBFC Acceptance of Public Deposits (Reserve Bank) Directions, 1998, reclassifying deposit taking NBFCs, such as us. We are also subject to the requirements of the Non Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, issued by the RBI on February 22, 2007, as amended.

The laws and regulations governing the banking and financial services industry in India have become increasingly complex and cover a wide variety of issues such as interest rates, liquidity, securitization, investments, ethical issues, money laundering and privacy. In some cases, there are overlapping regulations and enforcement authorities. Moreover, these laws and regulations can be amended, supplemented or changed at any time such that we may be required to restructure our activities and incur additional expenses to comply with such laws and regulations, which could materially and adversely affect our business and our financial performance. For instance, RBI has vide recent circular dated May 3, 2011 clarified that bank finance to NBFCs would not be classified as priority sector lending, which has affected profitability of NBFCs engaged in money lending activities. Compliance with many of the regulations applicable to our operations in India and/or outside India, including any restrictions on investments, lending and other activities currently being carried out by our Company, involves a number of risks, particularly in areas where applicable regulations may be subject to varying interpretations. If the interpretation of the regulators and authorities varies from our interpretation, we may be subject to penalties and our business could be adversely affected. We are also subject to changes in Indian laws, regulations and accounting principles and practices. There can be no assurance that the laws governing the Indian financial services sector will not change in the future or that such changes or the interpretation or enforcement of existing and future laws and rules by governmental and regulatory authorities will not adversely affect our business and future financial performance.

20. We may not be able to maintain our current levels of profitability due to increased costs or reduced spreads,

which could adversely affect our results of operations.

Our business strategy involves a relatively high level of ongoing interaction with our customers. We believe that this involvement is an important part of developing our relationship with our customers, identifying new cross-selling opportunities and monitoring our performance. However, this level of involvement also entails higher levels of costs and also requires a relatively higher gross spread, or margin, on the finance products we offer in order to maintain profitability. There can be no assurance that we will be able to maintain our current levels of profitability if the gross spreads on our finance products were to reduce substantially, which could adversely affect our results of operations.

21. As part of our business strategy we assign or securitize a substantial portion of our Loan Assets to banks and

other institutions. Any deterioration in the performance of any pool of direct assigned and securitized to banks

and other institutions may adversely impact our financial performance.

As part of our means of raising and/or managing our funds, we assign or securitize a substantial portion of the receivables from our loan portfolio to banks and other institutions. Such direct assignment and securitization transactions are conducted on the basis of our internal estimates of our funding requirements, which may vary from time to time. In fiscal 2008, 2009, 2010, 2011 and 2012 we securitized/assigned assets of a book value of ` 75,781.80 lacs, ` 88,844.37 lacs, ` 30,000 lacs, and ` 117,915.72 lacs and ` 2,66,942.25 lacs respectively on an

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unconsolidated basis. Any change in statutory and/regulatory requirements in relation to assignments or securitizations by financial institutions, including the requirements prescribed by RBI and the Government of India, could have an adverse impact on our assignment or securitization transactions. Any adverse changes in the policy and/or regulations in connection with securitization of assets by NBFCs and/or new circulars and/or directions issued by the RBI in this regard, affecting NBFCs or the purchasers of assets, would affect the securitization market in general and our ability to securitise and/or assign our assets. We are also required to provide a credit enhancement for the securitization/assignment transactions by way of either fixed deposits or corporate guarantees and the aggregate credit enhancement amount outstanding as on March 31, 2012 was ` 37,184.28 lacs by way of cash collateral on an unconsolidated basis. In the event a relevant bank or institution does not realize the receivables due under such Loan Assets, such bank or institution would have recourse to such credit enhancement, which could have a material adverse effect on our results of operations and financial condition.

22. Any change in control of our Promoters and/or any disassociation of our Company from the Shriram Group

could adversely affect our operations and profitability.

As at June 30, 2012, SCL holds 51.00 % of the paid up share capital of our Promoter, Shriram Retail Holdings Private Limited, (“SRHPL”), and the remaining shares in SRHPL were held by certain strategic investors. SEHPL and SRHPL hold Nil and 50.70 % of the paid up share capital of our Company, as at August 17, 2012, respectively. If SCL ceases to exercise control over SRHPL as a result of any transfer of shares or otherwise, our ability to derive any benefit from the brand name “Shriram” and our goodwill as a part of the Shriram Group of companies may be adversely affected, which in turn could adversely affect our business and results of operations. Any such change of control could also significantly influence our business policies and operations. We benefit in several ways from other entities under the Shriram Group. We leverage on the Shriram Group’s ecosystem to reach out to our prospective customers and our focus has been in maximizing our association with the “Shriram” brand name and the synergies offered by the infrastructure, of other entities in the Shriram Group. Our customer base over the years has comprised of customers of other entities in the Shriram Group. The large customer bases and wide-spread network of branches of entities such as Shriram Transport Finance Company Limited, (one of the largest organized asset financing NBFCs in India), and entities operating under the “Shriram Chits” brand name has continued to provide us with a large platform of target customers. Further, typically loans provided to chit depositors of Shriram Chits are partly or entirely secured by the deposits made with Shriram Chits. Accordingly, any disassociation of our Company from the Shriram Group and/or our inability to have access to the infrastructure provided by other companies in the Shriram Group could adversely affect our ability to attract customers and to expand our business, which in turn could adversely affect our goodwill, operations and profitability.

23. The trade mark/service mark and logo in connection with the “Shriram” brand which we use is licensed to us

and consequently, any termination or non-renewal of such license may adversely affect our goodwill,

operations and profitability.

Pursuant to a license agreement dated April 1, 2010 between our Company and Shriram Ownership Trust, (“SOT”) we are entitled to use the brand name “Shriram” and the associated mark. In this regard, our Company has to pay to SOT, 0.25% on the gross turnover of our Company for the first year of the license agreement. Royalty rates for the subsequent years will be decided mutually on or before April 1st of the respective financial years. Along with the royalty, our Company also is required to pay to SOT amounts by way of reimbursement of actual expenses incurred by SOT in respect of protection and defence of the Copyright. The agreement is valid for a period of three years from the date of execution thereof, subject to any pre-mature termination thereof by SOT in accordance with the terms and conditions of the agreement. In the event such license agreement is terminated or is not renewed or extended in the future, we may not be entitled to use the brand name “Shriram” and the associated mark in connection with our business operations. Consequently, we will not be able to derive the goodwill that we have been enjoying under the “Shriram” brand. Further, if the commercial terms and conditions including the consideration payable pursuant to the said agreement are revised unfavorably, our Company may be required to allocate larger portions of its profits and/or revenues towards such consideration, which would adversely affect our profitability.

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We operate in a competitive environment and we believe that our brand recognition is a significant competitive advantage to us. If the license and user agreement is not renewed or terminated, we may need to change our name, trade mark/service mark or the logo. Any such change could require us to incur additional costs and may adversely impact our goodwill, business prospects and results of operations.

24. We have certain contingent liabilities which may adversely affect our financial condition.

As at March 31, 2012, we had certain contingent liabilities not provided for on an unconsolidated basis, including the following:

• Guarantees issued by the company –` 450.00 lacs

• Guarantees issued by others –` Nil lacs For further information on such contingent liabilities, see Annexure VI to our Reformatted Unconsolidated Summary Financial Statements. In the event that any of these contingent liabilities materialize, our financial condition may be adversely affected.

25. Our Subsidiary, SHFL, has incurred losses in the past. If SHFL fails to improve its financial performance,

our overall profitability on a consolidated basis could be impacted, which in turn may affect the valuation of

our Company and Subsidiary as a whole.

Our Subsidiary, namely Shriram Housing Finance Limited has an incurred loss after taxation of ` 444.79 in the financial year 2012 as per its respective audited financial statements. For further details please refer to Reformatted Consolidated Summary Financial Statements. If SHFL fails to improve its financial performance, our overall profitability on a consolidated basis could be impacted, which in turn may affect the valuation of our Company and Subsidiary as a whole.

26. We may have to comply with strict regulations and guidelines issued by regulatory authorities in India. There

can be no assurance that changes in these regulations and/or guidelines and the enforcement of existing and

future regulatory requirements by governmental and regulatory authorities will not adversely affect our

business and future financial performance.

We are regulated principally by and have reporting obligations to the RBI. We are also subject to the corporate, taxation and other laws in effect in India. The regulatory and legal framework governing us may continue to change as India’s economy and commercial and financial markets evolve. In recent years, existing rules and regulations have been modified, new rules and regulations have been enacted and reforms have been implemented which are intended to provide tighter control and more transparency in India’s asset finance sector. Further, RBI may increase the minimum capital adequacy requirement for deposit taking NBFCs such as us. Compliance with many of the regulations applicable to our operations may involve significant costs and otherwise may impose restrictions on our operations. If the interpretation of the regulators and authorities varies from our interpretation, we may be subject to penalties and the business of our Company could be adversely affected. There can be no assurance that changes in these regulations and the enforcement of existing and future rules by governmental and regulatory authorities will not adversely affect our business and future financial performance.

27. Our ability to assess, monitor and manage risks inherent in our business differs from the standards of some of

our counterparts in India and in some developed countries.

We are exposed to a variety of risks, including liquidity risk, interest rate risk, credit risk, operational risk and legal risk. The effectiveness of our risk management is limited by the quality and timeliness of available data. Our hedging strategies and other risk management techniques may not be fully effective in mitigating our risks in all market environments or against all types of risk, including risks that are unidentified or unanticipated. Some methods of managing risks are based upon observed historical market behavior. As a result, these methods may

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not predict future risk exposures, which could be greater than the historical measures indicated. Other risk management methods depend upon an evaluation of information regarding markets, customers or other matters. This information may not in all cases be accurate, complete, current, or properly evaluated. Management of operational, legal or regulatory risk requires, among other things, policies and procedures to properly record and verify a number of transactions and events. Although we have established these policies and procedures, they may not be fully effective. Our future success will depend, in part, on our ability to respond to new technological advances and evolving NBFC and retail finance sector standards and practices on a cost-effective and timely basis. The development and implementation of such technology entails significant technical and business risks. There can be no assurance that we will successfully implement new technologies or adapt our transaction-processing systems to customer requirements or evolving market standards.

28. Our Promoters have significant control in our Company, which will enable them to influence the outcome of

matters submitted to shareholders for approval, and their interests may differ from those of other holders of

Equity Shares.

As of August 17, 2012, our Promoters SEHPL and SRHPL beneficially owned Nil and 50.70 %, of our paid-up equity share capital, respectively. See “Capital Structure”. Our Promoters have the ability to control our business including matters relating to any sale of all or substantially all of our assets, the timing and distribution of dividends and the election or termination of appointment of our officers and directors. This control could delay, defer or prevent a change in control of our Company, impede a merger, consolidation, takeover or other business combination involving our Company or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company even if it is in our Company’s best interest. In addition, for so long as our Promoters continue to exercise significant control over our Company, it may influence the material policies of our Company in a manner that could conflict with the interests of our other shareholders. The Promoters may have interests that are adverse to the interests of our other shareholders and may take positions with which we or our other shareholders do not agree.

29. We have entered into certain related party transactions and may continue to do so in the future.

We have entered into transactions with related parties, within the meaning of AS 18 as notified by the Companies (Accounting Standards) Rules, 2006. These transactions include royalty paid to Shriram Ownership Trust pursuant to the License Agreement dated April 1, 2010 between our Company and Shriram Ownership Trust in connection with the use of the brand name "Shriram" and the associated mark. For further information on our related party transactions please see the section titled “Financial Information”. Such transactions may give rise to current or potential conflicts of interest with respect to dealings between us and such related parties. Additionally, there can be no assurance that any dispute that may arise between us and related parties will be resolved in our favor.

30. Any failure by us to identify, manage, complete and integrate acquisitions, divestitures and other significant

transactions successfully could adversely affect our results of operations, business and prospects.

As part of our business strategy, we may acquire complementary companies or businesses, divest non-core businesses or assets, enter into strategic alliances and joint ventures and make investments to further our business. In order to pursue this strategy successfully, we must identify suitable candidates for and successfully complete such transactions, some of which may be large and complex, and manage the integration of acquired companies or employees. We may not fully realize all of the anticipated benefits of any such transaction within the anticipated timeframe or at all. Any increased or unexpected costs, unanticipated delays or failure to achieve contractual obligations could make such transactions less profitable or unprofitable. Managing business combination and investment transactions requires varying levels of management resources, which may divert our attention from other business operations, may result in significant costs and expenses and charges to earnings. The challenges involved in integration include:

• combining product offerings and entering into new markets in which we are not experienced;

• consolidating and maintaining relationships with customers;

• consolidating and rationalizing transaction processes and corporate and IT infrastructure;

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• integrating employees and managing employee issues;

• coordinating and combining administrative and other operations and relationships with third parties in accordance with applicable laws and other obligations while maintaining adequate standards, controls and procedures;

• achieving savings from infrastructure integration; and

• managing other business, infrastructure and operational integration issues. 31. Certain of our shareholders agreements give various rights to the other parties which may restrict our ability

to take decisions and the raise capital, such as rights to nominate directors on our Board and/or rights to

prevent dilution of shareholding of such other parties.

Pursuant to various investment agreements executed by our Company, the relevant investors have rights to appoint independent directors and/or observers on the Board of our Company, subject to such investors maintaining certain thresholds of shareholding in our equity share capital. The terms of some of the the abovementioned agreements require that if our Company should undertake a further issue of equity shares or any other instrument convertible to equity shares, the Investor is entitled to be offered equity shares in a manner so as to enable the Investor to maintain its shareholding percentage in our Company at the same level as it had prior to such further issue. For further details please refer to the section titled “History, Main Objects and Key

Agreements” on page 115 of this Draft Prospectus. Such rights may restrict our ability to take decisions and the raise capital.

32. Our success depends in large part upon our management team and key personnel and our ability to attract,

train and retain such persons.

Our ability to sustain our rate of growth depends significantly upon our ability to manage key issues such as selecting and retaining key managerial personnel, developing managerial experience to address emerging challenges and ensuring a high standard of client service. In order to be successful, we must attract, train, motivate and retain highly skilled employees, especially branch managers and product executives. If we cannot hire additional qualified personnel or retain them, our ability to expand our business will be impaired and our revenue could decline. We will need to recruit new employees, who will have to be trained and integrated into our operations. We will also have to train existing employees to adhere properly to internal controls and risk management procedures. Failure to train and motivate our employees properly may result in an increase in employee attrition rates, divert management resources and subject us to incurring additional human resource related expenditure. Hiring and retaining qualified and skilled managers are critical to our future, as our business model depends on our credit-appraisal and asset valuation mechanism, which are personnel-driven operations. Moreover, competition for experienced employees in the finance sector can be intense. While we have an incentive structure and two employee stock option schemes namely, ESOP 2006 and ESOP 2008, designed to encourage employee retention, our inability to attract and retain talented professionals, or the resignation or loss of key management personnel, may have an adverse impact on our business and future financial performance.

33. We are exposed to fluctuations in the market values of our investment and other asset portfolio.

Recent turmoil in the financial markets has adversely affected economic activity globally, including in India. Continued deterioration of the credit and capital markets could result in volatility of our investment earnings and impairments to our investment and asset portfolio, which could negatively impact our financial condition and reported income.

34. Our results of operations could be adversely affected by any disputes with our employees.

As of June 30, 2012, we employed 3,672 employees. Currently, none of our employees are members of any labor union. While we believe that we maintain good relationships with our employees, there can be no assurance that

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we will not experience future disruptions to our operations due to disputes or other problems with our work force, which may adversely affect our business and results of operations.

35. Our inability to obtain, renew or maintain our statutory and regulatory permits and approvals required to

operate our business may have a material adverse effect on our business.

We require certain statutory and/or regulatory permits and approvals for our business. Failure to obtain the any statutory and/or regulatory permits and approvals for our business will adversely affect our business. In the future, we will be required to renew such permits and approvals and obtain new permits and approvals for any proposed operations. There can be no assurance that the relevant authorities will issue any of such permits or approvals in a timely manner or at all, and/or on favorable terms and conditions. Failure by us to comply with the terms and conditions to which such permits or approvals are subject, and/or to renew, maintain or obtain the required permits or approvals may result in the interruption of our operations and may have a material adverse effect on our business, financial condition and results of operations.

36. Our gold loans business could be adversely impacted by RBI requirements in connection with lending against

security of gold jewellery.

Pursuant to a circular dated March 21, 2012 the RBI decided that all NBFCs must (a) maintain a Loan-to-Value ratio not exceeding 60% for loans granted against the collateral of gold jewellery, and (b) disclose in their balance sheet the percentage of such loans to their total assets. The abovementioned RBI circular also requires NBFCs primarily engaged in lending against gold jewellery (such loans comprising 50% or more of their financial assets) to maintain a minimum Tier I capital of 12% by April 1, 2014 and stipulates that NBFCs must not grant any advance against bullion / primary gold and gold coins. The abovementioned requirements of the RBI and/or any future changes in connection with regulation of lending against security of gold jewellery could adversely impact our loans against gold business, which could adversely affect our growth, operations, profitability and cash flows. As on, March 31 2012, the total book value of Gold Loan assets which stood at ` 4,41,088.00 lacs, was 40.82% of our total book of loan assets.

37. Our insurance coverage may not adequately protect us against losses.

We maintain such insurance coverage that we believe is adequate for our operations. Our insurance policies, however, may not provide adequate coverage in certain circumstances and are subject to certain deductibles, exclusions and limits on coverage. We maintain general liability insurance coverage including coverage for errors or omissions. We cannot, however, assure you that the terms of our insurance policies will be adequate to cover any damage or loss suffered by us or that such coverage will continue to be available on reasonable terms or will be available in sufficient amounts to cover one or more large claims or that the insurer will not disclaim coverage as to any future claim. A successful assertion of one or more large claims against us that exceeds our available insurance coverage or changes in our insurance policies including premium increases or the imposition of a larger deductible or co-insurance requirement could adversely affect our business, financial condition and results of operations.

38. There is ambiguity on whether or not NBFCs are required to comply with the provisions of state money

lending laws, which if interpreted unfavorably by statutory/regulatory authorities or courts of law could

adversely affect our operations and profitability.

There is ambiguity on whether or not NBFCs are required to comply with the provisions of state money lending laws that establish ceilings on interest rates. We also carry out operations in several states such as Andhra Pradesh, Tamil Nadu, Madhya Pradesh, and Maharashtra, where there are money lending statutes in operation. The relevant state money lending statutes provide penalties for non-compliance with such statutes, including civil and criminal consequences. In the event that the government of any state in India requires us to comply with the provisions of their respective state money lending laws or imposes any penalty against us, our Directors or our officers, including for prior non-compliance, our business, results of operations and financial condition may be adversely affected.

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39. We do not own most of our branch offices and our registered office. Any failure on our part to execute and/or

renew leave and license agreements and/or lease deeds in connection with such offices or failure to locate

alternative offices in case of termination of the leases and/or leave and license arrangements in connection

with any branch could adversely affect our operations and profitability.

Our Registered Office and most of our branches are located on leased and/or licensed premises. If any of the owners of these premises does not renew an agreement under which we occupy the premises or if any of the owners seeks to renew an agreement on terms and conditions unfavorable to us, we may suffer a disruption in our operations or increased costs, or both, which may adversely affect our business and results of operations.

Risks Relating to the Utilization of Issue Proceeds

40. The fund requirement and deployment mentioned in the Objects of the Issue have not been appraised by any

bank or financial institution.

We intend to use the proceeds of the Issue, inter alia to finance our business operations, lending, investments, repay existing loans, business operations including capital expenditure, working capital requirements, meeting expenses of the Issue. For further details, please refer to the section titled “Objects of the Issue” beginning on page 61 of this Draft Prospectus. The fund requirement and deployment is based on internal management estimates and has not been appraised by any bank or financial institution. The management will have significant flexibility in applying the proceeds received by us from the Issue. Further, as per the provisions of the Debt Regulations, we are not required to appoint a monitoring agency and therefore no monitoring agency has been appointed for this Issue.

41. We have not entered into any definitive agreements to utilise a substantial portion of the net proceeds of the

Issue.

We intend to use the net proceeds for the purpose described in the section titled “Objects of the Issue” beginning on page 61 of this Draft Prospectus. We have not entered into any definitive agreements to utilize the net proceeds of the Issue. We currently intend to use the net proceeds from the Issue inter alia to finance our business operations, lending, investments, repay existing loans, business operations including capital expenditure, working capital requirements, meeting expenses of the Issue. Our funding requirements are based on current conditions and are subject to change in light of changes in external circumstances 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 its business plan from time to time. Any such change in our plans may require rescheduling of our current plans or discontinuing existing plans and an increase or decrease in the fund requirements for the objects, at the discretion of the management. There can be no assurance that we will be able to conclude definitive agreements for inter alia to finance our business operations, lending, investments, repay existing loans. These proposed expenditures have not been appraised by any bank or financial institution or any other independent organization.

Risks Relating to the NCDs

42. Changes in interest rates may affect the price of our NCDs.

All securities where a fixed rate of interest is offered, such as our NCDs, are subject to price risk. The price of such securities will vary inversely with changes in prevailing interest rates, i.e. when interest rates rise, prices of fixed income securities fall and when interest rates drop, the prices increase. The extent of fall or rise in the prices is a function of the existing coupon, days to maturity and the increase or decrease in the level of prevailing interest rates. Increased rates of interest, which frequently accompany inflation and/or a growing economy, are likely to have a negative effect on the price of our NCDs.

43. You may not be able to recover, on a timely basis or at all, the full value of the outstanding amounts and/or

the interest accrued thereon in connection with the NCDs.

Our ability to pay interest accrued on the NCDs and/or the principal amount outstanding from time to time in connection therewith would be subject to various factors inter-alia including our financial condition, profitability and the general economic conditions in India and in the global financial markets. We cannot assure you that we

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would be able to repay the principal amount outstanding from time to time on the NCDs and/or the interest accrued thereon in a timely manner or at all. Although our Company will create appropriate security in favour of the Debenture Trustee for the NCD holders on the assets adequate to ensure at least 100% asset cover for the NCDs, which shall be free from any encumbrances, the realizable value of the assets charged as security, when liquidated, may be lower than the outstanding principal and/or interest accrued thereon in connection with the NCDs. A failure or delay to recover the expected value from a sale or disposition of the assets charged as security in connection with the NCDs could expose you to a potential loss.

44. If we do not generate adequate profits, we may not be able to maintain an adequate Debenture Redemption

Reserve, (“DRR”) for the NCDs issued pursuant to this Draft Prospectus.

Section 117C of the Act states that any company that intends to issue debentures must create a DRR to which adequate amounts shall be credited out of the profits of the company until the debentures are redeemed. The Ministry of Corporate Affairs has, through its circular dated April 18, 2002, (“Circular”), specified that the quantum of DRR to be created before the redemption liability actually arises in normal circumstances should be ‘adequate’ to pay the value of the debentures plus accrued interest, (if not already paid), till the debentures are redeemed and cancelled. The Circular however further specifies that, for NBFCs like our Company, (NBFCs which are registered with the RBI under Section 45-IA of the RBI Act), the adequacy of the DRR will be 50% of the value of debentures issued through the public issue. Accordingly, our Company is required to create a DRR of 50% of the value of debentures issued through the public issue. As further clarified by the Circular, the amount to be credited as DRR will be carved out of the profits of the company only and there is no obligation on the part of the company to create DRR if there is no profit for the particular year. Accordingly, if we are unable to generate adequate profits, the DRR created by us may not be adequate to meet the 50% of the value of the NCDs. This may have a bearing on the timely redemption of the NCDs by our Company.

45. Any downgrading in credit rating of our NCDs may affect the value of NCDs and thus our ability to raise

further debts.

The NCDs proposed to be issued under this Issue have been rated ‘CARE AA’ by CARE for an amount of upto ` 50,000 lacs vide its letter dated August 10, 2012, and ‘CRISIL AA-/Stable’ by CRISIL for an amount of upto ` 50,000 lacs vide its letter dated August 14, 2012. The rating of the NCDs by CARE indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The rating of NCDs by CRISIL indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The ratings provided by CARE and/or CRISIL may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. .

46. There is no active market for the NCDs on the stock exchanges. As a result the liquidity and market prices of

the NCDs may fail to develop and may accordingly be adversely affected.

There can be no assurance that an active market for the NCDs will develop. If an active market for the NCDs fails to develop or be sustained, the liquidity and market prices of the NCDs may be adversely affected. The market price of the NCDs would depend on various factors inter alia including (i) the interest rate on similar securities available in the market and the general interest rate scenario in the country, (ii) the market price of our Equity Shares, (iii) the market for listed debt securities, (iv) general economic conditions, and, (v) our financial performance, growth prospects and results of operations. The aforementioned factors may adversely affect the liquidity and market price of the NCDs, which may trade at a discount to the price at which you purchase the NCDs and/or be relatively illiquid.

47. There may be a delay in making refunds to applicants.

We cannot assure you that the monies refundable to you, on account of (a) withdrawal of your applications, (b) our failure to receive minimum subscription in connection with the Base Issue, (c) withdrawal of the Issue, or (d) failure to obtain the final approval from the NSE and/or BSE for listing of the NCDs, will be refunded to you in a timely manner. We however, shall refund such monies, with the interest due and payable thereon as prescribed under applicable statutory and/or regulatory provisions.

17

B. EXTERNAL RISK FACTORS

48. Our two-wheeler and other vehicle loans businesses are dependent on the automobile and transportation

industry in India.

Our two-wheeler and other vehicle loans businesses to a large extent depend on the continued growth in the automobile and transportation industry in India, which are influenced by a number of extraneous factors which are beyond our control, inter-alia including (a) the macroeconomic environment in India, (b) the demand for transportation services, (c) natural disasters and calamities, and (d) changes in regulations and policies in connection with motor vehicles. Such factors may result in a decline in the sales or value of new and pre-owned vehicles. Correspondingly, the demand for availing finance for new and pre-owned vehicles may decline, which in turn may adversely affect our financial condition and the results of our operations. Further, the ability of vehicle owners and/or operators to perform their obligations under existing financing agreements may be adversely affected if their businesses suffer as a result of the aforesaid factors.

49. Our loans to the small enterprises is dependent on the performance of the small enterprises sector in India,

competition from public sector banks and financial institutions and other NBFCs, and government policies

and statutory and/or regulatory reforms in the small enterprises finance sector.

As on March 31, 2012, 29.39 % of our Assets Under Management were represented by loans to the small enterprises segment. In recognition of the contribution and vast potential of the small enterprises finance sector in the economy, provision of adequate credit to this sector continues to be an important element of banking policy, particularly after the initiation of structural reforms in 1991. As per available statistics (4th Census of the MSME Sector), the MSME sector employs an estimated 597 lac persons spread over 261 lac enterprises. It is estimated that in terms of value, MSME sector accounts for about 45% of the manufacturing output and around 40% of the total export of the country. (Source: http://www.msme.gov.in/msme_aboutus.htm). The Government of India has from time to time taken economic policy initiatives to promote this sector and enhance credit to small and medium enterprises. Some of the initiatives of the Government towards MSME financing include setting up of credit guarantee fund trust for small industries, risk sharing facility, venture capital funding, micro credit, etc. The small enterprises finance sector currently is catered to largely by public sector banks, public financial institutions and local unorganized private financiers.

Any change in statutory and/or regulatory requirements in connection with the small enterprises finance sector, change in government policies, slow down in liberalization and reforms affecting the sector could affect the performance of small enterprises, which would affect the demand for finance in this sector, which in turn would affect the results of our operations from loans to the small enterprises finance sector.

Further, progressive reforms, policy, statutory and/regulatory provisions in connection with the sector could enable easier access to finance to small enterprises from banks, NBFCs and other financial institutions which in turn could result in increased competition for our Company in relation to loans issued to small enterprises. Our inability to manage such competition could adversely affect our results of operations from loans to the small enterprises finance sector.

50. Increase in competition from our peer group in the finance sector may result in reduction of our market

share, which in turn may adversely affect our profitability.

We have been increasingly facing competition from domestic and foreign banks and NBFCs in each of our lines of businesses. Some of our competitors are very aggressive in underwriting credit risk and pricing their products and may have access to funds at a lower cost, wider networks and greater resources than our Company. Our financial condition and results of operations are dependent on our ability to obtain and maintain low cost funds and to provide prompt and quality services to our customers. If our Company is unable to access funds at a cost comparable to or lower than our competitors, we may not be able to offer loans at competitive interest rates to our customers.

18

While our Company believes that it has historically been able to offer competitive interest rates on the loans extended to our customers, there can be no assurance that our Company will be able to continue to do so in the future. An increase in competition from our peer group may result in a decline in our market share, which may in turn result in reduced incomes from our operations and may adversely affect our profitability.

51. Our growth depends on the sustained growth of the Indian economy. An economic slowdown in India and

abroad could have a direct impact on our operations and profitability.

Macroeconomic factors that affect the Indian economy and the global economic scenario have an impact on our business. The quantum of our disbursements is driven by the growth in demand for vehicles, capital by small enterprises and loans by individuals. Any slow down in the Indian economy may have a direct impact on our disbursements and a slowdown in the economy as a whole can increase the level of defaults thereby adversely impacting our Company’s profitability, the quality of its portfolio and growth plans.

52. Political instability or changes in the government could delay further liberalization of the Indian economy

and adversely affect economic conditions in India generally, which could impact our business.

Since 1991, the Government has pursued a policy of economic liberalization, including significantly relaxing restrictions on the private sector. There can be no assurance that these liberalization policies will continue in the future as well. The rate of economic liberalization could change and specific laws and policies affecting financial services companies, foreign investment, currency exchange rates and other matters affecting investments in Indian companies could change as well. A significant slowdown in India’s economic liberalization and deregulation policies could disrupt business and economic conditions in India, thus affecting our business. Any political instability in the country, including any change in the Government, could materially impact our business adversely.

53. Civil unrest, terrorist attacks and war would affect our business.

Terrorist attacks and other acts of violence, war or conflicts, particularly those involving India, as well as the United States of America, the United Kingdom, Singapore and the European Union, may adversely affect Indian and global financial markets. Such acts may negatively impact business sentiment, which could adversely affect our business and profitability. India has from time to time experienced and continues to experience, social and civil unrest, terrorist attacks and hostilities with neighbouring countries. Also, some of India’s neighbouring countries have experienced or are currently experiencing internal unrest. This, in turn, could have a material adverse effect on the Indian economy and in turn may adversely affect our operations and profitability and the market for the NCDs.

54. Our business may be adversely impacted by natural calamities or unfavourable climatic changes.

India, Bangladesh, Pakistan, Indonesia, Japan and other Asian countries have experienced natural calamities such as earthquakes, floods, droughts and a tsunami in recent years. Some of these countries have also experienced pandemics, including the outbreak of avian flu. These economies could be affected by the extent and severity of such natural disasters and pandemics which could, in turn affect the financial services sector of which our Company is a part. Prolonged spells of abnormal rainfall, draught and other natural calamities could have an adverse impact on the economy, which could in turn adversely affect our business and the price of our NCDs.

55. Any downgrading of India's sovereign rating by an international rating agency (ies) may affect our business

and our liquidity to a great extent.

Any adverse revision to India's credit rating for domestic and international debt by international rating agencies may adversely impact our ability to raise additional finances at favourable interest rates and other commercial terms. This could have an adverse effect on our growth, financial performance and our operations.

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PROMINENT NOTES

1. This is a public issue of NCDs by our Company aggregating upto ` 25,000 lacs with an option to retain over-

subscription upto ` 25,000 lacs for issuance of additional NCDs, aggregating to a total of ` 50,000 lacs.

2. For details on the interest of our Company’s Directors, please refer to the sections titled “Our Management” and “Capital Structure” beginning on pages 126 and 45 of this Draft Prospectus, respectively.

3. Our Company has entered into certain related party transactions, within the meaning of AS 18 as notified by the

Companies (Accounting Standards) Rules, 2006, as disclosed in the section titled “Financial Information” beginning on page 146 of this Draft Prospectus.

4. Any clarification or information relating to the Issue shall be made available by the Lead Managers and our

Company to the investors at large and no selective or additional information would be available for a section of investors in any manner whatsoever.

5. Investors may contact the Registrar to the Issue, Compliance Officer and the Lead Managers for any complaints

pertaining to the Issue. In case of any specific queries on allotment/refund, Investor may contact Registrar to the Issue.

6. In the event of oversubscription to the Issue, allocation of NCDs will be as per the "Basis of Allotment" set out on

page 197 of this Draft Prospectus. 7. Our Equity Shares are listed on the NSE, BSE and MSE.

8. The non convertible debentures issued pursuant to a previous public issue in the year 2011, vide the prospectus

dated August 1, 2011, are listed on the NSE and BSE. 9. Some of our privately placed non convertible debentures are listed on the BSE. 10. As at March 31, 2012, we had certain contingent liabilities not provided for on an unconsolidated basis,

including the following:

• Guarantees issued by the company – ` 450.00 lacs

• Guarantees issued by others – ` Nil lacs

For further information on such contingent liabilities, see Annexure VI to our Reformatted Unconsolidated Summary Financial Statements.

11. For further information relating to certain significant legal proceedings that we are involved in, see “Pending

Proceedings and Statutory Defaults” beginning on page 205 of this Draft Prospectus.

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SECTION III : INTRODUCTION

GENERAL INFORMATION

Shriram City Union Finance Limited

Our Company was incorporated as a private limited company, Shriram Hire-Purchase Finance Private Limited, on March 27, 1986, under the provisions of the Companies Act, 1956. Further with effect from October 29, 1988, the status of our Company was changed to a public limited company. The name of our Company was changed from Shriram Hire-Purchase Finance Limited to Shriram City Union Finance Limited and a fresh certificate of incorporation dated April 10, 1990 was issued by the ROC, Chennai, Tamil Nadu. Subsequently, our Company has obtained a certificate of registration as a Deposit-Accepting Financing Company, dated April 17, 2007, bearing registration no. 07-00458 issued by the RBI to carry on activities of a NBFC under section 45 IA of the RBI Act, 1934. However, as on March 31, 2012, in terms of our total assets and total income on an unconsolidated basis, our Company is now classified as a “loan company” under the provisions of Section 45 IA of the RBI Act, 1934 and applicable notifications on classification of NBFCs issued by the RBI. As on date of this Draft Prospectus, we have not been granted a revised certificate of registration as a “loan company” by the RBI.

Registered Office:

123, Angappa Naicken Street, Chennai, Tamil Nadu - 600 001.

Corporate Office:

144, Santhome High Road, Mylapore, Chennai 600 004, Tamil Nadu, Tel. No.: + 91 44 4392 5300; Fax: +91 44 4392 5430

Registration:

Corporate Identification Number: L65191TN1986PLC012840 issued by the Registrar of Companies, Chennai, Tamil Nadu.

Our Company holds a certificate of registration dated April 17, 2007, bearing registration no. 07-00458 issued by the RBI to

carry on the activities of a NBFC under section 45 IA of the RBI Act, 1934.

Compliance Officer (and Company Secretary):

The details of the person appointed to act as Compliance Officer for the purposes of this Issue is set out below:

Mr. C. R. Dash

Company Secretary

Shriram City Union Finance Limited

144, Santhome High Road, Mylapore,

Chennai 600 004, Tamil Nadu,

Tel. No.: + 91 44 4392 5300

Fax: +91 44 4392 5430

Email: sect@shriramcity.in

Investors may contact the Registrar to the Issue or the Compliance Officer in case of any pre-Issue or post-Issue related

matters such as non-receipt of Allotment Advice, demat credit, refund orders or interest on application money.

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Lead Managers:

JM Financial Institutional Securities Private

Limited^ 141 Maker Chambers III, Nariman Point Mumbai - 400 021 Tel: +91 22 6630 3030 Fax: +91 22 2204 2137 Email: scuf.ncd@jmfl.com Investor Grievance Email: grievance.ibd@jmfl.com Website: www.jmfl.com Contact Person: Ms. Lakshmi Lakshmanan Compliance Officer: Mr. Chintal Sakaria SEBI Registration No.: INM000010361

A. K. Capital Services Limited 30-39, Free Press House, Free Press Journal Marg, 215 Nariman Point, Mumbai - 400 021 Tel: +91 22 6754 6500 Fax: +91 22 6610 0594 Email: scufncd2012@akgroup.co.in Investor Grievance Email: investor.grievance@akgroup.co.in Website: www.akcapindia.com Contact Person: Ms. Akshata Tambe/ Mr. Yashesh Thakkar Compliance Officer: Mr.Vikas Agarwal SEBI Registration No: INM000010411

Edelweiss Financial Services Limited Edelweiss House, 14th Floor, Off C.S.T. Road, Kalina Mumbai – 400 098 Maharashtra, India Tel: +91 22 4086 3535 Fax: +91 22 4086 3610 Email: scufbondissue@edelcap.com Investor Grievance Email: customerservice.mb@edelcap.com Website:www.edelweissfin.com Contact Person: Mr. Chitrang Gandhi / Mr. Viral Shah Compliance Officer: Mr. B Renganathan SEBI Registration No:INM0000010650

^ JM Financial Institutional Securities Private Limited has made an application on May 14, 2012, with SEBI for renewal of its certificate of registration.

Debenture Trustee: GDA Trusteeship Limited GDA House, First Floor, Plot No. 85, S. No. 94 & 95 Bhusari Colony, (Right), Kothrud, Pune - 411038 Tel: 020 - 25280081 Fax: 020 - 25280275 Email: dt@gdatrustee.com Investor Grievance Email: dt@gdatrustee.com Website: www.gdatc.com Contact Person: Mr. R. K. Kulkarni Compliance Officer: Mr. Shekhar Belhekar SEBI Registration No.: IND000000034 GDA Trusteeship Limited has by its letter dated August 11, 2012 given its consent for its appointment as Debenture Trustee to the Issue and for its name to be included in this Draft Prospectus and in all the subsequent periodical communications sent to the holders of the Debentures issued pursuant to this Issue.

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Registrar to the Issue

Integrated Enterprises (India) Limited 2nd Floor, Kences Towers, No. 1, Ramakrishna Street, North Usman Road, T. Nagar, Chennai - 600 017 Tel: + 91 44 2814 0801, +91 44 2814 0802, +91 44 2814 0803

Fax: + 91 44 2814 2479 Email:scuf@integratedindia.in Investor Grievance Email: sureshbabu@integratedindia.in Website: www.integratedindia.in Contact Person: Mr. K Balasubranium and Mr. Sriram S SEBI Registration No: INR000000544

Statutory Auditor:

Our statutory auditor being:

M/s Pijush Gupta & Co Chartered Accountants P-199, C.I.T. Road, Scheme IV-M Kolkata - 700 010 Email: pijushgupta.ca@gmail.com Tel: +91 33 2353 6859 Firm registration number: 309015E

Credit Rating Agencies:

CRISIL Limited CRISIL House, Central Avenue Hiranandani Business Park, Powai, Mumbai - 400 076 Tel: +91 22 3342 3000 Fax: +91 22 3342 3050

Credit Analysis & Research Limited 4th Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway Sion (East), Mumbai - 400 022 Tel: +91 22 6754 3456 Fax: +91 22 6754 3457

Legal Advisor to the Issue:

J Sagar Associates Vakils House, 18, Sprott Road Ballard Estate Mumbai- 400 001 Tel: +91 22 4341 8500 Fax: +91 22 6656 1515

Lead Brokers to the Issue

[●]

Bankers to the Issue:

[●]

Bankers to our Company

ANDHARA BANK ALLAHABAD BANK Mowbrays Road Branch, 265, Industrial Finance Branch, " Anna Theatre Building" Alwarpet, Chennai - 600 018 41, Mount Road, Chennai - 600 002

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Tel: +91 44 2499 2485 Tel: +91 44 2854 7497 Fax: +91 44 2466 1297 Fax: +91 44 2855 5959

AXIS BANK LIMITED BANK OF INDIA Karumuthu Nilayam, No. 192, Ground Floor Chennai Corporate Banking Branch, IV Floor, Anna Salai, Chennai - 600 002 Tarapore Towers, No. 826, Tel: +91 44 2857 7763 Anna Salai, Chennai - 600 002

Fax: +91 44 2811 1084 Tel: +91 44 2851 0661 Fax: +91 44 2852 1912

BANK OF MAHARASHTRA No.16, East Mada Street, Near Theradi,

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK

Mylapore, Chennai - 600 004 Westminster Building, 2nd Floor, Tel: +91 44 2433 8248 No. 108, Dr. Radhakrishnan Salai, Fax: +91 44 2461 4357 Mylapore, Chennai - 600 004

Tel: +91 44 6635 1001 Fax: +91 44 2847 4619

CANARA BANK CENTRAL BANK OF INDIA Prime Corporate Branch, Industrial Finance Branch, Ground Floor, Spencer Tower-I, No. 48/49, Montieth Road, No.770, Anna Salai, Chennai - 600 002 Egmore, Chennai - 600 008

Tel: +91 44 2849 7010 Tel: +91 44 2888 3186 Fax: +91 44 2849 7016 Fax: +91 44 2346 4231

CORPORATION BANK CITY UNION BANK No.38 & 39, Whites Road, Keerthis', Ist Floor, No.67 Mandaveli Street, Chennai - 600 014 Mandaveli, Chennai - 600 028 Tel: +91 44 2852 1705 Tel: +91 44 2493 7874 Fax: +91 44 2461 7288 Fax: +91 44 2461 0024

CITI BANK CITICORP FINANCE (INDIA) LIMITED Mount Road Branch Citigroup Centre, 5th Floor, C- 61 Block G Chennai - 600 002 Bandra Kurla Complex, Bandra (East), Tel: +91 44 4222 6514 Mumbai - 400 051 Fax: +91 44 2846 0610 Tel: +91 22 4029 6586 Fax: +91 22 2653 5835

DBS BANK LIMITED DENA BANK No. 806, Anna Salai, No.1, Thanikachalam Street, Chennai - 600 002 T. Nagar, Chennai - 600 034 Tel: +91 44 6656 8824 Tel: +91 44 2433 2656 Fax: +9144 6656 8899 Fax: +91 44 2434 4870

FEDERAL BANK HDFC BANK LIMITED 61, Anna Salai, No. 115, Dr. Radhakrishnan Salai, Chennai - 600 002 9th Floor, Mylapore, Chennai - 600 004 Tel: +91 44 2851 2561 Tel: +91 2847 7249 Fax: +91 44 2852 3058 Fax: +91 2847 7250 THE HONG KONG & SHANGHAI BANKING

CORPORATION LIMITED

ICICI BANK LIMTED ICICI Bank, 3rd Floor,

Nagarbrahma Towers, No. 76, Cathedral Road Cenotaph Rd, Teynampet, Chennai - 600 086 Chennai - 600 018 Tel: +91 44 4391 2064 Tel: +91 44 4231 6978 Fax: +91 44 2811 1845 Fax: +9144 4231 6960

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IDBI BANK LIMTIED INDIAN BANK No. 115, Anna Salai , P.B. No. 805, Harbour Branch, No. 66 Rajaji Salai, Saidapet , Chennai - 600 015 Chennnai - 600 001 Tel; +91 44 2235 5201 Tel: +91 44 2521 5368 Fax: +91 44 2235 3346 Fax: +91 44 2521 0342

INDIAN OVERSEAS BANK INDUSIND BANK LIMITED Commerical & Institutional Credit Branch, New No.34, (Old no. 115 & 116) "Auras Corporate Centre", No.98-A, G, N. Chetty Road, #98, Dr. Radhakrishnan Salai, Mylapore, T Nagar, Chennai - 600 017 Chennai - 600 004 Tel : +91 44 4345 7534 Tel: +91 44 2847 8634 Fax: +91 44 2834 6305 Fax: +91 44 2847 8633

ING VYSYA BANK LIMITED JAMMU & KASHMIR BANK LIMITED Regional Office, No. 185, Voltas International Centre, Anna Salai, II Floor, Chennai - 600 006 # 52, Armenian Street, Parrys, Chennai - 600 001 Tel: +91 44 2852 8377 Tel: +91 44 2533 0478 Fax: +91 44 2859 3322 Fax: +91 44 2859 3322

KOTAK MAHINDRA BANK LIMITED ORIENTAL BANK OF COMMERCE Agri Business Group, Zone II Spencer Plaza, No. 769 04th Floor, Kotak Infiniti, Building No. 21 Anna Salai , Chennai - 600 002 Infinity Park, Gen A.K. Vaidya Marg, Malad (E), Tel: +91 44 2849 2940 Mumbai - 400 097 Fax: +91 44 2849 8031 Tel: +91 22 6605 4139 Fax: +91 22 6725 9063

PUNJAB NATIONAL BANK No.10, Raja Street,

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

T Nagar, Chennai - 600 017 Overseas Towers, No. 756 L, Anna Salai Tel: +91 44 2432 3928 (Opp. TVS), Chennai - 600 002 Fax: +91 44 2434 1050 Tel: +91 44 2841 3716 Fax: +91 44 2852 0692

STATE BANK OF BIKANER & JAIPUR STATE BANK OF INDIA 01st Floor, " Giriraj", No. 73 Industrial Finance Branch, Sant Tukaram Road, Danabunder, Masjid (E) The Arcade, 2nd Floor, World Trade Centre, Mumbai - 400 009 Cuffe Parade, Colaba, Mumbai - 400 005 Tel: +91 22 2348 7020 Tel: +91 22 2216 1955 Fax: +91 22 2348 1944 Fax: +91 22 2215 5223

STATE BANK OF PATIALA STATE BANK OF MAURITIUS Commercial Branch, 22 A Cathedral Road, Atlanta, 01 st Floor, Prince Arcade, Nariman Point, Mumbai 400 021 4th Floor, Chennai 600 086 Tel + 91 22 2285 1762 Tel + 91 44 2811 0943/2811 0806 Fax +91 22 6637 5703 Fax +91 44 2841 6445

STATE BANK OF MYSORE STATE BANK OF TRAVANCORE Corporate Accounts Branch, Commercial Branch, No: 224 C Mittal Court, ‘C’ Wing, “Jeeva Aanad” Nariman Point, Mumbai 400 021 No 556 Anna SAlai, Teynampet Chennai 600 018 Tel + 91 22 2288 5577 Tel + 91 44 2435 9432 Fax +91 22 2204 4281 Fax +91 44 2435 1671

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SYNDICATE BANK TAMINAD MERCANTILE BANK LIMITED First Floor, 170, No. 738, Anna Salai, Ground Floor Eldarts Road, Teyampet, Near District Central Library Chennai - 600 018 Mount Road, Chennai 600 002 Tel + 91 44 2432 3212 Tel + 91 44 2841 2205 Fax +91 44 2435 2182 Fax +91 44 2841 2208

THE SOUTH INDIAN BANK LIMITED UNION BANK OF INDIA Industrial Finance Branch, Industrial Finance Branch, Riaz Garden No. 110 Raheja Towers, 177, No. 12- 13, Kodambakkam High Road, Anna Salai , Chennai - 600 002 Nungambakkam, Chennai - 600 034 Tel: +91 44 2860 3964 Tel; +91 44 2346 0749 Fax: +91 44 2860 3962 Fax: +91 44 2346 0751

UNITED BANK OF INDIA VIJAYA BANK United Bank of India Building, No. 25 Mount Road Branch, 168 Mount Road Sir P.M. Road Fort, Mumbai - 400 001 Opp. Spencer Plaza, Chennai - 600 002 Tel: +91 22 2202 0431 Tel: +91 44 2852 1746 Fax: +91 22 2281 0440 Fax: +91 44 2852 5231

YES BANK LIMITED No. 143/1, Nungambakkam High Road Nungambakkam, Chennai - 600 034 Tel: +91 44 2831 9000 Fax: +91 44 2831 9001

Impersonation

As a matter of abundant precaution, attention of the investors is specifically drawn to the provisions of sub-section (1) of

section 68A of the Act, relating to punishment for fictitious applications.

Minimum Subscription If our Company does not receive the minimum subscription of 75 % of the Base Issue, i.e. ` 18,750 lacs, on the date of closure of the Issue, the entire subscription shall be refunded to the applicants within the time prescribed under applicable statutory/regulatory requirements. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to refund the subscription amount, our Company will pay interest for the delayed period at rates prescribed under applicable statutory and/or regulatory requirements.

Credit Rating and Rationale

The NCDs proposed to be issued under this Issue have been rated ‘CARE AA’ by CARE for an amount of upto ` 50,000 lacs vide its letter dated August 10, 2012, and ‘CRISIL AA-/Stable’ by CRISIL for an amount of upto ` 50,000 lacs vide its letter dated August 14, 2012. The rating of the NCDs by CARE indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The rating of NCDs by CRISIL indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The ratings provided by CARE and/or CRISIL may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions.

Rationale

The rationale for the aforementioned credit rating issued by CARE is as follows:

The rating derives strength from the position of Shriram City Union Finance Limited (SCUF) as a niche player in rural & semi-urban market offering diversified asset-financing products, its strong resource raising ability with diversified funding base & comfortable liquidity profile, good overall asset quality, healthy profitability indicators and experienced

26

management. The rating also takes into account the benefits derived from being part of the Shriram group which has significant presence in the domestic financial services sector. The rating, however, is constrained by regional concentration of its asset portfolio and risk associated with its customer base which is relatively less organised.

The ability of the company to maintain asset quality and capital adequacy levels will be key rating sensitivity.

CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the

concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from

sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy, or

completeness of any information and is not responsible for any errors or omissions or for the results obtained from the

use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee,

based on the amount and type of bank facilities/instruments

The rationale for the aforementioned rating issued by CRISIL is as follows:

The ratings continue to factor in the operational benefits that the Shriram City derives from its association with, and expectation of need-based support from, the Shriram group. The ratings also reflect Shriram City’s health capitalisation and adequate earnings profile. These rating strengths are partially offset by Shriram City’s exposure to inherent asset-quality-related risks arising from lending to low-income group segments, and geographic concentration.

CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated

instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information

provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the

completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to

buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. All

CRISIL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. CRISIL is not

responsible for any errors and especially states that it has no financial liability whatsoever

to the subscribers / users / transmitters / distributors of this product.

Utilisation of Issue proceeds Our Board of Directors certifies that:

• all monies received out of the Issue shall be credited/transferred to a separate bank account other than the bank account referred to in sub-section (3) of Section 73 of the Act;

• details of all monies utilised out of the Issue referred above shall be disclosed under an appropriate separate head in our balance sheet indicating the purpose for which such monies have been utilised along with details, if any, in relation to all such proceeds of the Issue that have not been utilized thereby also indicating investments, if any, of such unutilized proceeds of the Issue;

• details of all unutilised monies out of the Issue, if any, shall be disclosed under an appropriate head in our balance sheet indicating the form in which such unutilised monies have been invested; and

• we shall utilize the Issue proceeds only upon creation of security as stated in this Draft Prospectus in the section titled “Issue Structure” beginning on page 162 of this Draft Prospectus.

• the Issue proceeds shall not be utilized towards full or part consideration for the purchase or any other acquisition, inter alia by way of a lease, of any immovable property.

Issue Programme

The subscription list for the Issue shall remain open for subscriptions during banking hours for the period indicated above, except that the Issue may close on such earlier date or extended date as may be decided at the discretion of the duly authorised committee of Directors of our Company subject to necessary approvals. In the event of such early closure or extension of the Issue, our Company shall ensure that notice of the same is provided to the prospective investors, on or

27

before such early date of closure or the initial Closing Date, as the case may be, through advertisement/s in a leading national daily newspaper.

ISSUE OPENS ON [●]

ISSUE CLOSES ON [●]

28

SUMMARY OF BUSINESS, STRENGTH & STRATEGY

Frost & Sullivan India Private Limited has taken due care and caution in preparing the report titled “Analysis of MSME

Loan Markets for NBFCs – July 2011”. Information has been obtained by Frost & Sullivan India Private Limited from

sources which it considers reliable. However, Frost & Sullivan India Private Limited does not guarantee the accuracy,

adequacy or completeness of any information and is not responsible for any errors or omissions or for the results

obtained from the use of such information. No part of the said report may be published / reproduced in any form without

Frost & Sullivan India Private Limited’s prior written approval. Frost & Sullivan India Private Limited is not liable for

investment decisions which may be based on the views expressed in the said report.

Overview

Our Company is a deposit-accepting NBFC registered with RBI, offering (i) financing for two wheelers, appliances and other commercial goods, (“Product Finance”), (ii) pre-owned and new vehicle loans, (iii) personal loans, (iv) loans against gold including small enterprise segment loans collateralized by gold, and (v) loans to the small enterprise finance segment. Our current lines of business and organisational structure are as follows: * loans against gold is inclusive of small enterprises finance collateralized by gold.

According to the Frost and Sullivan report titled “Analysis of MSME Loan Markets for NBFCs – July 2011”, our Company is the largest small enterprise finance company in India. In the small loan segment (loans of `1 lacs -10 lacs) our Company has a dominant share of 95%. Our Company also leads the total Indian micro, small and medium enterprises market with 53 % share. Our Company was established in 1986 and we have a track record of more than twenty five years in the financial services sector in India. Since 2005 we have focused on the retail financing segment. Our Company has been registered as a deposit accepting NBFC with the RBI since September 4, 2000 under Section 45IA of the Reserve Bank of India Act, 1934. We are a part of the Shriram Group companies, which has a strong presence in financial services in India, including commercial vehicle financing, consumer finance, life and general insurance, stock broking, chit funds and distribution of financial products such as life and general insurance products and mutual fund products, as well as a growing presence in other businesses such as property development, engineering projects and information technology. We leverage on the Shriram Group’s network to reach out to our prospective customers and our focus has been in maximizing our association with the “Shriram” brand name and the synergies offered by the infrastructure, of other entities in the Shriram Group. Our customer base over the years has significantly comprised of customers of other entities

Retail Loans Small Enterprise Finance

Loan against Gold* Personal Loan Auto Loans Product Finance

Retail and small Business Loans Financing Model

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in the Shriram Group. The large customer bases and wide-spread network of business outlets of entities such as, Shriram Transport Finance Company Limited, (one of the largest organized asset financing NBFCs in India), and entities operating under the “Shriram Chits” brand name, has continued to provide us with a large platform of target customers. Over the last 26 years our Company has established a pan-India presence, with 575 branches and 91 other business outlets as at June 30, 2012, across 17 states in India, with a significant presence in south India. As on June 30, 2012, our total employee strength was 3,672. We operate in a ‘hub-and spoke’ business model, where responsibilities from loan origination to recoveries of loans are vested in each of our business outlets, under the general supervision and control of our head office in Chennai. Our business outlet networks are interconnected and each business outlet is connected to our head office through an ERP platform developed by Take Solution Limited, Chennai. We have demonstrated consistent growth in our business and in our profitability. Our Assets Under Management have grown by a compounded annual growth rate (CAGR), of 41.30% from ` 3,36,889.78 lacs as at March 31, 2008 to ` 13,43,103.98 lacs as at March 31, 2012. Our capital adequacy ratio as at March 31, 2012 computed on the basis of applicable RBI requirements was 17.40 %, compared to the RBI stipulated minimum requirement of 15.00%. Our Tier I capital as at March 31, 2012 was ` 1, 56,514.87 lacs. Our Gross NPAs as a percentage of Total Loan Assets were 1.55 % as at March 31, 2012. Our Net NPAs as a percentage of Net Loan Assets was 0.38 % as at March 31, 2012. Our total income increased from ` 62,399.78 lacs in fiscal 2008 to ` 2,05,641.43 lacs in fiscal 2012 at a CAGR of 34.74 %. Our net profit after tax increased from ` 8,763.50 lacs in fiscal 2008 to ` 34,253.12 lacs in fiscal 2012, at a CAGR of 40.61 %. A summary of our assets under management, net non performing assets, total income and net profit after tax for the corresponding periods specified below are as follows:

`̀̀̀ in lacs

Particulars As at March

31, 2008

As at March 31,

2009

As at March

31, 2010

As at March 31,

2011

As at March

31, 2012

Assets Under Management

336,889.78 462,950.89 521,550.18 799,804.88 13,43,103.98

Net Non performing assets

2,495.70 3,590.35 3,322.73 2,982.76 4,079.56

Particulars For the

Financial Year

Ended March

31, 2008

For the

Financial Year

Ended March

31, 2009

For the

Financial Year

ended March

31, 2010

For the

Financial year

ended March

31, 2011

For the

Financial year

ended March

31, 2012

Total Income 62,399.78 93,502.06 1,10,790.49 132,344.65 2,05,641.43

Net Profit after Tax 8,763.50 11,700.77 19,425.86 24,058.85 34,253.12

Our Strengths

We believe that the following are our key strengths: Diversified Portfolio of Products

Our Company’s product portfolio comprises (i) Product Finance loans, (ii) pre-owned and new vehicles loans, (iii) personal loans, (iv) loans against gold including small enterprise segment loans collateralized by gold, and (v) loans to small enterprise finance segment. Each of our products differs in terms of the average tenor, average yield, average interest rates and average size of loan. As on March 31, 2012 approximately 11.60 % of our Assets Under Management comprised product finance loans, 18.33 % of our Assets Under Management comprised vehicle loans, 5.23 % of our Assets Under Management comprised personal loans, 15.46 % of our Assets Under Management comprised loans against gold, 19.99 % of Asset Under Management comprised loans to the small enterprises finance segment collateralized by gold, and 29.39 % of our Assets Under Management comprised loans to small enterprise finance segment. Our diverse revenue streams reduce our dependence on any particular product, thus enabling us to spread and mitigate our risk exposure to any particular industry, business or customer segment.

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Pan-India Presence, Strong Foot-hold in Southern India and Synergies with Other Shriram Group Entities

As on June 30, 2012, we had 575 branches and 91 other business outlets across 17 states in India, with a significant presence in south India. As on June 30, 2012, our total employee strength was 3,672. We have a strong foothold in south India. We leverage on the Shriram Group’s ecosystem to solicit our customers and our focus has been in maximizing our association with the “Shriram” brand name and the synergies offered by the infrastructure, of other entities in the Shriram Group. Our customer base over the years has significantly comprised of customers of other entities in the Shriram Group. The large customer bases and wide-spread network of business outlets of entities such as, Shriram Transport Finance Company Limited, (one of the largest organized asset financing NBFCs in India), and entities operating under the “Shriram Chits” brand name, has continued to provide us with a large platform of target customers. We believe the under-banked community, especially the small enterprise finance segment often do not have sufficient movable and/or immovable property to provide as security or collateral for loans. Our relationship and knowledge of customers’ requirements enables us to minimize our risks while extending loans to such under-banked communities. For instance, loans provided to chit depositors of Shriram Chits, are partly or entirely secured by the deposits made with Shriram Chits. Shriram Chits has several years of experience of collecting chit deposits from self-employed professionals, wholesale/retail dealers, merchants, builders, manufacturers and small and medium scale business operators, which provides us a with an extensive database of potential borrowers, specially for our loans to the small enterprise finance segment. Hub and Spoke Business Model with Efficient Credit Policies and Procedures

We operate in a ‘hub-and spoke’ business model, where the responsibilities from loan origination to recoveries of loans are vested in each of our business outlets, under the general supervision and control of our head office in Chennai. Our business outlet networks are interconnected and each business outlet is connected to our head office through an ERP platform developed by Take Solution Limited, Chennai. The ERP platform enables our management to monitor each loan right from its origination to final closure of accounts. Our head office and senior management is primarily responsible for the broad policy formulation for our businesses. However, the decision making process in connection with loans is decentralized and majorly vested in our business outlets, which ensures speedy credit approvals and more efficient turn around times in processing loans. We focus on closely monitoring our assets and borrowers through our officials at each business outlet. Our branch officials develop relationships with our target customer base, which enables us to capitalize on local knowledge. We follow stringent credit policies, including limits on customer exposure, to ensure the asset quality of our loans and the security provided for such loans. Further, we have nurtured a culture of accountability by making our product executives responsible for loan administration and monitoring as well as recovery of the loans they originate. We have a dedicated team of officials at each business outlet who are responsible for (i) loan origination, (ii) credit evaluation, (iii) pre-lending field investigations where our officials personally visit our prospective customers at their homes or offices, and (v) post lending credit appraisal. The team of officials responsible for origination of a loan is also responsible for the timely servicing of loans, recoveries, and monitoring the performance of each loan from origination to closure of the loan. We offer incentivized salary structures to such officials, where their incentives are linked to recovery of installments of the principal amount and interest on the loans. We believe our efficient credit policies, credit approval procedures, credit delivery process and relationship-based loan administration and monitoring methodology have aided in increasing our customer loyalty and earn repeat business and customer referrals. Our stringent credit policies and relationship based model has helped us maintain relatively low NPA levels. Our Gross NPAs as a percentage of Total Loan Assets were 1.55 % as at March 31, 2012. Our Net NPAs as a percentage of Net Loan Assets was 0.38 % as at March 31, 2012.

Access to a range of cost effective funding sources

We fund our capital requirements through a variety of sources. Our fund requirements are currently predominantly sourced through term loans from banks, issue of redeemable non-convertible debentures on a private placement basis, and cash credit from banks including working capital loans. We access funds from a number of credit providers, including nationalized banks, private Indian banks and foreign banks, and our track record of prompt debt servicing has allowed us to establish and maintain strong relationships with these financial institutions. We have also placed commercial paper, as and when required in the past. As a deposit-taking NBFC, we are also able to mobilize retail fixed deposits at competitive

31

rates. We have also raised subordinated loans eligible for Tier II capital. We also undertake securitization/assignment transactions to increase the efficient use of our capital and as a cost effective source of funds. In relation to our long-term debt instruments, we currently have ratings of ‘CARE AA’ from CARE RATINGS,‘ CRISIL AA-/STABLE’ from CRISIL RATINGS and ‘FITCH AA- (IND)/STABLE’ from FITCH RATINGS. In relation to our short-term debt instruments, we have also received ratings of “[CARE A1+]” from CARE RATINGS, “CRISIL A1+” from CRISIL RATINGS, and “FITCH A1+ (IND)” from FITCH RATINGS. Our fixed deposit programme has been rated as ‘CARE AA (FD)’ by CARE RATINGS, FAA/STABLE BY CRISIL RATINGS and ‘FITCH tAA- (IND)’ by FITCH RATINGS. The NCDs proposed to be issued under this Issue have been rated ‘CARE AA’ by CARE for an amount of upto ` 50,000 lacs vide its letter dated August 10, 2012, and ‘CRISIL AA-/Stable’ by CRISIL for an amount of upto ` 50,000 lacs vide its letter dated August 14, 2012. The rating of the NCDs by CARE indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The rating of NCDs by CRISIL indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. We believe that we have been able to achieve a relatively stable cost of funds despite the difficult conditions in the global and Indian economy and the resultant reduced liquidity and an increase in interest rates, primarily due to our improved credit ratings, (as evidenced by the recent upgrade in our ratings by Fitch and CARE). We believe we are able to borrow from a range of sources at competitive rates. Experienced senior management team Our Board consists of 10 Directors, (including representatives of the TPG Group), with extensive experience in the financial services sectors. Our senior and middle management personnel have significant experience and in-depth industry knowledge and expertise. Our management promotes a result-oriented culture that rewards our employees on the basis of merit. In order to strengthen our credit appraisal and risk management systems, and to develop and implement our credit policies, we have hired a number of senior managers who have extensive experience in the Indian banking and financial services sector and in specialized finance firms providing loans to retail customers. We believe that the in-depth industry knowledge and loyalty of our management and professionals provide us with a distinct competitive advantage. Strategy

Our key strategic priorities are as follows:

Further expand operations by growing our business outlet network and introducing full range of products in all

business outlets

We intend to continue to strategically expand our operations in target markets establishing additional business outlets. Our customer origination and servicing efforts strategically focus on building long term relationships with our customers and address specific issues and local business requirements of potential customers in a particular region. We have a strong concentration of our business in south India with 249 of our 575 branches as on June 30, 2012, located in the states of Tamil Nadu, Andhra Pradesh and Karnataka. 86.80 % of our Assets Under Management as on March 31, 2012 were represented by loans originated in the states of Tamil Nadu, Karnataka and Andhra Pradesh. However, we have continued to make efforts to expand and penetrate into other regions in India. Currently, we have succeeded in opening business outlets in 17 different states in India. We propose to target establishing our operations through new business outlets in cities and towns where we historically had relatively limited operations, such as in eastern and northern parts of India, and to further consolidate our position and operations in western and southern parts of India. Our focus would be to typically target Tier II and Tier III cities, where we believe that demand for our products will grow steadily in the near future. As an internal policy, we typically introduce our products in a particular location only after having evaluated the regional market and the demand for each individual product. Currently, not all of our business outlets offer our full range of products. As a part of our strategy we target to gradually introduce our entire range of product offerings, namely (i) Product Finance loans, (ii) pre-owned and new vehicles loans, (iii) personal loans, (iv) loans against gold including small enterprise segment loans collateralized by gold, and (v) small enterprise finance segment at each of our existing business outlets across India.

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Continue growth in the Loans to Small Enterprises Finance Segment

Our Company started offering customized loans to small enterprises finance segment in 2006 and has continually focused on expanding our customer base for this product since then. We see a significant opportunity for our Company to expand our customer base in small enterprise finance segment. According to the Frost and Sullivan report titled “Analysis of MSME Loan Markets for NBFCs – July 2011”, our Company is the largest small enterprise finance company in India. In the small loan segment (loans of `1 lacs -10 lacs) our Company has a dominant share of 95 %. Our Company also leads the total Indian micro, small and medium enterprises market with 53 % share. As a strategy, we will continue to leverage on the infrastructure provided by entities operating under the ‘Shriram Chits’ brand name. Shriram Chits has several years of experience of collecting chit deposits from self-employed professionals, wholesale/retail dealers, merchants, builders, manufacturers and small and medium scale business operators, which provides us a with an extensive database of potential borrowers, specially for our loans to the small enterprises segment. We also propose to extend such loans to our existing customer base for our other products and propose to introduce small enterprises segment loans in all our current business outlets as well as in new business outlets that we open in the future. Continue to implement advanced processes and systems We have invested in our technology systems and processes to create a stronger organization and ensure good management of customer credit quality. Our information technology strategy is designed to increase our operational and managerial efficiency. We aim to increasingly use technology in streamlining our credit approval, administration and monitoring processes to meet customer requirements on a real-time basis. We continue to implement technology led processing systems to make our appraisal and collection processes more efficient, facilitate rapid delivery of credit to our customers and augment the benefits of our relationship based approach. We also believe that deploying strong technology systems will enable us to respond to market opportunities and challenges swiftly, improve the quality of services to our customers, and improve our risk management capabilities. Grow our Subsidiary’s Housing Finance Business

Our Company’s subsidiary, namely Shriram Housing Finance Limited recently received a certificate of registration dated August 4, 2011 from the National Housing Bank, to operate as a housing finance company and has commenced operations in the last financial year pursuant thereto. We believe that offering housing finance will help us expand our product portfolio and we are well positioned to enter into this business through our established infrastructure, our existing customer base as well as through leveraging our association with other entities in the Shriram Group. As a part of its strategy, Shriram Housing Finance Limited typically targets middle-income customers in semi-urban locations.

33

THE ISSUE

The following is a summary of the 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” beginning on page 158 of this Draft Prospectus.

Common Terms of NCDs

Issuer Shriram City Union Finance Limited

Issue Public Issue by our Company of NCDs aggregating upto ` 25,000 lacs with an option to retain over-subscription upto ` 25,000 lacs for issuance of additional NCDs aggregating to a total of upto ` 50,000 lacs.

Stock Exchanges

proposed for listing of the NCDs

NSE and BSE

Issuance and Trading Compulsorily in dematerialised form

Trading Lot One NCD

Depositories NSDL and CDSL

Security

Security for the purpose of this Issue will be created in accordance with the terms of the Debenture Trust Deed. For further details please refer to the section titled “Issue

Structure” beginning on page 162 of this Draft Prospectus.

Rating The NCDs proposed to be issued under this Issue have been rated ‘CARE AA’ by CARE for an amount of upto ` 50,000 lacs vide its letter dated August 10, 2012, and ‘CRISIL AA-/Stable’ by CRISIL for an amount of upto ` 50,000 lacs vide its letter dated August 14, 2012. The rating of the NCDs by CARE indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The rating of NCDs by CRISIL indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk.

Issue Schedule ∗

The Issue shall be open from [●] to [●] with an option to close earlier and/or extend upto a period as may be determined by our Board.

Deemed Date of

Allotment

The Deemed Date of Allotment for the NCDs shall be the date of issue of the Allotment Advice / Regret or such date as may be determined by the Board of our Company and/or a duly authorized committee thereof and notified to the Stock Exchanges

* The subscription list for the Issue shall remain open for subscriptions during banking hours for the period indicated above, except that the Issue may close on such earlier date or extended date as may be decided at the discretion of the duly authorised committee of Directors of our Company subject to necessary approvals. In the event of such early closure or extension of the Issue, our Company shall ensure that notice of the same is provided to the prospective investors, on or before such early date of closure or the initial Closing Date, as the case may be, through advertisement/s in a leading national daily newspaper.

34

The specific terms of each instrument are set out below:

We are offering secured redeemable NCDs which will be issued at a face value of ` 1,000/- per NCD. Interest on the Series I and Series II NCDs shall be payable on an annual basis, and there shall be no interest payable on the Series III and Series IV NCDs, as set out hereinafter. However, the Series III NCDs, shall be redeemable at a premium of ` [●] per Series III NCD held by an Individual and at a premium of ` [●] per Series III NCD held by a Non Individual. Series IV NCDs, shall be redeemable at a premium of ` [●] per Series IV NCD held by an Individual and at a premium of ` [●] per Series IV NCD held by an Non Individual, at the end of their respective tenors. The terms of the NCDs offered pursuant to the Issue are as follows:

Series I II III IV

Frequency of

Interest Payment

Annual Annual Not Applicable Not Applicable

Minimum

Application

` 10,000/- (10 NCDs) (for all Series of NCDs, namely Series I, Series II, Series III and Series IV either taken individually or collectively)

In Multiples

of ` 1,000 (1 NCD) ` 1,000 (1 NCD) ` 1,000 (1 NCD) ` 1,000 (1 NCD)

Face Value of NCDs (` / NCD)

` 1,000 ` 1,000 ` 1,000 ` 1,000

Issue Price (`

/ NCD)

` 1,000 ` 1,000 ` 1,000 ` 1,000

Mode of Payment of Interest and/or Redemption

of NCDs

Through Various options available

Through Various options available

Through Various options available

Through Various options available

Coupon (% per annum) -

(A)

[●] [●] Not Applicable Not Applicable

Additional Incentive on

Coupon (% per annum) on Any Record Date - (B)

NCD Holders

who are Individuals

NCD Holders

who are Non

Individuals

NCD Holders

who are Individuals

NCD Holders

who are Non

Individuals

Not Applicable Not Applicable

[●] [●] [●] [●]

Aggregate of Coupon and Additional

Incentive on any Record Date (% per annum) = (A)

+ (B)

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

Not Applicable Not Applicable

[●] [●] [●] [●]

Effective Yield (% per annum) on

any Record Date

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

[●] [●] [●] [●] [●] [●] [●] [●]

Put and call option

None None None None

Tenor Thirty six months Sixty months Thirty six months Sixty months

Redemption Date

Thirty six months from the Deemed Date of Allotment

Sixty months from the Deemed Date of Allotment

Thirty six months from the Deemed Date of Allotment

Sixty months from the Deemed Date of Allotment

Redemption Amount

Repayment of the Face Value plus any interest that

Repayment of the Face Value plus any interest that

NCD Holders

NCD Holders

NCD Holders

NCD Holders

35

Series I II III IV

Frequency of Interest Payment

Annual Annual Not Applicable Not Applicable

(`/NCD) may have accrued plus Additional Incentive as may be applicable at the Redemption Date

may have accrued plus Additional Incentive as may be applicable at the Redemption Date

who are Individuals

who are Non

Individuals

who are Individuals

who are Non

Individuals

` [●] per NCD

` [●] per NCD

` [●] per NCD

` [●] per NCD

Record Date [●] days prior to the date on which interest is due and payable, or the date of redemption, or as may be prescribed by the relevant stock exchange(s).

[●] days prior to the date on which interest is due and payable, or the date of redemption, or as may be prescribed by the relevant stock exchange(s).

[●] days prior to the date of redemption, or as may be prescribed by the relevant stock exchange(s).

[●] days prior to the date of redemption, or as may be prescribed by the relevant stock exchange(s).

Deemed Date of Allotment

The Deemed Date of Allotment for the NCDs shall be the date of issue of the Allotment Advice / Regret or such date as may be determined by the Board of our Company and/or a duly authorized committee thereof and notified to the Stock Exchanges.

Credit Rating

CARE 'CARE AA’ for an amount of upto ` 50,000 Lacs

CRISIL 'CRISIL AA/Stable ' for an amount of upto ` 50,000 Lacs

Security The principal amount of the NCDs to be issued in terms of this Prospectus together with all interest due on the NCDs, as well as all costs, charges, all fees, remuneration of Debenture Trustee and expenses payable in respect thereof shall be secured by way of first and exclusive charge in favour of the Debenture Trustee on an identified immovable property and specified future receivables of our Company as may be decided mutually by our Company and the Debenture Trustee.

Listing The NCDs offered through this Prospectus are proposed to be listed on the NSE and BSE.

Depositories NSDL & CDSL

36

SUMMARY FINANCIAL INFORMATION

The following tables present an extract of Reformatted Consolidated Summary Financial Statements and the Reformatted Unconsolidated Summary Financial Statements. The Reformatted Consolidated Summary Financial Statements and the Reformatted Unconsolidated Summary Financial Statements should be read in conjunction with the examination report thereon issued by our Statutory Auditors and statement of significant accounting policies and notes to accounts on the Reformatted Consolidated Summary Financial Statements and the Reformatted Unconsolidated Summary Financial Statements contained in the section titled “Financial Information” beginning on page 146 of this Draft Prospectus.

A. SUMMARY INFORMATION OF OUR UNCONSOLIDATED ASSETS AND LIABILITIES

`̀̀̀ in lacs

Particulars

As at March 31,

2012 2011 2010 2009 2008

Equity and Liabilities

A. Shareholders’ funds

(a) Share capital

5,236.72 4,953.69 4,915.47 4,585.68 6,444.48

(b) Reserves and surplus

1,59,822.32 1,16,253.59 95,084.15 63,688.56 38,303.11

(c) Money received against share warrants

8,437.00 - - 2,700.00 232.20

Total Shareholders’ funds

1,73,496.04 1,21,207.28 99,999.62 70,974.24 44,979.79

B. Share application money pending allotment - - 0.71 - -

C. Non-current liabilities

(a) Long-term borrowings

6,31,400.98 4,13,366.00 1,75,745.30 1,58,524.22 1,30,935.37

(b) Deferred tax liabilities (net)

- - - - 632.99

(c) Other long-term borrowings

44,591.61 31,824.39 18,494.31 10,526.29 8,862.40

(d) Long-term provisions

1,024.94 1,265.20 1,457.57 1,975.89 973.79

Total Non-current liabilities

6,77,017.53 4,46,455.59 1,95,697.18 1,71,026.40 1,41,404.55

D. Current liabilities

(a) Short-term borrowings

1,23,794.53 1,57,437.62 1,93,157.06 1,51,788.78 1,15,153.34

(b) Other current liabilities

2,82,715.23 2,00,574.79 1,25,711.12 1,44,562.82 74,020.50

(c) Short-term provisions

7,829.34 5,874.88 2,817.94 1,614.18 1,563.01

Total Current liabilities

4,14,339.10 3,63,887.29 3,21,686.12 2,97,965.78 1,90,736.85

E. Total Equity and Liabilities (A+B+C+D) 12,64,852.67 9,31,550.16 6,17,383.63 5,39,966.42 3,77,121.19

Assets

F. Non-current assets

(a) Fixed assets

(i) Tangible assets

5,124.03 2,737.94 1,752.14 3,717.33 5,108.06

(ii) Intangible assets

130.28 206.49 292.38 4.65 -

(b) Non-current investments

1,781.45 551.45 101.45 601.45 601.45

(c) Deferred tax assets

1,314.44 1,581.66 1,122.70 313.05 -

(d) Long-term loans and advances

2,49,575.13 2,09,228.90 1,82,467.47 1,59,837.59 1,25,979.22

(e) Other non-current assets

36,908.80 10,632.14 3,733.99 5,112.91 676.68

37

Total Non-current assets

2,94,834.13 2,24,938.58 1,89,470.13 1,69,586.98 1,32,365.41

G. Current assets

(a) Current investments

- - - 5.00 3.53

(b) Cash and bank balances

1,15,649.90 2,09,950.14 1,36,990.05 1,55,699.67 86,997.06

(c) Short-term loans and advances

8,22,512.52 4,82,108.27 2,85,205.31 2,13,852.49 1,56,797.38

(d) Other current assets

31,856.12 14,553.17 5,718.14 822.28 957.81

Total Current assets

9,70,018.54 7,06,611.58 4,27,913.50 3,70,379.44 2,44,755.78

H. Total Assets (F+G) 12,64,852.67 9,31,550.16 6,17,383.63 5,39,966.42 3,77,121.19

38

B. SUMMARY INFORMATION OF OUR UNCONSOLIDATED STATEMENT OF PROFIT AND LOSS

`̀̀̀ in lacs

Particulars

For year the ended March 31,

2012 2011 2010 2009 2008

A. Income

(a) Revenue from Operation

2,03,747.82 1,32,053.58 1,07,711.13 92,466.04 61,153.31

(b) Other Income

1,893.61 291.07 3,079.36 1,036.02 1,246.47

Total Revenue

2,05,641.43 1,32,344.65 1,10,790.49 93,502.06 62,399.78

B. Expenses:

(a) Employee benefits expenses

9,236.77 4,367.02 3,611.63 3,582.75 2,274.74

(b) Finance costs

92,858.01 55,145.42 49,182.04 46,251.94 27,053.74

(c) Depreciation and amortisation expenses

1,371.34 747.41 464.77 1,018.23 1,127.52

(d) Other expenses

31,924.25 24,173.01 16,740.57 16,866.25 14,070.34

(e) Provisions & write offs (net)

17,834.75 11,851.70 12,165.62 7,809.36 5,174.98

Total expenses

1,53,225.12 96,284.56 82,164.63 75,528.53 49,701.32

C. Profit before tax (A-B)

52,416.31 36,060.09 28,625.86 17,973.53 12,698.46

D. Tax expense:

(a) Current tax

16,898.55 12,460.20 9,972.11 7,055.25 6,134.29

(b) Deferred tax

267.22 (458.96) (809.65) (946.04) (2,340.33)

(c) Wealth tax

- - - 1.76 -

(d) Fringe benefit tax

- - - 161.79 141.00

(e)Tax of earlier years

997.42 - 37.54 - -

Total tax expense

18,163.19 12,001.24 9,200.00 6,272.76 3,934.96

E. Profit after tax from continuing

operations (C-D) 34,253.12 24,058.85 19,425.86 11,700.77 8,763.50

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C. SUMMARY INFORMATION OF OUR UNCONSOLIDATED CASH FLOW STATEMENT ` ` ` ` in lacs

Particulars For year the ended March 31,

2012 2011 2010 2009 2008

A. Cash flow from Operating activities

Net profit before taxation 52,416.31 36,060.09 28,625.86 17,973.53 12,698.46

Non-cash adjustments to reconcile profit before tax to net cash flows:

Depreciation and amortization 1,371.34 747.41 464.77 1,018.23 1,127.52

Provision for impairment - - - 1,186.81 -

(Profit)/loss on sale of fixed assets 3.52 13.78 1.60 0.12 3.35

Employees Stock option compensation expenses

191.82 471.68 751.53 1,111.28 542.09

Share and debenture issue expenses written off

162.05 - - - 2.13

Provision for non performing assets and bad debt written off

16,889.81 10,136.82 12,165.62 7,809.36 5,174.98

Contingent Provision on Standard assets 944.94 1,714.89 - -

Provision for hedging contracts (772.49) (546.62) - 994.18 811.68

Provision for gratuity 63.55 40.82 15.88 6.46 104.70

Provision for leave benefits 25.08 27.48 9.87 1.51 13.60

Provision for diminution in value of investments

- - - - (3.80)

Net (gain)/loss on sale of investments (134.74) - (1,400.00) 0.08 -

Interest income on current and long term investments and interest income on fixed deposits

(1,140.59) (270.70) (1,203.65) (258.14) (228.64)

Dividend Income (596.67) - (444.91) (56.47) (46.06)

Operating profit before working capital changes

69,423.93 48,395.65 38,986.57 29,786.95 20,200.01

Movement in Working capital:

(Increase) / decrease in assets under financing activities

(3,95,959.82) (2,33,365.56) (1,06,665.06) (1,05,885.40) (1,08,713.59)

(Increase) / decrease in Short-term loans and advances

(577.32) 86.00 240.73 2,244.60 (142.47)

(Increase) / decrease in Long-term loans and advances

(1,103.15) (521.66) 13.82 4,149.27 (1,670.97)

(Increase) / decrease in other current assets (17,025.15) (8,835.03) (4,895.86) 135.53 (227.78)

(Increase) / decrease in other non-current assets

(14,915.23) (3,526.56) (506.74) 59.67 (59.26)

Increase / (decrease) in other current liabilities

82,140.44 74,863.67 (18,851.70) 70,542.32 20,008.94

Increase / (decrease) in other non-current liabilities

12,767.22 13,330.08 7,968.02 1,663.89 (483.64)

Cash generated from operation (2,65,249.08) (1,09,573.41) (83,710.22) 2,696.83 (71,088.76)

Direct taxes paid (net of refund) (16,862.29) (11,127.69) (9,197.57) (6,450.11) (6,522.66)

Net Cash flow from/(used in) operating

activities (A) (2,82,111.37) (1,20,701.10) (92,907.79) (3,753.28) (77,611.42)

40

` ` ` ` in lacs

Particulars For year the ended March 31,

2012 2011 2010 2009 2008

B. Cash flow from investing activities

Investment in Fixed Deposit (having original maturity of more than three months)

51.00 145.00 611.34 (209.76) 763.47

Investment in margin money deposit (21,747.88) 7,937.17 (13,367.04) (5,645.94) (710.84)

Purchase of fixed and intangible assets (3,686.08) (1,663.61) (1,058.11) (879.02) (670.26)

Proceeds from sale of fixed assets 1.33 2.52 2,269.20 59.93 1.81

Investment in subsidiary company (1,230.00) (250.00) - (4.55) (4.99)

Purchase of non-current investments - (200.00) - - -

Proceeds from sale of non-current investments

- - 1,900.00 - 4.55

Proceeds from sale of current investments (net)

134.74 - 5.00 3.00 59.50

Interest received on current and long term investments and interest on fixed deposits

1,140.59 270.70 1,203.65 258.14 228.64

Dividend received 596.67 - 444.91 56.47 46.06

Net cash flow from/(used in) investing

activities (B) (24,739.63) 6,241.78 (7,991.05) (6,361.73) (282.06)

C. Cash flow from financing activities

Proceeds from issue of equity share capital including securities premium and share application money

21,732.61 133.05 11,717.48 15,453.21 2,960.20

Increase / (decrease) of long-term borrowings 2,18,034.98 2,37,620.70 17,221.08 27,588.85 49,737.16

Increase / (decrease) of short-term borrowings (33,643.09) (35,719.44) 41,368.28 36,635.44 77,913.21

Public issue expenses for non-convertible debenture paid

(1,268.28) - - - -

Dividend Paid (2,985.09) (2,710.89) (2,358.20) (1,897.26) (1,324.00)

Tax on dividend (484.25) (450.25) (400.78) (322.42) (225.01)

Net Cash flow from/(used in) financing

activities (C) 2,01,386.88 1,98,873.17 67,547.86 77,457.82 1,29,061.56

Net increase / (decrease) in cash and cash

equivalents (A+B+C) (1,05,464.12) 84,413.85 (33,350.98) 67,342.81 51,168.08

Cash and cash equivalents at the beginning

of the year 2,01,052.74 1,16,638.89 1,49,989.87 82,647.06 31,478.98

Cash and cash equivalents at the end of the

year 95,588.62 2,01,052.74 1,16,638.89 1,49,989.87 82,647.06

41

D. SUMMARY INFORMATION OF OUR CONSOLIDATED ASSETS AND LIABILITIES

` ` ` ` in lacs

Particulars

As at March,31,

2012 2011

Equity and Liabilities

A. Shareholders’ funds (a) Share capital

5,236.72 4,953.69

(b) Reserves and surplus

1,59,377.53 1,16,253.59 (c) Money received against share warrants

8,437.00 -

Total Shareholders’ funds

1,73,051.25 1,21,207.28

B. Non-current liabilities

(a) Long-term borrowings

6,31,400.98 4,13,366.00 (b) Other long-term liabilities

44,591.61 31,824.39

(c) Long-term provisions

1,045.59 1,265.20

Total Non-current liabilities

6,77,038.18 4,46,455.59 C. Current liabilities

(a) Short-term borrowings

1,23,794.53 1,57,437.62

(b) Other current liabilities

2,82,754.09 2,00,593.46 (c) Short-term provisions

7,834.49 5,874.88

Total Current liabilities

4,14,383.11 3,63,905.96

D. Total Equity and Liabilities (A+B+C)

12,64,472.54 9,31,568.83

Assets

E. Non-current assets

(a) Fixed assets

(i) Tangible assets

5,194.75 2,740.66 (ii) Intangible assets

130.59 206.49

(b) Non-current investments

301.45 301.45 (c) Deferred tax assets

1,358.83 1,581.66

(d) Long-term loans and advances

2,50,108.17 2,09,228.90 (e) Other non-current assets

36,968.56 10,655.90

Total Non-current assets

2,94,062.35 2,24,715.06

F. Current assets

(a) Cash and bank balance

1,16,015.14 2,10,192.33 (b) Short-term loans and advances

8,22,524.21 4,82,108.27

(c) Other current assets

31,870.84 14,553.17

Total Current assets

9,70,410.19 7,06,853.77

G. Total Assets (E+F) 12,64,472.54 9,31,568.83

42

Particulars

Notes

For the year ended March 31,

2012 2011

A. Income

(a) Revenue from Operation 13 2,03,783.03 1,32,053.58 (b) Other Income 14 1,901.58 291.07

Total Revenue 2,05,684.61 1,32,344.65 B. Expenses: (a) Employee benefits expense 15 9,416.76 4,367.02 (b) Finance costs 16 92,858.01 55,145.42 (c) Depreciation and amortization expense 7 1,377.97 747.41 (d) Other expenses 17 32,109.26 24,173.01 (e) Provisions & write offs (net) 18 17,995.48 11,851.70

Total expenses 1,53,757.48 96,284.56 C. Profit before tax (A-B) 51,927.13 36,060.09

D. Tax expense: (a) Current tax 16,898.55 12,460.20 (b) Deferred tax 222.83 (458.96) (c) Tax of earlier years 997.42 -

Total tax expense 18,118.80 12,001.24

E. Profit after tax from continuing operations (C-D) 33,808.33 24,058.85

E. SUMMARY INFORMATION OF OUR CONSOLIDATED STATEMENT OF PROFIT AND LOSS `̀̀̀ in lacs

43

F. SUMMARY INFORMATION OF OUR CONSOLIDATED CASH FLOW STATEMENT

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011

A. Cash flow from Operating activities

Net profit before taxation 51,927.13 36,060.09

Non-cash adjustments to reconcile profit before tax to net cash flows:

Depreciation and amortization 1,379.49 747.42

(Profit)/loss on sale of fixed assets 3.52 13.78

Employees Stock option compensation expenses 191.82 471.68

Public issue expenditure for non-convertible debenture 162.05 -

Provision for non performing assets and bad debt written off 16,889.81 10,136.82

Contingent Provision on Standard assets 946.89 1,714.89

Provision for hedging contracts (772.49) (546.62)

Provision for gratuity 81.76 40.82

Provision for bonus and ex-gratia 5.12 -

Provision for leave benefits 25.60 27.48

Net gain on sale of current investments (134.74) -

Interest income on current and long term investments and interest income on fixed deposits (1,148.05) (270.70)

Dividend Income (596.67) -

Operating profit before working capital changes 68,961.24 48,395.66

Movement in Working capital:

(Increase) / decrease in assets under financing activities (3,95,959.82) (2,33,365.56)

(Increase) / decrease in Short-term loans and advances (589.02) 86.00

(Increase) / decrease in Long-term loans and advances (1,636.18) (521.66)

(Increase) / decrease in other current assets (17,039.87) (8,835.03)

(Increase) / decrease in other non-current assets (14,951.23) (3,550.32)

Increase / (decrease) in other current liabilities 82,160.63 74,882.34

Increase / (decrease) in other non-current liabilities 12,767.22 13,330.08

Cash generated from operation (2,66,287.03) (1,09,578.49)

Direct taxes paid (net of refund) (16,862.29) (11,127.69)

Net Cash flow from/(used in) operating activities (A) (2,83,149.32) (1,20,706.18)

B. Cash flow from Investing Activities

Investment in Fixed Deposit (having maturity of more than three months) 51.00 145.00

Investment in margin money deposit (21,747.88) 7,937.17

Purchase of fixed and intangible assets (3,762.54) (1,666.34)

Proceeds from sale of fixed assets 1.33 2.52

Purchase of Investments - (200.00)

Proceeds from sale of investments (net) 134.74 -

Interest received on current and long term investments and interest on fixed deposits 1,148.05 270.70

Dividend received 596.67 -

44

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011

Net cash flow from/(used in) investing activities (B) (23,578.63) 6,489.05

C. Cash flow from financing activities

Proceeds from issue of equity share capital including securities premium and share application money 21,732.61 133.05

Increase / (decrease) of long-term borrowings 2,18,034.98 2,37,620.70

Increase / (decrease) of short-term borrowings (33,643.09) (35,719.44)

Public issue expenses for non-convertible debenture paid (1,268.28) -

Dividend Paid (2,985.09) (2,710.89)

Tax on dividend (484.25) (450.25)

Net Cash flow from/(used in) financing activities (C) 2,01,386.88 1,98,873.17

Net increase / (decrease) in cash and cash equivalents (A+B+C) (1,05,341.07) 84,656.04

Cash and cash equivalents at the beginning of the year 2,01,294.93 1,16,638.89

Cash and cash equivalents at the end of the year 95,953.86 2,01,294.93

45

CAPITAL STRUCTURE Details of share capital The share capital of our Company as at date of this Draft Prospectus is set forth below:

Share Capital `̀̀̀ in lacs

AUTHORISED SHARE CAPITAL

100,000,000 Equity Shares of ` 10/- each 10,000.00

4,000,000 Cumulative Redeemable Preference Shares of ` 100/- each 4,000.00

TOTAL 14,000.00

ISSUED

52,485,701 Equity Shares of ` 10 /- each 5,248.57

SUBSCRIBED

52,485,701 Equity Shares of ` 10 /- each 5,248.57

PAID-UP SHARE CAPITAL

52,485,701 Equity Shares of ` 10/- each 5,248.57

TOTAL 5,248.57

Changes in the authorised capital of our Company as on the date of this Draft Prospectus:

Sr.

No.

FY Alteration

1. 1987 The Authorised Share capital of our Company was increased from ` 2,500,000 divided into 25,000 Equity

shares of `100/- each to ` 5,000,000 divided into 50,000 Equity shares of ` 100/- each.

2. 1988 The Authorised Share capital of our Company was increased from ` 5,000,000 divided into 50,000 Equity

shares of `100/- each to ` 20,000,000 divided into 2,000,000 Equity shares of ` 10/- each.

3. 1990 The Authorised Share capital of our Company was reorganised and increased from ` 20,000,000 divided

into 2,000,000 Equity shares of ` 10/- each to ` 60,000,000 divided into 6,000,000 Equity shares of `10/- each

4. 1990 The Authorised Share capital of our Company was reorganised ` 60,000,000 divided into 6,000,000

Equity shares of `10/- each to ` 45,000,000 divided into 4,500,000 Equity shares of `10/- each and ` 15,000,000 divided into 1,500,000 preference shares of `10/- each.

5. 1994 The Authorised Share capital of our Company was increased from ` 60,000,000 divided into 4,500,000

Equity shares of `10/- each and 1,500,000 preference shares of `10/- each to ` 100,000,000 divided into 8,500,000 Equity shares of `10/- each and 1,500,000 preference shares of `10/- each.

6. 1997 The Authorised Share capital of our Company was increased from ` 100,000,000 divided into 8,500,000

Equity shares of `10/- each and 1,500,000 preference shares of `10/- each to ` 200,000,000 divided into 15,000,000 Equity Shares of `10/- each and 5,000,000 redeemable preference shares of `10/- each

7.

1998 The Authorised Share capital of our Company was increased from ` 200,000,000 divided into 15,000,000 Equity Shares of `10/- each and 5,000,000 redeemable preference shares of `10/- each to ` 250,000,000 divided into 15,000,000 Equity shares of `10/- each and 1,000,000 Cumulative Redeemable Preference shares of `100/- each with redemption period of 5 years carrying dividends by the Board.

8.

2000 The Authorised Share capital of our Company was increased from ` 250,000,000 divided into 15,000,000 Equity shares of `10/- each and 1,000,000 Cumulative Redeemable Preference shares of `100/- each to ` 350,000,000 divided into 15,000,000 Equity shares of `10/- each and 2,000,000 Cumulative Redeemable Preference shares of `100/- each with redemption period of 5 years carrying dividends by the Board.

9. 2001 The Authorised Share capital of our Company was increased from ` 350,000,000 divided into 15,000,000 Equity shares of `10/- each and 2,000,000 Cumulative Redeemable Preference shares of `100/- each to `

46

Sr.

No.

FY Alteration

450,000,000 divided into 15,000,000 Equity shares of `10/- each and 3,000,000 Cumulative Redeemable Preference shares of `100/- each with redemption period of 5 years carrying dividends by the Board.

10. 2002 The Authorised Share capital of our Company was increased from ` 4,50,000,000 divided into 15,000,000 Equity shares of `10/- each and 3,000,000 Cumulative Redeemable Preference shares of `100/- each to ` 550,000,000 divided into 25,000,000 Equity shares of `10/- each and 3,000,000 Cumulative Redeemable Preference shares of `100/- each with redemption period of 5 years carrying dividends by the Board.

11. 2003 The Authorised Share capital of our Company was increased from ` 550,000,000 divided into 25,000,000 Equity shares of `10/- each and 3,000,000 Cumulative Redeemable Preference shares of `100/- each to ` 850,000,000 divided into 45,000,000 Equity shares of `10/- each and 4,000,000 Cumulative Redeemable Preference shares of `100/- each with redemption period of 5 years carrying dividends by the Board.

12. 2008 The Authorised Share capital of our Company was increased from ` 850,000,000 divided into 45,000,000 Equity shares of `10/- each and 4,000,000 Cumulative Redeemable Preference shares of `100/- each to ` 1,000,000,000 divided into 60,000,000 Equity shares of `10/- each and 4,000,000 Cumulative Redeemable Preference shares of `100/-each.

13. 2012 The Authorised Share capital of our Company was increased from ` 1,000,000,000 divided into 60,000,000 Equity shares of `10/- each and 4,000,000 Cumulative Redeemable Preference shares of `100/- each to ` 1,400,000,000 divided into 100,000,000 Equity shares of `10/- each and 4,000,000 Cumulative Redeemable Preference shares of `100/-each.

Equity Share Capital History of our Company

Date of Allotment Number of shares

issued and allotted

Cumulative

Paid-up capital

in (`̀̀̀)

Nature of Issue Face Value

(`̀̀̀)

Premium

(`̀̀̀)

March 27, 1986 20 2,000 Subscribers to the Memorandum 100/- Nil

April 7, 1986 4,980 500,000 Further Issue 100/- Nil

May 14, 1986 1,000 600,000 Further Issue 100/- Nil

May 30, 1986 4,000 1,000,000 Further Issue 100/- Nil

August 2, 1986 1,000 1,100,000 Further Issue 100/- Nil

September 6,1986 5,000 1,600,000 Further Issue 100/- Nil

November 29,1986 4,000 2,000,000 Further Issue 100/- Nil

March 7,1987 3,500 2,350,000 Further Issue 100/- Nil

April 14,1987 3,500 2,700,000 Further Issue 100/- Nil

November 21, 1987 8,000 3,500,000 Further Issue 100/- Nil

June 11, 1988 15,000 5,000,000 Further Issue 100/- Nil

October 29, 1988 10,000 6,000,000 Rights Issue 100/- Nil

October 29, 1988 - - Sub-division of the face value of the Equity Shares of our

Company from ` 100/- each to ` 10/- each

- -

December 30, 1988 150,000 7,500,000 Rights Issue 10/- Nil

March 27, 1989 240,000 9,900,000 Rights Issue 10/- Nil

January 22, 1991 990,000 19,800,000 Rights Issue 10/- Nil

June 10, 1993 1,980,000 39,600,000 Rights Issue 10/- Nil

June 14, 1994 40,000 40,000,000 Preferential Issue 10/- Nil

December 22, 1994 2,000,000 60,000,000 Public Issue 10/- 10/-

February 19, 1996 1,500,000 75,000,000 Bonus Issue Nil Nil

September 12, 2003 19,600,000 271,000,000 Preferential Issue 10/- 5.35/-

December 22, 2006 4,000,000 311,000,000 Preferential Issue 10/- 150/-

December 27, 2006 4,000,000 351,000,000 Preferential Issue 10/- 150/-

December 29, 2006 4,000,000 391,000,000 Preferential Issue 10/- 150/-

47

Date of Allotment Number of shares issued and allotted

Cumulative Paid-up capital

in (`̀̀̀)

Nature of Issue Face Value (`̀̀̀)

Premium (`̀̀̀)

March 20, 2008 2,055,000 411,550,000 Preferential Issue (Conversion of Warrants)

10/- 150/-

May 14, 2008 1,837,500 429,925,000 Preferential Issue 10/- 390/-

May 16, 2008 1,412,500 444,050,000 Preferential Issue 10/- 390/-

June 27, 2008 1,445,000 458,500,000 Preferential Issue (Conversion of Warrants)

10/- 150/-

January 30, 2009 6,800 458,568,000 ESOP$ 10/- 25/-

May 29, 2009 7,050 458,638,500 ESOP$ 10/- 25/-

November 6, 2009 587,500 464,513,500 Preferential Issue

(Conversion of Warrants) 10/- 390/-

November 9, 2009 662,500 471,138,500 Preferential Issue (Conversion of Warrants)

10/- 390/-

November 11,2009 2,000,000 491,138,500 Preferential Issue

(Conversion of Warrants) 10/- 390/-

January 6, 2010 10,100 491,239,500 ESOP$ 10/- 25/-

March 30, 2010 30,750 491,547,000 ESOP$ 10/- 25/-

May 31, 2010 27,184 491,818,840 ESOP$ 10/- 25/-

June 30, 2010 20,572 492,024,560 ESOP$ 10/- 25/-

August 13, 2010 83,126 492,855,820 ESOP$ 10/- 25/-

September 17, 2010 39,957 493,255,390 ESOP$ 10/- 25/-

October 19,2010 34,050 493,595,890 ESOP$ 10/- 25/-

November 8,2010 33,150 493,927,390 ESOP$ 10/- 25/-

December 04, 2010 20,350 494,130,890 ESOP$ 10/- 25/-

December 31,2010 49,150 494,622,390 ESOP$ 10/- 25/-

January 31, 2011 48,200 495,104,390 ESOP$ 10/- 25/-

March 2, 2011 14,810 495,252,490 ESOP$ 10/- 25/-

March 31, 2011 11,628 495,368,770 ESOP$ 10/- 25/-

April 30, 2011 1,48,400 496,852,770 ESOP$ 10/- 25/-

June 7, 2011 43,550 497,288,270 ESOP$ 10/- 25/-

June 29, 2011 4,552 497,333,790 ESOP$ 10/- 25/-

August 1, 2011 16,600 497,499,790 ESOP$ 10/- 25/-

August 30, 2011 10,880 497,608,590 ESOP$ 10/- 25/-

October 3, 2011 8,600 497,694,590 ESOP$ 10/- 25/-

November 5, 2011 7,500 497,769,590 ESOP$ 10/- 25/-

December 3, 2011 15,300 497,922,590 ESOP$ 10/- 25/-

December 29, 2011 91,700 498,839,590 ESOP$ 10/- 25/-

February 4, 2012 1,32,750 500,167,090 ESOP$ 10/- 25/-

March 1, 2012 36,900 500,536,090 ESOP$ 10/- 25/-

March 27, 2012 23,00,000 523,536,090 Preferential Issue 10/- 560/-

March 31, 2012 13,600 523,672,090 ESOP$ 10/- 25/-

May 4, 2012 32,000 523,990,090 ESOP$ 10/- 25/-

May 31, 2012 8,950 524,081,590 ESOP$ 10/- 25/-

June 30, 2012 20,457 524,286,160 ESOP$ 10/- 25/-

July 31, 2012 57,085 524,857,010 ESOP$ 10/- 25/

Total 52,485,701 524,857,010

$ Equity shares allotted to the employees of our Company as fully paid up under the Company’s ESOP 2006 on exercise of vested options.

48

Notes:

1. On March 20, 2008, the Company issued and allotted 2,055,000 Equity Shares of ` 10/- each at a premium of ` 150/- per Equity share on conversion of warrants to Shriram Enterprise Holdings Private Limited

2. On June 27, 2008, the Company issued and allotted 1,445,000 Equity Shares of ` 10/- each at a premium of ` 150/- per Equity share on conversion of warrants to Shriram Enterprise Holdings Private Limited.

3. On November 6, 2009, the Company issued and allotted 587,500 Equity Shares of ` 10/- each at a premium of

` 390/- per Equity share on conversion of warrants to Asiabridge fund I LLC

4. On November 9, 2009 the Company issued and allotted 662,500 Equity Shares of ` 10/- each at a premium of ` 390/- per Equity share on conversion of warrants to Van Gogh Limited.

5. On November 11, 2009, the Company issued and allotted 2,000,000 Equity Shares of ` 10/- each at a premium of

` 390/- per Equity share on conversion of warrants, to Bessemer Venture Partners Trust (1,250,000) and IDBI Trusteeship Services Limited (India Advantage Fund VI)(750,000) .

Warrants Pursuant to a resolution passed by shareholders of our Company at their EGM held on March 24, 2012 and the Equity Allotment Committee of our Company at their meeting held on March 27, 2012, 59,00,000 warrants were issued and allotted to Shriram Capital Limited, (“SCL”) on a preferential basis, at a subscription price of not less than ` 143/- for each warrant conferring an option to SCL to subscribe to one Equity Share per warrant at an exercise price of ` 570/- per warrant and are outstanding as on date of this Draft Prospectus.

Share holding pattern of our Company as on August 17, 2012:

Sr.

No. Category of Shareholder

No. of

Shareho

lders

Total No.

of shares

No. of

shares

held in

Dematerialised Form

Total No. of

shareholding as a

percentage of Total No. of shares

Shares pledged or

otherwise

encumbered

As a % of

(A+B)

As a % of

(A+B+C)

No. of

Shares

As a %

of total

No. of

shares

(A)

SHAREHOLDING OF

PROMOTER AND

PROMOTER GROUP

(1) Indian

A Individual/Hindu Undivided Family

- -

B Central Government/ State Governments

- -

C Bodies Corporate 2 28,910,571 28,910,571 55.08 55.08 - -

D Financial Institutions / Banks

- -

E Any other (Specify)

- -

Sub Total A(1) 2 28,910,571 28,910,571 55.08 55.08 - 0.00

(2) Foreign

A Individual (Non -resident Individuals / Foreign individuals)

B Bodies Corporate

C Institutions

49

Sr.

No. Category of Shareholder

No. of

Shareho

lders

Total No.

of shares

No. of

shares

held in

Demateria

lised Form

Total No. of

shareholding as a

percentage of Total

No. of shares

Shares pledged or

otherwise

encumbered

As a %

of

(A+B)

As a %

of

(A+B+C)

No. of

Shares

As a %

of total No. of

shares

D Qualified Foreign Investor

E Any other (Specify)

Sub Total A(2) 0 - - 0.00 0.00 0.00 0.00

Total shareholding of

Promoter and Promoter

Group (A)= (A)(1) +(A)(2)

2 28,910,571 28,910,571 55.08 55.08 0.00 0.00

(B) Public Shareholding

(1) Institutions

A Mutual Funds/ UTI 8 147,567 147,292 0.28 0.28

B Financial Institutions / Banks 2 100,125 100,125 0.19 0.19

C Central Government/ State Governments

- -

D Venture capital Funds

- -

E Insurance Companies

- -

F Foreign Institutional Investors 16 7,828,657 7,828,657 14.92 14.92

G Foreign Venture Capital Investors

- -

H Qualified Foreign Investor

I Any other (Foreign Banks)

- -

Sub Total B(1) 26 8,076,349 8,076,074 15.39 15.39

(2) Non-Institutions

A Bodies Corporate 97 177,972 174,572 0.34 0.34

B Individuals

(i) Individual Shareholders holding Nominal Share Capital upto ` 1 Lakh

4844 1,103,375 757,875 2.10 2.10

(ii) Individual Shareholders holding Nominal Share Capital in excess of ` 1 Lakh

10 156,765 156,765 0.30 0.30

C Qualified Foreign Investor

D Any other -Clearing Members 25 6,562 6,562 0.01 0.01

-Trust 1 3,700,054 3,700,054 7.05 7.05

-Foreign Company 3 10,300,000 10,300,000 19.62 19.62

-NRI 47 41,053 41,053 0.08 0.08

- Limited Liability Partnership

1 13,000 13,000 0.02 0.02

Sub Total B(2) 5,028 15,498,781 15,149,881 29.53 29.53

Total Public Shareholding (B)= (B)(1)+(B)(2)

5,054 23,575,130 23,225,955 44.92 44.92 N.A. N.A.

TOTAL (A) + (B) 5,056 52,485,701 52,136,526 100.00 100.00 0.00 0.00

(C)

Shares held by Custodians

and against which Depository

Receipts have been issued

- N.A. N.A.

50

Sr.

No. Category of Shareholder

No. of

Shareho

lders

Total No.

of shares

No. of

shares

held in

Demateria

lised Form

Total No. of

shareholding as a

percentage of Total

No. of shares

Shares pledged or

otherwise

encumbered

As a %

of

(A+B)

As a %

of

(A+B+C)

No. of

Shares

As a %

of total No. of

shares

1 Promoter and Promoter Group

2 Public

Grand Total (A) + (B) + ( C) 5,056 52,485,701 52,136,526 100.00 100.00 0.00 0.00

List of top ten holders of Equity Shares of our Company as on August 17, 2012:

Sr.

No Name of shareholders Address

Total Number of

Equity Shares held

Percentage

Holding (%)

1. Shriram Retail Holdings Private Limited

Mookambika Complex, No.4, Lady Desika Road, Mylapore, Chennai -600 004.

2,66,10,571 50.70

2. Van Gogh Limited

HDFC Bank Limited, Custody Services, Lodha- I Think Techno Campus Office Floor-8, Next to Kanjurmarg railway station, Kanjurmarg (East) Mumbai- 400 042

66,25,000 12.62

3. Norwest Venture Partners X Fii – Mauritius

C/o Standard Chartered Bank, Securities Services, C-38/39, G.Block, BKC Bandra East, Mumbai- 400 051

43,42,179 8.27

4. IDBI Trusteeship Services Limited (India)

ICICI Bank Limited, 1st Floor SMS Department 414 Empire House S B Marg Lower Parel, Mumbai- 400 013

37,00,054 7.05

5. Bessemer Venture Partners Trust

Deutsche Bank AG, DB House, Hazrimal Somani Marg, Post Box No. 1142, Fort Mumbai - 400 001.

25,00,000 4.76

6. Shriram Capital Limited No.4, Mookambika Complex, Lady Desika Road, Mylapore, Chennai -600 004.

23,00,000 4.38

7. Asia Bridge Fund I Llc

Citibank N.A. Custody Services, 3rd Floor, Trent House, G Block, Plot No. 60, Bandra Kurla Complex, Bandra (East) Mumbai-400 051

11,75,000 2.24

8. Acacia Partners, LP

Citibank N.A. Custody Services, 3rd Floor, Trent House, G Block, Plot No. 60, BKC Bandra (East) Mumbai-400 051

11,19,828 2.13

9. Acacia Institutional Partners, LP

Citibank N.A. Custody Services, 3rd Floor, Trent House, G Block, Plot No. 60, BKC Bandra (East) Mumbai-400 051

5,43,000 1.04

51

Sr.

No Name of shareholders Address

Total Number of

Equity Shares held

Percentage

Holding (%)

10. Acacia Banyan Partners

Citibank N A, Custody Services 3rd Flr, Trent House, G Block, Plot No. 60, Bkc, Bandra - Eas Mumbai :400051

4,62,150 0.88

List of top ten holders of debt instruments, as on August 17, 2012:

1. List of top ten holders of Secured Redeemable Non-Convertible Debentures as on August 17, 2012 issued to public (non-

convertible debebtures-2011) - ISIN - INE 722A07208 (`̀̀̀ 5,429.05 lacs) of face value `̀̀̀ 1,000/- per debenture:

Sr.

No Name of debenture holders Address

Number of

debentures

Aggregate

amount (`̀̀̀ in

lacs)

1. HDFC Trustee Company Limited HDFC Mf Monthly Income Plan Long Term Plan

HDFC Bank Limited, Custody Services, Lodha - I Think Techno Campus, Off Flr 8, Next To Kanjurmarg Stn, Kanjurmarg East Mumbai – 400042

3,84,418 3,844.18

2. Borosil Glass Works Limited Khanna Construction House, 44 Dr R G Thadani Marg, Worli, Mumbai - 400018

41,871 418.71

3. Voltamp Transformers Limited Makarpura, Vadodara - 390014 20,936 209.36

4. United India Insurance Company (Employees) Pension Fund

C/O United India Insurance, Company Limited Head Office, 24 Whites Road, Chennai – 600014

19,221 192.21

5. Edelweiss Tokio Life Insurance Company Limited-Shareholders Fund-Beyond Solvency Margin

Citibank N. A. Custody Services, 3Rd Flr Trent House G Block, Plot No. 60 Bkc Bandra East, Mumbai - 400098

18,539 185.39

6. Malabar Capital Advisors Private Limited

55 Atlanta, 5Th Floor, Nariman Point, , Mumbai - 400021

10,468 104.68

7. Glance Finance Limited 5, Kitab Mahal, 192, Dr D N Road, Fort, Mumbai Maharashtra - 400001

8,374 83.74

8. Advent Fiscal Private Limited 602, Centre Point, J B Nagar, Andheri-Kurla Road, Andheri (East), Mumbai – 400059

8,374 83.74

9. Nifty Portfolio Services Private Limited 602 Centre Point, J B Nagar, Andheri Kurla Road, Andheri (East), Mumbai - 400059

8,374 83.74

10. Star Grain and Shipping Private Limited 3Rd Floor, Janmabhoomi Bhavan, 11/12, Janmabhoomi Marg, Fort, Mumbai – 400001

4,187 41.87

2. List of top ten holders of Secured Redeemable Non-Convertible Debentures as on August 17, 2012 issued to public (non-

convertible debebtures-2011) - ISIN - INE 722A07216 (`̀̀̀ 43,653.65 lacs ) of face value `̀̀̀ 1,000/- per debenture:

Sr.

No Name of debenture holders Address

Number of

debentures

Aggregate

amount (`̀̀̀ in

lacs)

1. UTI Dynamic Bond Fund

UTI Mutual Fund,UTI Asset Management, Company Limited, Department Of Fund, Accounts,UTI Tower, Gn Block, Bandra, Kurla Complex, Bandra (East), Mumbai – 400051

8,70,438 8,704.38

52

Sr.

No Name of debenture holders Address

Number of

debentures

Aggregate

amount (`̀̀̀ in

lacs)

2. UTI - Treasury Advantage Fund

UTI Mutual Fund,UTI Asset Management, Company Limited, Department Of Fund, Accounts,UTI Tower, Gn Block, Bandra, Kurla Complex, Bandra (East), Mumbai – 400051

4,19,597 4,195.97

3. HDFC Trustee Company Limited HDFC Mf Monthly Income Plan Long Term Plan

HDFC Bank Limited, Custody Services, Lodha - I Think Techno Campus, Off Flr 8, Next To Kanjurmarg Stn, Kanjurmarg East Mumbai - 400042

3,50,000 3,500.00

4. HDFC Trustee Company Limited A/C High Interest Fund Short Term Plan

HDFC Bank Limited, Custody Services, Lodha - I Think Techno Campus, Off Flr 8, Next To Kanjurmarg Stn, Kanjurmarg East Mumbai - 400042

3,00,000 3,000.00

5. UTI Short Term Income Fund

UTI Mutual Fund, UTI - Asset Management Co. Private Limited, UTI Tower, Gn Block, Bandra Kurla, Complex, Bandra (East), Mumbai – 400051

2,50,000 2,500.00

6. UTI - Childrens Career Balanced Plan

UTI Mutual Fund,UTI Asset Management, Company Limited, Department Of Fund, Accounts,UTI Tower, Gn Block, Bandra, Kurla Complex, Bandra (East), Mumbai – 400051

2,50,000 2,500.00

7. UTI-Unit Linked Insurance Plan UTI Amc Private Limited UTI Tower, Gn Block, Bandra Kurla Complex, Bandra (East) Mumbai - 400051

1,90,123 1,901.23

8. Deutsche Trustee Services (India) Private Limited A/C Dws Short Maturity Fund

Standard Chartered Bank, Crescenzo, Securities Services, 3Rd Floor, C-38/39 G-Block, Bkc Bandra (East), Mumbai India – 400051

1,34,000 1,340.00

9. HDFC Trustee Company Limited - HDFC Short Term Plan

HDFC Bank Limited, Custody Services, Lodha - I Think Techno Campus, Off Flr 8, Next To Kanjurmarg Stn, Kanjurmarg East Mumbai - 400042

1,00,000 1,000.00

10. HDFC Trustee Company Limited HDFC Mf Monthly Income Plan Short Term Plan

HDFC Bank Limited, Custody Services, Lodha - I Think Techno Campus, Off Flr 8, Next To Kanjurmarg Stn, Kanjurmarg East Mumbai - 400042

50,000 500.00

3. List of top ten holders of Secured Redeemable Non-Convertible Debentures as on August 17, 2012 issued to public (non-

convertible debebtures-2011) - ISIN - INE 722A07224 (` ` ` ` 12,125.30 lacs ) of face value `̀̀̀ 1,000/- per debenture:

Sr.

No Name of debenture holders Address

Number of

debentures

Aggregate amount (`̀̀̀ in

lacs)

1. UTI Dynamic Bond Fund

UTI Mutual Fund,UTI Asset Management, Company Limited, Department Of Fund, Accounts,UTI Tower, Gn Block, Bandra, Kurla Complex, Bandra (East), Mumbai – 400051

1,75,000 1,750.00

53

Sr.

No Name of debenture holders Address

Number of

debentures

Aggregate

amount (`̀̀̀ in

lacs)

2. HDFC Trustee Company Limited - HDFC Short Term Plan

HDFC Bank Limited, Custody Services, Lodha - I Think Techno Campus, Off Flr 8, Next To Kanjurmarg Stn, Kanjurmarg East Mumbai - 400042

1,50,000 1,500.00

3. Kotak Mahindra Trustee Co Limited - A/C Kotak Income Opportunities Fund

Deutsche Bank Ag, Db House, Hazarimal Somani Marg, P.O.Box No. 1142, Fort Mumbai, - 400001

1,50,000 1,500.00

4. Tripura State Co-Operative Bank Limited

Head Office 1 St Floor, Of Amulya Market P O Agartala, P O Box No 27, Tripura - 799001

1,50,000 1,500.00

5. Money Matters Financial Services Limited

1-B, 35, Court Chambers, Sir Vithaldas Thakersay Marg, New Marine Lines, Mumbai - 400020

95,867 958.67

6. Reliance Capital Trustee Co Limited A/C- Relianceregular Savings Fund-Debt Option

Deutsche Bank Ag, Db House, Hazarimal Somani Marg, Post Box No. 1142, Fort, Mumbai - 400001

50,000 500.00

7. UTI - Treasury Advantage Fund

UTI Mutual Fund,UTI Asset Management, Company Limited, Department Of Fund, Accounts,UTI Tower, Gn Block, Bandra, Kurla Complex, Bandra (East), Mumbai – 400051

50,000 500.00

8. United Bank Of India

The Deputy General Manager Ubi, Inestment Fund Management Dept, Head Office 4Th Floor 16 Old Court, House Street Kolkata - 700001

50,000 500.00

9. Kanoria Chemicals And Industries Limited

Park Plaza, 7Th Floor, 71 Park Street Near Park, St Post Office, Kolkata – 700016

35,122 351.22

10. Kotak Mahindra Trustee Co Limited - A/C Kotak Monthly Income Plan

Deutsche Bank Ag, Db House, Hazarimal Somani Marg, Post Box No. 1142, Fort, Mumbai - 400001

30,000 300.00

4. List of top ten holders of Secured Redeemable Non-Convertible Debentures as on August 17, 2012 issued to public (non-

convertible debebtures-2011) - ISIN - INE 722A07232 (` ` ` ` 9,570.95 lacs ) of face value `̀̀̀ 1,000/- per debenture:

Sr.

No Name of debenture holders Address

Number of

debentures

Aggregate

amount (`̀̀̀ in

lacs)

1. HDFC Trustee Co Limited A/C HDFC Fmp 36M October 2011(1)

HDFC Bank Limited Custody Services, Lodha-I Think Techno Campus Off Flr, 8, Next To Kanjurmarg Rly Stn, Kanjurmarg East Mumbai - 400042

3,34,999 3,349.99

2. Reliance Capital Trustee Co Limited A/C- Reliance regular Savings Fund-Debt Option

Deutsche Bank Ag, Db House, Hazarimal Somani Marg, Post Box No. 1142, Fort, Mumbai - 400001

2,85,734 2,857.34

3. Oriental Bank Of Commerce Plot No.5, InstitUTIonal Area, Sector - 32, Gurgaon, , Haryana - 122001

96,105 961.05

4. Union Bank Of India C/O. Ilfs, Ilfs House,Plot No.14, Raheja Vihar,Chandivali, Andheri (E), Mumbai – 400072

96,104 961.04

5. Deutsche Trustee Services (India) Private Limited A/C Dws Fixed Term Fund

Standard Chartered Bank, Crescenzo, Securities Services, 3Rd Floor, C-38/39

50,000 500

54

Sr.

No Name of debenture holders Address

Number of

debentures

Aggregate

amount (`̀̀̀ in

lacs)

Series 91 G-Block, Bkc Bandra (East), Mumbai India – 400051

6. Small Industries Development Bank Of India

Sme Development Centre 4Th Floor, Plot No C-11 G Block, Bandra Kurla Complex, Bandra (East) Mumbai – 400051

38,442 384.42

7. Tamilnadu Mercantile Bank Limited Treasury Department, 269/2/4, Avvai Shanmugam Salai, Royapettah, Chennai – 600014

38,442 384.42

8. HDFC Trustee Company Limited HDFC Mf Monthly Income Plan Short Term Plan

HDFC Bank Limited, Custody Services, Lodha - I Think Techno Campus, Off Flr 8, Next To Kanjurmarg Stn, Kanjurmarg East Mumbai - 400042

15,000 150

9. Sun Vacuum Formers Private Limited Plot No 40, Sector 18, MarUTI Industrial Area, Gurgaon - 122015

837 8.37

10. Subhash Shah And Associates Architects Private Limited

Lunat Mansion, 2Nd Floor,118/120, Mint Back Road, Fort, Mumbai - 400001

419 4.19

5. List of top ten holders of Secured Redeemable Non-Convertible Debentures as on August 17, 2012 issued to public (non-

convertible debebtures-2011) - ISIN - INE 722A07240 (` ` ` ` 1,346.35 lacs ) of face value `̀̀̀ 1,000/- per debenture:

Sr.

No Name of debenture holders Address

Number of

debentures

Aggregate

amount (`̀̀̀ in

lacs)

1. Jatinder Mehra C - 1 / 36, Safdarjung Development Area, New Delhi - 110016

658 6.58

2. Vithaldas N Bhatia Naraina Trading Co, 308, Sapphire Arcade, M G Road, Ghatkopar East, Mumbai - 400077

571 5.71

3. Sudhira Gupta A-203, New Friends Colony,New Delhi – 110065

499 4.99

4. Chellappa Amudhan Chosiv Apt. 1-A, 14/16, Raja St., T. Nagar, Chennai - 600017

420 4.20

5. Kanthimathi Amudhan Chosiv Apts. 1-A, 14/16, Raja Street, T. Nagar, Chennai - 600017

420 4.20

6. Satish Rajnarayan Singh C/10 Hitesh Chs Kondkarwadi, Virar East Behidn Motiba Rilemill,Thana, Thane Maharashtra - 401303

415 4.15

7. Bijoy Kumar Panda Duplex No 10, Sangam Vihar, P. O. Sonari, Jamshedpur, Bihar - 831001

387 3.87

8. Rajinder Paul Mittal Gd 192, Vishakha Enclave, Pitam Pura, Delhi – 110088

260 2.60

9. Jaideep Jagannath Haridas Flat No 3 Ramprasad, Complex, Sangli, Miraj Road, Sangli - 416416

258 2.58

10. Jagdish Maheshwari Atruim P 101 22 Kalakshetra Road, Thiruvanmiyur,Chennai - 600041

255 2.55

6. List of top ten holders of Secured Redeemable Non-Convertible Debentures as on August 17, 2012 issued to public (non-

convertible debebtures-2011) - ISIN - INE 722A07257 (` ` ` ` 2874.70 lacs ) of face value `̀̀̀ 1,000/- per debenture:

55

Sr.

No Name of debenture holders Address

Number of

debentures

Aggregate

amount (`̀̀̀ in

lacs)

1. Reliance Capital Trustee Co Limited A/C- Reliance regular Savings Fund-Debt Option

Deutsche Bank Ag, Db House, Hazarimal Somani Marg, Post Box No. 1142, Fort, Mumbai - 400001

2,50,868 2,508.68

2. Sudhangsu Sekhar Chakraborty J 217 Saket, New Delhi - 110017 7,526 75.26

3. Tumpudi Muralidhar Bhagavat No 17 4Th Main Road, Jayalakshmipuram, Mysore - 570012

5,017 50.17

4. Srikumar Ghosh D 75, Saket, Malviya Nagar, New Delhi – 110017

4,516 45.16

5. Jitendra Chandrakant Mehta Anupam Building Flat No 52, 5Th Floor, 11 Manav Mandir Rd, Walkeshwar, Mumbai - 400006

3,763 37.63

6. V Ranganathan 99, Royapettah High Road, Mylapore, Chennai - 600004

1,505 15.05

7. Rangaswamy Sundara Rajan 30/A,Davis Road, Cooke Town, St Thomas Town Post, Bangalore - 560084

1,004 10.04

8. Namrata Agarwalla C/O Castron Technologies Limited, Dhaiya Road, Post Nag Nagar, Jharkhand – 826004

853 8.53

9. Ashley Menezes C - 252, Defense Colony,New Delhi – 110024

752 7.52

10. Suresh Nair 180 Phase , Palm Meadows, Airport White Field Road, Bangalore - 560066

752 7.52

7. List of top ten holders of Secured Redeemable Non-Convertible Debentures as on August 17, 2012 (issued on private

placement basis) of face value of `̀̀̀ 10,00,000/- per debenture:

Sr.

No

Name of debenture holders Address Number of

debentures

Aggregate

amount (`̀̀̀ in lacs)

1. Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (Fmo)

Standard Chartered Bank, Crescenzo,Securities Services, 3Rd Floor,C-38/39 G-Block, Bkc Bandra (East),Mumbai India-400051

2,500 25,000.00

2. Standard Chartered Bank (Mauritius) Limited -Debt

Standard Chartered Bank, Crescenzo,Securities Services, 3Rd Floor,C-38/39 G-Block, Bkc Bandra (East),Mumbai India-400051

583 5,830.00

3. HDFC Trustee Co Limited A/C Hdfc Fmp 846D January 2012 (1)

HDFC Bank Limited Custody Services,Lodha-I Think Techno Campus Off Flr,8, Next To Kanjurmarg Rly Station,Kanjurmarg East Mumbai-400042

290 2,900.00

4. Bank Of Maharashtra Treasury And International Banking,2Nd Floor, 23 Maker Chamber Iii,Nariman Point,Mumbai-400021

260 2,600.00

5. Pramerica Credit Opportunities Fund Citibank N A, Custody Services,3Rd Flr, Trent House, G Block,Plot No. 60, Bkc, Bandra - East,Mumbai-400098

250 2,500.00

6. Deutsche Bank Ag C/O Settlements Department,222 Kodak House,Dr. D. N. Road Fort,Mumbai-400001

250 2,500.00

56

Sr.

No

Name of debenture holders Address Number of

debentures

Aggregate

amount

(`̀̀̀ in lacs)

7. Kotak Mahindra Trustee Company Limited A/C. Kotak Mahindra Bond Short Term Plan

Deutsche Bank Ag,Db House, Hazarimal Somani Marg,Post Box No. 1142, Fort,Mumbai-400001

250 2,500.00

8. Reliance Capital Trustee Co. Limited -A/C Reliancedual Advantage Fixed Tenure Fund Plan A

Deutsche Bank Ag, Db House,Hazarimal Somani Marg,P.O.Box No. 1142, Fort,Mumbai-400001

220 2,200.00

9. Reliance Capital Trustee Co. Limited -A/C Reliance Fixed Horizon Fund Xix Series 20

Deutsche Bank Ag, Db House,Hazarimal Somani Marg,P.O.Box No. 1142, Fort Mumbai,-400001

210 2,100.00

10. Kotak Mahindra Trustee Co. Limited A/C Kotak Fmp Series 63

Deutsche Bank Ag, Db House,Hazarimal Somani Marg,P.O.Box No. 1142, Fort Mumbai,-400001

180 1,800.00

8. List of top ten holders of Secured Redeemable Non-Convertible Debentures as August 17, 2012 (issued on private placement

basis) of face value of `̀̀̀ 1,00,000/- per debenture:

Sr.

No

Name of debenture

holders

Address Number of

debentures

Aggregate

amount (`̀̀̀ in

lacs)

1 Central Bank Of India Central Bank Of India , Treasury Department, , Chandramukhi Building, Nariman Point, , Mumbai – 400021

3,000 3,000.00

2 Corporation Bank Corporation Bank, General Account , Investment Division , 15 Mittal Chambers 1St Floor, Nariman Point Mumbai – 400021

2,500 2,500.00

3 Allahabad Bank Allahabad Bank, Treasury Branch , Allahabad Bank Building, 3Rd Floor , 37 Mumbai Samachar Marg , Fort, Mumbai – 400023

2,000 2,000.00

4 Bank Of Baroda DGM, Bank Of Baroda , Specialized Integrated Treasury Br. , Bst,4Th And 5Th Floor,C-34 G-Block, Bandra Kurla Complex, Mumbai – 400051

1,000 1,000.00

5 Trustees Central Bank Of India Employees Pension Fund

Pension Fund Department , , Ncl Building, 5Th Floor, , Bandra Kurla Complex, , Bandra (East), Mumbai - 400051

1,000 1,000.00

6 Trustees Central Bank Of India Employees Provident Fund

Provident Fund Department, , Ncl Building, 4Th Floor, , Bandra Kurla Complex, , Bandra (East), Mumbai - 400051

500 500.00

9. List of top ten holders of Secured Redeemable Non-Convertible Debentures as August 17, 2012 (issued on private placement

basis) of face value of `̀̀̀ 1,000/- per debenture:

Sr.

No

Name of debenture holders Address Number of

debentures

Aggregate

amount (`̀̀̀

in lacs)

1 Shriram General Insurance Co Limited E-B,Epip,Riico Industrial Area,Sitapura,Jaipur,Rajastan-302022

1,08,900 1,089.00

2 Shilpa A Shiva Sai Mandir,Cheruvu Road,Penukonda,Anantapur,Andhra Pradesh

60,133 601.33

3 S Ramchandran Flat No 31,3Rd Floor,Khushali ,Plot No 358,Central Avenue Road,Chembur Mumbai,Maharashtra-400071

41,115 411.15

57

Sr.

No

Name of debenture holders Address Number of

debentures

Aggregate

amount (`̀̀̀

in lacs)

4 S Krishnan 31,Khushali,Plot No 358,Central Avenue Road,Chembur Mumbai,Maharashtra-400071

31,640 316.40

5 Shriram Fortune Solutions Limited Shriram Fortune SolUTIons Limited.Shriram House,Plot No 14, Ring Road , Scheme No 59,Indore,MP-452014

26,000 260.00

6 Vaibhav Jain B/7 Sanjay Upwan,B/H Chl.Apollo Hospital,Lig,Indore,Madhya Pradesh-452001

25,000 250.00

7 Shriram Life Insurance Company Limited

H No 3-6-478 Anand Estate,3 Rd Floor,Himayath Nagar Liberty Road,Hyderabad,Andhra Pradesh-500029

19,899 198.99

8 Sri Selvamuthukumar No 5 Lakshmi Nivas,Dr Subburaya Nagar,Kodambakkam,Chennai,Tamilnadu-600024

15,800 158.00

9 Chitra Banu B Ab-86 First Street,Annanagar,Chennai,Tamilnadu-600040

13,275 132.75

10 Tilak Maharashtra Vidyapeeth Vidyapeeth Bhavan,Gultekadi, Tel-020-24403005,Pune,Maharashtra-411037

12,950 129.50

10. List of top ten holders of Deposit as on August 17, 2012:

Sr.

No

Name of deposit holders Address Aggregate

amount (`̀̀̀ in

lacs)

1 V C Godbole Plot No 2 Dandige Layout,Shankar Nagar,Nagpur,Maharashtra-440010

18.50

2 Srinivasa Murthy T #13 3Rd Cross 5Th Main Road,Srinidhi Layout,Chunchughatta Rd Konanakunte,Bangalore,Karnataka-560062

13.45

3 Somasundaram S V No 1 Kavery Street,Coastal Road,Besant Nagar,Chennai,Tamil Nadu-600090

8.00

4 Parvathy Subra No 6 12Th Avenue, Ashok Nagar,Chennai,Tamilnadu-600083 8.00

5 Jitendra R Doshi 1, R. K. Nagar,Nayan,B/H. Gadre Hospital,Rajkot,Gujarat-360001

7.25

6 Sivarajan N S S Bhavan,Mathirappa,Thadikkadu P O Anchal,Kollam,K- 5.00

7 Sedhou Ranganathan No 11 Nehru Nagar,,Pondicherry-605011 5.00

8 Ronghe Anuradha Shrikrishna Fl-7,Gulmohar Residency,20,Gulmohar Park,Iit Road,Near Icici Bank,Aundh, Ph. No. 020-25899877,Pune,Maharashtra-411007

5.00

9 Roney K Varghese Vilayil Villa,Cheneerkara P.O,Pathanamthitta,Kerela- 4.77

10 Thomas Mathew Thekke Thoppil,Kollaka P.O,Karunagappally,Kerala- 4.32

11. List of top ten Subordinate debt instrument holder (issued on private placement basis) of face value of `̀̀̀ 1,00,000/- as on

August 17, 2012:

Sr.

No

Name of Sub-debt holders Address Number of

Instrument

Aggregate

amount (`̀̀̀ in

lacs)

1. Axis Bank Limited Treasury Ops Non Slr Desk Corp Off,Axis House Level 4 South Blk Wadia,International Centre P B Marg Worli,Mumbai-400025

7,754 7,754.00

2. Indian Overseas Bank Treasury (Domestic),Central Office,763 Anna Salai,Chennai-600002

2,500 2,500.00

3. Bank Of Baroda Dgm,Bank Of Baroda,Specialized Integrated 2,000 2,000.00

58

Sr.

No

Name of Sub-debt holders Address Number of

Instrument

Aggregate

amount (`̀̀̀ in

lacs)

Treasury Br.,Bst,4Th And 5Th Floor,C-34 G-Block,Bandra Kurla Complex,Mumbai-400051

4. United India Insurance Company Limited

24,Whites Road,Chennai,-600014 2,000 2,000.00

5. Provident Fund Of The UTI Bank Limited

131, Maker Towers F,Cuffe Parade,Colaba,Mumbai-400005

1,660 1,660.00

6. Canara Bank-Mumbai Domestic Treasury (Back Office),Maker Chamber Iii,7Th Floor, Nariman Point,Mumbai-400021

1,500 1,500.00

7. A. K Capital Finance Private Limited 30 39 Free Press House,3 Rd Flr Free Press Journal Marg,215 Nariman Point,Mumbai-400021

1,500 1,500.00

8. Central Bank Of India Central Bank Of India,Treasury Department,Chandramukhi Building,Nariman Point,Mumbai-400021

1,000 1,000.00

9. Corporation Bank

Corporation Bank, General Account,Investment Division,15 Mittal Chambers 1St Floor,Nariman Point Mumbai-400021

1,000 1,000.00

10. The South Indian Bank Limited Crescenzo 804 8Th Floor B Wing,G Block Behind Mca Ground,Bandra Kurla Complex Bandra E,Mumbai-400051

1,000 1,000.00

12. List of top ten Subordinate debt instrument holder (issued on private placement basis) of face value of `̀̀̀ 1,000/- as on August

17, 2012:

Sr.

No Name of Sub-debt holders Address

Number of

instrument

Aggregate

amount (`̀̀̀ in

lacs)

1. Jehangir Faramji Elavia A-302/401, Shirin Apts.,Plot No.15, Sec-29,Vashi,Navi Mumbai,Maharashtra-400703

7,500 75.00

2. Khorshed Ezekiel 103-A,Pocket-B,Mayur Vihar Phase-2,New Delhi,Delhi-110091

5,400 54.00

3. Subodh Lagoo And Family Huf C/O Lagoo Medical Store,Itwari Bazar Ward Rawarpara,Jagdalpur,C G-494001

5,000 50.00

4. Khader Basha G H No 9-224,9 Mannur,Rajampet,Kadapa,Andhra Pradesh-0

5,000 50.00

5. Janakiraman P No:9 N N Street,Arumugapettai,Walajabad,Tamilnadu-631502

4,712 47.12

6. Ramachandran Venkat Raman 4A Francis Mansion,Agashe Path,Dadar West,Mumbai,Maharashtra-400028

4,500 45.00

7. Chandra Sekaran J Kamban Nagar,,Villupuram,Tamilnadu-Null 4,500 45.00

8. Shyam Kumar Choudhary Mig-Ii- 1710, Ward No-16,Industrial Area Bhilai,Bhilai,Cg-490026

4,000 40.00

9. Karimunisa S 20-3-126/A,Near Leela Mahal Circle,Tirupathi,Andhra Pradesh-517501

4,000 40.00

10. Bhaskar Reddy B V Hno 8/2/268/1/A/2,Avenue 8 Stno 7,Banjara Hills,Hyderabad,Andhra Pradesh-Null

3,735 37.35

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13. List of top ten holder of Commercial Paper of face value of `̀̀̀ 5,00,000/- per commercial paper as on August 17, 2012:

Sr. No

Name of holders Address Number of debentures

Aggregate amount (`̀̀̀

in lacs)

1. HDFC Trustee Company Limited A/C HDFC Liquid Fund

HDFC Bank Limited, Custody Services,Lodha - I Think Techno Campus,Off Flr 8, Next To Kanjurmarg Stn,Kanjurmarg East Mumbai-400042

2,400 12,000.00

2. SBI Short Horizon Debt Fund - Ultra Short Term Fund

HDFC Bank Limited, Custody Services,Lodha - I Think Techno Campus,Off Flr 8, Next To Kanjurmarg Stn,Kanjurmarg East Mumbai-400042

2,400 12,000.00

3. Axis Bank Limited Fort Branch Cp Redemption Account

Trishul, 3Rd Floor,Opp Samartheswar Temple,Nr Law Garden, Ellisbridge,Ahmedabad-380006

2,000 10,000.00

4. Reliance Capital Trustee Co Limited A/C Reliance Liquid Fund

Deutsche Bank Ag,Db House, Hazarimal Somani Marg,Post Box No. 1142, Fort,Mumbai-400001

2,000 10,000.00

5. Tata Trustee Co Limited A/C Tata Mutual Fund- Tata Floater Fund

HDFC Bank Limited, Custody Services,Lodha - I Think Techno Campus,Office,Flr 8, Next To Kanjurmarg Rly Stn,Kanjurmarg East, Mumbai-400042

2,000 10,000.00

6. HDFC Trustee Company Limited A/C HDFC Cash Management Fund Savings Plan

HDFC Bank Limited, Custody Services,Lodha - I Think Techno Campus,Off Flr 8, Next To Kanjurmarg Stn,Kanjurmarg East Mumbai-400042

1,500 7,500.00

7. Kotak Mahindra Trustee Company Limited A/C Kotakfloater Short Term Scheme

Deutsche Bank Ag, Db House, Hazarimal Sonmani Marg, P. O. Box No. 114, Fort, Mumbai - 40001

1,500 7,500.00

8. HDFC Trustee Company Limited HDFC Mf Monthly Income Plan Long Term Plan

HDFC Bank Limited, Custody Services,Lodha - I Think Techno Campus,Off Flr 8, Next To Kanjurmarg Stn,Kanjurmarg East Mumbai-400042

1,000 5,000.00

9. HDFC Trustee Company Limited -HDFC Floating Rate Income Fund A/C Short Term Plan

HDFC Bank Limited, Custody Services,Lodha - I Think Techno Campus,Off Flr 8, Next To Kanjurmarg Stn,Kanjurmarg East Mumbai-400042

600 3,000.00

10. Canara Robeco Mutual Fund A/C Canara Robeco Liquid

HDFC Bank Limited, Custody Services,Lodha - I Think Techno Campus,Off Flr 8, Next To Kanjurmarg Stn,Kanjurmarg East Mumbai-400042

500 2,500.00

Employee Stock Option Schemes

Pursuant to a special resolution dated October 30, 2006 passed by the shareholders of the Company, our Company has formulated an employee stock option scheme in 2006, namely, “ESOP 2006”. As on the date of the Draft Prospectus, the Company had issued 13,55,000 stock options under the ESOP 2006, of which no stock options have lapsed, 2,69,299 stock options are vested and unexercised and 10,85,701 stock options have been vested and exercised for equity shares of the Company. Under the ESOP 2006 the exercise price for stock options is ` 35/- per equity share of the Company to be issued upon the exercise of such stock options.

Pursuant to a special resolution dated May 3, 2008 passed by the shareholders of our Company, our Company has formulated an employee stock option scheme in 2008, namely, “SCUFL Employee Stock Option Scheme 2008”, (“ESOP

2008”). As on the date of this Draft Prospectus, our Company has not granted any stock options under the ESOP 2008. Under the ESOP 2008 the exercise price for stock options is ` 112 per Equity Share to be issued upon the exercise of such stock options. Further, pursuant to a special resolution passed by the shareholders of our Company at their AGM held on July 27, 2012 and the provisions of Section 81 (1A) and other applicable provisions, if any, of the Companies Act, 1956, and the subject to the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, the Board of Directors of our Company is empowered to grant, issue, offer and allot options under ESOP 2008 to the present and future employees of the subsidiary company(ies) of our Company.

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Debt - Equity ratio:

The debt equity ratio prior to this Issue is based on a total outstanding unconsolidated debt of ` 9,64,644.76 lacs and unconsolidated shareholder funds amounting to ` 1,82,822.75 lacs as on June 30, 2012. The debt equity ratio prior to the Issue is 5.96 times and the debt equity ratio post the Issue (assuming subscription of ` 50,000 lacs) would be 6.24 times, based on a total outstanding debt of ` 11,39,974.72 lacs and shareholders fund of ` 1,82,822.75 lacs as on June 30, 2012

` ` ` ` in lacs

Particulars Prior to the

Issue^

Post the

Issue*

Secured loans as on June 30, 2012 9,64,644.76 10,14,644.76

Unsecured loans as on June 30, 2012 1,25,329.96 1,25,329.96

Total Debt as on June 30, 2012 10,89,974.72 11,39,974.72

Share capital as on June 30, 2012 5,242.86 5,242.86

Reserves as on June 30, 2012 1,70,179.67 1,70,179.67

Money received against share warrants 8,437.00 8,437.00

Less: Misc. expenditure (to the extent not written off or adjusted) as on June 30,

2012 1,036.78 1,036.78

Total Shareholders fund 1,82,822.75 1,82,822.75

Debt Equity Ratio (Number of times) as on June 30, 2012 5.96 6.24

^ As on June 30, 2012.

* The debt-equity ratio post the Issue is indicative and is on account of assumed inflow of ` 50,000 lacs from the Issue as

on June 30, 2012 and does not include contingent and off-balance sheet liabilities. The actual debt-equity ratio post the

Issue would depend upon the actual position of debt and equity on the date of allotment.

For details on the total outstanding debt of our Company, please refer to the section titled “Disclosures on Existing

Financial Indebtedness” beginning on page 147 of this Draft Prospectus.

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OBJECTS OF THE ISSUE

The funds raised through this Issue will be used inter alia to finance our business operations, lending, investments, repay existing loans, business operations including capital expenditure, working capital requirements, meeting expenses of the Issue. The Main Objects clause of the Memorandum of Association of our Company permits our Company to undertake the activities for which the funds are being raised through the present Issue and also the activities which our Company has been carrying on till date. Further, in accordance with the Debt Regulations, our Company will not utilize the proceeds of the Issue for providing loans to or acquisitions of shares of any person who is a part of the same group as our Company or who is under the same management as our Company. The Issue proceeds shall not be utilized towards full or part consideration for the purchase or any other acquisition, inter alia by way of a lease of any property. Further, the Company undertakes that Issue proceeds from NCDs allotted to banks shall not be used for any purpose which may be in contravention of the RBI guidelines on bank financing to NBFCs including those relating to classification as capital market exposure or any other sectors that are prohibited under the RBI regulations.

Interim Use of Proceeds The management of our Company, 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 proceeds out of the Issue for the purposes described above, our Company intends to temporarily invest funds in high quality interest bearing liquid instruments including money market mutual funds, deposits with banks or temporarily deploy the funds in investment grade interest bearing securities as may be approved by the Board. Such investment would be in accordance with the investment policies approved by the Board or any committee thereof from time to time. Monitoring of Utilization of Funds There is no requirement for appointment of a monitoring agency in terms of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008. Our Board shall monitor the utilization of the proceeds of the Issue. For the relevant Financial Years commencing from FY 2013, our Company will disclose in our financial statements, the utilization of the net proceeds of the Issue under a separate head along with details, if any, in relation to all such proceeds of the Issue that have not been utilized thereby also indicating investments, if any, of such unutilized proceeds of the Issue. We shall utilize the proceeds of the Issue only upon the execution of the documents for creation of security as stated in this Draft Prospectus in the section entitled “Issue Structure - Specific Terms and Conditions in connection with each series of

NCDs - Security” on page 165 and upon the listing of the NCDs.

62

PIJUSH GUPTA & CO

CHARTERED ACCOUNTANTS

P-199, C.I.T.ROAD, SCHEME IV-M, KOLKATA –700 010

The Board of Directors Shriram City Union Finance Limited 123, Angappa Naicken Street, Chennai – 600 001

Dear Sirs, Statement of Possible Tax Benefits

We hereby report that the enclosed statement states the possible tax benefits available to the Company and to the NCD holders of the Company under the Income-tax Act, 1961 and the Wealth-tax Act, 1957 (as amended by the Finance Act, 2012), presently in force in India. Several of these benefits are dependent on the Company or its NCD holders fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company or its NCD holders to derive the tax benefits is dependent upon fulfillment of 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 in the enclosed statement 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:

(i) the Company or its NCD holders will continue to obtain these benefits in future; or

(ii) the conditions prescribed for availing the benefits have been/would be met with. The contents of the enclosed statement 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.

For Pijush Gupta & Co

Firm Registration Number-309015E

Chartered Accountants

Pijush Kumar Gupta

Partner

Membership No.: 015139 Date: August 20, 2012

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STATEMENT OF POSSIBLE TAX BENEFITS

______________________________________________________________________________

Under the current tax laws, the following tax benefits, interalia, will be available to the Debenture Holders. The tax benefits given below are as per the prevailing tax laws and may vary from time to time in accordance with amendments to the law or enactments thereto. The Debenture Holder is advised to consider in his own case the tax implications in respect of subscription to the Debentures after consulting his tax advisor as alternate views are possible. We are not liable to the Debenture Holder in any manner for placing reliance upon the contents of this statement of tax benefits.

A. IMPLICATIONS UNDER THE INCOME-TAX ACT, 1961 (‘I.T. ACT’)

I. To the Resident Debenture Holder

1. Interest on NCD received by Debenture Holders would be subject to tax at the normal rates of tax in accordance with

and subject to the provisions of the I.T. Act and such tax would need to be withheld at the time of credit/payment as per the provisions of Section 193 of the I.T. Act. However, no income tax is deductible at source in respect of the following:

a. On any security issued by a company in a dematerialized form and is listed on recognized stock exchange in

India in accordance with the Securities Contracts (Regulation) Act, 1956 and the rules made thereunder. (w.e.f. 01.06.2008).

b. In case the payment of interest on debentures to a resident individual or a Hindu Undivided Family (‘HUF’) Debenture Holder does not or is not likely to exceed Rs. 5,000 in the aggregate during the Financial year and the interest is paid by an account payee cheque.

c. When the Assessing Officer issues a certificate on an application by a Debenture Holder on satisfaction that the total income of the Debenture holder justifies no deduction of tax at source as per the provisions of Section 197(1) of the I.T. Act; and that certificate is filed with the Company before the prescribed date of closure of books for payment of debenture interest. The Debenture holder can also obtain certificate for lower rate of deduction;

d. (i) When the resident Debenture Holder with Permanent Account Number (‘PAN’) (not being a company or a firm) submits a declaration as per the provisions of section 197A(1A) of the I.T. Act in the prescribed Form 15G verified in the prescribed manner to the effect that the tax on his estimated total income of the financial year in which such income is to be included in computing his total income will be NIL. However under section 197A(1B) of the I.T. Act, Form 15G cannot be submitted nor considered for exemption from tax deduction at source if the aggregate of interest income credited or paid or likely to be credited or paid during the Financial year in which such income is to be included exceeds the maximum amount which is not chargeable to tax, as may be prescribed in each year’s Finance Act.

To illustrate, as on 01.04.2012,the maximum amount of income not chargeable to tax in case of individuals (other than senior citizens and super senior citizens) and HUFs is Rs. 2,00,000; ; in the case of every individual being a resident in India, who is of the age of 60 years or more but less than 80 years at any time during the Financial year (Senior Citizen) is Rs. 2,50,000; and in the case of every individual being a resident in India, who is of the age of 80 years or more at any time during the Financial year (Super Senior Citizen) is Rs. 5,00,000 for Financial Year 2012-13.

(ii) Senior citizens, who are 60 or more years of age at any time during the financial year, enjoy the special

privilege to submit a self-declaration in the prescribed Form 15H for non deduction of tax at source in accordance with the provisions of section 197A(1C) of the I.T. Act even if the aggregate income

64

credited or paid or likely to be credited or paid exceeds the maximum amount not chargeable to tax for FY 2012-13 provided that the tax due on total income of the person is NIL.

(iii) In all other situations, tax would be deducted at source as per prevailing provisions of the I.T. Act. Form

No.15G with PAN / Form No.15H with PAN / Certificate issued u/s 197(1) has to be filed with the Company before the prescribed date of closure of books for payment of debenture interest without any tax withholding.

2. In case where tax has to be deducted at source while paying debenture interest, the Company is not required to deduct

surcharge, education cess and secondary and higher education cess.

3. As per section 2(29A) of the IT Act, read with section 2(42A) of the I.T. Act, a listed debenture is treated as a long

term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer. As per section 112 of the I.T. Act, capital gains arising on the transfer of long term capital assets being listed securities are subject to tax at the rate of 20% of capital gains calculated after reducing indexed cost of acquisition or 10% of capital gains without indexation of the cost of acquisition. The capital gains will be computed by deducting expenditure incurred in connection with such transfer and cost of acquisition/indexed cost of acquisition of the debentures from the sale consideration. However as per the third proviso to section 48 of I.T. Act, benefit of indexation of cost of acquisition under second proviso of section 48 of I.T. Act, is not available in case of bonds and debenture, except capital indexed bonds. Thus, long term capital gains arising out of listed debentures would be subject to tax at the rate of 10 % computed without indexation. In case of an individual or HUF, being a resident, where the total income as reduced by such long-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at the rate mentioned above.

4. Short-term capital gains on the transfer of listed debentures, where debentures are held for a period of not more than 12 months would be taxed at the normal rates of tax in accordance with and subject to the provisions of the I.T. Act. The provisions relating to maximum amount not chargeable to tax described at para 2 above would also apply to such short term capital gains.

5. If the debentures are held as stock in trade, the income on transfer of debentures would be taxed as business income or loss in accordance with and subject to the provisions of the I.T. Act.

II. To the Non Resident Debenture Holder

1. A non-resident Indian has an option to be governed by Chapter XII-A of the I.T. Act, subject to the provisions contained therein which are given in brief as under: a. Under section 115E of the I.T. Act, interest income from debentures acquired or purchased with or subscribed to

in convertible foreign exchange will be taxable at 20%, whereas, long term capital gains on transfer of such Debentures will be taxable at 10% of such capital gains without indexation of cost of acquisition. Short-term capital gains will be taxable at the normal rates of tax in accordance with the provisions contained therein.

b. Under section 115F of the I.T. Act, long term capital gains arising to a non-resident Indian from transfer of debentures acquired or purchased with or subscribed to in convertible foreign exchange will be exempt from capital gain tax if the net consideration is invested within six months after the date of transfer of the debentures in any specified asset or in any saving certificates referred to in section 10(4B) of the I.T. Act in accordance with the provisions contained therein.

65

c. Under section 115G of the I.T. Act, it shall not be necessary for a non-resident Indian to file a return of income under section 139(1) of the I.T. Act, if his total income consists only of investment income as defined under section 115C and/or long term capital gains earned on transfer of such investment acquired out of convertible foreign exchange, and the tax has been deducted at source from such income under the provisions of Chapter XVII-B of the I.T. Act in accordance with and subject to the provisions contained therein.

d. Under section 115H of the I.T. Act, where a non-resident Indian becomes a resident in India in any subsequent year, he may furnish to the Assessing Officer a declaration in writing along with return of income under section 139 for the assessment year for which he is assessable as a resident, to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to the investment income (other than on shares in an Indian Company) derived from any foreign exchange assets in accordance with and subject to the provisions contained therein. On doing so, the provisions of Chapter XII-A shall continue to apply to him in relation to such income for that assessment year and for every subsequent assessment year until the transfer or conversion (otherwise than by transfer) into money of such assets.

2. In accordance with the provisions of section 115I of the I.T. Act, a Non-Resident Indian may opt not to be governed

by the provisions of Chapter XII-A of the I.T. Act. In that case,

a. Long term capital gains on transfer of listed debentures would be subject to tax at the rate of 10% computed without indexation

b. Short-term capital gains on the transfer of listed debentures, where debentures are held for a period of not more than 12 months preceding the date of transfer, would be taxed at the normal rates of tax in accordance with and subject to the provisions of the I.T. Act

c. Where, debentures are held as stock in trade, the income on transfer of debentures would be taxed as business income or loss in accordance with and subject to the provisions of the I.T. Act.

3. Under Section 195 of the I.T. Act, the company is required to deduct tax at source ie. 20% on investment income and

10% on any long-term capital gains as per section 115E, and at the normal rates for Short Term Capital Gains if the payee Debenture Holder is a Non Resident Indian.

4. In case of foreign companies, where the income paid or likely to be paid exceeds Rs. 1,00,00,000 a surcharge of 2% of such tax liability is payable. 2% education cess and 1% secondary and higher education cess on the total income tax (including surcharge) is also deductible.

5. The Finance Act, 2012 has inserted a new section 194LC in the I.T. Act which provides for lower rate of withholding tax at the rate of 5% (as against 20%) on payment by way of interest paid by an Indian company to a non-resident (including a foreign company) in respect of borrowing made in foreign currency from sources outside India between July 1, 2012 and July 1, 2015, under a loan agreement approved by Central Government.

6. As per section 90(2) of the I.T. Act read with the Circular no. 728 dated October 30, 1995 issued by the Central Board

of Direct Taxes, in the case of a remittance to a country with which a Double Tax Avoidance Agreement (DTAA) is in force, the tax should be deducted at the rate provided in the Finance Act of the relevant year or at the rate provided in the DTAA, whichever is more beneficial to the assessee. However, submission of tax residency certificate, containing prescribed particulars is a mandatory condition for availing benefits under any DTAA.

7. Alternatively, to ensure non deduction or lower deduction of tax at source, as the case may be, the Debenture Holder

should furnish a certificate under section 197(1) of the I.T. Act, from the Assessing Officer before the prescribed date of closure of books for payment of debenture interest. However, an application for the issuance of such certificate would not be entertained in the absence of PAN as per the provisions of section 206AA.

66

III. To the Foreign Institutional Investors (FIIs)

1. In accordance with and subject to the provisions of section 115AD of the I.T. Act, long term capital gains on transfer

of debentures by FIIs are taxable at 10% (plus applicable surcharge and education and secondary and higher education cess) and short-term capital gains are taxable at 30% (plus applicable surcharge and education and secondary and higher education cess). The benefit of cost indexation will not be available. Further, benefit of provisions of the first proviso of section 48 of the I.T. Act will not apply.

2. Income other than capital gains arising out of debentures is taxable at 20% in accordance with and subject to the provisions of Section 115AD. In addition to the aforesaid tax, in case of foreign corporate FIIs where the income exceeds Rs. 1,00,00,000 a surcharge of 2% of such tax liability is also payable. A 2% education cess and 1% secondary and higher education cess on the total income tax (including surcharge) is payable by all categories of FII’s.

3. In accordance with and subject to the provisions of section 196D(2) of the I.T. Act, no deduction of tax at source is applicable in respect of capital gains arising on the transfer of debentures by FIIs.

4. The provisions at para II (6 and 7) above would also apply to FIIs.

IV. To the Other Eligible Institutions

All mutual funds registered under Securities and Exchange Board of India or set up by public sector banks or public financial institutions or authorised by the Reserve Bank of India are exempt from tax on all their income, including income from investment in Debentures under the provisions of Section 10(23D) of the I.T. Act subject to and in accordance with the provisions contained therein.

V. Exemption under Sections 54EC and 54F of the I.T. Act

1. Under section 54EC of the I.T .Act, long term capital gains arising to the debenture holders on transfer of their debentures in the company shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months after the date of transfer. If only part of the capital gain is so invested, the exemption shall be proportionately reduced. However, if the said notified bonds are transferred or converted into money within a period of three years from their date of acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money. However, the exemption is subject to a limit of investment of Rs.50 Lakhs during any financial year in the notified bonds. Where the benefit of section 54EC of the Act has been availed of on investments in the notified bonds, a deduction from the income with reference to such cost shall not be allowed under section 80C of the Act.

2. As per the provisions of section 54F of the I.T. Act, any long-term capital gains on transfer of a long term capital asset (not being residential house) arising to a Debenture Holder who is an individual or Hindu Undivided Family, is exempt from tax if the entire net sales consideration is utilized, within a period of one year before, or two years after the date of transfer, in purchase of a new residential house, or for construction of residential house within three years from the date of transfer. If part of such net sales consideration is invested within the prescribed period in a residential house, then such gains would be chargeable to tax on a proportionate basis. This exemption is available, subject to the condition that the Debenture Holder does not own more than one residential house at the time of such transfer. If the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred. Similarly, if the Debenture Holder purchases within a period of two years or constructs within a period of three years after the date of transfer of capital asset, another residential house (other than the new residential house referred above), then the original exemption will be taxed as capital gains in the year in which the additional residential house is acquired.

67

VI. Requirement to furnish PAN under the I.T. Act

1. Sec.139A(5A)

a. Section 139A(5A) requires every person from whose income tax has been deducted at source under chapter

XVII-B of the I.T. Act to furnish his PAN to the person responsible for deduction of tax at source.

2. Sec.206AA:

a. Section 206AA of the I.T. Act requires every person entitled to receive any sum, on which tax is deductible

under Chapter XVIIB (‘deductee’) to furnish his PAN to the deductor, failing which attracts tax shall be deducted at the higher of the following rates:

(i) at the rate specified in the relevant provision of the I.T. Act; or

(ii) at the rate or rates in force; or

(iii) at the rate of twenty per cent.

b. A declaration under Section 197A(1) or 197A(1A) 197A(1C) shall not be valid unless the person furnishes his PAN in such declaration and the deductor is required to deduct tax as per Para (a) above in such a case

c. Where a wrong PAN is provided, it will be regarded as non furnishing of PAN and Para (a) above will apply

VII. Taxability of gifts received for nil or inadequate consideration

As per section 56(2)(vii) of the I.T. Act, where an individual or Hindu Undivided Family receives debentures from any person on or after 1st October, 2009:

(i) without any consideration, aggregate fair market value of which exceeds fifty thousand rupees, then the whole of the aggregate fair market value of such debentures or;

(ii) for a consideration which is less than the aggregate fair market value of the debenture by an amount exceeding fifty thousand rupees, then the aggregate fair market value of such debentures as exceeds such consideration;

shall be taxable as the income of the recipient at the normal rates of tax

However, this provision would not apply to any receipt:

(a) from any relative; or

(b) on the occasion of the marriage of the individual; or

(c) under a will or by way of inheritance; or

(d) in contemplation of death of the payer or donor, as the case may be; or

(e) from any local authority as defined in Section 10(20) of the I.T. Act

(f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in Section 10(23C)

(g) from any trust or institution registered under section 12AA.

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B. IMPLICATIONS UNDER THE WEALTH TAX ACT, 1957

Wealth-tax is not levied on investment in debentures under section 2(ea) of the Wealth-tax Act, 1957.

Notes

1. The above Statement sets out the provisions of law in a summary manner only and is not a complete analysis or listing

of all potential tax consequences of the purchase, ownership and disposal of shares.

2. The above statement covers only certain relevant benefits under the Income-tax Act, 1961, Wealth Tax Act, 1957 (collectively referred to as ‘direct tax laws’) and does not cover benefits under any other law.

3. The above statement of possible tax benefits are as per the current direct tax laws relevant for the assessment year 2013-14. Several of these benefits are dependent on the Debenture Holder fulfilling the conditions prescribed under the relevant provisions.

4. This statement is intended only to provide general information to the Debenture Holders and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of tax consequences, each Debenture Holder is advised to consult his/her/its own tax advisor with respect to specific tax consequences of his/her/its holding in the debentures of the Company.

5. The stated benefits will be available only to the sole/ first named holder in case the debenture is held by joint holders.

6. In respect of non-residents, the tax rates and consequent taxation mentioned above will be further subject to any benefits available under the relevant tax treaty, if any, between India and the country in which the nonresident has fiscal domicile.

7. In respect of non-residents, taxes paid in India could be claimed as a credit in accordance with the provisions of the relevant tax treaty.

No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to changes from time to time. We do not assume responsibility to update the views consequent to such changes. We shall not be liable to any claims, liabilities or expenses relating to this assignment except to the extent of fees relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or intentional misconduct. We will not be liable to any other person in respect of this statement.

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SECTION IV : ABOUT THE ISSUER COMPANY AND THE INDUSTRY

INDUSTRY

The information in this section is derived from various government publications and other industry sources. Neither we,

nor any other person connected with the issue has verified this information. Industry sources and publications generally

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accordingly, investment decisions should not be based on such information.

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Loan Markets for NBFCs – July 2011”. Information has been obtained by Frost & Sullivan India Private Limited from

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Indian Economy The Indian economy grew at a slower pace than its potential in 2011-12. Growth slowed down in all three sectors of the economy through the course of the year. Moderation in industrial growth persisted in the midst of domestic supply constraints, a clouded domestic policy environment and a deteriorating external outlook. The services sector also under-performed given its inter-linkages with the industrial sector. (Source: RBI ‘Macroeconomic and Monetary Developments -

First Quarter Review 2012-13’ dated July 30, 2012).

Sectoral Growth Rates of GDP at factor cost (2004-05 prices)

Industry Growth Percent share in GDP

2010-11(QE) 2011-12 (RE)

2010-11(QE) 2011-12 (RE)

Agriculture, forestry & fishing

7.0 2.8

14.5 14.0

Industry 7.2 3.4 27.8 27.0

Services 9.3 8.9 57.7 59.0

GDP at factor cost 8.4 6.5 100.0 100.0

(QE): Quick Estimate; (RE): Revised Estimate (Source: Ministry of Finance report titled ‘Monthly Economic Report’ dated June 2012)

Macroeconomic Outlook The Indian economy slowed significantly during 2011-12, with growth decelerating to 6.5%. The growth prospects for 2012-13 remain weak due to a combination of global and domestic macro-economic factors. Global growth is turning weaker than anticipated. Along with the sovereign debt overhang and financial market uncertainties, it is impacting global trade. (Source: RBI ‘Macroeconomic and Monetary Developments - First Quarter Review 2012-13’ dated July 30, 2012)

Headline inflation has moderated from near double-digit levels and remained in the range of 7-8% for the past seven months. The extent of moderation, in spite of the negative output gap, has been constrained by a number of off-setting

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factors such as rupee depreciation and sustained pressures from input costs and wages. Typically, episodes of high inflation have been marked by inflation persisting for 2-3 years and have required sustained efforts to lower inflation expectations and inflation. (Source: RBI ‘Macroeconomic and Monetary Developments - First Quarter Review 2012-13’

dated July 30, 2012)

(Source: RBI ‘Macroeconomic and Monetary Developments - First Quarter Review 2012-13’ dated July 30, 2012)

Monetary and Liquidity Conditions While continuing to manage the growth-inflation trade-off, the RBI reduced the repo rate by 50 basis points in April 2012. Monetary conditions have gradually eased in 2012-13 so far as a result of the two-stage reduction in the cash reserve ratio in the fourth quarter of 2011-12, the repo rate cut and significant depreciation of the exchange rate. Active liquidity management by the RBI by way of sizeable open market purchases and other policy measures has helped correct the excessively tight liquidity that prevailed during the latter part of 2011-12. Besides the gradual pick-up in growth in monetary aggregates in 2012-13 so far, there has been a pick-up in non-food credit which as of mid-July 2012 was growing marginally above the indicative projection for 2012-13. There was a significant easing of liquidity deficit in the first quarter of 2012-13, and the extent of deficit returned to the RBI’s comfort level of one per cent of net demand and time liabilities in July 2012. This was primarily on account of large scale open market purchases by the RBI as also measures such as enhancing of the limit of export credit refinance. Apart from the rate cut, monetary conditions eased as a result of softening impact on interest rates of the 125 basis points reduction in the cash reserve ratio (CRR) during the fourth quarter of 2011-12 and the significant exchange rate depreciation (about 10 % in the first quarter of 2012- 13 and about 20 % cumulative since August 2011). The monetary easing during the first quarter of 2012-13 has significantly corrected the tightness in monetary and liquidity conditions witnessed during the fourth quarter of 2011-12. Low reserve money expansion at 9.6% (adjusted for CRR changes) contributed to lower expansion of money supply. Reserve money creation has improved during 2012-13 so far, and deposit creation and consequently, monetary expansion is within sight of indicative projections for the year.

Movements in Key Policy Rates in India

Effective since Reverse Repo Rate Repo Rate Cash Reserve Ratio

1 2 3 4

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Movements in Key Policy Rates in India

Effective since Reverse Repo Rate Repo Rate Cash Reserve Ratio

May 3, 2011 6.25% (+0.50%) 7.25% (+0.50%) 6.00% June 16, 2011 6.50% (+0.25%) 7.50% (+0.25%) 6.00% July 26, 2011 7.00% (+0.50%) 8.00% (+0.50%) 6.00% September 16, 2011 7.25% (+0.25%) 8.25% (+0.25%) 6.00% October 25, 2011 7.50% (+0.25%) 8.50% (+0.25%) 6.00% January 28, 2012 7.50% 8.50% 5.50%(-0.50%) March 10, 2012 7.50% 8.50% 4.75% (-0.75%) April 17, 2012 7.00% (-0.50%) 8.00% (-0.50%) 4.75%

Reverse Repo indicates absorption of liquidity and Repo indicates injection of liquidity Figures in parentheses indicate change in policy rates in percentage

(Source: RBI and RBI report titled ‘Macroeconomic and Monetary Developments - First Quarter Review 2012-13’ dated

July 30, 2012)

Structure of India’s Financial Services Industry

The RBI is the central regulatory and supervisory authority for the Indian financial system. SEBI and the IRDA regulate the capital markets and insurance sector, respectively. A variety of financial intermediaries in the public and private sectors participate in India’s financial sector, including the following:

• Commercial banks;

• NBFCs ;

• Specialized financial institutions like the National Bank for Agriculture and Rural Development (NABARD), Export-Import Bank of India (EXIM Bank), the Small Industries Development Bank of India (SIDBI) and the Tourism Finance Corporation of India (TFCI);

• Securities brokers;

• Investment banks;

• Insurance companies;

• Mutual funds; and

• Venture capital funds. Non-Banking Financial Companies (NBFCs) Non-Banking Financial Companies (NBFCs) are an integral part of the country’s financial system, catering to a large market of niche customers, and have emerged as one of the major purveyors of retail and SME credit in India. It is a heterogeneous group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, such as accepting deposits, making loans and advances, providing leasing/hire purchase services, among others. There are over 12,000 NBFCs in India mostly in the private sector. NBFCs can be distinguished from banks with respect to the degree and nature of regulatory and supervisory controls. Firstly, the regulations governing these institutions are relatively lighter as compared to banks. Secondly, they are not subject to certain regulatory prescriptions applicable to banks. For instance, NBFCs are not subject to Cash Reserve Requirement (CRR) like banks. They are, however, mandated to maintain 15 % of their public deposit liabilities in Government and other approved securities as Statutory Liquidity Ratio (SLR). Thirdly, they do not have deposit insurance coverage and refinance facilities from the Reserve Bank. Fourthly, NBFCs do not have cheque issuing facilities and are not part of the payment and settlement system, other than to the extent of white label automated teller machines (“ATMs”), are set up and/or operated by NBFCs in accordance with the February 2012 RBI circular on Deployment of White Label ATMs.

There are two broad categories of NBFCs based on whether they accept public deposits, namely, NBFC-Deposit taking (NBFC-D) and NBFCs-Non Deposit taking (NBFC-ND). Till recently, NBFCs-ND were subject to minimal regulation as they were non-deposit taking bodies and considered as posing little threat to financial stability. However, recognising the growing importance of this segment and its interlinkages with banks and other financial institutions, capital adequacy and exposure norms have been made applicable to NBFCs- ND that are large and systemically important from April 1, 2007; such entities are referred to as NBFCs-ND-Systemically Important (SI).

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Since 2006, from time to time, NBFCs were reclassified based on whether they were involved in the creation of productive assets. NBFCs registered with the RBI are currently classified as (i) asset finance companies; (ii) investment companies; (iii) loan companies; (iv) infrastructure finance companies; (v) core investment companies; (vi) infrastructure debt fund NBFCs; and (vii) NBFC - micro finance institutions. A number of measures to enhance the regulatory and supervisory standards of NBFCs in order to put them on par with commercial banks were undertaken by the RBI over a period of time including the alignment of interest rates, allowing diversification of businesses e.g. issuance of co-branded cards and distribution of mutual fund and insurance products, regulation of systemically important NBFCs and introduction of a fair practices code and corporate governance. (Source:http://www.rbi.org.in/scripts/PublicationsView.aspx?id=12978;http://rbi.org.in/scripts/PublicationsView.aspx?id

=13979; http://financialservices.gov.in/reports/Reports%20_NBFCs.pdf)

The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the Reserve Bank of India Act, 1934 (Chapter III B) and the directions issued by it under the Act. As per the RBI Act, a 'non-banking financial company' is defined as:- (i) a financial institution which is a company; (ii) a non banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institutions, as the bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. (Source: http://business.gov.in/business_financing/non_banking.php)

NBFCs as a whole account for 12.3 % of assets of the total financial system. The total number of NBFCs registered with the RBI, consisting of NBFCs-D and NBFCs-ND, declined from 12,630 at the end of June 2010 to 12,409 at the end of June 2011. The number of NBFCs-D declined from 308 to 297 during the same period, mainly due to the exit of many NBFCs-D from deposit- taking activity, while non-deposit-taking systemically important NBFCs (NBFCs-ND-SI with asset size ` 100 crore and above) increased from 260 to 330 during the same period.

Number of NBFCs Registered with RBI

End June Number of Registered NBFCs Number of NBFCs-D

Number of NBFCs-ND-SI (with

asset size `̀̀̀ 100 crore and

above)

2005 13,261 507 -

2006 13,014 428 149

2007 12,968 401 173

2008 12,809 364 189

2009 12,740 336 234

2010 12,630 308 260

2011 12,409 297 330

(Source: http://indiabudget.nic.in/es2011-12/echap-05.pdf)

Provisioning and Capital Ratios In the interest of counter cyclicality and also to ensure that NBFCs create a financial buffer as a protection from the effect of economic downturns, provisioning for standard assets was introduced to NBFCs at 0.25% of the outstanding standard assets. (Source: RBI 2010-11 Annual Report)

It was decided to align the minimum capital ratio of all deposit taking NBFCs as well as NBFCs-ND-SI to 15%. Accordingly, all deposit taking NBFCs were advised to raise the minimum capital ratio consisting of Tier I and Tier II capital, which shall not be less than 15% of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet item with effect from March 31, 2012. (Source: RBI 2010-11 Annual Report)

Retail Finance – Automobiles

Automotive Industry Overview

In terms of global scale, the Indian automotive industry is the second largest two-wheeler market in the world, the fourth largest heavy commercial vehicle market in the world and the eleventh largest passenger vehicle market in the world. As

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one of the largest industrial sectors in India, it contributes nearly 17.0% to total indirect taxes. Although the automotive industry provides direct and indirect employment to over 130 lakh people, the penetration levels for vehicles in India are among the lowest in the world. [Source: Society of Indian Automobile Manufacturers (SIAM)].

According to SIAM, the demand for automobiles in India is projected to grow by 11% -13% by 2011-2012 as compared to 2010-2011. The forecasts made by SIAM in this regard are as follows:

Automobile segments 2011-12 growth over 2010-11 (per cent)

Cars 0-2%

Utility Vehicles 9-11%

Vans 8-10%

Passenger Vehicles Total 2-4%

Light Commercial Vehicle (Goods) 28-30%

Medium and Heavy Commercial Vehicles (Goods) 12-14%

Passenger Buses 0-2%

Total Commercial Vehicles 18-20%

Two Wheelers 13-15%

Three Wheelers (Goods) 14-16%

Three Wheelers (Passenger) (4)-(6)%

Three Wheeler (Total) 0-2%

Auto Total 11-13%

Source: SIAM – Demand Forecasts for Indian Automobile Industry2011-2012 – December 2011 Estimates

According to the Automotive Mission Plan 2006-2016, prepared by the Ministry of Industries & Public Enterprises, Government of India, (“Automotive Mission Plan”), India is emerging as one of the world’s fastest growing passenger car markets and the second largest two wheeler manufacturer. The growth of the Indian middle class with increasing purchasing power along with robust growth in economy in recent years has attracted major global auto manufacturers to Indian market. The Indian automotive industry after de-licensing has grown approximately at a rate of 17%.

Automobile Production Trends (Number of

Vehicles)

Category 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Passenger Vehicles

1,209,876 1,309,300 1,545,223 1,777,583 1,838,593 2,357,411 2,987,296

Commercial Vehicles

353,703 391,083 519,982 549,006 416,870 567,556 752,735

Three Wheelers

374,445 434,423 556,126 500,660 497,020 619,194 799,553

Two Wheelers

6,529,829 7,608,697 8,466,666 8,026,681 8,419,792 10,512,903 13,376,451

Grand Total 8,467,853 9,743,503 11,087,997 10,853,930 11,172,275 14,057,064 17,916,035

[Source: SIAM]

Production The cumulative production data for April-July 2012 shows production growth of 7.10 percent over same period last year. The industry produced 1,746,840 vehicles in July 2012 as against 1,656,014 in July 2011. [Source: SIAM]

Domestic Sales The overall growth in domestic sales during April-July 2012 was 9.34 percent over same period last year. [Source: SIAM]

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Passenger Vehicles segment grew at 10.20 percent during April-July 2012 over same period last year. Passenger Cars grew by 5.55 percent, Utility Vehicles grew by 53.66 percent and Vans grew by (-12.73) percent during April-July 2012 as compared to same period last year. [Source: SIAM] The overall Commercial Vehicles segment registered growth of 4.74 percent in April-July 2012 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered negative growth at (-12.75) percent, Light Commercial Vehicles grew at 18.02 percent. [Source: SIAM] Three Wheelers sales recorded marginal growth at 0.81 percent in April-July 2012. Passenger Carriers grew by 4.93 percent during April-July 2012 and Goods Carriers registered de-growth at (-13.62) percent during this period. [Source:

SIAM] Two Wheelers registered a growth of 9.75 percent during April-July 2012. Mopeds, Motorcycles and Scooters grew by 4.02 percent, 6.35 percent and 26.71 percent respectively in the period of April-July 2012. [Source: SIAM] Exports During April-July 2012 overall automobile exports registered negative growth at (-4.03) percent. While Passenger Vehicles and Commercial Vehicles both grew by 9.14 percent. Two & Three wheelers declined by (-1.00) and (-39.23) percent respectively in April–July 2012 compared to the same period last year. [Source: SIAM] The domestic market share between passenger cars, commercial vehicles, two wheelers and three wheelers for 2010-2011 were as follows:

Source: SIAM

Segment wise Market Share in 2010–11

Three Wheelers

3.39%Commercial Vehicles

4.36%

Passenger Vehicles

16.25%

Tw o Wheelers

76.00%

Segment wise Market Share in 2010–11

Three Wheelers

3.39%Commercial Vehicles

4.36%

Passenger Vehicles

16.25%

Tw o Wheelers

76.00%

Vehicle Finance Industry – Overview

[Source: CRISIL – Retail Finance – Auto

Two Wheeler Industry

The two-wheeler industry's domestic sales volumes are expectfinancing scenario and new model launches being the key monitorables for the two wheeler industry. Segment-wise change in demand for two

1. Motorcycles: The motorcycles segment is the largest in the two

total domestic sales. The segment primarily targets the urban and rural male population in the age group of 16years. Penetration of motorcycles has been higher in the urban markets compared to the rural markets due to easy availability of finance in the former and an increased focus on the establishment of dealers, service and distribution networks in these areas. On the flipside, the intof ownership would pose a threat to motorcycle demand over the long term. The entry of new players and the launch of new models in the ungeared scooter segment is also likely to affect the demand for forward, higher disposable incomes due to the restructuring of personal income tax slabs, loan waivers for farmers and pay commission hikes are likely to drive motorcycle demand.

2. Ungeared scooters: The target market for ungeared scoote

population in the age group of 18years. In the long run, the growth potential for this segment would be higher due to the current lowerlevels and a low base over the previous year. Convenient riding, increasing urban incomes, continuing urbanisation and an increase in the number of educated women and workforce population would drive demand for ungeared scooters. In many houseis a major demand driver. Lower dependence on finance, which relatively insulates the segment from such issues, also aids demand.

3. Mopeds: The major target customers for this segm

shopkeepers in urban areas. Although demand for mopeds has been rising, the prospects of any significant

75

Auto – August, 2012]

wheeler industry's domestic sales volumes are expected to grow by 11-13 % in 201financing scenario and new model launches being the key monitorables for the two wheeler industry.

wise change in demand for two-wheelers [Source: CRISIL – Retail Finance – Auto – October 11, 20

The motorcycles segment is the largest in the two-wheelers industry, accounting for almost 79 % of total domestic sales. The segment primarily targets the urban and rural male population in the age group of 16

orcycles has been higher in the urban markets compared to the rural markets due to easy availability of finance in the former and an increased focus on the establishment of dealers, service and distribution networks in these areas. On the flipside, the introduction of ultra low-cost cars and the declining cost of ownership would pose a threat to motorcycle demand over the long term. The entry of new players and the launch of new models in the ungeared scooter segment is also likely to affect the demand for forward, higher disposable incomes due to the restructuring of personal income tax slabs, loan waivers for farmers and pay commission hikes are likely to drive motorcycle demand.

The target market for ungeared scooters in urban areas has mainly been the female population in the age group of 18-30 years and to some extent, the male population in the age group of 16years. In the long run, the growth potential for this segment would be higher due to the current lowerlevels and a low base over the previous year. Convenient riding, increasing urban incomes, continuing urbanisation and an increase in the number of educated women and workforce population would drive demand for ungeared scooters. In many households, ungeared scooters are preferred as a second vehicle after cars, which is a major demand driver. Lower dependence on finance, which relatively insulates the segment from such

The major target customers for this segment are low-income, self-employed professionals and shopkeepers in urban areas. Although demand for mopeds has been rising, the prospects of any significant

% in 2011-12, with rural demand, financing scenario and new model launches being the key monitorables for the two wheeler industry.

October 11, 2011]

wheelers industry, accounting for almost 79 % of total domestic sales. The segment primarily targets the urban and rural male population in the age group of 16-45

orcycles has been higher in the urban markets compared to the rural markets due to easy availability of finance in the former and an increased focus on the establishment of dealers, service and

cost cars and the declining cost of ownership would pose a threat to motorcycle demand over the long term. The entry of new players and the launch of new models in the ungeared scooter segment is also likely to affect the demand for motorcycles. Going forward, higher disposable incomes due to the restructuring of personal income tax slabs, loan waivers for

rs in urban areas has mainly been the female 30 years and to some extent, the male population in the age group of 16-45

years. In the long run, the growth potential for this segment would be higher due to the current lower penetration levels and a low base over the previous year. Convenient riding, increasing urban incomes, continuing urbanisation and an increase in the number of educated women and workforce population would drive demand

holds, ungeared scooters are preferred as a second vehicle after cars, which is a major demand driver. Lower dependence on finance, which relatively insulates the segment from such

employed professionals and shopkeepers in urban areas. Although demand for mopeds has been rising, the prospects of any significant

increase are capped due to increase in substitution by ungeared scooters, limited regional presenceplayer interest.

Overall Demand Drivers in the Two Wheeler Industry [Source: CRISIL

1. Demographic trends: Going forward, growth in two

in the relevant age and income groups (which is defined as population in the age group of 16income bracket of ` 0.1-0.5 million) and increasing use of personal transport. Growth in relevant population in urban areas is expected to have slowed down tto 7.3 % in rural areas. Two-wheelers are estimated to have fairly penetrated the relevant population in both the rural and urban markets. However, growth in demand is mainly expected to com

2. Need for mobility and shift in preferred mode of transport:

expected to increase consumers' need for mobility. Other contributors to mobility are an increasing female workforce, especially in urban areas, and the rising trend of drifting away from agricultural employment in rural areas. Thus, there is likely to be a modal shift in demand for transport. Going ahead, the share of private modes of transport is expected to increase in ctransport arises from rudimentary means like walking, bicycles, animalahead, we expect dependence on walking and bicycles to shift in favour of twoincreasing need for mobility and the substitution effect will drive rural demand for twoare likely to stagnate as here, the shift is expected to be in favour of fourmodes.

3. Improving finance disbursement to support two

Direct Cash Collection (DCC) systems where cash is collected every month on a doorgiven to people who do not have accfinancing in the market. However, the two wheeler finance industry has turned into more of a cash salesdominated market in contrast to other automobile segments. The prevailing high ipremiums with two wheeler has led to an increase in cash sales in the industry.

Two Wheeler Finance Industry

With new players such as Tata capital and Hinduja finance expected to enter the twoResearch expects the existing financiers to expand operations aggressively in order to maintain market position. According to CRISIL Research estimates, two92 billion in 2011-12, led by a 13.9 per cent increase in twofinanciers, some NBFCs and a few private banks are offering twoexisting players to intensify operations and sowould push up finance penetration and hence growth in the twoare thus expected to grow by 15-17 per cent over the next 5 yea2012]

`E: Estimated; P: Projected

[Source: CRISIL – Retail Finance – Auto

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increase are capped due to increase in substitution by ungeared scooters, limited regional presence

Overall Demand Drivers in the Two Wheeler Industry [Source: CRISIL – Retail Finance – Auto

Going forward, growth in two-wheeler demand would come mainly from rising population relevant age and income groups (which is defined as population in the age group of 16

0.5 million) and increasing use of personal transport. Growth in relevant population in urban areas is expected to have slowed down to about 5 % during 2005 to 2010, while it is expected to increase

wheelers are estimated to have fairly penetrated the relevant population in both the rural and urban markets. However, growth in demand is mainly expected to come from rural markets.

Need for mobility and shift in preferred mode of transport: A growing population and rising economic activity is expected to increase consumers' need for mobility. Other contributors to mobility are an increasing female

pecially in urban areas, and the rising trend of drifting away from agricultural employment in rural areas. Thus, there is likely to be a modal shift in demand for transport. Going ahead, the share of private modes of transport is expected to increase in comparison to public modes of transport. In rural markets, demand for transport arises from rudimentary means like walking, bicycles, animal-drawn vehicles and tractors. Going ahead, we expect dependence on walking and bicycles to shift in favour of two-wheincreasing need for mobility and the substitution effect will drive rural demand for two

the shift is expected to be in favour of four-wheelers from two

Improving finance disbursement to support two-wheeler demand: Players have come out with schemes such as Direct Cash Collection (DCC) systems where cash is collected every month on a door-togiven to people who do not have access to formal payment options like a bank account

However, the two wheeler finance industry has turned into more of a cash salesdominated market in contrast to other automobile segments. The prevailing high interest rates and high risk premiums with two wheeler has led to an increase in cash sales in the industry.

With new players such as Tata capital and Hinduja finance expected to enter the two-wheeler finance industry, CRISIL Research expects the existing financiers to expand operations aggressively in order to maintain market position.

According to CRISIL Research estimates, two-wheeler finance disbursements have grown by 20.6 per cent (yed by a 13.9 per cent increase in two-wheeler sales during the year. Currently, only captive

financiers, some NBFCs and a few private banks are offering two-wheeler loans. Over the next 5 years, we expect the existing players to intensify operations and some new players to enter the market, leading to a intense competition, which would push up finance penetration and hence growth in the two-wheeler finance market. Two-wheeler loan disbursements

17 per cent over the next 5 years. [Source: CRISIL – Retail Finance

Auto – June, 2012]

increase are capped due to increase in substitution by ungeared scooters, limited regional presence and lack of

Auto – October 11, 2011]

wheeler demand would come mainly from rising population relevant age and income groups (which is defined as population in the age group of 16-45 years and

0.5 million) and increasing use of personal transport. Growth in relevant population in o about 5 % during 2005 to 2010, while it is expected to increase

wheelers are estimated to have fairly penetrated the relevant population in both the e from rural markets.

A growing population and rising economic activity is expected to increase consumers' need for mobility. Other contributors to mobility are an increasing female

pecially in urban areas, and the rising trend of drifting away from agricultural employment in rural areas. Thus, there is likely to be a modal shift in demand for transport. Going ahead, the share of private modes

omparison to public modes of transport. In rural markets, demand for drawn vehicles and tractors. Going

wheelers and buses. Thus, increasing need for mobility and the substitution effect will drive rural demand for two-wheelers. Urban markets

wheelers from two-wheelers and public

: Players have come out with schemes such as to-door basis and loans are

ess to formal payment options like a bank account in 2010-2011 to boost However, the two wheeler finance industry has turned into more of a cash sales-

nterest rates and high risk

wheeler finance industry, CRISIL Research expects the existing financiers to expand operations aggressively in order to maintain market position.

wheeler finance disbursements have grown by 20.6 per cent (y-o-y) to Rs wheeler sales during the year. Currently, only captive

wheeler loans. Over the next 5 years, we expect the me new players to enter the market, leading to a intense competition, which

wheeler loan disbursements Retail Finance – Auto – June,

E: Estimated; P: Projected

[Source: CRISIL – Retail Finance – Auto

Low two-wheeler finance penetration to increase going forward Domestic two-wheeler sales grew by 13.9 per cent in 2011Research expects the domestic two-wheeler demand to grow at 10 However, with two-wheelers becoming increasingly affordable, finance penetration in this segment had fallen to 23 per cent in 2010-11 from 37 per cent in 2008market is expected to see aggressive action by both existing players as well as new entrants. Moreover, we expect players to widen their reach to tier-3 and tier-Finance – Auto – June, 2012]

77

Auto – June, 2012]

penetration to increase going forward

wheeler sales grew by 13.9 per cent in 2011-12 with rural sales driving growth across all segments. CRISIL wheeler demand to grow at 10-12 per cent CAGR till 2016-17.

wheelers becoming increasingly affordable, finance penetration in this segment had fallen to 23 per 11 from 37 per cent in 2008-09. Going ahead, it is expected to recover to 29 per cent by 2016

see aggressive action by both existing players as well as new entrants. Moreover, we expect players -4 cities to tap latent demand for two-wheeler finance.

12 with rural sales driving growth across all segments. CRISIL 17.

wheelers becoming increasingly affordable, finance penetration in this segment had fallen to 23 per 09. Going ahead, it is expected to recover to 29 per cent by 2016-17 as the

see aggressive action by both existing players as well as new entrants. Moreover, we expect players . [Source: CRISIL – Retail

E: Estimated; P: Projected

[Source: CRISIL – Retail Finance – Auto

LTVs to improve Liberal credit underwriting norms adopted by many financiers in the past 2quality in this segment. As a result, banks/ financiers have strengthened their credit appraisal norms and are now stringent in checking the customers' past track record, documentation, repayment capability etc. The average LTV ratio in the two-wheeler finance industry is estimated to have inthe lows seen in 2008-09. The unorganised players operating in this segment offer high LTVs and have made this segment highly competitive. Moreover, this segment is also seeing the entry of new players, thus increacompetitive intensity. The organised sector through CIBIL, will thus be forced to offer high LTVs in order to stay competitive.Auto – June, 2012]

78

Auto – June, 2012]

Liberal credit underwriting norms adopted by many financiers in the past 2-3 years have significantly deteriorated asset banks/ financiers have strengthened their credit appraisal norms and are now stringent

in checking the customers' past track record, documentation, repayment capability etc.

wheeler finance industry is estimated to have increased to 76 per cent in 201009. The unorganised players operating in this segment offer high LTVs and have made this

segment highly competitive. Moreover, this segment is also seeing the entry of new players, thus increacompetitive intensity. The organised sector players, who draw comfort from better availability of custo

will thus be forced to offer high LTVs in order to stay competitive. [Source: CRISIL

3 years have significantly deteriorated asset banks/ financiers have strengthened their credit appraisal norms and are now stringent

creased to 76 per cent in 2010-11, from 09. The unorganised players operating in this segment offer high LTVs and have made this

segment highly competitive. Moreover, this segment is also seeing the entry of new players, thus increasing the better availability of customer information

CRISIL – Retail Finance –

E: Estimated; P: Projected

[Source: CRISIL – Retail Finance – Auto

Net margins to remain stable in 2012 According to CRISIL Research estimates, the profitability of twopositive in 2010-11. While the cost of funds increased in 2011pressure as they were not able to achieve a corresponding increase in yield. Credit losses are however expected to be lower in 2011-12, with the imposition of stringent credit appraisal norms in the aftermath of the global economic crisis of 2008-09. As players try innovative models to attract customers, operating expenses are stated to increase in the coming years. Moreover, many players offer high dealer payouts to gain volumes, which in turn impacts the yield of the financiers. However, the adverse impact of lower yield and higher operating expenses is expected to be more or less offset by the decline in the cost of funds and credit losses.of players in 2012-13 and 2013-14 [Source:

79

Auto – June, 2012]

Net margins to remain stable in 2012-13

According to CRISIL Research estimates, the profitability of two-wheeler financiers improved with net margins turning 11. While the cost of funds increased in 2011-12, the margins (estimates) of financiers came under

pressure as they were not able to achieve a corresponding increase in yield. Credit losses are however expected to be the imposition of stringent credit appraisal norms in the aftermath of the global economic crisis of

As players try innovative models to attract customers, operating expenses are stated to increase in the coming r high dealer payouts to gain volumes, which in turn impacts the yield of the

financiers. However, the adverse impact of lower yield and higher operating expenses is expected to be more or less offset by the decline in the cost of funds and credit losses. Hence, we do not expect any major changes in the profitability

[Source: CRISIL – Retail Finance – Auto – June, 2012]

wheeler financiers improved with net margins turning 12, the margins (estimates) of financiers came under

pressure as they were not able to achieve a corresponding increase in yield. Credit losses are however expected to be the imposition of stringent credit appraisal norms in the aftermath of the global economic crisis of

As players try innovative models to attract customers, operating expenses are stated to increase in the coming r high dealer payouts to gain volumes, which in turn impacts the yield of the

financiers. However, the adverse impact of lower yield and higher operating expenses is expected to be more or less Hence, we do not expect any major changes in the profitability

E: Estimated; P: Projected

[Source: CRISIL – Retail Finance – Auto

Cars and Utility Vehicles Industry Domestic sales of cars and utility vehicles (UVs) are expected to recover slowly, growing by only 8low base in 2011-12. In the previous year, sales had grown by only 5 per cent. A weak macroeconomic scenario, weak consumer sentiment, rising ownership costs and production disruptions at market leader Maruti Suzuki India Limited's plants will keep car sales growth moderate during the year. However, new model launches and a wide availability of diesel models will aid growth in sales of sedans and utility vehicles. Growth in car sales is likely to be slower than in UVs, at 5per cent, due to the higher availability of diesel models in this segment. Within cawill be faster as these vehicles are lesser sensitive to changes in ownership costs. Despite the gloom, demand for diesel cars will continue to rise, as the gap between prices of petrol and diesel remains high. A partial improvement in supply of diesel engines will aid the incremental growth in diesel car sales, despite weak buyer sentiment. [Source: CRISIL – Cars and Utility vehicles

Overall demand drivers for the passenger cars industry

1. Increase in affordability: The chief demand driver for passenger cars growth

enhances the aspiration levels of the consumers. The following factors determine affordability 2. Growth in addressable market, led by increase in disposable income

substantially from 9.8 million in 2005households are expected to increase to 122 mi

3. New launches: There is a significant increase in car sales after the launch of new models, as customers tempted to bring forward their decision tonew launches has gone up. Thesedrive demand. New launches the customer for new purchases

80

Auto – June, 2012]

Domestic sales of cars and utility vehicles (UVs) are expected to recover slowly, growing by only 812. In the previous year, sales had grown by only 5 per cent. A weak macroeconomic scenario, weak

consumer sentiment, rising ownership costs and production disruptions at market leader Maruti Suzuki India Limited's plants will keep car sales growth moderate during the year. However, new model launches and a wide availability of

rowth in sales of sedans and utility vehicles.

slower than in UVs, at 5-7 per cent. Sales of UVs are expected to grow faster at 19per cent, due to the higher availability of diesel models in this segment. Within cars, sales of sedans and utility vehicles will be faster as these vehicles are lesser sensitive to changes in ownership costs.

Despite the gloom, demand for diesel cars will continue to rise, as the gap between prices of petrol and diesel remains artial improvement in supply of diesel engines will aid the incremental growth in diesel car sales, despite weak

Cars and Utility vehicles – July, 2012]

Overall demand drivers for the passenger cars industry [Source: CRISIL – Retail Finance – Auto

The chief demand driver for passenger cars growth is greater affordability, which enhances the aspiration levels of the consumers. The following factors determine affordability

Growth in addressable market, led by increase in disposable income: Addressable households substantially from 9.8 million in 2005-06 to 64 million in 2010-11. Over the next 5 years, households are expected to increase to 122 million, driven mainly by rising income levels

There is a significant increase in car sales after the launch of new models, as customers their decision to purchase the vehicle. With the increase in competition

These launches by existing and new players in the domestic market will continue to drive demand. New launches at competitive prices across segments, which are less penetrated, would also woo

ses, given low penetration across segments.

Domestic sales of cars and utility vehicles (UVs) are expected to recover slowly, growing by only 8-10 per cent, despite a 12. In the previous year, sales had grown by only 5 per cent. A weak macroeconomic scenario, weak

consumer sentiment, rising ownership costs and production disruptions at market leader Maruti Suzuki India Limited's plants will keep car sales growth moderate during the year. However, new model launches and a wide availability of

7 per cent. Sales of UVs are expected to grow faster at 19-21 rs, sales of sedans and utility vehicles

Despite the gloom, demand for diesel cars will continue to rise, as the gap between prices of petrol and diesel remains artial improvement in supply of diesel engines will aid the incremental growth in diesel car sales, despite weak

Auto – October 11, 2011]

is greater affordability, which enhances the aspiration levels of the consumers. The following factors determine affordability:

Addressable households increased Over the next 5 years, total addressable

llion, driven mainly by rising income levels.

There is a significant increase in car sales after the launch of new models, as customers get competition, the number of

by existing and new players in the domestic market will continue to at competitive prices across segments, which are less penetrated, would also woo

4. Increase in dealerships and easy access to finance:

cars, as a large number of households will be added to the target population. Typically, these hthe potential to buy a car, but defer the decision due to lack of sales and service infrastructure. With most urban centres covered by dealership networks, car manufacturers are setting up new dealerships in smaller towns to increase penetration and sales in semisales of passenger cars across all segments. Most manufacturers are targeting rural and semiincrease sales volume. Along with increasing the number accessibility to finance in these markets to enable customers to purchase cars.

5. Reduction in holding period increases demand for a second car

increase the sales of passenger cars, mainly in the mainstream/ small car/ midperiod has shrunk from 5-6 years in 2000model from the same or higher segment. Also the cothan one working member in a family, the need for personal transportation is acting like an impetus for purchasing more than one car.

Car and Utility Vehicle Finance Industry

In 2011-12, the domestic sales of cars and UVs increased by 2vehicle sales and high interest rates is expected to have affected finance penetration levels in 2011CRISIL Research estimates, disbursements towards new car and UVs were lower by 0.6 per cent in 2011 However, in 2012-13, CRISIL Research expects cars and UV sales to grow by 10respectively. The new car and UV loan disbursements are thus expected to gra marginal increase in finance penetration levels.grow at a CAGR of 18-20 per cent till 2016penetration and higher LTV ratios would drive the disbursements in the next 5 years.Auto – June, 2012]

CRISIL Research expects aggregate car and UV loan disbursements to grow at a CAGR of 18steady growth in underlying vehicle demand, increase in finance penetration and higher LTV ratios would drive the disbursements in the next 5 years.

81

Increase in dealerships and easy access to finance: Greater distribution reach will push up the sales of passenger cars, as a large number of households will be added to the target population. Typically, these hthe potential to buy a car, but defer the decision due to lack of sales and service infrastructure. With most urban centres covered by dealership networks, car manufacturers are setting up new dealerships in smaller towns to

tion and sales in semi-urban and rural areas. Enhanced penetration of financing can improve sales of passenger cars across all segments. Most manufacturers are targeting rural and semiincrease sales volume. Along with increasing the number of dealerships, manufacturers are improving accessibility to finance in these markets to enable customers to purchase cars.

Reduction in holding period increases demand for a second car: A decline in the average holding period will also of passenger cars, mainly in the mainstream/ small car/ mid-size segment. The average holding

6 years in 2000-01 to 3-4 years in 2008-09, implying frequent upmodel from the same or higher segment. Also the concept of a second car is on the rise in urban areas. With more than one working member in a family, the need for personal transportation is acting like an impetus for purchasing more than one car.

Car and Utility Vehicle Finance Industry

domestic sales of cars and UVs increased by 2-3 per cent and 13-14 per cent, respectivand high interest rates is expected to have affected finance penetration levels in 2011

sements towards new car and UVs were lower by 0.6 per cent in 2011

13, CRISIL Research expects cars and UV sales to grow by 10-12 per cent and 12respectively. The new car and UV loan disbursements are thus expected to grow by 16 to 17 per cent in 2012a marginal increase in finance penetration levels. CRISIL Research expects aggregate car and UV loan disbursements to

20 per cent till 2016-17. A steady growth in underlying vehicle demand, ipenetration and higher LTV ratios would drive the disbursements in the next 5 years. [Source: CRISIL

CRISIL Research expects aggregate car and UV loan disbursements to grow at a CAGR of 18-20 pesteady growth in underlying vehicle demand, increase in finance penetration and higher LTV ratios would drive the

Greater distribution reach will push up the sales of passenger cars, as a large number of households will be added to the target population. Typically, these households have the potential to buy a car, but defer the decision due to lack of sales and service infrastructure. With most urban centres covered by dealership networks, car manufacturers are setting up new dealerships in smaller towns to

urban and rural areas. Enhanced penetration of financing can improve sales of passenger cars across all segments. Most manufacturers are targeting rural and semi-urban areas to

of dealerships, manufacturers are improving

A decline in the average holding period will also size segment. The average holding

09, implying frequent up-gradation to another ncept of a second car is on the rise in urban areas. With more

than one working member in a family, the need for personal transportation is acting like an impetus for

14 per cent, respectively. Slowdown in and high interest rates is expected to have affected finance penetration levels in 2011-12. According to

sements towards new car and UVs were lower by 0.6 per cent in 2011-12.

12 per cent and 12-14 per cent, ow by 16 to 17 per cent in 2012-13 aided by

CRISIL Research expects aggregate car and UV loan disbursements to 17. A steady growth in underlying vehicle demand, increase in finance

[Source: CRISIL – Retail Finance –

20 per cent till 2016-17. A steady growth in underlying vehicle demand, increase in finance penetration and higher LTV ratios would drive the

E: Estimated; P: Projected

[Source: CRISIL – Retail Finance – Auto

Finance penetration to increase in going forward Rising interest rates is expected have impacted the industry and caused finance penetration levels to fallcars and 62 per cent for UVs in 2011-12. However, by 2016cars and 66 per cent in UVs following moderation in interest rates and alleviation of credit risks. Finance – Auto – June, 2012]

82

Auto – June, 2012]

Finance penetration to increase in going forward

Rising interest rates is expected have impacted the industry and caused finance penetration levels to fall12. However, by 2016-17, we expect penetration levels to recover to 74 per cent in

cars and 66 per cent in UVs following moderation in interest rates and alleviation of credit risks.

Rising interest rates is expected have impacted the industry and caused finance penetration levels to fall to 68 per cent for enetration levels to recover to 74 per cent in

cars and 66 per cent in UVs following moderation in interest rates and alleviation of credit risks. [Source: CRISIL – Retail

E: Estimated; P: Projected

[Source: CRISIL – Retail Finance – Auto

Players have adopted stringent underwriting norms since the economic slowdown in 2008financiers facing high delinquency levels. Over only marginally to 75 per cent and 71 per cent respectively.

E: Estimated; P: Projected

[Source: CRISIL – Retail Finance – Auto

83

Auto – June, 2012]

Players have adopted stringent underwriting norms since the economic slowdown in 2008financiers facing high delinquency levels. Over the next 5 years, we expect LTV ratio for cars and UV segment to riseonly marginally to 75 per cent and 71 per cent respectively. [Source: CRISIL – Retail Finance –

Auto – June, 2012]

Players have adopted stringent underwriting norms since the economic slowdown in 2008-09, which led to many ratio for cars and UV segment to rise

Auto – June, 2012]

According to CRISIL Research estimates, the net marginsunder pressure in 2011-12 on account of an increase in the cost of funds, which could not be entirely passed on. However, net credit losses in the car finance industry were lower in and informed lending based on availability of CIBIL data. However, credit losses for the players are expected to increase in 2012financier is expected to decrease but at a slower rate than the decrease in the cost of funds as the players try to sustain their margins. In 2013-14, further improvement in gross spreads would more than offset the increase in credit losses and operating expenses leading to increase in net margins.

[Source: CRISIL – Retail Finance – Auto

Commercial Vehicles Industry

The commercial vehicle industry is segmented into “light commercial vehicles” (for vehicles with gross vehicle weight of less than 7.5 tons) and “medium and heavy commercial vehicles” (for vehicles weighing more than 7.5 tons). The performance of the medium and heavy commercial vehicle industry bears a high correlation with industrial growth and is driven by economic development, improved road infrastructtransportation and a favorable regulatory environment (in this regard, demand created in the years 2006attributable to the strict enforcement of overloading restrictions and age norms). In commercial vehicle industry tends to be less cyclical in nature and is driven by GDP growth and demand for last mile distribution. The market share of light commercial vehicles increased rapidly by certain players created a new segment typically occupied by threeresulting in significant growth in the commercial vehicle market as a whole. Total domestic sales in the commercialdomestic sales had grown at a healthy CAGR of in economic development, credit availability and costs, an inone-time demand created in 2006-07 by the strict enforcement of overloading restrictions.

After a stable second quarter in fiscal 2009, the automotive sector in India sufferedthird quarter of fiscal 2009, arising from major financial and other market upheavals. This, along with contraction in freight movement in many segments of the industry, led to a massive drop in the medium and heavy comsegment demand. High interest rates and peak commodity prices also affected the industry and the supply chain. In the

84

According to CRISIL Research estimates, the net margins of financiers in the new car and UV finance industry were 12 on account of an increase in the cost of funds, which could not be entirely passed on. However,

net credit losses in the car finance industry were lower in 2011-12 due to the adoption of better risk management practices and informed lending based on availability of CIBIL data.

However, credit losses for the players are expected to increase in 2012-13 due to weak economic scenario. The yield to rease but at a slower rate than the decrease in the cost of funds as the players try to sustain

14, further improvement in gross spreads would more than offset the increase in credit losses and in net margins.

Auto – June, 2012]

The commercial vehicle industry is segmented into “light commercial vehicles” (for vehicles with gross vehicle weight of and heavy commercial vehicles” (for vehicles weighing more than 7.5 tons). The

performance of the medium and heavy commercial vehicle industry bears a high correlation with industrial growth and is driven by economic development, improved road infrastructure (such as the Golden Quadrilateral) for long haulage transportation and a favorable regulatory environment (in this regard, demand created in the years 2006attributable to the strict enforcement of overloading restrictions and age norms). In turn, the performance of the light commercial vehicle industry tends to be less cyclical in nature and is driven by GDP growth and demand for last mile distribution. The market share of light commercial vehicles increased rapidly - the introduction of a sby certain players created a new segment typically occupied by three-wheelers and similar forms of intraresulting in significant growth in the commercial vehicle market as a whole.

Total domestic sales in the commercial vehicle industry reached 6,76,048 units in 2010-11. From 200domestic sales had grown at a healthy CAGR of 13.4%. The reduction in domestic sales was attributed to the slowdown in economic development, credit availability and costs, an increase in fuel prices, in addition to the base effect due to the

07 by the strict enforcement of overloading restrictions. [Source: SIAM]

After a stable second quarter in fiscal 2009, the automotive sector in India suffered severe contraction in demand in the third quarter of fiscal 2009, arising from major financial and other market upheavals. This, along with contraction in freight movement in many segments of the industry, led to a massive drop in the medium and heavy comsegment demand. High interest rates and peak commodity prices also affected the industry and the supply chain. In the

of financiers in the new car and UV finance industry were 12 on account of an increase in the cost of funds, which could not be entirely passed on. However,

better risk management practices

13 due to weak economic scenario. The yield to rease but at a slower rate than the decrease in the cost of funds as the players try to sustain

14, further improvement in gross spreads would more than offset the increase in credit losses and

The commercial vehicle industry is segmented into “light commercial vehicles” (for vehicles with gross vehicle weight of and heavy commercial vehicles” (for vehicles weighing more than 7.5 tons). The

performance of the medium and heavy commercial vehicle industry bears a high correlation with industrial growth and is ure (such as the Golden Quadrilateral) for long haulage

transportation and a favorable regulatory environment (in this regard, demand created in the years 2006-2007 was turn, the performance of the light

commercial vehicle industry tends to be less cyclical in nature and is driven by GDP growth and demand for last mile the introduction of a sub-one ton carrier

wheelers and similar forms of intra-city transport,

. From 2004-05 to 2010-11, . The reduction in domestic sales was attributed to the slowdown

crease in fuel prices, in addition to the base effect due to the [Source: SIAM]

severe contraction in demand in the third quarter of fiscal 2009, arising from major financial and other market upheavals. This, along with contraction in freight movement in many segments of the industry, led to a massive drop in the medium and heavy commercial vehicle segment demand. High interest rates and peak commodity prices also affected the industry and the supply chain. In the

85

third quarter of fiscal 2009, industry commercial vehicle sales were down 44.0% and passenger vehicle sales dropped by as much as 16.5% against the comparable quarter of the previous year. The economy grew 5.3% in the December 2008 quarter from a year earlier, below forecasts of 6.2% and the previous quarter's 7.6% as the global economic crisis cut demand and exports. As a result, 2008-2009 volumes declined 21.7%. With the Indian economy gaining momentum and rising GDP growth, the sales of the commercial vehicles increased by 38.7% in 2009-10 and by 27.0% in 2010-11. Over the long term, the commercial vehicle industry and consequently, commercial vehicle financing, is expected to continue to show growth in light of the following factors: Modernization of trucking industry. A replacement boom is likely to be triggered by stricter enforcement of regulations banning trucks beyond 15 years and overloading, as well as the introduction by transport associations of a voluntary retirement scheme for old trucks with better financing options. An anticipated replacement demand for 11 Lakh new as well as pre-owned trucks will require financing of ` 1,07,80,000 Lakhs. (Source: Society of Indian Automobile

Manufacturers)

Structural shift to hub-and-spoke model and improving road infrastructure. All commercial vehicle segments are expected to experience a boost from the fast-evolving hub- and spoke-structure of the freight industry. Long-distance haulage between hubs is typically serviced by heavy commercial vehicles on highways which continue to benefit from the Golden Quadrilateral and road development projects, with freight distribution from the hub to the local warehouse at the end of the spoke requiring medium commercial vehicles and distribution over the last mile requiring small commercial vehicles. Growing freight capacity. GDP growth rate continues to drive incremental freight capacity, which is estimated to increase at 1.25 times of GDP growth. Growth of construction industry. The share of the construction industry in GDP has increased from 6.1% in 2002-03 to 6.9% in 2006-07. This increase has been largely propelled by government spending. Because a substantial portion of construction investment is spent on equipment, this construction boom heralds a similar expansion in the need for construction vehicles. The Indian construction industry is dominated by small contractors that perform over 90.0% of projects. These local players often lack adequate access to institutional finance, creating enormous opportunities in the area of construction equipment financing. (Source: Government of India Planning Commission Eleventh Five Year Plan)

Commercial Vehicle Finance

Led by a growth of around 20 per cent in underlying vehicle domestic sales volume, commercial vehicle loan disbursements are estimated to have risen by 18-20 per cent in 2011-12. Disbursements going forward would be driven by growth in underlying asset sales, a decline in financiers' risk aversion levels and higher average ticket size of loans. With the underlying asset expected to grow by 11-13 per cent in 2012-13, CRISIL Research forecasts CV disbursements to grow by 15-17 per cent 2012-13. However, we expect the market to rebound in 2013-14 and grow by 19-21 per cent in 2013-14 on account of higher growth in the underlying asset and increasing average ticket size. About 75 per cent of disbursement in the CV finance space are likely to be towards small fleet operators (SFOs) and first-time users (FTUs) with the remaining going to large fleet operators (LFOs) [Source: CRISIL – Retail Finance – Auto – June, 2012]

The underlying commercial vehicles sales grew by 20 per while the MHCV segment grew moderately by 8

E: Estimated; P: Projected; LCV: Light commercial vehicle

[Source: CRISIL – Retail Finance – Auto

CRISIL Research forecasts CV sales volume to grow by 11next 5 years too. This coupled with growth in average ticket size would drive the growth in the CV finance indforward.

86

The underlying commercial vehicles sales grew by 20 per cent in 2011-12 driven by strong growth in the LCV segment, while the MHCV segment grew moderately by 8-10 per cent. [Source: CRISIL – Retail Finance

E: Estimated; P: Projected; LCV: Light commercial vehicle

Auto – June, 2012]

CRISIL Research forecasts CV sales volume to grow by 11-13 per cent in 2012-13 and grow at the same rate over the next 5 years too. This coupled with growth in average ticket size would drive the growth in the CV finance ind

12 driven by strong growth in the LCV segment, Retail Finance – Auto – June, 2012]

13 and grow at the same rate over the next 5 years too. This coupled with growth in average ticket size would drive the growth in the CV finance industry going

E: Estimated; P: Projected; MHCV: Medium and heavy commercial vehicle

[Source: CRISIL – Retail Finance – Auto

With a weakening economic scenario and transporters margins coming under pressure, CV financiers are exmaintain their LTVs in 2012-13. CRISIL Research forecasts average LTV ratio for CV loans to have increased to 75 per cent in 2010-11 from 74 per cent in 2009the next 2 years due to the anxiety of deterioration in asset quality. Small fleet operators and firstwould remain at a higher risk from the financier's perspective. On this backdrop, we expect LTV levels to remain at around 75 to 76 per cent levels over the next five years.

87

MHCV: Medium and heavy commercial vehicle

Auto – June, 2012]

With a weakening economic scenario and transporters margins coming under pressure, CV financiers are ex13. CRISIL Research forecasts average LTV ratio for CV loans to have increased to 75 per

11 from 74 per cent in 2009-10. However, credit appraisal mechanisms are expected to remain stringent in years due to the anxiety of deterioration in asset quality. Small fleet operators and first

from the financier's perspective. On this backdrop, we expect LTV levels to remain at vels over the next five years. [Source: CRISIL – Retail Finance – Auto

With a weakening economic scenario and transporters margins coming under pressure, CV financiers are expected to 13. CRISIL Research forecasts average LTV ratio for CV loans to have increased to 75 per

10. However, credit appraisal mechanisms are expected to remain stringent in years due to the anxiety of deterioration in asset quality. Small fleet operators and first-time users continue

from the financier's perspective. On this backdrop, we expect LTV levels to remain at Auto – June, 2012]

E: Estimated; P: Projected

[Source: CRISIL – Retail Finance – Auto

Commercial vehicle finance industry is already highly penetrated. Typically, more thpurchased on finance. Although finance penetration had decreased marginally in 2008levels in 2009-10. This represents a huge dependence on finance industry. Finance penetration levels are exremain high at a level of 96-98 per cent by 2016

E: Estimated; P: Projected

88

Auto – June, 2012]

Commercial vehicle finance industry is already highly penetrated. Typically, more than 95 per cent of vehicles are purchased on finance. Although finance penetration had decreased marginally in 2008-09, the same came back to normal

10. This represents a huge dependence on finance industry. Finance penetration levels are ex98 per cent by 2016-17. [Source: CRISIL – Retail Finance – Auto –

an 95 per cent of vehicles are 09, the same came back to normal

10. This represents a huge dependence on finance industry. Finance penetration levels are expected to June, 2012]

89

[Source: CRISIL – Retail Finance – Auto – June, 2012] CRISIL Research estimates net margins of CV financiers to have declined in 2011-12 by around 20-25 bps as the increase in the cost of funds was higher than the increase in yields. However, credit losses and operating expenses are estimated to have declined in 2011-12. In 2012-13 and 2013-14, the profitability of the financiers is expected to improve as they are not expected to completely pass on the decline in cost of funds to the customers. The increase in gross spreads would more than offset the increase in credit costs thus increasing the net profitability of players. Operating expenses are expected to remain constant. [Source: CRISIL – Retail Finance – Auto – June, 2012] Commercial Vehicle Finance Industry

[Source: CRISIL – Retail Finance – Auto – October 11, 2011] I. Segment-wise assessment of demand drivers:

i. LCV: Demand for LCV goods vehicles has grown at a robust pace in the past few years led by the introduction of

sub one tonne category. Strong growth was recorded in this segment in 2010-11 on account of new model launches, growth in agriculture, FMCG and consumer durables in 2011-12, a moderation in growth in this segment is expected on account of higher base, increasing interest rate scenario and expected moderation in industry GDP.

ii. MHCV: Moderation in industrial production and rise in diesel prices and interest rates, in turn pressurising the

margins of transporters is expected to lead to a moderation in growth for MHCV vehicles.

II. Overall demand drivers for the commercial vehicle industry:

i. Growth in economic activity: The demand for commercial vehicles is closely linked to the overall economic growth of the country, as transportation is related to all the sectors of the economy. The CV industry transports more than 60 per cent of the total freight handled in the country. The CV industry is cyclical in nature, as demand is driven by various factors such as growth in industrial and agricultural production, freight movement, rising share of roadways in freight movement, changes in freight rates, fuel prices, government policies and profitability of truck operators and STUs.

ii. CV financing: Liquidity crunch associated with the economic downturn also proved to be an equal cause of decline

in the CV industry. Financiers' problems were further aggravated by the deteriorating asset quality and rising delinquency levels. Given such an environment, most financiers either stopped lending or curtailed their exposure to FTUs/SFOs category, to maintain their portfolio quality. Although lenders continued to lend to LFOs, they adopted stringent underwriting measures and increased the borrower's equity contribution. Also, the increasing interest rate scenario is expected to negatively impact the consumer sentiments.

iii. Transporter profitability: Continued firmness in raw material prices and expected moderation in CV sales is

expected to lead to pressure on the operating margins of the players. During 2010-11, the operating margins of players dropped by 130 bps due to significant increase in raw material costs, partially offset by increase in vehicle prices, better product mix and higher capacity utilisation.

iv. Entry of new players to intensify competition: The entry of international players like Daimler, Beiqi Forton,

General Motors etc and expansion of the product portfolio by the local players like Mahinda & Mahindra, Asia Motor Works etc is expected to lead to intensification of competition in the industry and thus accelerate product development. It is also expected to lead to the introduction of technologically advanced products, which will enable Indian players to compete on a global scale.

v. Other long-term drivers: Besides the above mentioned factors, other long-term drivers for the CV industry are

infrastructure development, structural changes and government initiatives. Improvement in road infrastructure improves connectivity level on trunk routes, which would facilitate the sale of higher tonnage vehicles such as multi-axle vehicles (MAVs). Also, it is estimated that the growth in the industry would be led by higher price realisations in the MHCV segment, as medium commercial vehicles (MCVs) are being substituted by higher-tonnage vehicles like MAVs. Upper-end LCVs and MCVs are also getting substituted by ICVs, as they offer better cost economics. [Source: CRISIL – Retail Finance – Auto – October 11, 2011]

90

Micro Small and Medium Enterprises (MSME) Finance

MSME Sector

Micro, Small and Medium Enterprises (MSMEs), including khadi and village/rural enterprises credited with generating the highest rates of employment growth, account for a major share of industrial production and exports. They also play a key role in the development of economies with their effective, efficient, flexible and innovative entrepreneurial spirit. The socio-economic policies adopted by India since the Industries (Development and Regulation) Act, 1951 have laid stress on MSMEs as a means to improve the country’s economic conditions. [Ministry of MSME Annual Report 2011-12]

The MSME sector contributes significantly to the manufacturing output, employment and exports of the country. It is estimated that in terms of value, the sector accounts for about 45 % of the manufacturing output and 40 % of the total exports of the country. Further, this sector has consistently registered a higher growth rate than the rest of the industrial sector. [Ministry of MSME Annual Report 2011-12] In recognition of the contribution and vast potential of the MSME sector in the economy, provision of adequate credit to this sector continues to be an important element of banking policy, particularly after the initiation of structural reforms in 1991. The Government of India has from time to time taken economic policy initiatives to promote this sector and enhance credit to small and medium enterprises. Some of the initiatives of the Government towards MSME financing include setting up of credit guarantee fund trust for small industries, risk sharing facility, venture capital funding, micro credit, etc.

Performance of MSMEs - Units, Investment, Production, Employment & Exports

Fixed

Investment

Production Current

Prices Exports

SI. No.

Year

Total MSMEs

(lakh

numbers)

Employment (lakh person)

(` Crore)

1 1992-93 73.51 174.84 109,623 84,413 17,784

(4.07) (5.33) (9.24) (4.71) (28.10)

2 1993-94 76.49 182.64 115,795 98,796 25,307

(4.07) (4.46) (5.63) (17.04) (42.30)

3 1994-95 79.60 191.40 123,790 122,154 29,068

(4.07) (4.79) (6.90) (23.64) (14.86)

4 1995-96 82.84 197.93 125,750 147,712 36,470

(4.07) (3.42) (1.58) (20.92) (25.46)

5 1996-97 86.21 205.86 130,560 167,805 39,248

(4.07) (4.00) (3.82) (13.60) (7.62)

6 1997-98 89.71 213.16 133,242 187,217 44,442

(4.07) (3.55) (2.05) (11.57) (13.23)

7 1998-99 93.36 220.55 135,482 210,454 48,979

(4.07) (3.46) (1.68) (12.41) (10.21)

8 1999-00 97.15 229.10 139,982 233,760 54,200

(4.07) (3.88) (3.32) (11.07) (10.66)

9 2000-01 101.10 238.73 146,845 261,297 69,797

91

Fixed

Investment

Production

Current

Prices

Exports

SI.

No. Year

Total

MSMEs

(lakh numbers)

Employment

(lakh person)

(` Crore)

(4.07) (4.21) (4.90) (11.78) (28.78)

10 2001-02 105.21 249.33 154,349 282,270 71,244

(4.07) (4.44) (5.11) (8.03) (2.07)

11 2002-03 109.49 260.21 162,317 314,850 86,013

(4.07) (4.36) (5.16) (11.54) (20.73)

12 2003-04 113.95 271.42 170,219 364,547 97,644

(4.07) (4.31) (4.87) (15.78) (13.52)

13 2004-05 118.59 282.57 178,699 429,796 124,417

(4.07) (4.11) (4.98) (17.90) (27.42)

14 2005-06 123.42 294.91 188,113 497,842 150,242

(4.07) (4.37) (5.27) (15.83) (20.76)

15 2006-07 261.12 595.66 500,758 709,398 182,538

(111.57) (101.98) (166.20) (42.49) (21.50)

16 2007-08 272.79 626.34 558,190 790,759 202,017

(4.47) (5.15) (11.47) (11.47) (10.67)

17 2008-09 285.16 659.35 621,753 880,805 NA

(4.53) (5.27) (11.39) (11.39)

18* 2009-10 298.08 695.38 693,835 982,919 NA

(4.53) (5.46) (11.59) (11.59)

19# 2010-11 311.52 732.17 773,487 1,095,758 NA

(4.51) (5.29) (11.48) (11.48)

The figures in brackets show the percentage growth over the previous year. The data for the period up to 2005-06 is Small Scale Industries (SSI).

Subsequent to 2005-06, data with reference to Micro, Small and Medium Enterprises are being compiled. The growth for the year 2010-11 is based on

the average growth rate for the previous three years.

* : Provisional, # : Projected, NA: Not Available (Source: Ministry of MSME Annual Report 2011-12, 2010-11, 2009-10, 2008-09)

Comparison of the MSME Sector with the Overall Industrial Growth in India

The MSME sector has maintained a higher rate of growth vis-à-vis the overall industrial sector as would be clear from the comparative growth rates of production for both the sectors during last five years as incorporated in the following table:

Growth rates of 2001-02

base IIP (%age)

Over all Industrial Growth rates of sector

(%age) #

2002-03 8.68 5.70

2003-04 9.64 7.00

2004-05 10.88 8.40

2005-06 12.32 8.00

92

Growth rates of 2001-02

base IIP (%age)

Over all Industrial

Growth rates of sector

(%age) #

2006-07 12.60 11.90

2007-08 13.00* 8.70

2008-09 ** 3.20

2009-10 ** 10.50

2010-11 ** 7.80

*: Projected, IIP — Index of industrial Production

#: Source- Ministry of MSME Annual Report 2011-12, 2010-11, 2009-10 and M/o Statistics and P1 website –

http://www.mospi.gov.in

The total employment from the MSME sector in the country with reference year 2006-07 was 595.66 lakh numbers. As per the estimates compiled for the year 2009-10, the MSME sector employed 695.38 lakh persons.

The size of the registered MSME sector is estimated to be 1,563,974 of the total working enterprises. The total proportion by micro, small and medium enterprises were 94.94%, 4.89% and 0.17% respectively. About 45.23% (7.07 lakh) of the units were located in rural areas. 67.10 % of the enterprises in the registered MSME sector were engaged in manufacturing/ assembling/processing, whereas 16.78 % of the units were engaged in services activities. The remaining 16.13 % of the enterprises were engaged in the repair and maintenance.

Distribution by Nature of Activity No. in lakh

Manufacturing/ Assembling/ Processing 10.50 (67.10%)

Services 2.62 (16.78%)

Repairing & Maintenance 2.52 (16.13%)

Total 15.64 (100%)

The MSME industry envisions that the sector will have a healthy growth with a large number of enterprises being set up and their upward graduation into small and medium enterprises. This would be accompanied by enhancement of their contribution to the GDP, manufacturing output, employment and exports. The economic externalities which affect the MSME sector are the following:

294.91

595.66626.34

659.35695.38

732.17

0

100

200

300

400

500

600

700

800

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Employment

(no. in lakh person)

93

(i) Overall domestic and global growth trends; (ii) Domestic tax regime, particularly advent of Goods and Service Tax and Direct Tax Code; (iii) Policies governing the credit flow to the sector; (iv) Trade policies, including free trade agreements with other countries; (v) Labour policies, particularly multiplicity of labour laws and procedures for compliance of various labour

regulations; (vi) Availability of infrastructure facilities, including power, water, roads, etc.; (vii) Availability of critical raw material at competitive prices; (viii) Availability of skilled manpower for manufacturing, services, marketing, etc. Credit to the MSME sector

Credit availability to MSMEs remains one of the major concerns. Although, the Government of India has taken several steps to increase the lending of this Sector, this remains even now the most difficult problem faced by the MSME. There is a cyclical nature of availability of funds to the MSME sector. This is determined by larger issues of international and domestic monetary policies, fiscal policies and other parameters beyond the pale of the sector. In times of a liquidity crunch, lack of liquidity in the financial system, even though caused by external factors, can quite dry up the flow of credit to the sector. The major dependence of the sector is working capital requirement which directly impacts the production cycle. As stated elsewhere, the tolerance threshold levels of this sector are very low. Hence, any liquidity crunch has an immediate and disastrous impact. During the last global economic crisis, this was seen to be a problem area, affecting the MSMEs for their day-today requirement of working capital. The MSME thus need to be insulated from such credit squeezes in times of adverse monetary conditions. Credit Guarantee Fund Scheme

The Government of India launched the Credit Guarantee Fund Scheme for Micro and Small Enterprises in August, 2000, with the objective of making available credit to micro and small enterprises (MSEs), particularly micro enterprises, for loans up to ` 100 lakh without collateral/third party guarantees. The Scheme is being operated through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) set up jointly by the Government of India and Small Industries Development Bank of India (SIDBI). The Scheme covers collateral free credit facility (term loan and/ or working capital) extended by eligible member lending institutions (MLIs) to new and existing micro and small enterprises up to ` 100 lakh per borrowing unit. The guarantee cover provided is up to 75% of the credit facility up to `50 lakh with an incremental guarantee of 50% of the credit facility above `50 lakh and up to `100 lakh (85% for loans up to ` 5 lakh provided to micro enterprises, 80% for MSEs owned/ operated by women and all loans to the North Eastern Region of India). As on November 30, 2011, there were 125 eligible lending institutions registered as MLIs of the Trust comprising 26 Public Sector Banks, 19 Private Sector Banks, 67 Regional Rural Banks (RRBs), 4 foreign banks and 9 other Institutions. Cumulatively 6,98,365 proposals have been approved for guarantee cover for a total sanctioned loan amount of ` 31,642.11 crore. In spite of various initiatives taken by the Government of India, banks and financial institutions, MSMEs face certain challenges. These problems relate to the issue of collaterals, cost of loans, delay in receivables, obsolete technology, marketing, etc. The MSME sector is still under banked to a large extent and barring certain public financial institutions and public sector banks, lending in this sector has traditionally been addressed by the unorganized players in most regions in India. Outstanding Bank Credit to Micro and Small Enterprises

As on last

reporting

Friday of

March

Public Sector

Banks

Private

Sector Banks

Foreign

Banks

All

Scheduled

Commercial

Banks

Percentage of

MSE Credit

to Net Bank

Credit

1 2 3 4 5 6

2005 67,800 8,592 6,907 83,498 8.8

2006 82,434 10,421 8,430 1,01,285 7.5

94

As on last

reporting

Friday of

March

Public Sector

Banks

Private

Sector Banks

Foreign

Banks

All

Scheduled

Commercial

Banks

Percentage of

MSE Credit

to Net Bank

Credit

(21.6) (21.3) (22.1) (21.3)

2007 1,02,550 13,136 11,637 1,27,323 7.2

(24.4) (26.1) (38.0) (25.7)

2008 1,51,137 46,912 15,489 2,13,538 11.6

(47.4) (257.1) (33.1) (67.7)

2009 1,91,408 46,656 18,063 2,56,127 11.3

(26.6) 0.0 (16.6) (19.9)

2010 2,78,398 64,534 21,069 3,64,011 13.4

(45.4) (38.3) (16.6) (42.1)

2011 3,76,625 87,857 21,461 4,85,943

(Provisional) (35.3) (36.1) (1.9) (33.5)

Source: Ministry of MSME Annual Report 2011-12 and Reserve Bank of India.

Note:

1. Figure in parentheses indicates year-on-year growth.

2. The high growth witnessed during 2008 is on account of re-classification of MSEs as per MSMED Act, 2006. Firstly,

the investment limit of small (manufacturing) was raised from `1 crore to `5 crore and small (services) was added to

include enterprises with investment limit between `10 lakh to `2 crore. Secondly, the coverage of service enterprises

was broadened to include small road and water transport operators, small business, professional and self-employed

and all other service enterprises as per definition provided under MSMED Act, 2006.

3. Vide circular RPCD.CO.Plan. BC.24/04.09.01/2009-10 dated September 18, 2009, retail trade (credit limit not

exceeding `20 lakh) has also been included under the ambit of MSE Sector.

Role of NBFCs in the MSME finance sector

Funding through banks requires extensive documentation; funding through unorganized sources is expensive. NBFC loans provide ideal mid way between bank lending and unorganized sector. The growth drivers for NBFCs engaged in MSME finance can be summarized as follows:

• Swift Loan Processing due to minimal documentation and flexibility of disbursement process;

• Customized repayment schedules, based on customer requirement at a lower interest rate than informal sources

• Huge untapped market and the lack of adequate penetration by banks

• Extensive network of branches which leads to better customer service [Source: Analysis of MSME Loan Markets for NBFCs – Frost & Sullivan – July 2011] Most of the loans given to MSME sectors by NBFCs have a tenure of 2-3 years and it is only since 2008 the market has witnessed significant size and growth. While loans to MSMEs are considered relatively risky (mostly unsecured and to under-banked community), there is no concrete data to validate it due to the young life of this market.

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MSME LOAN MARKET FOR NBFCS:

Source: Analysis of MSME Loan Markets for NBFCs – Frost & Sullivan – July 2011 NBFCs loan disbursals to MSMEs have grown at 75.8 % CAGR from Fiscal 2009 to Fiscal 2011. MSME loan market is expected to increase at a CAGR of over 50.0% from 2011 to 2013 and further continue growing at 30-35 per cent from 2013 to 2015. Thereafter growth in this segment is expected to stabilise post 2015 around 20 % per year for the next five years. [Source: Analysis of MSME Loan Markets for NBFCs – Frost & Sullivan – July 2011] Loans Against Gold

India is one of the largest markets for gold and accounts for around 10% of total world gold stock with an annual demand of around 700 tonnes. [Source: Gold Loans Market in India 2010 - IMaCS Research and Analytics].

Gold Loans have continued emerging as a key gold based financial product and as of Fiscal 2010, the organised gold loans market in India is estimated at around ` 350-400 billion with a compounded annual growth of around 40% during Fiscal 2002-2010. At this level, the gold loans portfolio translates into a marginal 1.2% of the value of total gold stock in India. The market is significantly under-penetrated and is expected to continue growing at the rate of 35-45% going forward. Gold loans in India have largely been concentrated in South India, which holds the largest proportion of gold portfolio and is typically more open to borrowing against gold as compared to consumers in Northern and Western India, which are averse to pledging their gold holdings - considered as a symbol of family pride and honour. As of Fiscal 2010, the gold loans market is largely concentrated between two categories of lenders; south based NBFCs specialised in gold loans accounting for around 32 % of total market and scheduled commercial banks holding another 58% of the market. The rest of the gold loans portfolio is constituted by several small co-operative banks. [Source: Gold Loans Market in

India 2010 - IMaCS Research and Analytics] Role of NBFCs in the Gold Loan Market Due to their ability to service the customer requirements, the specialised NBFCs command superior yields (20-24%) as compared to their banking competitors (at 8-12%). [Source: Gold Loans Market in India 2010 - IMaCS Research and

Analytics]. Even with attractive yields in the gold loans segment, banks typically lack adequate focus on the segment and the ability to provide flexible service offerings such as quick disbursal and low levels of documentation to meet the requirements of gold loans customers. Given these limitations, banks find it difficult to service the demand of non-agriculture client base which is largely un-organised and are hesitant of going through the processes and formalities of banks, even if it means getting loans at significantly lower rates of interest. [Source: Gold Loans Market in India 2010 -

IMaCS Research and Analytics] Several large pan-India NBFCs have marked their entry into the segment. These NBFCs are currently in a very cautious and preparatory mode and are expected to take a few years to ramp up their capabilities in gold loans segment. A few of these NBFCs have strong knowledge of local market conditions in South India, brand presence and an ability to replicate the business model and service offerings of large specialised NBFCs and are to be closely watched at in this space.

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[Source: Gold Loans Market in India 2010 - IMaCS Research and Analytics]

IMaCS Research and Analytics believe gold loans market holds immense potential in India and specialised NBFCs will continue to be a leading force in the segment over the next 4-5 years. These NBFCs are expected to be able to maintain their commanding position in the space, work aggressively to increase their branch presence and brand image, establish operations beyond South India and develop alternate product and fee based offerings for the large customer franchise. The following chart illustrates gold demand trends in India since 1991:

Lending against gold is one of the popular instruments based on gold and it works well with Indian rural household’s mindset, which typically view gold as an important saving instrument that is liquid and can be into converted into cash instantly to meet any urgent expense needs. The market is very well established in the Southern states of India, which account for the highest accumulated gold stock. Further, traditionally gold holders in Southern India are more open to accept and exercise the option of pledging gold as compared to other regions in the country which are reluctant to pledge jewellery or ornaments for borrowing money. Size and Potential of Gold Loans Market in India

The organised gold loans market in India is estimated at around ` 350-400 billion in Fiscal 2010. At this size, the organised gold loans market translates into 1.2% of the value of total gold stock in India and signifies a hugely under penetrated market with a large potential. The organised segment has registered a growth of 35-45% and is expected to continue growing at the same rate over the next few years and reach a portfolio size of ` 520-550 billion by Fiscal 2011. [Source: Gold Loans Market in India 2010 - IMaCS Research and Analytics] There are no official estimates available on the size of this market which is marked with the presence of numerous pawnbrokers, money lenders and cooperative societies operating on a local level. These players are quite active in rural areas of India and provide loans against jewellery to families at interest rates in excess of 30 %. These operators have a strong understanding of the local customer base and offer an advantage of immediate liquidity to customers in need, without requirements of any elaborate formalities and documentation. However, these players are largely un-regulated leaving the customers vulnerable to exploitation at the hands of these moneylenders and pawn-brokers. Going forward, we believe that as organised players, particularly NBFCs, become more aggressive in the gold loans market, a significant part of the gold loans should shift from the un-organised lenders to the organised lenders, thus fuelling a strong growth in the organised market. Further, the growth would be even higher if the customer attitude towards gold pledging becomes more positive aided by government regulations and aggressive promotion by banks and finance companies. [Source: Gold

Loans Market in India 2010 - IMaCS Research and Analytics]

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A typical Gold Loan customer expects high loan-to-value ratios, easy access, low levels of documentation and formalities, quick approval and disbursal of loans, lockers to ensure safety of their pledged gold and a team of expert valuers. Specialized NBFCs have created a niche in the Gold Loans capabilities by meeting these requirements of the typical gold loan customers, who require Gold Loans primarily to meet their urgent cash requirements[Source: Gold Loans Market in

India 2010 - IMaCS Research and Analytics]

NBFCs specializing in Gold Loans continue to perform strongly in the Gold Loans market and the overall statistics demonstrate that the relative share of traditional gold finance NBFCs in the market has not changed significantly over the last three years. In fiscal 2010, the Gold Loans market was largely concentrated between two categories of lenders: south Indian based NBFCs specializing in Gold Loans which held approximately 32% and SCBs which held 58% of the total market. The rest of the Gold Loans portfolio was held by several small co-operative banks. [Source: Gold Loans Market

in India 2010 - IMaCS Research and Analytics] Outlook of the Gold Loans Market in India

As the market is currently under-penetrated, it is expected that the Gold Loans market will offer enough opportunities for portfolio expansion and retain attractive margins for all existing specialised NBFCs, banks and new entrants [Source:

Gold Loans Market in India 2010 - IMaCS Research and Analytics] The branch expansion and marketing initiatives of various specialized NBFCs are anticipated to give a strong boost to the acceptability of gold loans and lead to further growth in the gold loans market. [Source: Gold Loans Market in India 2010

- IMaCS Research and Analytics]

NBFCs in the Indian gold loans market

Source: Gold Loans Market in India 2010 - IMaCS Research and Analytics

In addition, it is anticipated that the large public sector banks in southern India will continue to be amongst the leading lenders, but considering the various regulatory and operational processes, it would be challenging for the banks to match the flexible service regime of the specialised NBFCs (Source: Gold Loans Market in India 2010 - IMaCS Research and

Analytics). New NBFC entrants in the market are currently in a cautious preparatory mode to enter the Gold Loans market but it will take some time for these NBFCs to emerge as formidable competitors to specialized existing NBFCs. [Source: Gold

Loans Market in India 2010 - IMaCS Research and Analytics] This is because it will take time for these new NBFCs to build the requisite focus, infrastructure (valuers, lockers, etc,) and branch network (Source: IMaCS Industry Report 2009). Specialized NBFCs are expected to continue to hold their share of the Gold Loans market with their ability to provide superior and niche servicing capabilities to their existing and future customers. The following factors will be crucial in contributing to the continued growth of specialized NBFCs:

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• ability to maintain their strong hold in the southern India markets in terms of reach and customer services;

• strengthening brand image in the target customer segments with a special emphasis on markets beyond the southern region in India;

• developing related products such as education loans and offering fee based services such as money transfers or financial products distribution; and

• capturing a strong market position in other regions of India, including in the northern and western regions

Source: Gold Loans Market in India 2010 - IMaCS Research and Analytics

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OUR BUSINESS

Frost & Sullivan India Private Limited has taken due care and caution in preparing the report titled “Analysis of MSME

Loan Markets for NBFCs – July 2011”. Information has been obtained by Frost & Sullivan India Private Limited from

sources which it considers reliable. However, Frost & Sullivan India Private Limited does not guarantee the accuracy,

adequacy or completeness of any information and is not responsible for any errors or omissions or for the results

obtained from the use of such information. No part of the said report may be published / reproduced in any form without

Frost & Sullivan India Private Limited’s prior written approval. Frost & Sullivan India Private Limited is not liable for

investment decisions which may be based on the views expressed in the said report.

Overview

Our Company is a deposit-accepting NBFC registered with RBI, offering (i) financing for two wheelers, appliances and other commercial goods, (“Product Finance”), (ii) pre-owned and new vehicle loans, (iii) personal loans, (iv) loans against gold including small enterprise segment loans collateralized by gold, and (v) loans to the small enterprise finance segment. Our current lines of business and organisational structure are as follows: * loans against gold is inclusive of small enterprises finance collateralized by gold.

According to the Frost and Sullivan report titled “Analysis of MSME Loan Markets for NBFCs – July 2011”, our Company is the largest small enterprise finance company in India. In the small loan segment (loans of `1 lacs -10 lacs) our Company has a dominant share of 95%. Our Company also leads the total Indian micro, small and medium enterprises market with 53 % share. Our Company was established in 1986 and we have a track record of more than twenty five years in the financial services sector in India. Since 2005 we have focused on the retail financing segment. Our Company has been registered as a deposit accepting NBFC with the RBI since September 4, 2000 under Section 45IA of the Reserve Bank of India Act, 1934. We are a part of the Shriram Group companies, which has a strong presence in financial services in India, including commercial vehicle financing, consumer finance, life and general insurance, stock broking, chit funds and distribution of financial products such as life and general insurance products and mutual fund products, as well as a growing presence in other businesses such as property development, engineering projects and information technology. We leverage on the Shriram Group’s network to reach out to our prospective customers and our focus has been in maximizing our association with the “Shriram” brand name and the synergies offered by the infrastructure, of other entities in the Shriram Group. Our customer base over the years has significantly comprised of customers of other entities in the Shriram Group. The large customer bases and wide-spread network of business outlets of entities such as, Shriram

Retail Loans Small Enterprise Finance

Loan against Gold* Personal Loan Auto Loans Product Finance

Retail and small Business Loans Financing Model

100

Transport Finance Company Limited, (one of the largest organized asset financing NBFCs in India), and entities operating under the “Shriram Chits” brand name, has continued to provide us with a large platform of target customers. Over the last 26 years our Company has established a pan-India presence, with 575 branches and 91 other business outlets as at June 30, 2012, across 17 states in India, with a significant presence in south India. As on June 30, 2012, our total employee strength was 3,672. We operate in a ‘hub-and spoke’ business model, where responsibilities from loan origination to recoveries of loans are vested in each of our business outlets, under the general supervision and control of our head office in Chennai. Our business outlet networks are interconnected and each business outlet is connected to our head office through an ERP platform developed by Take Solution Limited, Chennai. We have demonstrated consistent growth in our business and in our profitability. Our Assets Under Management have grown by a compounded annual growth rate (CAGR), of 41.30% from ` 3,36,889.78 lacs as at March 31, 2008 to ` 13,43,103.98 lacs as at March 31, 2012. Our capital adequacy ratio as at March 31, 2012 computed on the basis of applicable RBI requirements was 17.40 %, compared to the RBI stipulated minimum requirement of 15.00%. Our Tier I capital as at March 31, 2012 was ` 1, 56,514.87 lacs. Our Gross NPAs as a percentage of Total Loan Assets were 1.55 % as at March 31, 2012. Our Net NPAs as a percentage of Net Loan Assets was 0.38 % as at March 31, 2012. Our total income increased from ` 62,399.78 lacs in fiscal 2008 to ` 2,05,641.43 lacs in fiscal 2012 at a CAGR of 34.74 %. Our net profit after tax increased from ` 8,763.50 lacs in fiscal 2008 to ` 34,253.12 lacs in fiscal 2012, at a CAGR of 40.61 %. A summary of our assets under management, net non performing assets, total income and net profit after tax for the corresponding periods specified below are as follows:

`̀̀̀ in lacs

Particulars As at March

31, 2008

As at March 31,

2009

As at March

31, 2010

As at March 31,

2011

As at March

31, 2012

Assets Under Management

336,889.78 462,950.89 521,550.18 799,804.88 13,43,103.98

Net Non performing assets

2,495.70 3,590.35 3,322.73 2,982.76 4,079.56

Particulars For the

Financial Year

Ended March

31, 2008

For the

Financial Year

Ended March

31, 2009

For the

Financial Year

ended March

31, 2010

For the

Financial year

ended March

31, 2011

For the

Financial year

ended March

31, 2012

Total Income 62,399.78 93,502.06 1,10,790.49 132,344.65 2,05,641.43

Net Profit after Tax 8,763.50 11,700.77 19,425.86 24,058.85 34,253.12

Our Strengths We believe that the following are our key strengths: Diversified Portfolio of Products

Our Company’s product portfolio comprises (i) Product Finance loans, (ii) pre-owned and new vehicles loans, (iii) personal loans, (iv) loans against gold including small enterprise segment loans collateralized by gold, and (v) loans to small enterprise finance segment. Each of our products differs in terms of the average tenor, average yield, average interest rates and average size of loan. As on March 31, 2012 approximately 11.60 % of our Assets Under Management comprised product finance loans, 18.33 % of our Assets Under Management comprised vehicle loans, 5.23 % of our Assets Under Management comprised personal loans, 15.46 % of our Assets Under Management comprised loans against gold, 19.99 % of Asset Under Management comprised loans to the small enterprises finance segment collateralized by gold, and 29.39 % of our Assets Under Management comprised loans to small enterprise finance segment. Our diverse revenue streams reduce our dependence on any particular product, thus enabling us to spread and mitigate our risk exposure to any particular industry, business or customer segment.

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Pan-India Presence, Strong Foot-hold in Southern India and Synergies with Other Shriram Group Entities

As at June 30, 2012, we had 575 branches and 91 other business outlets across 17 states in India, with a significant presence in south India. As on June 30, 2012, our total employee strength was 3,672. We have a strong foothold in south India. We leverage on the Shriram Group’s ecosystem to solicit our customers and our focus has been in maximizing our association with the “Shriram” brand name and the synergies offered by the infrastructure, of other entities in the Shriram Group. Our customer base over the years has significantly comprised of customers of other entities in the Shriram Group. The large customer bases and wide-spread network of business outlets of entities such as, Shriram Transport Finance Company Limited, (one of the largest organized asset financing NBFCs in India), and entities operating under the “Shriram Chits” brand name, has continued to provide us with a large platform of target customers. We believe the under-banked community, especially the small enterprise finance segment often do not have sufficient movable and/or immovable property to provide as security or collateral for loans. Our relationship and knowledge of customers’ requirements enables us to minimize our risks while extending loans to such under-banked communities. For instance, loans provided to chit depositors of Shriram Chits, are partly or entirely secured by the deposits made with Shriram Chits. Shriram Chits has several years of experience of collecting chit deposits from self-employed professionals, wholesale/retail dealers, merchants, builders, manufacturers and small and medium scale business operators, which provides us a with an extensive database of potential borrowers, specially for our loans to the small enterprise finance segment. Hub and Spoke Business Model with Efficient Credit Policies and Procedures

We operate in a ‘hub-and spoke’ business model, where the responsibilities from loan origination to recoveries of loans are vested in each of our business outlets, under the general supervision and control of our head office in Chennai. Our business outlet networks are interconnected and each business outlet is connected to our head office through an ERP platform developed by Take Solution Limited, Chennai. The ERP platform enables our management to monitor each loan right from its origination to final closure of accounts. Our head office and senior management is primarily responsible for the broad policy formulation for our businesses. However, the decision making process in connection with loans is decentralized and majorly vested in our business outlets, which ensures speedy credit approvals and more efficient turn around times in processing loans. We focus on closely monitoring our assets and borrowers through our officials at each business outlet. Our branch officials develop relationships with our target customer base, which enables us to capitalize on local knowledge. We follow stringent credit policies, including limits on customer exposure, to ensure the asset quality of our loans and the security provided for such loans. Further, we have nurtured a culture of accountability by making our product executives responsible for loan administration and monitoring as well as recovery of the loans they originate. We have a dedicated team of officials at each business outlet who are responsible for (i) loan origination, (ii) credit evaluation, (iii) pre-lending field investigations where our officials personally visit our prospective customers at their homes or offices, and (v) post lending credit appraisal. The team of officials responsible for origination of a loan is also responsible for the timely servicing of loans, recoveries, and monitoring the performance of each loan from origination to closure of the loan. We offer incentivized salary structures to such officials, where their incentives are linked to recovery of installments of the principal amount and interest on the loans. We believe our efficient credit policies, credit approval procedures, credit delivery process and relationship-based loan administration and monitoring methodology have aided in increasing our customer loyalty and earn repeat business and customer referrals. Our stringent credit policies and relationship based model has helped us maintain relatively low NPA levels. Our Gross NPAs as a percentage of Total Loan Assets were 1.55 % as at March 31, 2012. Our Net NPAs as a percentage of Net Loan Assets was 0.38 % as at March 31, 2012.

Access to a range of cost effective funding sources

We fund our capital requirements through a variety of sources. Our fund requirements are currently predominantly sourced through term loans from banks, issue of redeemable non-convertible debentures on a private placement basis, and cash credit from banks including working capital loans. We access funds from a number of credit providers, including nationalized banks, private Indian banks and foreign banks, and our track record of prompt debt servicing has allowed us to establish and maintain strong relationships with these financial institutions. We have also placed commercial paper, as and when required in the past. As a deposit-taking NBFC, we are also able to mobilize retail fixed deposits at competitive

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rates. We have also raised subordinated loans eligible for Tier II capital. We also undertake securitization/assignment transactions to increase the efficient use of our capital and as a cost effective source of funds. In relation to our long-term debt instruments, we currently have ratings of ‘CARE AA’ from CARE RATINGS,‘ CRISIL AA-/STABLE’ from CRISIL RATINGS and ‘FITCH AA- (IND)/STABLE’ from FITCH RATINGS. In relation to our short-term debt instruments, we have also received ratings of “[CARE A1+]” from CARE RATINGS, “CRISIL A1+” from CRISIL RATINGS, and “FITCH A1+ (IND)” from FITCH RATINGS. Our fixed deposit programme has been rated as ‘CARE AA (FD)’ by CARE RATINGS, FAA/STABLE BY CRISIL RATINGS and ‘FITCH tAA- (IND)’ by FITCH RATINGS. The NCDs proposed to be issued under this Issue have been rated ‘CARE AA’ by CARE for an amount of upto ` 50,000 lacs vide its letter dated August 10, 2012, and ‘CRISIL AA-/Stable’ by CRISIL for an amount of upto ` 50,000 lacs vide its letter dated August 14, 2012. The rating of the NCDs by CARE indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The rating of NCDs by CRISIL indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. We believe that we have been able to achieve a relatively stable cost of funds despite the difficult conditions in the global and Indian economy and the resultant reduced liquidity and an increase in interest rates, primarily due to our improved credit ratings, (as evidenced by the recent upgrade in our ratings by Fitch and CARE). We believe we are able to borrow from a range of sources at competitive rates. Experienced senior management team Our Board consists of 10 Directors, (including representatives of the TPG Group), with extensive experience in the financial services sectors. Our senior and middle management personnel have significant experience and in-depth industry knowledge and expertise. Our management promotes a result-oriented culture that rewards our employees on the basis of merit. In order to strengthen our credit appraisal and risk management systems, and to develop and implement our credit policies, we have hired a number of senior managers who have extensive experience in the Indian banking and financial services sector and in specialized finance firms providing loans to retail customers. We believe that the in-depth industry knowledge and loyalty of our management and professionals provide us with a distinct competitive advantage. Strategy

Our key strategic priorities are as follows:

Further expand operations by growing our business outlet network and introducing full range of products in all

business outlets

We intend to continue to strategically expand our operations in target markets establishing additional business outlets. Our customer origination and servicing efforts strategically focus on building long term relationships with our customers and address specific issues and local business requirements of potential customers in a particular region. We have a strong concentration of our business in south India with 249 of our 575 branches as on June 30, 2012, located in the states of Tamil Nadu, Andhra Pradesh and Karnataka. 86.80 % of our Assets Under Management as on March 31, 2012 were represented by loans originated in the states of Tamil Nadu, Karnataka and Andhra Pradesh. However, we have continued to make efforts to expand and penetrate into other regions in India. Currently, we have succeeded in opening business outlets in 17 different states in India. We propose to target establishing our operations through new business outlets in cities and towns where we historically had relatively limited operations, such as in eastern and northern parts of India, and to further consolidate our position and operations in western and southern parts of India. Our focus would be to typically target Tier II and Tier III cities, where we believe that demand for our products will grow steadily in the near future. As an internal policy, we typically introduce our products in a particular location only after having evaluated the regional market and the demand for each individual product. Currently, not all of our business outlets offer our full range of products. As a part of our strategy we target to gradually introduce our entire range of product offerings, namely (i) Product Finance loans, (ii) pre-owned and new vehicles loans, (iii) personal loans, (iv) loans against gold including small enterprise segment loans collateralized by gold, and (v) small enterprise finance segment at each of our existing business outlets across India.

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Continue growth in the Loans to Small Enterprises Finance Segment

Our Company started offering customized loans to small enterprises finance segment in 2006 and has continually focused on expanding our customer base for this product since then. We see a significant opportunity for our Company to expand our customer base in small enterprise finance segment. According to the Frost and Sullivan report titled “Analysis of MSME Loan Markets for NBFCs – July 2011”, our Company is the largest small enterprise finance company in India. In the small loan segment (loans of `1 lacs -10 lacs) our Company has a dominant share of 95 %. Our Company also leads the total Indian micro, small and medium enterprises market with 53 % share. As a strategy, we will continue to leverage on the infrastructure provided by entities operating under the ‘Shriram Chits’ brand name. Shriram Chits has several years of experience of collecting chit deposits from self-employed professionals, wholesale/retail dealers, merchants, builders, manufacturers and small and medium scale business operators, which provides us a with an extensive database of potential borrowers, specially for our loans to the small enterprises segment. We also propose to extend such loans to our existing customer base for our other products and propose to introduce small enterprises segment loans in all our current business outlets as well as in new business outlets that we open in the future. Continue to implement advanced processes and systems We have invested in our technology systems and processes to create a stronger organization and ensure good management of customer credit quality. Our information technology strategy is designed to increase our operational and managerial efficiency. We aim to increasingly use technology in streamlining our credit approval, administration and monitoring processes to meet customer requirements on a real-time basis. We continue to implement technology led processing systems to make our appraisal and collection processes more efficient, facilitate rapid delivery of credit to our customers and augment the benefits of our relationship based approach. We also believe that deploying strong technology systems will enable us to respond to market opportunities and challenges swiftly, improve the quality of services to our customers, and improve our risk management capabilities. Grow our Subsidiary’s Housing Finance Business

Our Company’s subsidiary, namely Shriram Housing Finance Limited recently received a certificate of registration dated August 4, 2011 from the National Housing Bank, to operate as a housing finance company and has commenced operations in the last financial year pursuant thereto. We believe that offering housing finance will help us expand our product portfolio and we are well positioned to enter into this business through our established infrastructure, our existing customer base as well as through leveraging our association with other entities in the Shriram Group. As a part of its strategy, Shriram Housing Finance Limited typically targets middle-income customers in semi-urban locations.

Our Company’s Products Product Finance Loan

Our product finance loans comprise of two wheeler loans, loans for purchase of electrical appliances and other white and brown goods. The average tenor for our Product Finance loans is typically 24 months and the average yield typically ranges between 24-26%. As on March 31, 2012, the Assets Under Management for Product Finance loans `1,55,865 lacs, which represented 11.60 % of our total Assets under Management as at that date; . Pre-owned and New Vehicle Loans

Our Company offers a variety of loans to finance the purchase of new and pre-owned passenger and commercial vehicles includes three wheelers, four wheelers, used and new cars. Our financing products are principally targeted at the financing of new passenger and commercial vehicles, although we also provide financing for pre-owned passenger and commercial vehicles. Our Company’s executives are stationed at the showrooms of various passenger and commercial vehicle dealers and are responsible right from bringing in the customer, credit verification and loan origination to recovery of the loan. The average tenor for our vehicle loans is typically 30 months and the average yield typically ranges between 22-24%. As on March 31, 2012, the Assets Under Management for vehicle loans was ` 2,46,154 lacs, which represented 18.33 % of our total Assets Under Management as at that date.

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Personal Loans

We provide personal loans to our existing and old customers as well as to customers of other Shriram Group entities. Our officials reach out directly to our personal loan customers and visit them at their doorstep to carry out loan origination and credit evaluation, so as to ensure speedy processing of loans. We target customer segments who do not have easy access to bank or other modes of financing for immediate short or medium term funding requirements, within reasonable time or at all. The average tenor for such loans is typically 30 months with average yields typically ranging between 24-27%. As on March 31, 2012, the Assets Under Management for personal loans was ` 70,196 lacs, which represented 5.23 % of our total Assets Under Management as at that date.

Loans against Gold

Since 2007 we have been providing personal and business loans secured by gold jewellery and ornaments, primarily to individuals who possess gold jewellery but do not have access to formal credit within a reasonable time, or to whom credit may not be available at all, to meet their short-term requirements. Our gold loans are for an average tenure of 4 months and provide a typical average yield of 18-20%. We have also recently forayed into providing loans to the small enterprises segment which are collateralized by gold, which we believe, reduces the processing time for availing loans since gold is provided as security for such loans. We propose to further concentrate, promote and expand operations in connection with such loans collateralized by gold. The target customer segment for this product includes both small entrepreneurs (first time borrowers for our Company) as well as financiers who would require funding for shorter duration. These loans are provided against gold collaterals. The loan value is determined based on the assessed value of gold as in the case of retail gold loan. However, loan amounts per individual borrower could be higher than the retail loans against gold. Similar to small enterprises finance segment, our Company monitors exposure per borrower for the above product. As on March 31, 2012, the Assets Under Management for loans against gold was ` 4,76,088 lacs, which represented 34.45 % (includes 19.99 % of Asset Under Management for loans to the small enterprises finance collateralized by gold) of our total Assets Under Management as at that date.

Small Enterprise Finance Segment

Our Company started offering customized loans to small enterprises segment in 2006 and we have continually focused on expanding our customer base for this product since then. According to the Frost and Sullivan report titled “Analysis of MSME Loan Markets for NBFCs – July 2011”, our Company is the largest small enterprise finance company in India. In the small loan segment (loans of `1 lacs -10 lacs) our Company has a dominant share of 95 %. Our Company also leads the total Indian micro, small and medium enterprises market with 53 % share. Currently, our Company offers business loans to the small enterprises segment for an average tenor of 36 months and an average yield of 22-24%. Our target customers in the small enterprises segment typically comprises self-employed professionals, wholesale and retail dealers, merchants, builders, small and medium scale manufacturing concerns, catering services, tour operators, etc. Our small enterprises segment is typically customized to suit the requirements of our customers after having assessed and understood their business model. As on March 31, 2012, the Assets Under Management for loans to the small enterprises finance segment was ` 3,94,801 lacs, which represented 29.39% of our total Assets Under Management as at that date. We believe that the small enterprises finance segment is still under banked to a large extent and barring certain public financial institutions and public sector banks, lending in this sector has traditionally been addressed by the unorganized players in most regions in India. Accordingly, we see a significant opportunity for our Company to expand our customer base in small enterprises segment. The Shriram Group, particularly Shriram Chits has a large number of customers under the small enterprises segment. Our Company does business with various vendors and dealers of Shriram Group. We plan to tap this potential small enterprises segment and increase the size of our small enterprises segment portfolio by continuing to offer customized products to our target customers.

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Our Company’s Operations

Business Outlet Network

As at June 30, 2012, we had a wide network of 575 branches and 91 other business outlets across India and 3,672 employees, across 17 states in India. We have a strong concentration of our business in south India in the states of Tamil Nadu, Andhra Pradesh and Karnataka. We propose to target establishing our operations through new business outlets in cities and towns where we historically had relatively limited operations, such as in eastern and northern parts of India, and to further consolidate our position and operations in western and southern parts of India. As an internal policy, we typically introduce our products in a particular location only after having evaluated the regional market and the demand for each individual product. Currently, not all of our business outlets offer our full range of products. As a part of our strategy we target to gradually introduce our entire range of product offerings at each of our existing business outlets across India. A typical business outlet comprises 3 to 6 employees, including the branch manager. As at March 31, 2012, all of our business outlets were connected to servers at our corporate office to enable real time information with respect to our loan disbursement and recovery administration. Our customer origination efforts strategically focus on building long term relationships with our customers, address specific issues and local business requirements of potential customers in a specific region.

Strategic Partnerships Since the retail financing and Small Enterprise Finance Segment continue to be influenced by the unorganized lending sector in semi-urban regions, we from time to time, enter into agreements and memorandum of understanding with local private financiers to cater to such markets. Currently, we have entered into a memorandum of understanding dated January 2, 2010 with M/s. Hari & Company Investment Madras Private Limited, (“HAC”), whereby HAC identifies the prospective customers desirous of availing finance, verifies the credit worthiness of such customers, evaluates the loan proposals, disburses the loan amounts, obtains all necessary documentation in connection with the loan proposal, collects installments and penalties for all customers, assists in creation of the charge in connection with the loan and follows up on recovery of loan amounts, repossession of assets and/or enforcement of the security interest on such loans. Our Company in turn provides the necessary funds for financing the target customers and maintains the policy and procedures and banking transactions in connection with such loans. The aforesaid memorandum of understanding is valid for a period of five years. HAC is entitled to an incentivized revenue sharing based payment in connection with each loan originated and serviced by HAC. Customer Evaluation, Credit Appraisal and Disbursement Initial Evaluation

Due to our customer profile, in addition to a credit evaluation of the borrower, we rely on guarantor arrangements, the availability of security, referrals from existing relationships and close client relationships in order to manage our asset quality. All customer origination and evaluation, loan disbursement, loan administration and monitoring as well as loan recovery processes are carried out by our executives at each business outlet, who are responsible for (i) loan origination, (ii) credit evaluation, (iii) pre-lending field investigations and (iv) post lending credit appraisal. The team of officials responsible for origination of a loan is also responsible for the timely servicing of loans, recoveries, and monitoring performance of each loan from origination to closure of the loan. We offer incentivized salary structures to such officials where their incentives are directly linked to recovery of installments of the principal amount and interest on the loans. We do not utilize or engage direct selling or other marketing and distribution agents or appraisers to carry out these processes. We follow certain procedures for the evaluation of the creditworthiness of potential borrowers. The credit appraisal process is as follows:

When a customer is identified and the requisite information for a financing proposal is received, a branch manager or our branch executive personally visits such customer at their homes and/or place of business to assess the loan requirements and creditworthiness of such customer. We also require an applicant to provide appropriate references from existing or former customers. The proposal form requires the customer to provide information on the age, address, employment

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details and annual income of the customer, as well as information on outstanding loans. The applicant is required to provide proof of identification and residence for verification purposes. Generally, where the customer is unable to provide sufficient immovable or movable property to secure the entire value of the loan, the applicant is also required to furnish a guarantee from an existing or a former customer. Detailed information relating to such guarantor is also required to be provided. Credit policies

We follow stringent credit policies to ensure the asset quality of our loans and the security provided for such loans. Any deviation from such credit policies in connection with a loan application requires prior approval from our state/regional head office. In connection with a customer who is also an existing customer of ‘Shriram Chits’ we generally create a lien over the chit deposits of such customer. If the value of the chit deposits is in-sufficient to cover the entire loan amount, we generally also require immovable or movable property to be provided for the remaining value of the loan amount. In cases where the customer is unable to provide such immovable or movable property as security, the applicant is also required to furnish a guarantee from an existing or a former customer. For our two-wheeler and vehicle loans, the two-wheeler/vehicle is hypothecated in favour of our Company for the tenure of the loan. From time to time, our management lays down loan approval parameters which are linked to the value of the underlying security and/or collateral. The borrower is charged prepayment charges in the event of termination of the loan by prepayment. Security received from the borrower, including unutilized post-dated cheques, if any, is released on repayment of all dues or on collection of the entire outstanding loan amount, provided no other existing right or lien for any other claim exists against the borrower.

Approval Process

After having verified the credentials of an applicant, our branch executive is responsible for signaling any early warning signals to the relevant branch manager and the disbursement team. The branch manager evaluates the loan proposal based on supporting documentation and various other factors. The primary criterion for approval of a loan proposal is based on the past reference of the prospective customer either from an existing or a past customer of our Company or of another Shriram Group entity, report of our branch executive and guarantee if required furnished by the customer. In addition, our branch managers may also consider other factors in the approval process such as the location and the time period of residence, past repayment record and income sources. The branch manager is authorized to approve a loan if the proposal meets the criteria established for the approval of a loan. The applicant is intimated of the outcome of the approval process, as well as the amount of loan approved, the terms and conditions of such financing, including the rate of interest (annualized) and the application of such interest during the tenure of the loan. Disbursement

Margin money and other charges are collected prior to loan disbursements. The disbursing officer retains evidence of the applicant’s acceptance of the terms and conditions of the loan as part of the loan documentation. For vehicle loans and two-wheeler loans, a chassis print of the vehicle is also obtained and maintained in the loan file. The relevant Regional Transport Office (RTO) endorsement forms are also required to be executed by the borrower prior to the disbursement of the loan. Prior to the loan disbursement, the loan officer ensures that a Know Your Customer checklist is completed by the applicant. The loan officer verifies such information provided and includes the records in the relevant loan file. The loan officer is also required to ensure that the contents of the loan documents are explained in detail to the borrower either in English or in the local language of the borrower and a statement to such effect is included as part of the loan documentation. The borrower is provided with a copy of the loan documents executed by him. Although our customers have the option of making payments by cash or cheque, we may require the applicant to submit post-dated cheques covering an initial period prior to any loan disbursement. Loan administration and monitoring

The borrower (and guarantor, if required) execute(s) the security creation documents and the loan agreement setting out the terms of the loan. A loan repayment schedule is attached as a schedule to the loan agreement, which generally sets out

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periodical repayment terms. Repayments are made in periodical installments. Loans disbursed are recovered from the customer in accordance with the loan terms and conditions agreed with the customer. We track loan repayment schedules of our customers, on a monthly basis, based on the outstanding tenure of the loans, the number of installments due and defaults committed, if any. This data is analyzed based on the loans disbursed and location of the customer. The official originating the loan is responsible for monitoring the quality of the underlying security and/or collateral and timely repayment of loans. Typically, the loan official’s remuneration is incentivized and linked to the recovery of installments from the customer. Our management information systems department operates out of our head office and monitors compliance with the terms and conditions for credit facilities through our ERP system. We monitor the completeness of documentation, creation of security etc. through regular visits to the business outlets by our regional as well as head office executives and internal auditors. All borrower accounts are reviewed at least once a year, with a higher frequency of reviews for the larger exposures and delinquent borrowers. The branch managers review collections regularly and personally contact borrowers that have defaulted on their loan payments. Branch managers are assisted by the officers responsible for loan origination, who are also responsible for the collection of installments from each borrower serviced by them. We believe that close monitoring of debt servicing efficiency enables us to maintain high recovery ratios. Collection and Recovery

We believe that our loan recovery procedure is particularly well-suited to our target market for each of our products. The entire collection operation is administered in-house through our branch officials and we do not outsource loan recovery and collection operations. In case of default, the reasons for the default are identified by the officer responsible for each loan and appropriate action is initiated, such as requiring partial repayment and/or seeking additional guarantees or collateral. In the event of a default on three loan installments, the relevant officer is required to make a personal visit to the borrower to determine the gravity of the loan recovery problem. We may initiate the process for repossession of the underlying asset and/or enforcement of the charge if required. Our officers are trained to repossess assets and/or enforce the security interest and no external agency is involved in such processes. Repossessed assets are held at designated secured facilities for eventual disposal. The notice to the customer specifies the outstanding amount to be paid within a specified period, failing which the asset may be disposed of and/or the charge enforced. In the event there is a short fall in the recovery of the outstanding amount from enforcement of the charge, legal proceedings against the customer may be initiated. Asset Quality We maintain our asset quality through the establishment of prudent credit norms, the application of stringent credit evaluation tools, limiting customer and security exposure and direct interaction with customers. In addition to our credit evaluation and recovery mechanism, our asset-backed lending model and adequate asset cover has helped maintain low gross and net NPA levels. Our historical Assets Under Management for each segment and Net NPAs of our business have been as follows:

` In Lacs

Particulars As at March 31, 2008

As at March 31, 2009

As at March 31, 2010

As at March 31, 2011

As at March 31, 2012

Assets Under Management for Product Finance Loans

1,38,519.97 98,219.95 79,422.24 1,16,584.39 1,55,865

Assets Under Management for Vehicle Loans

1,01,631.66 2,14,126.71 2,07,372.26 1,93,530.59 2,46,154

Assets Under Management for Personal Loans

37,814.52 39,755.51 49,785.79 71,548.15 70,196

Assets Under 13,436.18 34,751.82 85,478.36 2,20,472.81 4,76,088

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` In Lacs

Particulars As at March

31, 2008

As at March 31,

2009

As at March

31, 2010

As at March 31,

2011

As at March

31, 2012

Management for Loans Against Gold

Assets Under Management for Small Enterprise Finance Segment Loans

4,35,85.85 70,294.50 99,197.48 1,95,329.92 394801

Other Assets Under Management

1,901.60 5,802.41 294.05 2,339.01 Nil

Total Assets Under

Management 3,36,889.78 4,62,950.89 5,21,550.18 7,99,804.88 13,43,104

Net Non performing

assets

2,495.70 3,590.35 3,322.73 2,982.76 4,079.56

Classification of Assets

The Prudential Norms Directions, 2007, read with the NBFC Acceptance of Public Deposits Directions, 1998, as amended, prescribed by the RBI, among other matters, require us to observe the classification of our asset; treatment of NPAs; and provisioning against NPAs. An asset is termed as an NPA if interest or installments of the principal amount remain overdue for a period of 180 days or more. Each deposit-accepting NBFC is required to classify its lease/hire purchase assets, loans, advances and other forms of credit into the following classes, namely: Standard assets: An asset in respect of which no default in repayment of principal or payment of interest is perceived and which does not disclose any problem nor carry more than normal risk attached to the business. Sub-standard assets: An asset will be classified as an NPA for a period not exceeding 18 months or where the terms of the agreement regarding interest and / or principal have been renegotiated or rescheduled after commencement of operations, until the expiry of one year of satisfactory performance under the renegotiated or rescheduled terms. Doubtful assets: An asset which remains a sub-standard asset for a period exceeding 18 months. Loss assets (a) An asset which has been identified as loss asset by the NBFC or its internal or external auditor or by the RBI during the inspection of the NBFC, to the extent that it is not written off by the NBFC; and (b) an asset which is adversely affected by a potential threat of non-recoverability due to either erosion in the value of security or non availability of security or due to any fraudulent act or omission on the part of the borrower. For further information on the Prudential Norms Directions, 2007, refer to the section titled “Regulations and Policies” beginning on page 226 this Draft Prospectus. Our Audit Committee has constituted a policy for making provisions in excess of the amounts prescribed by RBI and we may make further provisions if we determine that it is prudent for a known and identified risk. Based on our policy our provisions as at March 31, 2012 stood at ` 12,624.43 lacs as compared to the RBI required minimum provision of ` 7,245.14 lacs. The following table sets forth, as at the dates indicated, data regarding our NPAs:

Period Gross NPA (`

in lacs)

Net NPA (` in

lacs)

Total Loan

Assets (` in

lacs)

Net Loan

Assets (` in

lacs)

% of Gross

NPA to Total

Loan Assets

% of Net NPA

to Net Loan

Assets

March 31, 2008

4,228.66 2,495.70 274,857.78 273,124.82 1.54 0.91

March 31, 7,784.03 3,590.35 375,395.10 371,201.42 2.07 0.97

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Period Gross NPA (`

in lacs)

Net NPA (` in

lacs)

Total Loan

Assets (` in

lacs)

Net Loan

Assets (` in

lacs)

% of Gross

NPA to Total

Loan Assets

% of Net NPA

to Net Loan

Assets

2009

March 31, 2010

10,753.30 3,322.73 473,135.02 465,704.45 2.27 0.71

March 31, 2011

12,966.18 2,982.76 698,919.09 688,935.67 1.86 0.43

March 31, 2012

16,703.98 4,079.56 10,80,607.53 10,67,983.11 1.55 0.38

Our Gross NPAs as a percentage of Total Loan Assets were 1.55 % as at March 31, 2012. Our Net NPAs as a percentage of Net Loan Assets was 0.38 % as at March 31, 2012. We believe that our eventual write-offs are relatively low because of our relationship based customer origination and customer support, prudent loan approval processes, including adequate collateral being obtained and our ability to realize such collateral in a timely manner. Funding Sources

We have expanded our sources of funds in order to reduce our funding costs, protect interest margins and maintain a diverse funding portfolio. This will enable us to achieve funding stability and liquidity. Our sources of funding comprise term loans including term loans from banks and financial institutions, cash credit from banks, redeemable non-convertible debentures on a private placement basis, subordinated bonds, short term commercial paper, public deposits, and inter-corporate deposits. Borrowings

The following table sets forth the principal components of our secured loans as at the dates indicated:

As at March 31

` in lacs

SECURED LOANS 2008 2009 2010 2011 2012

Redeemable non-convertible debentures

69,106.39 127,741.10 154,073.77 219,877.64 3,54,414.93

Term loans:

- Term loans from banks 109,693.02 143,562.74 104,634.17 295,677.28 3,83,915.15 - Term loans from financial institutions, and corporate

16,575.00 9,426.40 9,530.00 6,500.00 16,500.00

Cash credit from banks including working capital demand loans

67,420.99 109,715.19 145,372.61 134,896.09 1,21,781.03

The following table sets forth the principal components of our unsecured loans as at the dates indicated:

As at March 31,

`̀̀̀ in lacs

UNSECURED LOANS 2008 2009 2010 2011 2012

Fixed deposits 165.67 112.80 100.74 55.10 22.21 Inter-corporate deposits 925.00 Nil Nil Nil 2,000.00 Subordinated debt 28,036.78 41,718.53 53,002.95 53,272.33 83,574.01 Redeemable non-convertible debentures 3,500.00 Nil Nil Nil Nil Commercial paper 4,500.00 Nil Nil 22,500 Nil

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As at March 31,

`̀̀̀ in lacs

UNSECURED LOANS 2008 2009 2010 2011 2012

Term loans:

- Term loans from banks Nil Nil Nil Nil Nil - Term loans from corporate Nil Nil Nil Nil Nil

Increasingly, we have depended on the issue of redeemable non-convertible debentures on a private placement basis, term loans from banks, term loans from financial institutions and corporates and cash credit from banks including working capital demand loans as the primary sources of our funding. We believe that we have developed stable long term relationships with our lenders, and established a track record of timely servicing of our debts, and have been able to secure fixed rate long term loans of three to five years tenure to stabilize our cost of borrowings. In fiscal 2012, total repayment of bank borrowings was `1,99,877.19 lacs. As at March 31, 2012, loans from banks aggregated ` 5,05,696.18 lacs, as compared to ` 430,573.37 lacs as at March 31, 2011. In fiscal 2012, net redemption of redeemable non-convertible debentures was ` ` 86,725.33 lacs. As at March 31, 2012, the aggregate outstanding amount of secured redeemable non-convertible debentures was ` 3,54,414.93 lacs as compared to ` 219,877.64 lacs as at March 31, 2011. Our short term fund requirements are primarily funded by cash credit from banks including working capital loans. Cash credit from banks including working capital loans outstanding as at March 31, 2012 was ` 1,21,781.03lacs.

As at March 31, 2012 our outstanding subordinated debt amounted to ` 83,574.01 lacs, compared to ` 53,272.33 lacs as at March 31, 2011. The debt is subordinated to our present and future senior indebtedness. Based on the balance term to maturity, as at March 31, 2012, ` 52,995.64 lacs of the discounted book value of subordinated debt is considered as Tier II under the guidelines issued by the RBI for the purpose of capital adequacy computation. As at March 31, 2012, outstanding commercial paper amounted to ` Nil lacs. We are registered as a deposit-taking NBFC with the RBI under Section 45IA of the Reserve Bank of India Act, 1934, which authorizes us to accept deposits from the public. We do not, however, depend on deposits as our primary source of funding. As at March 31, 2012, we had fixed deposits outstanding of ` 22.21 lacs, compared to ` 55.10 lacs as at March 31, 2011, respectively. Securitization/assignment of Portfolio against financing activities

We also undertake securitization/assignment transactions to increase and efficiently utilize our capital, and as a cost effective source of funds. We sell part of our assets under financing activities from time to time through securitization transactions as well as through direct assignment transactions. Our securitization/assignment transactions involve provision of additional collateral and deposits or bank/ corporate guarantee. In fiscal 2012, total book value of Loan Assets securitized/assigned was ` 2,66,942.25 lacs. We continue to provide administration services for the securitized/assigned portfolio, the expenses for which are provided for, at the outset of each transaction. The gains arising out of securitization/assignment, which vary according to a number of factors such as the tenor of the securitized/assigned portfolio, the yield on the portfolio securitized/assigned and the discounting rate applied are treated as income over the tenure of agreements as per RBI guidelines on securitization of standard assets. Loss, if any, is recognized upfront. The following tables set forth certain information with respect to our securitization/assignment transactions on a unconsolidated basis:

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For the Financial Year Ended March 31,

` in lacs

2008 2009 2010 2011 2012 Total number of Loan Assets securitized/assigned

398,691 314,685 146,402.00 178,502.00 3,07,315.00

Total book value of Loan Assets securitized/assigned

75,781.80 88,844.37 30,000.00 117,915.72 2,66,942.25

Sale consideration received for securitized/assigned assets

83,539.14 91,874.15 30,000.00 126,737.01 2,66,942.25

Gain on account of securitization/assignment 7,757.34 13,182.64 2,554.73 27,163.76 55,508.86

As on March 31 (on an unconsolidated basis)

`̀̀̀ in lacs

2008 2009 2010 2011 2012

-Fixed Deposit 46,95.88 10,017.54 7,373.57 15,436.40 37,184.28 -Guarantees given by third parties - 3,117.77 1,942.77 1,942.77 -

We are required to provide credit enhancement for the securitization/assignment transactions by way of either fixed deposits or corporate guarantees and the aggregate credit enhancement amount outstanding as on March 31, 2012 was ` 37,184.28 lacs on an unconsolidated basis. In the event a relevant bank or institution does not realize the receivables due under such Loan Assets, such bank or institution would have recourse to such credit enhancement.

Capital Adequacy

We are subject to the capital adequacy ratio (“CAR”) requirements prescribed by the RBI. We are currently required to maintain a minimum CAR of 15.00%, as prescribed under the Prudential Norms Directions, 2007, based on our total capital to risk-weighted assets. As per RBI notification dated February 17, 2011, all deposit taking NBFCs have to maintain a minimum capital ratio, consisting of Tier I and Tier II capital, which shall not be less than 15.00% of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items w.e.f. March 31, 2012. As a part of our governance policy, we ordinarily maintain capital adequacy higher than the statutorily prescribed CAR. As at March 31, 2012, our capital adequacy ratio computed on the basis of applicable RBI requirements was 17.40 %, compared to the minimum capital adequacy requirement of 15.00% stipulated by the RBI.

The following table sets out our capital adequacy ratios computed on the basis of applicable RBI requirements as at the dates indicated:

Credit Rating The following table sets forth certain information with respect to our credit ratings as on the date of this Draft Prospectus:

Credit Rating

Agency

Instruments

Ratings

Limit in `̀̀̀ lacs

FITCH NCD FITCH AA- (IND) / STABLE 75,000

FITCH BANK LOAN RATINGS FITCH AA- (IND) / STABLE 6,58,270

FITCH SHORT TERM DEBT FITCH A1+ (IND) 40,000

FITCH TERM DEPOSIT RATING FITCH tAA- (IND) -

CARE NCD (including public issue of NCD –

August 2011)

CARE AA 1,32,500

CARE SHORT TERM DEBT CARE A1+ 37,500

CARE FIXED DEPOSIT RATING CARE AA (FD) 1,000

As at March 31,

2008 2009 2010 2011 2012

Capital adequacy ratio (%)……………………………………………………….

20.25 25.74 26.28 20.53 17.40

Tier 1 capital……………………………………………. 39,265.00 70,662.00 98,585.00 1,19,419.00 1,56,514.87

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Credit Rating

Agency

Instruments

Ratings

Limit in `̀̀̀ lacs

CARE SUB DEBT RATING CARE AA 25,000

CRISIL NCD (including public issue of NCD -

August 2011)

CRISIL AA- / STABLE 77,000

CRISIL SHORT TERM DEBT CRISIL A1+ 85,000

CRISIL FIXED DEPOSIT RATING FAA / STABLE -

CRISIL SUB DEBT RATING CRISIL AA- 15,000

The NCDs proposed to be issued under this Issue have been rated ‘CARE AA’ by CARE for an amount of upto ` 50,000 lacs vide its letter dated August 10, 2012, and ‘CRISIL AA-/Stable’ by CRISIL for an amount of upto ` 50,000 lacs vide its letter dated August 14, 2012. The rating of the NCDs by CARE indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. The rating of NCDs by CRISIL indicates high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. Risk Management We have developed a strong risk-assessment model in order to maintain adequate asset quality. The key risks and risk-mitigation principles we apply to address these risks are summarized below: Interest Rate Risk Our results of operations are dependent upon the level of our net interest margins. Net interest income is the difference between our interest income and interest expense. Since our balance sheet consists of rupee assets and predominantly rupee liabilities, movements in domestic interest rates constitute the primary source of interest rate risk. We assess and manage the interest rate risk on our balance sheet through the process of asset liability management. We borrow funds at fixed and floating rates of interest, while we extend credit at fixed rates. In the absence of proper planning and in a market where liquidity is limited, our net interest margin may decline, which may impact our revenues and ability to exploit business opportunities. We have developed stable long term relationships with our lenders, and established a track record of timely servicing our debts. This has enabled us to become a preferred customer with most of the major banks and financial institutions with whom we do business. Moreover, our valuation capabilities enable us to invest in good quality assets with stable, attractive yields. Some of our loans are classified as priority sector assets by the RBI, which when securitized, find a ready market with various financial institutions, including our lenders. Liquidity Risk Liquidity risk arises due to non-availability of adequate funds or non-availability of adequate funds at an appropriate cost, or of appropriate tenure, to meet our business requirements. This risk is minimized through a mix of strategies, including asset securitization/assignment and temporary asset liability gap. We monitor liquidity risk through our Asset Liability Management (“ALM”) function with the help of liquidity gap reports. This involves the categorization of all assets and liabilities into different maturity profiles, and evaluating these items for any mismatches in any particular maturities, especially in the short-term. The ALM policy has capped the maximum mismatches in the various maturities in line with RBI guidelines and ALCO guidelines. To address liquidity risk, we have developed expertise in mobilizing long-term and short-term funds at competitive interest rates, according to the requirements of the situation. For instance, we structure our indebtedness to adequately cover the average three-year tenure of loans we extend. As a matter of practice, we generally do not deploy funds raised from short term borrowing for long term lending.

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Credit risk Credit risk is the risk of loss that may occur from the default by our customers under the loan agreements with us. As discussed above, borrower defaults and inadequate collateral may lead to higher NPAs. We lend on a relationship-based model, and we believe that our high loan recovery ratios indicate the effectiveness of this approach for our target customer base. We also employ advanced credit assessment procedures, which include verifying the identity and checking references of the proposed customer thoroughly at the lead generation stage. Our extensive local presence also enables us to maintain regular direct contact with our customers. In this regard, we assign personal responsibility to each member of the lead generation team for the timely recovery of the loans they originate, closely monitoring their performance against our Company's standards, and maintain client wise exposure limits.

Employees

As at June 30, 2012 our total employee strength was 3,672. We have built a highly capable workforce primarily by recruiting and training fresh graduates. As our business model does not require extensive background in banking or the financial services industry, we prefer to hire and train fresh graduates in the particular operational aspects of our business. Moreover, we prefer to hire our workforce from the locality in which they will operate, in order to benefit from their knowledge of the local culture, language, preferences and territory. We emphasize both classroom training and on-the-job skills acquisition. Post recruitment, an employee undergoes induction training to gain an understanding of our Company and our operations. Our product executives are responsible for customer origination, loan administration and monitoring as well as loan recovery and this enables them to develop strong relationships with our customers. We believe our transparent organizational structure ensures efficient communication and feedback and drives our performance-driven work culture. In a business where personal relationships are an important driver of growth, executive attrition may lead to loss of business. We therefore endeavor to build common values and goals throughout our organization, and strive to ensure a progressive career path for promising employees and retention of quality intellectual capital in our Company. We provide a performance-based progressive career path for our employees. For instance, we introduced two employee stock option plans for eligible employees at branch manager level and above. We believe our attrition rates are among the lowest in the industry at managerial levels. Intellectual Property Pursuant to a License Agreement dated April 1, 2010 between our Company and Shriram Ownership Trust, (“SOT”), we are licensed to use the name "Shriram" and the associated mark for which our Company has to pay to SOT, 0.25% on the gross turnover of our Company for the first year of the License Agreement. Royalty rates for the subsequent years will be decided mutually on or before April 1st of the respective financial years. Along with the royalty, our Company is also required to pay to SOT amounts by way of reimbursement of actual expenses incurred by SOT in respect of protection and defence of the Copyright. The License Agreement is valid for a period of three years from the date of execution thereof.

Technology We use information technology as a strategic tool in our business operations to improve our overall productivity. We believe that our information systems enable us to manage our nationwide operations network well and to effectively monitor and control risks.

All our business outlets are online, connected through an ERP software developed by Take Solution Limited Chennai and all our business outlets with our Central Server located at Chennai.

Property

Our registered office is at 123, Angappa Naicken Street, Chennai -600001, Tamil Nadu, India. Our corporate office is at 144,Santhome High Road, Mylapore, Chennai 600 004, Tamil Nadu, India. As at June 30, 2012, we had 575 branches and 91 other business outlets across India. We enter into lease and/or leave and license agreements in connection with the premises required for our business outlet.

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Collaborations

Except as disclosed herein, our Company has not entered into any collaboration, any performance guarantee or assistance in marketing by any collaborators.

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HISTORY, MAIN OBJECTS AND KEY AGREEMENTS

Brief background of our Company

Our Company was incorporated as a private limited company, Shriram Hire-Purchase Finance Private Limited, on March 27, 1986, under the provisions of the Companies Act, 1956. Further with effect from October 29, 1988, the status of our Company was changed to a public limited company. The name of our Company was changed from Shriram Hire-Purchase Finance Limited to Shriram City Union Finance Limited and a fresh certificate of incorporation dated April 10, 1990 was issued by the ROC, Chennai, Tamil Nadu. Subsequently, our Company has obtained a certificate of registration as a Deposit-Accepting Financing Company, dated April 17, 2007, bearing registration no. 07-00458 issued by the RBI to carry on activities of a NBFC under section 45 IA of the RBI Act, 1934.

Change in registered office of our Company There has been no change in the registered office of our Company in the last five years preceding the date of this Draft Prospectus. Main objects of our Company

The main objects of our Company as contained in our Memorandum of Association are:

• To lend money on security on movable or immovable properties or any shares or securities of any nature or without security and to negotiate loans.

• To Undertake and carry on the business of financing, hire-purchase contracts relating to property or assets of any description either fixed or movable and in particular relating to Houses, Lands, Government Bonds, Goods, Chattels, Motorcars, Motor-Buses, Motor-lorries, Auto-Rickshaws, Omnibuses, Tricycles, Scooters, Bicycles, Unicycles, Quadricycles, Velocipedes, Carriages and Vehicles of all kinds whether mechanically propelled by steam, oil, gas, petrol or electricity or otherwise, Tractors, bullion, stocks, Shares, television sets, machineries of all kinds, pump-sets, refrigerators, electric and electronic goods and on other household articles.

• To draw, accept, endorse, discount, buy, sell and deal in bills of exchange, promissory notes, bonds Debentures and other negotiable instruments and securities.

• To issue on commission, subscribe for, take acquire and hold, sell, exchange and deal in Shares, stock, bonds, obligations or securities of any Government, local authority or Company.

• To acquire, improve, manage, work, develop, exercise all rights in respect of leases and mortgages and to sell, dispose of, turn to account and otherwise deal with property of all kinds, and in particular, land, buildings, concessions, patents, business concerns and undertakings.

• Generally to carry on and undertake any business or operation, commonly carried on or undertaken by capitalists, financiers.

• To borrow or take deposits of money at interest or otherwise from any person or persons, local authority of Government and advance, lend or deposit any such money or other moneys of the Company for the time being on such security or otherwise as the Company may deem expedient. But the Company shall not do any banking business, as defined in the Banking Regulations Act, 1949.

• The Company shall either singly or in association with other Bodies Corporate-act as Asset Management Company/ Manager/ Fund Manager in respect of any scheme of Mutual Fund whether Open-End Scheme or Closed-End Scheme, floated/to be floated by any Trust/Mutual Fund (whether offshore or onshore)/Company by providing management of Mutual Fund for both offshore and onshore Mutual Funds, Financial Services consultancy, exchange of research and analysis on commercial basis. Constitute any trust and to subscribe and act as, and to undertake and carry on the office or offices and duties of trustees, custodian trustees, executors, administrators,

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liquidators, receivers, treasures, attorneys, nominees and agents; and to manage the funds of all kinds of trusts and to render periodic advice on investments, finance, taxation and to invest these funds from time to time in various forms of investments including shares, term loans and debentures etc. Carry on and undertake the business of portfolio investment and Management, for individuals as well as large Corporate Bodies and/or such other bodies as approved by the Government, in Equity Shares, Preference Shares, Stock. Debentures (both convertible and non-convertible), Company deposits, bonds unit. loans, obligations and securities issued or guaranteed by Indian or Foreign Governments, States, Dominions, Sovereigns, Municipalities or Public Authorities and/or any other financial instruments, and to provide a package of Investment/Merchant Banking Services by acting as Managers to Public issue of securities, to act as underwriters, issue house and to carry on the business of Registrar to Public issue/various investment schemes and to act as Brokers to Public Issue. Without prejudice to the generality of the foregoing to acquire any shares, stocks, debentures, debenture-stock, bonds, units of any Mutual Fund Scheme or any other statutory body including Unit Trust of India, obligations or securities by original subscription, and/or through markets both primary, secondary or otherwise participation in syndicates, tender, purchase, (through any stock exchange, OTC exchange Of privately), exchange or otherwise and to subscribe for the same whether or not fully paid-up, either conditionally or otherwise, to guarantee the subscription thereof and to exercise and to enforce all rights and powers conferred by or incidental to the ownership thereof and to advance, deposit or lend money against securities and properties to or with any company, body corporate, firms, person or association or without security and on such terms as may be determined from time to time. To engage in Merchant Banking activities, Venture Capital, acquisitions, amalgamations and all related merchant banking activities including loan Syndication.

• To carry on the business as manufacturers, exporters, importers, contractors, sub-contractors, sellers, buyers, lesser or lessees and agents for wind electric generators and turbines, hydro turbines, thermal turbines, solar modules and components and parts including rotor blades, braking systems, tower, nacelle, control unit, generators, etc. and to set up wind farms for the company and/or other singly or jointly and also to generate, acquire by purchase in bulk, accumulate, sell distribute and supply electricity and other power (subject to and in accordance with the laws in force from time to time);

• To carry on business of an investment company or an Investment Trust Company, to undertake and transact trust and agency investment, financial business, financiers and for the purpose to lend or invest money or negotiate loans in any form or manner, to draw, accept , endorse, discount, buy, sell and deal in bills of exchange, hundies, promissory notes and other negotiable instruments and securities and also to issue on commission , to subscribe for, underwrite, take, acquire and hold, sell and exchange and deal in shares stocks, bonds or debentures or securities of any Government or Public Authority or Company, gold and silver and bullion and to form, promote, subsidize and assist companies, syndicates and partnership to promote and finance industrial enterprises and also to give any guarantees for payment of money or performance of any obligation or undertaking, to advances, loans and subscribe to the capital of industrial undertakings and to undertake any business transaction or operation commonly carried on or undertaken by capitalists, promoters, financiers and underwriters.

• To act as investors, guarantors, underwriters and financers with the object of financing industrial enterprises, to lend or deal with the money either with or without interest or security including in current or deposit account with any bank or banks, other person or persons upon such terms, conditions and manner as may from time to time be determined and to receive money on deposit or loan upon such terms and conditions as the Company may approve. Provided that the Company shall not do any banking business as defined under the Banking Regulations Act, 1949;

• To act as investors, guarantors, underwriters and financiers with the object of financing industrial enterprises, to lend or deal with the money either with or without interest or security including in current or deposit account with any bank or banks, other person or persons upon such terms, conditions and manner as may from time to time be determined and to receive money on deposit or loan upon such terms, conditions and manner as may from time to time be determined and to receive money on deposit or loan upon such terms and conditions as the Company may approve. Provided that the Company shall not do any banking business as defined under the Banking Regulations Act, 1949.

• To carry on in India or elsewhere the business of consultancy services in various fields, such as, general, administrative, commercial, financial, legal, economic, labour and industrial relations, public relations, statistical, accountancy, taxation and other allied services, promoting, enhancing, propagating the activity of investment in

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securities, tendering necessary services related thereto, advising the potential investors or investment activities, acting as brokers, sub-brokers, investment consultant and to act as marketing agents, general agents, sub-agents for individuals/bodies corporate/institutions for marketing of shares, securities, stocks, bonds, fully convertibles debentures partly convertible debentures, Non-convertible debentures, debenture stocks, warrants, certificates, premium notes, mortgages, obligations, inter corporate deposits, call money deposits, public deposits, commercial papers, general insurance products, life insurance products and other similar instruments whether issued by government, semi government, local authorities, public sector undertakings, companies, corporations, co-operative societies, and other similar organisations at national and international levels;

Key terms of our Material Agreements

KEY TERMS OF THE MATERIAL CONTRACTS

1. Investor agreement dated May 13, 2008 between Western India Trustee and Executor Company Limited,

in its capacity as the trustee of India Advantage Fund – VI, (“Investor”) and Shriram City Union Finance

Limited, (“Company”), (“Investor Agreement I”).

Pursuant to the Investor Agreement I, the Investor has subscribed to 750,000 equity shares at a price of ` 400/- per equity share, constituting 1.69% of the equity share capital of our Company post the preferential allotment of equity shares to the Investor, certain other investors, Shriram Capital Limited and Shriram Enterprise Holding Limited, (“Post Preferential Issue Equity Share Capital”) and 750,000 warrants each convertible into one equity share of our Company at a price of ` 400/- per warrant. The shares and the warrants subscribed by the Investor in one or more tranches would, on a fully diluted basis, aggregate to 2.85% of the Post Preferential Issue Equity Share Capital of our Company. The salient features of the Investor Agreement I are as follows:

(a) Investor rights:

(i) Right to appoint independent director: The Investor has a right to appoint an independent director on the Board

of our Company, with mutual consent of our Company, as long as the shareholding of the Investor, together with

its affiliates equals to or exceeds 7% of the paid up equity share capital of our Company.

(ii) Right to appoint observer: The Investor has a right to appoint an observer who will be entitled to attend any and

all of the meetings of the Board and the committees, as long as the shareholding of the Investor and its affiliates

is equal to or exceeds 7% of the paid up equity share capital of our Company.

(iii) Pre-emptive right on further issues of capital: If our Company should undertake a further issue of equity shares

or any other instrument convertible to equity shares, the Investor is entitled to be offered equity shares in a

manner so as to enable the Investor to maintain its shareholding percentage in our Company at the same level as

it had prior to such further issue. This right is available to the Investor as long as the shareholding of the Investor

and its affiliates is equal to or exceeds 5% of the paid up equity share capital of our Company.

(iv) Information Rights: Customary information rights are available to the Investor as long as the shareholding of the

Investor together with its affiliates in our Company is equal to or exceeds 7% of the paid up equity share capital

of our Company. If the shareholding of the Investor, together with its affiliates in our Company falls below 7%

of the paid up equity share capital of our Company and/or thereafter the Investor or its affiliates acquire

additional shares of our Company so as to take the shareholding of the Investor in our Company equal to or more

than 7% of the paid up equity share capital of our Company, the information rights will no longer be available to

the Investor.

(b) Investor not considered to be promoters: The Investor is merely a financial investor in our Company. Our

Company shall take all actions to ensure that the Investor shall not be considered or classified to be a promoter or

any ‘person acting in concert’ of the promoter of our Company. The Investor is not in control of our Company.

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(c) Term and Termination: The Agreement may be terminated and the transactions contemplated by the

Agreement may be abandoned if closing does not take place on or before such time as mutually agreed to

between the parties. . Either party may terminate this Investment Agreement any time before the date on which

closing shall have taken place in the event that the other party commits a breach of its obligations under this

Investment Agreement and such breach is not remedied by the defaulting party within 60 days of notice of such

breach.

This Agreement shall terminate in the event that the shareholding of the Investor in our Company (which includes warrants on a fully diluted basis and shares purchased by the Investor in an open market) and its affiliates falls below 5% of the paid up share capital of our Company.

(d) Governing Law: Indian Law.

(e) Dispute Resolution: Arbitration will be carried out in accordance with the Arbitration and Conciliation Act,

1996 and the place of arbitration is Mumbai. All proceedings will be conducted in English Language.

2. Investor agreement dated May 12, 2008 between Bessemer Ventures Partners, (“Investor”) and Shriram

City Union Finance Limited, (“Company”), (“Investor Agreement II”)

Pursuant to the Investor Agreement II, the Investor has subscribed to 12,50,000 equity shares at a price of ` 400 per equity share constituting 2.81% of the equity share capital of our Company post the preferential allotment of equity shares to the Investor, certain other investors, Shriram Capital Limited and Shriram Enterprise Holding Limited, (“Post Preferential Issue Equity Share Capital”) and 12,50,000 warrants each convertible to one equity share of our Company at price of ` 400 per warrant. The shares and the warrants subscribed by the Investor in one or more tranches would, on a fully diluted basis, aggregate to 4.75% of the Post Preferential Issue Equity Share Capital of our Company. The salient features of the Investor Agreement II are as follows:

(a) Investor Rights:

(i) Right to appoint observer: The Investor has a right to appoint an observer to the Board.

(ii) Pre-emptive right on further issues of capital: If our Company should undertake any further issue of equity

shares and/or any other instrument convertible into equity shares, the Investor is entitled to be offered such

equity shares and/or other instruments on the same terms as the proposed issuance so as to enable to the Investor

to maintain its shareholding in our Company at the same level as it had prior to such further issue. This right is

available to the Investor as long as the shareholding of the Investor in our Company is more than 5% of the paid

up equity share capital of our Company.

(iii) Information rights: As long as the shareholding of the Investor is more than 7% of the paid-up equity share

capital of our Company, the Investor is entitled to customary information rights as set out in the Investor

Agreement II. In the event that the shareholding of the Investor falls below 7%, and thereafter the Investor

acquires additional shares of our Company so as to take the shareholding of the Investor in our Company to more

than 7%, the information rights will no longer be available to the Investor. However, notwithstanding the

information rights of the Investor, our Company shall publish any unpublished price sensitive information before

providing it to the Investor and the Investor agrees that these information rights shall remain suspended during

the time the Board withholds the publication of such price sensitive information.

(b) Investor not to be considered Promoters: The Investor is merely a financial investor in our Company. Our

Company shall take all actions to ensure that the Investor is not considered or classified to be a ‘promoter’ of our

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Company or as a person acting in concert with the promoter of our Company. The Investor is not in control of

our Company and the investment by the Investor is purely financial in nature.

(c) Non termination of arrangements with connected persons: Our Company is required to seek prior written

consent of the Investor before terminating any of its material contracts or arrangements with such persons

described as ‘connected persons’ in the Investment Agreement, in relation to sharing of infrastructure or

facilities.

(d) Term and termination: Either party has the right to terminate this Agreement any time before the date on which

closing shall have taken place due to a breach of the covenants of this Investment Agreement. In the event the

shareholding of the Investor (which shall include warrants on a fully diluted basis and any purchase by the

Investor of the shares of our Company in an open market) and its affiliates fall below 5% of the paid up share

capital of our Company this Investment Agreement shall terminate.

(e) Governing law: Indian law

(f) Dispute resolution: Arbitration will be carried out in accordance with the Arbitration and Conciliation Act, 1996

and the place of arbitration is Mumbai. All proceedings will be conducted in English Language.

3. Investment agreement dated May 9, 2008 between Asiabridge Fund I LLC, (“Investor”) and Shriram City

Union Finance Limited, (“Company”), (“Investment Agreement”)

Pursuant to the Investment Agreement, the Investor has subscribed to 5,87,500 equity shares at a price of ` 400 per equity share, constituting 1.32% of the equity share capital of our Company post the preferential allotment of equity shares to the Investor, certain other investors, Shriram Capital Limited and Shriram Enterprise Holding Limited, (“Post Preferential Issue Equity Share Capital”) and 5,87,500 warrants each convertible to one equity share of our Company at a price of ` 400 per warrant. The shares and the warrants subscribed by the Investor in one or more tranches would, on a fully diluted basis, aggregate to 2.23% of the Post Preferential Issue Equity Share Capital of our Company. The salient features of the Investment Agreement are as follows:

(a) Investor Rights:

(i) More favourable rights: Our Company shall not grant to the shareholders who may invest in our Company in the future (“New Investors”), any terms which are more favourable than that of the existing Investors, so long as the New Investors are at par or less than 2.23% of the shareholding in our Company.

(ii) Information Rights: The Investor is entitled to customary information rights as set out in the Investment Agreement. In the event any information rights are provided to other investors participating in the preferential allotment, the same rights shall be provided to the Investors.

(b) Investor not to be considered as promoters: The Investor is merely a financial investor in our Company. Our

Company shall take actions to ensure that the Investor shall not be considered/classified to be a ‘promoter’ of our

Company or any ‘person acting in concert’ with the promoter of our Company. The Investor is not in control of

our Company and the investment by the Investor is purely financial in nature.

(c) Term and termination: Either party has the right to terminate this Agreement any time before the date on which

closing shall have taken place due to a breach of the covenants by the opposite party of this Investment

Agreement.

(d) Governing Law: Indian Law

(g) Dispute Resolution: Arbitration will be in accordance with the Arbitration and Conciliation Act, 1996, and the

place of arbitration is Mumbai. All proceedings will be conducted in English Language.

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4. Investment agreement dated December 26, 2006 between Van Gogh Limited, (“Investor”) and Shriram

City Union Finance Limited, (“Company”), (“Investment Agreement”) as amended by the Subscription

and Amendment Agreement dated May 12, 2008 between the Investor and our Company, (“Amendment

Agreement”)

Pursuant to the Investment Agreement, our Company has issued and allotted 40,00,000 equity shares at a price of ` 160 per equity share, to the Investor in one or more tranches aggregating to 10.23% of the equity share capital of our Company, post the preferential allotment of equity shares to the Investor and other financial investors investing in the equity shares of our Company (“Other New Investors-I”) pursuant to the resolution passed under the extra-ordinary general meeting dated December 18, 2006, of our Company (“Post Preferential Issue

Equity Share Capital-I”). Pursuant to the Amendment Agreement our Company has further issued and allotted to the Investor, 6,62,500 equity shares at a price of ` 400 per equity share constituting 1.5% of the equity share capital of our Company post the preferential allotment of equity shares to the Investor, Other New Investors-I and other financial investors investing in the equity shares of our Company (“Other New Investors – II”) pursuant to the preferential allotment under the extra-ordinary general meeting resolution dated May 3, 2008. Further, pursuant to the Amendment Agreement, our Company has issued and allotted 6,62,500 warrants to the Investor which represent a right to apply for an aggregate of 6,62,500 equity shares of our Company at a price of ` 400 per equity share payable on the exercise of each warrant (adjusted for any bonus issues, share splits, share consolidation or reduction of capital of our Company). The salient features of the Investment Agreement and the Amendment Agreement are as follows:

(a) Indemnities: Our Company will indemnify (i) the Investor and its affiliates (entities which are either controlled,

in control of or in common control with the Investor) and employees and (ii) the Investor Group (as described in

the Investment Agreement), against any losses arising out of misrepresentations or breach of any warranty, costs

and expenses incurred by the Investors in respect of any claim.

(b) Board of Directors: Our Company, the Investor and Other New Investors – I will jointly agree on a panel of six

independent directors out of which three will be appointed by our Company for a period of five years and will

not be eligible to retire by rotation. The Investor also has a right to appoint an observer who is entitled to attend

any and all Board meetings.

(c) Reserved matters: Our Company is required to seek consent from the Investor before passing any resolution or

taking any decisions with respect to a reserved matter. Reserved matters include approval of an annual business

plan/operating budget; any material deviations from the approved business plan; entering into or modifying

transactions with connected persons/concerns; making investments or acquiring shares exceeding ` 5 crore;

transfer or disposal of any material part of our Company’s business; changes in the memorandum or articles of

association of our Company; issue of new shares or convertible instruments (except in a case where the Investor

has not exercised the pre-emptive rights offered to the Investor); any change in the class rights, preferences and

privileges of shareholders (including common equity, preference shares and other convertible instruments);

voluntary delisting of the shares; any material change in the nature of business of our Company or

commencement of a new line of business or entering into any joint venture, partnership or consortium

arrangement; passing any resolution or taking any steps to have our Company wound up, liquidated or to

dissolve our Company, including taking steps to effect a recapitalization, reclassification, split-off, spin-off or

bankruptcy of our Company; undertaking a merger, amalgamation, demerger, spin-off, consolidation of or by

our Company or an acquisition of another company; to mortgage, pledge, hypothecate, grant security interest in,

subject to any lien, any business or assets of our Company; appointment of the independent director and director

appointed at the suggestion of the Other New Investors and Other New Investors - II; approval of any employee

stock option scheme or employee stock purchase scheme; any change in the name of our Company; and any

commitment or agreement to do any of the foregoing;

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(d) Further Issue of Shares: In the event that our Company issues any further shares or other warrants, convertible

instruments, or any options or any appreciation rights and other securities convertible into securities or otherwise

to any person, (“Fresh Offering”) the following shall be applicable vis-à-vis the Investor.

(i) In case of a preferential issue: Our Company will offer such number of securities to the Investor, Other New

Investors-I and Other New Investors – II in the Fresh Offering, which is equal to their shareholding in our

Company prior to such Fresh Offering on the same terms as that of the Fresh Offering.

If any of the Other New Investors-I and the Other New Investors – II decline to subscribe to their portion of the securities so offered, then such declined securities shall be offered proportionately to the Investor and the non-declining Other New Investors-I and the non-declining Other New Investors – II in proportion to their respective shareholding percentage prior to the Fresh Offering in our Company, on the same terms as the proposed Fresh Offering.

(ii) In case of a rights issue: If a whole or a part of the rights issue remains unsubscribed then the unsubscribed

portion of the securities shall be proportionately offered to the Investor, the Other New Investors-I and the Other

New Investors – II on the same terms as the proposed rights issue. Provided that, if any of the Other New

Investors-I, the Other New Investors – II decline to subscribe such securities, our Company shall offer such

securities proportionately to the Investor, Other New Investor-I and the Other New Investor- II on the same terms

as the proposed rights issue.

(e) Investor not to be considered as Promoter: The Investor is merely a financial investor in our Company. Our

Company shall ensure that the Investor is not classified or considered to be a ‘promoter’ or a ‘person acting in

concert’ with the promoter of our Company. The Investor is not in control of our Company and the investment

by the Investor is purely financial in nature.

(f) Term and Termination: The rights of the Investor in connection with reserved matters stand terminated upon

the dilution threshold of the Investor (calculated as per the Amendment Agreement) falls below 7% as a result of

the Investor selling any of the Investor’s shares or failing to exercise their pre-emptive rights at the time of a

further issue. The rights of the Investor in connection with further issue of shares stand terminated upon the

dilution threshold falling below 5% unless the same is caused due to securities not being offered to the Investor

in accordance with the Investor’s pre-emptive right.

5. Share subscription agreement dated September 12, 2008 between (i) Mr. R. Thyagarajan, Mr. T

Jayaraman, Shriram Capital Limited and Shriram Ownership Trust acting through its trustees Mr. R.

Thyagarajan, Mr. Arun Duggal, Mr. D.A Prasanna, Mr. R. Kannan and Mr. D.V Ravi (collectively known

as the “Founders”) and (ii) TPG India Investments I, Inc. (the “Investor”) and (iii) Shriram Retail

Holdings Private Limited (“SRHPL”), and (iv) Shriram Enterprises Holdings Private Limited (“SRHPL”) and Shriram City Union Finance Limited (“Company”), (“Agreement”).

Pursuant to the Agreement, the Investor has subscribed to 1,306,700 shares at a price of ` 2,388.80 per share and 1,538,278 warrants convertible into shares of SRHPL at a price of ` 2,388.80 per warrant. Upon allotment of shares by SRHPL, the Investor shall hold 39.0% equivalent to 1,306,700 shares of SRHPL. The salient features of the agreement are as follows:

(a) Non-Compete: As long as the Investor directly or indirectly holds no less than 5% beneficial interest in the paid

up share capital of our Company, whether through SRHPL, SEHPL or directly in our Company, neither the Founders nor any of their affiliates may work for, associate with or conduct business as a competitor of the Company or any future direct or indirect subsidiaries of the Company (directly or indirectly).

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Regardless of the beneficial interest of the Investor in our Company, (whether through SRHPL, SEHPL or directly in our Company), the Founders shall not, directly or indirectly, work for or associate in any way (including but not limited to as proprietor, shareholder, partner or director) with, or conduct business as, a competitor of our Company or any of its future direct or indirect subsidiaries for a period of five years from the later of (a) the date on which the Founders cease to have the right to appoint or nominate any Directors to the Board of all the Companies or (b) the date on which the Founders (taken together) cease to directly or indirectly hold at least 5% beneficial interest in the paid up share capital of the Company, whether through SRHPL, SEHPL or directly in our Company.

(b) Lock in and Restrictions on Transfer: For a period of three years from the date of closing, the Founders shall

not directly or indirectly effect or permit any transfer of shares of our Company, SEHPL or SRHPL or warrants issued by our Company to any person including the lenders of our Company, except with the prior written consent of the Investors. Such restrictions

The restrictions for transfer of shares shall not apply to any inter-se transfer between the Promoter and their affiliates, provided that such affiliate signs a deed of adherence. The Founders may seek to create a pledge, lien or charge over the shares held by SRHPL and SEHPL and SRHPL upon completion of the merger of SEHPL with SRHPL (as contemplated in the Agreement) in our Company as security for short term borrowings which pledge, lien or charge shall be subject to the prior written consent of the Investor. The restrictions contemplated herein shall not in any manner apply to the transfer of shares of Shriram Capital Limited subject to it satisfying certain conditions as laid down in the Agreement.

(c) Investor’s Right of First Refusal: Before transferring any of its shares and/or warrants in SCUFL and/or SRHPL, the Founder shall give a notice of such intention to transfer such shares and warrants (“Transfer

Notice”) which inter-alia includes details of the offer price and the name of the proposed purchaser to the Investor. If the Investor either fails to respond to the notice within 30 days or refuses to buy the shares, the Founder may transfer such shares and/or warrants to any person on terms and conditions no less favourable than indicated in the Transfer Notice.

(d) Tag along rights: Tag along rights are provided for in the Agreement. In the event of a proposed transfer of

shares and/or warrants by the Investor or Founders to a third party, the transferring percentage will be calculated and the non-transferring party is entitled to cause the proposed transferee to purchase such number of shares and/or warrants held by the non-transferring party as equal to the transferring percentage of the total number of shares and/or warrants held by the non-transferring party as on the date of the proposed transfer. Transferring percentage means the ratio of the number of shares and/or warrants proposed to be transferred by the transferring party and the total number of share and/or warrants held by the transferring party.

(e) Composition of the Board of Directors: Under the terms of the Agreement, the Board of our Company shall

constitute 12 (twelve) directors out of which (i) three directors shall be the nominee of the Investor; (ii) three directors shall be the nominee of the Founders; (iii) one director shall be the nominee of IREDA; (iv) four independent directors to be nominated by the following existing investors investment agreements namely (a) Indopark Holdings Limited (b) CPIM Structured Credit Fund A 1500 Limited; (c) CPIM Structured Credit Fund A 1000 Limited (d) CPIM Structured Credit Fund A 20 Limited (e) Van Gogh Limited (f) Western India Trustee and Executor Company Limited. The Investor and Founders shall mutually agree upon and identify one individual who shall be independent Director and who shall be the chairman of the Board. In the event that IREDA or any of the Existing Investors waive their right to nominate an independent Director on the Board of the Companies or cease to be entitled to such right, the resulting vacancy in the office of independent directors of the Companies shall be filed in accordance to the terms of this Agreement. The Managing Director of the Companies shall be appointed by the Founders.

(f) Quorum: The Chairman of the Board shall not have a casting vote. The quorum of any meeting of the Board

where any matter which requires the specific consent of the nominee(s) of the Investor or the Founders or both in accordance with the provisions of the Agreement is to be taken up shall be in accordance with applicable law, of which at least one Director shall be the nominee(s) of the Investor or the Founders or both, as the case may be. The quorum of any meeting of the Board of Directors other than those aforementioned shall be in accordance with the applicable law and shall comprise at least one Director who shall be a nominee of the Investor and one

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Director who shall be a nominee of the Founders. In the absence of such quorum, the meeting of the Board of Directors shall be reconvened after one week. At such reconvened meeting, the quorum shall be in accordance with applicable law and shall not require the presence of a nominee of the Investor and / or the Founders. However, it is clarified that at such meeting of the Board of Directors, there will be no discussion and no vote on matters which require either the specific consent of the nominee of the Investor or the Founders in terms of the Agreement. All decisions at any meeting of the Board shall be in accordance with the vote of a simple majority save such decisions which require the specific consent of the Founders or the Investor, as the case may be.

(g) Fundamental Issues: Any action with respect to customary fundamental issues shall require the specific consent

of the shareholders of SRHPL and SEHPL by way of an extraordinary resolution and/or the consent of the Investor’s and the Founders’ nominee on the Board or Committee thereof, as the case may be.

(h) Indemnification: Our Company and the Founders jointly and severally agree to indemnify the Investor in case

of any material breach arising from the agreement. (i) Investor not to be considered Founder/Promoter: The Founders will ensure that the Investor will not be

classified as ‘promoter’ of any of our Company or its subsidiaries and the shares and warrants allotted to the Investor at the time of closing are not subject to lock-in or any other restriction, which are applicable to the promoters. SRHPL, SEHPL and the Founders will be considered as ‘persons acting in concert’ with the Investor solely for the purpose of the Agreement and the acquisition of shares contemplated therein.

(j) Investor’s Right to Exit:

(i) Right to sell or transfer shares: The Investor has the right to freely transfer the beneficial interest held by it in SCUFL whether directly or through shares/warrants of SRHPL to any person including third parties. In the event that the proposed transfer of such beneficial (direct or indirect) interest by the Investor is by way of placement with other investors of a block of shares/warrants owned by the Investor, the SRHPL and SEHPL shall take necessary steps (including access to information and records) to facilitate such transfer by the Investor.

In the event of the block of shares/warrants proposed to be transferred by the Investor is:

• less than 25% of the fully diluted percentage beneficial ownership held by the Investor in SCUFL (whether directly or through SRHPL and SEHPL), the transfer of such shares and warrants by the Investor shall be without any rights attached to such shares/warrants under this Agreement, subject to the transferee executing a deed of adherence;

• more than 25%, but less than 50% of the fully diluted percentage beneficial ownership held by the Investor in SCUFL (whether directly or through SRHPL and SEHPL), the Investor shall be entitled to transfer such shares and warrants along with the Tag-along rights, Information Rights, Right of registration and right to nominate one director on the Board of Directors of SRHPL and SCUFL only, subject to the transferee executing a deed of adherence;

• more than 50% of the fully diluted percentage of beneficial ownership held by the Investor in SCUFL (whether directly or through SRHPL and SEHPL), the Investor shall be entitled to transfer such shares and warrants with all rights attached to such shares or warrants under this Agreement subject to the transferee executing a deed of adherence.

(ii) Roll down of beneficial ownership of SCUFL: Any time after the expiry of two years from the date of closing,

the Investor may require SRHPL to distribute the shares/warrants held by SRHPL in our Company amongst the Founders and the Investor in proportion to their respective holdings in SRHPL. In the alternative, the Investor may require the merger of SRHPL with our Company to effect such distribution and the Founders agree to use their best efforts to effect such distribution.

(h) Drag along Rights: The Investor has the right but not the obligation to require the Founders to sell all or part of

the any Shares or Warrants that the Founders hold in our Company and/or SRHPL. (Shares or Warrants mean any shares and warrants held by the Founders or the Investor in our Company and/or SRHPL, or any direct or indirect beneficial interest held by the Founders or the Investor in the shares and warrants of our Company and/or SRHPL). The Investor may notify the Founders of its decision to exercise this right by delivering a written notice (“Exit Notice”) to the Founders. The Founders may notify the name of a proposed purchaser, (“Proposed

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Purchaser”), terms and conditions of the purchase, including the price, (“Exit Price”), for the purchase of all but not part of the Shares and Warrants held by the Investor within 30 days from the receipt of the Exit Notice.

The Investor may exercise its acceptance to sell all of its Shares and Warrants to the proposed purchaser within 30 days of the receipt of the exit notice (“Acceptance Period”), by delivery of a written notice.

In the event the Investor, at its sole discretion, does not accept the offer for purchase, or the Investor has failed to communicate its agreement to sell its Shares and Warrants to the proposed purchaser at the end of the expiry of the Acceptance Period, the Investor may, within 180 days of the Acceptance Period, furnish a written notice (“Drag Notice”) giving the name of a proposed buyer, (“Exit Buyer”), along with terms and conditions including price offered by the Exit Buyer, (“Drag Price”) to purchase all or part of the Shares and Warrants held by the Founders. The Drag Price shall not be less than the Exit Price and the fair market value calculated as on the date of the Exit Notice.

Upon delivery of the Drag Notice, the Founders are required to transfer the Shares and Warrants as required by the Drag Notice to the Exit Buyer, upon the same terms and conditions (including, the Drag Price) as agreed by the Investor and the Exit Buyer. The Founder shall make representations, warranties, covenants and agreements to the Exit Buyer comparable to those made by the Investor and shall agree to the same conditions to the transfer as the Investor agrees. All such representations, warranties, covenants and agreements shall be made by each Founder and Investor severally and not jointly

(i) Consequences of a material breach: In the event of a material breach of the provisions of this Agreement, the

non-defaulting parties are entitled to the following rights if such material breach is not cured within 60 days of receipt of notice of such breach, (“Cure Period”) and the non-defaulting party has not been compensated according to the provisions of the Agreement.

(i) Put and Call Option: The non-defaulting party shall have the right to either require the defaulting party, jointly and severally, to acquire any or all of the Shares and Warrants held by the non-defaulting party in SRHPL (collectively, “Securities”) at a price equivalent to 12.5% of the fair market value of the Securities, or cause the defaulting party to sell to the non-Defaulting party any or all of the Securities then held by the defaulting party at a price equivalent of 75% of the fair market value of the securities. The aforesaid premium or discount to the fair market value represents a reasonable assessment made by the defaulting party and the non-defaulting party representing the size of the liquidated damages payable to the non-defaulting party owing to the breach on the part of the defaulting party.

Within 30 days from the expiry of the Cure Period, the non-defaulting party shall issue a notice, (“Options

Notice”) to the defaulting party setting out the details of the option proposed to be exercised by the non-defaulting party, number of shares and/or warrants in respect of which such option is proposed to be exercised and the price of each share and/or warrant for such purpose. The sale or purchase of the Shares and/or Warrants, pursuant to such Option Notice shall be completed within 30 days from the date of the Option Notice.

(ii) Merger of SCUFL with SRHPL: The non-defaulting party has the right to requisition the convening of an extra-

ordinary general meeting of the shareholders of our Company and SRHPL to effect and sanction the merger of

SCUFL and SRHPL. For the purpose of protecting the non-defaulting party’s rights under this Agreement,

SRHPL and the defaulting party shall vote in favour of any resolution at such meeting of the shareholders of our

Company and SRHPL to authorize, sanction or effect such merger.

(j) Dispute Resolution: Arbitration in accordance with the Arbitration and Conciliation Act, 1996 and the place of

arbitration is Mumbai. Arbitration will be conducted in English Language.

(k) Governing law: Indian Law.

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6. License Agreement dated April 1, 2010 between Shriram Ownership Trust, (“SOT”) and our Company,

(“License Agreement”):

Pursuant to the License Agreement, SOT granted license to use the non exclusive copyright, relating to the existing artistic work “SHRIRAM” logo, (“Copyright”) assigned in the favour of SOT by Shriram Capital Limited, to our Company and to reproduce the said work, in connection with the business activities of our Company in the territory of India during the term of the Copyright. The salient terms of the License Agreement are as follows:

(i) Consideration: A royalty of 0.25% on the gross turnover of our Company for the first year of the License Agreement will be paid by our Company to SOT. Royalty rates for the subsequent years will be decided mutually on or before April 1st of the respective financial years. Royalty will be paid by our Company to SOT with quarterly rates ending on June 30th, September 30th, December 31st and March 31st with effect from date of the License Agreement. Along with the royalty, our Company will also pay to SOT amounts by way of reimbursement of actual expenses incurred by SOT in respect of protection and defence of the Copyright.

(ii) Duration: The License Agreement will remain in force for a period of three years and can be renewed thereafter by mutual consent. SOT may terminate the agreement if our Company breaches the provisions of the License Agreement and fails to remedy such breach within 60 days of notice of such breach.

(iii) Arbitration: In case of dispute or difference arising between the SOT and our Company shall be referred to an arbitrator decided on a mutual consent and the decision of the arbitrator is final and binding on both the parties. The place of arbitration shall be in Chennai.

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OUR MANAGEMENT

Board of Directors

The general superintendence, direction and management of our affairs and business are vested in our Board of Directors. Currently, we have 10 Directors on our Board.

Details relating to Directors

Name, Designation,

Age and DIN Nationality Date of

Appointment Address Other Directorships

Mr. Arun Duggal Non Executive Non

Independent

Chairman

Age: 65 DIN: 00024262 Occupation: Consultant

Indian/United States of America (Dual citizenship holder)

May 25, 2007 A-4, 3rd Floor West-End Colony New Delhi- 110 021

(i) Zuari Industries Limited; (ii) Patni Computer Systems Limited; (iii) Info Edge (India) Limited; (iv) Zuari Holdings Limited; (v) Jubilant Energy Limited, Canada; (vi) Shriram Properties Private

Limited; (vii) Adani Ports and Special Economic

Zone Limited; (viii) Dish TV India Limited; (ix) Shriram Transport Finance

Company Limited; (x) Educomp School Management

Limited; (xi) Shriram EPC Limited; (xii) Motrice Limited, Singapore; (xiii) FIL Fund Management Private

Limited; (xiv) Carzonrent (India) Private Limited; (xv) The Bellwether Micro Finance

Fund Private Limited; (xvi) International Asset Reconstruction

Company Private Limited; (xvii) Shriram Capital Limited; and (xviii) Jubilant Energy N.V, Netherlands

Mr. R. Duruvasan Managing Director Age:50 DIN: 00223052 Occupation: Service

Indian June 6, 2012 Flat No B21, 8-2-416, Stone Valley Apartments, Road No. 4, Banjara Hills, Hyderabad-500034

(i) Serve All Enterprise Solutions Limited

Mr. S.

Krishnamurthy Non Executive

Independent Director

Age:73 DIN: 00140414

Indian April 28, 2005 C/39, Ashtalakshmi Apartments,59,Arundale Beach Road,Besant Nagar, Chennai 600 090

(i) Shriram EPC Limited; (ii) Kerala Ayurveda Limited; and (iii) Take Solutions Limited

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Name, Designation,

Age and DIN

Nationality Date of

Appointment

Address Other Directorships

Occupation: Retired Chief General Manager & Banking Ombudsman

Mr. Vipen Kapur Non Executive

Independent Director

Age:66 DIN: 01623192 Occupation: Consultant

Indian June 15, 2007 No. A1-1201 World SPA, Sector - 41, Gurgaon - 122002

(i) Golden Agri Resources (India) Private Limited

Mr. Ranvir Dewan Non Executive Non

Independent Director

Age: 59 DIN: 01254350 Occupation: Service

Citizen of Singapore

December 1, 2010

41, Ewe Boon Road #11/41, Crystal Tower Singapore - 259335

(i) Shriram Transport Finance Company Limited;

(ii) PT Bank of Tabunegan Pensiunan Nasional (Indonesia);

(iii) TPG Asia SF V Pte Limited; (iv) TPG Asia SF VI Pte Limited; (v) TPG Star SF Pte Limited; and (vi) TPG Markets SF Pte Limited

Mr. V. Murali Non Executive

Independent Director

Age: 52 DIN: 00730218 Occupation: Practicing Chartered Accountant

Indian December 1, 2011

`RAINTREE' Flat No.1A, Block E No.21, Venus Colony 2nd Street, Alwarpet Chennai-600 018

(i) Witzenmann (India) Private Limited; and

(ii) Neyveli Lignite Corporation Limited

Mrs. Lakshmi

Pranesh Non Executive

Independent Director

Age: 67 DIN: 03333412 Occupation: Retired Indian Administrative Officer

Indian December 1, 2010

Old No. 48, New No.30, Rukmani Road Kalakshetra Colony Besant Nagar, Chennai -600 090

Nil

Mr. Puneet Bhatia Non Executive Non

Independent Director

Indian December 1, 2010

214B Aralias Apartments, DLF PH-V, Old Golf Club

(i) TPG Capital India Private Limited; (ii) Shriram Transport Finance

Company;

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Name, Designation,

Age and DIN

Nationality Date of

Appointment

Address Other Directorships

Age:45 DIN: 00143973 Occupation: Service

Gurgaon - 122009 (iii) Shriram Holdings (Madras) Private Limited;

(iv) Shriram Capital Limited; (v) TPG Wholesale Private Limited; (vi) Flare Estate Private Limited; (vii) Mylan Laboratories Limited; and (viii) Shriram Properties Private Limited

Mr. G. S.

Sundararajan Non Executive Non

Independent Director

Age: 52 DIN: 00361030 Occupation: Service

Indian December 31, 2009

A2, Ashok Tejasvi, New No. 7, Old No. 4 Fourth Cross Street, R. A. Puram, Chennai – 600 028

(i) Shriram Capital Limited; (ii) Shriram Credit Company Limited; (iii) Shriram General Insurance

Company Limited; (iv) Vistaar Financial Services Private

Limited; (v) Shriram Equipment Finance

Company Limited; and (vi) Shriram Life Insurance Company

Limited

Mr. Sunil Varma Non Executive

Independent Director

Age: 68 DIN: 01020611 Occupation: Service

Indian August 17, 2007

104 Aradhana Apartments R.K.Puram Sec-13, New Delhi- 110 066

(i) International Asset Reconstruction Company Private Limited

(ii) Vistaar Financial Services Private Limited;

(iii) HKT Limited; and (iv) HKT Management Limited

Profile of Directors

Mr. Arun Duggal - Chairman

Mr. Arun Duggal is the non-executive Chairman of our Board. Mr. Arun Duggal is a Mechanical Engineer from the Indian Institute of Technology, Delhi and a Master’s degree in Business Administration from the Indian Institute of Management, Ahmedabad. He teaches a course on Venture Capital & Private Equity at the Indian Institute of Management, Ahmedabad as a visiting Professor. He is a US National and Overseas Citizen of India.

Mr. Arun Duggal had a two and a half decade career with Bank of America, mostly in the U.S., Hong Kong and Japan. He spent ten years (1981-1990) with the New York Corporate Office of Bank of America handling multinational relationships. From 1991-1994 as the Chief Executive of BA Asia Limited, Hong Kong, he looked after Investment Banking activities for the Bank in Asia. In 1995, he moved to Tokyo as the Regional Executive, managing Bank of America's business in Japan, Australia, and Korea. His last assignment was as Chief Executive of Bank of America in India from 1998 to 2001. From 2001 to 2003 he was Chief Financial Officer of HCL Technologies, India. Mr. Arun Duggal is a senior advisor to TPG Capital, a major private equity firm headquartered in San Francisco, USA.

He is involved in several initiatives in the social service sector. He is a Trustee of Centre for Civil Society, New Delhi, which focuses on improving the quality and access of education to students especially for the poor.

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He is the Chairman of Bellwether Microfinance Fund which provides equity capital to promising Micro Finance organizations. He was on the Board of Governors of the National Institute of Bank Management. He is a Board Member and erstwhile Chairman of the American Chamber of Commerce, India.

He serves on the board of Adani Ports and Special Economic Zone Limited, Dish TV India Limited, Educomp School Management Limited, Info Edge (India) Limited, Patni Computer Systems Limited, Shriram Transport Finance Company Limited, Shriram Properties Private Limited., Shriram Capital Limited, Shriram EPC Limited, Zuari Industries Limited, Zurai Holdings Limited, FIL Fund Management Private Limited, International Asset Reconstruction Company Private Limited, Carzonrent (India) Private Limited, The Bellwether Micro Finance Fund Private Limited, Jubliant Energy N V,Netherlands, Jubilant Energy Limited, Canada and Mortice Limited, Singapore

Mr. R. Duruvasan - Managing Director

Mr. R. Duruvasan is a commerce graduate, has been serving the Shriram Group for more than 3 decades. He has started his career with Shriram Chits at Chennai in the collection department and has worked his way up to being CEO and Executive Director of Shriram Chits Private Limited, Hyderabad. He was instrumental in the growth of the Company during his stint at Hyderabad and has expanded the Company from 16 branches to 202 branches.

During his tenure the company flourished as the largest chit fund company in the country in terms of Auction Turnover, Number of Branches, Manpower and Customer base. His contribution has paved way for the Shriram group to expand its Deposits and NCD portfolio.

Mr. R. Duruvasan was the managing director and principal officer of Shriram Life Insurance Company Limited. He also serves on the board of Serve All Enterprise Solutions Limited.

Mr. S. Krishnamurthy - Non Executive Independent Director

Mr. S. Krishnamurthy holds a Master’s Degree in labour management and post graduate diploma in Industrial Relations and Personnel Management (IR & PM) besides a Bachelor’s degree in General Law. He is also a certified Associate of the Indian Institute of Bankers.

Mr. S. Krishnamurthy is a senior banker with extensive experience of over 4 decades with the Reserve Bank of India and commercial banks.

He was the chairman and chief executive officer of Tamil Nadu Mercantile Bank, Tuticorin for a period of 5 years and also served as General Manager (Vigilance & Inspection/Audit) with Indian Overseas Bank, Chennai for 5 years. He was Banking Ombudsman, Chennai for around two years.

He serves on the board of Kerala Ayurveda Limited, Take Solutions Limited and Shriram EPC Limited.

Mr. Vipen Kapur - Non Executive Independent Director

Mr. Vipen Kapur holds bachelors degree in Commerce from University of Madras and is an Associate of the Institute of Bankers, London. He has rich and varied experience in the international banking sector. He has served Grindlays Bank (now Standard Chartered Bank) in various departments with specialization in corporate banking and finance. He was also a Vice President and Head of the New Delhi Branch of Bank of America and gained experience in dealing with large Indian and multinational borrowers. He has served with two major middle east banks including an affiliate of Chase Manhattan Bank (now JP Morgan Chase) in corporate banking and syndications.

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Mr. Vipen Kapur was also the chief operations officer at the Al Rushiad Group overseeing various joint ventures, real estate operations, trading activities and international investments. He has served with a Sinar Mas group of Indonesia as Group Managing Director. He was the President and chief executive officer of New Quest Corporation Private Limited, the parent Company of the Ballarpur Group and was responsible for business rationalization and new ventures. He is presently the Managing Director of Golden Agri Resources (India) Private Limited.

Mr. Ranvir Dewan - Non Executive Non Independent Director

Mr. Ranvir Dewan is a Non-Executive Director on our Board. He is a fellow member of the Institute of Chartered Accountants in England & Wales (FCA) and a member of the Canadian Institute of Chartered Accountants (CA). Mr. Ranvir Dewan holds bachelors degree in Commerce (Hons) from Delhi University, India. Mr. Ranvir Dewan is working in TPG Capital as head of Financial Institutions Group Opertaions since June 2006 and is based in Singapore. He was the Executive Vice President and Chief Financial Officer of Standard Chartered First Bank in Seoul, Korea. He has also spent thirteen years at Citibank and held various senior positions in its international businesses. In his previous assignment, he was Vice-President and Regional Financial Controller of Citibank’s Global Consumer Bank with responsibilities covering 11 countries in the Asia Pacific region. He has also held senior positions with KPMG in Canada and England where he specialized in the audits of financial institutions.

Mr. Ranvir Dewan is an advisor to Taishin Financial Holdings. He serves on the boards of Shriram Transport Finance Company Limited, PT Bank Tabunean Pensiunan Nasional (Indonesia), TPG Asia SF V Pte Limited, TPG Asia SF VI Pte Limited, TPG Star SF Pte Limited and TPG Markets SF Pte Limited.

Mr. V. Murali - Non Executive Independent Director

Mr. V. Murali, is a Bachelor of Commerce from the Vivekananda College, Chennai. He is a Fellow Member of the Institute of Chartered Accountants of India and an Associate Member of the Institute of Cost & Works Accountants of India. Mr. V. Murali is the Senior Partner of M/s Victor Grace & Co., Chartered Accountants, Chennai. He has to his credit more than three decades of experience in the areas of Finance, Accounts & Consultancy. He is elected as a Central Council Member of Institute of Chartered Accountants of India, (“ICAI”) for three terms in succession for the periods 2004-2013. He is at present Chairman of the Board of Studies, Chairman of the Committee on Banking, Insurance and Pension, Vice Chairman of the Ethical Standards Board and a member of various committees constituted by the ICAI. He was nominated as a `Technical Expert' by the Comptroller and Auditor General of India, New Delhi on the Audit Boards of Power Finance Corporation Limited and Rural Electrification Corporation Limited.

Since 2006-07, he has been an Executive Committee Member of The Madras Chamber of Commerce & Industry, Andhra Chamber of Commerce, The Tamil Chamber of Commerce and Hindustan Chamber of Commerce. He is the elected Vice-President of The Hindustan Chamber of Commerce.

Mr. V. Murali is a social worker dedicated to public causes and connected with various professional, cultural, social, voluntary, on-profit organizations, public charitable and welfare organizations.

He serves on the board of Witzenmann (India) Private Limited and Neyveli Lignite Corporation Limited. He was a director on the Board of State Bank of Hyderabad and was the chairman of its Audit Committee.

Mrs. Lakshmi Pranesh - Non Executive Independent Director

Mrs. Lakshmi Pranesh holds a master’s degree in Mathematics from the University of Madras, securing the fischer medal for mathematics. She joined the Indian Administrative Service in 1968 and held posts like Sub Collector, Director of Social Welfare, Director of Employment and Training, Joint Secretary to Government (Finance department), Additional Secretary to Government (Rural Development department), Chairman-Teachers' recruitment Board, Chairman-Handicrafts

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Development Corporation, Secretary to Government of Tamil Nadu in the departments of Chief Minister's Nutritious Noon Meal Programme, Personnel and Administrative Reforms, Labour and Employment, Social welfare, Food and Civil Supplies. She was the Chief Secretary to the Government of Tamil Nadu for the period 2002-2005. She was ex-officio Chairman of the Tamil Nadu Civil Supplies Corporation, Overseas Manpower Corporation, and Women's Economic Development Corporation. She has served as a government nominated director in many corporations in the public sector viz. the Tamil Nadu Industrial Development Corporation, Small Industries Development Corporation, Police Housing Corporation and Agro-Industries Corporation. She participated in many international conferences dealing with subjects like Rural Development, Gender Equity, Micro-credit, Disaster Management and Labour Welfare.

Presently she does not hold directorships in any other company.

Mr. Puneet Bhatia - Non Executive Non Independent Director

Mr. Puneet Bhatia holds a Bachelor's Degree in Commerce (Honors) and is an M.B.A from the Indian Institute of Management, Calcutta. Mr. Bhatia is presently working as the Managing Director and Country -Head, India for TPG Asia.

From 1990 to 1995, he was with ICICI Bank in the project and corporate finance group and thereafter worked as a senior analyst with Crosby Securities for a year. From 1996 to 2002 he was the chief executive of the private equity group GE Capital India.

Mr. Bhatia serves on the Board of Shriram Transport Finance Company Limited, TPG Capital India Private Limited, TPG Wholesale Private Limited, Shriram Capital Limited, Shriram Holdings (Madras) Private Limited, Mylan Laboratories Limited, Flare Estate Private Limited and Shriram Properties Private Limited.

Mr. G. S. Sundararajan - Non Executive Non Independent Director

Mr. G. S. Sundararajan holds a bachelors degree in engineering from College of Agricultural Engineering, Tamil Nadu Agricultural University, Coimbatore and a post graduate diploma in management from the Indian Institute of Management, Ahmedabad. Mr. G. S. Sundararajan is at present the whole-time Director of Shriram Capital Limited,

In this capacity, Mr. G. S. Sundararajan functions on the boards of few companies and provides oversight in critical areas of Strategy, growth opportunities and mentorship of the seniors in each of the businesses. Mr. G. S. Sundararajan also leads the Banking initiative for the group which is one of the key value-enhancing forays in the near future for this financial conglomerate.

Mr. G. S. Sundararajan was the CEO & managing director of Fullerton India Credit Company Limited, a registered Non Banking Finance Company catering to the financial services needs of the retail and commercial mass markets. Fullerton India Credit Company Limited is a fully owned subsidiary of Temasek Holdings, Singapore

Mr. G. S. Sundararajan was also the Managing Director of Fullerton Enterprises Private Limited., a KPO, which had formed a strategic alliance with the Centurion Bank of Punjab. to jointly drive the SME business. Mr. G. S. Sundararajan, was nominated to the boards of two financial services investments of Temasekin China, one in Nanjing for the SME Business and the other in Chengdu in their Village Bank franchise.

He serves on the Board of Shriram Capital Limited, Shriram Credit Company Limited, Shriram General Insurance Company Limited, Shriram Life Insurance Company Limited, Vistaar Financial Services Private Limited and Shriram Equipment Finance Company Limited.

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Mr. Sunil Varma - Non Executive Independent Director

Mr. Sunil Varma is a graduate in Economics, is a Charted Accountant and a Cost & Management Accountant. A business consultant with a long and distinguished career, Mr. Sunil Varma has extensive consulting experience spanning over 30 years with Price Water House, Management Consultants and the IBM Consulting Group in India and Overseas. He has worked in Australia, India, Indonesia, Hong Kong, Thailand, China and other countries in Africa and the Asia-Pacific region.

During his 25 year tenure with Price Water house (now Price Water House Coopers) he headed the consulting practice in Indonesia between 1978 and 1984. Thereafter, he was the Vice-President of the regional/ transnational practice of Price Water house in Asia Pacific until he joined IBM Global Services as the regional adviser to their consulting group in 1994.

Mr. Sunil Varma has advised large multinational as well as domestic companies in the areas of Corporate Governance, Financial Management, Organizational Strengthening, Efficiency Improvement, Process Re-engineering and Business Systems.

The industries to which his expertise extends include Information Technology, Oil & Gas, Fertilizers &Chemicals, Power and Steel. He has handled several very large assignments for public sector undertakings funded by the World Bank, Asian Development Bank and other multi-lateral funding agencies. He officiated as CFO, HCL-Perot Systems and MD, Asia Online Limited, Hong Kong.

He serves on the board of International Asset Reconstruction Company Private Limited, Vistaar Financial Services Private Limited, HKT Limited and HKT Management Limited.

Remuneration of the Directors

The independent directors are paid sitting fees for attending the various meetings of the Board and of the Committees of the Board as under:

Meeting Overall limit per Director (`)

Meetings of the Board 15,000

Meetings of any committee of the Board 10,000

Appointment and Remuneration of the Managing Director

Mr. R. Duruvasan, was appointed as the managing director of our Company for a period of five (5) years with effect from June 6, 2012, pursuant to a resolution of the Board of Directors of our Company passed by circulation on June 1, 2012 and the approval of the shareholders of our Company pursuant to a resolution passed at their AGM held on July 27, 2012. The remuneration payable to our managing director by way of salary and other perquisites, (as authorised by the shareholders of our Company pursuant to resolution(s) passed at their AGM held on July 27, 2012), is as follows:

A. Remuneration:

(i) Salary: ` 3,00,000/- per month with annual increment of not less than 10% per annum with effect from April 1,

every year.

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B. Perquisites:

(i) Housing- Rent free accommodation owned/leased/rented by our Company or Housing Allowance in lieu thereof as per the rules of our Company.

(ii) Club fees- Subscription limited to a maximum of two clubs. No life membership or admission fees shall be paid by our Company. All expenses at club for official purpose shall be reimbursed or paid to the club.

(iii) Expenditure on entertainment for official purpose shall be on the Company’s account.

(iv) Contribution to Provident Fund, Superannuation Fund or Annuity Fund- As per the rules of our Company. These will not be considered or included for the computation of ceiling on perquisites to the extent these either singly or put together are not taxable under the Income Tax Act, 1961.

(v) Gratuity - As per the rules of the company.

(vi) Encashment of leave - As per the rules of the Company.

(vii) Leave - As per the Company’s Rules.

(viii) Company’s car with driver for use on Company’s business and maintenance expenses thereon. Use of car for personal use shall be charged to the Managing Directors.

(ix) Telephone: Telephone charges at residence shall be borne by the Company. Mobile telephone bills shall be paid by the Company. Personal long distance calls shall be charged to the Managing Director.

(x) Newspaper and periodicals- As per the company’s rules.

(xi) Employees Stock Option- As may be decided by the Remuneration Committee/ Board of Directors from time to time according to the Employees Stock Option Scheme of the Company.

(xii) Other terms- As per the company’s Rules, and as may be agreed to by the Board from time to time.

C. Other Terms:

(i) The Managing Director shall not be paid any sitting fees for attending General Meetings and Meetings of the Board or Committee thereof.

(ii) In the event of absence or inadequacy of profits in any financial year, the Managing Director will be paid the above remuneration as minimum remuneration subject to the overall ceilings laid down in Section II of Part II of Schedule XIII of the Act or any modification thereof.

(iii) The Board may revise the existing or allow any other facilities/perquisites from time to time, within overall ceiling.

(iv) The Managing Director shall not retire by rotation.

For further details refer to the section titled “Material Contracts and Documents for Inspection” beginning on page 237 this Draft Prospectus.

134

Borrowing Powers of the Board

Pursuant to resolution passed by the shareholders of our Company at their AGM held on July 27, 2012, and in accordance with provisions of Section 293 (1)(d) of the Act, the Board has been authorised to borrow sums of money as they may deem necessary for the purpose of the business of our Company upon such terms and conditions and with or without security as the Board of Directors may think fit, provided that money or monies to be borrowed together with the monies already borrowed by our Company (apart from temporary loans obtained and/or to be obtained from the Company’s bankers in the ordinary course of business) shall not exceed ` 20,00,000 lacs. Interest of the Directors

All the directors of our Company, including our 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. All the non-executive independent directors of our Company are entitled to sitting fees for every meeting of the board or a committee thereof. The managing director of our Company is interested to the extent of remuneration paid for services rendered as an officer or employee of our Company. All the directors of our Company, including independent directors, may also be deemed to be interested to the extent of Equity Shares, if any, held by them or by companies, firms and trusts in which they are interested as directors, partners, members or trustees and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. All our directors may be deemed to be interested in the contracts, agreements/arrangements entered into or to be entered into by our Company with any company in which they hold directorships or any partnership firm in which they are partners as declared in their respective declarations. Except as otherwise stated in this Draft Prospectus and statutory registers maintained by our Company in this regard, our Company has not entered into any contract, agreements or arrangements during the preceding two years from the date of this Draft Prospectus in which the directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangements which are proposed to be made with them. Our Company’s directors have not taken any loan from our Company.

Debenture holding of Directors:

None of our Directors are holding debentures of our Company.

Changes in the Board of Directors of our Company during the last three years:

The changes in the Board of Directors of our Company in the last three years preceding the date of this Draft Prospectus are as follows:

Name of the Director Date of Change Reason

Mr. V. Parthasarathi November 2, 2009 Resigned as a Director

Mr G. S. Sundararajan December 31,2009 Appointed as an Additional Director

Dr. T.S. Sethurathnam January 30, 2010 Resigned as a Director

Mr. Ranvir Dewan December 1,2010 Appointed as an Additional Director

Mr. Puneet Bhatia December 1,2010 Appointed as an Additional Director

Mrs. Lakshmi Pranesh December 1,2010 Appointed as an Additional Director

Mr. Ramamoorthy Rajagopalan Kuttalam

November 2, 2011 Resigned as a Director

Mr. Mukund Govind Diwan November 15, 2011 Resigned as a Director

Mr. V. Murali December 1, 2011 Appointed s an Additional Director

Mr. Ramamurthy Kannan June 5, 2012 Resigned as the Managing Director

135

Name of the Director Date of Change Reason

and Director with effect from the closing hours of June 5, 2012

Mr. R. Duruvasan June 6, 2012 Appointed as an Additional Director and as the Managing Director with effect from June 6, 2012

Mr. S. Venkatakrishnan August 21, 2012 Resigned as a Director with effect from the closing hours of August 21, 2012

Shareholding of Directors, including details of qualification shares held by Directors

As per the provisions of our MOA and AOA, Directors are not required to hold any qualification shares.

None of our Directors are holding shares in our Company.

Corporate Governance

Our Company has been complying with the requirements of the applicable regulations, including the listing agreement with the Stock Exchanges where our securities are listed and the SEBI Regulations, in respect of corporate governance including constitution of the Board and Committees thereof. The corporate governance framework is based on an effective independent Board, separation of the Board’s supervisory role from the executive management team and constitution of the Board Committees, as required under law. The Board is constituted in compliance with the Companies Act , the listing agreement with Stock Exchanges where our securities are listed and in accordance with best practices in corporate governance. The Board functions either as a full Board or through various committees constituted to oversee specific operational areas. The executive management of our Company provides the Board detailed reports on its performance periodically.

Details of various committees of the Board

Our Company has constituted the following committees:

A. Audit Committee The members of the Audit Committee are: 1. Mr. Sunil Varma- Chairman; 2. Mr. S. Krishnamurthy; 3. Mr. Ranvir Dewan; and 4. Mrs. Lakshmi Pranesh. Terms of Reference: � To oversee the financial reporting process � To recommend appointment and re-appointment of Auditors and their remuneration � Approval of payment to Statutory Auditors for any other services rendered by the Statutory Auditors � Reviewing, with the management, the Financial Statements before submission to the Board

� Revieweing with the management, the statement of uses/application of funds raised through public issue

136

� To ensure proper disclosure in the quarterly , half yearly and Audited Financial Statements

� Reviewing the adequacy of internal audit function including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure , coverage and frequency of internal audit

� Discussing with Internal Auditors on any significant findings and follow up there on

� Reviewing the findings of any internal examinations by the Internal Auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board

� Discussion with Statutory Auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

� To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors, if any.

� To review the functioning of the Whistle Blower Mechanism

� To approve appointment of Chief Financial Officer (CFO) of the Company( person heading the finance function or discharging that function) .

� To have management discussion and analysis of financial condition and results of operations

� To review significant related party transactions

� Management letters/letters of internal control weaknesses issued by the Statutory Auditors

� Internal Audit Reports relating to internal control weaknesses � To review the appointment , removal and terms of remuneration of the Internal Auditor

� Reviewing , with the management, performance of Statutory and Internal Auditors, adequacies of the internal

control systems

� To Carry out any other function as decided by the Board from time to time

� The Company Secretary shall act as the Secretary of the Committee

B. Remuneration and Compensation Committee The members of the Remuneration and Compensation Committee are: 1. Mr. Vipen Kapur- Chairman; 2. Mr. S. Krishnamurthy; and 3. Mr. V. Murali. The terms of reference of the Remuneration and Compensation Committee, inter alia, include: � To determine salaries, benefits and compensation stock options grants to Directors of the Company. � To develop guidelines and broad Remuneration Policy of the Company.

� To guide policies and practices in the talent management of the Company. � To review and approve employment agreements , severance arrangements, change in control agreements.

137

� To establish guidelines and to grant the stock options to employees, Directors, officers of the Company and grant of

options to employees and officers of the subsidiary company. � To administer the Company’s stock incentive plans and other similar incentive plans and interpret and adopt

rules for the operation thereof.

� To form sub committees and take matters as may be assigned by the Board from time to time.

� The Company Secretary of the company acts as the Secretary for the Committee. C. Shareholders’ and Investors’ Grievance Committee The members of the Shareholders’ and Investors’ Grievance Committee are: 1. Mr. G. S. Sundararajan - Chairman; 2. Mr. R. Duruvasan; and 3. Mr. S. Krishnamurthy. The terms of reference of the Shareholders and Investors Grievance Committee, inter alia, include: � Redressal of shareholders', investors', Debenture holders, Debt Holders, customers complaints

� Review the Shareholding pattern and Ownership .

� Facilitate better investor/customer services and relations.

� Transfer of unclaimed Dividend/Deposits/Debentures/Subordinated Debt, to Investor Education and Protection

Fund

� Listing of Securities on Stock Exchanges including Global depository receipts

� Review of Secretarial audits, appointment of Secretarial Auditors and their remuneration

� Address matters relating to Depositories, Registrar and Transfer Agents

� Monitor the Code of Conduct for Insider Trading pursuant to SEBI (Prohibition of Insider Trading) Regulations,

1992

� To form sub committees

� Any other subject as may be assigned by the Board from time to time.

� The Company Secretary shall act as the Secretary of the Committee

D. Asset liability Management Committee The members of the Asset liability Management Committee, (“ALCO”) are: 1. Mr. R. Duruvasan – Chairman; 2. Mr. R. Chandrasekhar; and 3. Mrs. Subhasri Sriram.

The terms of reference of the ALCO, inter alia, include: The ALCO is responsible for ensuring adherence to the limits set by the Board as well as for deciding the business

strategy of the Company in line with the Company’s budget and decided risk management objectives.

The ALCO is the decision-making unit responsible for Balance Sheet planning from risk-return perspective including

strategic management of interest rate and liquidity risks.

138

Its functions include the following:

� Liquidity risk management

� Funding and Capital Planning

� Forecasting and analyzing future business environment and preparation of contingency plans

� Management of Market Risk

� Profit Planning and growth projection

E. Banking and Finance Committee The members of the Banking and Finance Committee are: 1. Mr. G. S. Sundararajan - Chairman 2. Mr. R. Duruvasan; and 3. Mrs. Subhasri Sriram. The terms of reference of the Banking and Finance Committee, inter alia, include: � Banking operations including Open, Close, Operation of all types of Bank Accounts with any Bank and authorize

such person to do all or any of these activities. � Authorise any person/s to accept and confirm the bank balances � Borrow money from bank or any other institution within the limit specified by the Board from time to time either

by short term loan or long term loan by whatever name called. i.e, working capital loan, cash credit, working capital demand loan, short term loan, overdraft, term loan, commercial papers, debentures, subordinated debt, securitization, assignment and any other forms of borrowings

� Invest keep deposited or otherwise the funds of the Company in short term deposits and long term deposits with

banks or any other institutions, in mutual funds or any other funds within the limit sanctioned by the Board and authorize such person/s to do any such activities.

� All matters relating to listing or authorizing for listing of any instruments/securities with stock exchanges and all

matters relating to depositaries.

� To authorize ay person to sign the documents required for banking and borrowing of any nature and such other activities.

� To do all such acts required for all types of banking and borrowing and authorize such other person/s to do any

or all such activities. � To sell down the assets of the Company. � All matters relating to issuing and paying agent, merchant bankers, brokers, trustees, registrar, transfer agents,

legal advisors, bankers, credit rating agencies and related agents for banking and borrowings. � Any other activity related to banking and borrowing or any activity of business importance.

139

Payment of benefits and profit-share to Employees

Except entitlement to stock options under the ESOP 2006 and ESOP 2008, and payments in accordance with the terms of appointment of our employees, we have not paid or granted any amounts or benefits to our employees, in the two years preceding the date of this Draft Prospectus. Our employees are not entitled to any share in the profits of our Company.

140

OUR PROMOTER

Profile of our Promoters

Our Promoters are Shriram Retail Holdings Private Limited and Shriram Enterprise Holdings Private Limited.

A. Shriram Retail Holdings Private Limited

Shriram Retail Holdings Private Limited was incorporated as a private limited company under the Act, with the name Shriram Insurance Holdings Private Limited, vide a certificate of incorporation dated January 24, 2006, issued by the ROC, Tamil Nadu. Subsequently, the name of our Promoter was changed to Shriram Retail Holdings Private Limited and a fresh certificate of incorporation dated January 31, 2008, was issued by the ROC, Chennai, Tamil Nadu. The registered office of our Promoter is located at Mookambika Complex, No.4, Lady Desika Road, Mylapore, Chennai 600 004. Our Promoter is primarily engaged in the business of Investment promotion including facilitating strategic investor or private equity investor or third parties to invest in our Company.

Our Promoter has not been named or set out as a promoter of any other company in any offer document, filing with stock exchange(s) or with any regulatory and/or statutory authorities except Shriram Enterprise Holdings Private Limited and our Company. Further, besides holding shares of our Company, our Promoter does not directly or indirectly hold shares in the share capital of any company. There are no common pursuits between our Company and our Promoter.

Interest of Promoter in our Company

Except as stated under the section titled “Financial Information” beginning on page 146 of this Draft Prospectus and to the extent of their shareholding in our Company, the Promoter does not have any other interest in our Company’s business. Further, our Promoter has no interest in any property acquired by our Company in the last two years from the date of this Draft Prospectus, or proposed to be acquired by our Company.

Our Promoter does not propose to subscribe to this Issue.

Other than the payment of dividend on the shares held by our Promoter in the share capital of our Company and interest paid on Inter-corporate Deposit, we have not paid or granted any amounts or benefits, in the two years preceding the date of this Draft Prospectus. As on August 17, 2012, Shriram Retail Holdings Private Limited holds 2,66,10,571 equity shares of face value of ` 10 each of our Company, aggregating to 50.70% of the paid-up equity share capital of our Company. Details of Shares allotted to our Promoter during the last three Financial Years

There have been no allotments to Shriram Retail Holdings private Limited during the last three Financial years.

Shareholding Pattern of our Promoter as on June 30, 2012:

Sr.

No.

Name of Shareholder No. of Shares Percentage Shareholding (%)

1. Shriram Capital Limited 2,305,997 51.00 2. R. Thyagarajan and Shriram Capital Limited 10 0.00 3. TPG India Investments I INC. 2,215,575 49.00 Total 4,521,582 100.00

141

Board of directors of our Promoter as on June 30, 2012:

1. Mr. Ravi Devaki Venkataraman; and 2. Ms. Akhila Srinivasan.

Changes in the board of directors

There have been no changes in the board of directors of our Promoter in the last three years preceding the date of this Draft Prospectus.

Audited Financial Performance of our Promoter for the last three financial years

(` in lacs)

Particulars FY 2010 FY 2011 FY 2012

Balance Sheet

EQUITY AND LIABILITIES

Shareholder Funds:

Share Capital 452.16 452.16 452.16

Reserves and Surplus 60738.17 61,207.52 60897.10

Non Current Liabilities

Long term borrowings - - -

Long term provisions - - -

Deferred Tax liability - - 158.76

Current Liabilities

Short term borrowings - - -

Trade payables - - -

Other current liabilities 0.16 0.22 0.23

Short term provisions - - -

Total 61,190.49 61,659.90 61,508.25

ASSETS

Non -current assets

Fixed assets Tangible assets - - 1,257.08

Capital work in progress - - -

Non-current investments 55,962.27 55,962.27 55,962.27

Deferred tax assets (net) - - -

Long term loans and advances - - -

Other non-current assets - - -

Current assets

Cash and bank balances 939.82 1,402.24 15.26

Current Investments - - 1,845.18

Loans and Advances 4,288.40 4,228.30 2,428.30

Other current assets - 67.09 0.16

Total 61,190.49 61,659.90 61,508.25

Profit and Loss Account

142

Particulars FY 2010 FY 2011 FY 2012

INCOME

Revenue from operations 334.38 470.59 560.10

Other Income 449.01 - 1.58

Total 873.39 470.59 561.68

EXPENDITURE

Employee benefit expense - - -

Finance Cost - - 11.07

Depreciation and amortisation expense - - 601.12

Other expense 1,542.84 1.28 0.52

Total 1,542.84 1.28 612.71

Profit Before Tax (759.45) 469.31 (51.03)

Provision for Current Tax

Current Tax 86.08 - -

Deferred Tax - - 158.76

Profit After Tax from continuing operations (845.53) 469.31 (209.79)

B. Shriram Enterprise Holdings Private Limited

Shriram Enterprise Holdings Private Limited was incorporated as a private limited company under the Act, with the name Shriram Financial Technology Services Private Limited, vide a certificate of incorporation dated June 29, 1995, issued by the ROC, Tamil Nadu. Subsequently, the name of our Promoter was changed to Shriram Enterprise Holdings Private Limited and a fresh certificate of incorporation dated February 10, 2006, was issued by the ROC, Chennai, Tamil Nadu. The registered office of our Promoter is located at Mookambika Complex, No.4, Lady Desika Road, Mylapore, Chennai 600 004. Our Promoter is primarily engaged in the business of investment promotion including facilitating strategic investor or private equity investor or third parties to invest in our Company.

Our Promoter has not been named or set out as a promoter of any other company in any offer document, filing with stock exchange(s) or with any regulatory and/or statutory authorities. Further, besides holding shares of our Company, our Promoter does not directly or indirectly hold shares in the share capital of any company. There are no common pursuits between our Company and our Promoter.

Interest of Promoter in our Company

Except as stated under the section titled “Financial Information” beginning on page 146 of this Draft Prospectus and to the extent of their shareholding in our Company, the Promoter does not have any other interest in our Company’s business. Further, our Promoter has no interest in any property acquired by our Company in the last two years from the date of this Draft Prospectus, or proposed to be acquired by our Company.

Our Promoter does not propose to subscribe to this Issue.

Other than the payment of dividend on the shares held by our Promoter in the share capital of our Company and interest paid on Inter-corporate Deposit, we have not paid or granted any amounts or benefits, in the two years preceding the date of this Draft Prospectus. As on August 17, 2012, Shriram Enterprise Holdings Private Limited does not hold any equity shares in our Company.

143

Details of Shares allotted to our Promoter during the last three Financial Years Our Company has not allotted any shares to our Promoter during the last three Financial Years.

Shareholding Pattern of our Promoter as on June 30, 2012:

Sr.

No.

Name of Shareholder No. of Shares Percentage Shareholding(%)

1. Shriram Retail Holdings Private Limited 999,990 99.99

2. Sri R. Thyagarajan and Shriram Retail Holdings Private Limited

10 0.01

Total 1,000,000 100.00

Board of directors of our Promoter as on June 30, 2012

1. Mr. Chandrashekhar Ramasubramanian 2. Mr. Ravi Devaki Venkatraman 3. Mr. Murali Srinivasan Changes in the board of directors

The changes in the board of directors of our Promoter in the last three years preceding the date of this Draft Prospectus are as follows:

Name of the Director Date of Change Reason

Mr. Rengaswamy Sundararajan October 1, 2009 Resignation

Mr. Venkataraman Mahalingam May 27, 2010 Deceased

Audited Financial Performance of our Promoter for the last three financial years

(` in lacs)

Particulars FY 2010 FY 2011 FY 2012

Balance Sheet

EQUITY AND LIABILITIES

Shareholder Funds:

Share Capital 1,000.00 1,000.00 1,000.00

Reserves and Surplus 23,991.49 24,976.85 26,080.30

Current Liabilities

Short term borrowings 4,228.30 4,228.30 2,428.30

Trade payables 0.13 0.15 0.15

Short term provisions - - 0.20

Total 29,219.92 30,205.30 29,508.95

ASSETS

Non -current assets

Fixed assets Tangible assets - - -

Capital work in progress - - -

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Particulars FY 2010 FY 2011 FY 2012

Non-current investments 28,311.74 28,311.74 28,311.74

Current assets

Cash and bank balances 908.00 1,893.38 72.35

Current Investments - - 1,124.62

Loans and Advances - - -

Other current assets 0.18 0.18 0.24

Total 29,219.92 30,205.30 29,508.95

Profit and Loss Account

INCOME

Revenue from operations 896.07 985.68 1,103.31

Other Income - - 0.63

Total 896.07 985.68 1,103.94

EXPENDITURE

Other expense 169.84 0.32 0.29

Total 169.84 0.32 0.29

Profit Before Tax 726.23 985.36 1,103.65

Provision for Current Tax - - 0.20

Profit After Tax from continuing operations 726.23 985.36 1103.45

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OUR SUBSIDIARY As on the date of this Draft Prospectus our Company has the following one subsidiary:

1. Shriram Housing Finance Limited (“SHFL”):

SHFL was incorporated pursuant to a certificate of incorporation dated November 9, 2010 and obtained a certificate of commencement of business dated January 21, 2011, issued by the Registrar of Companies, Chennai, Tamil Nadu. SHFL commenced its operations, pursuant to a certificate of registration dated August 4, 2011, issued by the National Housing Bank. The registered office is situated at123, Angappa Naicken Street, Chennai, Tamil Nadu 600001.

Shareholding Pattern:

As on the date of this Draft Prospectus the shareholding pattern of SHFL is as follows:

Sr.

No.

Name of Shareholder No. Of Equity

Shares

Face value of

Equity Shares in

(`̀̀̀)

Percentage of

Equity Share

capital (%)

1. Shriram City Union Finance Limited 69,999,994 10 76.50

2. Subhasri Sriram 1 10 0.00

3. C.R. Dash 1 10 0.00

4. Yalamati Srinivasa Chakravarti 1 10 0.00

5. M. R. Vijaya 1 10 0.00

6. Krithika Doraiswamy 1 10 0.00

7. P Udhaya Geetha 1 10 0.00

8. Valiant Mauritius Partners FDI Limited 21,500,000 10 23.50

Total 91,500,000 100

Board of Directors:

The board of directors of SHFL comprises of the following persons:

1. Mr. Sujan Sinha-Managing Director & Chief Executive Officer;

2. Mrs. Subhasri Sriram; and

3. Mr. Yalamati Srinivasa Chakravarti.

146

SECTION V : FINANCIAL INFORMATION

FINANCIAL STATEMENTS

Sr. No. Particulars Page No.

1. Examination report on Reformatted Unconsolidated Summary Financial Statements as at and for the financial years ended March 31, 2008, 2009, 2010, 2011 and 2012 as issued by the Statutory Auditor

F-1

2. Reformatted Unconsolidated Summary Financial Statements as at and for the financial years ended March 31, 2008, 2009, 2010, 2011 and 2012

F-4

3. Examination report on Reformatted Consolidated Summary Financial Statements as at and for the financial years ended March 31, 2011 and 2012 as issued by Statutory Auditor

F-86

4. Reformatted Consolidated Summary Financial Statements as at and for the financial years ended March 31, 2011 and 2012

F-90

F-1

PIJUSH GUPTA & CO CHARTERED ACCOUNTANTS

P-199, C.I.T.ROAD, SCHEME IV-M, KOLKATA –700 010

EXAMINATION REPORT

To,

The Board of Directors,

Shriram City Union Finance Limited,

123, Angappa Naicken Street,

Chennai-600001

Dear Sirs,

1. We, Pijush Gupta & Co, Chartered Accountants, have examined the Reformatted Unconsolidated

Financial Statements (the "Reformatted Statements") of Shriram City Union Finance Limited (the

"Company") as at and for the years ended March 31, 2012, 2011, 2010, 2009 and 2008 annexed to

this report for the purpose of inclusion in the Offer Document (“OD”) to be filed by the Company in

connection with the offer of Non Convertible Debentures of the Company .The Reformatted

Statements are approved by , Debt Issuance Committee ,the empowered committee of Board of

Directors of the Company (the Committee) and same Reformatted Statements are prepared by the

Company in accordance with the requirements of :

a. paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 ('the Act') and

b. the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations,

2008 ('the Regulations') issued by the Securities Exchange Board of India ('SEBI'), as amended

from time to time in pursuance of Section 11 of the Securities Exchange Board of India Act,

1992 (the "SEBI Act").

Pijush Gupta & Co, Chartered Accountants are referred to as the "Auditors" and the references to

"we", "us" , "our", in this letter, shall be construed accordingly.

The preparation of such Reformatted Statements is the responsibility of the Company's management.

Our responsibility is to report on such statements based on our procedures.

2. We report that the Reformatted Statements have been prepared by the Management from the

audited financial statements of the Company for the years ended March 31, 2012; March 31 2011;

March 31,2010; March 31, 2009 and March 31, 2008 and from the books of account underlying such

audited financial statements of the Company , which were approved by the Board of Directors on

May 18, 2012; May 26 , 2011; May 21 ,2010; May 30, 2009 and June 16, 2008 respectively, which

have been audited by us and in respect of which we have issued audit report dated May 18, 2012;

May 26 , 2011; May 21 ,2010; May 30, 2009 and June 16, 2008 respectively.

3. We have examined the Reformatted Statements, prepared by the Company and approved by the

Committee which is authorised by the Board of Directors, in accordance with the requirements of The

Revised Guidance Note on Reports in Company Prospectuses issued by the Institute of Charted

Accountants of India.

F-2

4. For the purpose of our audit of the unconsolidated financial statements of the Company for the years

ended March 31, 2012, March 31, 2011, March 31, 2010, March 31, 2009 and March 31, 2008, we

have placed reliance on the following:

a. The books of account underlying the audited unconsolidated financial statements and

related working prepared by the company, in respect of the years ended March 31, 2012,

March 31, 2011;March 31, 2010, March 31, 2009 and March 31, 2008

b. The financial statements as at March 31, 2011, March 31, 2010 March 31, 2009 and March

31,2008 relating to corporate region have been audited by us and other regions have been

audited by Branch auditors, whose reports have been forwarded to and considered by us, as

stated in our audit reports dated May 26, 2011; May 21, 2010; May 30, 2009 and June 16,

2008 respectively.

5. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI

Regulations, terms of our engagements agreed with you, we further report that:

(a) The Reformatted unconsolidated Summary Statements of Asset and Liabilities and the schedules

forming part thereof, Reformatted unconsolidated Summary Statements of Profit and Loss

and the schedules forming part thereof and the Reformatted unconsolidated Summary Statement of

Cash Flow ('Reformatted unconsolidated Summary Statement') of the Company, as at March 31,

2012; March 31; 2011; March 31, 2010; Match 31, 2009 and March 31, 2008 examined by

us, have been set out in Annexure I to V to this report. These Reformatted unconsolidated Summary

statements are after regrouping as in our opinion appropriate and more fully described in

Significant Accounting Policies and Notes (Refer Annexure XIII)

(b) Based on the above we state that:

• the Reformatted unconsolidated Summary Statements have to be read in conjunction with

the notes given in Annexure XIII;

• the figures of earlier period have been regrouped , wherever necessary, to conform to the

classification adopted for the Reformatted unconsolidated Summary Statements as at/for

the year ended March 31, 2012;

• there are no extraordinary items which need to be disclosed separately in the reformatted

unconsolidated summary statements; and there are no qualifications in the auditors reports,

which require any adjustments to the reformatted unconsolidated summary statements

6. In the preparation and presentation of the Reformatted Statements based on audited unconsolidated

financial statements as referred to in paragraphs 3 and 4 above, no adjustment have been made for

any events occurring subsequent to the dates of the audit reports specified in paragraph 2 above.

7. As stated in our audit reports referred to in paragraph 2 above, we conducted our audit in accordance

with the auditing standards generally accepted in India to enable us to issue an opinion on the

General Purpose Financial Statements. Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material

misstatements. 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 the management, as well as evaluation of the overall

presentation of financial statements. We believe that our audit provides a reasonable basis for our

opinion.

8. Our audits referred to in paragraph 2 above were carried out for the purpose of certifying the

general purpose financial statements taken as a whole. For none of the periods referred to in

F-3

paragraph 2 above, did we perform audit tests for the purpose of expressing an opinion on individual

balances of account or summaries of selected transactions, and accordingly, we express no such

opinion thereon.

9. We have not audited any unconsolidated financial statements of the Company as of any date or for

any period subsequent to March 31, 2012. Accordingly, we express no opinion on the financial

position, results of operations or cash flows of the Company as of any date or for any period

subsequent to March 31, 2012.

Other unconsolidated Financial Information:

10. At the Company's request, we have also examined the following unconsolidated financial information

proposed to be included in the OD prepared by the management and approved by the

Committee and annexed to this report relating to the Company for the years ended (unless specified

“as at”) March 31, 2012, March 31, 2011, March 31, 2010, March 31, 2009 and March 31, 2008:

- Statement of contingent liabilities as at March 31, 2012, March 31, 2011, March 31, 2010,

March 31, 2009 and March 31, 2008, enclosed as Annexure VI

- Statement of dividend paid /proposed, enclosed as Annexure VII

- Statement of accounting ratios relating to earnings per share, net asset value (as at March

31, 2012, March 31, 2011, March;31, 2010, March 31, 2009 and March 31, 2008) , return on

net worth (as at March 31, 2012, March 31, 2011, March 31, 2010, March 31, 2009 and

March 31, 2008), enclosed as Annexure VIII

- Statement of Secured and Unsecured Loans including terms and conditions, enclosed as

Annexure IX & X (as at March 31, 2012, March 31, 2011, March 31, 2010, March 31, 2009

and March 31, 2008)

- Capitalization Statement as at March 31, 2012, enclosed as Annexure XI

- Statement of tax shelters, enclosed as Annexure XII.

11. In our opinion, the Reformatted Unconsolidated financial information as disclosed in the

annexures to this report, read with the respective significant accounting policies and notes

disclosed in Annexure XIII, as considered appropriate and disclosed, has been prepared in

accordance with Paragraph B (1) of Part II of Schedules II of the Act and the Regulations.

12. We have no responsibility to update our report for events and circumstances occurring

after the date of the report.

13. This report should not in any way be construed as a re-issuance or redating of any of the

previous audit reports issued by us nor should this be construed as a new opinion on any of

the financial statements referred to herein.

14. This report is intended for your information and for inclusion in the Offering document filed in

connection with the proposed offer of Non-Convertible Debenture of Shriram City Union Finance

Limited and is not to be used, referred to or distributed for any other purpose, without our prior

written consent,

For Pijush Gupta & Co,

Firm Registration No: 309015E

Chartered Accountants

Pijush Kumar Gupta

Partner

Membership No: 015139

Date: - August 1, 2012

F-4

Shriram City Union Finance Limited

Annexure I

Reformatted Summary of Assets and Liabilities

`̀̀̀ in lacs

Particulars Notes As at March 31,

2012 2011 2010 2009 2008

Equity and Liabilities

A. Shareholders’ funds

(a) Share capital 1 5,236.72 4,953.69 4,915.47 4,585.68 6,444.48

(b) Reserves and surplus 2 1,59,822.32 1,16,253.59 95,084.15 63,688.56 38,303.11

(c) Money received against share warrants 1.4 8,437.00 - - 2,700.00 232.20

Total Shareholders’ funds

1,73,496.04 1,21,207.28 99,999.62 70,974.24 44,979.79

B. Share application money pending allotment - - 0.71 - -

C. Non-current liabilities

(a) Long-term borrowings 3 6,31,400.98 4,13,366.00 1,75,745.30 1,58,524.22 1,30,935.37

(b) Deferred tax liabilities (net) 9 - - - - 632.99

(c) Other long-term borrowings 4 44,591.61 31,824.39 18,494.31 10,526.29 8,862.40

(d) Long-term provisions 5 1,024.94 1,265.20 1,457.57 1,975.89 973.79

Total Non-current liabilities

6,77,017.53 4,46,455.59 1,95,697.18 1,71,026.40 1,41,404.55

D. Current liabilities

(a) Short-term borrowings 6 1,23,794.53 1,57,437.62 1,93,157.06 1,51,788.78 1,15,153.34

(b) Other current liabilities 4 2,82,715.23 2,00,574.79 1,25,711.12 1,44,562.82 74,020.50

(c) Short-term provisions 5 7,829.34 5,874.88 2,817.94 1,614.18 1,563.01

Total Current liabilities

4,14,339.10 3,63,887.29 3,21,686.12 2,97,965.78 1,90,736.85

E. Total Equity and Liabilities (A+B+C+D) 12,64,852.67 9,31,550.16 6,17,383.63 5,39,966.42 3,77,121.19

Assets

F. Non-current assets

(a) Fixed assets

(i) Tangible assets 7 5,124.03 2,737.94 1,752.14 3,717.33 5,108.06

(ii) Intangible assets 7 130.28 206.49 292.38 4.65 -

(b) Non-current investments 8 1,781.45 551.45 101.45 601.45 601.45

(c) Deferred tax assets 9 1,314.44 1,581.66 1,122.70 313.05 -

(d) Long-term loans and advances 10 2,49,575.13 2,09,228.90 1,82,467.47 1,59,837.59 1,25,979.22

(e) Other non-current assets 11 36,908.80 10,632.14 3,733.99 5,112.91 676.68

Total Non-current assets

2,94,834.13 2,24,938.58 1,89,470.13 1,69,586.98 1,32,365.41

G. Current assets

(a) Current investments 12 - - - 5.00 3.53

(b) Cash and bank balances 13 1,15,649.90 2,09,950.14 1,36,990.05 1,55,699.67 86,997.06

(c) Short-term loans and advances 10 8,22,512.52 4,82,108.27 2,85,205.31 2,13,852.49 1,56,797.38

(d) Other current assets 11 31,856.12 14,553.17 5,718.14 822.28 957.81

Total Current assets

9,70,018.54 7,06,611.58 4,27,913.50 3,70,379.44 2,44,755.78

H. Total Assets (F+G) 12,64,852.67 9,31,550.16 6,17,383.63 5,39,966.42 3,77,121.19

F-5

Shriram City Union Finance Limited

Annexure I

Reformatted Summary of Assets and Liabilities

`̀̀̀ in lacs

Net worth As at March 31,

2012 2011 2010 2009 2008

(i) Share capital 5,236.72 4,953.69 4,915.47 4,585.68 6,444.48

(ii) Reserves and surplus 1,59,822.32 1,16,253.59 95,084.15 63,688.56 38,303.11

(iii) Money received against share warrants 8,437.00 - - 2,700.00 232.20

(iv) Share application money pending allotment - - 0.71 - -

(v) Less: Miscellaneous Expenditure (to the extend not written of or adjusted)

1,106.23 - - - -

Total (i+ii+iii+iv-v) 1,72,389.81 1,21,207.28 1,00,000.33 70,974.24 44,979.79

The accompanying statement of Significant Accounting policies and Notes to Account on Summary Financial Statements are integral part of this statement.

As per our report of even date For and on behalf of the Board of Directors of

Shriram City Union Finance Limited

For Pijush Gupta & Co.

Firm Registration No: 309015E

Chartered Accountants

R. Duruvasan

S.Venkatakrishnan

Pijush Kumar Gupta Managing Director Director

Partner

Membership no: 015139

C R Dash

Place: Chennai

Company Secretary

Date: August 1, 2012

F-6

Shriram City Union Finance Limited

Annexure II

Reformatted Summary of Statement of Profit and Loss

`̀̀̀ in lacs

Particulars Notes For year the ended March 31,

2012 2011 2010 2009 2008

A. Income

(a) Revenue from Operation 14 2,03,747.82 1,32,053.58 1,07,711.13 92,466.04 61,153.31

(b) Other Income 15 1,893.61 291.07 3,079.36 1,036.02 1,246.47

Total Revenue

2,05,641.43 1,32,344.65 1,10,790.49 93,502.06 62,399.78

B. Expenses:

(a) Employee benefits expenses 16 9,236.77 4,367.02 3,611.63 3,582.75 2,274.74

(b) Finance costs 17 92,858.01 55,145.42 49,182.04 46,251.94 27,053.74

(c) Depreciation and amortisation expenses 7 1,371.34 747.41 464.77 1,018.23 1,127.52

(d) Other expenses 18 31,924.25 24,173.01 16,740.57 16,866.25 14,070.34

(e) Provisions & write offs (net) 19 17,834.75 11,851.70 12,165.62 7,809.36 5,174.98

Total expenses

1,53,225.12 96,284.56 82,164.63 75,528.53 49,701.32

C. Profit before tax (A-B)

52,416.31 36,060.09 28,625.86 17,973.53 12,698.46

D. Tax expense:

(a) Current tax

16,898.55 12,460.20 9,972.11 7,055.25 6,134.29

(b) Deferred tax

267.22 (458.96) (809.65) (946.04) (2,340.33)

(c) Wealth tax

- - - 1.76 -

(d) Fringe benefit tax

- - - 161.79 141.00

(e)Tax of earlier years

997.42 - 37.54 - -

Total tax expense

18,163.19 12,001.24 9,200.00 6,272.76 3,934.96

E. Profit after tax from continuing

operations (C-D) 34,253.12 24,058.85 19,425.86 11,700.77 8,763.50

Earnings per equity share:

Equity shares of par value `10/- each

Basic (`)

68.75 48.78 41.22 25.77 21.95

Diluted (`)

68.22 47.97 40.32 22.44 21.74

The accompanying statement of Significant Accounting policies and Notes to Account on Summary Financial Statements are integral part of this statement.

As per our report of even date For and on behalf of the Board of Directors of Shriram City Union Finance Limited

For Pijush Gupta & Co.

Firm Registration No: 309015E

Chartered Accountants

R. Duruvasan

S.Venkatakrishnan

Pijush Kumar Gupta Managing Director Director

Partner

Membership no: 015139

C R Dash

Place: Chennai

Company Secretary

Date: August 1, 2012

F-7

Shriram City Union Finance Limited

Annexure III

Reformatted Summary of Cash Flow Statement

` ` ` ` in lacs

Particulars For year the ended March 31,

2012 2011 2010 2009 2008

A. Cash flow from Operating activities

Net profit before taxation 52,416.31 36,060.09 28,625.86 17,973.53 12,698.46

Non-cash adjustments to reconcile profit before tax to net cash flows:

Depreciation and amortization 1,371.34 747.41 464.77 1,018.23 1,127.52

Provision for impairment - - - 1,186.81 -

(Profit)/loss on sale of fixed assets 3.52 13.78 1.60 0.12 3.35

Employees Stock option compensation expenses

191.82 471.68 751.53 1,111.28 542.09

Share and debenture issue expenses written off

162.05 - - - 2.13

Provision for non performing assets and bad debt written off

16,889.81 10,136.82 12,165.62 7,809.36 5,174.98

Contingent Provision on Standard assets 944.94 1,714.89 - -

Provision for hedging contracts (772.49) (546.62) - 994.18 811.68

Provision for gratuity 63.55 40.82 15.88 6.46 104.70

Provision for leave benefits 25.08 27.48 9.87 1.51 13.60

Provision for diminution in value of investments

- - - - (3.80)

Net (gain)/loss on sale of investments (134.74) - (1,400.00) 0.08 -

Interest income on current and long term investments and interest income on fixed deposits

(1,140.59) (270.70) (1,203.65) (258.14) (228.64)

Dividend Income (596.67) - (444.91) (56.47) (46.06)

Operating profit before working capital changes

69,423.93 48,395.65 38,986.57 29,786.95 20,200.01

Movement in Working capital:

(Increase) / decrease in assets under financing activities

(3,95,959.82) (2,33,365.56) (1,06,665.06) (1,05,885.40) (1,08,713.59)

(Increase) / decrease in Short-term loans and advances

(577.32) 86.00 240.73 2,244.60 (142.47)

(Increase) / decrease in Long-term loans and advances

(1,103.15) (521.66) 13.82 4,149.27 (1,670.97)

(Increase) / decrease in other current assets (17,025.15) (8,835.03) (4,895.86) 135.53 (227.78)

(Increase) / decrease in other non-current assets

(14,915.23) (3,526.56) (506.74) 59.67 (59.26)

Increase / (decrease) in other current liabilities

82,140.44 74,863.67 (18,851.70) 70,542.32 20,008.94

Increase / (decrease) in other non-current liabilities

12,767.22 13,330.08 7,968.02 1,663.89 (483.64)

Cash generated from operation (2,65,249.08) (1,09,573.41) (83,710.22) 2,696.83 (71,088.76)

Direct taxes paid (net of refund) (16,862.29) (11,127.69) (9,197.57) (6,450.11) (6,522.66)

Net Cash flow from/(used in) operating

activities (A) (2,82,111.37) (1,20,701.10) (92,907.79) (3,753.28) (77,611.42)

F-8

Shriram City Union Finance Limited

Annexure III

Reformatted Summary of Cash Flow Statement

` ` ` ` in lacs

Particulars For year the ended March 31,

2012 2011 2010 2009 2008

B. Cash flow from investing activities

Investment in Fixed Deposit (having original maturity of more than three months)

51.00 145.00 611.34 (209.76) 763.47

Investment in margin money deposit (21,747.88) 7,937.17 (13,367.04) (5,645.94) (710.84)

Purchase of fixed and intangible assets (3,686.08) (1,663.61) (1,058.11) (879.02) (670.26)

Proceeds from sale of fixed assets 1.33 2.52 2,269.20 59.93 1.81

Investment in subsidiary company (1,230.00) (250.00) - (4.55) (4.99)

Purchase of non-current investments - (200.00) - - -

Proceeds from sale of non-current investments

- - 1,900.00 - 4.55

Proceeds from sale of current investments (net)

134.74 - 5.00 3.00 59.50

Interest received on current and long term investments and interest on fixed deposits

1,140.59 270.70 1,203.65 258.14 228.64

Dividend received 596.67 - 444.91 56.47 46.06

Net cash flow from/(used in) investing

activities (B) (24,739.63) 6,241.78 (7,991.05) (6,361.73) (282.06)

C. Cash flow from financing activities

Proceeds from issue of equity share capital including securities premium and share application money

21,732.61 133.05 11,717.48 15,453.21 2,960.20

Increase / (decrease) of long-term borrowings 2,18,034.98 2,37,620.70 17,221.08 27,588.85 49,737.16

Increase / (decrease) of short-term borrowings (33,643.09) (35,719.44) 41,368.28 36,635.44 77,913.21

Public issue expenses for non-convertible debenture paid

(1,268.28) - - - -

Dividend Paid (2,985.09) (2,710.89) (2,358.20) (1,897.26) (1,324.00)

Tax on dividend (484.25) (450.25) (400.78) (322.42) (225.01)

Net Cash flow from/(used in) financing

activities (C) 2,01,386.88 1,98,873.17 67,547.86 77,457.82 1,29,061.56

Net increase / (decrease) in cash and cash

equivalents (A+B+C) (1,05,464.12) 84,413.85 (33,350.98) 67,342.81 51,168.08

Cash and cash equivalents at the beginning

of the year 2,01,052.74 1,16,638.89 1,49,989.87 82,647.06 31,478.98

Cash and cash equivalents at the end of the

year 95,588.62 2,01,052.74 1,16,638.89 1,49,989.87 82,647.06

F-9

Shriram City Union Finance Limited

Annexure III

Reformatted Summary of Cash Flow Statement

`̀̀̀ in lacs

Component of cash and cash equivalents For the year ended March 31,

2012 2011 2010 2009 2008

Cash on hand and remittance in transit 7,520.43 6,025.87 3,590.69 1,602.77 1,907.24 Balances with banks:

Current Account 31,514.92 95,504.76 93,133.90 37,506.22 36,671.80 Balance in unpaid dividend accounts 30.77 22.11 17.03 20.87 22.78 Bank Deposit with maturity of less than 3 months

56,522.50 99,500.00 19,897.27 1,10,860.01 44,045.24

Total Cash and cash equivalents 95,588.62 2,01,052.74 1,16,638.89 1,49,989.87 82,647.06

As per our report of even date For and on behalf of the Board of Directors of

Shriram City Union Finance Limited

For Pijush Gupta & Co.

Firm Registration No: 309015E

Chartered Accountants

R. Duruvasan S.Venkatakrishnan

Pijush Kumar Gupta Managing Director Director Partner

Membership no: 015139

C R Dash

Place: Chennai

Company Secretary Date : August 1, 2012

F-10

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

1. Share capital `̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Authorised

Equity share capital * 10,000.00 6,000.00 6,000.00 6,000.00 4,500.00

Cumulative redeemable preference share capital 4,000.00 4,000.00 4,000.00 4,000.00 4,000.00

14,000.00 10,000.00 10,000.00 10,000.00 8,500.00

Number of equity shares of `10/- each 10,00,00,000 6,00,00,000 6,00,00,000 6,00,00,000 4,50,00,000

Number of Cumulative redeemable preference shares of ` 100/- each

40,00,000 40,00,000 40,00,000 40,00,000 40,00,000

Issued, subscribed and fully paid-up

Equity share capital 5,236.72 4,953.69 4,915.47 4,585.68 4,115.50

Number of equity shares of `10/- each 5,23,67,209 4,95,36,877 4,91,54,700 4,58,56,800 4,11,55,000

Cumulative redeemable preference share capital - - - - 2,328.98

Number of preference shares of `100/- each - - - - 23,28,980

Total Issued, subscribed and fully paid-up share

capital 5,236.72 4,953.69 4,915.47 4,585.68 6,444.48

* Necessary returns for increase in authorised equity capital for the year ended on March 31, 2012 and March 31, 2009 were filed with Registrar of companies, Chennai on April 7, 2012 and May 6, 2008 respectively.

1.1 Reconciliation of the shares outstanding at the beginning and at the end of the reporting period

Equity share

Particulars As at March 31,

2012 2011 2010 2009 2008

Number of shares outstanding at the beginning of the year

4,95,36,877 4,91,54,700 4,58,56,800 4,11,55,000 3,91,00,000

Number shares issued during the year - ESOP [Refer Annex XIII note 5]

5,30,332 3,82,177 47,900 6,800 -

Number shares issued during the year - Preferential issue [Annex IV note 1.6]

23,00,000 - - 32,50,000 -

Number shares issued during the year - Warrant conversion

- - 32,50,000 14,45,000 20,55,000

Number of shares outstanding at the end of the year 5,23,67,209 4,95,36,877 4,91,54,700 4,58,56,800 4,11,55,000

Preference shares

Particulars As at March 31,

2012 2011 2010 2009 2008

Number of shares at the beginning of the year - - - 23,28,980 23,28,980

Number of shares issued during the year - - - - -

Number of shares redeemed during the year - - - 23,28,980 -

Number of shares at the end of the year - - - - 23,28,980

F-11

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Equity share capital `̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Share capital outstanding at the beginning of the year 4,953.69 4,915.47 4,585.68 4,115.50 3,910.00

Issued during the year-ESOP 53.03 38.22 4.79 0.68 -

Issued during the year-Preferential issue 230.00 - - 325.00 -

Issued during the year-Warrant conversion - - 325.00 144.50 205.50

Share capital outstanding at the end of the year 5,236.72 4,953.69 4,915.47 4,585.68 4,115.50

Preference share capital `̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Share capital outstanding at the beginning of the year - - - 2,328.98 2,328.98

Issued during the year - - - - -

Redeemed during the year - - - 2,328.98 -

Share capital outstanding at the end of the year - - - - 2,328.98

1.2 Terms / rights attached to equity shares

The company has only one class of equity share having a par value of ` 10/- per share. Each holder of the equity share is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the respective Annual General Meeting.

The dividend per equity share (including interim dividend) recognised as distribution to equity shareholders is as under:

Dividend As at March 31,

2012 2011 2010 2009 2008

Equity share of `10/- each (in `) 6.50 6.00 5.00 4.00 4.00

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

1.3 Details of shareholders holding more than 5% shares in the company

Name of the shareholders As at March 31,

2012 2011 2010 2009 2008

Equity share of `̀̀̀10 each fully paid Shriram Enterprise Holding Pvt. Ltd.

No. of Shares held 1,79,21,462 1,79,21,462 1,79,21,462 1,79,21,462 1,64,76,462 % of holding in the class 34.22 36.18 36.46 39.08 40.04

Shriram Financial Services Holdings Pvt. Ltd.

No. of Shares held - - - - 54,20,000

% of holding in the class - - - - 13.17

Shriram Retail Holding Pvt. Ltd.

No. of Shares held 85,56,201 85,56,201 85,56,201 54,41,700 -

% of holding in the class 16.34 17.27 17.41 11.87 -

F-12

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Van Gogh Ltd.

No. of Shares held 66,25,000 66,25,000 66,25,000 59,62,500 53,00,000 % of holding in the class 12.65 13.37 13.48 13.00 12.88

Indopark Holdings Ltd

No. of Shares held - - - 40,00,000 40,00,000 % of holding in the class - - - 8.72 9.72

CPIM Structured Credit Fund A 20 Ltd.

No. of Shares held - - - - 22,00,000

% of holding in the class - - - - 5.35

Norwest Venture Partners X FII-Mauritius

No. of Shares held 43,42,179 43,42,179 43,42,179 - -

% of holding in the class 8.29 8.77 8.83 - -

IDBI Trusteeship Services Ltd.

No. of Shares held 37,00,054 37,00,054 37,00,054 - -

% of holding in the class 7.07 7.47 7.53 - -

Bessemer Venture Partners Trust

No. of Shares held 25,00,000 25,00,000 25,00,000 - -

% of holding in the class 4.77 5.05 5.09 - -

Preference share of `̀̀̀100 each fully paid

Shriram Financial Services Holding Pvt. Ltd.

No. of Shares held - - - - 20,79,030

% of holding in the class - - - - 89.27%

1.4 Shares reserved for issue under option:

(i) For detail of share reserved for issue under the employees stock option scheme (ESOP) [Refer Annex XIII note 5]

(ii) Preferential issue of share warrants:

During the year ended Mar 31, 2012, warrants were issued /allotted to Shriram Capital Limited conferring an option to the holder to subscribe to one equity share per warrant within a period of 18 months from the date of allotment. During the year ended March 31, 2009, warrants were issued /allotted to Asiabridge Fund I LLC (5,87,500), Bessemer Venture Partners Trust (12,50,000), IDBI Trusteeship Services Ltd (7,50,000), Van Gogh Limited (6,62,500) and Shriram Retail Holdings Pvt. Ltd (35,00,000) conferring an option to the holder to subscribe to one equity share per warrant within a period of 12 months (18 months for Shriram Retail Holdings Pvt. Ltd) from the date of allotment.

F-13

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Particulars As at March 31,

2012 2011 2010 2009 2008

No of warrants issued 59,00,000 - - 67,50,000 -

Exercise Price (`) 570.00 - - 400.00 160.00

Subscription price per warrant (`) 143.00 - - 40.00 -

Subscription Amount (` in lacs) 8,437.00 - - 2,700.00 -

Equity Shares allotted on exercise of options - - 32,50,000* 14,45,000 20,55,000

Amount received on exercising the option to convert into equity shares (` in lacs)

- - 11,700.00 2,080.80 2,959.20

* Out of 67,50,000 warrants issued during the year ended on March 31, 2009, 32,50,000 options were exercised for conversion into equity shares. The balance 35, 00,000 warrants were not exercised for conversion into shares and they lapsed . The amount received for subscribing to 35, 00,000 warrants, at a subscription price of ` 40 per warrant amounting to `1400 lacs credited to capital reserve.

During the year ended March 31, 2007 an amount of ` 232.20 was received towards subscription of 14,45,000 @ ` 16.00 per warrant.

1.5 The company issued 13,55,000 equity shares during the period of five years immediately preceding the reporting date on exercise of options granted under ESOP, wherein a part of the consideration was received in form of employee service.

1.6 Preferential Allotment of equity Shares :

During the year ended on March 31, 2012, 23,00,000 equity shares of the company were issued/allotted to Shriram Capital Limited for cash at a subscription price of `570.00 per equity share (includes a premium of `560.00 per equity share).During the year ended March 31, 2009, equity shares were issued /allotted to Asiabridge Fund I LLC (5,87,500), Bessemer Venture Partners Trust

(12,50,000), IDBI Trusteeship Services Ltd (7,50,000), Van Gogh Limited (6,62,500) for cash on preferential basis at the rate of ` 400/- per share (includes a premium of `390/- per share).

F-14

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

2. Reserves & surplus `̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Capital reserves

Opening balance 1,400.00 1,400.00 - - -

Add : forfeiture of optionally convertible warrants - - 1,400.00 - -

Closing balance 1,400.00 1,400.00 1,400.00 - -

Capital redemption reserve

Opening balance 2,328.98 2,328.98 2,328.98 - -

Add: transfer from statement of profit & loss - - - 2,328.98 -

Closing balance 2,328.98 2,328.98 2,328.98 2,328.98 -

Securities premium

Opening balance 50,797.13 49,836.14 37,040.70 22,181.10 19,098.60

Add : securities premium credited during the year 14,213.52 960.99 12,795.44 14,859.60 3,082.50

Closing balance 65,010.65 50,797.13 49,836.14 37,040.70 22,181.10

Debenture redemption reserve

Opening balance - - - - -

Add: transfer from statement of profit & loss 4,914.00 - - - -

Less: transfer to general reserve - - - - -

Closing balance 4,914.00 - - - -

Stock options outstanding

Employee stock option outstanding 878.15 2,079.09 2,882.26 2,990.73 3,006.12

Less: transfer to deferred employee compensation outstanding

- (191.82) (601.22) (1,352.76) (2,464.04)

Closing balance 878.15 1,887.27 2,281.04 1,637.97 542.08

Statutory reserve (pursuant to section 45-IC of the RBI

act, 1934)

Opening balance 15,960.00 11,150.00 7,260.00 4,920.00 3,158.89

Add: transfer from statement of profit & loss 6,860.00 4,810.00 3,890.00 2,340.00 1,761.11

Closing balance 22,820.00 15,960.00 11,150.00 7,260.00 4,920.00

General reserve

Opening balance 7,767.90 5,357.90 3,417.90 2,247.90 1,360.00

Add: transfer from statement of profit & loss 3,430.00 2,410.00 1,940.00 1,170.00 880.00

Add: transfer from investment allowance reserve - - - - 7.90

Closing balance 11,197.90 7,767.90 5,357.90 3,417.90 2,247.90

F-15

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

2. Reserves & surplus `̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Investment allowance reserve

Opening balance - - - - 7.90

Less: transfer to general reserve since utilised - - - - (7.90)

Closing balance - - - - -

Surplus in the statement of profit & loss

Opening balance 36,112.31 22,730.09 12,003.01 8,412.03 4,471.38

Add: net profit for the year 34,253.12 24,058.85 19,425.86 11,700.77 8,763.50

Less: Appropriations

- Interim dividend-Equity (1,251.30) (1,236.25) (982.28) (501.85) (391.00)

- Interim dividend - cumulative redeemable preference share

- - - (63.17) (141.59)

- Tax on interim dividend (202.99) (205.33) (166.94) (96.02) (90.52)

- Proposed final equity dividend (2,094.69) (1,733.79) (1,474.64) (1,375.92) (1,332.15)

- Proposed final preference dividend - - - - (0.08)

- Tax on proposed dividend (339.81) (281.26) (244.92) (233.84) (226.40)

- Transfer to statutory reserves (pursuant to section 45-IC of the RBI act, 1934)

(6,860.00) (4,810.00) (3,890.00) (2,340.00) (1,761.11)

- Transfer to general reserve (3,430.00) (2,410.00) (1,940.00) (1,170.00) (880.00)

- Transfer to capital redemption reserve - - - (2,328.98) -

- Transfer to debenture redemption reserve (4,914.00) - - - -

Net surplus in the statement of profit & loss 51,272.64 36,112.31 22,730.09 12,003.01 8,412.03

Total 1,59,822.32 1,16,253.59 95,084.15 63,688.56 38,303.11

F-16

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

3. Long-term borrowings

` ` ` ` in lacs

Particulars

Non-current portion

As at March 31,

2012 2011 2010 2009 2008

Secured

Privately placed redeemable non-convertible debentures (Retail) [Refer Annex IV note 3.1(A)(i)]

1,32,134.87 94,640.44 73,522.92 53,782.79 39,623.82

Privately placed redeemable non-convertible debentures (Institutional) [Refer Annex IV note 3.1(A)(ii)(a),(b)&(c)]

58,726.67 58,750.00 10,000.00 - 5,000.00

Public issue of redeemable non-convertible debentures [Refer Annex IV note 3.1(A)(iii)]

75,000.00 - - - -

Term loan from banks [Refer Annex IV note 3.1(B)(i)]

2,74,356.88 2,03,304.65 43,536.05 60,925.77 48,922.05

Term loan from financial institutions [Refer Annex IV 3.1(B)(ii)]

16,500.00 6,500.00 - 2,098.80 9,426.40

Total secured long-term borrowing 5,56,718.42 3,63,195.09 1,27,058.97 1,16,807.36 1,02,972.27

Unsecured

Fixed deposits [Refer Annex IV note 3.2(A)] 8.71 13.57 41.31 39.21 58.32

Subordinated debts [Refer note Annex IV 3.2(B)(i)(ii)]

74,673.85 50,157.34 48,645.02 41,677.65 27,904.78

Total unsecured long-term borrowing 74,682.56 50,170.91 48,686.33 41,716.86 27,963.10

Total 6,31,400.98 4,13,366.00 1,75,745.30 1,58,524.22 1,30,935.37

F-17

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

3. Long-term borrowings

` ` ` ` in lacs

Particulars

Current maturities

As at March 31,

2012 2011 2010 2009 2008

Secured

Privately placed redeemable non-convertible debentures (Retail) [Refer Annex IV note 3.1(A)(i)]

73,820.06 60,653.87 60,550.85 46,958.31 24,482.57

Privately placed redeemable non-convertible debentures (Institutional) [Refer Annex IV note 3.1(A)(ii)(a),(b)&(c)]

14,733.33 5,833.33 - 5,000.00 -

Term loan from banks [Refer Annex IV note 3.1(B)(i)]

1,09,558.27 92,372.63 30,873.10 62,636.97 27,170.97

Term loan from financial institutions [Refer Annex IV 3.1(B)(ii)]

- - 2,030.00 7,327.60 2,048.60

Total secured long-term borrowing 1,98,111.66 1,58,859.83 93,453.95 1,21,922.88 53,702.14

Unsecured

Fixed deposits (Refer Annex IV note 3.2(A)) 13.50 41.53 59.43 73.59 107.35

Subordinated debts (Refer note Annex IV 3.2(B)(i)(ii))

8,900.16 3,114.99 4,357.93 40.88 132.00

Total unsecured long-term borrowing 8,913.66 3,156.52 4,417.36 114.47 239.35

Amount disclosed under the head "other current liabilities"[Refer Annex IV note 4]

(2,07,011.82) (1,61,974.82) (97,811.88) (1,21,963.76) (53,834.14)

Amount disclosed under the head "short-term borrowings" [Refer Annex IV note 6]

(13.50) (41.53) (59.43) (73.59) (107.35)

Total - - - - -

F-18

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted summary of Assets and Liabilities

3.1 Secured loans - Long term borrowings

A. Secured redeemable non convertible debenture

(i) Privately placed secured redeemable non convertible debentures of (NCDs)`̀̀̀1000/- each - Unquoted (Retail)

Terms of repayment as at March 31, 2012 ` ` ` ` in lacs

Redeemable at par within

Rate of interest

< 10% >= 10% <

12%

>= 12% <

14%

>= 14% Total

Over 60 months - - 321.36 - 321.36

48-60 Months 11.72 1,616.20 241.48 1.12 1,870.52

36-48 Months 620.49 1,339.37 - 292.28 2,252.14

24-36 months 1,511.71 68,577.25 3.10 115.36 70,207.42

12-24 months 28,045.27 28,756.66 571.14 110.36 57,483.43

Total non-current portion 30,189.19 1,00,289.48 1,137.08 519.12 1,32,134.87

12 months 47,129.83 25,680.74 833.21 176.28 73,820.06

Total current maturities 47,129.83 25,680.74 833.21 176.28 73,820.06

Grand Total 77,319.02 1,25,970.22 1,970.29 695.40 2,05,954.93

Terms of repayment as at March 31, 2011

` ` ` ` in lacs

Redeemable at par within

Rate of interest

< 10% >= 10% < 12%

>= 12% < 14%

>= 14% Total

Over 60 months - - 562.84 1.12 563.96

48-60 months 610.17 549.30 - 292.28 1,451.75

36-48 months 500.41 1,636.83 3.10 115.36 2,255.70

24-36 months 19,582.78 26,542.68 571.95 110.36 46,807.77

12-24 months 16,735.32 25,815.00 834.66 176.28 43,561.26

Total non-current portion 37,428.68 54,543.81 1,972.55 695.40 94,640.44

12 months 34,123.40 11,221.33 14,750.14 559.00 60,653.87

Total current maturities 34,123.40 11,221.33 14,750.14 559.00 60,653.87

Grand Total 71,552.08 65,765.14 16,722.69 1,254.40 1,55,294.31

F-19

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Terms of repayment as at March 31, 2010

`̀̀̀ in lacs

Redeemable at par within

Rate of interest

< 10% >= 10% <

12%

>= 12% <

14%

>= 14% Total

Over 60 months 562.84 293.40 856.24

48-60 months 270.00 1,347.80 3.10 115.36 1,736.26

36-48 months 120.65 720.58 572.65 110.36 1,524.24

24-36 months 8099.41 26085.87 836.77 176.28 35,198.33

12-24 months 7,162.89 11,607.60 14,878.36 559.00 34,207.85

Total non-current portion 15,652.95 39,761.85 16,853.72 1,254.40 73,522.92

12 months 22,940.38 33,601.57 3,064.23 944.67 60,550.85

Total current maturities 22,940.38 33,601.57 3,064.23 944.67 60,550.85

Grand Total 38,593.33 73,363.42 19,917.95 2,199.07 1,34,073.77

Terms of repayment as at March 31, 2009

`̀̀̀ in lacs

Redeemable at par within Rate of interest

<10% >=10%<12% >=12%<14% >=14% Total

Over 60 months - - 563.08 408.76 971.84

48-60 months 0.40 292.38 571.71 110.52 975.01

36-48 months 0.10 732.29 683.75 176.28 1,592.42

24-36 months 31.04 8,599.57 14,923.18 559.84 24,113.63

12-24 months 414.19 21,673.76 3,096.89 945.05 26,129.89

Total non-current portion 445.73 31,298.00 19,838.61 2,200.45 53,782.79

12 months 2,560.62 41,416.48 2,658.53 322.68 46,958.31

Total current maturities 2,560.62 41,416.48 2,658.53 322.68 46,958.31

Grand Total 3,006.35 72,714.48 22,497.14 2,523.13 1,00,741.10

F-20

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Terms of repayment as at March 31, 2008

` ` ` ` in lacs

Redeemable at par within

Rate of interest

< 10% >= 10% <

12% >= 12% <

14% >= 14% Total

Over 60 months - - 634.65 520.32 1,154.97

48-60 months 0.10 492.05 371.58 177.56 1,041.29

36-48 months 40.80 1,158.63 399.25 563.69 2,162.37

24-36 months 127.67 13,963.61 111.08 918.51 15,120.87

12-24 months 1,821.37 17,069.42 1,141.04 112.49 20,144.32

Total non-current portion 1,989.94 32,683.71 2,657.60 2,292.57 39,623.82

12 months 3,956.25 17,854.11 2,522.38 149.83 24,482.57

Total current maturities 3,956.25 17,854.11 2,522.38 149.83 24,482.57

Grand Total 5,946.19 50,537.82 5,179.98 2,442.40 64,106.39

Nature of security

The redemption of principal amount of secured redeemable non-convertible debentures with all interest there on are secured by a legal mortgage on the specified immovable property and by way of charge on the company's specifically identified movable assets such as book debts / loan receivables in favour of the Trustees appointed.

These secured redeemable non-convertible debentures are redeemable at par over a period of 12 months to 160 months from the date of allotment depending on the terms of the agreement.

Secured redeemable non-convertible debentures may be bought back subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the company. The company may grant loan against the security of SNCDs upon the terms and conditions as may be decided by the company and subject to applicable statutory and /or regulatory requirements.

(ii) Privately placed redeemable non-convertible debenture (Institutional)

a. Privately placed redeemable non-convertible debenture (NCDs) of `̀̀̀1,00,000/- each - quoted

Terms of repayment

Long term borrowing

` ` ` ` in lacs

Rate of interest As at March 31, Redeemable

at par on 2012 2011 2010 2009 2008

10.75% 900.00 900.00 900.00 - - 07-Oct-14

10.75% 2,100.00 2,100.00 2,100.00 - - 30-Sep-14

10.75% 900.00 900.00 900.00 - - 07-Apr-14

10.75% 2,100.00 2,100.00 2,100.00 - - 30-Mar-14

10.75% 600.00 600.00 600.00 - - 07-Oct-13

10.75% 1,400.00 1,400.00 1,400.00 - - 30-Sep-13

10.75% 600.00 600.00 600.00 - - 07-Apr-13

10.75% - 1,400.00 1,400.00 - - 30-Mar-13

Total 8,600.00 10,000.00 10,000.00 - -

F-21

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Current maturities ` ` ` ` in lacs

Rate of interest As at March 31, Redeemable

at par on 2012 2011 2010 2009 2008

10.75% 1,400.00 - - - - 30-Mar-13

Total 1,400.00 - - - -

b. Privately Placed Redeemable Non-Convertible Debenture (NCDs) of `̀̀̀10,00,000/- each - quoted

Terms of repayment

Long term borrowing

` ` ` ` in lacs

Rate of interest As at March 31, Redeemable

at par on 2012 2011 2010 2009 2008

10.60% 1,000.00 1,000.00 - - - 13-Dec-17

10.60% 1,500.00 1,500.00 - - - 13-Dec-17

9.00% 27,500.00 27,500.00 - - - 30-Mar-17

10.75% 500.00 500.00 - - - 04-Feb-21

10.50% 2,000.00 2,000.00 - - - 23-Nov-17

10.65% 1,000.00 - - - - 03-Feb-15

11.00% 1,500.00 - - - - 01-Dec-14

10.61% 2,900.00 - - - - 02-Jun-14

10.60% 680.00 - - - - 17-Feb-14

10.30% 1,000.00 - - - - 20-Jan-14

10.95% 1,800.00 - - - - 25-Oct-13

10.60% 500.00 - - - - 09-Aug-13

10.96% 2,500.00 - - - - 23-May-13

10.85% 1,100.00 - - - - 18-Apr-13

10.96% 1,730.00 - - - - 03-Apr-13

9.00% - 7,500.00 - - - 05-Jan-13

7.82% 2,916.67 2,916.67 - - - 22-Apr-13

7.82% - 2,916.67 - - - 22-Oct-12

7.82% - 2,916.66 - - - 22-Apr-12

50,126.67 48,750.00 - - -

Current maturities

` ` ` ` in lacs

Rate of interest As at March 31, Redeemable

at par on 2012 2011 2010 2009 2008

9.00% 7,500.00 - - - - 05-Jan-13

7.82% 2,916.67 - - - - 22-Oct-12

7.82% 2,916.66 - - - - 22-Apr-12

7.82% - 2,916.67 - - - 22-Oct-11

7.82% - 2,916.66 - - - 22-Apr-11

13,333.33 5,833.33

F-22

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

c. Privately placed redeemable non-convertible debenture (NCDs) of `̀̀̀1,000/- each - quoted

Terms of repayment

Long term borrowing

` ` ` ` in lacs

Rate of interest As at March 31, Redeemable

at par on 2012 2011 2010 2009 2008

12.00% - - - - 5,000.00 15-Apr-09

Total - - - - 5,000.00

Current maturities ` ` ` ` in lacs

As at March 31, Redeemable

at par on 2012 2011 2010 2009 2008

12.00% - - - 5,000.00 - 15-Apr-09

Total - - - 5,000.00 -

Nature of security

The redemption of principal amount of secured redeemable non-convertible debentures with all interest there on are secured by a legal mortgage on the specified immovable property and by way of charge on the company's specifically identified movable assets such as book debts / loan receivables in favour of the Trustees appointed.

Secured redeemable non-convertible debenture may be bought back subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the company.

(iii) Public issue of secured redeemable non convertible debentures ((NCDs)of `̀̀̀1000/- each - quoted (2011)

` ` ` ` in lacs

Option Detail Rate of Interest

As at March 31, Redeemable at par on

Put and call option 2012 2011

Option I 11.60% 5,429.05 - 25-Aug-16 25-Aug-15

12.10% 43,653.65 - 25-Aug-16 25-Aug-15

11.85% 12,125.30 - 25-Aug-16 25-Aug-15

Option II 11.50% 9,570.95 - 25-Aug-14 -

11.85% 1,346.35 - 25-Aug-14 -

11.60% 2,874.70 - 25-Aug-14 -

75,000.00 -

F-23

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Nature of security

The repayment of secured redeemable non convertible debentures of `1,000/- each at face value on maturity together with interest thereon are secured by mortgage of immovable property and by way of charge on the company's specifically identified movable assets such as book debts / loan receivables in favour of the Trustees appointed. Secured redeemable non-convertible debenture may be bought back subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the company.

B. Term loan

(i) Term loan from bank

Terms of repayment as at March 31, 2012

` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

36-48 months 11.15% to 12% 1 to 48 instalments of bullet, half yearly and yearly frequency 50,625.00 6,875.00

24-36 months 10.75% to 11.50% 1 to 36 instalments of bullet & quarterly frequency 1,00,000.00 -

12-24 months 9.25% to 12.25% 1 to 24 instalments of bullet, monthly, quarterly and half yearly frequency 1,23,731.88 22,000.00

Upto 12 months 8.20% to 12.25% 1 to 12 instalments of bullet, Quarterly & half yearly frequency

- 80,683.27

Grand Total 2,74,356.88 1,09,558.27

Terms of repayment as at March 31, 2011 ` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

36-48 months 10% 1 to 48 instalments of quarterly frequency 5,000.00 -

24-36 months 9.25% to 10.75% 1 to 36 instalments of bullet, monthly, quarterly, half yearly and yearly frequency

1,15,749.39 11,250.00

12-24 months 8.75% to 12.25% 1 to 24 instalments of bullet, Quarterly & half yearly frequency

82,555.26 4,683.32

Upto 12 months 8.20% to 12.50% 1 to 12 instalments of bullet, Quarterly & half yearly frequency

- 76,439.31

Grand Total 2,03,304.65 92,372.63

F-24

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Terms of repayment as at March 31, 2010

` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

24-36 months 8.20% to 11.00% 1 to 36 instalments of bullet, monthly & quarterly frequency

27,236.76 3,933.32

12-24 months 7.75% to 11.50% 1 to 24 instalments of bullet, monthly, quarterly, half yearly and yearly frequency

16,299.29 11,858.59

Upto 12 months 7.75% to 10.50% 1 to 12 instalments of bullet, monthly & Quarterly frequency

- 15,081.19

Total 43,536.05 30,873.10

Terms of repayment as at March 31, 2009

`̀̀̀in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

Above 36 months 10.75% to 14.25% 1 to 48 instalments of quarterly & half yearly and frequency

9,525.51 3,062.60

24-36 months 10.75% to 13.25% 1 to 36 instalments of monthly, quarterly & half yearly and frequency

29,286.92 11,730.43

12-24 months 10.00% to 13.50% 1 to 24 instalments of bullet, monthly, Quarterly & half yearly frequency

22,113.34 20,610.00

Upto 12 months 8.50% to 13.00% 1 to 12 instalments of bullet, monthly, Quarterly & half yearly frequency

- 27,233.94

Total

60,925.77 62,636.97

Terms of repayment as at March 31, 2008

`̀̀̀ in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

Above 36 months 10.25% to 11.50% 1 to 88 instalments of monthly& half yearly frequency 4,598.12 1,054.60

24-36 months 10.00% to 13.00% 1 to 36 instalments of bullet, monthly, Quarterly & half yearly frequency

19,640.00 6,860.00

12-24 months 8.50% to 12.50% 1 to 24 instalments of bullet, monthly, Quarterly & half yearly frequency

24,683.93 10,073.04

Upto 12 months 8.10% to 8.75% 1 to 12 instalments of bullet & monthly frequency - 9,183.33

Total 48,922.05 27,170.97

F-25

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Nature of Security

Term Loans from banks are secured by an exclusive charge by way of hypothecation of specific assets under financing.

(ii) Term loan from Financial Institutions

Terms of repayment as at March 31, 2012

` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

24-66 months 11.75% Annual and half-yearly instalments 10,000.00 -

12-24 months 10.00% Bullet repayment 6,500.00 -

Total 16,500.00 -

Terms of repayment as at March 31, 2011

` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

24-36 months 10.00% Bullet repayment 6,500.00

Total 6,500.00 -

Terms of repayment as at March 31, 2010

` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

Upto 12 months 11.50% 1 to12 monthly instalments - 2,030.00

Total - 2,030.00

Terms of repayment as at March 31, 2009

` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

48 months 9.00% 1 to 48 quarterly instalments 233.80 89.60

12-24 months 11.50% 1 to 24 monthly instalments 1,865.00 1,980.00

Upto 12 months 10.50% to 11.45% 1 to12 bullet & monthly instalments - 5,258.00

Total 2,098.80 7,327.60

F-26

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Terms of repayment as at March 31, 2008

` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

60 months 9.00% 1 to 60 months quarterly instalment 323.40 89.60

24-36 months 11.50% 1 to 36 monthly instalments 3,845.00 1,155.00

12-24 months 10.50% to 11.70% 1 to 24 bullet & monthly instalments 5,258.00 804.00

Total 9,426.40 2,048.60

Nature of security

Term Loans from institutions are secured by an exclusive charge by way of hypothecation of specific assets under financing.

3.2 Unsecured loan - Long term borrowings

A. Fixed deposits of `̀̀̀1000/- each - unquoted Terms of repayment as at March 31, 2012

` ` ` ` in lacs

Redeemable at par within Rate of interest

>=6% <8% >=8%

<10%

>=10%

<12%

>=12% Total

36-48 months 0.20 - - - 0.20

36-48 Months - - - - -

24-36 months 3.15 2.49 - - 5.64

12-24 months 2.57 0.30 - - 2.87

Total non-current portion 5.92 2.79 - - 8.71

12 months 6.31 7.07 0.12 - 13.50

Total current maturities 6.31 7.07 0.12 - 13.50

Grand Total 12.23 9.86 0.12 - 22.21

Terms of repayment as at March 31, 2011

` ` ` ` in lacs

Redeemable at par within

Rate of interest

>=6% <8% >=8%

<10%

>=10%

<12%

>=12% Total

36-48 months - 2.49 - - 2.49

24-36 months 2.47 0.30 - - 2.77

12-24 months 1.12 7.07 0.12 - 8.31

Total non-current portion 3.59 9.86 0.12 - 13.57

12 months 21.31 16.85 3.37 - 41.53

Total current maturities 21.31 16.85 3.37 - 41.53

Grand Total 24.90 26.71 3.49 - 55.10

F-27

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Terms of repayment as at March 31, 2010

` ` ` ` in lacs

Redeemable at par within

Rate of interest

>=6% <8% >=8% <10%

>=10% <12%

>=12% Total

36-48 months - 3.24 - - 3.24

36-48 months - 0.20 - - 0.20

24-36 months 0.33 7.07 0.12 - 7.52

12-24 months 5.09 16.95 8.30 - 30.34

Total non-current portion 5.42 27.46 8.42 - 41.31

12 months 23.67 35.49 0.27 - 59.43

Total current maturities 23.67 35.49 0.27 - 59.43

Grand Total 29.09 62.95 8.69 - 100.74

Terms of repayment as at March 31, 2009

` ` ` ` in lacs

Redeemable at par within

Rate of interest

>=6% <8% >=8% <10%

>=10% <12%

>=12% Total

36-48 months

0.10

- 0.10

36-48 months 0.95 0.12 - 1.07

24-36 months 0.38 17.35 8.05 - 25.78

12-24 months 2.26 9.53 0.47 - 12.26

Total non-current portion 2.64 27.93 8.64 - 39.21

12 months 12.72 60.87 - - 73.59

Total current maturities 12.72 60.87 - - 73.59

Grand Total 15.36 88.80 8.64 - 112.80

Terms of repayment as at March 31, 2008

` ` ` ` in lacs

Redeemable at par within

Rate of interest

>=6% <8% >=8%

<10%

>=10%

<12%

>=12% Total

36-48 months 3.42 - - - 3.42

36-48 months 13.84 - - - 13.84

24-36 months 14.48 - - - 14.48

12-24 months 21.15 5.43 - - 26.58

Total non-current portion 52.88 5.43 - - 58.32

12 months 87.32 12.12 7.91 - 107.35

Total current maturities 87.32 12.12 7.91 - 107.35

Grand Total

140.20 17.56 7.91 - 165.67

F-28

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

B. Privately placed subordinated debts

The company has issued subordinated debt bonds with coupon rate of 7% to 15% per annum which are redeemable over a period of 60 months to 216 months.

Terms of repayment as at March 31, 2012 (i) Privately placed subordinated debts of `̀̀̀1,000/- each - unquoted

` ` ` ` in lacs

Redeemable at par within

Rate of interest

< 10% >= 10% <

12%

>= 12% <

14%

>= 14% Total

Over 60 months 1,239.57 14,170.39 - - 15,409.96

48-60 Months 56.17 2,443.60 - - 2,499.77

36-48 Months - 8,731.43 55.61 - 8,787.04

24-36 months - 3,763.80 7,687.31 - 11,451.11

12-24 months - 10,574.89 2,916.08 - 13,490.97

Total non-current portion 1,295.74 39,684.11 10,659.00 - 51,638.85

12 months - 8,719.49 180.34 0.33 8,900.16

Total current maturities - 8,719.49 180.34 0.33 8,900.16

Grand Total 1,295.74 48,403.60 10,839.34 0.33 60,539.01

(ii) Privately placed subordinated debts of `̀̀̀1,00,000/- each - quoted

` ` ` ` in lacs

Redeemable at par within

Rate of interest

< 10% >= 10% < 12%

>= 12% < 14%

>= 14% Total

Over 60 months - 23,035.00 - - 23,035.00

Total non-current portion - 23,035.00 - - 23,035.00

Terms of repayment as at March 31, 2011

Privately placed subordinated debts of `̀̀̀1,000/- each - unquoted ` ` ` ` in lacs

Redeemable at par within

Rate of interest

< 10% >= 10% <

12%

>= 12% <

14%

>= 14% Total

Over 60 months 1,295.74 6,232.32 - - 7,528.06

48-60 Months - 8,731.43 55.61 - 8,787.04

36-48 Months - 3,763.80 7,687.31 - 11,451.11

24-36 months - 10,574.89 2,916.08 - 13,490.97

12-24 months - 8,719.49 180.34 0.33 8,900.16

Total non-current portion 1,295.74 38,021.93 10,839.34 0.33 50,157.34

With in 12 months - 3,114.81 - 0.18 3,114.99

Total current maturities - 3,114.81 - 0.18 3,114.99

Grand Total

1,295.74 41,136.74 10,839.34 0.51 53,272.33

F-29

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Terms of repayment as at March 31, 2010

Privately placed subordinated debts of `̀̀̀1,000/- each - unquoted ` ` ` ` in lacs

Redeemable at par within Rate of interest

< 10% >= 10% <

12%

>= 12% <

14% >= 14% Total

Over 60 months 457.15 11,175.03 55.61 - 11,687.79

48-60 Months - 3,763.80 7,687.06 - 11,450.86

36-48 Months - 10,574.39 2,916.08 - 13,490.47

24-36 months - 8,719.49 180.34 0.33 8,900.16

12-24 months - 3,115.74 - - 3,115.74

Total non-current portion 457.15 37,348.45 10,839.09 0.33 48,645.02

With in 12 months - 4,357.93 - - 4,357.93

Total current maturities - 4,357.93 - - 4,357.93

Grand Total 457.15 41,706.38 10,839.09 0.33 53,002.95

Terms of repayment as at March 31, 2009

Privately placed subordinated debts of `̀̀̀1,000/- each - unquoted

` ` ` ` in lacs

Redeemable at par within

Rate of interest

< 10% >= 10% <

12%

>= 12% <

14%

>= 14% Total

Over 60 months - 4,202.05 7,578.75 - 11,780.80

48-60 Months - 10,589.69 2,917.08 - 13,506.77

36-48 Months - 8,730.80 180.34 0.33 8,911.47

24-36 months - 3,118.72 - 0.18 3,118.90

12-24 months - 4,359.71 - - 4,359.71

Total non-current portion - 31,000.97 10,676.17 0.51 41,677.65

With in 12 months - 40.88 - -

Total current maturities - 40.88 - - 40.88

Grand Total - 31,041.85 10,676.17 0.51 41,718.53

F-30

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Terms of repayment as at March 31, 2008

Privately placed subordinated debts of `̀̀̀1,000/- each - unquoted ` ` ` ` in lacs

Redeemable at par within

Rate of interest

< 10% >= 10% <

12%

>= 12% <

14%

>= 14% Total

Over 60 months - 11,404.77 59.45 - 11,464.22

48-60 Months - 8,738.30 180.44 0.33 8,919.07

36-48 Months - 3,120.72 - 0.18 3,120.90

24-36 months - 4,359.71 - - 4,359.71

12-24 months - 40.88 - - 40.88

Total non-current portion - 27,664.38 239.89 0.51 27,904.78

With in 12 months 132.00 - - - 132.00

Total current maturities 132.00 - - - 132.00

Grand Total

132.00 27,664.38 239.89 0.51 28,036.78

F-31

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

4. Other liabilities

`̀̀̀ in lacs

Particulars

Long-term

As at March 31,

2012 2011 2010 2009 2008

Interest accrued but not due on borrowings 23,469.00 21,194.69 17,986.05 9,869.60 7,376.15

Application Money on Redeemable non convertible debentures

421.05 967.07 117.27 172.09 392.23

Application Money on Redeemable Subordinate debts 217.26 107.47 4.00 43.11 216.33

Securitisation deferred income (income received in advance)

19,321.32 8,889.38 152.73 312.12 777.47

Retention and other 1,162.98 665.78 234.26 129.37 100.22

Total 44,591.61 31,824.39 18,494.31 10,526.29 8,862.40

`̀̀̀ in lacs

Particulars

Short-term

As at March 31,

2012 2011 2010 2009 2008

Current maturities of long-term borrowings [Refer Annex IV note 3]

207,011.82 161,974.82 97,811.88 121,963.76 53,834.14

Interest accrued but not due on borrowings 16,934.34 11,623.74 10,916.12 11,673.65 6,219.27

Unclaimed dividends* 30.77 22.11 17.03 20.87 22.78

Unclaimed matured deposits and interest accrued thereon*

14.51 27.05 28.92 27.50 18.11

Unclaimed matured debentures and interest accrued thereon*

5,260.72 4,487.39 3,300.41 2,826.03 2,597.38

Unclaimed matured Subordinate debts and interest accrued thereon*

553.05 352.48 18.65 107.26 -

Temporary credit balance in bank accounts 13,485.59 3,122.28 7,126.55 2,796.97 2,473.35

Tax deducted at source 356.69 267.81 151.28 126.78 131.62

Service tax payable - - - 0.11 1.86

Statutory dues pertaining to employees 39.88 24.39 14.60 13.06 6.90

Service tax - contested # 1,553.08 1,553.08 1,553.08 1,553.08 1,553.08

Securitisation deferred income (income received in advance)

33,326.76 14,796.99 3,872.90 1,916.37 4,398.99

Retention and other 4,148.02 2,322.65 899.70 1,537.38 2,763.02

Total 282,715.23 200,574.79 125,711.12 144,562.82 74,020.50

# As regards the recovery of Service tax on lease and hire purchase transactions, the Hon’ble Supreme Court vide its order dated October 26, 2010 has directed the competent authority under the Finance act, 1994 to decide the matter in accordance with the law laid down.

*Accrued interest is up to the date of maturity. Amounts shall be credited to Investor Education & Protection Fund to the extend unclaimed as and when due.

F-32

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

5. Provisions

`̀̀̀ in lacs

Particulars

Long-term

As at March 31,

2012 2011 2010 2009 2008

Provision for Employee benefits:

Provision for gratuity 250.52 190.77 154.78 136.83 130.49

Provision for leave benefits 47.10 49.13 25.62 15.27 13.69

Other provisions:

Provision for standard assets [Refer Annex XIII note 2(l)]

617.04 520.62 - - -

Provision for hedging contracts 92.35 486.75 1,259.24 1,805.86 811.68

Provision for diminution in the value of investments 17.93 17.93 17.93 17.93 17.93

Total 1,024.94 1,265.20 1,457.57 1,975.89 973.79

`̀̀̀ in lacs

Particulars

Short-term

As at March 31,

2012 2011 2010 2009 2008

Provision for Employee benefits:

Provision for gratuity 9.37 5.57 0.74 2.81 2.69

Provision for leave benefits 32.21 5.10 1.13 1.61 1.68

Other provisions:

Provision for standard assets [Refer Annex XIII note 2(l)]

2,042.78 1,194.27 - - -

Provision for hedging contracts 394.40 772.49 546.62 - -

Provision for income tax [net of advance tax] 2,916.08 1,882.40 549.89 - -

Proposed dividend on

- Equity shares 2,094.69 1,733.79 1,474.64 1,375.92 1,332.15

- Cumulative redeemable preference shares - - - - 0.08

Corporate dividend tax 339.81 281.26 244.92 233.84 226.41

Total 7,829.34 5,874.88 2,817.94 1,614.18 1,563.01

F-33

Shriram City Union Finance Limited

Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

6. Short term borrowings

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Secured

Privately placed redeemable non-convertible debentures (Institutional) [Refer Annex IV note 6.1(A)]

- - 10,000.00 22,000.00 -

Term loan from banks [Refer Annex IV note 6.1(B)(i)] - - 30,225.02 20,000.00 33,600.00

Term loan from financial institutions [Refer Annex IV note 6.1(B)(ii)

- - 7,500.00 - 5,100.00

Cash Credit from bank 56,366.20 63,806.17 119,873.43 93,715.19 67,420.99

Working capital demand loan from bank 65,414.83 71,089.92 25,499.18 16,000.00 -

121,781.03 134,896.09 193,097.63 151,715.19 106,120.99

Unsecured

Fixed Deposits [Refer Annex IV note 3] 13.50 41.53 59.43 73.59 107.35

Commercial papers [Refer Annex IV note 6.3] - 22,500.00 - - 4,500.00

Inter Corporate Deposits 2,000.00 - - - 925.00

Privately placed redeemable non-convertible debenture [Refer Annex IV note 6.4]

- - - - 3,500.00

2,013.50 22,541.53 59.43 73.59 9,032.35

Total 123,794.53 157,437.62 193,157.06 151,788.78 115,153.34

6.1 Secured loans - Short-term borrowings

A. Privately Placed Redeemable Non-Convertible Debenture (NCDs) of `̀̀̀1,000/- each - quoted

Terms of repayment

`̀̀̀ in lacs

Rate of interest As at March 31, Redeemable

at par on 2012 2011 2010 2009 2008

9.75% - 10,000.00 - - 23-Apr-10

10.25% - - - 12,500.00 - 28-Oct-09

12.76% - - - 9,500.00 - 17-Dec-09

- - 10,000.00 22,000.00 -

B. Term loan

(i) Term loan from bank

Terms of repayment `̀̀̀ in lacs

Rate of interest Repayment Details As at March 31,

2012 2011 2010 2009 2008

5.80% to 12.75% Bullet - - 30,225.02 20,000.00 33,600.00

Total - - 30,225.02 20,000.00 33,600.00

F-34

Shriram City Union Finance Limited

Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

Nature of Security

Term loans from banks are secured by an exclusive charge by way of hypothecation of specific assets under financing.

(ii) Term loan from institution

Terms of repayment

`̀̀̀ in lacs

Rate of interest Repayment Details As at March 31,

2012 2011 2010 2009 2008

7.75% Two half yearly installments - - 7,500.00 -

13.00% 12 monthly installments - - - - 100.00

10.90% Bullet - - - - 5,000.00

Total - - 7,500.00 - 5,100.00

Nature of security

Term Loans from institutions are secured by an exclusive charge by way of hypothecation of specific assets under financing.

6.2 Cash Credit and Working Capital Demand Loans from banks

Cash credit and working capital demand loan from banks are secured by way of hypothecation of specific movable assets relating to the loans.

6.3 Commercial paper

Terms of repayment `̀̀̀ in lacs

Rate of interest As at March 31, Redeemable

at par on 2012 2011 2010 2009 2008

8.90% - 2,500.00 - - - 12-Sep-11

8.90% - 1,000.00 - - - 12-Sep-11

8.90% - 2,000.00 - - - 12-Sep-11

8.90% - 7,500.00 - - - 7-Sep-11

8.90% - 5,000.00 - - - 12-Sep-11

8.90% - 1,500.00 - - - 7-Oct-11

8.90% - 1,000.00 - - - 7-Oct-11

8.70% - 1,500.00 - - - 19-Sep-11

8.90% - 500.00 - - - 7-Oct-11

11.72% - - - - 3,000.00 25-Aug-08

10.50% - - - - 1,500.00 26-Sep-08

Total - 22,500.00 - - 4,500.00

6.4 Privately placed unsecured redeemable non-convertible debentures (NCDs) of `̀̀̀1,000/- each - quoted

Terms of repayment

`̀̀̀ in lacs

Rate of interest As at March 31, Redeemable

at par on 2012 2011 2010 2009 2008

10.30% - - - - 3,500.00 3-Oct-08

Total - - - - 3,500.00

F-35

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

7. Tangible and intangible fixed assets

` ` ` ` in lacs

Particulars

Tangible assets

Total

tangible asset

Intangible

assets Total fixed

assets Land Building

Plant and

machinery

Furniture and

fixtures Vehicles

Leasehold

improvements

Computer

software

Gross Block

As at April 1, 2007 131.70 12.94 6,274.03 357.43 448.69 - 7,224.79 - 7,224.79 Additions - - 384.13 60.01 7.37 218.74 670.25 - 670.25 Disposals - - (164.07) (185.93) (444.62)

(794.62) - (794.62)

Adjustment - - - (110.20) - 110.20 - -

As at March 31, 2008 131.70 12.94 6,494.09 121.31 11.44 328.94 7,100.42 - 7,100.42

Additions - - 431.77 269.08 11.08 161.81 873.74 5.28 879.02 Disposals (58.81) - (0.05) - (1.68) - (60.54) - (60.54) Adjustment

1.25 - (1.25) - - -

As at March 31, 2009 72.89 12.94 6,925.81 391.64 20.84 489.50 7,913.62 5.28 7,918.90

Additions - - 294.66 158.25 2.69 256.94 712.54 345.57 1,058.11 Disposals (71.13) - (5,872.52) (1.88) - (1.59) (5,947.12) - (5,947.12)

As at March 31, 2010 1.76 12.94 1,347.95 548.01 23.53 744.85 2,679.04 350.85 3,029.89

Additions - - 559.49 480.69 6.42 576.04 1,622.64 40.97 1,663.61 Disposals - - (9.86) (9.52) (0.48) (20.21) (40.07) - (40.07)

As at March 31, 2011 1.76 12.94 1,897.58 1,019.18 29.47 1,300.68 4,261.61 391.82 4,653.43

Additions 0.46 - 1,465.89 924.87 6.67 1,202.70 3,600.59 85.49 3,686.08 Disposals - - (4.03) (2.00) (2.90) - (8.93) - (8.93)

As at March 31, 2012 2.22 12.94 3,359.44 1,942.05 33.24 2,503.38 7,853.27 477.31 8,330.58

F-36

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

7. Tangible and intangible fixed assets

` ` ` ` in lacs

Particulars

Tangible assets

Total

tangible asset

Intangible

assets Total fixed

assets Land Building

Plant and

machinery

Furniture and

fixtures Vehicles

Leasehold

improvements

Computer

software

Depreciation

As at April 1, 2007 - 1.53 1,136.99 73.57 442.21 - 1,654.30 - 1,654.30 Charge for the year - 0.19 888.42 179.47 3.62 55.82 1,127.52 - 1,127.52 Disposals - - (162.58) (182.26) (444.62)

(789.46) - (789.46)

Adjustment - - - (44.10) - 44.10 - - -

As at March 31, 2008 - 1.72 1,862.83 26.68 1.21 99.92 1,992.36 - 1,992.36

Charge for the year - 0.21 866.81 46.62 1.56 102.41 1,017.61 0.63 1,018.24 Disposals - - (0.02) - (0.47) - (0.49) - (0.49) Adjustment -

0.37 - (0.37) - - -

As at March 31, 2009 - 1.93 2,729.62 73.67 2.30 201.96 3,009.48 0.63 3,010.11

Charge for the year - 0.21 179.04 56.66 2.09 168.93 406.93 57.84 464.77 Disposals - - (2,488.32) (0.26) - (0.93) (2,489.51) - (2,489.51)

As at March 31, 2010 - 2.14 420.34 130.07 4.39 369.96 926.90 58.47 985.37

Charge for the year - 0.21 248.89 101.73 2.57 267.15 620.55 126.86 747.41 Disposals - - (1.90) (3.55) (0.22) (18.11) (23.78) - (23.78)

As at March 31, 2011 - 2.35 667.33 228.25 6.74 619.00 1,523.67 185.33 1,709.00

Charge for the year - 0.21 417.60 230.84 3.19 557.80 1,209.64 161.70 1,371.34 Disposals - - (2.08) (0.79) (1.20) - (4.07) - (4.07)

As at March 31, 2012 - 2.56 1,082.85 458.30 8.73 1,176.80 2,729.24 347.03 3,076.27

F-37

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

7. Tangible and intangible fixed assets

` ` ` ` in lacs

Particulars

Tangible assets

Total

tangible asset

Intangible

assets Total fixed

assets Land Building

Plant and

machinery

Furniture and

fixtures Vehicles

Leasehold

improvements

Computer

software

Impairment loss

As at April 1, 2007 - - - - - - - - -

As at March 31, 2008 - - - - - - - - -

Charge for the year - - 1,186.81 - - - 1,186.81 - 1,186.81

As at March 31, 2009 - - 1,186.81 - - - 1,186.81 - 1,186.81

Charge for the year - - -

- - - Disposals

(1,186.81)

(1,186.81) - (1,186.81)

As at March 31, 2010 - - - - - - - - -

As at March 31, 2011 - - - - - - - - -

As at March 31, 2012 - - - - - - - -

Net Block

As at March 31, 2008 131.70 11.22 4,631.26 94.63 10.23 229.02 5,108.06 - 5,108.06

As at March 31, 2009 72.89 11.01 3,009.38 317.97 18.54 287.54 3,717.33 4.65 3,721.98

As at March 31, 2010 1.76 10.80 927.61 417.94 19.14 374.89 1,752.14 292.38 2,044.52

As at March 31, 2011 1.76 10.59 1,230.25 790.93 22.73 681.68 2,737.94 206.49 2,944.43

As at March 31, 2012 2.22 10.38 2,276.59 1,483.75 24.51 1,326.58 5,124.03 130.28 5,254.31

F-38

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

7. Tangible and intangible fixed assets

Depreciation and amortisation

` ` ` ` in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

On tangible 1,209.64 620.55 406.93 1,017.61 1,127.52

On intangible 161.70 126.86 57.84 0.63 -

Total 1,371.34 747.41 464.77 1,018.24 1,127.52

Net Block

` ` ` ` in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

On tangible 5,124.03 2,737.94 1,752.14 3,717.33 5,108.06

On intangible 130.28 206.49 292.38 4.65 -

Total 5,254.31 2,944.43 2,044.52 3,721.98 5,108.06

F-39

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

8. Non-current investments

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Long-term investment

Other than trade

A. Unquoted equity instruments

(i) Investment in wholly owned subsidiary (valued at cost)

Equity shares of `10/- each fully paid-up in Shriram Housing Finance Ltd.

1,480.00 250.00 - - -

(ii) Investment in other companies (valued at cost)

Equity shares of `10/- each fully paid-up in Highmark Credit Information Services Private Ltd.

200.00 200.00 - - -

Equity shares of `10/- each fully paid-up in Shriram Life Insurance Company Limited

- - - 500.00 500.00

Total unquoted non-current investment 1,680.00 450.00 - 500.00 500.00

B. Quoted Investment

(i) Investment in government securities (valued at cost)

6.13% GOI Loan 2028 of face value `100.00 lacs 101.45 101.45 101.45 101.45 101.45

Total quoted non-current investment 101.45 101.45 101.45 101.45 101.45

Total 1,781.45 551.45 101.45 601.45 601.45

Aggregate amount of Quoted Investments (cost of acquisition)

101.45 101.45 101.45 101.45 101.45

Aggregate amount of Unquoted Investments (cost of acquisition)

1,680.00 450.00 - 500.00 500.00

Aggregate amount of provision for diminution in value of Investments

17.93 17.93 17.93 17.93 17.93

a. In accordance with the Reserve Bank of India circular no. RBI/2006-07/225 DNBS (PD) C.C No.87/03.02.2004/2006-07 dated January 4,2007, the company has created a floating charge on the statutory liquid assets comprising of investment in government securities being statutory liquid assets to the extent of `101.45 lacs in favour of trustees representing the public deposit holders of the company.

F-40

Shriram City Union Finance Limited

Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

9. Deferred tax asset (net)

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Deferred tax liabilities

Timing difference on account of :

Fixed assets: Impact of difference between tax depreciation and depreciation/amortization charged for the financial reporting

72.50 85.63 92.32 881.85 1,495.39

Deferred expenses incurred for NCD mobilization 358.91 - -

Gross deferred tax liabilities (A) 431.41 85.63 92.32 881.85 1,495.39

Deferred tax asset

Timing difference on account of :

Provision for service tax 503.90 515.90 527.89 527.89 527.89

Contingent provision against standard assets 862.98 569.65 - - -

Provision for leave benefits 25.73 18.01 9.09 5.74 5.22

Provision for gratuity 84.32 65.22 52.86 47.46 45.27

Provision for derivative 157.93 418.29 613.82 613.81 275.89

Provision for bonus 46.10 13.78 11.36 - 8.13

Estimated disallowances 64.89 66.44 - - -

Gross deferred tax Assets (B) 1,745.85 1,667.29 1,215.02 1,194.90 862.40

Net Deferred tax asset (liabilities) (B-A) 1,314.44 1,581.66 1,122.70 313.05 (632.99)

F-41

Shriram City Union Finance Limited

Annexure IV

Notes forming part of Reformatted summary of Assets and Liabilities

10. Loans and advances

` ` ` ` in lacs

Long-term

Particulars As at March 31,

2012 2011 2010 2009 2008

Unsecured, considered good

Capital advances 719.24 108.93 12.60 50.00 4,128.96

Security deposits# 1,046.55 553.71 128.38 104.80 175.11

Loans and advances

Assets under financing activities :

- Secured, considered good 2,27,370.63 1,86,230.96 1,67,152.04 1,47,942.38 1,06,880.78

- Doubtful 1,382.21 447.34 155.03 415.87 642.30

- Less: provision for non-performing assets (388.90) (128.03) (41.88) (121.43) (73.53)

- Unsecured, considered good 19,445.40 22,015.99 15,061.30 11,445.97 14,225.60

- Doubtful 230.94 148.15 103.52 4.36 0.83

- Less: provision for non-performing assets (230.94) (148.15) (103.52) (4.36) (0.83)

Total 2,49,575.13 2,09,228.90 1,82,467.47 1,59,837.59 1,25,979.22

F-42

Shriram City Union Finance Limited

Annexure IV

Notes forming part of Reformatted summary of Assets and Liabilities

10. Loans and advances

` ` ` ` in lacs

Short-term

Particulars As at March 31,

2012 2011 2010 2009 2008

Unsecured, considered good

Capital advances - - - - -

Security deposits# 300.00 - - 78.69 352.64

Loans and advances Assets under financing activities : - Secured, considered good 7,68,852.49 4,28,753.40 2,47,639.06 1,76,428.79 1,25,765.49

- Doubtful 12,432.95 9,602.36 8,118.27 6,265.20 3,364.42

- Less: provision for non-performing assets (9,346.71) (6,938.92) (4,908.70) (2,969.30) (1,437.48)

- Unsecured, considered good 48,259.74 48,954.70 32,533.94 27,409.48 23,766.00

- Doubtful 2,657.88 2,768.32 2,376.47 1,098.59 221.12

- Less: provision for non-performing assets (2,657.88) (2,768.32) (2,376.47) (1,098.59) (221.12)

Loan and advances to related parties

Secured, considered good

Loans to subsidiaries - - - 4,392.66 -

Other loan and advances

Unsecured, considered good

Advance income tax (net of provision for taxation)

- - - 262.19 1,030.88

Advances recoverable in cash or in kind or for value to be received

2,014.05 1,736.73 1,822.74 1,984.78 3,955.43

Total 8,22,512.52 4,82,108.27 2,85,205.31 2,13,852.49 1,56,797.38

# Includes deposits pledged with Corporate as margin for securitisation

- - - 75.77 396.67

F-43

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

11. Other assets

` ` ` ` in lacs

Non-current

Particulars As at March 31,

2012 2011 2010 2009 2008

Bank balances non-current portion [Refer Annexure IV note-13]

17,123.00 6,590.00 3,218.41 5,104.07 608.17

Public issue expenses for non-convertible debentures (to the extent not written off or adjusted)

828.43 - - -

Interest accrued on fixed deposit and other loan and advances

972.10 138.53 290.45 8.84 60.96

Securitisation-receivable 17,985.27 3,902.27 200.14 - 7.55

Service tax credit (input) receivable - - - - -

Prepaid expenses - - - - -

Other assets - 1.34 24.99 - -

Total 36,908.80 10,632.14 3,733.99 5,112.91 676.68

Current

Particulars As at March 31,

2012 2011 2010 2009 2008

Public issue expenses for non-convertible debentures (to the extent not written off or adjusted)

277.80 - - - -

Interest accrued on fixed deposit and other loan and advances

269.10 186.43 972.39 404.87 264.22

Securitisation-receivable 30,475.82 13,244.80 4,341.94 - 51.43

Service tax credit (input) receivable 106.76 146.00 243.20 290.17 363.99

Prepaid expenses 725.30 952.29 24.00 38.21 202.35

Other assets 1.34 23.65 136.61 89.03 75.82

Total 31,856.12 14,553.17 5,718.14 822.28 957.81

F-44

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

12. Current investments

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Current portion of long-term investments

Other than trade

A. Unquoted equity instruments

(i) Investment in wholly owned subsidiary

(valued at cost)

Equity shares of `10/- each fully paid-up in Shriram Non Conventional Energy Limited

- - - 5.00 0.45

- - - 5.00 0.45

B. Quoted Investment

(i) Investment in government securities (valued

at cost)

12.25% GOI Loan 2008 of face value `3.00 lacs

3.08

- - - - 3.08

Total - - - 5.00 3.53

Aggregate amount of Quoted Investments (cost of acquisition)

- - - - 3.08

Aggregate amount of Unquoted Investments (cost of acquisition)

- - - 5.00 0.45

Aggregate amount of provision for diminution in value of Investments

- - - - -

F-45

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Summary of Assets and Liabilities

13. Cash and bank balances

`̀̀̀ in lacs

Particulars

Current

As at March 31,

2012 2011 2010 2009 2008

Cash and cash equivalents :

Balances with banks:

- Current Account 31,514.92 95,504.76 93,133.90 37,506.22 36,671.80

- Balance in unpaid dividend accounts 30.77 22.11 17.03 20.87 22.78

- Bank Deposit with original maturity of less than 3 months

56,522.50 99,500.00 19,897.27 110,860.01 44,045.24

Cash on hand and remittance in transit 7,520.43 6,025.87 3,590.69 1,602.77 1,907.24

95,588.62 201,052.74 116,638.89 149,989.87 82,647.06

Other bank balances:

Bank deposit with original maturity for more than 12 months

- 51.00 145.00 95.00 33.00

Bank deposit with original maturity for more than 3 months but less than 12 months

- - - 516.34 538.58

Margin money Deposit# 20,061.28 8,846.40 20,206.16 5,098.46 3,778.42

20,061.28 8,897.40 20,351.16 5,709.80 4,350.00

Total 115,649.90 209,950.14 136,990.05 155,699.67 86,997.06

Particulars

Non-current

As at March 31,

2012 2011 2010 2009 2008

Other bank Balances:

Bank deposit with original maturity for more than 12 months

- - 51.00 196.00 26.00

Margin money Deposit# 17,123.00 6,590.00 3,167.41 4,908.07 582.17

17,123.00 6,590.00 3,218.41 5,104.07 608.17

Amount disclosed under the head "non-current asset" [Refer Annexure IV note 11]

(17,123.00) (6,590.00) (3,218.41) (5,104.07) (608.17)

Total - - - - -

# Includes deposits pledged with Banks as margin for securitisation

37,184.28 15,436.40 7,373.57 9,941.77 4,299.21

# Includes deposits pledged as lien against loans taken

- - 16,000.00 64.76 61.38

F-46

Shriram City Union Finance Limited Annexure V

Notes forming part of Reformatted Summary of Statement of Profit and Loss

14. Revenue from operation

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Income from finance and other charges 175,171.77 122,778.70 96,759.92 86,138.88 51,359.21

Income on Securitisation / assignment 26,238.79 8,222.30 9,695.44 5,812.89 9,255.64

Interest on Margin money on securitisation / assignment

1,935.51 799.12 749.99 405.96 457.44

Bad debts recovery 401.75 253.46 505.78 108.31 81.02

Total 203,747.82 132,053.58 107,711.13 92,466.04 61,153.31

15. Other income

` ` ` ` in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Dividend Income 596.67 - 444.91 56.47 46.06

Net gain on sale of investments 134.74 - 1,400.00 - -

Other non-operating income:

Interest on deposit with bank 1,134.46 264.57 1,197.52 251.85 221.73

Interest on government securities 6.13 6.13 6.13 6.29 6.91

Profit on sale of assets 0.05 0.16 0.15 - 0.01

Commission 5.24 10.23 10.37 116.32 121.22

Compensation charges - - - 24.74 242.54

Sale of electricity - - - 500.59 476.13

Miscellaneous income 16.32 9.98 20.28 79.76 131.87

Total 1,893.61 291.07 3,079.36 1,036.02 1,246.47

16. Employee benefits expenses

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Salaries and incentives 8,575.91 3,678.56 2,721.32 2,341.36 1,621.31

Contributions to -Provident fund 215.51 138.21 94.27 90.09 60.07

Gratuity 69.12 40.51 14.60 9.24 31.77

Expense on Employee Stock Option Scheme 191.82 471.68 751.53 1,111.28 542.09

Staff welfare expenses 184.41 38.06 29.91 30.78 19.50

Total 9,236.77 4,367.02 3,611.63 3,582.75 2,274.74

F-47

Shriram City Union Finance Limited Annexure V

Notes forming part of Reformatted Summary of Statement of Profit and Loss

17. Finance cost

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Interest expense on :

Debenture 31,999.07 18,256.28 17,817.36 12,863.43 8,777.67

Subordinate debts 8,651.76 7,456.74 6,764.46 4,460.21 2,971.95

Fixed deposits 6.72 6.03 10.42 11.56 36.35

Loans from bank 40,112.97 18,914.70 15,549.18 19,430.72 9,132.34

Loans from institution and others 1,039.73 1,243.82 962.59 1,670.87 1,265.04

Commercial Paper 1,601.26 1,434.16 30.40 250.72 291.17

Borrowing Cost:

Bank Charges 1,230.54 1,535.79 3,289.78 2,700.70 1,591.33

Processing and other charges 1,879.52 2,413.69 907.39 1,684.45 971.18

Brokerage 6,336.44 3,884.21 3,850.46 3,179.28 2,016.71

Total 92,858.01 55,145.42 49,182.04 46,251.94 27,053.74

F-48

Shriram City Union Finance Limited Annexure V

Notes forming part of Reformatted Summary of Statement of Profit and Loss

18. Other expenses

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Rent 1,711.12 1,007.21 689.58 476.63 526.83

Power and fuel expenses 334.73 360.57 452.72 393.97 232.87

Repairs & maintenance:

- Plant and machinery - - - 127.29 80.58

- Other 981.85 437.90 365.69 261.26 265.30

Rates, duties & taxes 783.68 636.02 643.41 577.56 0.68

Printing & stationery 1,523.77 1,649.92 835.83 748.39 838.55

Travelling & conveyance 3,953.79 3,704.17 2,977.98 2,536.28 2,213.53

Advertisement 924.39 520.06 49.84 61.04 63.53

Business promotion expenses 5,394.99 3,495.02 2,533.95 2,257.86 1,880.57

Commission 5,980.18 3,702.84 2,576.97 2,796.71 3,795.19

Sourcing fees and other charges 2,574.22 1,444.79 1,123.68 949.88 443.61

Royalty 565.95 364.24 304.08 269.55 147.50

Directors' sitting fees 6.15 5.45 5.55 5.20 3.03

Insurance 322.40 167.01 44.07 21.59 21.47

Communication expenses 2,040.92 1,908.24 1,603.23 1,533.99 1,493.66

Payments to the auditor as

a. audit fees 17.66 14.09 13.11 10.60 6.75

b. tax audit fees 3.28 3.10 2.59 2.08 1.50

c. other services 4.14 4.05 6.52 5.10 2.25

Professional charges 2,702.70 2,092.43 1,069.77 1,130.74 648.15

Legal & professional fees 1,076.49 2,053.29 1,295.15 1,085.60 849.21

Donations - 1.00 - 65.00 41.50

Public issue expenses for non-convertible debenture

162.05 - - - -

Share issue expenses - - - - 2.13

Impairment loss on fixed assets and stock - - - 1,186.81

Loss on sale of assets 3.57 13.94 1.75 0.12 3.36

Loss on sale of investments - - - 0.08 -

Miscellaneous expenses 856.22 587.67 145.10 362.92 508.59

Total 31,924.25 24,173.01 16,740.57 16,866.25 14,070.34

F-49

Shriram City Union Finance Limited Annexure V

Notes forming part of Reformatted Summary of Statement of Profit and Loss

19. Provisions & write offs

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Provision for non performing assets 2,641.01 2,552.85 3,236.89 2,460.72 253.75

Provision for standard assets 944.94 1,714.89 - - -

Bad debts written off 14,248.80 7,583.96 8,928.73 5,348.64 4,921.23

Total 17,834.75 11,851.70 12,165.62 7,809.36 5,174.98

F-50

Shriram City Union Finance Limited Annexure VI

Statement of Contingent Liabilities

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

a. Income tax 1,447.80 - - - -

b. Guarantees issued by the Company 450.00 6.81 6.81 6.81 6.81

c. Guarantees issued by others - 1,942.77 1,942.77 3,177.77 -

Commitments not provided for

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

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

686.76 61.78 2.80 - 276.84

Commitments to invest in the subsidiary company i.e. Shriram Housing Finance Limited

5529.55 - - - -

F-51

Shriram City Union Finance Limited Annexure VII

Statement of dividend

Statement of dividend in respect of equity shares

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Interim Dividend

Rate of Dividend 25% 25% 20% 10% 10%

Number of Equity Shares on which interim dividend paid

49,760,859 49,392,739 49,113,850 45,850,000 39,100,000

Amount of Interim Dividend 1,244.02 1,234.82 982.28 458.50 391.00

Dividend Distribution tax 201.81 205.09 166.94 77.91 66.45

Dividend Distribution tax Rate 16.2225% 16.609% 16.995% 16.995% 16.995%

Final Dividend for the previous year

Rate of Dividend 35% 30% 30% 30% 20%

Number of Equity Shares on which interim dividend paid

208,002 47,756 - 14,45,000 -

Amount of Interim Dividend 7.28 1.43 - 43.35 -

Dividend Distribution tax 1.18 0.24 - 7.37 -

Dividend Distribution tax Rate 16.2225% 16.609% 16.995% 16.995% 16.995%

Proposed Final Dividend for the current year

Rate of Dividend 40% 35% 30% 30% 30%

Number of Equity Shares on which final dividend paid

52,367,209 49,536,877 49,154,700 45,856,800 41,155,000

Preferential allotment/ESOP - - - 7,050 32,50,000

Amount of Final Dividend 2,094.69 1,733.79 1,474.64 1,375.92 1,332.15

Dividend Distribution tax 339.81 281.26 244.92 233.84 226.40

Dividend Distribution tax Rate 16.2225% 16.2225% 16.609% 16.995% 16.995%

F-52

Shriram City Union Finance Limited Annexure VII

Statement of dividend

Statement of dividend in respect of preference shares

% of dividend For the year ended March 31,

2012 2011 2010 2009 2008

5% - - - - 4,210

6% - - - 23,28,980* 2,018,590

8% - - - - 83,260

9% - - - - -

10% - - - - 16,270

12% - - - - 2,950

14% - - - - 200,000

14% - - - - 1,900

15% - - - - 1,800

Total shares - - - 23,28,980 23,28,980

Amount of dividend ( ` in lacs) - - - 63.17 141.67

Dividend distribution Tax ( ` in lacs) - - - 10.74 24.07

* During the financial year ended on March 31, 2009 all preference shares were redeemed

F-53

Shriram City Union Finance Limited Annexure VIII

Statement of Accounting Ratios

[Calculation of Earnings Per Share (EPS)]

Earnings per share calculation is done in accordance with Accounting Standard -20 "Earnings Per Share" notified under Accounting Standards (AS) under Companies Accounting Standard Rules, 2006, as amended

Particulars

As at March 31,

2012 2011 2010 2009 2008

Net profit after tax as per Statement of profit and loss (` in lacs)

34,253.12 24,058.85 19,425.86 11,700.77 8,763.50

Less: Preference dividend including tax on dividend (` in lacs)

- - - 73.91 165.74

Net Profit Attributable to Equity Shareholders (` in lacs)

a 34,253.12 24,058.85 19,425.86 11,626.86 8,597.76

Weighted average number of Equity Share Outstanding during the year/ period (for Basic EPS) (No. in lacs)

b 498.20 493.23 471.32 451.16 391.67

(i) Equity Share arising on conversion of optionally convertible warrants (No. in lacs)

c 0.20 - - 59.28 1.45

(ii) Equity Share for no consideration arising on grant of Stock option under ESOP (No. in lacs)

d 3.67 8.32 10.45 7.71 2.29

Weighted average number of Equity Shares outstanding during the year/ period (for Diluted EPS) (b+c+d) (No. in lacs)

E 502.07 501.55 481.77 518.15 395.41

Earnings per share (Basics) (`̀̀̀) (a/b) 68.75 48.78 41.22 25.77 21.95

Earnings per share (Diluted) (`̀̀̀) (a/e) 68.22 47.97 40.32 22.44 21.74

F-54

Shriram City Union Finance Limited Annexure VIII

Statement of Accounting Ratios

[Calculation of Return on Net Worth (RONW)] `̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

SHAREHOLDERS FUNDS

Share capital 5,236.72 4,953.69 4,915.47 4,585.68 6,444.48

Reserves and surplus 159,822.32 116,253.59 95,084.15 63,688.56 38,303.11

Money received against share warrants 8,437.00 - - 2,700.00 232.20

Share application money pending allotment - - 0.71 - -

Less: Miscellaneous Expenditure (to the extend not written off)

1,106.23 - - - -

Net worth as at the end of the year 172,389.81 121,207.28 100,000.33 70,974.24 44,979.79

Net profit after tax 34,253.12 24,058.85 19,425.86 11,700.77 8,763.50

Return on Net worth (Annualised) (%) 19.87% 19.85% 19.43% 16.49% 19.48%

Statement of Accounting Ratios

[Calculation of Net Asset Value (NAV) Per Equity Share]

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

SHAREHOLDERS FUNDS

Share capital 5,236.72 4,953.69 4,915.47 4,585.68 6,444.48

Reserves and surplus

159,822.32 116,253.59 95,084.15 63,688.56 38,303.11

Money received against share warrants 8,437.00 - - 2,700.00 232.20

Share application money pending allotment

- - 0.71 - -

Less: Miscellaneous Expenditure (not written off)

1,106.23 - - - -

Net Asset Value

172,389.81 121,207.28 100,000.33 70,974.24 44,979.79

Number of Equity shares outstanding at the end of the year/ period

52,367,209 49,536,877 49,154,700 45,856,800 41,155,000

Net asset Value per Equity Share (`̀̀̀) 329.19 244.68 203.44 154.77 109.29

F-55

Shriram City Union Finance Limited

Secured loans

A. Term loan from banks

`̀̀̀ in lacs

Particulars Date of

Disbursement

Disbursed

amount

Balance as on

March 31st

2012

Repayment terms

Allahabad Bank. 30-Dec-11 15,000.00 15,000.00

Repayable in three Equal Inst. of ` 50 cr each at the end of 24th, 30th & 36th month from the date of disbursement.

Andhra Bank 20-Feb-12 17,500.00 17,500.00 Repayable in 8 half yearly installments

Bank of India 31-Oct-11 20,000.00 20,000.00 Bullet payment as on 31-Oct-2014

Bank of Maharashtra 31-Mar-11 5,000.00 5,000.00 Repayable of `25 crs each at the end of 39th month & 42nd month

Bank of Maharashtra 29-Sep-11 10,000.00 10,000.00 Principal amt of `50 cr. Each paid at the end of 39th & 42nd month

Calyon Bank 30-Dec-10 3,500.00 3,500.00 Bullet payment on 02-Dec-2012

Canara Bank 29-Jan-10 20,000.00 20,000.00 Bullet payment on 29-Dec-2012

Canara Bank 17-Sep-10 20,000.00 20,000.00 Bullet payment on 24-Aug-2013

Canara Bank 24-Sep-10 10,000.00 10,000.00 Bullet payment on 24-Aug-2013

Canara Bank 29-Feb-12 20,000.00 20,000.00 Bullet payment on 29-Jan-2015

Corporation Bank 31-Dec-10 10,000.00 9,987.08 Bullet payment on 28-Dec-2013

ICICI Bank 25-Mar-11 25,000.00 18,750.00 Repayable in Oct11, Apr12, Oct12, Apr13 - `62.5 Crs each (25 months)

Indian Bank 24-Sep-11 30,000.00 30,000.00 Bullet payment as on 24-Sep-2014

Ing Vysya Bank 26-Mar-10 4,300.00 1,433.33 Repayable in half yearly installment of `716.66 lacs

Oriential Bank of Commerce 31-Mar-11 10,000.00 10,000.00

Repayable in 4 Quarterly installments of `25 Cr each after an initial moratorium period of 24 months

Oriential Bank of Commerce 20-Jan-12 30,000.00 30,000.00

Repayment in two equals half yearly installment after a moratorium of one year from the date of availment.

State Bank Mauritius Ltd 7-Feb-11 1,500.00 750.00 Repayable in 8 Quarterly Installments of ` 31.25 Million each

State Bank of Mysore 27-Nov-10 10,000.00 9,994.79 Bullet payment on 27-Nov-2013

State Bank of Patiala 31-Jan-10 10,000.00 10,000.00 Bullet payment on 21-Jan-2013

F-56

Shriram City Union Finance Limited

Secured loans

A. Term loan from banks `̀̀̀ in lacs

Particulars Date of

Disbursement

Disbursed

amount

Balance as on

March 31st

2012

Repayment terms

State Bank of Patiala 22-Mar-11 15,000.00 10,000.00 Repayment at the end of every 12 months in 3 annual equal installments

State Bank of Travancore 16-Dec-10 10,000.00 9,999.94 Bullet payment on 23-Dec-2012

Syndicate Bank 22-Jan-11 15,000.00 15,000.00 Bullet payment on 03-Jan-2013

Syndicate Bank 25-Feb-12 30,000.00 30,000.00 Bullet payment on 25-Jun-2015

Union Bank of India 22-Nov-10 15,000.00 15,000.00 Bullet payment on 22-Nov-2012

Union Bank of India 25-Jan-11 15,000.00 15,000.00 Bullet payment on 04-Jan-2013

United Bank of India 29-Sep-11 10,000.00 10,000.00 Repaid in 4 equal annual installments of `25 crores each.

Vijaya Bank 30-Mar-11 9,000.00 9,000.00

Repayable In 36 Months With An Initial Moratorium Period of 12 Months & Thereafter It should be repaid in 24 EMI

Yes Bank 28-Feb-11 8,000.00 8,000.00 Bullet payment on 28-Feb-2014

Total

3,98,800.00 383,915.15

B. Term loan from other

`̀̀̀ in lacs

Particulars Date of

Disbursement Disbursed

amount Balance as on

March 31, 2012 Repayment terms

SIDBI – I 10-Aug-10 10,000.00 6,500.00 Bullet payment on 10-Aug-2013

SIDBI – II 31-Dec-11 10,000.00 10,000.00

10% each at the end of 12th & 24th month, 15% each at the end of 36th & 48th months and 25% each at the end of 60th and 66th months from the date of disb.

Total 20,000.00 16,500.00

F-57

Shriram City Union Finance Limited

Secured loans

C. Cash credit from banks (including WCDL)

` ` ` ` in lacs

Particulars Date of Disbursement Sanctioned limit Balance as on March

31, 2012

Andhra Bank 31-Dec-11 7500.00 180.06

Axis Bank 31-Dec-09 10000.00 0.00

Bank of India 30-Jun-10 20000.00 17744.32

Bank of Maharashtra 31-Mar-11 5000.00 4742.18

Canara Bank 23-Nov-11 5000.00 3902.58

Central Bank of India 25-Mar-09 10000.00 3.40

Centurion Bank (Hdfc) 19-Oct-11 2800.00 0.00

City Union Bank 30-Jan-08 1400.00 0.00

Corporation Bank 30-Dec-10 5000.00 2414.21

DBS Bank 22-Jul-10 100.00 4.52

Dena Bank 17-Mar-09 15000.00 15.47

Federal Bank 10-Mar-11 5000.00 2507.96

Idbi Bank 24-Mar-11 16000.00 155.80

Indian Bank 6-Nov-07 2500.00 53.95

Indian Overseas Bank 21-Jan-09 10000.00 9995.51

Indusind Bank 16-Jun-10 7500.00 2.62

Ing Vysya Bank 24-Mar-10 500.00 109.51

Ing Vysya Bank 24-Mar-10 500.00 4.48

Jammu & Kashmir Bank Ltd., 31-Mar-11 10000.00 4.55

Kotak Mahindra Bank 19-Jan-12 5000.00 2422.69

Oriental Bank of Commerce 28-Sep-07 5000.00 4823.58

Punjab National Bank 5-Mar-10 5000.00 6.42

South Indian Bank 26-Jun-09 100.00 47.88

State Bank of India 27-Jun-11 5000.00 8.53

State Bank of Mysore 26-Nov-10 100.00 0.00

State Bank of Patiala 25-Feb-09 5000.00 26.89

State of Bikanur And Jaipur 21-Sep-10 500.00 27.80

Tamilnadu Mercantile Bank 4-Aug-11 1000.00 0.00

Union Bank of India 7-Mar-08 5000.00 6.85

United Bank of India 20-Mar-09 7500.00 7154.46

WCDL

HSBC Bank 23-Dec-09 5000.00 3125.00

South Indian Bank 25-Jun-10 5000.00 4989.83

State Bank of India 24-Jun-11 25000.00 25000.00

State Bank of Mysore 18-Mar-11 4900.00 4900.00

State Bank of Bikaner & Jaipur 22-Dec-10 2400.00 2400.00

Canara Bank 13-Feb-12 25000.00 25000.00

Total 240300.00 121781.03

F-58

Shriram City Union Finance Limited

Secured loans

C. Privately placed secured redeemable non-convertible debenture of `̀̀̀1,00,000/- each

` ` ` ` in lacs

Particulars Date of

Allotment

Disbursed

amount

Balance as on

March 31, 2012 Repayment terms

Corporation Bank 24-Sep-09 2,500.00 2,500.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Central Bank of India 17-Sep-09 1,000.00 1,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Central Bank of Pension Fund 17-Sep-09 1,000.00 1,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Central Bank of Provident Fund 17-Sep-09 500.00 500.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Allahabad Bank. 23-Sep-09 2,000.00 2,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Bank of Baroda 6-Oct-09 1,000.00 1,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

A.K. Capital Services 6-Oct-09 2,000.00 2,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Total

10,000.00 10,000.00

F-59

Shriram City Union Finance Limited

Secured loans

D. Privately placed secured redeemable non-convertible debenture of `̀̀̀10,00,000/- each

`̀̀̀ in lacs

Particulars Date of

Allotment

Disbursed

amount

Balance as on

March 31, 2012 Repayment terms

Standard Chartered Bank 22-Apr-10 17500.00 8750.00 Repayable half yearly 6 installment

Reliance Mutual Fund 5-Jul-10 7500.00 7500.00 Repayable on 5-Jan-2013

Ing Vysya Bank 23-Nov-10 2000.00 2000.00 In 3 equal installment in 5th, 6th & 7th year from deemed date of Allotment.

Ing Vysya Bank 13-Dec-10 1000.00 1000.00 Bullet on 13-Dec-2017

Ing Vysya Bank 13-Dec-10 1500.00 1500.00 Bullet on 13-Dec-2017

Jharkand Grahim Bank 4-Feb-11 500.00 500.00 Equal installments of 20% each at par starting from the end of 6th year till end of 10th year

Deutsche Bank 30-Mar-11 27500.00 27500.00 Bullet payment on 30-Mar-2017

Kotak Mahindra Mutual Fund 23-Nov-11 1100.00 1100.00 Bullet payment on 23-May-2013

Kotak Mahindra Mutual Fund 25-Oct-11 1800.00 1800.00 Bullet payment on 18-Apr-2013

Kotak Mahindra Mutual Fund 25-Oct-11 1730.00 1730.00 Bullet payment on 25-Oct-2013

Pramerica 11-Nov-11 2500.00 2500.00 Bullet payment on 03-Apr-2013

HDFC Mutual Fund 5-Dec-11 1500.00 1500.00 Bullet payment on 01-Dec-2014

Kotak Mahindra Mutual Fund 25-Jan-12 1000.00 1000.00 Bullet payment on 20-Jan-2014

Deutsche Mutual Fund 10-Feb-12 1000.00 1000.00 Bullet payment on 03-Feb-2015

Hdfc Mutual fund 13-Feb-12 2900.00 2900.00 Bullet payment on 02-Jun-2014

Kotak Mahindra Mutual Fund 17-Feb-12 500.00 500.00 Bullet payment on 09-Aug-2013

Sundaram Mutual Fund 24-Feb-12 680.00 680.00 Bullet payment on 17-Feb-2014

Total

72210.00 63460.00

E. Public issue of secured redeemable non-convertible debenture of `̀̀̀ 1,000/- each

`̀̀̀ in lacs

Particulars No. of Debenture

holders

Balance as on March

31, 2012 Repayment terms

Option I

32.00 5,429.05 Repayable on 25-Aug-2016

15,696.00 43,653.65 Repayable on 25-Aug-2016

175.00 12,125.30 Repayable on 25-Aug-2016

Option II

14.00 9,570.95 Repayable on 25-Aug-2014

3,610.00 1,346.35 Repayable on 25-Aug-2014

43.00 2,874.70 Repayable on 25-Aug-2014

Total 19,570.00 75,000.00

F. Privately placed secured redeemable non-convertible debenture of `̀̀̀ 1,000/- each

`̀̀̀ in lacs

Particulars Balance as on March 31,

2012 Repayment terms

Secured redeemable non convertible debentures (Retail)

205954.93 Redeemable at par over a period of 160 months

F-60

Shriram City Union Finance Limited

Annexure X

Unsecured loans

A. Fixed Deposits

`̀̀̀ in lacs

Particulars Balance as on March 31,

2012 Repayment terms

Fixed Deposits 22.21 Redeemable at par over a period of 60 months

B. Sub-ordinated Debt (Institutional) `̀̀̀ in lacs

Particulars Date of

Allotment

Disbursed

amount

Balance as on

March 31, 2012 Repayment terms

A.K.Capital Finance 16-Jan-12 1,000.00 1,000.00 Repayable on 16-Jan-2019

A.K.Capital Finance 16-Jan-12 1,000.00 1,000.00 Repayable on 16-Jan-2019

Canara Bank 27-Feb-12 1,500.00 1,500.00 Repayable on 27-Aug-2017

Central Bank of India 27-Feb-12 1,000.00 1,000.00 Repayable on 27-Feb-2019

Bank of Baroda 27-Feb-12 2,000.00 2,000.00 Repayable on 27-Feb-2019

Lakshmi Villas Bank 27-Feb-12 500.00 500.00 Repayable on 27-Feb-2019

Salim Pattiwala 26-Mar-12 10.00 10.00 Repayable on 26-Mar-2019

Madav Prasad Jalan 26-Mar-12 10.00 10.00 Repayable on 26-Mar-2019

The South Indian Bank Ltd 26-Mar-12 1,000.00 1,000.00 Repayable on 26-Mar-2019

Axis Bank 26-Mar-12 1,500.00 1,500.00 Repayable on 26-Mar-2019

Indian Overseas Bank 26-Mar-12 2,500.00 2,500.00 Repayable on 26-Mar-2019

Vidut Supplier PRI-SUB DEBT 26-Mar-12 15.00 15.00 Repayable on 26-Sep-2017

Corporation Bank 26-Mar-12 1,000.00 1,000.00 Repayable on 26-Sep-2017

Axis bank ltd 15-Mar-12 10,000.00 10,000.00 Repayable on 26-Mar-2019

Total 23,035.00 23,035.00

C. Sub-ordinated Debt (Retail)

`̀̀̀ in lacs

Particulars Balance as on March 31,

2012 Repayment terms

Sub-ordinated Debt 60539.01 Redeemable at par over a period of 88 months

D. Deposits (Corporate)

`̀̀̀ in lacs

Description Date of the financing document Balance as on March 31,

2012

Shriram Credit Company Limited 1-Nov-11 2,000.00

F-61

Shriram City Union Finance Limited Annexure XI

Capitalisation statement

`̀̀̀ in lacs

Particulars Prior to the Issue as at March

31, 2012 (Audited) Post to the Issue*

Debt

Short-term debt 330,806.35 330,806.35

Long-term debt 631,400.98 681,400.98

Total debt 962,207.33 1,012,207.33

Shareholders fund

Share capital 5,236.72 5,236.72

Reserves and surplus 159,822.32 159,822.32

Money received against share warrants 8,437.00 8,437.00

Share application money pending allotment - -

Less: Miscellaneous Expenditure (not written off) 1,106.23 1,106.23

Total Shareholders fund 172,389.81 172,389.81

Long-term debt/Equity ratio 3.66 3.95

* The debt-equity ratio post the Issue is indicative and is on account of assumed inflow of `50,000.00 lacs from the Issue, as on March 31, 2012.

F-62

Shriram City Union Finance Limited

Annexure XII

Statement of Tax Shelter

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Profit as per accounting books (business) 52,281.57 36,060.09 27,225.86 17,973.53 12,698.46

Profit as per accounting books (investments)

134.74 - 1,400.00 - -

Total profit as per accounting books 52,416.31 36,060.09 28,625.86 17,973.53 12,698.46

Tax rate on business income 32.45% 33.22% 33.99% 33.99% 33.99%

Tax rate on investment income 16.22% 0.00% 11.33% 0.00% 0.00%

Tax on accounting profit 16,984.61 11,978.26 9,412.69 6,109.20 4,316.21

Permanent Differences

Donation - 0.50 - 32.50 13.25

Exempt Dividend Income (596.67) - (444.91) (56.47) (46.06)

Disallowance u/s 14A 600.71 - 500.00 - -

Capital gains on sale of fixed assets

- 2,193.38 - 2,797.00

Employee Compensation Expenses 191.82 - - - -

Others 203.52 13.94 200.00 0.20 24.34

Sub Total (A) 399.38 14.44 2,448.47 (23.77) 2,788.53

Temporary Differences

Depreciation and Lease adjustments 38.43 0.03 (97.37) 1,804.92 859.39

Deferred revenue expenses (1,106.23) - - - -

Service tax write off - - - - 783.14

Provision for standard assets 944.93 1,714.89 - - -

Provision for Leave, Gratuity & Bonus 230.73 68.30 25.75 7.97 140.16

Provision for Derivative contract (772.49) (546.62) - 994.18 811.68

Others

199.83 (0.42) - (34.03)

Sub Total (B) (664.63) 1,436.43 (72.04) 2,807.07 2,560.34

Net Adjustments (A+B) (265.25) 1,450.87 2,376.43 2,783.30 5,348.87

Tax Impact on Net Adjustments (86.06) 481.949

559.42 946.04 1,818.08

Total Taxation 16,898.55 12,460.20 9,972.11 7,055.25 6,134.29

Current Tax Provision for the year 16,898.55 12,460.20 9,972.11 7,055.25 6,134.29

F-63

Shriram City Union Finance Limited

Annexure XIII

Notes forming part of the Reformatted Summary Statements

1. Corporate information

Shriram City Union Finance Limited (the company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange Ltd. (BSE),National Stock Exchange of India Ltd.(NSE) and Madras Stock Exchange Ltd.(MSE). The company is a Deposit Accepting Non Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI). The company operates in India.

2. Basis of preparation

The financial statements of the company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 as amended, the relevant provisions of the Companies Act, 1956 and the guidelines issued by RBI as applicable to NBFCs. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year.

2.1 Summary of significant accounting policies

a. Presentation and disclosure of financial statements

During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the figures for the previous years in accordance with the requirements applicable in the year ended March 31, 2012.

b. Current / Non-current classification of assets / liabilities

Pursuant to applicability of revised Schedule VI on presentation of financial statements for the financial year ended March 31, 2012; the Company has classified all its assets / liabilities into current / non-current portion based on the time frame of 12 months from the date of financial statements. Accordingly, assets/liabilities expected to be realised /settled within 12 months from the date of financial statements are classified as current and other assets/ liabilities are classifies as non current.

c. Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the date of the financial statements and results of operations during the reporting year end. Although these estimates are based on the management’s best knowledge of current events and actions, actual results could differ from these estimates. Any revision to the accounting estimates are recognised in the respective and future years.

d. Tangible fixed assets

Fixed assets, are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises of purchase price and directly attributable cost for bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

F-64

Shriram City Union Finance Limited

Annexure XIII

Notes forming part of the Reformatted Summary Statements

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenditure is incurred.

Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.

e. Intangible fixed assets

Intangible fixed assets are stated at cost less accumulated amortisation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

f. Depreciation on tangible fixed assets

Depreciation on fixed assets is provided on Straight Line Method (SLM) by using the rates arrived at based on the useful lives estimated by the management, which are greater than or equal to the rates prescribed under the Schedule XIV to the Companies Act, 1956., except depreciation on Wind mill @ 10% on straight-line basis.

Leasehold improvements are amortised on SLM over the primary period of lease subject to a maximum of 60 months. All fixed assets individually costing ` 5,000.00 or less are fully depreciated in the year of installation. Depreciation on assets acquired /sold during the year is recognised on a prorata basis in the statement of profit and loss till the date of sale or from the date of acquisition.

g. Depreciation on intangible assets

Amortisation is provided on Straight Line Method (SLM), which reflects the management’s estimate of the useful life of the intangible asset. The company has provided depreciation on the intangible assets on straight-line basis @33.33% on Compute software.

Amortisation on assets acquired/sold during the year is recognised on prorata basis in the statement of profit and loss till the date of acquisition/sale.

h. Impairment of assets

The company assesses at each balance sheet date if there is an indication of impairment of any asset. If any indication exists, the company estimates the recoverable amount of the asset. The recoverable amount of an asset is greater of net selling price and value in use of the asset. Where the carrying amount of an asset is more than its recoverable amount, the asset is considered impaired and is written down to it’s recoverable amount.. The value in use is the estimated future cash flows discounted to their present value at pre-tax discount rate which reflects current market assessment of the time value of money and risk specific to the asset.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

An assessment is made at each balance sheet date about existence or decrease of previously recognised impairment losses. If such indication exists, the company estimates the asset’s recoverable amount. A previously recognised impairment loss is increased or reversed depending on the changes in the circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment.

F-65

Shriram City Union Finance Limited

Annexure XIII

Notes forming part of the Reformatted Summary Statements

i. Capital advance

Capital advances are advances given for procurement of fixed assets. Company does not expect to realise them in cash and over a period of time these advances get converted into fixed assets which are non-current by nature. Therefore irrespective of when the fixed assets are expected to be received such advances are disclosed under "long-term loans and advances".

j. Borrowing costs

Borrowing cost includes interest and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Ancillary and other borrowing costs are charged to statement of profit & loss in the year in which they are incurred.

k. Investments

Investments intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline, other than temporary in the value of such investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

l. Provision/write off of assets

Non performing loans are written off / provided for, as per estimates of management, subject to the minimum provision required as per Non- Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

Provision on standard asset is made as required under Reserve Bank of India (RBI) notification No. DNBS.222/CGM (US-2011) dated January 17, 2011 for the year ended on March 31, 2012 & March 31, 2011.

m. Loans

Loans are stated at the amount advanced including finance charges accrued and expenses recoverable, as reduced by the amounts received up to the date of balance sheet and loans securitised.

n. Leases

Where the Company is the lessor

Assets given on operating leases are included in fixed assets. Lease income is recognised in the statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the statement of profit and loss.

Where the Company is the lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.

F-66

Shriram City Union Finance Limited

Annexure XIII

Notes forming part of the Reformatted Summary Statements

o. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The revenue recognisation are as under:

(i) Income from financing activities is recognised on the basis of internal rate of return.

(ii) Additional finance charges / additional interest are treated to accrue on realisation due to uncertainty of its realisation.

(iii) Gain arising on securitization/direct assignment of assets is recognised over the tenure of agreements as per guideline on securitisation of standard assets issued by RBI. Loss or expenditure in respect of securitisation / assignment, if any, is recognised upfront.

(iv) The prudential norms for income recognition prescribed under Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions 2007 are followed.

(v) Income from services is recognised as per the terms of the contract on accrual basis.

(vi) Interest Income on deposit accounts with banks is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(vii) Dividend is recognised as income when right to receive payment is established by the date of balance sheet.

(viii) Profit/loss on sale of investments is recognised at the time of actual sale / redemption.

(ix) Income form Power generation is regonised as per the terms of Power purchase agreement for the year ended March 31, 2009.

p. Foreign currency translation

Foreign currency transactions and balances

Initial recognition : Foreign currency transactions are recorded in Indian rupee, by applying to the foreign currency amount the exchange rate between the Indian rupee and the foreign currency at the date of the transaction.

Conversion : Foreign currency monetary items are retranslated to Indian rupees by using the exchange rate prevailing at the Balance Sheet date ( Statement of Asset and Liabilities) Exchange differences : All exchange differences are dealt with in the statement of profit and loss.

q. Income taxes

Tax expense comprises of current tax and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the respective years and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

F-67

Shriram City Union Finance Limited

Annexure XIII

Notes forming part of the Reformatted Summary Statements

The carrying cost of the deferred tax assets are reviewed at each balance sheet date. The company writes down the carrying amount of a deferred tax asset to the extent it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write down is reversed to the extent it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

The un-recognised deferred tax assets are re-assessed by the Company at each balance sheet date and are recognised to the extent it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

r. Segment reporting

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole. The segments are identified based on the nature of product & market served. The income /expenses which are not allocated to any reportable segments are reported as un allocable segment.

s. Employee stock compensation cost

The measurement and disclosure of the employee share based payment plans is done in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India (ICAI).The company measures cost relating to employees stock option by intrinsic value method. Compensation expenses is amortised on straight line method over the period of vesting of options.

t. Retirement and other employee benefits

Provident fund

All the employees of the company are entitled to receive benefits under the Provident Fund, a defined contribution plan in which both the employee and the company contribute monthly at a stipulated rate. The Company has no liability for future Provident Fund benefits other than its annual contribution and recognises such contributions as an expense in the year it is incurred.

Gratuity

The company provides for gratuity, a defined benefit retirement plan covering all employees. The plan provides for lump sum payments to employees upon death while in employment or on separation from employment after serving for the stipulated year mentioned under ‘The Payment of Gratuity Act, 1972’. The Company accounts for liability of future gratuity benefits based on an external actuarial valuation on projected unit credit method carried out for assessing liability as at the reporting date.

Leave benefits

Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.

F-68

Shriram City Union Finance Limited

Annexure XIII

Notes forming part of the Reformatted Summary Statements

u. Earnings per share (EPS)

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

v. Expenses on deposits / debentures

Expenses for private placement of debentures/subordinated debt bonds/deposits are charged to statement of profit and loss in the year in which they are incurred.

Expenses incurred on public issue of debentures other than brokerage are charged off on straight line basis over the weighted average tenor of the underlying debentures. The brokerage incurred on issue of debenture is treated as expenditure in the year in which it is incurred.

w. Provisions

A provision is recognised when the company has a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the best estimates then.

x. Cash and cash equivalents

Cash and cash equivalents are held for the purpose of meeting short-term cash commitments. Cash equivalents are short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents include cash-in-hand, cash at bank, cheque in hand, remittances in transit and short term investments with an original maturity period of three months or less.

y. Derivative instruments

In accordance with the ICAI guidelines and on principle of prudence, derivative contracts, other than foreign currency forward contracts covered under AS 11, are marked to market on a portfolio basis, and the net loss, if any, after considering the offsetting effect of gain on the underlying hedged item, is charged to the statement of profit and loss. However net gain, if any, after considering the offsetting effect of loss on the underlying hedged item, is ignored.

z. Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events, which are beyond the control of the company. A contingent liability also includes a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises where, a liability cannot be measured reliably. The company does not recognise a contingent liability in the accounts but discloses its existence in the financial statements.

F-69

Shriram City Union Finance Limited

Annexure XIII

Notes forming part of the Reformatted Summary Statement

3. Earnings per share (EPS)

Particulars

For the year ended March 31,

2012 2011 2010 2009 2008

Net profit after tax as per statement of profit and loss (` in lacs)

34,253.12 24,058.85 19,425.86 11,700.77 8,763.50

Less: preference dividend

- - - 73.91 165.74

Net profit for equity shareholders (` in lacs) (A) 34,253.12 24,058.85 19,425.86 11,626.86 8,597.76

Weighted average number of equity shares for calculating Basic EPS (No. in lacs) (B)

498.20 493.23 471.32 451.16 391.67

Weighted average number of equity shares for calculating Diluted EPS (No. in lacs) (C)

502.07 501.55 481.77 518.15 395.41

Basic earnings per equity share (in Rupees) (Face value of `10/- per share) (A) / (B)

68.75 48.78 41.22 25.77 21.95

Diluted earnings per equity share (in Rupees) (Face value of `10/- per share) (A) / (C)

68.22 47.97 40.32 22.44 21.74

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Weighted average number of equity shares for calculating EPS (No. in lacs)

498.20 493.23 471.32 451.16 391.67

Add : Equity shares arising on conversion of optionally convertible warrants (No. in lacs)

0.20 - - 59.28 1.45

Add : Equity shares for no consideration arising on grant of stock options under ESOP (No. in lacs)

3.67 8.32 10.45 7.71 2.29

Weighted average number of equity shares in calculation diluted EPS (No. in lacs)

502.07 501.55 481.77 518.15 395.41

F-70

Shriram City Union Finance Limited Annexure XIII

Notes forming part of Reformatted Summary Statement

4. Gratuity and other post-employment benefit plans:

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is

eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Consequent to the adoption of revised AS 15 ‘Employee Benefits’ issued under Companies Accounting Standard Rules, 2006, as amended, the following disclosures are made as required by the standard:

Statement of profit and loss

Net Employee benefit expenses recognised in the employee cost:

`̀̀̀ in lacs

Particulars

Gratuity

For the year ended March 31,

2012 2011 2010 2009 2008

Current service cost 30.74 4.84 21.49 35.29 45.67

Interest cost on benefit obligation 16.20 12.44 12.38 13.37 5.93

Expected return on plan assets N.A. N.A. N.A. N.A. N.A.

Net actuarial (gain) / loss recognised in the year 22.18 23.23 (19.27) (39.51) 53.10

Past service cost - -

Net benefit expense 69.12 40.51 14.60 9.15 104.70

Actual return on plan assets N.A. N.A. N.A. N.A. N.A.

Balance sheet

Benefit asset/liability `̀̀̀ in lacs

Particulars

Gratuity

As at March 31,

2012 2011 2010 2009 2008

Defined benefit obligation 259.89 196.34 155.52 139.64 133.18

Fair value of plan assets N.A. N.A. N.A. N.A. N.A.

Total 259.89 196.34 155.52 139.64 133.18

Less: Unrecognised past service cost - - - - -

Plan asset / (liability) (259.89) (196.34) (155.52) (139.64) (133.18)

Changes in the present value of the defined benefit obligation are as follows:

`̀̀̀ in lacs

Particulars

Gratuity

As at March 31,

2012 2011 2010 2009 2008

Opening defined benefit obligation 196.34 155.52 139.64 133.18 28.48

Interest cost 16.2 12.44 12.38 13.37 5.93

Current service cost 30.74 4.84 21.49 35.29 45.67

Benefits paid (5.57) - 1.28 (2.69) Nil

Actuarial (gains) / losses on obligation 22.18 23.54 (19.27) (39.51) 53.1

Closing defined benefit obligation 259.89 196.34 155.52 139.64 133.18

F-71

Shriram City Union Finance Limited Annexure XIII

Notes forming part of Reformatted Summary Statement

4. Gratuity and other post-employment benefit plans:

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

`̀̀̀ in lacs

Particulars

Gratuity

As at March 31,

2012 2011 2010 2009 2008

Investments with insurer NA NA NA NA NA

The principal assumptions used in determining gratuity obligations for the Company’s plan are shown below:

`̀̀̀ in lacs

Particulars

Gratuity

As at March 31,

2012 2011 2010 2009 2008

Discount Rate 8.50% 8.25% 7.75% 7.75% 8.00%

Increase in compensation cost 5.00% 5.00% 5.00% 5.00% 5.00%

Employee Turnover* 2.00% 2.00% 3.25% 3.25% 10.00%

The estimates of future salary increases, considered in actuarial valuation, are on account of inflation, seniority, promotion and other

relevant factors, such as supply and demand in the employment market the amounts are as follows.

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

Defined benefit obligation 259.89 196.34 155.52 139.64 133.18

Plan assets NA NA NA NA NA

Surplus / (deficit) (259.89) (196.34) (155.52) (139.64) (133.18)

Experience adjustments on plan liabilities (35.18) (29.63) (19.27) (39.51) 53.10

Experience adjustments on plan assets NA NA NA NA NA

5. Employee Stock Option Plans:

The company provides share-based payment schemes to its employees. The relevant details of the scheme and the grant are as below:

Date of Shareholder’s approval : October 30 2006

Date of grant : October 19 2007

Date of Board Approval : October 19 2007

Number of options granted : 1355000

Method of Settlement (Cash/Equity) : Equity

Graded vesting period:

After 1 years of grant date : 10% of options granted

After 2 years of grant date : 20% of options granted

After 3 years of grant date : 30% of options granted

After 4 years of grant date : 40% of options granted

Exercisable period : 10 years from vesting date

Vesting Conditions : on achievement of pre –determined targets

F-72

Shriram City Union Finance Limited Annexure XIII

Notes forming part of Reformatted Summary Statement

The details of Series I have been summarized below:

As at March 31, 2012 As at March 31, 2011 As at March 31, 2010 As at March 31, 2009 As at March 31, 2008

Number of

Shares

Weighted Average

Exercise

Price(in `̀̀̀)

Number of

Shares

Weighted Average

Exercise

Price (in `̀̀̀)

Number

of Shares

Weighted Average

Exercise

Price (in `̀̀̀)

Number

of Shares

Weighted Average

Exercise

Price (in `̀̀̀)

Number

of Shares

Weighted Average

Exercise

Price (in `̀̀̀)

Outstanding at the beginning of the year

918,123 35.00 1,272,800 35.00 1,320,700 35.00 1,327,500 35.00 -

Add: Granted during the year -

27,500

-

- - 1,327,500 35.00

Less: Forfeited during the year -

-

-

-

-

Less: Exercised during the year 530,332 35.00 382,177 35.00 47,900 35.00 6,800 35.00 -

Less: Expired during the year

-

-

-

-

Outstanding at the end of the year

387,791 35.00 918,123 35.00 1,272,800 35.00 1,320,700 35.00 1,327,500 35.00

Exercisable at the end of the year

-

-

-

-

Weighted average remaining contractual life (in years)

8.55 - 9.55 - 10.55 - 11.55 - 12.55

Weighted average fair value of options granted

227.42 - 227.42 - 227.42 - 227.42 - 227.42

F-73

Shriram City Union Finance Limited Annexure XIII

Notes forming part of Reformatted Summary Statement

The details of exercise price for stock options outstanding at the end of the period are:

As at March 31,

Range of exercise

prices(in `̀̀̀)

No. of options

outstanding

Weighted average

remaining

contractual life of

options (in years)

Weighted average

Exercise Price(in `̀̀̀)

2012 35.00 3,87,791 8.55 35.00

2011 35.00 9,18,123 9.55 35.00

2010 35.00 12,72,800 10.55 35.00

2009 35.00 13,20,700 11.55 35.00

2008 35.00 13,27,500 12.55 35.00

Stock Options granted

The weighted average fair value of stock options granted was `.227.42. The Black Scholes model has been used for computing the weighted average fair value of options considering the following inputs:

2006 2007 2008 2009

Exercise Price (Rs.) 35.00 35.00 35.00 35.00 Expected Volatility (%) 55.36 55.36 55.36 55.36

Historical Volatility NA NA NA NA

Life of the options granted (Vesting and exercise period) in years

1.50 2.50 3.50 4.50

Expected dividends per annum (`) 3.00 3.00 3.00 3.00

Average risk-free interest rate (%) 7.70 7.67 7.66 7.67

Expected dividend rate (%) 0.84 0.84 0.84 0.84

The expected volatility was determined based on historical volatility data equal to the NSE volatility rate of Bank Nifty which is considered as a comparable peer group of the Company. To allow for the effects of early exercise it was assumed that the employees would exercise the options within six months from the date of vesting in view of the exercise price being significantly lower than the market price.

Effect of the employee share-based payment plans on the profit and loss account and on its financial position:

` ` ` ` in lacs

For the year ended March 31,

2012 2011 2010 2009 2008

Compensation cost pertaining to equity-settled employee share-based payment plan included above

191.82 471.68 751.53 1111.28 542.08

Liability for employee stock options outstanding as at year end

878.15 2079.09 2882.26 2990.73 3006.12

Deferred compensation cost Nil 191.82 601.22 1352.76 2464.04

F-74

Shriram City Union Finance Limited Annexure XIII

Notes forming part of Reformatted Summary Statement

Since the company used the intrinsic value method the impact on the reported net profit and earnings per share by applying

the fair value based method is as follows:

In March 2005,the ICAI issued a guidance note on “Accounting for Employees Share Based Payments” applicable to employee based share plan the grant date in respect of which falls on or after April 1 2005. The said guidance note requires that the proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said guidance note the impact on the reported net profit and earnings per share would be as follows:

For the year ended March 31,

2012 2011 2010 2009 2008

Profit as reported (` in lacs) 34,253.12 24,058.85 19,425.86 11,700.77 8,763.50

Add: Employee stock compensation under intrinsic value method (` in lacs)

191.82 471.68 751.53 1,111.28 542.08

Less: Employee stock compensation under fair

value method (` in lacs) 192.64 473.70 754.75 1,116.04 544.40

Proforma profit (` in lacs) 34,252.30 24,056.83 19,422.64 11,696.01 8,761.18

Less: Preference Dividend - - - 73.91 165.74

Proforma Net Profit for Equity Shareholders 34,252.30 24,056.83 19,422.64 11,622.10 8,595.44

Earnings per share

Basic (`.)

- As reported 68.75 48.78 41.22 25.77 21.95

- Proforma 68.75 48.77 41.21 25.76 21.95

Diluted (`.)

- As reported 68.22 47.97 40.32 22.44 21.74

- Proforma 68.22 47.96 40.31 22.43 21.74

6. Segment Information

The company has got a single reportable segment.

F-75

Shriram City Union Finance Limited Annexure XIII

Notes forming part of Reformatted Summary of Assets and Liabilities

7. Related Party Disclosure

(i) Subsidiaries

Shriram Housing Finance Limited (from 9th November 2010) (SHFL)

Shriram Non-Conventional Energy Limited (till 26th June 2009)(SNCEL)

(ii) Other Related Parties

Enterprises having significant influence over the Company Shriram Enterprises Holding Private Limited (SEHPL) Shriram Retail Holdings Private Limited (SRHPL) Shriram Capital Limited (SCL)

TPG India Investments I Inc. (TPGI)

Shriram Ownership Trust (SOT)

(iii) Key Managerial Personnel R Kannan Managing Director

` ` ` ` in lacs

Enterprises having significant influence over the Company Subsidiaries

March 31, March 31,

2012 2011 2010 2009 2008 2012 2011 2010 2009 2008

Payments/Expenses

Royalty to SOT 565.95 338.15 - - - - - - - -

Data Sourcing Fees to SOT 367.75 206.40 - - - - - - - -

Service Charges SOT 2,206.48 1,238.39 - - - - - - - -

Royalty to SCL - - 304.08 269.55 147.50 - - - - -

Data Sourcing Fees to SCL - - 160.53 135.70 63.38 - - - - -

Service Charges SCL - - 963.15 814.18 380.24 - - - - - Reimbursement of business promotion expenses, rent and other expenses to SCL

226.85 33.09 44.12 - - - - - - -

F-76

` ` ` ` in lacs

Enterprises having significant influence over the Company Subsidiaries

March 31, March 31,

2012 2011 2010 2009 2008 2012 2011 2010 2009 2008

License Fees to SCL 661.80 - - - - - - - - -

Gratuity and other expenses to SHFL - - - - - 14.80 - - - -

Equity dividend to SCL - - - - 162.60 - - - - - Equity dividend to SEHPL 448.04 985.68 896.07 716.86 432.64 - - - - -

Equity dividend to SRHPL 213.91 470.59 334.38 217.67 - - - - - -

Investments in Equity shares in SNCEL - - - - - - - - - 4.99

Investments in Equity shares in SHFL - - - - - 1,230.00 250.00 - - - Loan to SNCEL - - - - - - - - 4,392.66

Receipts

Subscription to optionally convertible warrants by SCL

8,437.00 - - - - - - - - -

Subscription to optionally convertible warrants by SRHPL

- - - 1,400.00 - - - - - -

Conversion of warrants into equity/securities premium

- - - 2,080.80 2,959.20 - - - - -

Sale of investments in SNCEL - - - - - - - - - 4.54 Sale of investments to SCL - - 1,900.00 - -

Interest received from SNCEL - - - - - - - - 78.00 -

Balance outstanding

Share Capital held by SCL 230.00 - - - 542.00

Share Capital held by SEHPL 1,792.15 1,792.15 1,792.15 1,792.15 1,647.65 - -

Share Capital held by SRHPL 855.62 855.62 855.62 544.17 - - -

Share warrants held by SCL 8,437.00 - - - - - - - - -

Share warrants held by SRHPL - - - 1,400.00 - - - - - -

Share warrants held by SEHPL - - - - 232.20 - - - - -

Investment in Shares of SNCEL - - - - - - - - 5.00 0.45

Investment in Shares of SHFL - - - - - 1,480.00 250.00

Outstanding Expenses SCL - - 41.84 60.90 174.28 - - - - -

Outstanding Expenses SOT 764.63 897.09 - - - - - - - -

Interest receivable on loan to SNCEL - - - - - - - - 60.32 -

F-77

Shriram City Union Finance Limited Annexure XIII

Notes forming part of Reformatted Summary statement

8. Contingent liabilities and commitments to the extent not provided for

(i) Contingent liabilities

`̀̀̀ in lacs

particulars As at March 31,

2012 2011 2010 2009 2008

a. Income tax 1,447.80 - - - -

b. Guarantees issued by the Company 450.00 6.81 6.81 6.81 6.81

c. Guarantees issued by others - 1,942.77 1,942.77 3,177.77 -

The Income tax assessments of the company have been completed up to the Assessment Year 2009-10. The disputed demand outstanding up to the assessment Year 2009-10 is `̀̀̀1447.80 lacs.

The company has provided NSE with a bank guarantee for `̀̀̀450.00 lacs from Indusind bank, Nugambakkam, Chennai branch and a deposit of `̀̀̀300.00 lacs as security deposit both together 1% of total public issue of secured non-convertible debentures of `̀̀̀75,000.00 lacs.[Refer Annex XIII note 9]

Standard Chartered Bank had provided guarantee for `̀̀̀1942.77 lacs in favour of Bank of Maharastra for Securitisation. The guarantee was closed on May 22, 2011.

(ii) Commitments

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011 2010 2009 2008

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

686.76 61.78 2.80 - 276.84

Commitments to invest in the subsidiary company i.e. Shriram Housing Finance Limited

5529.55 - - - -

9. Utilization of money raised through public issue of debenture, preferential issue of equity shares and warrants

(i) through public issue of debentures [Refer Annex IV note 3.1 (A)(iii)]

During the year ended March 31, 2012, the company raised `75,000 lacs through public issue of secured redeemable non convertible debenture of face value of `1000/- each . The proceeds of issue were utilized for the following purpose:

Particulars ` in lacs

Disbursement of loans

11,409.00

Repayment of loans from banks

39,030.00

Repayment of loans (Term loans, Securitisation loans)

24,561.00 Total 75,000.00

F-78

Shriram City Union Finance Limited Annexure XIII

Notes forming part of Reformatted Summary statement

(ii) through preferential issue of equity shares and warrants [Refer Annex IV note 1.4(ii) & 1.6]

Particulars ` in lacs

FD placed With Bank

21,500.00

Disbursement of loan

47.00

Total 21,547.00

During the year ended on March 31, 2009, 14,40,000 equity shares were allotted to Shriram Enterprise Holdings Private Limited in

excise of its option of conversion of warrants into equity shares at a price of `160 ( includes premium of `150).The total amount of `2167.50 lacs received from the said preferential allotment was utilized for the purpose of the issue.

10. Securitisation / Assignment

The Company sells loans through securitisation and direct assignment.

(i) The information on direct assignment activity of the Company as an originator is given below:

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Total number of assets 262,044 178,502 146,402 314,685 398,691

Total book value of assets (` in lacs) 200,398.99 117,915.72 30,000.00 88,844.37 75,781.80

Sale consideration received (` in lacs) 200,398.99 126,737.01 30,000.00 91,874.15 83,539.14

Gain (` in lacs) 37,682.48 27,163.76 2,554.73 13,182.64 7,757.34

Outstanding credit enhancement- Deposit with banks/corporate (` in lacs)

31,766.37 15,436.40 7,373.57 10,017.54 4,695.88

Outstanding Credit enhancement – Retained interest on securitisation (` in lacs)

1,374.98 1,900.63 2,735.13 1,762.03 3,200.86

* Gain on direct assignment deals is amortised over the period of the loan.

(ii) The information on securitisation activity of the Company as an originator is given below:

` in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Total number of assets 45,271 - - - -

Total book value of assets (` in lacs) 66,543.26 - - - -

Sale consideration received (` in lacs) 66,543.26 - - - -

Gain (` in lacs) 17,826.38 - - - -

Outstanding credit enhancement- Deposit with banks/corporate (` in lacs)

5,417.91 - - - -

Outstanding Credit enhancement – Retained interest on securitisation (` in lacs)

- - - - -

* Gain on securitisation is amortised over the period of the loan.

F-79

Shriram City Union Finance Limited Annexure XIII

Notes forming part of Reformatted Summary statement

11. Derivative Instruments:

The Notional principal amount of derivative transactions outstanding for interest rate swaps is `12500 lacs.

12. Expenditure in foreign currency (cash basis)

`̀̀̀ in lacs

For the year ended March 31,

2012 2011 2010 2009 2008

Subscription Fees - 0.09 0.08 0.08 -

Travelling - - - - 1.67

13.During the year ended March 31, 2010 the company exited the activity of power generation through wind mills.

14. In addition to auditors remuneration shown in other expenses for the year ended March 31, 2012, the company also incurred auditors remuneration amounting to ` 10.00 lacs in connection with other services provided by auditors for public issue of non-convertible debentures and the same was amortised as per Annex XIII note 2.1(v) stated under "other assets" as public issue expenditure to the extent not written off.

15. Based on the intimation received by the company, none of the suppliers have confirmed to be registered under "the Micro, Small and Medium Enterprises Development ('MSMED') Act, 2006". Therefore, the related information for this purpose stands to be Nil.

16. The ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

F-80

As required in terms of Paragraph 13 of Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007

`̀̀̀ in lacs

Particulars As on March 31, 2012 As on March 31, 2011 As on March 31, 2010 As on March 31, 2009 As on March 31, 2008

Liabilities side : Amount

outstanding

Amount

overdue

#

Amount

outstanding

Amount

overdue

#

Amount

outstanding

Amount

overdue

#

Amount

outstanding

Amount

overdue

#

Amount

outstanding

Amount

overdue #

(1) Loans and advances availed by

the NBFCs inclusive of interest

accrued thereon but not paid:

(a) Debenture : Secured 3,79,168.47 5,260.72 2,42,299.99 4,487.39 1,73,984.77 3,300.41 1,44,720.26 2,826.03 81,076.87 2,597.38

: Unsecured (other than falling within the meaning of public deposits*)

- - - - - - - - 3,669.88 -

(b) Deferred Credits - - - - - - - - - -

(c) Term Loans 4,01,630.05 - 3,02,979.72 - 1,14,676.66 - 1,53,594.21 - 1,26,803.37 -

(d) Inter-corporate loans and borrowing

2,000.00 - - - - - - - 959.41 -

(e) Commercial Paper - - 22,500.00 - - - - - 4,500.00 -

(f) Public Deposits* 38.32 14.51 90.85 27.05 1,39,350.00 28.92 155.19 27.50 210.43 18.11

(g) Other Loans - Subordinate Debts

1,04,184.05 553.05 68,701.99 352.48 64,830.99 18.65 48,647.97 - 32,101.36 -

- Cash Credit 1,22,056.36 - 1,34,965.79 - 1,45,453.74 - 1,09,771.11 - 67,420.99 -

Total (1) 10,09,077.26 5,828.28 7,71,538.34 4,866.92 6,38,296.16 3,347.98 4,56,888.74 2,853.53 3,16,742.31 2,615.49

*Please see Note 1 below

# Represent amount unclaimed.

F-81

`̀̀̀ in lacs

Particulars As on March 31, 2012 As on March 31, 2011 As on March 31, 2010 As on March 31, 2009 As on March 31, 2008

Liabilities side : Amount

outstanding

Amount

overdue

#

Amount

outstanding

Amount

overdue

#

Amount

outstanding Amount

overdue # Amount

outstanding Amount

overdue # Amount

outstanding

Amount

overdue

#

(2) Break-up of (1)(f) above

(Outstanding

Public deposits inclusive of

interest accrued thereon but not paid):

(a) In the form of Unsecured debentures - - - - - - - - - -

(b) In the form of partly secured debentures i.e debentures where there is a shortfall in the value of security

- - - - - - - - - -

(c) Other public deposits 38.32 14.51 90.85 27.05 139.50 28.92 155.19 27.50 210.43 18.11

Total (2) 38.32 14.51 90.85 27.05 139.50 28.92 155.19 27.50 210.43 18.11

*Please see Note 1 below

# Represent amount unclaimed.

Assets side: Amount outstanding

(3) Break-up of Loans and Advances including bills

receivables (other than those included in (4)

below ):

As on March 31, 2012 As on March 31, 2011 As on March 31, 2010 As on March 31, 2009 As on March 31,

2008

(a) Secured 10,10,038.28 6,25,034.06 4,23,064.40 1,215.04 8.75

(b) Unsecured 70,593.96 71,548.15 50,075.23 39,958.40 -

Total (3) 10,80,632.24 6,96,582.21 4,73,139.63 41,173.44 8.75

F-82

`̀̀̀ in lacs

Asset side: Amount outstanding

(4) Break up of Leased Assets and stock on hire and other assets counting towards AFC activities

As on March 31, 2012 As on March 31, 2011 As on March 31, 2010 As on March 31, 2009 As on March 31, 2008

(i) Lease assets including lease rentals under sundry debtors :

(a) Financial lease - - - - -

(b) Operating lease - - - - -

(ii) Stock on Hire including hire charges under sundry debtors :

(a) Assets on hire - - - - -

(b) Repossessed Assets - - - - -

(iii) Other loans counting towards AFC Activities :

(a) Loans where assets have been repossessed - - - - -

(b) Loans other than (a) above - - - 3,35,118.24 2,37,502.50

Total (4) - - - 3,35,118.24 2,37,502.50

`̀̀̀ in lacs

Asset side: Amount outstanding

(5) Break-up of Investments : As on March 31, 2012 As on March 31, 2011 As on March 31, 2010 As on March 31, 2009 As on March 31, 2008

Current Investments :

1. Quoted :

(I) Shares : (a) Equity - - -

(b) Preference - - - - -

(ii) Debenture and Bonds - - - - -

(iii) Units of mutual funds - - - - -

(iv) Government Securities - - - - -

(v) Others (Please specify) - - - - -

F-83

`̀̀̀ in lacs

Asset side: Amount outstanding

(5) Break-up of Investments : As on March 31, 2012 As on March 31, 2011 As on March 31, 2010 As on March 31, 2009 As on March 31, 2008

2. Unquoted :

(I) Shares: (a) Equity - 450.00 - - -

(b) Preference - - - - -

(ii) Debentures and Bonds - - - - -

(iii) Units of mutual funds - - - - -

(iv) Government Securities - - - - -

(v) Others (Please specify) - - - - -

Long Term investments :

1. Quoted : - - - - -

(I) Shares : (a) Equity - - - - -

(b) Preference - - - - -

(ii) Debentures and Bonds - - - - -

(iii) Units of mutual funds - - - - -

(iv) Government Securities 101.45 101.45 101.45 101.45 104.53

(v) Others (Please specify) - - - - -

2. Unquoted :

(I) Shares: (a) Equity 1,680.00 - - 505.00 500.45

(b) Preference - - - - -

(ii) Debentures and Bonds - - - - -

(iii) Units of mutual funds - - - - -

(iv) Government Securities - - - - -

(v) Others (Please specify) - - - - -

Total (4) 1,781.45 551.45 101.45 6,70,842.93 4,75,609.98

F-84

`̀̀̀ in lacs

Asset side: Amount (net of provisions)

(6) Borrower group-wise classification of assets,

financed as in (3) and (4)

above : Please see Note 2 below:

As on March 31, 2012 As on March 31, 2011 As on March 31, 2010 As on March 31, 2009 As on March 31, 2008

Category Secured Unsecured Secured Unsecured Secured Unsecured Secured Unsecured Secured Unsecured

1. Related Parties **

(a) Subsidiaries - - - - - - 4,369.66 - - -

(b) Companies in the same group

- - - - - - - - - -

( c) Other related parties - - - - - - - - - -

2. Other than related parties

10,00,302.67 67,705.14 6,17,967.11 68,631.67 4,18,113.82 47,595.24 3,28,872.90 38,855.44 2,37,578.64 37,991.59

Total (6) 10,00,302.67 67,705.14 6,17,967.11 68,631.67 4,18,113.82 47,595.24 3,33,242.56 38,855.44 2,37,578.64 37,991.59

`̀̀̀ in lacs

(7) Investor group-wise classification

of all investments (current and

long term) in shares and securities

(both quoted and unquoted): Please see Note 3 below

As on March 31, 2012 As on March 31, 2011 As on March 31, 2010 As on March 31, 2009 As on March 31,

2008

Category

Market Value/brea

k-up or fair

value or

NAV

Book

Value

(net of

provisions)

Market Value/brea

k-up or

fair value

or NAV

Book

Value

(net of

provisions)

Market Value/brea

k-up or fair

value or

NAV

Book Value

(net of

provisions

)

Market Value/brea

k-up or fair

value or

NAV

Book Value

(net of

provisions

)

Market Value/br

eak-up or

fair value

or NAV

Book Value

(net of

provision

s)

1. Related Parties **

(a) Subsidiaries 1,480.00 1,480.00 250.00 250.00 - - 5.00 5.00 0.45 0.45

(b) Companies in the same group - - - - - - - - - -

( c) Other related parties - - - - - - - - - -

2. Other than related parties 283.52 283.52 283.52 283.52 83.52 83.52 583.52 583.52 586.69 586.60

Total (7) 1,763.52 1,763.52 533.52 533.52 83.52 83.52 588.52 588.52 587.14 587.05

F-85

* Disclosure is made in respect of available information.

** As per Accounting Standard of ICAI (Please see Note 3)

`̀̀̀ in lacs

(8) Other Information: As on March 31, 2012 As on March 31, 2011 As on March 31, 2010 As on March 31, 2009 As on March 31, 2008

Particulars Amount Amount Amount Amount Amount

(i) Gross Non-Performing Assets (a) Related parties - - - - -

(b) Other than related parties 16,703.98 12,966.18 10,753.30 7,784.03 4,228.66

(ii) Net Non-Performing Assets

(a) Related parties - - - - -

(b) Other than related parties 4,079.56 2,982.76 3,322.73 3,590.35 2,495.70

(iii) Assets acquired in satisfaction of debt - - - - -

Notes :

1. As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

2 Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998.

3 All Accounting Standards and Guidance Notes issued by ICAI are applicable including for calculation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column (5) above.

F-86

PIJUSH GUPTA & CO CHARTERED ACCOUNTANTS

P-199, C.I.T.ROAD, SCHEME IV-M, KOLKATA –700 010

EXAMINATION REPORT

To

The Board of Directors

Shriram City Union Finance Ltd,

123, Angappa Naicken Street,

Chennai-600001.

Dear Sirs,

1. We Pijush Gupta & Co, Chartered Accountants have examined the Reformatted Consolidated

Financial statements (the “Reformatted Statements”) of Shriram City Union Finance Limited (the

“Company) and its subsidiary Shriram Housing Finance Limited (collectively referred to as “the Group”)

as at and for the years ended March 31,2012 and March 31,2011; annexed to this report for the purpose

of inclusion in the Offer Document (OD) to be filed by the company in connection with the offer of Non

Convertible Debentures of Shriram City Union Finance Limited. The reformatted statements are

approved by Debt Issuance Committee, the empowered committee of Board of Directors of the

company ( the committee) and the same reformatted statements are prepared by the Company in

accordance with the requirements of :-

a. Paragraph B(1) of Part II of Schedule II to the Companies Act,1956 (‘the Act’) and

b. The Securities and Exchange Board of India (Issue and Listing of Debt Securities ) Regulations,

2008 (‘the Regulations’) issued by the Securities and Exchange Board of India (‘SEBI’) , as

amended from time to time in pursuance of Section 11 of the Securities and Exchange Board of

India Act, 1992 (the “SEBI Act “).

Pijush Gupta & Co, Chartered Accountants referred to as the “ Auditors “ and the references to “we”,

“us” or “our” in this letter , shall be construed accordingly.

The preparation of such Reformatted Statements is the responsibility of the Company’s management.

Our responsibility is to report on such statements based on our procedures.

2. We report that the Reformatted Statements have been prepared by the Management from the

audited consolidated financial statements of the Group for the years ended March 31,2012; March

F-87

31,2011 and from the books of accounts underlying such audited financial statements of the Group,

which were approved by the Board of Directors on May 18, 2012 and May 26, 2011 respectively . The

said consolidated financial statement have been audited by us and in respect of which we have issued

audit opinions dated May 18, 2012, and May 26, 2011 respectively.

3. We have examined the Reformatted statements, prepared by the Company and approved by

Debt Issuance Committee which is authorized by the Board of Directors, in accordance with the

requirements of the Revised Guidance Note on Reports in Company Prospectuses issued by the Institute

of Chartered Accountants of India.

4. For the purpose of our audit of the Consolidated financial Statements of the group for the

years ended March 31,2012 and March 31,2011 we have placed reliance on the following:

a. The books of account underlying the audited Consolidated financial statements and related

consolidated workings prepared by the Company, in respect of the years ended March 31, 2012.

b. The Audit report submitted by M/s R. Shankar, Chartered Accountant who were the auditors of

the subsidiary Shriram Housing Finance Ltd., for the year ended 31 March, 2011.

c. The financial statements of subsidiary , which have been audited and reported upon by other

auditors, to the extent stated in our audit opinions dated May 26, 2011 on the consolidated

financial statements of the Group as at March 31,2011 and for the years then ended.

5. The Financial statements as at March31, 2011 relating to corporate region have been audited by

us and other regions have been audited by branch auditors, whose reports have been forwarded to

considered by us, as stated in our audit report dated May 26, 2011.

6. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI

Regulations, terms of our engagement agreed with you , we further report that:

a) The Reformatted Consolidated Summary Statement of Asset and Liabilities and the schedules

forming part thereof, Reformatted Consolidated Summary Statement of Profit & Loss and the

schedules forming part thereof and the Reformatted Consolidated Summary Statement of Cash Flow

(‘Reformatted Consolidated Summary Statement’) of the Group as at March 31, 2012,and March

31, 2011 have been set out in Annexure I to V to this report. These Reformatted Consolidated

Summary Statements are after regrouping as in our opinion are appropriate and more fully

described in Significant Accounting Policies and Notes (Refer Annexure XIII)

b) Based on above we state that:

• the Reformatted Consolidated Summary Statements have to be read in conjunction

with the notes given in Annexure XIII;

F-88

• The figures of earlier periods have been regrouped wherever necessary, to conform to

the classification adopted for the Reformatted Consolidated Summary Statement as

at/for the year ended March 31,2012;

• There are no extraordinary items which need to be disclosed separately in the

Reformatted Consolidated Summary Statements; and

• There are no qualifications in the auditors’ reports, which require any adjustments to

the reformatted consolidated summary statements

7. In the preparation and presentation of Reformatted statements based on audited Consolidated

financial statements as referred to in Paragraph 3 & 4 above, no adjustments have been made for any

events occurring subsequent to the dates of the audit reports specified in Paragraph 2 above.

8. As stated in our audit reports referred to in Paragraph 2 above , we conducted our audits

mentioned in that Paragraph, in accordance with the auditing standards generally accepted in India to

enable us to issue an opinion on the general purpose financial statements. Those standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatements. 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 the management as well as evaluating the overall

financial statements presentations. We believe that our audit provide a reasonable basis for our

opinion.

9. Our audits referred to in Paragraph 2 above were carried out for the purpose of certifying the

general purpose financial statements taken as a whole. For none of the periods referred to in Paragraph

2 above, did we perform tests for the purpose of expressing an opinion on individual balances of

account or summaries of selected transactions, and accordingly, we express no such opinion thereon.

10. We have not audited any Consolidated Financial Statements of the Group as of any date or for

any period subsequent to March 31, 2012. Accordingly, we express no opinion on the financial position,

results of operations or cash flows of the Company as of any date or for any period subsequent to March

31, 2012.

Other consolidated Financial Information:

11. At the company’s request, we have also examined the following consolidated financial

information proposed to be included in the OD prepared by the management and approved by the

Committee and annexed to this report relating to the Group for the years ended (unless specified “as

at”) March 31,2012, March 31,2011.

F-89

- Statement of contingent liabilities as at March 31,2012 and March 31,2011 enclosed as

Annexure VI

- Statement of dividend paid/proposed, enclosed as Annexure VII

- Statement of accounting ratios relating to earnings per share, net asset value and return on net

worth (as at March 31,2012, and March 31,2011), enclosed as Annexure VIII

- Statement of secured and unsecured loans including term and conditions , enclosed as

Annexure IX & X( as at March 31,2012, and March 31,2011)

- Capitalization Statement as at March 31,2012, enclosed as Annexure XI

- Statement of tax shelters, enclosed as Annexure XII

12. In our opinion , the Reformatted Consolidated Financial Information as disclosed in the

annexures to this report, read with respective significant accounting policies and notes disclosed in the

Annexure XIII, as considered appropriate and disclosed, has been prepared in accordance with

Paragraph B (1) of Part II of Schedule II of the Act and the Regulations.

13. We have no responsibility to update our report for events and circumstances occurring after the

date of the report.

14. This report should not in any way be construed as a re-issuance or redating of any of the

previous audit reports issued by us nor should this be construed as a new opinion on any of the financial

statements referred to herein.

15. This report is intended solely for your information and for inclusion in the offering document

filed in connection with the proposed offer of Non-Convertible Debentures of Shriram City Union

Finance Limited and is not to be used, referred to or distributed for any other purpose, without our prior

written consent.

For Pijush Gupta & Co,

Firm Registration No: 309015E

Chartered Accountants

Pijush Kumar Gupta

Partner

Membership No: 015139

Date: - August 1, 2012

F-90

Shriram City Union Finance Limited Annexure I

Reformatted consolidated summary of Assets and Liabilities

` ` ` ` in lacs

Particulars Notes As at March,31,

2012 2011

Equity and Liabilities

A. Shareholders’ funds (a) Share capital 1 5,236.72 4,953.69 (b) Reserves and surplus 2 1,59,377.53 1,16,253.59 (c) Money received against share warrants 1.4 8,437.00 -

Total Shareholders’ funds

1,73,051.25 1,21,207.28 B. Non-current liabilities

(a) Long-term borrowings 3 6,31,400.98 4,13,366.00 (b) Other long-term liabilities 4 44,591.61 31,824.39 (c) Long-term provisions 5 1,045.59 1,265.20

Total Non-current liabilities

6,77,038.18 4,46,455.59

C. Current liabilities

(a) Short-term borrowings 6 1,23,794.53 1,57,437.62 (b) Other current liabilities 4 2,82,754.09 2,00,593.46 (c) Short-term provisions 5 7,834.49 5,874.88

Total Current liabilities

4,14,383.11 3,63,905.96

D. Total Equity and Liabilities (A+B+C)

12,64,472.54 9,31,568.83

Assets

E. Non-current assets

(a) Fixed assets

(i) Tangible assets 7 5,194.75 2,740.66 (ii) Intangible assets 7 130.59 206.49 (b) Non-current investments 8 301.45 301.45 (c) Deferred tax assets 9 1,358.83 1,581.66 (d) Long-term loans and advances 10 2,50,108.17 2,09,228.90 (e) Other non-current assets 11 36,968.56 10,655.90

Total Non-current assets

2,94,062.35 2,24,715.06

F. Current assets

(a) Cash and bank balance 12 1,16,015.14 2,10,192.33 (b) Short-term loans and advances 10 8,22,524.21 4,82,108.27 (c) Other current assets 11 31,870.84 14,553.17

Total Current assets

9,70,410.19 7,06,853.77

G. Total Assets (E+F) 12,64,472.54 9,31,568.83

F-91

Shriram City Union Finance Limited Annexure I

Reformatted consolidated summary of Assets and Liabilities

` ` ` ` in lacs

Networth as at March, 31 Notes 2012 2011

(i) Share capital

5,236.72 4,953.69 (ii) Reserves and surplus

1,59,377.53 1,16,253.59

(iii) Money received against share warrants

8,437.00 - (iv) Less: Miscellaneous expenditure(to the extent not written off )

1,106.23 23.76

Total (i+ii+iii+iv)

1,71,945.02 1,21,183.52

The accompanying statement of Significant Accounting policies and Notes to Account on Summary Financial Statements are integral part of this statement.

As per our report of even date For and on behalf of the Board of Directors of Shriram City Union Finance Limited

For Pijush Gupta & Co. Firm Registration No: 309015E

Chartered Accountants R. Duruvasan

S.Venkatakrishnan

Managing Director Director

Pijush Kumar Gupta Partner C R Dash Membership no: 015139 Company Secretary Place: Chennai Date: August 1, 2012

F-92

Particulars Notes For the year ended March 31,

2012 2011

A. Income

(a) Revenue from Operation 13 2,03,783.03 1,32,053.58 (b) Other Income 14 1,901.58 291.07

Total Revenue 2,05,684.61 1,32,344.65 B. Expenses: (a) Employee benefits expense 15 9,416.76 4,367.02 (b) Finance costs 16 92,858.01 55,145.42 (c) Depreciation and amortization expense 7 1,377.97 747.41 (d) Other expenses 17 32,109.26 24,173.01 (e) Provisions & write offs (net) 18 17,995.48 11,851.70

Total expenses 1,53,757.48 96,284.56 C. Profit before tax (A-B) 51,927.13 36,060.09

D. Tax expense: (a) Current tax 16,898.55 12,460.20 (b) Deferred tax 222.83 (458.96) (c) Tax of earlier years 997.42 -

Total tax expense 18,118.80 12,001.24

E. Profit after tax from continuing operations (C-D) 33,808.33 24,058.85

Earnings per equity share:

Equity shares of par value `10/- each Basic (`) 67.86 48.78 Diluted (`) 67.34 47.97

The accompanying statement of Significant Accounting policies and Notes to Account on Summary Financial Statements are integral part of this statement. As per our report of even date For and on behalf of the Board of Directors of

Shriram City Union Finance Limited For Pijush Gupta & Co. Firm Registration No: 309015E R.Duruvasan S.Venkatakrishnan Chartered Accountants Managing Director Director Pijush Kumar Gupta Partner C R Dash Membership no: 015139 Company Secretary

Place: Chennai Date: August 1, 2012

Shriram City Union Finance Limited Annexure II

Reformatted Consolidated summary of Statement of Profit and Loss `̀̀̀ in lacs

F-93

Shriram City Union Finance Limited Annexure III

Reformatted consolidated summary of cash flow statement

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011

A. Cash flow from Operating activities

Net profit before taxation 51,927.13 36,060.09

Non-cash adjustments to reconcile profit before tax to net cash flows:

Depreciation and amortization 1,379.49 747.42

(Profit)/loss on sale of fixed assets 3.52 13.78

Employees Stock option compensation expenses 191.82 471.68

Public issue expenditure for non-convertible debenture 162.05 -

Provision for non performing assets and bad debt written off 16,889.81 10,136.82

Contingent Provision on Standard assets 946.89 1,714.89

Provision for hedging contracts (772.49) (546.62)

Provision for gratuity 81.76 40.82

Provision for bonus and ex-gratia 5.12 -

Provision for leave benefits 25.60 27.48

Net gain on sale of current investments (134.74) -

Interest income on current and long term investments and interest income on fixed deposits (1,148.05) (270.70)

Dividend Income (596.67) -

Operating profit before working capital changes 68,961.24 48,395.66

Movement in Working capital:

(Increase) / decrease in assets under financing activities (3,95,959.82) (2,33,365.56)

(Increase) / decrease in Short-term loans and advances (589.02) 86.00

(Increase) / decrease in Long-term loans and advances (1,636.18) (521.66)

(Increase) / decrease in other current assets (17,039.87) (8,835.03)

(Increase) / decrease in other non-current assets (14,951.23) (3,550.32)

Increase / (decrease) in other current liabilities 82,160.63 74,882.34

Increase / (decrease) in other non-current liabilities 12,767.22 13,330.08

Cash generated from operation (2,66,287.03) (1,09,578.49)

Direct taxes paid (net of refund) (16,862.29) (11,127.69)

Net Cash flow from/(used in) operating activities (A) (2,83,149.32) (1,20,706.18)

B. Cash flow from Investing Activities

Investment in Fixed Deposit (having maturity of more than three months) 51.00 145.00

Investment in margin money deposit (21,747.88) 7,937.17

Purchase of fixed and intangible assets (3,762.54) (1,666.34)

Proceeds from sale of fixed assets 1.33 2.52

Purchase of Investments - (200.00)

Proceeds from sale of investments (net) 134.74 -

Interest received on current and long term investments and interest on fixed deposits 1,148.05 270.70

Dividend received 596.67 -

F-94

Shriram City Union Finance Limited Annexure III

Reformatted consolidated summary of cash flow statement

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011

Net cash flow from/(used in) investing activities (B) (23,578.63) 6,489.05

C. Cash flow from financing activities

Proceeds from issue of equity share capital including securities premium and share application money 21,732.61 133.05

Increase / (decrease) of long-term borrowings 2,18,034.98 2,37,620.70

Increase / (decrease) of short-term borrowings (33,643.09) (35,719.44)

Public issue expenses for non-convertible debenture paid (1,268.28) -

Dividend Paid (2,985.09) (2,710.89)

Tax on dividend (484.25) (450.25)

Net Cash flow from/(used in) financing activities (C) 2,01,386.88 1,98,873.17

Net increase / (decrease) in cash and cash equivalents (A+B+C) (1,05,341.07) 84,656.04

Cash and cash equivalents at the beginning of the year 2,01,294.93 1,16,638.89

Cash and cash equivalents at the end of the year 95,953.86 2,01,294.93

Component of Cash and Cash Equivalents For the year ended March 31,

2012 2011

Cash on hand 7,520.52 6,025.90

Balances with banks:

Current Account 31,580.07 95,746.92

Balance in unpaid dividend accounts 30.77 22.11

Bank Deposit with maturity of less than 3 months 56,822.50 99,500.00

Total Cash and cash equivalents 95,953.86 2,01,294.93

As per our report of even date For and on behalf of the Board of Directors of Shriram City Union Finance Limited

For Pijush Gupta & Co. Firm Registration No: 309015E R.Duruvasan S.Venkatakrishnan Chartered Accountants Managing Director Director Pijush Kumar Gupta Partner C R Dash Membership no: 015139 Company Secretary

Place: Chennai Date: August 1, 2012

F-95

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

1. Share capital ` ` ` ` in lacs

Particulars As at March 31,

2012 2011

Authorised 1000,00,000 (March 31, 2011: 600,00,000) equity shares of `10/- each * 10,000.00 6,000.00 40,00,000 (March 31, 2011: 40,00,000) cumulative redeemable preference shares of `100/- each 4,000.00 4,000.00

14,000.00 10,000.00

Issued, subscribed and fully paid-up

Equity shares

5,23,67,209 (March 31, 2011: 4,95,36,877) shares of `10/- each 5236.72 4953.69

Total Issued, subscribed and fully paid-up share capital 5236.72 4953.69

* Necessary return for increase in authorised equity capital for the year ended on March 31, 2012 was filed with Registrar of companies, Chennai on April 7, 2012.

1.1 Reconciliation of the shares outstanding at the beginning and at the end of the reporting period

Equity shares

Particulars

As at March 31, 2012 As at March 31, 2011

Number ` ` ` ` in lacs Number ` ` ` ` in lacs

At the beginning of the year 4,95,36,877 4,953.69 4,91,54,700 4,915.47 Issued during the year – ESOP [Refer Annex XIII note 5]

5,30,332 53.03 3,82,177 38.22

Issued during the year - Preferential Issue [Refer Annex IV note-1.6]

23,00,000 230.00 - -

Outstanding at the end of the year 5,23,67,209 5,236.72 4,95,36,877 4,953.69

1.2 Terms / rights attached to equity shares

The company has only one class of equity shares having a par value of ` 10 per share. Each holder of the equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuring Annual General Meeting. During the year ended March 31, 2012, the amount of dividend per equity share recognised as distributions to equity shareholders is `6.50 (March 31, 2011: `6.00 including interim dividend) including interim dividend. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

1.3 Details of shareholders holding more than 5% shares in the company

Name of the shareholder

As at March 31, 2012 As at March 31, 2011

No. of Shares

held

% of Holding No. of Shares

held

% of Holding

Equity share of `̀̀̀10 each fully paid Shriram Enterprise Holding Pvt. Ltd. 1,79,21,462 34.22 1,79,21,462 36.18 Shriram Retail Holding Pvt. Ltd. 85,56,201 16.34 85,56,201 17.27 Norwest Venture Partners X FII-Mauritius 43,42,179 8.29 43,42,179 8.77 Van Gogh Ltd. 66,25,000 12.65 66,25,000 13.37 Bessemer Venture Partners Trust 25,00,000 4.77 25,00,000 5.05 IDBI Trusteeship Services Ltd. 37,00,054 7.07 37,00,054 7.47

As per records of the company, including the register of shareholders /members and other declarations received from shareholders/members regarding beneficial interest, the above shareholding represents legal ownerships of shares.

F-96

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

1.4 Shares reserved for issue under option:

(i) For detail of share reserved for issue under the employees stock option scheme (ESOP) [Refer Annex XIII note 5]

(ii) Preferential issue of share warrants: During the year ended Mar 31, 2012, warrants were issued /allotted to Shriram Capital Limited conferring an option to the holder to subscribe to one equity share per warrant within a period of 18 months from the date of allotment. During the year ended March 31, 2009, warrants were issued /allotted to Asiabridge Fund I LLC (5,87,500), Bessemer Venture Partners Trust (12,50,000), IDBI Trusteeship Services Ltd (7,50,000), Van Gogh Limited (6,62,500) and Shriram Retail Holdings Pvt. Ltd (35,00,000) conferring an option to the holder to subscribe to one equity share per warrant within a period of 12 months (18 months for Shriram Retail Holdings Pvt. Ltd) from the date of allotment

1.5 The company issued 13,55,000 equity shares (March 31, 2011: 13,55,000) during the period of five years immediately preceeding the reporting date on exercise of options granted under ESOP, wherein a part of the consideration was received in form of employee service.

1.6 Preferential Allotment of equity Shares :

During the year ended on March 31, 2012, 23,00,000 equity shares of the company were issued/alloted to Shriram Capital Limited for cash at a subscription price of `570.00 per equity share (includes a premium of `560.00 per equity share).During the year ended March 31, 2009, equity shares were issued /allotted to to Asiabridge Fund I LLC (5,87,500), Bessemer Venture Partners Trust (12,50,000), IDBI Trusteeship Services Ltd (7,50,000), Van Gogh Limited (6,62,500) for cash on preferential basis at the rate of ` 400/- per share (includes a premium of `390/- per share).

F-97

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

2. Reserves & surplus ` ` ` ` in lacs

Particulars As at March 31,

2012 2011

Capital reserves 1,400.00 1,400.00

Capital redemption reserve 2,328.98 2,328.98

Securities premium account

Opening balance 50,797.13 49,836.14

Add : securities premium credited during the year 14,213.52 960.99

Closing balance 65,010.65 50,797.13

Debenture redemption reserve

Opening balance - -

Add: transfer from profit& loss account 4,914.00 -

Closing balance 4,914.00 -

Stock options outstanding account

Employee stock option outstanding 878.15 2,079.09

Less: transfer to deferred employee compensation outstanding - (191.82)

Closing balance 878.15 1,887.27

Statutory reserve (pursuant to section 45-IC of the RBI Act, 1934)

Opening balance 15,960.00 11,150.00

Add: transfer from statement of profit & loss account 6,860.00 4,810.00

Closing balance 22,820.00 15,960.00

General reserve

Opening balance 7,767.90 5,357.90

Add: transfer from statement of profit & loss account 3,430.00 2,410.00

Closing balance 11,197.90 7,767.90

Surplus in the statement of profit & loss

Opening balance 36,112.31 22,730.09

Add: net profit for the year 33,808.33 24,058.85

Less: Appropriations

- Interim dividends (1,251.30) (1,236.25)

- Tax on interim dividend (202.99) (205.33)

- Proposed final equity dividend (2,094.69) (1,733.79)

- Tax on proposed equity dividend (339.81) (281.26)

- Transfer to statutory reserves (pursuant to section 45-IC of the RBI Act, 1934) (6,860.00) (4,810.00)

- Transfer to general reserve (3,430.00) (2,410.00)

- Transfer to debenture redemption reserve (4,914.00) -

Net surplus in the statement of profit & loss account 50,827.85 36,112.31

Total 1,59,377.53 1,16,253.59

F-98

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

3. Long-term borrowings

` ` ` ` in lacs

Particulars

Non-current portion Current maturities

As at March 31, As at March 31,

2012 2011 2012 2011

Secured

Privately placed redeemable non-convertible debentures (Retail) [Refer Annex IV note 3.1(A)(i)]

1,32,134.87 94,640.44 73,820.06

60,653.87

Privately placed redeemable non-convertible debentures (Institutional) [Refer Annex IV note 3.1(A)(ii)(a)&(b)]

58,726.67 58,750.00 14,733.33 5,833.33

Public issue of redeemable non-convertible debentures [Refer Annex IV note 3.1(A)(iii)]

75,000.00 - - -

Term loan from banks [Refer Annex IV note 3.1(B)(i)]

2,74,356.88 2,03,304.65 1,09,558.27 92,372.63

Term loan from financial institutions [Refer Annex IV 3.1(B)(ii)]

16,500.00 6,500.00 - -

Total secured long-term borrowing 5,56,718.42 3,63,195.09 1,98,111.66 1,58,859.83

Unsecured

Fixed deposits (Refer Annex IV note 3.2(A)) 8.71 13.57 13.50 41.53 Subordinated debts (Refer Annex IV note 3.2(B)(i)(ii))

74,673.85 50,157.34 8,900.16 3,114.99

Total unsecured long-term borrowing 74,682.56 50,170.91 8,913.66 3,156.52

Amount disclosed under the head "other current liabilities"[Refer Annex IV note-4]

- - (2,07,011.82) (1,61,974.82)

Amount disclosed under the head "short-term borrowings" [Refer Annex IV note-6]

- - (13.50) (41.53)

Total 6,31,400.98 4,13,366.00 - -

F-99

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

3.1 Secured loans - Long term borrowings

A. Secured redeemable non convertible debentures (i) Privately placed secured redeemable non convertible debentures of (NCDs)`̀̀̀1000/- each - unquoted (retail)

Terms of repayment as at March 31, 2012

` ` ` ` in lacs

Redeemable at par within Rate of interest

< 10% >= 10% < 12% >= 12% < 14% >= 14% Total

Over 60 months - - 321.36 - 321.36 48-60 Months 11.72 1,616.20 241.48 1.12 1,870.52 36-48 Months 620.49 1,339.37 - 292.28 2,252.14 24-36 months 1,511.71 68,577.25 3.10 115.36 70,207.42 12-24 months 28,045.27 28,756.66 571.14 110.36 57,483.43

Total non-current portion 30,189.19 1,00,289.48 1,137.08 519.12 1,32,134.87

12 months 47,129.83 25,680.74 833.21 176.28 73,820.06

Total current maturities 47,129.83 25,680.74 833.21 176.28 73,820.06

Grand Total 77,319.02 1,25,970.22 1,970.29 695.40 2,05,954.93

Terms of repayment as at March 31, 2011 ` ` ` ` in lacs

Redeemable at par within Rate of interest

< 10% >= 10% < 12% >= 12% < 14% >= 14% Total

Over 60 months - - 562.84 1.12 563.96 48-60 Months 610.17 549.30 - 292.28 1,451.75 36-48 Months 500.41 1,636.83 3.10 115.36 2,255.70 24-36 months 19,582.78 26,542.68 571.95 110.36 46,807.77 12-24 months 16,735.32 25,815.00 834.66 176.28 43,561.26

Total non-current portion 37,428.68 54,543.81 1,972.55 695.40 94,640.44

12 months 34,123.40 11,221.33 14,750.14 559.00 60,653.87

Total current maturities 34,123.40 11,221.33 14,750.14 559.00 60,653.87

Grand Total 71,552.08 65,765.14 16,722.69 1,254.40 1,55,294.31

Nature of security The redemption of principal amount of secured redeemable non-convertible debentures with all interest there on are secured by a legal mortgage on the specified immovable property and by way of charge on the company's specifically identified movable assets such as book debts / loan receivables in favor of the Trustees appointed.

These secured redeemable non-convertible debentures are redeemable at par over a period of 12 months to 160 months from the date of allotment depending on the terms of the agreement.

Secured redeemable non-convertible debentures may be bought back by the company subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the company. The company may grant loan against the security of NCDs upon the terms and conditions as may be decided by the company and subject to applicable statutory and /or regulatory requirements.

(ii) Privately placed redeemable non-convertible debentures (Institutional)

a. Privately placed redeemable non-convertible debentures (NCDs) of `̀̀̀1,00,000/- each - quoted

` ` ` ` in lacs

Rate of Interest

Non-current portion Current maturities Redeemable at

par on As at March 31, As at March 31,

2012 2011 2012 2011

10.75% 900.00 900.00 - - 07-Oct-14 10.75% 2,100.00 2,100.00 - - 30-Sep-14 10.75% 900.00 900.00 - - 07-Apr-14 10.75% 2,100.00 2,100.00 - - 30-Mar-14 10.75% 600.00 600.00 - - 07-Oct-13 10.75% 1,400.00 1,400.00 - - 30-Sep-13 10.75% 600.00 600.00 - - 07-Apr-13 10.75% - - 1,400.00 - 30-Mar-13

8,600.00 10,000.00 1,400.00 -

F-100

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

b. Privately Placed Redeemable Non-Convertible Debentures (NCDs) of `̀̀̀10,00,000/- each - quoted

` ` ` ` in lacs

Rate of Interest

Non-current portion Current maturities Redeemable at

par on As at March 31, As at March 31,

2012 2011 2012 2011

10.60% 1,000.00 1,000.00 - - 13-Dec-17 10.60% 1,500.00 1,500.00 - - 13-Dec-17 9.00% 27,500.00 27,500.00 - - 30-Mar-17

10.75% 500.00 500.00 - - 04-Feb-21 10.50% 2,000.00 2,000.00 - - 23-Nov-17 10.65% 1,000.00 - - - 03-Feb-15 11.00% 1,500.00 - - - 01-Dec-14 10.61% 2,900.00 - - - 02-Jun-14 10.60% 680.00 - - - 17-Feb-14 10.30% 1,000.00 - - - 20-Jan-14 10.95% 1,800.00 - - - 25-Oct-13 10.60% 500.00 - - - 09-Aug-13 10.96% 2,500.00 - - - 23-May-13 10.85% 1,100.00 - - - 18-Apr-13 10.96% 1,730.00 - - - 03-Apr-13 9.00% - 7,500.00 - - 05-Jan-13 7.82% 2,916.67 2,916.67 - - 22-Apr-13 7.82% - 2,916.67 - - 22-Oct-12 7.82% - 2,916.66 - - 22-Apr-12 9.00% - - 7,500.00 - 05-Jan-13 7.82% - - 2,916.67 - 22-Oct-12 7.82% - - 2,916.66 - 22-Apr-12 7.82% - - - 2,916.67 22-Oct-11 7.82% - - - 2,916.66 22-Apr-11

50,126.67 48,750.00 13,333.33 5,833.33

Nature of security The redemption of principal amount of secured redeemable non-convertible debentures with all interest there on are secured by a legal mortgage on the specified immovable property and by way of charge on the company's specifically identified movable assets such as book debts / loan receivables in favor of the Trustees appointed.

Secured redeemable non-convertible debentures may be bought back by the company subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the company.

(iii) Public issue of secured redeemable non convertible debentures ((NCDs)of `̀̀̀1000/- each - quoted (2011)

` ` ` ` in lacs

Option Detail Rate of Interest As at March 31, Redeemable at

par on Put and call

option 2012 2011

Option I 11.60% 5,429.05 - 25-Aug-16 25-Aug-15 12.10% 43,653.65 - 25-Aug-16 25-Aug-15 11.85% 12,125.30 - 25-Aug-16 25-Aug-15

Option II 11.50% 9,570.95 - 25-Aug-14 - 11.85% 1,346.35 - 25-Aug-14 - 11.60% 2,874.70 - 25-Aug-14 -

75,000.00 -

Nature of security

The repayment of secured redeemable non convertible debentures of `1,000/- each at face value on maturity together with interest thereon are secured by mortgage of specified immovable property and by way of charge on the company's specifically identified movable assets such as book debts / loan receivables in favor of the Trustees appointed.

Secured redeemable non-convertible debentures may be bought back by the company subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the company.

F-101

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

B. Term loan

(i) Term loan from bank

Terms of repayment as at March 31, 2012

` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

36-48 months 11.15% to 12% 1 to 48 installments of bullet, half yearly and yearly frequency

50,625.00 6,875.00

24-36 months 10.75% to 11.50% 1 to 36 installments of bullet & quarterly frequency

1,00,000.00 -

12-24 months 9.25% to 12.25% 1 to 24 installments of bullet, monthly, quarterly and half yearly frequency

1,23,731.88 22,000.00

Upto 12 months 8.20% to 12.25% 1 to 12 installments of bullet, Quarterly & half yearly frequency

- 80,683.27

Grand Total 2,74,356.88 1,09,558.27

Terms of repayment as at March 31, 2011

` ` ` ` in lacs

Tenor Rate of interest Repayment Details Non-Current

portion

Current

Maturities

36-48 months 10% 1 to 48 installments of quarterly frequency

5,000.00 -

24-36 months 9.25% to 10.75% 1 to 36 installments of bullet, monthly, quarterly, half yearly and yearly frequency

1,15,749.39 11,250.00

*12-24 months 8.75% to 12.25% 1 to 24 installments of bullet, Quarterly & half yearly frequency

82,555.26 4,683.32

Up to 12 months 8.20% to 12.50% 1 to 12 installments of bullet, Quarterly & half yearly frequency

- 76,439.31

Grand Total 2,03,304.65 92,372.63

* Includes a loan outstanding amount of `1,871.95 lacs with original maturity date is Dec 30, 2012 but that was pre-closed on Feb 22, 2012.

Nature of Security Term Loans from banks are secured by an exclusive charge by way of hypothecation of specific assets under financing. (ii) Term loan from Financial Institutions

` ` ` ` in lacs

Rate of Interest

Non-current portion Current maturities Redeemable at

par on As at March 31, As at March 31,

2012 2011 2012 2011

11.75% 10,000.00 - - - 10-Jul-17 10% 6,500.00 6,500.00 - - 10-Aug-13

16,500.00 6,500.00 - -

Nature of security Term Loans from institutions are secured by an exclusive charge by way of hypothecation of specific assets under financing.

F-102

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

3.2 Unsecured loan - Long term borrowings

A. Fixed deposits of `̀̀̀1000/- each - unquoted

Terms of repayment as at March 31, 2012

` ` ` ` in lacs

Redeemable at par within Rate of interest

>=6% <8% >=8% <10% >=10% <12% >=12% Total

48-60 Months 0.20 - - - 0.20 36-48 Months - - - - - 24-36 months 3.15 2.49 - - 5.64 12-24 months 2.57 0.30 - - 2.87

Total non-current portion 5.92 2.79 - - 8.71

12 months 6.31 7.07 0.12 - 13.50

Total current maturities 6.31 7.07 0.12 - 13.50

Grand Total 12.23 9.86 0.12 - 22.21

Terms of repayment as at March 31, 2011

` ` ` ` in lacs

Redeemable at par within Rate of interest

>=6% <8% >=8% <10% >=10% <12% >=12% Total

36-48 Months - 2.49 - - 2.49 24-36 months 2.47 0.30 - - 2.77 12-24 months 1.12 7.07 0.12 - 8.31

Total non-current portion 3.59 9.86 0.12 - 13.57

12 months 21.31 16.85 3.37 - 41.53

Total current maturities 21.31 16.85 3.37 - 41.53

Grand Total 24.90 26.71 3.49 - 55.10

B. Privately placed subordinated debts

The company has issued subordinated debt bonds with coupon rate of 7% to 15% per annum which are redeemable over a period of 60 months to 88 months.

Terms of repayment as at March 31, 2012

(i) Privately placed subordinated debt bonds of `̀̀̀1,000/- each - unquoted

` ` ` ` in lacs

Redeemable at par within Rate of interest

< 10% >= 10% < 12% >= 12% < 14% >= 14% Total

Over 60 months 1,239.57 14,170.39 - - 15,409.96 48-60 Months 56.17 2,443.60 - - 2,499.77 36-48 Months - 8,731.43 55.61 - 8,787.04 24-36 months - 3,763.80 7,687.31 - 11,451.11 12-24 months - 10,574.89 2,916.08 - 13,490.97

Total non-current portion 1,295.74 39,684.11 10,659.00 - 51,638.85

12 months - 8,719.49 180.34 0.33 8,900.16

Total current maturities - 8,719.49 180.34 0.33 8,900.16

Grand Total 1,295.74 48,403.60 10,839.34 0.33 60,539.01

(ii) Privately placed subordinated debt bonds of `̀̀̀1,00,000/- each - quoted

` ` ` ` in lacs

Redeemable at par within Rate of interest

< 10% >= 10% < 12% >= 12% < 14% >= 14% Total

Over 60 months - 23,035.00 - - 23,035.00

Total non-current portion - 23,035.00 - - 23,035.00

F-103

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

Terms of repayment as at March 31, 2011

(i) Privately placed subordinated debt bonds of `̀̀̀1,000/- each - unquoted

` ` ` ` in lacs

Redeemable at par within Rate of interest

< 10% >= 10% < 12% >= 12% < 14% >= 14% Total

Over 60 months 1,295.74 6,232.32 - - 7,528.06 48-60 Months - 8,731.43 55.61 - 8,787.04 36-48 Months - 3,763.80 7,687.31 - 11,451.11 24-36 months - 10,574.89 2,916.08 - 13,490.97 12-24 months - 8,719.49 180.34 0.33 8,900.16

Total non-current portion 1,295.74 38,021.93 10,839.34 0.33 50,157.34

Within 12 months - 3,114.81 - 0.18 3,114.99

Total current maturities - 3,114.81 - 0.18 3,114.99

Grand Total 1,295.74 41,136.74 10,839.34 0.51 53,272.33

4. Other liabilities

` ` ` ` in lacs

Particulars

Long-term Short-term

As at March 31, As at March 31,

2012 2011 2012 2011

Current maturities of long-term borrowings (Refer Refer Annex IV note 3 ) - - 2,07,011.82 1,61,974.82 Interest accrued but not due on borrowings 23,469.00 21,194.69 16,934.34 11,623.74 Application money on redeemable non convertible debentures 421.05 967.07 - - Application money on subordinate debt bonds 217.26 107.47 - - Unclaimed dividends* - - 30.77 22.11 Unclaimed matured deposits and interest accrued thereon* - - 14.51 27.05 Unclaimed matured debentures and interest accrued thereon* - - 5,260.72 4,487.39 Unclaimed matured subordinate debt bonds and interest accrued thereon* - - 553.05 352.48 Temporary credit balance in bank accounts - - 13,485.59 3,122.28 Tax deducted at source - - 356.71 267.81 Statutory due pertaining to employees - - 39.88 24.39 Service tax - contested # - - 1,553.08 1,553.08 Securitisation deferred income (income received in advance) 19,321.32 8,889.38 33,326.76 14,796.99 Retention and other 1,162.98 665.78 4,186.86 2,341.32

Total 44,591.61 31,824.39 2,82,754.09 2,00,593.46

# As regards the recovery of Service tax on lease and hire purchase transactions, the honorable Supreme Court vide its order dated October 26, 2010 has directed the competent authority under the Finance act, 1994 to decide the matter in accordance with the law laid down.

*Accrued interest is up to the date of maturity. Amounts shall be credited to Investor Education & Protection Fund as and when due to the extent unclaimed.

F-104

Shriram City Union Finance Limited Annexure IV Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

5. Provisions

` ` ` ` in lacs

Particulars

Long-term Short-term

As at March 31, As at March 31,

2012 2011 2012 2011

Provision for Employee benefits:

Provision for gratuity

268.73

190.77

9.37

5.57

Provision for leave benefits

47.62

49.13

32.21

5.10 Other provisions:

Provision for standard assets [Refer Annex XIII note 2(l)]

618.96

520.62

2,042.81

1,194.27

Provision for hedging contracts

92.35

486.75

394.40

772.49

Provision for dimunition in the value of Investments

17.93

17.93 - - Provision for income tax [net of advance for income tax of `56916.23 lacs [March 31, 2011 ` 40053.93 lacs ]

- -

2,916.08

1,882.40

Proposed dividend - -

2,094.69

1,733.79

Corporate dividend tax - -

339.81

281.26

Provision for bonus and exgratia - -

5.12 -

Total 1,045.59 1,265.20 7,834.49 5,874.88

6. Short term borrowings

` ` ` ` in lacs

Particulars As at March 31,

2012 2011

Secured Cash credit from banks 56,366.20 63,806.17

Working capital demand loan from banks 65,414.83 71,089.92

1,21,781.03 1,34,896.09

Unsecured

Fixed deposits [Refer Annex IV note 3] 13.50 41.53

Commercial papers [Refer Annex IV note 6.1] - 22,500.00

Inter corporate deposits[Shriram Credit Company Ltd. @10.50% on November 1,2011] 2,000.00 -

2,013.50 22,541.53

Total 1,23,794.53 1,57,437.62

F-105

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

6.1 Commercial paper

Terms of repayment

Terms of repayment

` ` ` ` in lacs

Rate of interest As at March 31, Redeemable at par

on 2012 2011

8.90% - 2,500.00 12-Sep-11

8.90% - 1,000.00 12-Sep-11

8.90% - 2,000.00 12-Sep-11

8.90% - 7,500.00 7-Sep-11

8.90% - 5,000.00 12-Sep-11

8.90% - 1,500.00 7-Oct-11

8.90% - 1,000.00 7-Oct-11

8.70% - 1,500.00 19-Sep-11

8.90% - 500.00 7-Oct-11

Total - 22,500.00

F-106

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

7. Tangible and intangible fixed assets

`̀̀̀ in lacs

Particulars

Tangible assets

Total tangible

asset

Intangible assets

Total fixed

assets Land Building

Plant and

machinery

Furniture

and fixtures Vehicles

Leasehold

improvements

Computer

software

Gross Block As at April 1, 2010 1.76 12.94 1,347.95 548.01 23.53 744.85 2,679.04 350.85 3,029.89 Additions - - 562.22 480.69 6.42 576.04 1,625.37 40.97 1,666.34 Disposals - - (9.86 ) (9.52) (0.48) (20.21) (40.07) - (40.07)

As at March 31, 2011 1.76 12.94 1,900.31 1,019.18 29.47 1,300.68 4,264.34 391.82 4,656.16

Additions 0.46 - 1,493.69 928.54 6.67 1,247.35 3,676.71 85.83 3,762.54 Disposals - - ( 4.03) (2.00) (2.90) - (8.93) - (8.93)

As at March 31, 2012 2.22 12.94 3,389.97 1,945.72 33.24 2,548.03 7,932.12 477.65 8,409.77

Depreciation As at April 1, 2010 - 2.14 420.34 130.07 4.39 369.96 926.90 58.47 985.37 Charge for the year - 0.21 248.90 101.73 2.57 267.15 620.56 126.86 747.42 Disposals - - (1.90) (3.55) (0.22) (18.09) (23.76) - (23.76)

As at March 31, 2011 - 2.35 667.34 228.25 6.74 619.02 1,523.70 185.33 1,709.03

Charge for the year - 0.21 419.82 231.03 3.19 563.51 1,217.76 161.73 1,379.49 Disposals - - (2.08) (0.79) (1.22) - (4.09) - (4.09)

As at March 31, 2012 - 2.56 1,085.08 458.49 8.71 1,182.53 2,737.37 347.06 3,084.43

Net Block

As at March 31, 2011 1.76 10.59 1,232.97 790.93 22.73 681.66 2,740.64 206.49 2,947.13

As at March 31, 2012 2.22 10.38 2,304.89 1,487.23 24.53 1,365.50 5,194.75 130.59 5,325.34

F-107

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted summary of Assets and Liabilities

7. Tangible and intangible fixed assets

Depreciation and amortization

` ` ` ` in lacs

Particulars As at March 31,

2012 2011

On tangible 1,217.76 620.56 On intangible 161.73 126.86

Total 1,379.49* 747.42*

Net Block

Particulars As at March 31,

2012 2011

On tangible 5,194.75 2,740.64

On intangible 130.59 206.49

Total 5,325.34 2,947.13

*SHFL Depreciation for the year ended March 31,2012 and March 31, 2011 includes depreciation amount of ` 1.52 lacs and `0.01

lacs, which has been taken as pre operative expenses.

F-108

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

8. Non-current investments

` ` ` ` in lacs

Particulars As at March 31,

2012 2011

Long-term investment

Other than trade

A. Unquoted equity instruments (i) Investment in other companies (valued at cost) 16,32,653 (31 March 2011: 16,32,653) equity shares of `10 each fully paid-up in Highmark Credit Information services Private Ltd.

200.00 200.00

Total unquoted investment 200.00 200.00

A. Quoted Investment (i) Investment in government securities (valued at cost)

Quoted

6.13% GOI Loan 2028 of face value `100 lacs (Market value as on March 31,2012: `83.52 lacs and March 31,2011: `83.52 lacs)

101.45 101.45

Total quoted investment 101.45 101.45 Total 301.45 301.45

Aggregate amount of Quoted Investments (cost of acquisition) 101.45 101.45 Aggregate amount of Unquoted Investments (cost of acquisition) 200.00 200.00 Aggregate amount of provision for diminution in value of Investments 17.93 17.93 a. In accordance with the Reserve Bank of India circular no. RBI/2006-07/225 DNBS (PD) C.C No.87/03.02.2004/2006-07 dated January 4, 2007, the company has created a floating charge on the statutory liquid assets comprising of investment in government securities being statutory liquid assets to the extent of `101.45 Lacs (March 31, 2011: `101.45Lacs) in favor of trustees representing the public deposit holders of the company.

9. Deferred tax asset (Net) `̀̀̀ in lacs

Particulars As at March 31,

2012 2011

Deferred tax liabilities Timing difference on account of : Fixed assets: Impact of difference between tax depreciation and depreciation/amortization charged for the financial reporting

74.46 85.63

Deferred expenses incurred for NCD mobilization 358.91 -

Gross deferred tax liabilities (A) 433.37 85.63

Deferred tax asset Timing difference on account of : Provision for service tax 503.90 515.90 Contingent provision against standard assets 863.58 569.65 Provision for leave benefits 25.89 18.01 Provision for gratuity 89.95 65.22 Provision for derivative 157.93 418.29 Provision for bonus 46.89 13.78 Estimated disallowances 64.89 66.44 Preliminary expenditure 0.67 - Deferred revenue expenditure 38.50 -

Gross deferred tax Assets (B) 1,792.20 1,667.29

Deferred tax asset (Net) ) (B-A) 1,358.83 1,581.66

F-109

Shriram City Union Finance Limited Annexure IV Notes forming part of Reformatted Consolidated summary of Assets and Liabilities 10. Loans and advances

` in lacs

Long-term Short-term

Particulars As at March 31, As at March 31,

2012 2011 2012 2011

Unsecured, considered good Capital Advances 771.82 108.93 - - Security deposits 1,046.55 553.71 300.00 - Loans and advances Assets under financing activities : - Secured, considered good 2,27,851.09 1,86,230.96 7,68,864.19 4,28,753.40 - Doubtful 1,382.21 447.34 12,432.95 9,602.36 - Less: provision for non-performing assets (388.90) (128.03) (9346.71) (6938.92) - Unsecured, considered good 19,445.40 22,015.99 48,259.74 48,954.70 - Doubtful 230.94 148.15 2,657.88 2,768.32 - Less: provision for non-performing assets (230.94) (148.15) (2,657.88) (2,768.32) Advances recoverable in cash or in kind or for value to be received - - 2,014.04 1,736.73

Total 2,50,108.17 2,09,228.90 8,22,524.21 4,82,108.27

11. Other assets

` ` ` ` in lacs

Non-current Current

Particulars As at March 31, As at March 31,

2012 2011 2012 2011

Bank balances non-current portion [Refer Annexure IV note-12] 17,123.00 6,590.00 - - Fixe deposit with bank under lien [Refer Annexure IV note-12] 7.00 - - - Public issue of debentures expenses (to the extent not written off or adjusted)

828.43 - 277.80 -

Miscellaneous expenditure (to the extent not written off or adjusted)

- 23.76 - -

Interest accrued on fixed deposit and other loan and advances

972.10 138.53 269.10 186.43

Securitisation-receivable 17,985.27 3,902.27 30,475.82 13,244.80 Service tax credit (input) receivable - - 115.13 146.00 Prepaid Expenses - - 725.52 952.29 Security deposit 52.76 - - - Other assets - 1.34 7.47 23.65

Total 36,968.56 10,655.90 31,870.84 14,553.17

F-110

Shriram City Union Finance Limited Annexure IV

Notes forming part of Reformatted Consolidated summary of Assets and Liabilities

12. Cash and bank balance

` ` ` ` in lacs

Particulars

Non-current Current

As at March 31, As at March 31,

2012 2011 2012 2011

Cash and cash equivalents : Balances with banks: -Current account - - 31,580.07 95,746.92 -Balance in unpaid dividend accounts - - 30.77 22.11 -Bank deposit with maturity of less than three months - - 56,822.50 99,500.00 Cash on hand - - 7,520.52 6,025.90

Other bank balances: Bank deposit with maturity of more than three months but less than 12 months - - - 51.00 More than 12 months 7.00 - - - Margin money deposit 17,123.00 6,590.00 20,061.28 8,846.40

17,130.00 6,590.00 1,16,015.14 2,10,192.33 Amount disclosed under the head "non-current asset" [Refer annexure IV note 11] (17,130.00) (6,590.00)

Total - - 1,16,015.14 2,10,192.33

Margin money deposit of `37184.28 lacs as at March 31, 2012 (March 31, 2011 `15436.40 lacs) is pledged with banks as margin for securitisation. Bank deposit of ` 7.00 lacs is under lien as on March 31, 2012.

F-111

Shriram City Union Finance Limited Annexure V

Notes forming part of Reformatted summary of profit and loss account

13. Revenue from operation

` ` ` ` in lacs

Particulars For the year ended March 31,

2012 2011

Income from finance and other charges 1,75,206.98 1,22,778.70 Income on securitisation / assignment 26,238.79 8,222.30 Interest on margin money on securitisation / assignment 1,935.51 799.12 Bad debts recovery 401.75 253.46

Total 2,03,783.03 1,32,053.58

14. Other income

` ` ` ` in lacs

Particulars For the year ended March 31,

2012 2011

Dividend Income 596.67 - Net gain on sale of investments 134.74 - Other non-operating income: Interest on deposit with bank 1,141.92 264.57 Interest on government securities 6.13 6.13 Profit on sale of assets 0.05 0.16 Commission / referral fees received 5.24 10.23 Miscellaneous income 16.83 9.98

Total 1,901.58 291.07

15. Employee benefits expenses

` ` ` ` in lacs

Particulars For the year ended March 31,

2012 2011

Salaries and incentives 8,725.71 3,678.56 Contributions to -provident fund 219.39 138.21 Gratuity 87.63 40.51 Provision for leave encashment 0.65 0.00 Bonus and ex-gratia 5.12 0.00 Expense on employee stock option scheme and employee stock purchase plan 191.82 471.68 Staff welfare expenses 186.44 38.06

Total 9,416.76 4,367.02

F-112

Shriram City Union Finance Limited Annexure V

Notes forming part of Reformatted summary of profit and loss account

16. Finance cost

` ` ` ` in lacs

Particulars For the year ended March 31,

2012 2011

Interest expense on : Debentures 31,999.07 18,256.28 Subordinate debt bonds 8,651.76 7,456.74 Fixed deposits 6.72 6.03 Loans from bank 40,112.97 18,914.70 Loans from institution and others 1,039.73 1,243.82 Commercial Paper 1,601.26 1,434.16 Borrowing cost: Bank charges 1,230.54 1,535.79 Processing and other charges 1,879.52 2,413.69 Brokerage 6,336.44 3,884.21

Total 92,858.01 55,145.42

17. Other expenses

` ` ` ` in lacs

Particulars For the year ended March 31,

2012 2011

Rent 1,784.26 1,007.21 Power and fuel expenses 339.28 360.57 Repairs & maintenance 984.31 437.90 Rates, duties & taxes 839.12 636.02 Printing & stationery 1,528.06 1,649.92 Travelling & conveyance 3,976.19 3,704.17 Advertisement 924.39 520.06 Business promotion expenses 5,398.06 3,495.02 Commission 5,980.18 3,702.84 Sourcing fees and other charges 2,575.66 1,444.79 Royalty 565.95 364.24 Directors' sitting fees 6.25 5.45 Insurance 322.40 167.01 Communication expenses 2,045.42 1,908.24

Payments to the auditor as a. audit fees 18.71 14.09 b. tax audit fees 3.28 3.10 c. other services 4.14 4.05 Professional charges 2,715.27 2,092.43 Legal & professional fees 1,076.49 2,053.29 Donations 0.00 1.00 Public issue expenses for non-convertible debentures 162.05 0.00 Loss on sale of assets 3.57 13.94 Miscellaneous expenses 856.22 587.67

Total 32,109.26 24,173.01

F-113

Shriram City Union Finance Limited Annexure V

Notes forming part of Reformatted summary of profit and loss account

18. Provisions & write offs

` ` ` ` in lacs

Particulars For the year ended March 31,

2012 2011

Provision for non performing assets 2,641.01 2,552.85 Provision for standard assets 946.89 1,714.89 Bad debts written off 14,248.80 7,583.96 Preliminary & pre operative expenditure 158.48 - Others 0.30 -

Total 17,995.48 11,851.70

F-114

Shriram City Union Finance Limited Annexure VI

Statement of Contingent Liabilities

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011

a. Income tax 1,447.80 -

b. Guarantees issued by the Company 450.00 6.81

c. Guarantees issued by others - 1,942.77

Commitments not provided for

`̀̀̀ in lacs

Particulars As at March 31,

2012 2011

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

686.76 61.78

Commitments to invest in the subsidiary company i.e. Shriram Housing Finance Limited

5,529.55 -

F-115

Shriram City Union Finance Limited Annexure VII

Statement of dividend

Statement of dividend in respect of equity shares

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011

Interim Dividend

Rate of Dividend 25% 25%

Number of Equity Shares on which interim dividend paid 4,97,60,859 4,93,92,739

Amount of Interim Dividend 1,244.02 1,234.82

Dividend Distribution tax 201.81 205.09

Dividend Distribution tax Rate 16.2225% 16.609%

Final Dividend for the previous year

Rate of Dividend 35% 30%

Number of Equity Shares on which interim dividend paid 208,002 47,756

Amount of Interim Dividend 7.28 1.43

Dividend Distribution tax 1.18 0.24

Dividend Distribution tax Rate 16.2225% 16.609%

Proposed Final Dividend for the current year

Rate of Dividend 40% 35%

Number of Equity Shares on which final dividend paid 5,23,67,209 4,95,36,877

Amount of Final Dividend 2,094.69 1,733.79

Dividend Distribution tax 339.81 281.26

Dividend Distribution tax Rate 16.2225% 16.2225%

F-116

Shriram City Union Finance Limited Annexure VIII

Statement of Accounting Ratios [Calculation of Earnings Per Share (EPS)]

Earnings per share calculation are done in accordance with Accounting Stanndard -20 "Earning Per Share" notified under Accounting Standards (AS) under Companies Accounting Standard Rules, 2006, as amended

Particulars For the year ended March 31,

2012 2011

Net profit after tax as per Statement of profit and loss (` in lacs) a 33,808.33 24,058.85 Weighted average number of Equity Share Outstanding during the year/ period (for Basic EPS) (No. in lacs) b 498.20 493.23

(i) Equity Share arising on conversion of optionally convertiable warrants (lacs) c 0.20 - (ii) Equity Share for no consideration arising on grant of Stock option under ESOP (No. lacs) d 3.67 8.32 Weighted average number of Equity Shares outstanding during the year/ period (for Diluted EPS) (b+c+d) (No. in lacs) e 502.07 501.55

Earnings per share (Basics) (`̀̀̀) (a/b) 67.86 48.78

Earnings per share (Diluted) (`̀̀̀) (a/e) 67.34 47.97

Statement of Accounting Ratios [Calculation of Return on Net Worth (RONW)]

Particulars As at March 31,

2012 2011

SHAREHOLDERS FUNDS Share capital 5,236.72 4,953.69 Reserves and surplus 1,59,377.53 1,16,253.59 Money received against share warrants 8,437.00 -

Less: Miscellaneous Expenditure (not written off) 1,106.23 23.76

Net worth as at the end of the year 1,71,945.02 1,21,183.52

Net profit after tax 33,808.33 24,058.85

Return on Net Worth (Annualised) (%) 19.66% 19.85%

Statement of Accounting Ratios [Calculation of Net Asset Value (NAV) Per Equity Share]

Particulars As at March 31,

2012 2011

SHAREHOLDERS FUNDS Share capital 5,236.72 4,953.69 Reserves and surplus 1,59,377.53 1,16,253.59 Money received against share warrants 8,437.00 - Share application money pending allotment

Less: Miscellaneous Expenditure (not written off) 1,106.23 23.76

Net Asset Value 171,945.02 121,183.52

Number of Equity shares outstanding at the end of the year/ period 52,367,209 49,536,877

Net asset Value per Equity Share (`̀̀̀) 328.34 244.63

F-117

Shriram City Union Finance Limited Annexure IX

Secured loans

A. Term loan from banks

`̀̀̀ in lacs

Particulars Date of

Disbursement

Disbursed

amount

Balance as on

March 31st

2012

Repayment terms

Allahabad Bank. 30-Dec-11 15,000.00 15,000.00 3 Equal Inst. of `. 50 cr each at the end of 24th, 30th & 36th month from the date of Disbursement.

Andhra Bank 20-Feb-12 17,500.00 17,500.00 8 half yearly installments

Bank of India 31-Oct-11 20,000.00 20,000.00 Bullet payment as on 31-Oct-2014

Bank of Maharashtra 31-Mar-11 5,000.00 5,000.00 `.25 crs each at the end of 39th month & 42nd month

Bank of Maharashtra 29-Sep-11 10,000.00 10,000.00 Principal amt of `.50 cr. Each paid at the end of 39th & 42nd month

Calyon Bank 30-Dec-10 3,500.00 3,500.00 Bullet payment on 02-Dec-2012

Canara Bank 29-Jan-10 20,000.00 20,000.00 Bullet payment on 29-Dec-2012

Canara Bank 17-Sep-10 20,000.00 20,000.00 Bullet payment on 24-Aug-2013

Canara Bank 24-Sep-10 10,000.00 10,000.00 Bullet payment on 24-Aug-2013

Canara Bank 29-Feb-12 20,000.00 20,000.00 Bullet payment on 29-Jan-2015

Corporation Bank 31-Dec-10 10,000.00 9,987.08 Bullet payment on 28-Dec-2013

ICICI Bank 25-Mar-11 25,000.00 18,750.00 In Oct11, Apr12, Oct12, Apr13 - `.62.5 Crs each (25 months)

Indian Bank 24-Sep-11 30,000.00 30,000.00 Bullet payment as on 24-Sep-2014

Ing Vysya Bank 26-Mar-10 4,300.00 1,433.33 Half yearly installment of `716.66 lacs

Oriential Bank of Commerce 31-Mar-11 10,000.00 10,000.00 4 Quarterly installments of `25 Cr each after an initial moratorium period of 24 months

Oriential Bank of Commerce 20-Jan-12 30,000.00 30,000.00 Two equal half yearly installment after a moratorium of one year from the date of availment

State Bank Mauritius Ltd 7-Feb-11 1,500.00 750.00 8 Quarterly Installments of `. 31.25 Million each

State Bank of Mysore 27-Nov-10 10,000.00 9,994.79 Bullet payment on 27-Nov-2013

State Bank of Patiala

31-Jan-10 10,000.00 10,000.00 Bullet payment on 21-Jan-2013

State Bank of Patiala 22-Mar-11 15,000.00 10,000.00 End of every 12 months in 3 annual equal installments

State Bank of Travancore 16-Dec-10 10,000.00 9,999.94 Bullet payment on 23-Dec-2012

Syndicate Bank 22-Jan-11 15,000.00 15,000.00 Bullet payment on 03-Jan-2013

Syndicate Bank 25-Feb-12 30,000.00 30,000.00 Bullet payment on 25-Jun-2015

Union Bank of India 22-Nov-10 15,000.00 15,000.00 Bullet payment on 22-Nov-2012

Union Bank of India 25-Jan-11 15,000.00 15,000.00 Bullet payment on 04-Jan-2013

United Bank of India 29-Sep-11 10,000.00 10,000.00 4 equal annual installments of `.25 crores each.

Vijaya Bank 30-Mar-11 9,000.00 9,000.00 36 Months with an initial moratorium Period of 12 Months & Thereafter It should be repaid in 24 EMI

Yes Bank 28-Feb-11 8,000.00 8,000.00 Bullet payment on 28-Feb-2014

Total

398,800.00 383,915.15

F-118

Shriram City Union Finance Limited Annexure IX

Secured loans

B. Term loan from other

`̀̀̀ in lacs

Particulars Date of

Disbursement Disbursed

amount

Balance as on March 31,

2012

Repayment terms

SIDBI – I 10-Aug-10 10,000.00 6,500.00 Bullet payment on 10-Aug-2013

SIDBI – II 31-Dec-11 10,000.00 10,000.00

10% each at the end of 12th & 24th month, 15% each at the end of 36th & 48th months and 25% each at the end of 60th and 66th months from the date of disbursement.

Total 20,000.00 16,500.00

F-119

Shriram City Union Finance Limited Annexure IX

Secured loans

C. Cash credit from banks (including WCDL)

`̀̀̀ in lacs

Particulars Date of

Disbursement Disbursed amount

Balance as on March

31, 2012

Andhra Bank 31-Dec-11 7500.00 180.06

Axis Bank 31-Dec-09 10000.00 0.00

Bank of India 30-Jun-10 20000.00 17744.32

Bank of Maharashtra 31-Mar-11 5000.00 4742.18

Canara Bank 23-Nov-11 5000.00 3902.58

Central Bank of India 25-Mar-09 10000.00 3.40

Centurion Bank (Hdfc) 19-Oct-11 2800.00 0.00

City Union Bank 30-Jan-08 1400.00 0.00

Corporation Bank 30-Dec-10 5000.00 2414.21

DBS Bank 22-Jul-10 100.00 4.52

Dena Bank 17-Mar-09 15000.00 15.47

Federal Bank 10-Mar-11 5000.00 2507.96

Idbi Bank 24-Mar-11 16000.00 155.80

Indian Bank 6-Nov-07 2500.00 53.95

Indian Overseas Bank 21-Jan-09 10000.00 9995.51

Indusind Bank 16-Jun-10 7500.00 2.62

Ing Vysya Bank 24-Mar-10 500.00 109.51

Ing Vysya Bank 24-Mar-10 500.00 4.48

Jammu & Kashmir Bank Ltd., 31-Mar-11 10000.00 4.55

Kotak Mahindra Bank 19-Jan-12 5000.00 2422.69

Oriental Bank of Commerce 28-Sep-07 5000.00 4823.58

Punjab National Bank 5-Mar-10 5000.00 6.42

South Indian Bank 26-Jun-09 100.00 47.88

State Bank of India 27-Jun-11 5000.00 8.53

State Bank of Mysore 26-Nov-10 100.00 0.00

State Bank of Patiala 25-Feb-09 5000.00 26.89

State of Bikanur And Jaipur 21-Sep-10 500.00 27.80

Tamilnadu Mercantile Bank 4-Aug-11 1000.00 0.00

Union Bank of India 7-Mar-08 5000.00 6.85

United Bank of India 20-Mar-09 7500.00 7154.46

WCDL

HSBC Bank 23-Dec-09 5000.00 3125.00

South Indian Bank 25-Jun-10 5000.00 4989.83

State Bank of India 24-Jun-11 25000.00 25000.00

State Bank of Mysore 18-Mar-11 4900.00 4900.00

State Bank of Bikaner & Jaipur 22-Dec-10 2400.00 2400.00

Canara Bank 13-Feb-12 25000.00 25000.00

Total 240300.00 121781.03

F-120

Shriram City Union Finance Limited Annexure IX

Secured loans

D. Privately placed secured redeemable non-convertible debenture of `̀̀̀1,00,000/- each

`̀̀̀ in lacs

Particulars Date of Allotment Disbursed

amount

Balance as on

March 31, 2012 Repayment terms

Corporation Bank 24-Sep-09 2,500.00 2,500.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Central Bank of India 17-Sep-09 1,000.00 1,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Central Bank of Pention Fund 17-Sep-09 1,000.00 1,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Central Bank of Provident Fund 17-Sep-09 500.00 500.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Allahabad Bank. 23-Sep-09 2,000.00 2,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Bank of Baroda 6-Oct-09 1,000.00 1,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

A.K. Capital Services 6-Oct-09 2,000.00 2,000.00 3.5 years 1st 20%, 4th year 2nd 20%, 4.5 years 30% and 5th year30%

Total 10,000.00 10,000.00

F-121

Shriram City Union Finance Limited Annexure IX Secured loans E. Privately placed secured redeemable non-convertible debenture of `̀̀̀10,00,000/- each

`̀̀̀ in lacs

Particulars Date of

Allotment

Disbursed

amount

Balance as on March 31,

2012

Repayment terms

Standard Chartered Bank 22-Apr-10 17500.00 8750.00 Half yearly 6 installment

Reliance Mutual Fund 5-Jul-10 7500.00 7500.00 On 5-Jan-2013

Ing Vysya Bank 23-Nov-10 2000.00 2000.00 In 3 equal installment in 5th, 6th &

7th year from deemed date of Allotement.

Ing Vysya Bank 13-Dec-10 1000.00 1000.00 Bullet on 13-Dec-2017

Ing Vysya Bank 13-Dec-10 1500.00 1500.00 Bullet on 13-Dec-2017

Jharkand Grahim Bank 4-Feb-11 500.00 500.00 Staggered equal installments of 20%

each at par starting from the end of 6th year till end of 10th year

Deutsche Bank 30-Mar-11 27500.00 27500.00 Bullet on 30-Mar-2017

Kotak Mahindra Mutual Fund 23-Nov-11 1100.00 1100.00 Bullet on 23-May-2013

Kotak Mahindra Mutual Fund 25-Oct-11 1800.00 1800.00 Bullet on 18-Apr-2013

Kotak Mahindra Mutual Fund 25-Oct-11 1730.00 1730.00 Bullet on 25-Oct-2013

Pramerica 11-Nov-11 2500.00 2500.00 Bullet on 03-Apr-2013

HDFC Mutual Fund 5-Dec-11 1500.00 1500.00 Bullet on 01-Dec-2014

Kotak Mahindra Mutual Fund 25-Jan-12 1000.00 1000.00 Bullet on 20-Jan-2014

Deutsche Mutual Fund 10-Feb-12 1000.00 1000.00 Bullet on 03-Feb-2015

Hdfc Mutualfund 13-Feb-12 2900.00 2900.00 Bullet on 02-Jun-2014

Kotak Mahindra Mutual Fund 17-Feb-12 500.00 500.00 Bullet on 09-Aug-2013

Sundaram Mutual Fund 24-Feb-12 680.00 680.00 Bullet on 17-Feb-2014

Total 72210.00 63460.00

F. Public issue of secured redeemable non-convertiable debenture of `̀̀̀ 1,000/- each

`̀̀̀ in lacs

Particulars

No. of

Debenture

holders

Balance as on

March 31,

2012

Repayment terms

Option I

32.00 5,429.05 Repayable on 25-Aug-2016

15,696.00 43,653.65 Repayable on 25-Aug-2016

175.00 12,125.30 Repayable on 25-Aug-2016

Option II

14.00 9,570.95 Repayable on 25-Aug-2014

3,610.00 1,346.35 Repayable on 25-Aug-2014

43.00 2,874.70 Repayable on 25-Aug-2014

Total 19,570.00 75,000.00

G. Privately placed secured redeemable non-convertible debenture of `̀̀̀ 1,000/- each

`̀̀̀ in lacs

Particulars Balance as on

March 31, 2012 Repayment terms

Secured redeemable non convertible debentures (Retail) 2,05,954.93 Redeemable at par over a period of 160 months

F-122

Shriram City Union Finance Limited Annexure X

Unsecured loans

A. Fixed Deposits

`̀̀̀ in lacs

Particulars Balance as on

March 31, 2012 Repayment terms

Fixed Deposits 22.21 Redeemable at par over a period of 60 months

B. Sub-ordinated Debt (Institutional) `̀̀̀ in lacs

Particulars Date of

Allotment

Disbursed

amount

Balance as on

March 31, 2012 Repayment terms

A.K.Capital Finance 16-Jan-12 1,000.00 1,000.00 Repayable on 16-Jan-2019

A.K.Capital Finance 16-Jan-12 1,000.00 1,000.00 Repayable on 16-Jan-2019

Canara Bank 27-Feb-12 1,500.00 1,500.00 Repayable on 27-Aug-2017

Central Bank of India 27-Feb-12 1,000.00 1,000.00 Repayable on 27-Feb-2019

Bank of Baroda 27-Feb-12 2,000.00 2,000.00 Repayable on 27-Feb-2019

Lakshmi Villas Bank 27-Feb-12 500.00 500.00 Repayable on 27-Feb-2019

Salim Pattiwala 26-Mar-12 10.00 10.00 Repayable on 26-Mar-2019

Madav Prasad Jalan 26-Mar-12 10.00 10.00 Repayable on 26-Mar-2019

The South Indian Bank Ltd 26-Mar-12 1,000.00 1,000.00 Repayable on 26-Mar-2019

Axis Bank 26-Mar-12 1,500.00 1,500.00 Repayable on 26-Mar-2019

Indian Overseas Bank 26-Mar-12 2,500.00 2,500.00 Repayable on 26-Mar-2019

Vidut Supplier PRI-SUB DEBT 26-Mar-12 15.00 15.00 Repayable on 26-Sep-2017

Corporation Bank 26-Mar-12 1,000.00 1,000.00 Repayable on 26-Sep-2017

Axis bank ltd 15-Mar-12 10,000.00 10,000.00 Repayable on 26-Mar-2019

Total 23,035.00 23,035.00

C. Sub-ordinated Debt (Retail) ` ` ` ` in lacs

Particulars Balance as on March

31, 2012 Repayment terms

Sub-ordinated Debt 60,539.01 Redeemable at par over a period of 88 months

D. Deposits (Corporate)

`̀̀̀ in lacs

Description Date of the financing

document Balance as on March 31, 2012

Shriram Credit Company Limited 1-Nov-11 2,000.00

F-123

Shriram City Union Finance Limited Annexure XI

Capitalisation statement `̀̀̀ in lacs

Particulars Prior to the Issue as at

March 31, 2012 (Audited) Post to the Issue*

Debt Short-term debt 3,30,806.35 3,30,806.35 Long-term debt 6,31,400.98 6,81,400.98

Total debt 9,62,207.33 10,12,207.33

Shareholders fund Share capital 5,236.72 5,236.72 Reserves and surplus 1,59,377.53 1,59,377.53 Money received against share warrants 8,437.00 8,437.00 Share application money pending allotment - - Less: Miscellaneous Expenditure (not written off) 1,106.23 1,106.23

Total Shareholders fund 1,71,945.02 1,71,945.02

Long-term debt/Equity ratio 3.67 3.96

* The debt-equity ratio post the Issue is indicative and is on account of assumed inflow of `50,000.00 lacs from the Issue, as on March 31, 2012.

F-124

Shriram City Union Finance Limited Annexure XII

Statement of Tax Shelter

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011

Profit as per accounting books (business) 52,281.57 36,060.09

Profit as per accounting books (investments) 134.74 -

Total profit as per accounting books 52,416.31 36,060.09

Tax rate on business income 32.45% 33.22%

Tax rate on investment income 16.22% 0.00%

Tax on accounting profit 16,984.61 11,978.26

Permanent Differences

Donation - 0.50

Exempt Dividend Income (596.67) -

Disallowance u/s 14A 600.71 -

Capital gains on sale of fixed assets -

Employee Compensation Expenses 191.82 -

Others 203.52 13.94

Sub Total (A) 399.38 14.44

Temporary Differences

Depreciation and Lease adjustments 38.43 0.03

Deferred revenue expenses (1,106.23) -

Service tax write off - -

Provision for standard assets 944.93 1,714.89

Provision for Leave, Gratuity & Bonus 230.73 68.30

Provision for Derivative contract (772.49) (546.62)

Others 199.83

Sub Total (B) (664.63) 1,436.43

Net Adjustments (A+B) (265.25) 1,450.87

Tax Impact on Net Adjustments (86.06) 481.94

Total Taxation 16,898.55 12,460.20

Current Tax Provision for the year 16,898.55 12,460.20

F-125

Shriram City Union Finance Limited Annexure XIII

Notes forming part of the reformatted consolidated summary statement 1. Basis of preparation

The consolidated financial statements related to Shriram City Union Finance Limited ('the Company') and its subsidiary company. The financial statements have been prepared in conformity with generally accepted accounting principles to comply in all material respects with the notified Accounting Standards (‘AS’) under Companies Accounting Standard Rules, 2006, as amended, the relevant provisions of the Companies Act, 1956 (‘the Act’) and the guidelines issued by the Reserve Bank of India (‘RBI’) as applicable to a Non Banking Finance Company (‘NBFC’) and the guidelines issued by National Housing Bank (NHB) as applicable for housing finance operations. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Group and are consistent with those used in the previous year, except for the change in accounting policy explained below. 2. Basis of consolidation (i)The financial statements of the subsidiary company used in the consolidation are drawn up to the same reporting date as of the Company i.e. period ended March 31, 2012 and are prepared based on the accounting policies consistent with those used by the Company. (ii)The financial statements of the Group have been prepared in accordance with the Accounting Standard 21 (AS21) ‘Consolidated Financial Statements’ and Accounting Standard 23(AS23) ‘Accounting for investments in Associates in Consolidated Financial Statements, notified under the Companies (Accounting Standards) Rules, 2006, as amended and other generally accepted accounting principles in India. (iii)The consolidated financial statements have been prepared on the following basis : a. The financial statements of the company and its subsidiary company have been combined on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. The intra-group balances and intra-group transactions have been fully eliminated. b. Consolidated Financial Statements:During the year ended March 31, 2009 the company further acquired 45,500 equity shares of

Shriram Non Conventional Energy Limited (SNEL) and consequently SNEL became wholly owned subsidiary of the company with

effect from January 10,2009. The investment was intended to be temporary and was with a view to dispose it in near future.

Complying with Accounting Standard 21(AS21) issued by the Institute of Charted Accountants of India, consolidated accounts were

therefore not presented, then. The company, at its Extra Ordinary General Meeting held on May 11, 2009 obtained the approval of the

shareholders to sell the shares held as investments in its wholly owned subsidiary.

c. The consolidated financial statements include the share of profit / loss of the associate company which has been accounted as per the ‘Equity method’, and accordingly, the share of profit / loss of the associate company (the loss being restricted to the cost of investment) has been added to / deducted from the cost of investments. d. The excess of cost to the Company of its investments in the subsidiary company over its share of equity of the subsidiary company, at the dates on which the investments in the subsidiary company are made, is recognised as ‘Goodwill’ being an asset in the consolidated financial statements. Alternatively, where the share of equity in the subsidiary company as on the date of investment is in excess of cost of investment of the Company, it is recognised as ‘Capital Reserve’ and shown under the head ‘Reserves and Surplus’, in the consolidated financial statements. e. Minority interest, if any, in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made by the Company in the subsidiary company and further movements in their share in the equity, subsequent to the dates of investments as stated above. (iv) The following subsidiary company is considered in the consolidated financial statements:

Name of the company Country of

incorporation

Share of ownership interest as at March,31

2012 2011

Shriram Housing Finance Limited(SHFL) India 100% 100%

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2.1 Summary of significant accounting policies

a.Presentation and disclosure of financial statements

During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the figures for the previous year in accordance with the requirements applicable in the year ended March 31,2012.

b. Current / Non-current classification of assets / liabilities

Pursuant to applicability of Revised Schedule VI on presentation of financial statements for the financial year ended March 31, 2012; the Company has classified all its assets / liabilities into current / non-current portion based on the time frame of 12 months from the date of financial statements. Accordingly, assets/liabilities expected to be realised /settled within 12 months from the date of financial statements are classified as current and other assets/ liabilities are classifies as noncurrent.

c. Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the date of the financial statements and results of operations during the reporting year end. Although these estimates are based on the management’s best knowledge of current events and actions, actual results could differ from these estimates. Any revision to the accounting estimates are recognised in the respective and future years. d. Tangible fixed assets

Fixed assets, are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises of purchase price and directly attributable cost for bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenditure is incurred.

Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised. e. Intangible fixed assets

Intangible fixed assets are stated at cost less accumulated amortisation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

f. Depreciation on tangible fixed assets

Depreciation on fixed assets is provided on Straight Line Method (SLM) by using the rates arrived at based on the useful lives estimated by the management, which are greater than or equal to the rates prescribed under the Schedule XIV to the Companies Act, 1956., except depreciation on Wind mill @ 10% on straight-line basis.

Leasehold improvements are amortised on SLM over the primary period of lease subject to a maximum of 60 months. All fixed assets individually costing ` 5,000 or less are fully depreciated in the year of installation. Depreciation on assets acquired /sold during the year is recognised on a prorata basis in the statement of profit and loss till the date of sale or from the date of acquisition. g. Depreciation on intangible assets

Amortisation is provided on Straight Line Method (SLM), which reflects the management’s estimate of the useful life of the intangible asset. The company has provided depreciation on the intangible assets on straight-line basis @33.33% on Compute software.

Amortisation on assets acquired/sold during the year is recognised on prorata basis in the statement of profit and loss till the date of acquisition/sale.

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h. Impairment of assets

The company assesses at each balance sheet date if there is an indication of impairment of any asset. If any indication exists, the company estimates the recoverable amount of the asset. The recoverable amount of an asset is greater of net selling price and value in use of the asset. Where the carrying amount of an asset is more than its recoverable amount, the asset is considered impaired and is written down to it’s recoverable amount.. The value in use is the estimated future cash flows discounted to their present value at pre-tax discount rate which reflects current market assessment of the time value of money and risk specific to the asset.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

An assessment is made at each Balance Sheet date about existence or decrease of previously recognised impairment losses. If such indication exists, the company estimates the asset’s recoverable amount. A previously recognised impairment loss is increased or reversed depending on the changes in the circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment.

i. Capital advance

Capital advances are advances given for procurement of fixed assets. Company does not expect to realise them in cash and over a period of time these advances get converted into fixed assets which are non-current by nature. Therefore irrespective of when the fixed assets are expected to be received such advances are disclosed under "long-term loans and advances".

j. Borrowing costs

Borrowing cost includes interest and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Ancillary and other borrowing costs are charged to statement of profit & loss in the year in which they are incurred.

k. Investments

Investments intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline, other than temporary in the value of such investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

l. Provision/write off of assets

Nonperforming loans are written off / provided for, as per estimates of management, subject to the minimum provision required as per Non- Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

Provision on standard asset is made as required under Reserve Bank of India (RBI) notification No. DNBS.222/CGM (US-2011) dated January 17, 2011 for the year ended on March 31, 2012 & March 31, 2011. m. Loans

Loans are stated at the amount advanced including finance charges accrued and expenses recoverable, as reduced by the amounts received up to the date of balance sheet and loans securitised.

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Notes forming part of the reformatted consolidated summary statement

n. Leases

Where the Company is the lessor

Assets given on operating leases are included in fixed assets. Lease income is recognised in the statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the statement of profit and loss.

Where the Company is the lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.

o. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The revenue recognisation are as under:

(i) Income from financing activities is recognised on the basis of internal rate of return.

(ii) Additional finance charges / additional interest are treated to accrue on realisation due to uncertainty of its realisation. (iii) Gain arising on securitization/direct assignment of assets is recognised over the tenure of agreements as per guideline on securitisation of standard assets issued by RBI. Loss or expenditure in respect of securitisation / assignment, if any, is recognised upfront.

(iv) The prudential norms for income recognition prescribed under Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions 2007 are followed.

(v) Income from services is recognised as per the terms of the contract on accrual basis.

(vi) Interest Income on deposit accounts with banks is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(vii) Dividend is recognised as income when right to receive payment is established by the date of balance sheet.

(viii) Profit/loss on sale of investments is recognised at the time of actual sale / redemption.

(ix) Income from Power generation is regonised as per the terms of Power purchase agreement for the year ended March 31, 2009.

p. Foreign currency translation Foreign currency transactions and balances Initial recognition: Foreign currency transactions are recorded in Indian rupee, by applying to the foreign currency amount the exchange rate between the Indian rupee and the foreign currency at the date of the transaction.

Conversion: Foreign currency monetary items are retranslated to Indian rupees by using the exchange rate prevailing at the Balance Sheet date ( Statement of Asset and Liabilities).

Exchange differences: All exchange differences are dealt with in the statement of profit and loss.

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q. Income taxes

Tax expense comprises of current tax and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the respective year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

The carrying cost of the deferred tax assets are reviewed at each balance sheet date. The Company writes down the carrying amount of a deferred tax asset to the extent it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write down is reversed to the extent it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

The un-recognised deferred tax assets are re-assessed by the Company at each balance sheet date and are recognised to the extent it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

r. Segment reporting

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole. The segments are identified based on the nature of product & market served. The income /expenses which are not allocated to any reportable segments are reported as un allocable segment.

s. Employee stock compensation cost

The measurement and disclosure of the employee share based payment plans is done in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999 and the Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India (ICAI).The company measures cost relating to employees stock option by intrinsic value method. Compensation expenses is amortised on straight line method over the period of vesting of options.

t. Retirement and other employee benefits Provident Fund All the employees of the Company are entitled to receive benefits under the Provident Fund, a defined contribution plan in which both the employee and the Company contribute monthly at a stipulated rate. The Company has no liability for future Provident Fund benefits other than its annual contribution and recognises such contributions as an expense in the year it is incurred.

Gratuity The Company provides for gratuity, a defined benefit retirement plan covering all employees. The plan provides for lump sum payments to employees upon death while in employment or on separation from employment after serving for the stipulated year mentioned under ‘The Payment of Gratuity Act, 1972’. The Company accounts for liability of future gratuity benefits based on an external actuarial valuation on projected unit credit method carried out for assessing liability as at the reporting date. Leave Benefits Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.

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Notes forming part of the reformatted consolidated summary statement

u. Earnings Per Share Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

v. Expenses on deposits / debentures Expenses for private placement of debentures/subordinated debts/deposits are charged to statement of profit and loss in the year in which they are incurred.

Expenses incurred on public issue of debentures other than brokerage are charged off on straight line basis over the weighted average tenor of the underlying debentures. The brokerage incurred on issue of debenture is treated as expenditure in the year in which it is incurred.

w. Provisions

A provision is recognised when the company has a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

x. Cash and cash equivalents

Cash and cash equivalents are held for the purpose of meeting short-term cash commitments. Cash equivalents are short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents include cash-in-hand, cash at bank, cheque in hand, remittances in transit and short term investments with an original maturity period of three months or less.

y. Derivative instruments

In accordance with the ICAI guidelines and on principle of prudence, derivative contracts, other than foreign currency forward contracts covered under AS 11, are marked to market on a portfolio basis, and the net loss, if any, after considering the offsetting effect of gain on the underlying hedged item, is charged to the statement of profit and loss. However net gain, if any, after considering the offsetting effect of loss on the underlying hedged item, is ignored.

z. Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events, which are beyond the control of the company. A contingent liability also includes a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises where; a liability cannot be measured reliably. The company does not recognise a contingent liability in the accounts but discloses its existence in the financial statements.

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Notes forming part of the reformatted consolidated summary statement

3. Earnings per share (EPS)

Particulars For the year ended March 31,

2012 2011

Net profit after tax and share of loss of Associates as per statement of profit and loss (` in lacs) (A) 33,808.33

24,058.85

Weighted average number of equity shares for calculating Basic EPS (No. in lacs) (B) 498.20 493.23 Weighted average number of equity shares for calculating Diluted EPS (No. in lacs) (C) 502.07 501.55 Basic earnings per equity share (in Rupees) (Face value of `10/- per share) (A) / (B) 67.86 48.78 Diluted earnings per equity share (in Rupees) (Face value of `10/- per share) (A) / (C) 67.34 47.97

Particulars For the year ended March 31,

2012 2011

Weighted average number of equity shares for calculating EPS (No. in lacs) 498.20 493.23 Add : Equity shares arising on conversion of optionally convertible warrants (No. in lacs) 0.20 0.00 Add : Equity shares for no consideration arising on grant of stock options under ESOP (No. in lacs) 3.67 8.32 Weighted average number of equity shares in calculation diluted EPS (No. in lacs) 502.07 501.55

4. Gratuity and other post-employment benefit plans:

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Consequent to the adoption of revised AS 15 ‘Employee Benefits’ issued under Companies Accounting Standard Rules, 2006, as amended, the following disclosures are made as required by the standard:

Statement of profit and loss Net Employee benefit expenses recognised in the employee cost

` ` ` ` in lacs

Particulars

Gratuity

For the year ended March 31,

2012 2011

Current service cost 33.04 4.84 Interest cost on benefit obligation 16.20 12.44 Expected return on plan assets N.A. N.A. Net actuarial (gain) / loss recognised in the year 38.09 23.23 Past service cost 0 Net benefit expense 87.33 40.51 Actual return on plan assets N.A. N.A.

Balance sheet Benefit asset/liability ` ` ` ` in lacs

Particulars

Gratuity

As at March 31,

2012 2011

Defined benefit obligation 278.10 196.34 Fair value of plan assets N.A. N.A. Total 278.10 196.34 Less: Unrecognised past service cost - - Plan asset / (liability) (278.10) (196.34)

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Shriram City Union Finance Limited Annexure XIII

Notes forming part of the reformatted consolidated summary statement Changes in the present value of the defined benefit obligation are as follows:

` ` ` ` in lacs

Particulars

Gratuity

As at March 31,

2012 2011

Opening defined benefit obligation 196.34 155.52 Interest cost 16.20 12.44 Current service cost 33.04 4.84 Benefits paid (5.57) -- Actuarial (gains) / losses on obligation 38.09 23.54 Closing defined benefit obligation 278.10 196.34

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

` ` ` ` in lacs

Particulars

Gratuity

As at March 31,

2012 2011

Investments with insurer NA NA

The principal assumptions used in determining gratuity obligations for the Company’s plan are shown below:

Particulars

Gratuity

As at March 31,

2012 2011

Discount rate 8.50% 8.25% Increase in compensation cost 5.00% 5.00% Employee turnover* 2.00% 2.00%

The estimates of future salary increases, considered in actuarial valuation, are on account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Amounts for the Current and previous three years are as follows:

` ` ` ` in lacs

Particulars As at March 31,

2012 2011 2010 2009

Defined benefit obligation 278.10 196.34 155.52 139.64 Plan assets NA NA NA NA Surplus / (deficit) (278.10) (196.34) (155.52) (139.64) Experience adjustments on plan liabilities (37.48) (29.63) (19.27) (39.51) Experience adjustments on plan assets NA NA NA NA

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Notes forming part of the reformatted consolidated summary statement

5. Employee Stock Option Plans: The company provides share-based payment schemes to its employees. During the year ended 31 March 2012, an employee stock option plan (ESOP) was in existence. The relevant details of the scheme and the grant are as below: Date of Shareholder’s approval : October 30 2006 Date of grant : October 19 2007 Date of Board Approval : October 19 2007 Number of options granted : 1355000 Method of Settlement (Cash/Equity) : Equity Graded vesting period: After 1 years of grant date : 10% of options granted After 2 years of grant date : 20% of options granted After 3 years of grant date : 30% of options granted After 4 years of grant date : 40% of options granted Exercisable period : 10 years from vesting date Vesting Conditions : on achievement of pre –determined targets The details of Series I have been summarized below:

As at March 31, 2012 As at March 31, 2011

Number of

Shares

Weighted

Average

Exercise

Price(in `)`)`)`)

Number of

Shares

Weighted

Average

Exercise Price

(in `)`)`)`)

Outstanding at the beginning of the year 9,18,123 35.00 12,72,800 35.00 Add: Granted during the year 27500 Less: Forfeited during the year - Less: Exercised during the year 5,30,332 35.00 3,82,177 35.00 Less: Expired during the year - Outstanding at the end of the year 3,87,791 35.00 9,18,123 35.00 Exercisable at the end of the year - Weighted average remaining contractual life (in years) 8.55 - 9.55 Weighted average fair value of options granted 227.42 - 227.42

The details of exercise price for stock options outstanding at the end of the period are:

As at March 31,

Range of

exercise

prices(in `̀̀̀)

No. of options

outstanding

Weighted

average

remaining

contractual

life of options (in years)

Weighted

average

Exercise

Price(in `̀̀̀)

2012 35.00 3,87,791 8.55 35.00 2011 35.00 9,18,123 9.55 35.00

Stock Options granted The weighted average fair value of stock options granted was `227.42. The Black Scholes model has been used for computing the weighted average fair value of options considering the following inputs:

2006 2007 2008 2009

Exercise Price (`) 35.00 35.00 35.00 35.00 Expected Volatility (%) 55.36 55.36 55.36 55.36 Historical Volatility NA NA NA NA Life of the options granted (Vesting and exercise period) in years

1.50 2.50 3.50 4.50

Expected dividends per annum (`) 3.00 3.00 3.00 3.00 Average risk-free interest rate (%) 7.70 7.67 7.66 7.67 Expected dividend rate (%) 0.84 0.84 0.84 0.84

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Notes forming part of the reformatted consolidated summary statement The expected volatility was determined based on historical volatility data equal to the NSE volatility rate of Bank Nifty which is considered as a comparable peer group of the Company. To allow for the effects of early exercise it was assumed that the employees would exercise the options within six months from the date of vesting in view of the exercise price being significantly lower than the market price.

Effect of the employee share-based payment plans on the profit and loss account and on its financial position: ` ` ` ` in lacs

As at March 31,

2012 2011

Compensation cost pertaining to equity-settled employee share-based payment plan included above

191.82 471.68

Liability for employee stock options outstanding as at year end 878.15 2,079.09 Deferred compensation cost Nil 191.82

Since the company used the intrinsic value method the impact on the reported net profit and earnings per share by applying

the fair value based method is as follows: In March 2005,the ICAI issued a guidance note on “Accounting for Employees Share Based Payments” applicable to employee based share plan the grant date in respect of which falls on or after April 1 2005. The said guidance note requires that the proforma disclosures of the impact of the fair value method of accounting of employee stock compensation accounting in the financial statements. Applying the fair value based method defined in the said guidance note the impact on the reported net profit and earnings per share would be as follows:

For the year ended March 31,

2012 2011

Profit as reported (` in lacs) 33,808.33 24,058.85 Add: Employee stock compensation under intrinsic value method (` in lacs) 191.82 471.68 Less: Employee stock compensation under fair value method (` in lacs) 192.64 473.70 Proforma profit (` in lacs) 33,807.51 24,056.83 Less Preference dividend - Proforma net profit for equity shareholders 33,807.51 24,056.83 Earnings per share

Basic (`.) - As reported 67.86 48.78 - Proforma 67.86 48.77 Diluted (`.) - As reported 67.34 47.97 - Proforma 67.34 47.96

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Notes forming part of the reformatted consolidated summary statement

6. Related Party Disclosure

(i) Other Related Parties

Enterprises having significant influence over the Company a. Shriram Enterprises Holding Private Limited (SEHPL) b. Shriram Retail Holdings Private Limited (SRHPL) c. Shriram Capital Limited (SCL) d. TPG India Investments I Inc. (TPGI) e. Shriram Ownership Trust (SOT)

(iii) Key Managerial Personnel

R Kannan Managing Director `̀̀̀ in lacs

March 31,

2012

March 31,

2011

Payments/Expenses Royalty to SOT 565.95 338.15 Data Sourcing Fees to SOT 367.75 206.40 Service Charges SOT 2,206.48 1,238.39 Reimbursement of business promotion expenses, rent and other expenses to SCL 361.15 33.09 License Fees to SCL 661.80 - Equity dividend to SEHPL 448.04 985.68 Equity dividend to SRHPL 213.91 470.59

Receipts Subscription to optionally convertible warrants SCL 8,437.00 -

Balance outstanding as at Share Capital held by SEHPL 1,792.15 1,792.15 Share Capital held by SRHPL 855.62 855.62 Share warrants SCL 8,437.00 - Share Capital held by SCL 230.00 Outstanding Expenses SOT 764.63 897.09

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Notes forming part of the reformatted consolidated summary statement

7. Contingent liabilities and commitments to the not provided for

(i) Contingent liabilities

` ` ` ` in lacs

Income Tax As at March 31,

2012 2011

a. Income tax 1,447.80 - b. Guarantees issued by the Company 457.00 6.81 e. Guarantees issued by others - 1,942.77

The Income tax assessments of the company have been completed up to the Assessment Year 2009-10. The disputed demand outstanding up to the assessment Year 2009-10 is `1447.80 lacs.

The company has provided NSE with a bank guarantee for ` 450.00 lacs and a deposit of ` 300.00 lacs as security deposit i.e. 1% of total public issue of secured non-convertible debentures of ` 75,000.00 lacs.[Refer Annexure XIII note:8] . And Bank deposit of ` 7.00 Lacs liened against corporate credit cards. Standard Chartered Bank had provided guarantee for `1942.77 lacs in favor of Bank of Maharashtra for Securitisation. The guarantee was closed on May 22, 2011.

(ii) Commitments

(i) As at March 31, 2012 `686.76 lacs (March 31, 2011: `61.78 lacs (net of advances) is the estimated amount of contracts remaining to be executed on capital account. (ii) The company has got further commitments to invest in the subsidiary company i.e. Shriram Housing Finance Limited as at March 31, 2012 `5529.55 (March 31, 2011 ` Nil )

8. Utilization of money raised through public issue of debentures, preferential issue of equity shares and warrants

(i) through public issue of debentures [Refer note 5.1 (A)(iii)]

During the year ended March 31, 2012, the company raised `75,000 lacs through public issue of secured redeemable non convertible debentures of face value of `1000/- each (March 31 2011: Nil). The proceeds of issue were utilized for the following purposes:

Particulars `̀̀̀ in lacs

Disbursement of loans by the company 11,409.00 Repayment of loans from banks (Funding of Cash credit account) 39,030.00 Repayment of loans (Term loans, Securitisation loans) 24,561.00

Total 75,000.00

(ii) through preferential issue of equity shares and warrants [Refer note- 3.4(ii & 3.6)]

Particulars `̀̀̀ in lacs

FD placed with bank 21,500.00 Disbursement of loan 47.00

Total 21,547.00

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9. Securitisation / Assignment

The Company sells loans through securitisation and direct assignment. (i) The information on direct assignment activity of the Company as an originator for the year March 31, 2012 and March 31, 2011 is given below: ` ` ` ` in lacs

Particulars For the year ended March 31,

2012 2011

Total number of assets 262,044 178502 Total book value of assets (` in lacs) 2,00,398.99 1,17,915.72 Sale consideration received (` in lacs) 2,00,398.99 1,26,737.01 Net gain (` in lacs) 37,682.48 27,163.76 Outstanding credit enhancement- Deposit with banks/corporate (` in lacs) 31,766.37 15,436.40

Outstanding Credit enhancement – Retained interest on securitisation (` in lacs) 1,374.98 1,900.63

* Gain on direct assignment deals is amortised over the period of the loan. (ii) The information on securitisation activity of the Company as an originator for the year March 31, 2012 and March 31, 2011 is given below: ` ` ` ` in lacs

Particulars For the year ended March 31,

2012 2011

Total number of assets 45,271 - Total book value of assets (` in lacs) 66,543.26 - Sale consideration received (`. in lacs) 66,543.26 - Net gain (` in lacs) 17,826.38 - Outstanding credit enhancement- Deposit with banks/corporate (`. in lacs) 5,417.91 -

Outstanding Credit enhancement – Retained interest on securitisation (`. in lacs) - -

* Gain on securitisation is amortised over the period of the loan. 10. Derivative Instruments:

The Notional principal amount of derivative transactions outstanding for interest rate swaps is `12500 lacs. 11. Expenditure in foreign currency (cash basis)

` ` ` ` in lacs

For the year ended March 31,

2012 2011

Subscription Fees - 0.09

12. The company had no discontinuing operations during the year ended March 31, 2012 and during the year ended March 31, 2011. 13. In addition to auditors remuneration shown in other expenses, the company has also incurred auditors remuneration amounting to ` 10 Lacs in connection with other services provided by auditors for public issue of non-convertible debentures and the same has been amortised as per note 2.1(v) stated under "other assets" as public issue expenditure to the extent not written off. 14. Based on the intimation received by the company, none of the suppliers have confirmed to be registered under "the Micro, Small and Medium Enterprises Development ('MSMED') Act, 2006". Therefore, the related information for this purpose stands to be Nil. 15. The ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular and hence the company is entitled to the exemption. Necessary information relating to the subsidiary has been included in the Consolidated Financial Statements.

F-138

Shriram City Union Finance Limited Annexure XIII

Notes forming part of the reformatted consolidated summary statement

16. The housing finance business operations started on and from 1st October 2011. Accordingly an amount of ` 158.48 lacs have been charged to statement of profit and loss account as Pre operative expenses. 17.Transfer to Reserve fund: Since there is no profit during the year ended March 31, 2012 from housing finance operations, no amount has been transferred to Special reserve fund as required under section 29C of the NHB act1987. 18. Previous Year Comparatives Till the year ended March 31, 2011, the company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended March 31, 2012 the revised Schedule Vi notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year' classification. It significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.

147

DISCLOSURES ON EXISTING FINANCIAL INDEBTEDNESS

A. Details of Secured Borrowings:

Our company’s secured borrowings as on June 30, 2012 amount to ` 9,64,644.76 lacs. The details of the individual borrowings are set out below:

1. Term Loans from Banks:

(`̀̀̀ in lacs)

Sr.

No.

Particulars Date of disbursement Amount outstanding

as on June 30, 2012

Maturity date

1. Allahabad Bank. December 30, 2011 15,000.00 December 30, 2014

2. Andhra Bank February 20, 2012 17,500.00 February 20, 2016

3. Bank of India October 31, 2011 20,000.00 October 31, 2014

4. Bank of Maharashtra March 31, 2011 5,000.00 September 30, 2014

5. Bank of Maharashtra September 29, 2011 10,000.00 March 29, 2015

6. Calyon Bank December 30, 2010 3,500.00 December 30, 2012

7. Canara Bank January 29, 2010 20,000.00 December 29, 2012

8. Canara Bank September 17, 2010 20,000.00 August 24, 2013

9. Canara Bank September 24, 2010 10,000.00 August 24, 2013

10. Canara Bank February 29, 2012 20,000.00 January 29, 2015

11. Corporation Bank December 31, 2010 9,987.08 December 31, 2013

12. ICICI Bank March 25, 2011 12,500.00 April 25, 2013

13. Indian Bank September 24, 2011 30,000.00 September 24, 2014

14. Ing Vysya Bank March 26, 2010 1,433.33 February 26, 2013

15. Oriental Bank of Commerce March 31, 2011 10,000.00 March 31, 2014

16. Oriental Bank of Commerce January 20, 2012 30,000.00 January 20, 2014

17. State Bank Mauritius Limited February 07, 2011 562.50 February 07, 2013

18. State Bank of Mysore November 27, 2010 9,994.79 November 27, 2013

19. State Bank of Patiala January 31, 2010 10,000.00 January 31, 2014

20. State Bank of Patiala March 22, 2011 10,000.00 March 22, 2014

21. State Bank of Travancore December 16, 2010 9,999.94 December 16, 2012

22. Syndicate Bank January 22, 2011 15,000.00 January 22, 2013

23. Syndicate Bank February 25, 2012 30,000.00 June 25, 2015

24. Union Bank of India November 22, 2010 15,000.00 November 22, 2012

25. Union Bank of India January 25, 2011 15,000.00 January 25, 2013

26. United Bank of India September 29, 2011 10,000.00 September 29, 2015

27. Vijaya Bank March 30, 2011 7,875.00 March 31, 2014

28. Yes Bank February 28, 2011 8,000.00 February 28, 2014

29. DBS May 11, 2012 10,500.00 May 01, 2013

30. HDFC June 20, 2012 2,000.00 September 09, 2012

Total 3,88,852.65

2. Term Loans from Others:

(`̀̀̀ in lacs)

Sr.

No.

Particulars Date of disbursement Amount outstanding

as on June 30, 2012

Maturity date

1. SIDBI August 10, 2010 6,500.00 August 10, 2013 2. SIDBI December 31, 2011 10,000.00 June 30, 2017 Total 16,500.00

148

3. Working Capital Demand Loans:

(`̀̀̀ in lacs)

Sr.

No.

Particulars Date of disbursement Amount outstanding as on

June 30, 2012

1. Canara Bank February 13, 2012 25,000.00

2. CITI bank June 01, 2012 10,000.00

3. Federal Bank May 11, 2012 4,500.00

4. HDFC (CENTURION BANK) May 30, 2012 2,400.00

5. HSBC - II December 23, 2009 2,500.00

6. South Indian Bank June 25, 2012 2.99

7. State Bank of Bikaner & Jaipur - II December 22, 2012

2,400.00

8. State Bank of India-II June 24, 2011 25,000.00

9. State Bank of Mysore - III April 30,2012 4,900.00

Total 76,702.99

4. Cash Credit:

(`̀̀̀ in lacs)

Sr.

No.

Particulars Date of disbursement Amount outstanding as on

June 30, 2012

1. Andhra Bank December 31, 2011 7,425.53

2. Axis Bank December 31, 2009 4,800.56

3. Bank of India June 30, 2010 19,969.58

4. Bank of Maharashtra March 31, 2011 4,815.69

5. Canara Bank November 23, 2011 4,748.69

6. Central Bank of India March 25, 2009 9,981.02

7. Corporation Bank December 30, 2010 4,886.93

8. DBS Bank July 22, 2010 1,360.30

9. DENA Bank March 17, 2009 7.55

10. Federal Bank March 10, 2011 4,36.90

11. ICICI June 21, 2012 4,955.77

12. IDBI Bank March 24, 2011 15,389.95

13. Indian Bank November 06, 2007 20.20

14. Indian Overseas Bank January 21, 2009 9,944.68

15. Indusind Bank June 16, 2010 7,430.26

16. Ing Vysya Bank March 24, 2010 7.69

17. Ing Vysya Bank March 24, 2010 13.71

18. Jammu & Kashmir Bank Limited March 31, 2011 9,977.79

19. Kotak Mahindra Bank January 19, 2012 2,492.22

20. Oriental Bank of Commerce September 28, 2007 4,951.09

21. HDFC Bank October 19, 2011 415.12

22. Punjab National Bank March 05, 2010 8.10

23. State Bank Of Mysore November 26, 2010 71.07

24. State Bank Of Mauritius June 20, 2012 6.29

25. State Bank of India June 27, 2011 4.86

26. State Bank of Patiala February 25, 2009 4.23

27. State of Bikanur and Jaipur September 21, 2010 44.21

28. Union Bank of India March 07, 2008 4,960.86

29. United Bank of India March 20, 2009 7,383.36

Total 1,26,514.21

149

5. Our Company has issued secured redeemable non convertible debentures of face value of `̀̀̀ 1,00,000/-

each on a private placement basis of which `̀̀̀ 10,000.00 lacs is outstanding as on June 30, 2012, the

details of which are set out below:

(`̀̀̀ in lacs)

Sr.

No.

Particulars Date of allotment Amount outstanding as

on June 30, 2012

Maturity Date

1. Corporation Bank September 24, 2009 2,500.00 September 30, 2014

2. Central Bank of India September 17, 2009 1,000.00 September 30, 2014

3. Central Bank of Pention Fund September 17, 2009 1,000.00 September 30, 2014

4. Central Bank of Provident Fund September 17, 2009 500.00 September 30, 2014

5. Allahabad Bank. September 23, 2009 2,000.00 September 30, 2014

6. Bank of Baroda October 06, 2009 1,000.00 October 07, 2014

7. A.K. Capital Services Limited October 06, 2009 2,000.00 October 07, 2014

Total 10,000.00

6. Our Company has issued secured redeemable non convertible debentures of face value of `̀̀̀ 10,00,000/-

each on a private placement basis of which `̀̀̀ 61,543.33 lacs is outstanding as on June 30, 2012, the

details of which are set out below:

(`̀̀̀ in lacs)

Sr.

No.

Particulars Date of allotment Amount outstanding as

on June 30, 2012

Maturity Date

1. Standard Chartered Bank April 22, 2010 5,833.33 April 22, 2013

2. Reliance Mutual Fund July 05, 2010 7,500.00 January 05, 2013

3. Ing Vysya Bank November 23, 2010 2,000.00 November 23, 2017

4. Ing Vysya Bank December 13, 2010 1,000.00 December 13, 2017

5. Ing Vysya Bank December 13, 2010 1,500.00 December 13, 2017

6. Jharkhan Gramin Bank February 04, 2011 500.00 February 04, 2021

7. Deutsche Bank March 30, 2011 27,500.00 March 30, 2017

8. Pramerica Mutual Fund November 23, 2011 2,500.00 May 23, 2013

9. Kotak Mahindra Mutual Fund October 25, 2011 1,100.00 April 18, 2013

10. Kotak Mahindra Mutual Fund October 25, 2011 1,800.00 October 25, 2013

11. Kotak Mahindra Mutual Fund November 11, 2011 1,730.00 April 03, 2013

12. HDFC Mutual Fund December 05, 2011 1,500.00 December 01, 2014

13. Kotak Mahindra Mutual Fund January 25, 2012 1,000.00 January 20, 2014

14. Deutsche Mutual Fund February 10, 2012 1,000.00 February 03, 2015

15. HDFC Mutual Fund February 13, 2012 2,900.00 June 02, 2014

16. Kotak Mahindra Mutual Fund February 17, 2012 500.00 August 09, 2013

17. Sundaram Mutual Fund February 24, 2012 680.00 February 17, 2014

18. Trust Capital services (India) Private Limited

May 23, 2012 1,000.00 May 23, 2015

Total 61,543.33

7. Our Company has issued secured redeemable non convertible debentures of face value of `̀̀̀ 1,000/-

each through public issue (2011) of which `̀̀̀ 75,000.00 lacs is outstanding as on June 30, 2012, the

details of which are set out below:

(`̀̀̀ in lacs)

Sr.

No.

Particulars Category No. of Debenture

Holders

Amount

outstanding as on June 30, 2012

Maturity Date

1. Option –I Institutional 32 5,429.05 August 25, 2016

Reserved Individual 15,333 43,653.65 August 25, 2016

150

Unreserved Individual 215 12,125.30 August 25, 2016

2. Option –II Institutional 14 9,570.95 August 25, 2014

Reserved Individual 3,606 1,346.35 August 25, 2014

Unreserved Individual 101 2,874.70 August 25, 2014

Total 19,301 75,000.00

8. Our Company has issued secured redeemable non convertible debentures (Retail) of face value of

`̀̀̀ 1,000/- each on a private placement basis of which `̀̀̀ 2,09,531.58 lacs is outstanding as on June 30,

2012, the details of which are set out below:

(`̀̀̀ in lacs)

Particulars Number of Debenture Holders

Amount outstanding as on June 30, 2012

Maturity Date

Secured Redeemable Non Convertible Debentures to Retail debenture holders

2,83,685 2,09,531.58 July 2012 – October 2017

Total 2,83,685 2,09,531.58

B. Details of Unsecured Borrowings:

Our Company’s unsecured borrowings as on June 30, 2012 amount to ` 1,25,329.96 lacs. The details of the individual borrowings are set out below:

1. Fixed Deposits:

(`̀̀̀ in lacs)

Particulars Amount outstanding as on June 30, 2012 Maturity Date Fixed Deposits 17.76 July 2012 – June 2016

Total 17.76

2. Subordinated Debts (Institutional):

(`̀̀̀ in lacs)

Sr.

No.

Particulars Date of allotment Amount outstanding

as on June 30, 2012

Maturity Date

1. A.K.Capital Finance Limited January 16, 2012 1,000.00 January 16, 2019

2. A.K.Capital Finance Limited January 16, 2012 1,000.00 January 16, 2019

3. Canara Bank February 27, 2012 1,500.00 August 27, 2017

4. Central Bank of India February 27, 2012 1,000.00 February 27, 2019

5. Bank of Baroda February 27, 2012 2,000.00 February 27, 2019

6. Lakshmi Villas Bank February 27, 2012 500.00 February 27, 2019

7. Salim Pattiwala March 26, 2012 10.00 March 26, 2019

8. Madav Prasad Jalan March 26, 2012 10.00 March 26, 2019

9. The South Indian Bank Limited March 26, 2012 1,000.00 March 26, 2019

10. Axis Bank March 26, 2012 1,500.00 March 26, 2019

11. Indian Overseas Bank March 26, 2012 2,500.00 March 26, 2019

12. Vidut Supplier PRI-SUB DEBT March 26, 2012 15.00 September 26, 2017

13. Corporation Bank March 26, 2012 1,000.00 September 26, 2017

14. Axis Bank Limited March 15, 2012 10,000.00 March 15, 2019

Total 23,035.00

3. Subordinated Debts (Retail):

151

Our Company has issued Subordinated debts of face value of `̀̀̀ 1,000/- each on a private placement

basis of which `̀̀̀ 62,277.20 lacs is outstanding as on June 30, 2012, the details of which are set out

below:

(`̀̀̀ in lacs)

Sr.

No.

Particulars Number of subordinated

debt holders

Amount outstanding

as on June 30, 2012

Maturity Date

1. Subordinated debt 1,37,602 62,277.20 July 2012 – December 2018

Total 1,37,602 62,277.20

4. Inter corporate deposits:

(`̀̀̀ in lacs)

Particulars Date of the financing document Amount outstanding as on June 30, 2012

Shriram Credit Company Limited

November 1, 2011 2,000.00

S. Natarajan May 19,2012 500.00

Total 2,500.00

5. Commercial Paper:

(`̀̀̀ in lacs)

Sr.

No.

Particulars Date of disbursement Maturity date Amount outstanding

as on June 30, 2012

1. Reliance Capital Trustee Company Limited

April 20, 2012 July 20, 2012 10,000.00

2. HDFC Trustee Company Limited

April 26, 2012 April 25, 2013 5,000.00

3. Kotak Mahindra Trustee Company Limited FMPSeries71

April 26, 2012 April 25, 2013 500.00

4. Kotak Mahindra Trustee Company Limited FMPSeries73

April 26, 2012 April 25, 2013 400.00

5. Kotak Mahindra Trustee Company Limited FMP Series 50

April 26, 2012 April 25, 2013 900.00

6. Kotak Mahindra Trustee Company Limited (Kotak Credit Opportunities Fund)

April 26, 2012 April 25, 2013 700.00

7. HDFC Trustee Company Limited (Income Fund Short Term Plan)

June 06, 2012 September 05, 2012 3,000.00

8. HDFC Trustee Company Limited (Management Fund Savings Plan)

June 06, 2012 September 05, 2012 3,500.00

9. HDFC Trustee Company Limited (HDFC Liquid Fund )

June 15, 2012 September 13, 2012 5,000.00

10. HDFC Trustee Company Limited A/C(HDFC Cash Management Plan)

June 15, 2012 September 13, 2012 2,500.00

11. HDFC Trustee Company Limited (HDFC Liquid Fund

June 22, 2012 September 20, 2012 2,000.00

152

Sr.

No.

Particulars Date of disbursement Maturity date Amount outstanding

as on June 30, 2012

Plan)

12. HDFC Trustee Company Limited (HDFC Cash Management Plan)

June 22, 2012 September 20, 2012 1,500.00

13. SBI Mutual Fund-SBI Premier Liquid Fund

June 27, 2012 September 26, 2012 2,500.00

Total 37,500.00

Asset Liability Mismatch

As detailed above, a portion of our funding requirements is met through short-term funding sources, i.e. bank loans, working capital demand loans, cash credit, short term loans and commercial papers and would be due for repayment/rollover in the short term. Further, a large portion of our assets have medium term maturities which creates/may create funding mismatches. Based on the structural liquidity position of our Company as on March31, 2012 as per the RBI norms, our Company has an asset liability mismatch of ` Nil over the next 6 months till September 30, 2012. The coupon rate (XIRR in case of zero coupon debentures) on the privately placed long term secured redeemable non-convertible debentures varies from 10.50% to 11.00% per annum. The interest rates on other secured debt are either fixed rates or floating rates which are usually linked to the prime lending rates of the individual lending banks

Restrictive Covenants under our Financing Arrangements:

Some of the corporate actions for which our Company requires the prior written consent of lenders include the following:

1. to declare and/ or pay dividend to any of its shareholders whether equity or preference, during any financial

year unless our Company has paid to the lender the dues payable by our Company in that year; 2. to undertake or permit any merger, amalgamation or compromise with its shareholders, creditors or effect

any scheme of amalgamation or reconstruction; 3. to create or permit any charges or lien on any mortgaged properties; 4. to amend its MOA and AOA or alter its capital structure; and 5. to make any major investments by way of deposits, loans, share capital, etc. in any manner. Servicing behaviour on existing debt securities, payment of due interest on due dates on term loans and debt

securities.

As on the date of this Draft Prospectus, there has been no default in payment of principal or interest on any existing term loan and debt security issued by the Issuer in the past.

153

MATERIAL DEVELOPMENTS

Save as disclosed hereinafter, there have been no developments since March 31, 2012 which effect the operations,

or financial condition of our Company:

• Our Company has received an ‘in-principle’ approval from the MSE vide its letter dated April 3, 2012, for the issue and allotment of 23,00,000 Equity Shares of ` 10 per Equity Share at a price of ` 570 per Equity Share and 59,00,000 warrants at an exercise price of ` 570 per warrant, to SCL on a preferential basis.

• Our Company has received an ‘in-principle’ approval from the NSE, BSE and the MSE vide their letters dated April 25, 2012, May 2, 2012 and May 11, 2012, respectively, for the listing of 23,00,000 Equity Shares of ` 10 per Equity Share, issued and allotted at a price of ` 570 per Equity Share to SCL on a preferential basis.

• Our Company has received the trading approval from the NSE, BSE and the MSE vide their letters dated May 17, 2012, May 22, 2012 and May 22, 2012, respectively, for 23,00,000 Equity Shares of ` 10 per Equity Share, issued and allotted at a price of ` 570 per Equity Share to SCL on a preferential basis.

• On May 4, 2012, our Company issued and allotted 32,000 Equity Shares at a price of ` 35 per Equity Share to 19 employees pursuant to the exercise of stock options pursuant to the ESOP 2006.

• On May 31, 2012, our Company issued and allotted 8,950 Equity Shares at a price of ` 35 per Equity Share to 9 employees pursuant to the exercise of stock options pursuant to the ESOP 2006.

• On June 30, 2012, our Company issued and allotted 20,457 Equity Shares at a price of ` 35 per Equity Share to 12 employees pursuant to the exercise of stock options pursuant to the ESOP 2006.

• On July 31, 2012, our Company issued and allotted 57,085 Equity Shares at a price of ` 35 per Equity Share to 24 employees pursuant to the exercise of stock options pursuant to the ESOP 2006.

• Mr. Ramamurthy Kannan, resigned as the managing director and director of our Company with effect from the closing hours of June 5, 2012, pursuant to his letter dated May 31, 2012, which was approved by a resolution of the Board of Directors of our Company passed by circulation on May 31, 2012.

• Mr. S. Venkatakrishnan, resigned as the director of our Company with effect from the closing hours of August 21, 2012, pursuant to his letter dated August 21, 2012, which was approved by a resolution of the Board of Directors of our Company passed by circulation on August 23, 2012.

• Pursuant to a resolution passed by the shareholders of our Company at their AGM held on July 27, 2012, a final dividend of ` 4 per Equity Share (40%) for the financial year ended March 31, 2012, has been declared.

• Pursuant to a resolution passed by the shareholders of our Company at their AGM held on July 27, 2012, and in accordance with provisions of Section 293 (1)(d) of the Act, the borrowing limits of the Board of Directors was increased from ` 15,00,000 lacs to ` 20,00,000 lacs.

• Pursuant to a resolution passed by the shareholders of our Company at their AGM held on July 27, 2012, and in accordance with provisions of Section 293 (1)(a) of the Act, the Board of Directors were authorised to mortgage and/or charge the current and future movable and immovable properties of the Company to secure borrowings and/or other financing arrangements availed by our Company upto a sum not exceeding ` 25,00,000 lacs.

• The appointment of Mr. R. Duruvasan as the managing director of our Company for a period of five (5) years with effect from June 6, 2012, pursuant to a resolution of the Board of Directors of our Company

154

passed by circulation on June 1, 2012 and the approval of the shareholders of our Company pursuant to a resolution passed at their AGM held on July 27, 2012. The remuneration payable to our managing director by way of salary and other perquisites, (as authorised by the shareholders of our Company pursuant to resolution(s) passed at their AGM held on July 27, 2012).

• Pursuant to a special resolution passed by the shareholders of our Company at their AGM held on July 27, 2012 and the provisions of Section 81 (1A) and other applicable provisions, if any, of the Companies Act, 1956, and the subject to the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, the Board of Directors of our Company is empowered to grant, issue, offer and allot options under ESOP 2008 to the present and future employees of the subsidiary company(ies) of our Company.

• Interim Financial Information for the Quarter ended June 30, 2012

Pursuant to a meeting of its Board of Directors on July 27, 2012, our Company has adopted and filed with the Stock Exchanges on July 27, 2012 the unaudited financial information as of and for the three months ended June 30, 2012, (“Unaudited June Interim Financial Information”), as presented below, in accordance with the provisions of Clause 41 of the Listing Agreement with the Stock Exchanges. Please note that the Unaudited June Interim Financial Information have been subjected to a limited review by the Statutory Auditors of the Company, M/s Pijush Gupta & Co. The presentation of the Unaudited June Interim Financial Information may not be comparable to the presentation of the Reformatted Financial Information Reformatted Unconsolidated Summary Financial Statements and the Reformatted Consolidated Summary Financial Statements included in this Draft Prospectus.

155

PIJUSH GUPTA & CO CHARTERED ACCOUNTANTS

P-199, C.I.T ROAD, SCHEME IV-M, KOLKATA - 700010 To, The Board of Directors Shriram City Union Finance Limited, 123,Angappa Naicken Street, Chennai-600001

Limited Review Report for the quarter ended June 30, 2012 We have reviewed the accompanying statement of unaudited financial results of Shriram City Union Finance Limited for the quarter ended June 30, 2012 (the statement), 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 reviewed by us. The statement is the responsibility of the Company’s Management and has been approved by the Board of Directors. Our responsibility is to issue a report on these financial statements based on our review. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, “Review of Interim

Financial Information performed by the independent auditors of the entity” 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 statement is 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 recognition and measurement principles laid down in accounting standard 25 (Interim Financial Reporting notified pursuant to the Companies (Accounting Standard) Rules 2006 (as amended) and other recognised accounting practices and policies ,is not prepared in all material respect in accordance with the applicable financial reporting frame work and 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 Pijush Gupta & Co., Firm Regn No: 309015E

Chartered Accountants

Place: Chennai Pijush Kumar Gupta Date: July 27, 2012 Partner

Membership No. 015139

156

Shriram City Union Finance Limited

Regd Office: No:123, Angappa Naickan Street, Chennai - 600 001

Website: www.shriramcity.in Email: sect@shriramcity.in

Statement of unaudited Financial Results for the Quarter Ended June 30, 2012

`̀̀̀ in lacs

Sl.

No. Particulars

Quarter ended Year ended

June 30, March 31, June 30, March 31,

2012 2012 2011 2012

(Unaudited) (Unaudited) (Unaudited) (Audited)

1 Income from Operations

(a) Net Sales/Income from Operations 67,258 60,752 41,547 2,03,748

(b) Other Operating Income - - - -

Total income from operations 67,258 60,752 41,547 2,03,748

2 Expenses

(a) Employee Benefit Expenses 3,484 3,094 1,632 9,237

(b) Depreciation and amortization Expenses 421 469 263 1,371

(c) Provision and written offs 8,812 6,093 3,654 17,835

(d) Other Expenses 9,186 8,797 5,856 31,924

Total expenses 21,903 18,453 11,405 60,367

3 Profit from Operations before Other Income, Interest

& Exceptional items (1-2) 45,355 42,299 30,142 1,43,381

4 Other Income 118 193 1,314 1,893

5 Profit before Finance Cost & Exceptional items (3+4) 45,473 42,492 31,456 1,45,274

6 Finance Cost 30,164 26,474 19,675 92,858

7 Profit after Finance Cost but before Exceptional items (5-6)

15,309 16,018 11,781 52,416

8 Exceptional items - - - -

9 Profit before tax (7-8) 15,309 16,018 11,781 52,416

10 Tax Expenses (including Deferred Tax) 4,967 6,257 3,743 18,163

11 Net Profit after tax ( 9-10) 10,342 9,761 8,038 34,253

12 Paid up Equity Share Capital (Face Value of ` 10/- per share)

5,243 5,237 4,973 5,237

13 Reserves (excluding Revaluation reserves) - - - 1,59,822

14 Earnings Per Share (EPS) in ` (Not Annualised) - - -

(a) Basic (`) 19.74 19.49 16.33 68.75

(b) Diluted (`) 19.09 19.31 16.31 68.22

Select Information for the quarter ended June 30 ,2012

A Particulars of Shareholding

1 Public Shareholding

(a) Number of shares 2,36,50,953 2,35,89,546 2,32,55,716 2,35,89,546

(b) Percentage of shareholding (% to total share capital of the company)

45.11% 45.05% 46.76% 45.05%

2 Promoters and promoter group Shareholding

(a) Pledged/Encumbered Nil Nil Nil Nil

i. Number of shares Nil Nil Nil Nil

157

`̀̀̀ in lacs

Sl.

No. Particulars

Quarter ended Year ended

June 30, March 31, June 30, March 31,

2012 2012 2011 2012

(Unaudited) (Unaudited) (Unaudited) (Audited)

ii. Percentage of shares(% of total share holding of promoters & promoter group)

Nil Nil Nil Nil

iii. Percentage of shares(% of total share capital of company)

Nil Nil Nil Nil

(b) Non-encumbered

i. Number of shares 2,87,77,663 2,87,77,663 2,64,77,663 2,87,77,663

ii. Percentage of shares(% of total share holding of promoters & promoter group)

100.00% 100.00% 100.00% 100.00%

iii. Percentage of Shares(% of total share capital of company)

54.89% 54.95% 53.24% 54.95%

B Information on investor complaints for the quarter ended June 30, 2012

Particulars

Pending as at the beginning of

the quarter

Received during the

quarter

Disposed during the

quarter

Remaining unresolved as at the end of the quarter

Number of Complaints - 1 1 -

Notes: 1 There has been no change in accounting policies and practices followed during the quarter ended June 30, 2012, as compared

to those in the preceeding financial year ended March 31, 2012. 2 The above results are reviewed by the Audit committee and approved by the Board of Directors at their respective meeting

held on July 26, 2012 and July 27, 2012. 3 The above results are reviewed by the statutory auditors of the Company.

4 The Company operates in single reportable segment as per Accounting Standard 17.

5 During the quarter ended June 30, 2012, the company allotted 61407 equity shares of `10/- each to its employees under the Employees Stock Option Scheme 2006.

6 The figures for the previous periods / years have been regrouped / rearranged where ever necessary to conform to the current period / year presentation.

7 During the year ended March 31, 2012 the company issued and allotted on preferential basis 23,00,000 equity shares of face value of `10/- each at a price of ` 570 each(including a premium of `560/- per equity share) and 59,00,000 warrants of `570/- each at a subscription price of `143/- each to Shriram Capital Limited. The proceeds of the issue have been fully utilised for the purpose for which the issue was made.

8 The results of the Company are available at www.bseindia.com, www.nseindia.com and www.shriramcity.in.

As per our Limited Review report of even date

By order of the Board

For Pijush gupta & Co, For Shriram City Union Finance Limited

Firm Registration No: 309015E

Chartered Accountants

R Duruvasan

Managing Director Pijush Kumar Gupta Partner Membership No: 015139

Place : Chennai

Date: July 27, 2012

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SECTION VI : ISSUE RELATED INFORMATION

TERMS OF THE ISSUE

Principal Terms & Conditions of this Issue The NCDs being offered as part of the Issue are subject to the provisions of the Debt Regulations, the Debt Listing Agreement, the Act, the Memorandum and Articles of Association of our Company, the terms of this Draft Prospectus, the Prospectus, the Application Forms, the terms and conditions of the Debenture Trust Agreement and the Debenture Trust Deed, other applicable statutory and/or regulatory requirements including those issued from time to time by SEBI/the Government of India/the Stock Exchange(s), RBI, and/or other statutory/regulatory authorities relating to the offer, issue and listing of debt securities and any other documents that may be executed in connection with the NCDs. Ranking of NCDs The NCDs would constitute direct and secured obligations of ours and shall rank pari passu inter se, and subject to any obligations under applicable statutory and/or regulatory requirements, shall also, with regard to the amount invested, be secured by way of first and exclusive charge on the identified immovable property and the specified future loan receivables of our Company. The claims of the NCD Holders shall be superior to the claims of any unsecured creditors, subject to applicable statutory and/or regulatory requirements. Debenture Redemption Reserve

Section 117C of the Act states that any company that intends to issue debentures must create a DRR to which adequate amounts shall be credited out of the profits of the company until the redemption of the debentures. The Ministry of Corporate Affairs has, through its circular dated April 18, 2002, (“Circular”), specified that the quantum of DRR to be created before the redemption liability actually arises in normal circumstances should be ‘adequate’ to pay the value of the debentures plus accrued interest, (if not already paid), till the debentures are redeemed and cancelled. The Circular however further specifies that, for NBFCs like our Company, (NBFCs which are registered with the RBI under Section 45-IA of the RBI Act), the adequacy of the DRR will be 50% of the value of debentures issued through the public issue. Accordingly our Company is required to create a DRR of 50% of the value of debentures issued through the public issue. As further clarified by the Circular, the amount to be credited as DRR will be carved out of the profits of the company only if there is profit for the particular year and there is no obligation on the part of the company to create DRR if there is no profit for the particular year. Our Company shall credit adequate amounts to DRR, from its profits every year until such NCDs are redeemed. The amounts credited to DRR shall not be utilized by our Company except for the redemption of the NCDs, or as may be otherwise permitted under applicable statutory and/or regulatory requirements.

Face Value The face value of each NCD shall be ` 1,000. NCD Holder not a Shareholder The NCD Holders will not be entitled to any of the rights and privileges available to the equity and/or preference shareholders of our Company. Rights of NCD Holders

Some of the significant rights available to the NCD Holders are as follows: 1. The NCDs shall not, except as provided in the Act, our Memorandum and Articles of Association and/or

the Debenture Trust Deed, confer upon the holders thereof any rights or privileges available to our Company’s members/shareholders including, without limitation, the right to attend and/or vote at any general meeting of our Company’s members/shareholders. However, if any resolution affecting the rights attached to the NCDs is to be placed before the members/shareholders of our Company, the said

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resolution will first be placed before the concerned registered NCD Holders for their consideration. In terms of Section 219(2) of the Act, holders of NCDs shall be entitled to a copy of the balance sheet and copy of trust deed on a specific request made to our Company.

2. Subject to applicable statutory/regulatory requirements and terms of the Debenture Trust Deed, including

requirements of the RBI, the rights, privileges and conditions attached to the NCDs may be varied, modified and/or abrogated with the consent in writing of the holders of at least three-fourths of the outstanding amount of the NCDs or with the sanction of a special resolution passed at a meeting of the concerned NCD Holders, provided that nothing in such consent or resolution shall be operative against us, where such consent or resolution modifies or varies the terms and conditions governing the NCDs, if the same are not acceptable to us.

3. Subject to applicable statutory/regulatory requirements and terms of the Debenture Trust Deed, the registered

NCD Holder or in case of joint-holders, the one whose name stands first in the register of debenture holders shall be entitled to vote in respect of such NCDs, either in person or by proxy, at any meeting of the concerned NCD Holders and every such holder shall be entitled to one vote on a show of hands and on a poll, his/her voting rights on every resolution placed before such meeting of the NCD Holders shall be in proportion to the outstanding nominal value of NCDs held by him/her.

4. The NCDs are subject to the provisions of the Debt Regulations, the Act, the Memorandum and Articles of

Association of our Company, the terms of this Draft Prospectus, the Prospectus, the Application Forms, the terms and conditions of the Debenture Trust Deed, requirements of the RBI, other applicable statutory and/or regulatory requirements relating to the issue and listing, of securities and any other documents that may be executed in connection with the NCDs.

5. A register of NCD Holders will be maintained in accordance with Section 152 of the Act and all interest

and principal sums becoming due and payable in respect of the NCDs will be paid to the registered holder thereof for the time being or in the case of joint-holders, to the person whose name stands first in the Register of NCD Holders as on the record date.

6. Subject to compliance with RBI requirements, NCDs can be rolled over only with the consent of the

holders of at least 75% of the outstanding amount of the NCDs after providing at least 21 days prior notice for such roll over and in accordance with the Debt Regulations. Our Company shall redeem the debt securities of all the debt securities holders, who have not given their positive consent to the roll-over.

The aforementioned rights of the NCD Holders are merely indicative. The final rights of the NCD Holders will be as per the terms of the Prospectus and the Debenture Trust Deed to be executed between our Company and the Debenture Trustee.

Minimum Subscription If our Company does not receive the minimum subscription of 75 % of the Base Issue, i.e. ` 18,750 lacs, on the date of closure of the Issue, the entire subscription shall be refunded to the applicants within the time prescribed under applicable statutory/regulatory requirements. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to refund the subscription amount, our Company will pay interest for the delayed period at rates prescribed under applicable statutory and/or regulatory requirements.

Market Lot & Trading Lot As per the Debt Regulations, the trading of the NCDs on the floor of the Stock Exchanges shall be in dematerialized form only. Since trading of the NCDs is in dematerialized form on the floor of the Stock Exchanges, the tradable lot is one NCD. Please note that the NCDs shall cease to trade from the Record Date (for payment of the principal amount and the applicable premium for such NCDs) prior to redemption of the NCDs. Allotment in the Issue to all Allottees, will be in electronic form in multiples of one NCD. For details of

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allotment refer to chapter titled “Issue Procedure” under section titled “Issue Related Information” beginning on page 177 of this Draft Prospectus. Nomination facility to NCD Holder In accordance with Section 109A of the Act, the sole NCD Holder or first NCD Holder, along with other joint NCD Holders (being Individual(s)) may nominate any one person (being an Individual) who, in the event of death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the NCD. A person, being a nominee, becoming entitled to the NCD by reason of the death of the NCD Holder(s), shall be entitled to the same rights to which he would be entitled if he were the registered holder of the NCD, subject to other terms and conditions as detailed in this Draft Prospectus and/or the Prospectus. Where the nominee is a minor, the NCD Holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to the NCD(s), in the event of his death, during the minority. A nomination shall stand rescinded upon sale of a NCD by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. When the NCD is held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at our Registered/ Corporate Office or at such other addresses as may be notified by us. NCD Holder(s) are advised to provide the specimen signature of the nominee to us to expedite the transmission of the NCD(s) to the nominee in the event of demise of the NCD Holder(s). The signature can be provided in the Application Form or subsequently at the time of making fresh nominations. This facility of providing the specimen signature of the nominee is purely optional. In accordance with Section 109B of the Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Act, shall upon the production of such evidence as may be required by our Board, elect either: (a) to register himself or herself as the holder of the NCDs; or (b) to make such transfer of the NCDs, as the deceased holder could have made. Further, our Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the NCDs, and if the notice is not complied with, within a period of 90 days, our Board may thereafter withhold payment of all interests or other monies payable in respect of the NCDs, until the requirements of the notice have been complied with. Persons holding NCDs in the physical form should provide required details in connection with their nominee to our Company. For all NCDs held in the dematerialized form, nominations registered with the respective Depository Participant of the applicant would prevail. If the investors require changing their nomination, they are requested to inform their respective Depository Participant in connection with NCDs held in the dematerialized form and inform our Company in connection with NCDs held in the physical form.

Jurisdiction

Exclusive jurisdiction for the purpose of the Issue is with the competent courts of jurisdiction in Chennai, India. Application in the Issue

NCDs being issued through the Prospectus can be applied for in the dematerialised form only through a valid Application Form filled in by the applicant along with attachment, as applicable. Period of Subscription The subscription list for the Issue shall remain open for subscriptions during banking hours for the period indicated

161

above, except that the Issue may close on such earlier date or extended date as may be decided at the discretion of the duly authorised committee of Directors of our Company subject to necessary approvals. In the event of such early closure or extension of the Issue, our Company shall ensure that notice of the same is provided to the prospective investors, on or before such early date of closure or the initial Closing Date, as the case may be, through advertisement/s in a leading national daily newspaper.

Issue Opens on : [●]

Issue Closes on : [●]

Restriction on transfer of NCDs There are no restrictions on transfers and transmission of NCDs and on their consolidation/ splitting except as may be required under applicable statutory and/or regulatory requirements including any requirements of the RBI and/or as provided in our Articles of Association. Please refer to the section titled “Summary of the Key Provisions of the

Articles of Association” beginning on page 234 of this Draft Prospectus.

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ISSUE STRUCTURE

Public Issue of NCDs aggregating upto ` 25,000 lacs with an option to retain over-subscription upto ` 25,000 lacs for issuance of additional NCDs, aggregating to a total of up to ` 50,000 lacs.

I. SUMMARY OF KEY COMMON TERMS AND CONDITIONS IN CONNECTION WITH THE NCDs

The key common terms and conditions of the NCDs are as follows:

Particulars Terms and Conditions

Minimum Application Size ` 10,000/- (10 NCDs) (for all Series of NCDs, namely Series I, Series II, Series III and Series IV either taken individually or collectively)

Mode of allotment Compulsorily in dematerialized form to all categories of investors

Terms of Payment Full amount on application

Trading Lot 1 (one) NCD

Who can Apply Category I – Institutional Investors

• Resident Public financial institutions, statutory corporations, commercial banks, co-operative banks and regional rural banks incorporated in India and authorized to invest in the NCDs;

• Indian Provident funds, pension funds, superannuation funds and gratuity funds, authorized to invest in the NCDs;

• Indian venture capital funds registered with SEBI;

• Indian insurance companies registered with the IRDA;

• National Investment Fund; and

• Indian Mutual Funds registered with SEBI.

Category II – Non Institutional Investors

• Companies, bodies corporate and societies, registered under the applicable laws in India, and authorized to invest in the NCDs;

• Trusts settled under the Indian Trusts Act, 1882, public/private charitable/religious trusts settled and/or registered in India under applicable laws, which are authorized to invest in the NCDs;

• Resident Indian scientific and/or industrial research organizations, authorized to invest in the NCDs;

• Partnership firms formed under applicable laws in India in the name of the partners, authorized to invest in the NCDs; and

• Limited liability partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No. 6 of 2009), authorized to invest in the NCDs.

Category III – Non Reserved Individual Investors

• Resident Indian individuals who apply for NCDs aggregating to a value more than ` 5 Lacs, across all Series of NCDs, (Series I,

163

Particulars Terms and Conditions

Series II, Series III and/or Series IV); and

• Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value more than ` 5 Lacs, across all Series of NCDs, (Series I, Series II, Series III and/or Series IV).

Category IV - Reserved Individual Investors

• Resident Indian individuals who apply for NCDs aggregating to a value not more than ` 5 Lacs, across all Series of NCDs, (Series I, Series II, Series III and/or Series IV); and

• Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value not more than ` 5 Lacs, across all Series of NCDs, (Series I, Series II, Series III and/or Series IV).

Participation by any of the above-mentioned investor classes in this Issue will be subject to applicable

statutory and/or regulatory requirements. Applicants are advised to ensure that applications made by them

do not exceed the investment limits or maximum number of NCDs that can be held by them under applicable

statutory and/or regulatory provisions. In case of Application Form being submitted in joint names, the applicants should ensure that the demat account is also held in the same joint names, and the names are in the same sequence in which they appear in the Application Form. Applicants are advised to ensure that they have obtained the necessary statutory and/or regulatory permissions/consents/approvals in connection with applying for, subscribing to, or seeking allotment of NCDs

pursuant to the Issue. For further details, please see “Issue Procedure” on page 177 of this Draft Prospectus.

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II. SPECIFIC TERMS AND CONDITIONS IN CONNECTION WITH EACH SERIES OF NCDs

Nature of the NCDs

We are offering secured redeemable NCDs which will be issued at a face value of ` 1,000/- per NCD. Interest on the Series I and Series II NCDs shall be payable on an annual basis, and there shall be no interest payable on the Series III and Series IV NCDs, as set out hereinafter. However, the Series III NCDs, shall be redeemable at a premium of ` [●] per Series III NCD held by an Individual and at a premium of ` [●] per Series III NCD held by a Non Individual. Series IV NCDs, shall be redeemable at a premium of ` [●] per Series IV NCD held by an Individual and at a premium of ` [●] per Series IV NCD held by an Non Individual, at the end of their respective tenors. The terms of the NCDs offered pursuant to the Issue are as follows:

Series I II III IV

Frequency of Interest

Payment

Annual Annual Not Applicable Not Applicable

Minimum Application

` 10,000/- (10 NCDs) (for all Series of NCDs, namely Series I, Series II, Series III and Series IV either taken individually or collectively)

In Multiples of

` 1,000 (1 NCD) ` 1,000 (1 NCD) ` 1,000 (1 NCD) ` 1,000 (1 NCD)

Face Value of NCDs (` / NCD)

` 1,000 ` 1,000 ` 1,000 ` 1,000

Issue Price (`

/ NCD)

` 1,000 ` 1,000 ` 1,000 ` 1,000

Mode of Payment of

Interest and/or Redemption of NCDs

Through Various options available

Through Various options available

Through Various options available

Through Various options available

Coupon (% per annum) - (A)

[●] [●] Not Applicable Not Applicable

Additional Incentive on Coupon (% per annum)

on Any Record Date - (B)

NCD Holders who are

Individuals

NCD Holders who are

Non

Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non

Individuals

Not Applicable Not Applicable

[●] [●] [●] [●]

Aggregate of Coupon and Additional Incentive

on any Record Date (% per annum) = (A)

+ (B)

NCD Holders who are

Individuals

NCD Holders who are

Non

Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non

Individuals

Not Applicable Not Applicable

[●] [●] [●] [●]

Effective Yield (% per annum) on

any Record Date

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non Individuals

[●] [●] [●] [●] [●] [●] [●] [●]

Put and call option

None None None None

Tenor Thirty six months Sixty months Thirty six months Sixty months

Redemption Date

Thirty six months from the Deemed Date of Allotment

Sixty months from the Deemed Date of Allotment

Thirty six months from the Deemed Date of Allotment

Sixty months from the Deemed Date of Allotment

165

Series I II III IV

Frequency of Interest Payment

Annual Annual Not Applicable Not Applicable

Redemption Amount (`/NCD)

Repayment of the Face Value plus any interest that may have accrued plus Additional Incentive as may be applicable at the Redemption Date

Repayment of the Face Value plus any interest that may have accrued plus Additional Incentive as may be applicable at the Redemption Date

NCD Holders who are

Individuals

NCD Holders who are

Non

Individuals

NCD Holders who are

Individuals

NCD Holders who are

Non

Individuals

` [●] per NCD

` [●] per NCD

` [●] per NCD

` [●] per NCD

Record Date [●] days prior to the date on which interest is due and payable, or the date of redemption, or as may be prescribed by the relevant stock exchange(s).

[●] days prior to the date on which interest is due and payable, or the date of redemption, or as may be prescribed by the relevant stock exchange(s).

[●] days prior to the date of redemption, or as may be prescribed by the relevant stock exchange(s).

[●] days prior to the date of redemption, or as may be prescribed by the relevant stock exchange(s).

Deemed Date of Allotment

The Deemed Date of Allotment for the NCDs shall be the date of issue of the Allotment Advice / Regret or such date as may be determined by the Board of our Company and/or a duly authorized committee thereof and notified to the Stock Exchanges.

Credit Rating

CARE 'CARE AA’ for an amount of upto ` 50,000 Lacs

CRISIL 'CRISIL AA/Stable ' for an amount of upto ` 50,000 Lacs

Security The principal amount of the NCDs to be issued in terms of this Prospectus together with all interest due on the NCDs, as well as all costs, charges, all fees, remuneration of Debenture Trustee and expenses payable in respect thereof shall be secured by way of first and exclusive charge in favour of the Debenture Trustee on an identified immovable property and specified future receivables of our Company as may be decided mutually by our Company and the Debenture Trustee.

Listing The NCDs offered through this Prospectus are proposed to be listed on the NSE and BSE.

Depositories NSDL & CDSL

Note:

All categories of persons who are individuals or natural persons (including Hindu Undivided Families acting through their Karta) including without limitation Non Reserved Individual Investors and Reserved Individual Investors who are eligible under applicable laws to hold the NCDs are collectively referred to as “Individuals”.

All categories of entities, associations, organizations, societies, trusts, funds, partnership firms, Limited Liability Partnerships, bodies corporate, statutory and/or regulatory bodies and authorities and other forms of legal entities who are NOT individuals or natural persons and are eligible under applicable laws to hold the NCDs including without limitation Institutional Investors and Non Institutional Investors are collectively referred to as “Non Individuals”.

Deemed Date of Allotment: The Deemed Date of Allotment for the NCDs shall be the date of issue of the Allotment Advice / Regret or such date as may be determined by the Board of our Company and/or a duly authorized committee thereof and notified to the Stock Exchanges. All benefits under the NCDs including payment of interest will accrue to the NCD Holders from the Deemed Date of Allotment. Actual Allotment may occur on a date other than the Deemed Date of Allotment.

Record Date: The record date (a) in connection with Series I and Series II NCDs shall be [●] days prior to the date on which interest is due and payable, or the date of redemption, or as may be prescribed by the relevant stock exchanges, and (b) in connection with Series III and Series IV NCDs shall be [●] days prior to the date of redemption of the Series III and Series IV NCDs, or as may be prescribed by the relevant stock exchanges.

Interest/Premium

1. Applicable Interest/Premium: (a) For Series I NCDs: Interest would be paid annually at the following rates of interest in connection

with the relevant categories of NCD Holders as on the Record Date, on the amount outstanding from time to time, commencing from the Deemed Date of Allotment::

166

Category of NCD

Holder as on the

Record Date

Rate of

Interest/Coupon (%

per annum) – (A)

Additional

Incentive on

Any Record

Date (% per

annum) – (B)

Aggregate of

Coupon and

Additional

Incentive

on any Record Date (% per

annum) =(A)+(B)

NCD Holder who is an Individual

[●] [●] [●]

NCD Holder who is a Non Individual*

[●] [●] [●]

* NCD Holders who are Non Individuals SHALL NOT be eligible for the additional incentive of [●]% per annum for Series I NCDs held on any Record Date

(b) For Series II NCDs: Interest would be paid annually at the following rates of interest in connection

with the relevant categories of NCD Holders as on the Record Date, on the amount outstanding from time to time, commencing from the Deemed Date of Allotment:

Category of NCD

Holder as on the Record Date

Rate of

Interest/Coupon (% per annum) – (A)

Additional

Incentive on Any Record

Date (% per

annum) – (B)

Aggregate of

Coupon and Additional

Incentive

on any Record

Date (% per

annum) =(A)+(B)

NCD Holder who is an Individual

[●] [●] [●]

NCD Holder who is a Non Individual*

[●] [●] [●]

* NCD Holders who are Non Individuals SHALL NOT be eligible for the additional incentive of [●]% per annum for Series II NCDs held on any Record Date

(c) For Series III NCDs: In case of Series III NCDs, no interest shall be payable. However, Series III

NCDs shall be redeemed at the end of thirty six months from the Deemed Date of Allotment at the following amounts based on the relevant categories of NCD Holders as on the Record Date for redemption of the Series III NCDs:

Category of NCD

Holder as on the

Record Date

Face Value (`̀̀̀ per

NCD) – (A)

Premium Amount (`̀̀̀

per NCD) – (B)

Aggregate

Amount Payable

at the Time of

Redemption (`̀̀̀

per NCD)

=(A)+(B)

NCD Holder who is an Individual

1,000.00 [●] [●]

NCD Holder who is a Non Individual

1,000.00 [●] [●]

(d) For Series IV NCDs: In case of Series IV NCDs, no interest shall be payable. However, Series IV NCDs shall be redeemed at the end of sixty months from the Deemed Date of Allotment at the following amounts based on the relevant categories of NCD Holders as on the Record Date for redemption of the Series IV NCDs:

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Category of NCD

Holder as on the

Record Date

Face Value (`̀̀̀ per

NCD) – (A)

Premium Amount (`̀̀̀

per NCD) – (B)

Aggregate

Amount Payable

at the Time of

Redemption (`̀̀̀

per NCD)

=(A)+(B)

NCD Holder who is an Individual

1,000.00 [●] [●]

NCD Holder who is a Non Individual

1,000.00 [●] [●]

On any relevant Record Date the Registrar and/or our Company shall determine the list and identity of NCD Holders, (based on their DP identification, PAN and/or entries in the register of NCD Holders), and make applicable interest payments based on whether such NCD Holder as on such Record Date is an Individual or a Non Individual. The categories of the NCD Holders, (i.e. Individuals and Non Individuals), will be identified based on the details obtained from the depository database (with respect to NCDs held in dematerialized form) and register of NCD Holders (with respect to the NCDs held in physical form).

2. Payment of Interest/Premium:

Annual Payment of Interest for Series I and Series II NCDs For NCDs subscribed under Series I and Series II, the relevant interest will be paid on the first day of April every year for the amount outstanding. The first interest payment will be made on April 1, 2013 for the period commencing from the Deemed Date of Allotment till March 31, 2013. The last interest payment will be made at the time of redemption of the NCD on a pro rata basis. Basis of payment of Interest / Premium

Payment of (a) interest and/or redemption amount in case of Series I and Series II NCDs and (b) the face value of the NCDs plus the applicable premium on redemption in case of Series III and Series IV NCDs, will be made to those NCD Holders (or to first holder in case of joint-holders), whose names appear in the register of NCD Holders (in case of NCDs held in physical form) and/or the details obtained from the depository database (in case of NCDs held in dematerialized form), as on the applicable Record Date. On every relevant Record Date the Registrar and/or our Company shall determine the list and identity of NCD Holders, (based on their DP identification, PAN and/or entries in the register of NCD Holders), and make applicable interest payments based on whether such NCD Holder as on the applicable Record Date is an Individual or a Non Individual. We may enter into an arrangement with one or more banks in one or more cities for direct credit of interest to the account of the investors. In such cases, interest, on the interest payment date, would be directly credited to the account of those investors who have given their bank mandate. We may offer the facility of NECS, NEFT, RTGS, Direct Credit and any other method permitted by RBI and SEBI from time to time to help NCD Holders. The terms of this facility (including towns where this facility would be available) would be as prescribed by RBI. Refer to the paragraph on “Manner of Payment of Interest/Refund/Redemption Amounts” at page 171 in this Draft Prospectus.

3. Taxation:

Any tax exemption certificate/document must be lodged at the office of the Registrar at least 7(seven) days prior to the Record Date or as specifically required, failing which tax applicable on interest will be deducted at source on accrual thereof in our Company’s books and/or on payment thereof, in accordance with the provisions of the IT Act and/or any other statutory modification, enactment or notification as the case may be. A tax deduction certificate will be issued for the amount of tax so deducted.

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As per clause (ix) of Section 193 of the I.T. Act, no tax is required to be withheld on any interest payable on any security issued by a company, where such security is in dematerialized form and is listed on a recognized stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the rules made thereunder. Accordingly, no tax will be deducted at source from the interest on listed NCDs held in the dematerialized form. However in case of NCDs held in physical form, as per the current provisions of the IT Act, tax will not be deducted at source from interest payable on such NCDs held by the investor (in case of resident Individuals and HUFs), if such interest does not exceed ` 5,000 in any financial year. If interest exceeds the prescribed limit of ` 5,000 on account of interest on the NCDs, then the tax will be deducted at applicable rate. However in case of NCD Holders claiming non-deduction or lower deduction of tax at source, as the case may be, the NCD Holder should furnish either (a) a declaration (in duplicate) in the prescribed form i.e. (i) Form 15H which can be given by Individuals who are of the age of 60 years or more (ii) Form 15G which can be given by all applicants (other than companies, and firms ), or (b) a certificate, from the Assessing Officer which can be obtained by all applicants (including companies and firms) by making an application in the prescribed form i.e. Form No.13. The aforesaid documents, as may be applicable, should be submitted to our Company quoting the name of the sole/ first NCD Holder, NCD folio number and the distinctive number(s) of the NCD held, prior to the Record Date to ensure non-deduction/lower deduction of tax at source from interest on the NCD. The investors need to submit Form 15H/ 15G/certificate in original from Assessing Officer for each financial year during the currency of the NCD to ensure non-deduction or lower deduction of tax at source from interest on the NCD.

If the date of interest payment falls on a Saturday, Sunday or a public holiday in Mumbai or Chennai or any other payment centre notified in terms of the Negotiable Instruments Act, 1881, then interest would be paid on the next working day. Payment of interest would be subject to the deduction as prescribed in the I.T. Act or any statutory modification or re-enactment thereof for the time being in force. Subject to the terms and conditions in connection with computation of applicable interest on the Record

Date as stated on page 165-167, please note that in case the NCDs are transferred and/or

transmitted in accordance with the provisions of this Prospectus read with the provisions of the

Articles of Association of our Company, the transferee of such NCDs or the deceased holder of

NCDs, as the case may be, shall be entitled to any interest which may have accrued on the NCDs.

4. Day Count Convention:

Interest shall be computed on a 365 days-a-year basis on the principal outstanding on the NCDs. However, where the interest period (start date to end date) includes February 29, interest shall be computed on 366 days-a-year basis, on the principal outstanding on the NCDs

5. Effect of holidays on payments:

If the date of payment of interest or principal or any date specified does not fall on a Working Day, then the succeeding Working Day will be considered as the effective date for such payment of interest or principal, as the case may be (the “Effective Date”). Interest and principal or other amounts, if any, will be paid on the Effective Date. For avoidance of doubt, in case of interest payment on Effective Date, interest for period between actual interest payment date and the Effective Date will be paid in normal course in next interest payment date cycle. Payment of interest will be subject to the deduction of tax as per Income Tax Act or any statutory modification or re-enactment thereof for the time being in force. In case the Maturity Date falls on a holiday, the payment will be made on the next Working Day, without any interest for the period overdue.

Interest on Application Money

1. Interest on application monies received which are used towards allotment of NCDs:

Our Company shall pay interest on application money on the amount allotted, subject to deduction of

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income tax under the provisions of the Income Tax Act, 1961, as amended, as applicable, to any applicants to whom NCDs are allotted, other than ASBA applicants, pursuant to the Issue from the date of realization of the cheque(s)/demand draft(s) or 3 (three) days from the date of receipt of the application (being the date of presentation of each application as acknowledged by the Bankers to the Issue) whichever is later upto one day prior to the Deemed Date of Allotment, at the rate of [●]% per annum.

Our Company has a right to withdraw the Issue at anytime 2 (two) days prior to Issue closing date for receiving subscription in the Issue. Our Company shall in the event of such withdrawal, subject to receipt of a minimum subscription of 75 % of the Base Issue, i.e. ` 18,750 lacs, allot NCDs to all applicants who have applied for NCDs upto one day prior to the date by which Company gives notice for withdrawal of Issue. However, it is clarified that in the event that our Company does not receive a minimum subscription of 75 % of the Base Issue, i.e. ` 18,750 lacs our Company will not allot any NCDs to applicants. Further our Company shall pay interest on application money on the amount allotted, subject to deduction of income tax under the provisions of the Income Tax Act, 1961, as amended, as applicable, to any applicants to whom NCDs are allotted pursuant to the Issue from the date of realization of the cheque(s)/demand draft(s) or 3 (three) days from the date of receipt of the application (being the date of presentation of each application as acknowledged by the Bankers to the Issue) whichever is later upto one day prior to the Deemed Date of Allotment, at the rate of [●]% per annum. However, it is clarified that in the event that our Company does not receive a minimum subscription of 75 % of the Base Issue, i.e. ` 18,750 lacs our Company will not allot any NCDs to applicants.

Our Company may enter into an arrangement with one or more banks in one or more cities for direct credit of interest to the account of the applicants. Alternatively, the interest warrant will be dispatched along with the Letter(s) of Allotment at the sole risk of the applicant, to the sole/first applicant.

2. Interest on application monies received which are liable to be refunded:

Our Company shall pay interest on application money which is liable to be refunded to the applicants, other than ASBA applicants, in accordance with the provisions of the Debt Regulations and/or the Companies Act, or other applicable statutory and/or regulatory requirements, subject to deduction of income tax under the provisions of the Income Tax Act, 1961, as amended, as applicable, from the date of realization of the cheque(s)/demand draft(s) or 3 (three) days from the date of receipt of the application (being the date of presentation of each application as acknowledged by the Bankers to the Issue) whichever is later upto one day prior to the Deemed Date of Allotment, at the rate of [●]% per annum. Such interest shall be paid along with the monies liable to be refunded. Interest warrant will be dispatched / credited (in case of electronic payment) along with the Letter(s) of Refund at the sole risk of the applicant, to the sole/first applicant.

In the event our Company does not receive a minimum subscription of 75 % of the Base Issue, i.e. ` 18,750 lacs on the date of closure of the Issue, our Company shall pay interest on application money which is liable to be refunded to the applicants in accordance with the provisions of the Debt Regulations and/or the Companies Act, or other applicable statutory and/or regulatory requirements, subject to deduction of income tax under the provisions of the Income Tax Act, 1961, as amended.

Provided that, notwithstanding anything contained hereinabove, our Company shall not be liable to pay any interest on monies liable to be refunded in case of (a) invalid applications or applications liable to be rejected, and/or (b) applications which are withdrawn by the applicant. Please refer to “Rejection of

Application” at page 195 of this Draft Prospectus.

Maturity and Redemption The NCDs issued pursuant to this Prospectus have a fixed maturity date.

• The date of maturity for Series I NCDs is thirty six months from the Deemed Date of Allotment.

• The date of maturity for Series II NCDs is sixty months from the Deemed Date of Allotment.

• The date of maturity for Series III NCDs is thirty six months from the Deemed Date of Allotment.

• The date of maturity for Series IV NCDs is sixty months from the Deemed Date of Allotment.

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Redemption Date Each Series I NCD shall be redeemed at the Face Value thereof along with the interest accrued thereon, if any, at the end of thirty six months from the Deemed Date of Allotment. Each Series II NCD shall be redeemed at the Face Value thereof along with the interest accrued thereon, if any, at the end of sixty months from the Deemed Date of Allotment. Each Series III NCD shall be redeemed at the end of thirty six months from the Deemed Date of Allotment at the following amounts based on the relevant categories of NCD Holders as on the Record Date for redemption of the Series III NCDs:

Category of NCD Holder as on the

Record Date

Face Value (`̀̀̀ per

NCD) – (A)

Premium Amount (`̀̀̀

per NCD) – (B)

Aggregate Amount Payable

at the Time of

Redemption (`̀̀̀

per NCD) =(A)+(B)

NCD Holder who is an Individual

1,000.00 [●] [●]

NCD Holder who is a Non Individual

1,000.00 [●] [●]

Each Series IV NCD shall be redeemed at the end of sixty months from the Deemed Date of Allotment at the following amounts based on the relevant categories of NCD Holders as on the Record Date for redemption of the Series IV NCDs:

Category of NCD

Holder as on the

Record Date

Face Value (`̀̀̀ per

NCD) – (A)

Premium Amount (`̀̀̀

per NCD) – (B)

Aggregate

Amount Payable

at the Time of

Redemption (`̀̀̀

per NCD)

=(A)+(B)

NCD Holder who is an Individual

1,000.00 [●] [●]

NCD Holder who is a Non Individual

1,000.00 [●] [●]

Put / Call Option No Put / Call Option for any Series of NCDs.

Application Size Each application should be for a minimum of 10 NCDs and in multiples of 1 NCD thereafter. The minimum application size for each application for NCDs would be ` 10,000/- (for all Series of NCDs namely, Series I Series II, Series III and Series IV NCDs either taken individually or collectively) and in multiples of ` 1,000/- thereafter. Applicants can apply for any or all series of NCDs offered hereunder (any/all options) using the same Application Form. Applicants are advised to ensure that applications made by them do not exceed the investment limits or

maximum number of NCDs that can be held by them under applicable statutory and or regulatory

provisions.

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Terms of Payment The entire issue price of ` 1,000 per NCD is payable on application itself. In case of allotment of lesser number of NCDs than the number of NCDs applied for, our Company shall refund the excess amount paid on application to the applicant in accordance with the terms of this Draft Prospectus. For further details please refer to the paragraph on “Interest on Application Money” beginning on page 168 of this Draft Prospectus. Manner of Payment of Interest / Premium / Redemption Amounts The manner of payment of interest / premium / redemption amounts in connection with the NCDs is set out below: For NCDs applied / held in electronic form: The bank details will be obtained from the Depositories for payment of Interest / refund / redemption as the case may be. Applicants who have applied for or are holding the NCDs in electronic form, are advised to immediately update their bank account details as appearing on the records of the depository participant. Please note that failure to do so could result in delays in credit of refunds to the applicant at the applicant’s sole risk, and the Lead Managers, our Company nor the Registrar to the Issue shall have any responsibility and undertake any liability for the same. For NCDs held in physical form: The bank details will be obtained from the Registrar to the Issue for payment of interest / refund / redemption as the case may be. The mode of interest / refund / redemption payments shall be undertaken in the following order of preference: 1. Direct Credit

Investors having their bank account with the Refund Banks, shall be eligible to receive refunds, if any, through direct credit. The refund amount, if any, would be credited directly to their bank account with the Refund Banker. 2. NECS Payment of interest / refund / redemption shall be undertaken through NECS for applicants having an account at the centers mentioned in NECS MICR list. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code, IFSC code, bank account number, bank name and branch name as appearing on a cheque leaf, from the Depositories. One of the methods for payment of interest / refund / redemption is through NECS for applicants having a bank account at any of the abovementioned centers. 3. RTGS Applicants having a bank account with a participating bank and whose interest payment / refund / redemption amount exceeds ` 2 lacs, or such amount as may be fixed by RBI from time to time, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive interest payment / refund / redemption through RTGS are required to provide the IFSC code in the Application Form or intimate our Company and the Registrars to the Issue at least 7 (seven) days before the Record Date. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant. In the event the same is not provided, interest payment / refund / redemption shall be made through NECS subject to availability of complete bank account details for the same as stated above.

3. NEFT Payment of interest / refund / redemption shall be undertaken through NEFT wherever the applicants’ bank has

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been assigned the Indian Financial System Code (“IFSC”), which can be linked to a Magnetic Ink Character Recognition (“MICR”), if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the de-mat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of interest/refund/redemption will be made to the applicants through this method. 4. Registered Post/Speed Post For all other applicants, including those who have not updated their bank particulars with the MICR code, the interest payment / refund / redemption orders shall be dispatched by post for value up to ` 1,500/- and through Speed Post/ Registered Post for refund orders /interest payment/redemption orders of ` 1,500/- and above.

Please note that applicants are eligible to receive payments through the modes detailed in (1), (2) (3), and (4) herein above provided they provide necessary information for the above modes and where such payment facilities are allowed / available. Please note that our Company shall not be responsible to the holder of NCD, for any delay in receiving credit of interest / refund / redemption so long as our Company has initiated the process of such request in time.

Printing of Bank Particulars on Interest Warrants As a matter of precaution against possible fraudulent encashment of refund orders and interest/redemption warrants due to loss or misplacement, the particulars of the applicant’s bank account are mandatorily required to be given for printing on the orders/ warrants. In relation to NCDs held in dematerialized form, these particulars would be taken directly from the depositories. In case of NCDs held in physical form on account of rematerialisation or transfer, the investors are advised to submit their bank account details with our Company / Registrar at least 7 (seven) days prior to the Record Date failing which the orders / warrants will be dispatched to the postal address of the holder of the NCD as available in the records of our Company. Bank account particulars will be printed on the orders/ warrants which can then be deposited only in the account specified. Loan against NCDs Our Company, at its sole discretion, subject to applicable statutory and/or regulatory requirements, may consider granting of a loan facility to the holders of NCDs against the security of such NCDs. Such loans shall be subject to the terms and conditions as may be decided by our Company from time to time. Buy Back of NCDs Our Company may, at its sole discretion, from time to time, consider, subject to applicable statutory and/or regulatory requirements, buyback of NCDs, upon such terms and conditions as may be decided by our Company. Our Company may from time to time invite the NCD Holders to offer the NCDs held by them through one or more buy-back schemes and/or letters of offer upon such terms and conditions as our Company may from time to time determine, subject to applicable statutory and/or regulatory requirements. Such NCDs which are bought back may be extinguished, re-issued and/or resold in the open market with a view of strengthening the liquidity of the NCDs in the market, subject to applicable statutory and/or regulatory requirements. Form and Denomination In case of NCDs held in physical form, a single certificate will be issued to the NCD Holder for the aggregate amount (“Consolidated Certificate”) for each type of NCDs. The applicant can also request for the issue of NCD certificates in denomination of one NCD (“Market Lot”).

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It is however distinctly to be understood that the NCDs pursuant to this Issue shall be issued only

in dematerialized form to all categories of investors. In respect of Consolidated Certificates, we will, only upon receipt of a request from the NCD Holder, split such Consolidated Certificates into smaller denominations subject to the minimum of Market Lot. No fees would be charged for splitting of NCD certificates in Market Lots, but stamp duty payable, if any, would be borne by the NCD Holder. The request for splitting should be accompanied by the original NCD certificate which would then be treated as cancelled by us. Procedure for Redemption by NCD Holders The procedure for redemption is set out below: NCDs held in physical form: No action would ordinarily be required on the part of the NCD Holder at the time of redemption and the redemption proceeds would be paid to those NCD Holders whose names stand in the register of NCD Holders maintained by us on the record date fixed for the purpose of Redemption. However, our Company may require that the NCD certificate(s), duly discharged by the sole holder/all the joint-holders (signed on the reverse of the NCD certificate(s)) be surrendered for redemption on maturity and should be sent by the NCD Holder(s) by Registered Post with acknowledgment due or by hand delivery to our office or to such persons at such addresses as may be notified by us from time to time. NCD Holder(s) may be requested to surrender the NCD certificate(s) in the manner as stated above, not more than three months and not less than one month prior to the redemption date so as to facilitate timely payment. We may at our discretion redeem the NCDs without the requirement of surrendering of the NCD certificates by the holder(s) thereof. In case we decide to do so, the holders of NCDs need not submit the NCD certificates to us and the redemption proceeds would be paid to those NCD Holders whose names stand in the register of NCD Holders maintained by us on the record date fixed for the purpose of redemption of NCDs. In such case, the NCD certificates would be deemed to have been cancelled. Also see the para “Payment on Redemption” given below. NCDs held in electronic form: No action is required on the part of NCD Holder(s) at the time of redemption of NCDs.

Payment on Redemption

The manner of payment of redemption is set out below: NCDs held in physical form:

The payment on redemption of the NCDs will be made by way of cheque/pay order/ electronic modes. However, if our Company so requires, the aforementioned payment would only be made on the surrender of NCD certificate(s), duly discharged by the sole holder / all the joint-holders (signed on the reverse of the NCD certificate(s)). Despatch of cheques/pay order, etc. in respect of such payment will be made on the Redemption Date or (if so requested by our Company in this regard) within a period of 30 days from the date of receipt of the duly discharged NCD certificate. In case we decide to do so, the redemption proceeds in the manner stated above would be paid on the Redemption Date to those NCD Holders whose names stand in the register of NCD Holders maintained by us on the record date fixed for the purpose of Redemption. Hence the transferees, if any, should ensure lodgement of the transfer documents with us at least 7 (seven) days prior to the record date. In case the transfer documents are not lodged with us at least 7 (seven) days prior to the record date and we dispatch the redemption proceeds to the transferor, claims in respect of the redemption proceeds should be settled amongst the parties inter se and no claim or action shall lie against us or the Registrars.

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Our liability to holder(s) towards his/their rights including for payment or otherwise shall stand extinguished from the date of redemption in all events and when we dispatch the redemption amounts to the NCD Holder(s). Further, we will not be liable to pay any interest, income or compensation of any kind from the date of redemption of the NCD(s).

NCDs held in electronic form: On the redemption date, redemption proceeds would be paid by cheque /pay order / electronic mode to those NCD Holders whose names appear on the list of beneficial owners given by the Depositories to us. These names would be as per the Depositories’ records on the record date fixed for the purpose of redemption. These NCDs will be simultaneously extinguished to the extent of the amount redeemed through appropriate debit corporate action upon redemption of the corresponding value of the NCDs. It may be noted that in the entire process mentioned above, no action is required on the part of NCD Holders. Our liability to NCD Holder(s) towards his/their rights including for payment or otherwise shall stand extinguished from the date of redemption in all events and when we dispatch the redemption amounts to the NCD Holder(s). Further, we will not be liable to pay any interest, income or compensation of any kind from the date of redemption of the NCD(s). Right to Reissue NCD(s) Subject to the provisions of the Act, where we have fully redeemed or repurchased any NCD(s), we shall have and shall be deemed always to have had the right to keep such NCDs in effect without extinguishment thereof, for the purpose of resale or reissue and in exercising such right, we shall have and be deemed always to have had the power to resell or reissue such NCDs either by reselling or reissuing the same NCDs or by issuing other NCDs in their place. The aforementioned right includes the right to reissue original NCDs. Transfer/Transmission of NCD(s)

The NCDs shall be transferred or transmitted freely in accordance with the applicable provisions of the Act. The provisions relating to transfer and transmission and other related matters in respect of our shares contained in the Articles and the Act shall apply, mutatis mutandis (to the extent applicable to debentures) to the NCD(s) as well. In respect of the NCDs held in physical form, a suitable instrument of transfer as may be prescribed by the Issuer may be used for the same. The NCDs held in dematerialized form shall be transferred subject to and in accordance with the rules/procedures as prescribed by NSDL/CDSL and the relevant DPs of the transfer or transferee and any other applicable laws and rules notified in respect thereof. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/redemption will be made to the person, whose name appears in the register of debenture holders maintained by the Depositories. In such cases, claims, if any, by the transferees would need to be settled with the transferor(s) and not with the Issuer or Registrar. Please see “Issue Structure –Interest/Premium” on page 165 for the implications on the interest applicable to NCDs held by Individual Investors on the Record Date and NCDs held by Non Individual Investors on the Record Date. For NCDs held in electronic form:

The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of the NCDs held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant. In case the transferee does not have a DP account, the seller can re-materialise the NCDs and thereby convert his dematerialized holding into physical holding. Thereafter the NCDs can be transferred in the manner as stated above.

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Joint-holders Where two or more persons are holders of any NCD(s), they shall be deemed to hold the same as joint holders with benefits of survivorship subject to other provisions contained in the Articles. Sharing of Information We may, at our option, use on our own, as well as exchange, share or part with any financial or other information about the NCD Holders available with us, with our subsidiaries, if any and affiliates and other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither we or our affiliates nor their agents shall be liable for use of the aforesaid information. Notices

All notices to the NCD Holder(s) required to be given by us or the Debenture Trustee shall be published in one English language newspaper having wide circulation and one regional language daily newspaper in Chennai and/or will be sent by post/ courier or through email or other electronic media to the Registered Holders of the NCD(s) from time to time. Issue of Duplicate NCD Certificate(s)

If any NCD certificate(s) is/are mutilated or defaced or the cages for recording transfers of NCDs are fully utilised, the same may be replaced by us against the surrender of such certificate(s). Provided, where the NCD certificate(s) are mutilated or defaced, the same will be replaced as aforesaid only if the certificate numbers and the distinctive numbers are legible. If any NCD certificate is destroyed, stolen or lost then upon production of proof thereof to our satisfaction and upon furnishing such indemnity/security and/or documents as we may deem adequate, duplicate NCD certificate(s) shall be issued. Upon issuance of a duplicate NCD certificate, the original NCD certificate shall stand cancelled. Security

The principal amount of the NCDs to be issued in terms of this Prospectus together with all interest due on the NCDs, as well as all costs, charges, all fees, remuneration of Debenture Trustee and expenses payable in respect thereof shall be secured by way of first and exclusive charge in favour of the Debenture Trustee on an identified immovable property and specified future receivables of our Company as may be decided mutually by our Company and the Debenture Trustee. Our Company will create appropriate security in favour of the Debenture Trustee for the NCD Holders on the assets adequate to ensure 100% asset cover for the NCDs, which shall be free from any encumbrances. Our Company intends to enter into an agreement with the Debenture Trustee, (‘Debenture Trust Deed’), the terms of which will govern the appointment of the Debenture Trustee. Our Company proposes to complete the execution of the Debenture Trust Deed during the subscription period after the minimum subscription for the Issue has been achieved and utilize the funds after the stipulated security has been created.

Under the terms of the Debenture Trust Deed, our Company will covenant with the Debenture Trustee that it will pay the NCD Holders the principal amount on the NCDs on the relevant redemption date and also that it will pay the interest due on NCDs on the rate specified in the Prospectus and in the Debenture Trust Deed. The Debenture Trust Deed will also provide that our Company may withdraw any portion of the security and replace with another asset of the same or a higher value. Trustees for the NCD Holders

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We have appointed GDA Trusteeship Limited to act as the Debenture Trustees for the NCD Holders. We and the Debenture Trustee will execute a Debenture Trust Deed, inter alia, specifying the powers, authorities and obligations of the Debenture Trustee and us. The NCD Holder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Debenture Trustee or any of its agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the NCDs as the Debenture Trustee may in its absolute discretion deem necessary or require to be done in the interest of the NCD Holder(s). Any payment made by us to the Debenture Trustee on behalf of the NCD Holder(s) shall discharge us pro tanto to the NCD Holder(s).

The Debenture Trustee will protect the interest of the NCD Holders in the event of default by us in regard to timely payment of interest and repayment of principal and they will take necessary action at our cost. Succession

Where NCDs are held in joint names and one of the joint holders dies, the survivor(s) will be recognized as the NCD holder(s). It will be sufficient for the Company to delete the name of the deceased NCD holder after obtaining satisfactory evidence of his death. Provided, a third person may call on the Company to register his name as successor of the deceased NCD holder after obtaining evidence such as probate of a will for the purpose of proving his title to the debentures. In the event of demise of the sole or first holder of the Debentures, the Company will recognise the executors or administrator of the deceased NCD holders, or the holder of the succession certificate or other legal representative as having title to the Debentures only if such executor or administrator obtains and produces probate or letter of administration or is the holder of the succession certificate or other legal representation, as the case may be, from an appropriate court in India. The directors of the Company in their absolute discretion may, in any case, dispense with production of probate or letter of administration or succession certificate or other legal representation. Where a non-resident Indian becomes entitled to the NCDs by way of succession, the following steps have to be complied with: (b) Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that the NCDs were

acquired by the non-resident Indian as part of the legacy left by the deceased NCD holder.

(c) Proof that the non-resident Indian is an Indian national or is of Indian origin. Such holding by a non-resident India will be on a non-repatriation basis.

Market Making

The company is exploring possibility of appointment of market maker for the offering and is in discussion with market participants in this respect. Market marker may be appointed also subject to receipt of statutory approvals as may be required.

Future Borrowings We will be entitled to borrow/raise loans or avail of financial assistance in whatever form as also to issue debentures/ NCDs/other securities in any manner having such ranking in priority, pari passu or otherwise, subject to applicable consents, approvals or permissions that may be required under any statutory/regulatory/contractual requirement, and change the capital structure including the issue of shares of any class, on such terms and conditions as we may think appropriate, without the consent of, or intimation to, the NCD Holders or the Debenture Trustee in this connection.

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ISSUE PROCEDURE

This section applies to all Applicants. ASBA Applicants and Applicants making Direct Online Applications using the

Online Payment Facility of the Stock Exchanges should note that the ASBA and the Direct Online Applications

processes involve application procedures which may be different from the procedures applicable to Applicants who

apply for NCDs through any of the other channels, and accordingly should carefully read the provisions applicable to

ASBA and Direct Online Applications hereunder. Please note that all Applicants are required to make payment of the

full Application Amount along with the Application Form. In case of ASBA Applicants, an amount equivalent to the

full Application Amount will be blocked by the Designated Branches of the SCSBs.

ASBA Applicants should note that they may submit their ASBA Applications to the Lead Managers, Lead Brokers,

sub-brokers or Trading Members of the Stock Exchanges only in the Specified Cities or directly to the Designated

Branches of the SCSBs. Applicants other than ASBA Applicants are required to submit their Applications to the Lead

Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges at the centres mentioned in the

Application Form or make Direct Online Applications using the Online Payment Facility of the Stock Exchanges. For

further information, please refer to “Submission of Completed Application Forms” on page 189 of this Draft

Prospectus.

Please note that this section has been prepared based on the Circular No. CIR./IMD/DF-1/20/2012 dated July 27,

2012 issued by SEBI. The following Issue procedure is subject to the Stock Exchanges being ready with the

necessary systems and infrastructure for implementation of the provisions of the abovementioned circular,

including the systems and infrastructure required in relation to Direct Online Applications through the online

platform and Online Payment Facility to be offered by Stock Exchanges and accordingly is subject to any further

clarifications, notification, modification, direction, instructions and/or correspondence that may be issued by the

Stock Exchange(s) and/or SEBI. The following Issue procedure may consequently undergo change between the date of the Draft Prospectus and Prospectus.

The information below is given for the benefit of the investors. Our Company and the Lead Managers are not liable for any amendment or modification or changes in applicable laws or regulations, which may occur after the date of this Draft Prospectus.

PLEASE NOTE THAT IT IS MANDATORY FOR ALL THE APPLICANTS TO APPLY FOR NCDs

PURSUANT TO THE ISSUE IN THE DEMATERIALISED FORM.

PROCEDURE FOR APPLICATION

Availability of Prospectus and Application Forms Please note that there is a single Application Form for ASBA Applicants as well as Non-ASBA Applicants.

Physical copies of the abridged Prospectus containing the salient features of the Prospectus together with Application Forms may be obtained from: (a) Our Company’s Registered Office and Corporate Office; (b) Offices of the Lead Managers, Lead Brokers and sub-brokers; (c) Trading Members; and (d) Designated Branches of the SCSBs. Electronic Application Forms will be available on the websites of the Stock Exchanges and on the websites of the SCSBs that permit submission of ASBA Applications electronically. A unique application number will be generated for every Application Form downloaded from the website of the Stock Exchanges. Our Company may also provide Application Forms for being downloaded and filled at such websites as it may deem fit. In addition, brokers having online demat account portals may also provide a facility of submitting the Application Forms virtually online to their account holders. Physical copies of the Prospectus can be obtained from our Company’s Registered Office and Corporate Office, as well as offices of the Lead Managers and Lead Brokers. Electronic copies of the Prospectus will be available on the

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website of the Lead Managers, the Stock Exchanges, SEBI and the SCSBs. Copies of the Prospectus and Application Form shall, on a request being made by any Applicant before the Issue Closing Date, be furnished to such Applicant at our Company’s Registered Office and Corporate Office.

Who are eligible to apply for NCDs?

The following categories of persons are eligible to apply in the Issue:

Category I Category II Category III Category IV

Institutional Investors Non Institutional Investors Non Reserved Individual Investors

Reserved Individual Investors

• Resident Public financial institutions, statutory corporations, commercial banks, co-operative banks and regional rural banks incorporated in India and authorized to invest in the NCDs;

• Indian Provident funds, pension funds, superannuation funds and gratuity funds, authorized to invest in the NCDs;

• Indian venture capital funds registered with SEBI;

• Indian insurance companies registered with the IRDA;

• National Investment Fund; and

• Indian Mutual Funds registered with SEBI.

• Companies, bodies corporate and societies, registered under the applicable laws in India, and authorized to invest in the NCDs;

• Trusts settled under the Indian Trusts Act, 1882, public/private charitable/religious trusts settled and/or registered in India under applicable laws, which are authorized to invest in the NCDs;

• Resident Indian scientific and/or industrial research organizations, authorized to invest in the NCDs;

• Partnership firms formed under applicable laws in India in the name of the partners, authorized to invest in the NCDs; and

• Limited Liability Partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No. 6 of 2009), authorized to invest in the NCDs.

• Resident Indian individuals who apply for NCDs aggregating to a value more than ` 5 Lacs, across all Series of NCDs; and

• Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value more than ` 5 Lacs, across all Series of NCDs

• Resident Indian individuals who apply for NCDs aggregating to a value not more than ` 5 Lacs, across all Series of NCDs; and

• Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value not more than ` 5 Lacs, across all Series of NCDs; and

Participation of any of the aforementioned categories of persons or entities is subject to the applicable statutory and/or regulatory requirements in connection with the subscription to Indian securities by such categories of persons or entities. Applicants are advised to ensure that Applications made by them do not exceed the investment limits or maximum number of NCDs that can be held by them under applicable statutory and or regulatory provisions. Applicants are advised to ensure that they have obtained the necessary statutory and/or regulatory

permissions/ consents/ approvals in connection with applying for, subscribing to, or seeking Allotment of

NCDs pursuant to the Issue.

The Lead Managers and their respective associates and affiliates are permitted to subscribe in the Issue.

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Who are not eligible to apply for NCDs? The following categories of persons, and entities, shall not be eligible to participate in the Issue and any Applications from such persons and entities are liable to be rejected: a) Minors without a guardian name; b) Foreign nationals; c) Persons resident outside India; d) Non Resident Individuals; e) Qualified Foreign Investors; f) Foreign Venture Capital Investors; g) Persons ineligible to contract under applicable statutory/regulatory requirements; h) Foreign Institutional Investors; and i) Overseas Corporate Bodies Based on the information provided by the Depositories, the Company shall have the right to accept Applications belonging to an account for the benefit of a minor (under guardianship). In case of Applications for Allotment of NCDs in dematerialised form, the Registrar to the Issue shall verify the above on the basis of the records provided by the Depositories based on the DP ID and Client ID provided by the Applicants in the Application Form and uploaded onto the electronic system of the Stock Exchanges. Modes of making Applications Applicants may use any of the following facilities for making Applications: (a) Direct Online Applications using the Online Payment Facility offered through the Stock Exchanges. For further details please refer to “Submission of Completed Application Forms - Submission of Direct Online

Applications” on page 190 of this Draft Prospectus; (b) ASBA Applications through the Lead Managers, Lead Brokers, sub-brokers or the Trading Members of the Stock Exchanges only in the Specified Cities (Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bengaluru, Hyderabad, Pune, Vadodara and Surat) (“Syndicate ASBA”). For further details please refer to “Submission of Completed Application Forms Submission of ASBA Applications” on page 191 of this Draft Prospectus; (c) ASBA Applications through the Designated Branches of the SCSBs. For further details please refer to “Submission of Completed Application Forms - Submission of ASBA Applications” on page 191 of this Draft Prospectus; and (d) Non-ASBA Applications (other than Direct Online Applications) through the Lead Managers, Lead Brokers, sub-brokers or the Trading Members of the Stock Exchanges at the centres mentioned in Application Form. For further details please refer to “Submission of Completed Application Forms - Submission of Non-ASBA

Applications (other than Direct Online Applications)” on page 192 of this Draft Prospectus. PLEASE NOTE THAT IT IS MANDATORY FOR ALL THE APPLICANTS TO APPLY FOR NCDs

PURSUANT TO THE ISSUE IN THE DEMATERIALISED FORM AND THAT APPLICANTS ARE NOT

ENTITLED TO APPLY FOR ALLOTMENT OF NCDs IN THE PHYSICAL FORM UNDER THE ISSUE.

APPLICATIONS FOR ALLOTMENT OF NCDs Details for Applications by certain categories of Applicants including documents to be submitted are summarized below.

PLEASE NOTE THAT IT IS MANDATORY FOR ALL THE APPLICANTS TO APPLY FOR NCDs

PURSUANT TO THE ISSUE IN THE DEMATERIALISED FORM

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Applications by Mutual Funds

No mutual fund scheme shall invest more than 15% of its NAV in debt instruments issued by a single Company which are rated not below investment grade by a credit rating agency authorized to carry out such activity. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees and the Board of Asset Management Company. A separate Application can be made in respect of each scheme of an Indian mutual fund registered with SEBI and such Applications shall not be treated as multiple Applications. Applications made by the AMCs or custodians of a Mutual Fund shall clearly indicate the name of the concerned scheme for which Application is being made. In case of Applications made by Mutual Fund registered with SEBI, a certified copy of their SEBI registration certificate must be submitted with the Application Form. The Applications must be also accompanied by certified true copies of (i) SEBI Registration Certificate and trust deed (ii) resolution authorising investment and containing operating instructions and (iii) specimen signatures of authorized signatories. Failing this, our Company reserves the right to accept or reject any Application in whole or in part, in either case, without assigning any reason therefor. Application by Commercial Banks, Co-operative Banks and Regional Rural Banks

Commercial Banks, Co-operative banks and Regional Rural Banks can apply in this public Issue based upon their own investment limits and approvals. The Application must be accompanied by certified true copies of (i) Board Resolution authorising investments; (ii) Letter of Authorisation. Failing this, our Company reserves the right to accept or reject any Application in whole or in part, in either case, without assigning any reason therefor.

Application by Insurance Companies

In case of Applications made by insurance companies registered with the Insurance Regulatory and Development Authority, a certified copy of certificate of registration issued by Insurance Regulatory and Development Authority must be lodged along with Application Form. The Applications must be accompanied by certified copies of (i) Memorandum and Articles of Association (ii) Power of Attorney (iii) Resolution authorising investment and containing operating instructions (iv) Specimen signatures of authorized signatories. Failing this, our Company reserves the right to accept or reject any Application in whole or in part, in either case, without assigning any reason therefor. Applications by Trusts

In case of Applications made by trusts, settled under the Indian Trusts Act, 1882, as amended, or any other statutory and/or regulatory provision governing the settlement of trusts in India, must submit a (i) certified copy of the registered instrument for creation of such trust, (ii) Power of Attorney, if any, in favour of one or more trustees thereof, (iii) such other documents evidencing registration thereof under applicable statutory/regulatory requirements. Further, any trusts applying for NCDs pursuant to the Issue must ensure that (a) they are authorized under applicable statutory/regulatory requirements and their constitution instrument to hold and invest in debentures, (b) they have obtained all necessary approvals, consents or other authorisations, which may be required under applicable statutory and/or regulatory requirements to invest in debentures, and (c) Applications made by them do not exceed the investment limits or maximum number of NCDs that can be held by them under applicable statutory and or regulatory provisions. Failing this, our Company reserves the right to accept or reject any Applications in whole or in part, in either case, without assigning any reason therefor.

Applications by Public Financial Institutions, Statutory Corporations, which are authorized to invest in the

NCDs The Application must be accompanied by certified true copies of: (i) Any Act/ Rules under which they are incorporated; (ii) Board Resolution authorising investments; and (iii) Specimen signature of authorized person. Failing this, our Company reserves the right to accept or reject any Applications in whole or in part, in either case, without assigning any reason therefor.

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Applications by Provident Funds, Pension Funds, Superannuation Funds and Gratuity Fund, which are

authorized to invest in the NCDs The application must be accompanied by certified true copies of: (i) Any Act/Rules under which they are incorporated; (ii) Power of Attorney, if any, in favour of one or more trustees thereof, (iii) Board Resolution authorising investments; (iii) such other documents evidencing registration thereof under applicable statutory/regulatory requirements; (iv) Specimen signature of authorized person; (v) certified copy of the registered instrument for creation of such fund/trust; and (vi) Tax Exemption certificate issued by Income Tax Authorities, if exempt from Tax. Applications by Indian Venture Capital Funds

The application must be accompanied by certified true copies of: (i) SEBI Registration Certificate; (ii) resolution authorising investment and containing operating instructions; and (iii) Specimen signatures of authorised signatories. Applications by National Investment Fund

The application must be accompanied by certified true copies of: (i) resolution authorising investment and containing operating instructions; and (ii) Specimen signature of authorized person.

Companies, bodies corporate and societies registered under the applicable laws in India The Application must be accompanied by certified true copies of: (i) Any Act/ Rules under which they are incorporated; (ii) Board Resolution authorising investments; and (iii) Specimen signature of authorized person. Failing this, our Company reserves the right to accept or reject any Applications in whole or in part, in either case, without assigning any reason therefor. Indian Scientific and/or industrial research organizations, which are authorized to invest in the NCDs The Application must be accompanied by certified true copies of: (i) Any Act/ Rules under which they are incorporated; (ii) Board Resolution authorising investments; and (iii) Specimen signature of authorized person. Failing this, our Company reserves the right to accept or reject any Applications in whole or in part, in either case, without assigning any reason therefor. Partnership firms formed under applicable Indian laws in the name of the partners and Limited Liability

Partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No.

6 of 2009) The Application must be accompanied by certified true copies of: (i) Partnership Deed; (ii) Any documents evidencing registration thereof under applicable statutory/regulatory requirements; (iii) Resolution authorizing investment and containing operating instructions (Resolution); (iv) Specimen signature of authorized person. Failing this, our Company reserves the right to accept or reject any Applications in whole or in part, in either case, without assigning any reason therefor. For information on the submission of Direct Online Applications through the online platform and Online Payment Facility offered by Stock Exchanges, please see “Submission of Completed Application Forms - Submission of

Direct Online Applications” on page 190 of this Draft Prospectus herein below INSTRUCTIONS FOR FILLING-UP THE APPLICATION FORM

General Instructions

A. General Instructions for completing the Application Form

• Applications must be made in prescribed Application Form only;

• Application Forms must be completed in block letters in English. Applicants should note that

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neither the Lead Managers, Lead Brokers, sub-brokers, Trading Member of the Stock Exchanges, Escrow Collection Banks nor Designated Branches, as the case may be, will be liable for error in data entry due to incomplete or illegible Application Forms;

• Applications should be in single or joint names (not exceeding two names). In case of Applications in joint names for Allotment of NCDs in dematerialized form, the names should be in the same order as appearing in the records of the Depository Participant.

• Applications should be made by Karta in case of HUFs;

• Thumb impressions and signatures other than in English/Hindi/Gujarati/Marathi or any other languages specified in the 8th Schedule of the Constitution needs to be attested by a Magistrate or Notary Public or a Special Executive Magistrate under his/her seal;

• No separate receipts will be issued for the money payable on the submission of the Application Form. However, the Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchanges or the Designated Branches of the SCSBs, as the case may be, will acknowledge the receipt of the Application Forms by stamping and returning to the Applicants the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Application Form for the records of the Applicant.

• Every Applicant should hold valid Permanent Account Number (PAN) and mention the same in the Application Form.

• All Applicants are required to tick the relevant column of “Category of Investor” in the Application Form.

• All Applicants are required to tick the relevant box of the “Mode of Application” in the Application Form choosing either ASBA or Non-ASBA mechanism.

• ASBA Applicants should correctly mention the ASBA Account number and ensure that funds equal to the Application Amount are available in the ASBA Account before submitting the Application Form to the Designated Branch, otherwise the Application is liable to be rejected.

All Applicants should apply for one or more Series of NCDs in a single Application Form only. Our Company would allot Series [●] NCDs to all valid Applications, wherein the Applicants have

not indicated their choice of NCDs. It is mandatory for all categories of Applicants to have their NCDs allotted in dematerialized form.

B. Applicant’s Depository Account and Bank Account Details

IT IS MANDATORY FOR ALL THE APPLICANTS TO APPLY FOR THEIR NCDs IN

DEMATERIALISED FORM. ALL APPLICANTS MUST MENTION THEIR DP ID AND CLIENT ID IN THE APPLICATION FORM. INVESTORS MUST ENSURE THAT THE

NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN

WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE APPLICATION FORM IS

SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY

ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE APPLICATION FORM.

Applicants applying for NCDs should note that on the basis of the DP ID and Client ID provided

by them in the Application Form and entered into the electronic system of the Stock Exchanges,

the Registrar to the Issue will obtain from the Depositories the Demographic Details of the

Applicant including Category, PAN, address, bank account details for printing on refund orders/ sending refunds through electronic mode, MICR Code and occupation. These Demographic

Details would be used for giving Allotment Advice and refunds (including through physical

refund warrants, direct credit, ECS, NEFT and RTGS), if any, to the Applicants. Hence,

Applicants are advised to immediately update their Demographic Details (including bank

account details) as appearing on the records of the Depository Participant and ensure that they

are true and correct. Please note that failure to do so could result in delays in dispatch/ credit of refunds to Applicants and delivery of Allotment Advice at the Applicants sole risk, and neither

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our Company, the Lead Managers, Lead Brokers, sub-brokers, Trading Member of the Stock

Exchanges, Escrow Collection Banks, SCSBs, Registrar to the Issue nor the Stock Exchanges

shall have any responsibility and undertake any liability for the same. Hence, Applicants should

carefully fill in their Depository Account details in the Application Form.

Applicants may note that in case the DP ID, Client ID and PAN mentioned in the Application

Form and entered into the electronic system of the Stock Exchanges do not match with the DP

ID, Client ID and PAN available in the Depository database or in case PAN is not available in the

Depository database, the Application Form is liable to be rejected.

The Demographic Details would be used for correspondence with the Applicants including mailing of the Allotment Advice and printing of bank particulars on the refund orders, or for refunds through electronic transfer of funds, as applicable. Allotment Advice and physical refund orders (as applicable) would be mailed at the address of the Applicant as per the Demographic Details received from the Depositories. Applicants may note that delivery of refund orders/ Allotment Advice 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 Applicant (other than ASBA Applicants and Applicants using Direct Online Application of the Stock Exchanges) in the Application Form would be used only to ensure dispatch of refund orders. Please note that any such delay shall be at such Applicants sole risk and neither our Company, the Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchanges, Escrow Collection Banks, SCSBs, Registrar to the Issue nor the Stock Exchanges shall be liable to compensate the Applicant for any losses caused to the Applicant due to any such delay or liable to pay any interest for such delay. In case of refunds through electronic modes as detailed in this Draft Prospectus, refunds may be delayed if bank particulars obtained from the Depository Participant are incorrect. In case of Applications made under power of attorney, our Company in its absolute discretion, reserves the right to permit the holder of Power of Attorney to request the Registrar that for the purpose of printing particulars on the refund order and mailing of refund orders/ Allotment Advice, the demographic details obtained from the Depository of the Applicant shall be used. By signing the Application Form, the Applicant would have deemed to have authorized the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. The Demographic Details given by Applicant in the Application Form would not be used for any other purpose by the Registrar to the Issue except in relation to the Issue. With effect from August 16, 2010, the beneficiary accounts of Applicants for whom PAN details have not been verified shall be suspended for credit and no credit of NCDs pursuant to the Issue will be made into the accounts of such Applicants. Application Forms submitted by Applicants whose beneficiary accounts are inactive shall be rejected. Furthermore, in case no corresponding record is available with the Depositories, which matches the three parameters, namely, DP ID, Client ID and PAN, then such Application are liable to be rejected.

C. Permanent Account Number (PAN)

The Applicant or in the case of Applications made in joint names, the first Applicant, should mention his or her Permanent Account Number (PAN) allotted under the IT Act. However, Applications on behalf of the Central or State Government officials and the officials appointed by the courts in terms of a SEBI circular dated June 30, 2008 and Applicants residing in the state of Sikkim who in terms of a SEBI circular dated July 20, 2006 may be exempt from specifying their PAN for transacting in the securities market. In accordance with Circular No. MRD/DOP/Cir-05/2007 dated April 27, 2007 issued by SEBI, the PAN would be the sole identification number for the participants transacting in the securities market, irrespective of the amount of transaction. Any Application

Form, without the PAN is liable to be rejected, irrespective of the amount of transaction. It

is to be specifically noted that the Applicants should not submit the GIR number instead of the

PAN as the Application is liable to be rejected on this ground.

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However, the exemption for the Central or State Government and the officials appointed by the courts and for investors residing in the State of Sikkim is subject to the Depository Participants‘ verifying the veracity of such claims by collecting sufficient documentary evidence in support of their claims. At the time of ascertaining the validity of these Applications, the Registrar to the Issue will check under the Depository records for the appropriate description under the PAN field i.e. either Sikkim category or exempt category.

D. Joint Applications

Applications can be in single or joint names (not exceeding two names). In case of Applications in joint

names for Allotment of NCDs, the names should be in the same order as the appearing in the records of the Depository Participant. In the case of joint Applications, all payments will be made out in favour of the first Applicant. All communications will be addressed to the first Applicant.

E. Additional/ Multiple Applications

An Applicant is allowed to make one or more Applications for the NCDs for the same or other Series of

NCDs, subject to a minimum application size of ` 10,000/- and in multiples of ` 1,000/- thereafter, for each Application. Any Application for an amount below the aforesaid minimum application size will be deemed as an invalid application and shall be rejected. However, multiple Applications by the same individual Applicant aggregating to a value exceeding ` 5 lacs shall be deem such individual Applicant to be a Non Reserved Individual Applicant and all such Applications shall be grouped in the Non Reserved Individual Portion, for the purpose of determining the basis of allotment to such Applicant. However, any Application made by any person in his individual capacity and an Application made by such person in his capacity as a karta of a Hindu Undivided family and/or as applicant (second or third applicant), shall not be deemed to be a multiple Application.

For the purposes of allotment of NCDs under the Issue, Applications shall be grouped based on the PAN,

i.e. Applications under the same PAN shall be grouped together and treated as one Application. Two or more Applications will be deemed to be multiple Applications if the sole or first applicant is one and the same. For the sake of clarity, two or more applications shall be deemed to be a multiple Application for the aforesaid purpose if the PAN number of the sole or the first applicant is one and the same.

F. Applications under Power of Attorney In case of Investments made pursuant to a power of attorney by Institutional Investors, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the memorandum of association and articles of association and/or bye laws and/or charter documents, as applicable, must be lodged along with the Application Form. In case of Investments made pursuant to a power of attorney by Non-Institutional Investors, Reserved Individual Investors and Non Reserved Individual Investors, a certified copy of the power of attorney must be lodged along with the Application Form. Brokers having online demat account portals may also provide a facility of submitting the Application Forms virtually online to their account holders. Under this facility, a broker receives an online instruction through its portal from the Applicant for making an Application on his/ her behalf. Based on such instruction, and a Power of Attorney granted by the Applicant to authorize the broker, the broker submits an Application Form.

Applications under Power of Attorney by limited companies, corporate bodies, registered societies

etc. In case of Applications made pursuant to a power of attorney or by limited companies, corporate bodies, registered societies etc, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the Memorandum of Association and Articles of Association and/or bye laws must be lodged along with the Application Form, failing this, our Company reserves the right to accept or reject any Application in whole or in part, in either case,

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without assigning any reason therefor. Do’s and Don’ts Applicants are advised to take note of the following while filling and submitting the Application Form: Do’s 1. Check if you are eligible to apply as per the terms of the Prospectus and applicable law; 2. Read all the instructions carefully and complete the Application Form in the prescribed form; 3. Ensure that the DP ID and Client ID are correct and beneficiary account is activated for Allotment

of NCDs in dematerialized form. The requirement for providing Depository Participant details shall be mandatory for all Applicants.

4. Ensure that the Application Forms are submitted at the collection centres provided in the Application Forms, bearing the stamp of a Lead Manager, Lead Broker, sub-brokers or Trading Members of the Stock Exchange, as the case may be, for Applications other than ASBA Applications/ Direct Online Applications.

5. Ensure that you have been given a TRS and an acknowledgement as proof of having accepted the Application Form;

6. In case of revision of Application during the Issue Period, ensure that you have first withdrawn your original Application and submit a fresh Application ;

7. Ensure that signatures other than in the languages specified in the Eighth Schedule to the Constitution of India is attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal;

8. Ensure that the DP ID, the Client ID and the PAN mentioned in the Application Form, match with the DP ID, Client ID and PAN available in the Depository database;

9. In case of an HUF applying through its Karta, the Applicant is required to specify the name of an Applicant in the Application Form as ‘XYZ Hindu Undivided Family applying through PQR’, where PQR is the name of the Karta;

10. Ensure that the Applications are submitted to the Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchange or Designated Branches of the SCSBs, as the case may be, before the closure of application hours on the Issue Closing Date.

11. Ensure that the Demographic Details including PAN are updated, true and correct in all respects; 12. Ensure that you have obtained all necessary approvals from the relevant statutory and/or

regulatory authorities to apply for, subscribe to and/or seek allotment of NCDs pursuant to the Issue;

13. Permanent Account Number: Except for Application (i) on behalf of the Central or State Government and officials appointed by the courts, and (ii) (subject to SEBI circular dated April 3, 2008) from the residents of the state of Sikkim, each of the Applicants should provide their PAN. Application Forms in which the PAN is not provided will be rejected. The exemption for the Central or State Government and officials appointed by the courts and for investors residing in the State of Sikkim is subject to (a) the demographic details received from the respective depositories confirming the exemption granted to the beneficiary owner by a suitable description in the PAN field and the beneficiary account remaining in “active status”; and (b) in the case of residents of Sikkim, the address as per the demographic details evidencing the same;

14. Joint Applications: Applications can be in single or joint names (not exceeding two names). In case of Applications in joint names for Allotment of NCDs, the names should be in the same order as the appearing in the records of the Depository Participant. In the case of joint Applications, all refunds/ interests/ redemption amounts will be made out in favour of the first Applicant. All communications will be addressed to the first named Applicant.

15. Applicants are requested to write their names and Application serial number on the reverse of the instruments by which the payments are made;

16. All Applicants are requested to tick the relevant column “Category of Investor” in the Application Form; and

17. Tick the Series of NCDs in the Application Form that you wish to apply for.

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Don’ts: 1. Do not apply for lower than the minimum application size; 2. Do not pay the Application Amount in cash, by money order or by postal order or by stockinvest; 3. Do not send Application Forms by post; instead submit the same to the Lead Managers, Lead

Brokers, sub-brokers, Trading Members of the Stock Exchange or Designated Branches of the SCSBs, as the case may be;

4. Do not fill up the Application Form such that the NCDs applied for exceeds the Issue size and/or investment limit or maximum number of NCDs that can be held under the applicable laws or regulations or maximum amount permissible under the applicable regulations;

5. Do not submit the GIR number instead of the PAN as the Application is liable to be rejected on this ground;

6. Do not submit incorrect details of the DP ID, Client ID and PAN or provide details for a beneficiary account which is suspended or for which details cannot be verified by the Registrar to the Issue;

7. Do not submit the Application Forms without the full Application Amount; 8. Do not submit Applications on plain paper or on incomplete or illegible Application Forms; 9. Do not apply if you are not competent to contract under the Indian Contract Act, 1872; 10. Do not submit an Application in case you are not eligible to acquire NCDs under applicable law or

your relevant constitutional documents or otherwise; 11. Do not submit an Application that does not comply with the securities law of your respective

jurisdiction; 12. Do not apply if you are a person ineligible to apply for NCDs under the Issue including

Applications by Persons Resident Outside India; and 13. Applicants other than ASBA Applicants should not submit the Application Form directly to the

Escrow Collection Banks/ Bankers to the Issue, and the same will be rejected in such cases. Additional Instructions Specific to ASBA Applicants

Do’s: 1. Check if you are eligible to Apply under ASBA; 2. Read all the instructions carefully and complete the Application Form; 3. Ensure that you tick the ASBA option in the Application Form and give the correct details of your

ASBA Account including bank account number/ bank name and branch; 4. Ensure that your Application Form is submitted either at a Designated Branch of a SCSB where

the ASBA Account is maintained or with the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange at the Specified Cities, and not directly to the Escrow Collecting Banks (assuming that such bank is not a SCSB) or to our Company or the Registrar to the Issue;

5. In case of ASBA Applications through Syndicate ASBA, before submitting the physical Application Form to the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange, ensure that the SCSB where the ASBA Account, as specified in the ASBA Form, is maintained has named at-least one branch in that Specified City for the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange, as the case may be, to deposit ASBA Forms (A list of such branches is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html);

6. Ensure that the Application Form is signed by the ASBA Account holder in case the ASBA Applicant is not the account holder;

7. Ensure that you have funds equal to the Application Amount in the ASBA Account before submitting the Application Form;

8. Ensure that you have correctly ticked, provided or checked the authorisation box in the Application Form, or have otherwise provided an authorisation to the SCSB via the electronic mode, for blocking funds in the ASBA Account equivalent to the Application Amount mentioned in the Application Form; and

9. Ensure that you receive an acknowledgement from the Designated Branch or the concerned Lead Manager, Lead Broker, sub-broker or Trading Member of the Stock Exchange, as the case may be,

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for the submission of the Application Form. Don'ts: 1. Payment of Application Amount in any mode other than through blocking of Application Amount

in the ASBA Accounts shall not be accepted under the ASBA process; 2. Do not submit the Application Form to the Lead Managers, Lead Brokers, sub-brokers or Trading

Members of the Stock Exchange, as the case may be, at a location other than the Specified Cities. 3. Do not send your physical Application Form by post. Instead submit the same to a Designated

Branch or the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange, as the case may be, at the Specified Cities; and

4. Do not submit more than five Application Forms per ASBA Account. Kindly note that ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or

Trading Members of the Stock Exchange at the Specified Cities will not be accepted if the SCSB

where the ASBA Account, as specified in the Application Form, is maintained has not named at least

one branch at that Specified City for the Lead Managers, Lead Brokers, sub-brokers or Trading

Members of the Stock Exchange, as the case may be, to deposit such Application Forms (A list of such branches is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html).

Please refer to “Rejection of Applications” on page 195 for information on rejection of Applications. TERMS OF PAYMENT

The entire issue price for the NCDs is payable on Application only. In case of Allotment of lesser number of NCDs than the number applied, our Company shall refund the excess amount paid on Application to the Applicant.

Payment mechanism for Direct Online Applicants

Applicants making Direct Online Applications through the online platform must make payment using the Online Payment Facility offered by Stock Exchange. Such online payments will be deposited in the Escrow Account(s) to be opened by our Company. See “Terms of Payment - Escrow Mechanism for

Applicants other than ASBA Applicants” on page 188.

Payment mechanism for ASBA Applicants The ASBA Applicants shall specify the ASBA Account number in the Application Form. For ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange at the Specified Cities, the ASBA Application will be uploaded onto the electronic system of the Stock Exchange and deposited with the relevant branch of the SCSB at the Specified City named by such SCSB to accept such ASBA Applications from the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange, as the case may be (A list of such branches is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html). The relevant branch of the SCSB shall perform verification procedures and block an amount in the ASBA Account equal to the Application Amount specified in the ASBA Application. For ASBA Applications submitted directly to the SCSBs, the relevant SCSB shall block an amount in the ASBA Account equal to the Application Amount specified in the ASBA Application, before entering the ASBA Application into the electronic system. SCSBs may provide the electronic mode of application either through an internet enabled application and banking facility or such other secured, electronically enabled mechanism for application and blocking of funds in the ASBA Account.

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ASBA Applicants should ensure that they have funds equal to the Application Amount in the ASBA

Account before submitting the ASBA Application to the Lead Managers, Lead Brokers, sub-brokers

or Trading Members of the Stock Exchange, as the case may be, at the Specified Cities or to the Designated Branches of the SCSBs. An ASBA Application where the corresponding ASBA Account

does not have sufficient funds equal to the Application Amount at the time of blocking the ASBA

Account is liable to be rejected.

The Application Amount shall remain blocked in the ASBA Account until approval of the Basis of Allotment and consequent transfer of the amount against the Allotted NCDs to the Public Issue Account(s), or until withdrawal/ failure of the Issue or until withdrawal/ rejection of the Application Form, as the case may be. Once the Basis of Allotment is approved, the Registrar to the Issue shall send an appropriate request to the controlling branch of the SCSB for unblocking the relevant ASBA Accounts and for transferring the amount pertaining to NCDs allocable to the successful ASBA Applicants to the Public Issue Account (s). 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.

Escrow Mechanism for Applicants other than ASBA Applicants

Our Company shall open an Escrow Account with each of the Escrow Collection Bank(s) in whose favour the Applicants (other than ASBA Applicants) shall make out the cheque or demand draft in respect of his or her Application. Cheques or demand drafts received for the full Application Amount from Applicants in a certain category would be deposited in the Escrow Account(s). All cheques/ bank drafts accompanying the Application should be crossed “A/c Payee only” and for eligible Applicants must be made payable to “Escrow Account SCUF NCD Public Issue”. Application Amounts paid through the Online Payment Facility of the Stock Exchanges shall also be deposited in the Escrow Account. The Escrow Collection Bank(s) shall transfer the Non ASBA funds from the Escrow Account into the Public Issue Account(s), as per the terms of the Escrow Agreement and this Draft Prospectus. The Escrow Collection Banks will act in terms of the Prospectus and the Escrow Agreement. The Escrow Collection Banks, for and on behalf of the Applicants, shall maintain the monies in the Escrow Account until the Designated Date. The Escrow Collection Banks shall not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Applicants. On the Designated Date, the Escrow Collection Banks shall transfer the funds represented by Allotment of NCDs (other than in respect of Allotment to successful ASBA Applicants) from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account(s). The balance amount of Non ASBA funds after transfer to the Public Issue Account(s) shall be transferred to the Refund Account. Payments of refund to the relevant Applicants shall also be made from the Refund Account as per the terms of the Escrow Agreement and the Prospectus. The Applicants should note that the escrow mechanism is not prescribed by SEBI and has been established as an arrangement between our Company, the Lead Managers, the Escrow Collection Banks and the Registrar to the Issue to facilitate collections from the Applicants. Each Applicant shall draw a cheque or demand draft mechanism for the entire Application Amount as per the following terms: 1. All Applicants would be required to pay the full Application Amount at the time of the submission

of the Application Form. 2. The Applicants shall, with the submission of the Application Form, draw a payment instrument for

the Application Amount in favour of the Escrow Accounts and submit the same along with their Application. If the payment is not made favouring the Escrow Accounts along with the Application Form, the Application will be rejected. Application Forms accompanied by cash, stockinvest, money order or postal order will not be accepted.

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3. The payment instruments for payment into the Escrow Account should be drawn in favour of

“Escrow Account SCUF NCD Public Issue”. 4. The monies deposited in the Escrow Accounts will be held for the benefit of the Applicants (other

than ASBA Applicants) till the Designated Date. 5. On the Designated Date, the Escrow Collection Banks shall transfer the Non ASBA funds from the

Escrow Accounts as per the terms of the Escrow Agreement into the Public Issue Account(s) with the Bankers to the Issue and the refund amount shall be transferred to the Refund Account.

6. Payments should be made by cheque or demand draft drawn on any bank (including a co-operative

bank), which is situated at, and is a member of or sub-member of the bankers’ clearing house located at the centre where the Application Form is submitted. Outstation cheques, post dated cheques and cheques/ bank drafts drawn on banks not participating in the clearing process will not be accepted and Applications accompanied by such cheques or bank drafts will be rejected. Cash/ stockinvest/ money orders/ postal orders will not be accepted. Please note that cheques without the nine digit Magnetic Ink Character Recognition (“MICR”) code are liable to be rejected.

7. Applicants are advised to provide the number of the Application Form on the reverse of the

cheque or bank draft to avoid misuse of instruments submitted with the Application Form.

RTGS

Only Institutional Investors, (other than those applying through the ASBA or Direct Online Application route), may make payment of their application monies through RTGS transfers to any of the Bankers to the Issue.

Payment by cash/ stockinvest/ money order

Payment through cash/ stockinvest/ money order shall not be accepted in this Issue.

SUBMISSION OF COMPLETED APPLICATION FORMS

Mode of Submission of

Application Forms

To whom the Application Form has to be submitted

Direct Online Applications

Online submission through the online platform and Online Payment Facility offered by Stock Exchanges.

ASBA Applications (i) If using physical Application Form, (a) to the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges only at the Specified Cities (“Syndicate

ASBA”), or (b) to the Designated Branches of the SCSBs where the ASBA Account is maintained; or

(ii) If using electronic Application Form, to the SCSBs,

electronically through internet banking facility, if available.

Non-ASBA Applications (other than Direct Online Applications)

The Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges at the centres mentioned in the Application Form.

Syndicate ASBA Applicants must ensure that their ASBA Applications are submitted to the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges only at the Specified Cities (Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bengaluru, Hyderabad, Pune,

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Vadodara and Surat). Kindly note that ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges at the Specified Cities will not be accepted if the SCSB where the ASBA Account, as specified in the ASBA Application, is maintained has not named at least one branch at that Specified City for the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges, as the case may be, to deposit ASBA Applications (A list of such branches is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html).

Applications shall be accepted only between 10 a.m. and 5 p.m. (Indian Standard Time “IST”) during the

Issue Period on all days between Monday and Friday, both inclusive barring public holidays, at the Collection

Centres or with the Lead Managers or Lead Brokers at the Specified Centers and the Designated Branches of SCSBs as mentioned on the Application Form. On the Issue Closing Date, Applications shall be accepted only

between 10 a.m. and 3 p.m. and shall be uploaded until (i) 5.00 p.m. or such extended time as permitted by

the Stock Exchanges. It is clarified that the Applications not uploaded in the electronic application system of

the Stock Exchanges would be rejected. Due to limitation of time available for uploading the Applications on the Issue Closing Date, Applicants are advised to submit their Applications one day prior to the Issue Closing Date and, in any case, no later than 3.00 p.m. on the Issue Closing Date. All times mentioned in this Draft Prospectus are Indian Standard Times. Applicants are cautioned that in the event a large number of Applications are received on the Issue Closing Date, some Applications may not get uploaded due to lack of sufficient time. Such Applications that cannot be uploaded will not be considered for allocation under the Issue. Applications will be accepted only on Business Days, i.e., Monday to Friday (excluding any public holiday). Neither our Company, nor the Lead Managers, Lead Brokers, sub-brokers or trading members of the Stock Exchanges is liable for any failure in uploading the Applications due to failure in any software/hardware system or otherwise. Please note that the Basis of Allotment under the Issue will be on a date priority basis and not on a date and time priority basis. Applicants other than ASBA Applicants are advised not to submit the Application Form directly to the Escrow Collection Banks/ Bankers to the Issue, and the same will be rejected in such cases and

the Applicants will not be entitled to any compensation whatsoever. ALL APPLICATIONS BY INSTITUTIONAL INVESTORS, OTHER THAN THOSE APPLYING

THROUGH THE ASBA OR THE DIRECT ONLINE APPLICATION ROUTE, SHALL BE RECEIVED ONLY BY THE LEAD MANAGERS AND THEIR RESPECTIVE AFFILIATES. Applicants other than ASBA Applicants are advised not to submit the Application Form directly to

the Escrow Collection Banks/ Bankers to the Issue, and the same will be rejected in such cases and

the Applicants will not be entitled to any compensation whatsoever.

Submission of Direct Online Applications

Applicants having operational demat accounts can opt to submit Direct Online Applications through the online platform and Online Payment Facility offered by Stock Exchanges. Such Applicants must:

• log on to the online platform of the Stock Exchanges;

• use and duly fill the Application Form available on the online platform of the Stock Exchanges;

• use the optional facility (if provided by the Stock Exchanges) to supply the details of the broker who referred the Issue to the Applicant, if any;

• submit the above information on-line following the instructions stated therein; and

• make the requisite payment for the NCDs applied for using the Online Payment Facility.

Relevant “know your customer” details of such Applicants shall be validated on-line on the basis of the DP ID and Client ID provided by them in the Application Form.

On successful submission of a Direct Online Application, the Applicant will receive:

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• a system-generated unique acknowledgement number, (“UAN”), and

• an SMS and/ or an e-mail confirmation upon credit of the requisite application monies paid through the Online Payment Facility along with the Direct Online Application.

Applicants applying through the Direct Online Application facility must preserve their UAN and quote their UAN in: (a) any cancellation/ withdrawal of their Application ;

(b) in queries in connection with allotment of NCDs and/ or refund(s); and/ or

(c) in all investor grievances/ complaints in connection with the Issue.

Please note that as per Circular No. CIR./IMD/DF-1/20/2012 dated July 27, 2012 issued by SEBI, the availability of the Direct Online Applications facility is subject to the Stock Exchanges putting in place the necessary systems and infrastructure, and accordingly the aforementioned disclosures are subject to any further clarifications, notification, modification deletion, direction, instructions and/or correspondence that may be issued by the Stock Exchange(s) and/or SEBI.

Submission of ASBA Applications Applicants can also apply for NCDs using the ASBA facility. ASBA Applications can be submitted through either of the following modes:

a) Physically or electronically to the Designated Branches of the SCSB with whom an Applicant’s ASBA Account is maintained. In case of ASBA Application in physical mode, the ASBA Applicant shall submit the Application Form at the relevant Designated Branch of the SCSB. The Designated Branch shall verify if sufficient funds equal to the Application Amount are available in the ASBA Account, as mentioned in the ASBA Application, prior to uploading such ASBA Application into the electronic system of the Stock Exchanges. If sufficient funds are not available in the ASBA Account, the respective Designated Branch shall reject such ASBA Application and shall not upload such ASBA Application in the electronic system of the Stock Exchanges. If sufficient funds are available in the ASBA Account, the Designated Branch shall block an amount equivalent to the Application Amount and upload details of the ASBA Application in the electronic system of the Stock Exchanges. The Designated Branch of the SCSBs shall stamp the Application Form. Upon receipt of the Application Form by SCSBs, an acknowledgement shall be issued by giving the counter foil of the Application Form to the ASBA Applicant as proof of having accepted the Application. In case of Application in the electronic mode, the ASBA Applicant shall submit the ASBA Application either through the internet banking facility available with the SCSB, or such other electronically enabled mechanism for application and blocking funds in the ASBA Account held with SCSB, and accordingly registering such ASBA Applications.

b) Physically through the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the

Stock Exchanges only at the Specified Cities (Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bangalore, Hyderabad, Pune, Vadodara and Surat), i.e. Syndicate ASBA. Kindly note that ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges at the Specified Cities will not be accepted if the SCSB where the ASBA Account, as specified in the ASBA Application, is maintained has not named at least one branch at that Specified City for the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges, as the case may be, to deposit ASBA Applications (A list of such branches is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html).

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Upon receipt of the Application Form by the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges, as the case may be, an acknowledgement shall be issued by giving the counter foil of the Application Form to the ASBA Applicant as proof of having accepted the Application. Thereafter, the details of the Application shall be uploaded in the electronic system of the Stock Exchanges and the Application Form shall be forwarded to the relevant branch of the SCSB, in the relevant Specified City, named by such SCSB to accept such ASBA Applications from the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges, as the case may be (A list of such branches is available at http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html). Upon receipt of the ASBA Application, the relevant branch of the SCSB shall perform verification procedures and check if sufficient funds equal to the Application Amount are available in the ASBA Account, as mentioned in the ASBA Form. If sufficient funds are not available in the ASBA Account, the relevant ASBA Application is liable to be rejected. If sufficient funds are available in the ASBA Account, the relevant branch of the SCSB shall block an amount equivalent to the Application Amount mentioned in the ASBA Application.

The Application Amount shall remain blocked in the ASBA Account until approval of the Basis of Allotment and consequent transfer of the amount against the Allotted NCDs to the Public Issue Account(s), or until withdrawal/ failure of the Issue or until withdrawal/ rejection of the Application Form, as the case may be.

ASBA Applicants must note that: (a) Physical Application Forms will be available with the Designated Branches of the SCSBs and with

the Lead Managers, Lead Brokers, sub-brokers and Trading Members of the Stock Exchanges at the Specified Cities; and electronic Application Forms will be available on the websites of the SCSBs and the Stock Exchanges at least one day prior to the Issue Opening Date. The Application Forms would be serially numbered. Further, the SCSBs will ensure that the abridged Prospectus is made available on their websites.

(b) The Designated Branches of the SCSBs shall accept ASBA Applications directly from ASBA

Applicants only during the Issue Period. The SCSB shall not accept any ASBA Applications directly from ASBA Applicants after the closing time of acceptance of Applications on the Issue Closing Date. However, in case of Syndicate ASBA, the relevant branches of the SCSBs at Specified Cities can accept ASBA Applications from the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges, as the case may be, after the closing time of acceptance of Applications on the Issue Closing Date.

(c) In case of Applications through Syndicate ASBA, the physical Application Form shall bear the

stamp of the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchanges, as the case maybe, if not, the same shall be rejected.

Submission of Non-ASBA Applications (other than Direct Online Applications) Applicants must use the specified Application Form, which will be serially numbered, bearing the stamp of the relevant Lead Manager, Lead Broker, sub-broker or Trading Member of the Stock Exchanges, as the case maybe, from whom such Application Form is obtained. Such Application Form must be submitted to the relevant Lead Manager, Lead Broker, sub-broker or Trading Member of the Stock Exchanges, as the case maybe, at the centers mentioned in the Application Form along with the cheque or bank draft or RTGS transfers (only available to Applicants who are Institutional Investors applying other than through the ASBA or Direct Online Application route) for the Application Amount, before the closure of the Issue Period. Institutional Investors, applying other than through the ASBA or Direct Online Application route, may transfer the application monies to the Bankers to the Issue through RTGS transfers. The Stock Exchanges may also provide Application Forms for being downloaded and filled. Accordingly the investors may download Application Forms and submit the completed Application Forms together with cheques/ demand drafts to the Lead Manager, Lead Broker, sub-broker or Trading Member of the Stock Exchanges at the centers mentioned in the Application Form.

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The Applicant shall be responsible for providing the required information accurately in the Application Form. Delays or failure in credit of the payments due to inaccurate details shall be at the sole risk of the Applicants and neither our Company, the Lead Managers, Lead Brokers, sub-brokers, trading member of the Stock Exchanges, Escrow Collection Banks, Registrar to the Issue nor the Stock Exchange shall have any responsibility and undertake any liability for the same. On submission of the complete Application Form, the relevant Lead Manager, Lead Broker, sub-broker or Trading Member of the Stock Exchange, as the case maybe, will upload the Application Form on the electronic system provided by the Stock Exchange, and once an Application Form has been uploaded, issue an acknowledgement of such upload by stamping the acknowledgement slip attached to the Application Form with the relevant date and time and return the same to the Applicant. Thereafter, the Application Form together with the cheque or bank draft shall be forwarded to the Escrow Collection Banks for realization and further processing. The duly stamped acknowledgment slip will serve as a duplicate Application Form for the records of the Applicant. The Applicant must preserve the acknowledgment slip and provide the same in connection with: (a) any cancellation/ withdrawal of their Application;

(b) queries in connection with allotment and/ or refund(s) of NCDs; and/or

(c) all investor grievances/ complaints in connection with the Issue. Electronic Registration of Applications

(a) The Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchange and

Designated Branches of the SCSBs, as the case may be, will register the Applications using the on-line facilities of the Stock Exchange. There will be at least one on-line connection in each city where Applications are being accepted. Direct Online Applications shall be registered by Applicants using the online platform offered by Stock Exchange.

The Lead Managers, the Lead Brokers, our Company and the Registrar to the Issue are not responsible for any acts, mistakes or errors or omission and commissions in relation to, (i) the Applications accepted by the SCSBs, (ii) the Applications uploaded by the SCSBs, (iii) the Applications accepted but not uploaded by the SCSBs, (iv) with respect to ASBA Applications accepted and uploaded by the SCSBs without blocking funds in the ASBA Accounts, (v) any Applications accepted and uploaded by the Trading Members of the Stock Exchange or (v) any Online Direct Applications.

(b) In case of apparent data entry error by the Lead Managers, Lead Brokers, sub-brokers, Trading

Members of the Stock Exchange, Escrow Collection Banks or Designated Branches of the SCSBs, as the case may be, in entering the Application Form number in their respective schedules other things remaining unchanged, the Application Form may be considered as valid and such exceptions may be recorded in minutes of the meeting submitted to the Designated Stock Exchange.

(c) The Stock Exchange will offer an electronic facility for registering Applications for the Issue. This facility

will be available on the terminals of Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchange and the SCSBs during the Issue Period. The Lead Managers, Lead Brokers, sub-brokers and Trading Members of the Stock Exchange can also set up facilities for off-line electronic registration of Applications subject to the condition that they will subsequently upload the off-line data file into the on-line facilities for Applications on a regular basis, and before the expiry of the allocated time on the Issue Closing Date. On the Issue Closing Date, the Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchange and the Designated Branches of the SCSBs shall upload the Applications till such time as may be permitted by the Stock Exchange. This information will be available with the Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchange and the Designated Branches of the SCSBs on a regular basis. Applicants are cautioned that a high inflow of high volumes on the last day of the Issue Period may lead to some Applications received on the last day not being uploaded

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and such Applications will not be considered for allocation. (d) At the time of registering each Application, other than ASBA Applications and Direct Online Applications,

the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange shall enter the requisite details of the Applicants in the on-line system including:

• Application Form number

• PAN (of the first Applicant, in case of more than one Applicant)

• Investor category and sub-category

• DP ID

• Client ID

• Series of NCDs applied for

• Number of NCDs applied for each Series of NCD

• Application amount paid

• Cheque number (e) With respect to ASBA Applications submitted directly to the SCSBs at the time of registering each

Application, the Designated Branches shall enter the requisite details of the Applicants in the on-line system including:

• Application Form number

• PAN (of the first Applicant, in case of more than one Applicant)

• Investor category and sub-category

• DP ID

• Client ID

• Series of NCDs applied for

• Number of NCDs applied for in each Series of NCD

• Bank code for the SCSB where the ASBA Account is maintained

• Bank account number

• Application amount paid (f) With respect to ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or

Trading Members of the Stock Exchange only at the Specified Cities, at the time of registering each Application, the requisite details of the Applicants shall be entered in the on-line system including:

• Application Form number

• PAN (of the first Applicant, in case of more than one Applicant)

• Investor category and sub-category

• DP ID

• Client ID

• Series of NCDs applied for

• Number of NCDs applied for in each Series of NCD

• Bank code for the SCSB where the ASBA Account is maintained

• Location of Specified City

• Application amount paid (g) A system generated TRS will be given to the Applicant as a proof of the registration of each Application. It

is the Applicant‘s responsibility to obtain the TRS from the Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchange and the Designated Braches of the SCSBs, as the case may be. The registration of the Application by the Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchange and the Designated Braches of the SCSBs, as the case may be, does not guarantee that the NCDs shall be allocated/ Allotted by our Company. TRS will be non-negotiable and by itself will not create any obligation of any kind.

(h) Applications can be rejected on the technical grounds listed on page 195 or if all required information is not

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provided or the Application Form is incomplete in any respect. (i) The permission given by the Stock Exchange to use their network and software of the online system

should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by our Company and/ or the Lead Managers are cleared or approved by the Stock Exchange; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of our Company, the management or any scheme or project of our Company; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Prospectus; nor does it warrant that the NCDs will be listed or will continue to be listed on the Stock Exchanges.

(j) Only Applications that are uploaded on the online system of the Stock Exchange shall be considered for

allocation/ Allotment. The Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchange and the Designated Braches of the SCSBs shall capture all data relevant for the purposes of finalizing the Basis of Allotment while uploading Application data in the electronic systems of the Stock Exchange. In order that the data so captured is accurate the Lead Managers, Lead Brokers, sub-brokers, Trading Members of the Stock Exchange and the Designated Braches of the SCSBs will be given up to one Working Day after the Issue Closing Date to modify/ verify certain selected fields uploaded in the online system during the Issue Period after which the data will be sent to the Registrar for reconciliation with the data available with the NSDL and CDSL.

Rejection of Applications

Applications would be liable to be rejected on the technical grounds listed on page 195 below or if all required information is not provided or the Application Form is incomplete in any respect. The Board of Directors and/or any committee of our Company 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 thereof. Application may be rejected on one or more technical grounds, including but not restricted to: • Applications submitted without payment of the entire Application Amount. However, our Company may

allot NCDs up to the value of application monies paid, if such application monies exceed the minimum application size as prescribed hereunder;

• In case of partnership firms, NCDs may be registered in the names of the individual partners and no firm as such shall be entitled to apply. However a limited liability partnership firm can apply in its own name;

• Application by persons not competent to contract under the Indian Contract Act, 1872; • PAN not mentioned in the Application Form, except for Applications by or on behalf of the Central or State

Government and the officials appointed by the courts and by investors residing in the State of Sikkim, provided such claims have been verified by the Depository Participants;

• DP ID and Client ID not mentioned in the Application Form; • GIR number furnished instead of PAN; • Applications by OCBs; • Applications for an amount below the minimum application size; • Submission of more than five ASBA Forms per ASBA Account; • Applications by persons who are not eligible to acquire NCDs of our Company in terms of applicable laws,

rules, regulations, guidelines and approvals; • In case of Applications under power of attorney or by limited companies, corporate, trust etc., relevant

documents are not submitted; • Applications accompanied by Stockinvest/ money order/ postal order/ cash; • Signature of sole and/ or joint Applicants missing. In case of joint Applicants, the Application Forms not

being signed by each of the joint Applicants (in the same sequence as they appear in the records of the Depository);

• ASBA Application Forms not being signed by the ASBA Account holder, if the account holder is different from the Applicant;

• Application Forms submitted to the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange does not bear the stamp of the relevant Lead Manager, Lead Broker, sub-broker or

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Trading Member of the Stock Exchange, as the case may be. ASBA Applications submitted directly to the Designated Branches of the SCSBs does not bear the stamp of the SCSB and/or the Designated Branch and/or the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange, as the case may be;

• ASBA Applications not having details of the ASBA Account to be blocked; • Application Forms do not have Applicant’s depository account details; • In case no corresponding record is available with the Depositories that matches three parameters namely,

DP ID, Client ID and PAN or if PAN is not available in the Depository database; • With respect to ASBA Applications, inadequate funds in the ASBA Account to enable the SCSB to block

the Application Amount specified in the ASBA Application Form at the time of blocking such Application Amount in the ASBA Account or no confirmation is received from the SCSB for blocking of funds;

• Applications for amounts greater than the maximum permissible amounts prescribed by the regulations and applicable law;

• Applications where clear funds are not available in Escrow Accounts as per final certificates from Escrow Collection Banks;

• Authorization to the SCSB for blocking funds in the ASBA Account not provided; • Applications by persons prohibited from buying, selling or dealing in shares, directly or indirectly, by SEBI

or any other regulatory authority; • Applications by any person outside India; • Applications by other persons who are not eligible to apply for NCDs under the Issue under applicable

Indian or foreign statutory/regulatory requirements; • Applications not uploaded on the terminals of the Stock Exchange; • Applications uploaded after the expiry of the allocated time on the Issue Closing Date, unless extended by

the Stock Exchange, as applicable; • Application Forms not delivered by the Applicant within the time prescribed as per the Application Form

and the Prospectus and as per the instructions in the Application Form and the Prospectus; • Applications by Applicants whose demat accounts have been 'suspended for credit' pursuant to the circular

issued by SEBI on July 29, 2010 bearing number CIR/MRD/DP/22/2010; • Where PAN details in the Application Form and as entered into the electronic system of the Stock

Exchange, are not as per the records of the Depositories; • ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or Trading Members of

the Stock Exchange at locations other than the Specified Cities or at a Designated Branch of a SCSB where the ASBA Account is not maintained, and ASBA Applications submitted directly to an Escrow Collecting Bank (assuming that such bank is not a SCSB), to our Company or the Registrar to the Issue;

• Applications tendered to the Trading Members of the Stock Exchange at centers other than the centers mentioned in the Application Form;

• Institutional Investor Applications, other than those applying through the ASBA or the Direct Online Application route, not procured by the Lead Managers or their respective affiliates;

• Category not ticked; and/or • Application Form accompanied with more than one cheque.

Kindly note that ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or Trading

Members of the Stock Exchange at the Specified Cities will not be accepted if the SCSB where the ASBA

Account, as specified in the ASBA Form, is maintained has not named at least one branch at that Specified City for the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange, as the

case may be, to deposit ASBA Applications (A list of such branches is available at

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1343901524048.html).

For information on certain procedures to be carried out by the Registrar to the Offer for finalization of the basis of allotment, please refer to “Issue Procedure- Information for Applicants” on page 196.

Information for Applicants

In case of ASBA Applications submitted to the SCSBs, in terms of the SEBI circular CIR/CFD/DIL/3/2010 dated April 22, 2010, the Registrar to the Issue will reconcile the compiled data received from the Stock Exchange and all SCSBs, and match the same with the Depository database for correctness of DP ID, Client ID and PAN. The Registrar to the Issue will undertake technical rejections based on the electronic details and the Depository database.

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In case of any discrepancy between the electronic data and the Depository records, the Company, in consultation with the Designated Stock Exchange, the Lead Managers and the Registrar to the Issue, reserves the right to proceed as per the Depository records for such ASBA Applications or treat such ASBA Applications as rejected. In case of ASBA Applicants submitted to the Lead Managers, Lead Brokers, sub-brokers and Trading Members of the Stock Exchange at the Specified Cities, the basis of allotment will be based on the Registrar‘s validation of the electronic details with the Depository records, and the complete reconciliation of the final certificates received from the SCSBs with the electronic details in terms of the SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011. The Registrar to the Issue will undertake technical rejections based on the electronic details and the Depository database. In case of any discrepancy between the electronic data and the Depository records, the Company, in consultation with the Designated Stock Exchange, the Lead Managers and the Registrar to the Issue, reserves the right to proceed as per the Depository records or treat such ASBA Application as rejected. In case of non-ASBA Applications and Direct Online Applications, the basis of allotment will be based on the Registrar‘s validation of the electronic details with the Depository records, and the complete reconciliation of the final certificates received from the Escrow Collection Banks with the electronic details in terms of the SEBI circular CIR/CFD/DIL/3/2010 dated April 22, 2010 and the SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011. The Registrar will undertake technical rejections based on the electronic details and the Depository database. In case of any discrepancy between the electronic data and the Depository records, the Company, in consultation with the Designated Stock Exchange, the Lead Managers, the Registrar to the Issue, reserves the right to proceed as per the Depository records or treat such Applications as rejected. Based on the information provided by the Depositories, the Company shall have the right to accept Applications belonging to an account for the benefit of a minor (under guardianship). In case of Applications for a higher number of NCDs than specified for that category of Applicant, only the maximum amount permissible for such category of Applicant will be considered for Allotment.

BASIS OF ALLOTMENT

Grouping of Applications and Allocation Ratio: For the purposes of the basis of allotment: (a) Applications received from applicants who are Institutional Investors: Applications received from

Institutional Investors, shall be grouped together, (“Institutional Portion”); (b) Applications received from applicants who are Non Institutional Investors: Applications received from Non

Institutional Investors, shall be grouped together, (“Non Institutional Portion”); (c) Applications received from Non Reserved Individual Investors: Applications received from Non Reserved

Individual Investors, shall be grouped together, (“Non Reserved Individual Portion”); and (d) Applications received from Reserved Individual Investors: Applications received from Reserved Individual

Investors, shall be grouped together, (“Reserved Individual Portion”); For removal of doubt, “Institutional Portion”, Non-Institutional Portion” “Non Reserved Individual Portion” and “Reserved Individual Portion” are individually referred to as “Portion” and collectively referred to as “Portions”. For the purposes of determining the number of NCDs available for allocation to each of the abovementioned Portions, our Company shall have the discretion of determining the number of NCDs to be allotted over and above the Base Issue Size, in case our Company opts to retain any oversubscription in the Issue upto ` 25,000 lacs. The aggregate value of NCDs decided to be allotted over and above the Base Issue Size, (in case our Company opts to retain any oversubscription in the Issue), and/or the aggregate value of NCDs upto the Base Issue Size shall be collectively termed as the “Overall Issue Size”.

Allocation Ratio Reservations shall be made for each of the Portions in the below mentioned format:

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Particulars Institutional

Category

Non Institutional

Category

Non Reserved

Individual

Category

Reserved

Individual

Category

Size in % [●]% of the Overall Issue Size

[●]% of the Overall Issue Size

[●]% of the Overall Issue Size

[●]% of the Overall Issue Size

Basis of Allotment for NCDs (a) Allotments in the first instance:

(i) Applicants belonging to the Institutional Portion, in the first instance, will be allocated NCDs upto

[●]% of Overall Issue Size on first come first serve basis (determined on the basis of the upload of

each Application into the electronic book of the Stock Exchange); (ii) Applicants belonging to the Non Institutional Portion, in the first instance, will be allocated NCDs

upto [●]% of Overall Issue Size on first come first serve basis (determined on the basis of the

upload of each Application into the electronic book of the Stock Exchange); (iii) Applicants belonging to the Reserved Individual Portion, in the first instance, will be allocated

NCDs upto [●]% of Overall Issue Size on first come first serve basis (determined on the basis of

the upload of each Application into the electronic book of the Stock Exchange); (iv) Applicants belonging to the Non Reserved Individual Portion, in the first instance, will be

allocated NCDs upto [●]% of Overall Issue Size on first come first serve basis (determined on the

basis of the upload of each Application into the electronic book of the Stock Exchange);

Allotments, in consultation with the Designated Stock Exchange, shall be made on a first-come first-serve basis, based on the upload of each Application into the electronic book of the Stock Exchange, in each Portion subject to the Allocation Ratio.

(b) Under Subscription: If there is any under subscription in any Portion, priority in allotments will be given in

the following order (in decreasing order of priority): (i) Reserved Individual Portion (ii) Non Reserved Individual Portion (iii) Non Institutional Portion (iv) Institutional Portion

(c) For each Portion, all Applications uploaded into the electronic book of the Stock Exchange on the same day

would be treated at par with each other. Allotment within a day would be on proportionate basis, where NCDs applied for exceeds NCDs to be allotted for each Portion respectively.

(d) Minimum allotments of 1NCD and in multiples of 1 NCD thereafter would be made in case of each valid

Application. (e) Allotments in case of oversubscription: In case of an oversubscription, allotments to the maximum extent,

as possible, will be made on a first-come first-serve basis and thereafter on proportionate basis in each Portion, i.e. full allotment of NCDs to the Applicants on a first come first basis up to the date falling 1 (one) day prior to the date of oversubscription and proportionate allotment of NCDs to the Applicants on the date of oversubscription (determined on the basis of the upload of each Application into the electronic book of the Stock Exchange, in each Portion).

(f) Proportionate Allotments: For each Portion, on the date of oversubscription:

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i) Allotments to the Applicants shall be made in proportion to their respective application size, rounded off to the nearest integer.

ii) If the process of rounding off to the nearest integer results in the actual allocation of NCDs being higher than the Issue size, not all Applicants will be allotted the number of NCDs arrived at after such rounding off. Rather, each Applicant whose allotment size, prior to rounding off, had the highest decimal point would be given preference.

iii) In the event, there are more than one Applicant whose entitlement remain equal after the manner of distribution referred to above, our Company will ensure that the basis of allotment is finalised by draw of lots in a fair and equitable manner.

(g) Applicant applying for more than one series of NCDs: If an Applicant has applied for more than one series

of NCDs, (Series I, Series II, Series III and/or Series IV, individually referred to as “Series”), and in case such Applicant is entitled to allocation of only a part of the aggregate number of NCDs applied for, the Series-wise allocation of NCDs to such Applicants shall be in proportion to the number of NCDs with respect to each Series, applied for by such Applicant, subject to rounding off to the nearest integer, as appropriate in consultation with Lead Managers and Designated Stock Exchange.

All decisions pertaining to the basis of allotment of NCDs pursuant to the Issue shall be taken by our Company in consultation with the Lead Managers and the Designated Stock Exchange and in compliance with the aforementioned provisions of this Draft Prospectus. Any other queries/issues in connection with the Applications will be appropriately dealt with and decided upon by the Company in consultation with the Lead Managers.

Our Company would allot Series [●] NCDs to all valid Applications, wherein the Applicants have not indicated their

choice of the relevant Series of NCDs. Our Company has the discretion to close the Issue irrespective of whether any of the Portion(s) are fully subscribed or not. Retention of oversubscription Our Company is making a public Issue of NCDs aggregating upto ` 25,000 lacs with an option to retain oversubscription of NCDs up to ` 25,000 lacs.

PAYMENT OF REFUNDS

Refunds for Applicants other than ASBA Applicants Within 12 Working Days of the Issue Closing Date, the Registrar to the Issue will dispatch refund orders/ give instructions for electronic refund, as applicable, of all amounts payable to unsuccessful Applicants (other than ASBA Applicants) and also any excess amount paid on Application, after adjusting for allocation/ Allotment of NCDs. Refunds, if any, to Applicants who have submitted Direct Online Applications through the online platform and Online Payment Facility offered by Stock Exchange, will also be made as per the as per this section. The Registrar to the Issue will obtain from the Depositories the Applicant’s bank account details, including the MICR code, on the basis of the DP ID and Client ID provided by the Applicant in their Application Forms, for making refunds. For Applicants who receive refunds through ECS, direct credit, RTGS or NEFT, the refund instructions will be given to the clearing system within 12 Working Days from the Issue Closing Date. A suitable communication shall be dispatched to the Applicants receiving refunds through these modes, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund. Such communication will be mailed to the addresses of Applicants, as per the Demographic Details received from the Depositories. The Demographic Details would be used mailing of the physical refund orders, as applicable. Mode of making refunds for Applicants other than ASBA Applicants

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The payment of refund, if any, for Applicants other than ASBA Applicants would be done through any of the following modes: 1. Direct Credit – Applicants having bank accounts with the Refund Bank(s), as per Demographic Details

received from the Depositories, shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Refund Bank(s) for the same would be borne by the Company.

2. NECS – Payment of refund would be done through NECS for applicants having an account at any of the

centres 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 from the Depositories.

3. RTGS – Applicants having a bank account at any of the centres where such facility has been made

available and whose refund amount exceeds Rs. 2 Lacs, have the option to receive refund through RTGS provided the Demographic Details downloaded from the Depositories contain the nine digit MICR code of the Applicant’s bank which can be mapped with the RBI data to obtain the corresponding Indian Financial System Code (IFSC). Charges, if any, levied by the applicant‘s bank receiving the credit would be borne by the Applicant.

4. NEFT – Payment of refund shall be undertaken through NEFT wherever the Applicant’s bank has been

assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Applicants have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method. The process flow in respect of refunds by way of NEFT is at an evolving stage, 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 in the sections.

5. For all other applicants, including those who have not updated their bank particulars with the MICR code,

the refund orders will be dispatched through Speed Post or Registered Post. Such refunds will be made by cheques, pay orders or demand drafts drawn on the relevant Refund Bank and payable at par at places where Applications are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Applicants.

Mode of making refunds for ASBA Applicants In case of ASBA Applicants, the Registrar shall instruct the relevant SCSB to unblock the funds in the relevant ASBA Account for withdrawn, rejected or unsuccessful or partially successful ASBA Applications within 12 Working Days of the Issue Closing Date.

Allotment and Issuance of Allotment Advice With respect to Applicants other than ASBA Applicants, our Company shall (i) ensure dispatch of Allotment Advice/ intimation within 12 Working Days of the Issue Closing Date, and (ii) give instructions for credit of NCDs to the beneficiary account with Depository Participants, for successful Applicants who have been allotted NCDs in dematerialized form, within 12 Working Days of the Issue Closing Date. The Allotment Advice for successful Applicants will be mailed to their addresses as per the Demographic Details received from the Depositories. With respect to the ASBA Applicants, our Company shall ensure dispatch of Allotment Advice and/ or give instructions for credit of NCDs to the beneficiary account with Depository Participants within 12 Working Days of the Issue Closing Date. The Allotment Advice for successful ASBA Applicants will be mailed to their addresses as per the Demographic Details received from the Depositories. Our Company shall use best efforts to ensure that all steps for completion of the necessary formalities for

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commencement of trading at the Stock Exchange where the NCDs are proposed to be listed are taken within 12 Working Days from the Issue Closing Date. The Company will provide adequate funds required for dispatch of refund orders and Allotment Advice, as applicable, to the Registrar to the Issue.

Withdrawal of Applications during the Issue Period Withdrawal of Direct Online Applications

Direct Online Applications would be withdrawn in accordance with the procedure as may be prescribed by the Stock Exchanges. Withdrawal of ASBA Applications

ASBA Applicants can withdraw their ASBA Applications during the Issue Period by submitting a request for the same to Lead Manager, Lead Broker, sub-broker, Trading Member of the Stock Exchange or the Designated Branch, as the case may be, through whom the ASBA Application had been placed. In case of ASBA Applications submitted to the Lead Managers, Lead Brokers, sub-brokers or Trading Members of the Stock Exchange at the Specified Cities, upon receipt of the request for withdrawal from the ASBA Applicant, the relevant Lead Manager, Lead Broker, sub-broker or Trading Member of the Stock Exchange, as the case may be, shall do the requisite, including deletion of details of the withdrawn ASBA Application Form from the electronic system of the Stock Exchange. In case of ASBA Applications submitted directly to the Designated Branch of the SCSB, upon receipt of the request for withdraw from the ASBA Applicant, the relevant Designated Branch shall do the requisite, including deletion of details of the withdrawn ASBA Application Form from the electronic system of the Stock Exchanges and unblocking of the funds in the ASBA Account directly. Withdrawal of Non-ASBA Applications (other than Direct Online Applications)

Non-ASBA Applicants can withdraw their Applications during the Issue Period by submitting a request for the same to Lead Manager, Lead Broker, sub-broker or Trading Member of the Stock Exchange, as the case may be, through whom the Application had been placed. Upon receipt of the request for withdrawal from the Applicant, the relevant Lead Manager, Lead Broker, sub-broker or Trading Member of the Stock Exchange, as the case may be, shall do the requisite, including deletion of details of the withdrawn Non-ASBA Application Form from the electronic system of the Stock Exchange.

Withdrawal of Applications after the Issue Period

In case an Applicant wishes to withdraw the Application after the Issue Closing Date, the same can be done by submitting a withdrawal request to the Registrar to the Issue prior to the finalization of Allotment. The Registrar to the Issue shall delete the withdrawn Application from the electronic file provide by the Stock Exchange and give instruction to the SCSB for unblocking the ASBA Account (in case of ASBA Applications).

Revision of Applications In case of revision of Application during the Issue Period, ensure that you have first withdrawn your original Application and submit a fresh Application. Revision of Applications is not permitted after the expiry of the time for acceptance of Application Forms on Issue Closing Date. Depository Arrangements We have made depository arrangements with NSDL and CDSL for issue and holding of the NCDs in dematerialized form. Please note that Tripartite Agreements have been executed between our Company, the Registrar and both the depositories. As per the provisions of the Depositories Act, 1996, the NCDs issued by us can be held in a dematerialized form. In this context:

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i Tripartite Agreement dated March 30, 2000 and April 30, 1999 between us, the Registrar to the Issue and

CDSL and NSDL, respectively for offering depository option to the investors. ii. An Applicant must have at least one beneficiary account with any of the Depository Participants (DPs) of

NSDL or CDSL prior to making the Application. iii. The Applicant must necessarily provide the DP ID and Client ID details in the Application Form. iv. NCDs Allotted to an Applicant in the electronic form will be credited directly to the Applicant’s

respective beneficiary account(s) with the DP. v. Applications can be in single or joint names (not exceeding two names). In case of Applications in joint

names for Allotment of NCDs, the names should be in the same order as the appearing in the records of the Depository Participant.

vi. Non-transferable Allotment Advice/ refund orders will be directly sent to the Applicant by the Registrar to this Issue.

ix. It may be noted that NCDs in electronic form can be traded only on the Stock Exchange having electronic connectivity with NSDL or CDSL. The Stock Exchanges have connectivity with NSDL and CDSL.

x. Interest or other benefits with respect to the NCDs held in dematerialized form would be paid to those NCD Holders whose names appear on the list of beneficial owners given by the Depositories to us as on Record Date. In case of those NCDs for which the beneficial owner is not identified by the Depository as on the Record Date/ book closure date, we would keep in abeyance the payment of interest or other benefits, till such time that the beneficial owner is identified by the Depository and conveyed to us, whereupon the interest or benefits will be paid to the beneficiaries, as identified, within a period of 30 days.

xi. The trading of the NCDs on the floor of the Stock Exchanges shall be in dematerialized form only. Please also refer to “Instructions for completing the Application Form - Applicant’s Depository Account and Bank

Account Details” on page 182. Please note that the NCDs shall cease to trade from the Record Date (for payment of the principal amount and the applicable premium for such NCDs) prior to redemption of the NCDs. PLEASE NOTE THAT TRADING OF NCDs ON THE FLOOR OF THE STOCK EXCHANGES SHALL

BE IN DEMATERIALISED FORM ONLY IN MULTIPLE OF ONE NCD. Allottees will have the option to re-materialise the NCDs Allotted under the Issue as per the provisions of the Act and the Depositories Act. Communications

• All future communications in connection with Applications made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or first Applicant, Application Form number, Applicant’s DP ID and Client ID, Applicant’s PAN, number of NCDs applied for, date of the Application Form, name and address of the Lead Manager, Lead Broker, sub-broker, Trading Member of the Stock Exchange or Designated Branch, as the case may be, where the Application was submitted, and cheque/ draft number and issuing bank thereof or with respect to ASBA Applications, ASBA Account number in which the amount equivalent to the Application Amount was blocked. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the relevant SCSB. All grievances relating to the Direct Online Applications may be addressed to the Registrar to the Issue, with a copy to the Stock Exchange.

• Applicants may contact our Compliance Officer (and Company Secretary) or the Registrar to the Issue in case of any pre-Issue or post-Issue related problems such as non-receipt of Allotment Advice, refunds, interest on application money or credit of NCDs in the respective beneficiary accounts, as the case may be.

Nomination Facility In accordance with Section 109A of the Companies Act, the sole or first Applicant, with other joint Applicants, may

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nominate any one person in whom, in the event of the death of sole Applicant or in case of joint Applicants, death of all the Applicants, as the case may be, the NCDs Allotted, if any, will vest. A nominee entitled to the NCDs by reason of the death of the original holder(s), will, in accordance with Section 109A of the Companies Act, be entitled to the same benefits to which he or she will be entitled if he or she were the registered holder of the NCDs. 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 NCDs in the event of the holder‘s death during minority. A nomination will stand rescinded on a sale/transfer/alienation of NCDs 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 and Corporate Office or with the Registrar to the Issue. In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of Section 109A of the Companies Act, will on the production of such evidence as may be required by the Board, elect either:

− to register himself or herself as holder of NCDs; or

− to make such transfer of the NCDs, 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 NCDs, and if the notice is not complied with within a period of 90 days, the Board may thereafter withhold payment of all dividend, bonuses or other monies payable in respect of the NCDs, until the requirements of the notice have been complied with. In case of Application for allotment of NCDs in dematerialised form, There is no need to make a separate nomination with our Company. Nominations registered with the respective Depository Participant of the Applicant will prevail. If Applicants want to change their nomination, they are advised to inform their respective Depository Participant. Interest in case of Delay Our Company undertakes to pay interest, in connection with any delay in allotment, demat credit and refunds, beyond the time limit as may be prescribed under applicable statutory and/or regulatory requirements, at such rates as stipulated under such applicable statutory and/or regulatory requirements.

Impersonation As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-section (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”. Pre-closure

Our Company, in consultation with the Lead Managers reserves the right to close the Issue at any time prior to the Issue Closing Date, subject to receipt of minimum subscription for NCDs aggregating to 75% of the Base Issue. Our Company shall allot NCDs with respect to the Applications received at the time of such pre-closure in accordance with the Basis of Allotment as described hereinabove and subject to applicable statutory and/or regulatory requirements. Utilisation of Application Money The sum received in respect of the Issue will be kept in separate bank accounts and we will have access to such funds as per applicable provisions of law(s), regulations and approvals. Utilisation of Issue Proceeds a) All monies received pursuant to the Issue of NCDs to public shall be transferred to a separate bank

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account other than the bank account referred to in sub-section (3) of section 73 of the Act. b) Details of all monies utilised out of Issue referred to in sub-item (a) shall be disclosed under an

appropriate separate head in our Balance Sheet indicating the purpose for which such monies had been utilised; and

c) Details of all unutilised monies out of issue of NCDs, if any, referred to in sub-item (a) shall be

disclosed under an appropriate separate head in our Balance Sheet indicating the form in which such unutilised monies have been invested.

d) We shall utilize the Issue proceeds only upon execution of the documents for creation of security as stated

in this Draft Prospectus and on receipt of the minimum subscription of 75% of the Base Issue.

e) The Issue proceeds shall not be utilized towards full or part consideration for the purchase or any other acquisition, inter alia by way of a lease, of any immovable property.

Filing of the Prospectus with ROC

A copy of the Prospectus shall be filed with the Registrar of Companies, Chennai, Tamil Nadu, in terms of section 56 and section 60 of the Act. Pre-Issue Advertisement

Our Company will issue a statutory advertisement on or before the Issue Opening Date. This advertisement will contain the information as prescribed under Debt Regulations. Material updates, if any, between the date of filing of the Prospectus with ROC and the date of release of this statutory advertisement will be included in the statutory advertisement. Listing

The NCDs offered through this Draft Prospectus are proposed to be listed on the NSE and the BSE. Our Company has obtained an ‘in-principle’ approvals for the Issue from the BSE vide their letter dated [●], 2012 and an ‘in-principle’ approvals for the Issue from NSE vide their letter dated [●], 2012. For the purposes of the Issue, NSE shall be the Designated Stock Exchange. If permissions to deal in and for an official quotation of our NCDs are not granted by the BSE and/or the NSE, our Company will forthwith repay, all moneys received from the applicants in pursuance of this Draft Prospectus, without interest. Our Company shall use best efforts to ensure that all steps for completion of the necessary formalities for commencement of trading at the Stock Exchange where the NCDs are proposed to be listed are taken within 12 Working Days from the Issue Closing Date. For the avoidance of doubt, it is hereby clarified that in the event of non subscription to any one or more of the Series, such Series(s) of NCDs shall not be listed.

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SECTION VII : LEGAL AND OTHER INFORMATION

PENDING PROCEEDINGS AND STATUTORY DEFAULTS As on the date of this Draft Prospectus, there are no defaults in meeting statutory dues, institutional dues, and towards holders of instrument like debentures, fixed deposits and arrears on cumulative preference shares, etc, by our Company or by public companies promoted by the same promoter and listed on stock exchange. Our Company is involved in legal proceedings which have arisen in the ordinary course of business. Save as stated

hereinbelow, such proceedings however, are not material enough to adversely affect our operations, financial

position and profitability.

Save as stated herein, there are no material defaults, non payments or over dues of statutory dues, institutional or

bank dues or dues towards holders of debentures, bonds and fixed deposits and arrears of preference shares. Save as disclosed herein below, there are no pending proceedings pertaining to: a. matters likely to affect operation and finances of our Company including disputed tax liabilities of any

nature; and b. criminal prosecution launched against our Company and the Directors for alleged offences under the

enactments specified in Paragraph 1 of Part I of Schedule XIII to the Act. Proceedings Initiated Against our Company

Civil Proceedings

259 civil proceedings have been initiated in the regular course of business against our Company involving an aggregate amount of ` 1,555.03 lacs. Tax Proceedings

1. The Commissioner of Income Tax (“CIT”), has filed two appeals against our Company before the Hon’ble

High Court of Madras (bearing no 835 of 2007 and T.C.A No.836 of 2007) against the order of the Income Tax Appellate Tribunal (“ITAT”) dated November 16, 2005, wherein inter alia it has omitted tax of i) bad debts amounting to ` 18,71,540, ii) Additional Finance Charges on accrual basis : ` 1,75,98,755, and iii) approved the method of accounting of the assessee for the assessment year 1996-97. The appeal has been raised on the grounds that the allowances made by the ITAT are erroneous. The matter is pending hearing and final disposal.

2. The Commissioner of Income Tax (“CIT”) has filed two appeals against our Company before the Hon’ble

High Court of Madras (bearing no T.C.A No. 1236 of 2007 and T.C.A No.1237/2007) against the order of the Income Tax Appellate Tribunal (“ITAT”) dated April 21, 2006, wherein inter alia it has omitted tax of i) deposit mobilisation expenses amounting to ` 2,85,05,921, ii) Additional Finance Charges on accrual basis : ` 31,015,733, and iii) approved the method of accounting of the assessee for the assessment year 1997-98. The appeal has been raised on the grounds that the allowances made by the ITAT are erroneous. The matter is pending hearing and final disposal.

3. The Commissioner of Income Tax (“CIT”) has filed two appeals against our Company before the Hon’ble

High Court of Madras (bearing no 1238 & 1239 of 2007) against the order of the Income Tax Appellate Tribunal (“ITAT”) dated April 21, 2006, wherein inter alia it has omitted tax of i) deposit mobilisation expenses amounting to ` 1,98,86,306, ii) Additional Finance Charges on accrual basis : ` 4,29,07,516, and iii) approved the method of accounting of the assessee for the assessment year 1998-99. The appeal has been raised on the grounds that the allowances made by the ITAT are erroneous. The matter is pending hearing and final disposal.

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4. The Commissioner of Income Tax (“CIT”) has filed two appeals against our Company before the Hon’ble

High Court of Madras (bearing no T.C.A No.1241/2007 and T.C.A No.1242/2007) against the order of the Income Tax Appellate Tribunal (“ITAT”) dated April 21, 2006, wherein inter alia it has omitted tax of i) taxing of additional finance charges on accrual basis ` 9,75,65,295; and ii) approved the method of accounting of the assessee for the assessment year 1999-2000. The CIT has also raised the issue of deduction of deposit mobilisation expenses amounting to ` 28,500,000 in appeal. The appeal has been raised on the grounds that the allowances made by the ITAT are erroneous. The matter is pending hearing and final disposal.

5. The Commissioner of Income Tax (“CIT”) has filed an appeal against our Company before the Hon’ble

High Court of Madras (bearing T.C.A No.1240/2007) against the order of the Income Tax Appellate Tribunal (“ITAT”) dated April 21, 2006, wherein inter alia it has omitted tax of i) additional finance charges on accrual basis: ` 2,11,69,152 and ii) approved the method of accounting of the assessee for the assessment year 2000-2001. The CIT also raised the issue of deduction of deposit mobilisation expenses amounting to ` 28,500,000 in appeal. The appeal has been raised on the grounds that the allowances made by the ITAT are erroneous. The matter is pending hearing and final disposal.

6. The Commissioner of Income Tax (“CIT”) has filed an appeal against our Company before the Hon’ble High Court of Madras (bearing T.C.A No.1243/2007) against the order of the Income Tax Appellate Tribunal (“ITAT”) dated April 21, 2006, wherein inter alia it has omitted tax of i) additional finance charges on accrual basis: ` 8,90,62,060 and ii) approved the method of accounting of the assessee for the assessment year 2001-2002. The CIT has also raised the issue of deduction of deposit mobilisation expenses amounting to ` 28,500,000 in appeal. The appeal has been raised on the grounds that the allowances made by the ITAT are erroneous. The matter is pending hearing and final disposal.

7. The Commissioner of Income Tax (“CIT”) has filed an appeal against our Company before the Hon’ble

High Court of Madras (bearing T.C.A No. 2161/2008) against the order of the Income Tax Appellate Tribunal (“ITAT”) dated December 19, 2007, wherein inter alia it has omitted tax of i) Additional Finance Charges on accrual basis : `.8,72,388 ii) Provision for Bad Debts under Section 115 JB of the Income Tax Act, 1961, ` 2,16,00,000 and iii) approved the method of accounting of the assessee for the assessment year 2002-2003. The CIT has also raised an issue of enhancement of additional finance charges in appeal. The appeal has been raised on the grounds that the allowances made by the ITAT are erroneous. The matter is pending hearing and final disposal.

8. The Commissioner of Income Tax (“CIT”) has filed an appeal against our Company before the Hon’ble

High Court of Madras (bearing T.C.A No.638/2009) against the order of the Income Tax Appellate Tribunal (“ITAT”) dated February 6, 2009, wherein inter alia it has omitted tax of i) additional finance charges ` 168,498,442 and ii) approved the method of accounting of the assessee for the assessment year 2003-2004. The appeal has been raised on the grounds that the allowances made by the ITAT are erroneous. The matter is pending hearing and final disposal.

9. The Commissioner of Income tax (“CIT”) has filed an appeal against our Company before the Hon’ble

High Court of Madras (bearing No T.C.A. No.1422/2010) against the order of the Income Tax Appellate Tribunal (“ITAT”) dated July 16, 2009 wherein inter alia it has omitted tax of i) Additional Finance Charges on accrual basis : ` 1,03,77,135; ii) provision for bad debts under Section 115 JB of the Income Tax Act, 1961: ` 41,451,000 and iii) approved the method of accounting of the assessee for the assessment year 2005-2006. The appeal has been raised on the grounds that the allowances made by the ITAT are erroneous. The matter is pending hearing and final disposal.

Proceedings Initiated by our Company Tax Proceedings 1. Our Company is in the process of filing an appeal, before the Madras High Court, against the order of the

Commissioner of Income Tax Appeals (“CIT Appeals”) dated June 28, 2012, wherein inter alia it had

207

confirmed the disallowance of the amount transferred to the statutory reserve fund of ` 32,55,30,819 in compliance with the provisions of Section 45-I of the Reserve Bank of India Act, for Assessment Year 2008-2009, under normal computation and ` 17,61,11,000 under computation under Section 115 JB of the Income Tax Act, 1961. The appeal has been raised on the grounds that the ITAT, has not granted disallowance made under Section 14A of the Income Tax Act, 1961, while computing income both normal provisions and the provisions of Section 115 JB of the Income Tax Act, 1961. The matter is pending hearing and final disposal.

2. Our Company has preferred an appeal before the Madras High Court, against the orders of the

Commissioner of Income Tax Appeals (“CIT Appeals”) dated October 10, 2011, and Corrigendum dated November 8, 2011, wherein inter alia it had confirmed the disallowance of the amount transferred to the statutory reserve fund of ` 17,09,56,664 in compliance with the provisions of Section 45-I of the Reserve Bank of India Act, for Assessment Year 2007-2008, under normal computation and ` 10,32,43,000 under computation under Section 115 JB of the Income Tax Act, 1961. The appeal has been raised on the grounds that the ITAT, has not granted disallowance made under Section 14A of the Income Tax Act, 1961, while computing income both normal provisions and the provisions of Section 115 JB of the Income Tax Act, 1961. The matter is pending hearing and final disposal.

3. Our Company has preferred an appeal before the Hon’ble High Court of Madras against the order of the Income Tax Appellate Tribunal (“ITAT”), dated May 6, 2009, wherein inter alia it had confirmed the disallowance of the amount transferred to the statutory reserve fund of ` 2,99,57,110 in compliance with the provisions of Section 45-I of the Reserve Bank of India Act, for the assessment year 2004-05, both under normal computation and under computation under Section 115 JB of the Income Tax Act, 1961. The appeal has been raised on the grounds that the ITAT, has not granted disallowance made under Section 14A of the Income Tax Act, 1961, while computing income both normal provisions and the provisions of Section 115 JB of the Income Tax Act, 1961. The matter is pending hearing and final disposal.

4. Our Company has preferred an appeal before the Hon’ble High Court of Madras against the order of the

Income Tax Appellate Tribunal (“ITAT”) dated July 16, 2009, wherein inter alia it had confirmed the disallowance of the amount transferred to the statutory reserve fund of ` 455,11,034 in compliance with the provisions of the Section 45-I of the Reserve Bank of India, Act, for the assessment year 2005-06 under normal computation and ` 4,62,79,000 under computation under Section 115 JB of the Income Tax Act, 1961. The appeal has been raised on the grounds that the ITAT, has not granted disallowance made under Section 14A of the Income Tax Act, 1961, while computing income both normal provisions and the provisions of Section 115 JB of the Income Tax Act, 1961. The matter is pending hearing and final disposal.

5. Our Company has preferred an appeal before the Hon’ble High Court of Madras against the order of the Income Tax Appellate Tribunal (“ITAT”) dated December 8, 2010, wherein inter alia it had confirmed the disallowance of the amount transferred to the statutory reserve fund of ` 789,00,354 in compliance with the provisions of the Section 45-I of the Reserve Bank of India, Act, for the assessment year 2006-07, under normal computation and ` 6,33,46,000 under computation under Section 115 JB of the Income Tax Act, 1961. The appeal has been raised on the grounds that the ITAT, has not granted disallowance made under Section 14A of the Income Tax Act, 1961, while computing income both normal provisions and the provisions of Section 115 JB of the Income Tax Act, 1961. The matter is pending hearing and final disposal.

6. Our Company has preferred an appeal before the Commissioner of Income tax (Appeals), against the order of the Income Tax Assessing Officer dated December 29, 2011, wherein inter alia the Assessing Officer had raised a demand of ` 42,98,29,510/- for the assessment year 2009-10. The appeal has been filed on the grounds that many of the Assessing Officer’s contentions have been dealt with by previous orders of the Income Tax Appellate Tribunal which are in favour of the Company. These proceedings are pending hearing and final disposal.

208

Civil Proceedings

Our Company has initiated various civil proceedings in the regular course of business, the outcome of which our Company believes will not materially adversely affect the financial condition and operations of our Company.

209

OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue

At the meeting of the Board of Directors of our Company, held on July 27, 2012, the Directors approved the issue of NCDs to the public upto an amount not exceeding ` 2,00,000 lacs. Pursuant to resolution passed by the shareholders of our Company at their AGM held on July 27, 2012, and in accordance with provisions of Section 293 (1)(d) of the Act, the Board has been authorised to borrow sums of money as they may deem necessary for the purpose of the business of our Company upon such terms and conditions and with or without security as the Board of Directors may think fit, provided that money or monies to be borrowed together with the monies already borrowed by our Company (apart from temporary loans obtained and/or to be obtained from the Company’s bankers in the ordinary course of business) shall not exceed ` 20,00,000 lacs.

Prohibition by SEBI Our Company, persons in control of our Company and/or our Promoter have not been restrained, prohibited or debarred by SEBI from accessing the securities market or dealing in securities and no such order or direction is in force. Further, no member of our promoter group has been prohibited or debarred by SEBI from accessing the securities market or dealing in securities due to fraud.

Disclaimer Clause of the Stock Exchanges Disclaimer Clause of NSE

[●] Disclaimer Clause of BSE

[●] Disclaimer Clause of the RBI THE COMPANY IS HAVING A VALID CERTIFICATE OF REGISTRATION DATED APRIL 17, 2007

ISSUED BY THE RESERVE BANK OF INDIA UNDER SECTION 45 IA OF THE RESERVE BANK OF

INDIA ACT, 1934. HOWEVER, THE RBI DOES NOT ACCEPT ANY RESPONSIBILITY OR

GUARANTEE ABOUT THE PRESENT POSITION AS TO THE FINANCIAL SOUNDNESS OF THE

COMPANY OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS OR REPRESENTATIONS

MADE OR OPINIONS EXPRESSED BY THE COMPANY AND FOR REPAYMENT OF DEPOSITS/ DISCHARGE OF LIABILITY BY THE COMPANY.

Jurisdiction

Exclusive jurisdiction for the purpose of the Issue is with competent courts/authorities in Chennai, Tamil Nadu, India.

Disclaimer in respect of jurisdiction This Issue is being made in India to persons resident in India, including Indian national residents in India who are inter alia majors, HUFs, companies, corporate bodies and societies registered under the applicable laws in India and authorised to invest in debt securities, shares, Mutual Funds, Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI’s permission), or trusts under applicable trust law and who are authorised under their constitution to hold and invest in debt securities, shares, public financial institutions as specified in Section 4A of the Companies Act, state industrial development corporations, insurance companies registered with the IRDA, provident funds (subject to applicable law) with minimum corpus of ` 2500 lacs and pension funds with minimum corpus of ` 2500 lacs, venture capital funds, the National Investment Fund, insurance

210

funds set up and managed by the army, navy or air force of the Union of India or by the Department of Posts, India and permitted Non-Residents including foreign institutional investors, their Sub-Accounts, foreign venture capital funds, alternate investment funds, multilateral and bilateral financial institutions and Eligible NRIs and other eligible foreign investors, if any, provided that they are eligible under all applicable laws and regulations to purchase the NCDs. The Draft Prospectus will not, however, constitute an offer to sell or an invitation to subscribe for NCDs offered hereby in any jurisdiction other than India to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession the Draft Prospectus comes is required to inform himself or herself about, and to observe, any such restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of appropriate court(s) in Chennai only. No action has been, or will be, taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that the Draft Prospectus has been filed with the SEBI and the Designated Stock Exchange pursuant to the provisions of the Debt Regulations. Accordingly, the NCDs represented hereby may not be offered or sold, directly or indirectly, and the Draft Prospectus may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of the Draft Prospectus nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of our Company from the date hereof or that the information contained herein is correct as of any time subsequent to this date. The NCDs have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the

“Securities Act”) or any state securities laws in the United States and may not be offered or sold within the

United States, or to, or for the account or benefit of, “U.S. Persons” (as defined the Regulation S under the

Securities Act).

The NCDs have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction.

Listing

An application has been made to the NSE and the BSE for permission to deal in and for an official quotation of our NCDs. NSE has been appointed as the Designated Stock Exchange. If permissions to deal in and for an official quotation of our NCDs are not granted by NSE and/or BSE, our Company will forthwith repay, without interest, all moneys received from the applicants in pursuance of this Draft Prospectus. Our Company shall ensure that all steps for the completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges mentioned above are taken within 12 working days from the Issue Closing Date. For the avoidance of doubt, it is hereby clarified that in the event of non subscription to any one or more of the Series, such NCDs with Series(s) shall not be listed. Consents

Consents in writing of: (a) the Directors, (b) our Company Secretary and Compliance Officer (c) Bankers to our Company; (d) Lead Managers, (e) the Registrar to the Issue, (f) Legal Advisors to the Issue, (g) Credit Rating Agencies and (h) the Debenture Trustee, to act in their respective capacities, have been obtained and the same will be filed along with a copy of the Prospectus with the ROC. The consent of the Statutory Auditor of our Company, namely M/s. Pijush Gupta & Co for (a) inclusion of their names as the Statutory Auditor, (b) examination reports on Reformatted Consolidated Summary Financial Statements and the Reformatted Unconsolidated Summary Financial Statements in the form and context in which

211

they appear in this Draft Prospectus, have been obtained and the same will be filed along with a copy of the Draft Prospectus with the Designated Stock Exchange. Expert Opinion

Except the reports issued by CARE dated August 10, 2012 and CRISIL dated August 14, 2012, respectively in respect of the credit ratings issued thereby for this Issue and the rationale for its rating, our Company has not obtained any expert opinions.

Common form of Transfer The Issuer undertakes that there shall be a common form of transfer for the NCDs and the provisions of the Companies Act, 1956 and all applicable laws shall be duly complied with in respect of all transfer of debentures and registration thereof.

Minimum Subscription

If our Company does not receive the minimum subscription of 75 % of the Base Issue, i.e. ` 18,750 lacs, on the date of closure of the Issue, the entire subscription shall be refunded to the applicants within the time prescribed under applicable statutory/regulatory requirements. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to refund the subscription amount, our Company will pay interest for the delayed period at rates prescribed under applicable statutory and/or regulatory requirements.

Filing of the Draft Prospectus

The Draft Prospectus has been filed with NSE on [●] and with BSE on [●] in terms of Regulation 7 of the Debt Regulations for dissemination on their website(s).

Debenture Redemption Reserve

Section 117C of the Act states that any company that intends to issue debentures must create a DRR to which adequate amounts shall be credited out of the profits of the company until the redemption of the debentures. The Ministry of Corporate Affairs has, through its circular dated April 18, 2002, (“Circular”), specified that the quantum of DRR to be created before the redemption liability actually arises in normal circumstances should be ‘adequate’ to pay the value of the debentures plus accrued interest, (if not already paid), till the debentures are redeemed and cancelled. The Circular however further specifies that, for NBFCs like our Company, (NBFCs which are registered with the RBI under Section 45-IA of the RBI Act), the adequacy of the DRR will be 50% of the value of debentures issued through the public issue. Accordingly our Company is required to create a DRR of 50% of the value of debentures issued through the public issue. As further clarified by the Circular, the amount to be credited as DRR will be carved out of the profits of the company only if there is profit for the particular year and there is no obligation on the part of the company to create DRR if there is no profit for the particular year. Our Company shall credit adequate amounts to DRR, from its profits every year until such NCDs are redeemed. The amounts credited to DRR shall not be utilized by the company except for the redemption of the NCDs.

Issue Related Expenses The expenses of this Issue include, among others, Fees for the Lead Managers, printing and distribution expenses, legal fees, advertisement expenses and listing fees. The estimated Issue expenses to be incurred for the Issue size of up to ` 50,000 lacs (assuming the full subscription including the retention of over subscription of up to ` 25,000 lacs) are as follows:

(` in lacs)

Activity Expenses

Lead Management Fee/ Underwriting Commission/Brokerage [●]

Advertising and Marketing Expenses [●]

212

Activity Expenses

Printing and Stationery [●]

Fees payable to legal advisors to the Issue [●]

Fess payable to the Registrars to the Issue [●]

Fees payable to the Debenture Trustee [●]

Others (Credit Rating Fee, Etc.) [●]

Total [●]

The above expenses are indicative and are subject to change depending on the actual level of subscription to the Issue and the number of Allottees, market conditions and other relevant factors.

Underwriting

The Issue has not been underwritten.

Details regarding the public issue during the last three years by our Company and other listed companies

under the same management within the meaning of section 370(1B):

Our Company has not made any public or rights or composite issue of capital during the last three years. There are no listed companies under the same management within the meaning of Section 370(1) (B) of the Companies Act, 1956.

Public / Rights Issues

Our Company has not made any public or rights issuances in the last five years except as follows:

Previous Issue

Sr.

No

.

Brief details of the Issue Date of

allotment

Opening

date

Closing

date

Date of

refunds

Date of

listing on

the stock exchange

Amount of

premium/di

scount at which the

securities

are allotted

(if any)

1. Public issue of 75,00,000

secured non convertible

debentures of face value

of ` 1,000 each

August

26, 2011

August 11,

2011

August 13,

2011

August 29,

2011

NSE:

September

2, 2011

BSE:

September

2, 2011

-

Other than as specifically disclosed in this Draft Prospectus, our Company has not issued any securities for consideration other than cash.

Commissions and Brokerage on previous issue

` 849.26 lacs was incurred towards commission and brokerage in connection with the public issue of 75,00,000 secured non convertible debentures of face value ` 1,000.00 each pursuant to the prospectus dated August 1, 2011.

213

Stock Market Data

A. Our Equity Shares

Our Equity Shares are listed on the BSE, NSE and MSE. However our Equity Shares have not been traded on the MSE since July 2, 2003. The high, low and average market prices of the Equity Shares of our Company during the preceding three years:

BSE

Year Date of High High (`̀̀̀) Volume on

date of High (No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low (No of

shares)

Average for

the year (`̀̀̀)

2010 October 11, 2010

713.50 397 January 4, 2010

393.75 640 536.18

2011 January 5, 2011

616.60 6 December 27, 2011

461.15 9 537.89

2012* July 16,2012 748.00 191 January 3, 2012

471.00 200 608.79

*Till July 31, 2012

(Source: www.bseindia.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.

NSE Year Date of

High

High (`̀̀̀) Volume on

date of

High (No

of Equity

Shares)

Date of

Low

Low(`̀̀̀) Volume on

date of

High (No

of Equity

Shares)

Average

for the

year (`̀̀̀)

2010 October 11, 2010

712.45 2,706 January 4, 2010

388.95 953 534.29

2011 April 29, 2011

617.20 5,850 December 19, 2011

471.15 6,719 534.66

2012* July 17, 2012

750.20 29,497 January 2, 2012

482.80 3,934 607.18

*Till July 31, 2012

(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 this Draft Prospectus:

BSE

Month Date High

(`̀̀̀) Volume (No.

of Shares) Date

Low

(`̀̀̀) Volume (No.

of Shares)

Average

(`)

February 2012 February 580.40 434 February 542.75 1 564.35

214

BSE

Month Date High

(`̀̀̀) Volume (No.

of Shares) Date

Low

(`̀̀̀) Volume (No.

of Shares)

Average

(`)

29,2012 1,2012

March 2012 March 30,2012

635.10 79 March 6,2012 575.00 213 601.92

April 2012 April 20,2012 664.70 1 April 9,2012 625.30 18 645.38

May 2012 May 7,2012 663.00 2 May 29,2012 605.00 4 626.93

June 2012 June 29,2012 630.00 92 June 7,2012 590.00 513 609.75

July 2012 July 16,2012 748.00 191 July 4,2012 627.05 28 690.25

(Source: www.bseindia.com)

NSE

Month Date High (`̀̀̀)

Volume (No. of

Shares)

Date Low (`̀̀̀)

Volume (No. of

Shares)

Average (`)

February 2012 February 29,2012

587.65 15230 February 1,2012

540.00 1,931 564.66

March 2012 March 30,2012

637.75 10503 March 3,2012

569.80 569 602.78

April 2012 April 20,2012

655.00 140 April 26,2012

619.40 878 638.41

May 2012 May 8,202 650.05 2411 May 30,2012 601.05 1439 624.74

June 2012 June 29,2012

630.05 2867 June 7,2012 590.10 2570 609.12

July 2012 July 17,2012

750.20 29497 July 6,2012 628.90 2701 690.61

(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. Details of the volume of business transacted during the last six months on the Stock Exchanges where our securities are listed:

(` lacs)

Period BSE NSE

February2012 3.64 675.33

March 2012 3.06 781.35

April 2012 2.51 277.01

May 2012 2.45 254.46

June 2012 3.41 313.87

July 2012 3.24 1870.89

(Source: www.bseindia.com, www.nseindia.com)

B. Trading of Debentures

The following privately placed debentures issued by our Company have been traded on the BSE in the last 3 years preceding the date of this Draft Prospectus:

215

ISIN No. Date of Trade Last Trade Price (`̀̀̀ in lacs)

Last Trade Value(`̀̀̀ in lacs)

Total Trade Value(`̀̀̀ in lacs)

Last Trade Yield (%) per annum

Weighted Average Price (`̀̀̀ in lacs)

INE722A07141 April 30,2010 100.0686 17500 17500 7.79 100.07

INE722A07190 May 5,2011 100.16 25000 25000 8.96 100.16

(Source: www.bseindia.com )

Except as stated above none of our other listed privately placed non convertible debentures have been traded in the last 3 years. The high, low and average market prices of the publically issued debentures of our Company, during the three years preceding the date of this Draft Prospectus: NSE

SCRIP CODE: N1

ISIN: INE722A07208

NSE

Year Date of High High (`̀̀̀) Volume on date of High

(No

of shares)

Date of low Low (`̀̀̀) Volume on Date of low

(No of

shares)

Average for the year (`̀̀̀)

2011^ September 2, 2011

574 2393 December 19, 2011

461 6719 517.50

2012* July 16, 2012 759 26406 January 4, 2012

477.10 4531 618.05

^ Commencend trading from September 2, 2011

*Till July 31, 2012

(Source: www.nseindia.com)

SCRIP CODE: N 2

ISIN: INE722A07224

NSE

Year Date of High High (`̀̀̀) Volume on

date of High

(No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low

(No of

shares)

Average for

the year (`̀̀̀)

2011^ September 2, 2011

574 2393 December 19, 2011

461 6719 517.50

2012* July 16, 2012 759 26406 January 4, 2012

477.10 4531 618.05

^ Commencend trading from September 2, 2011

*Till July 31, 2012

(Source: www.nseindia.com)

216

SCRIP CODE: N 3

ISIN: INE722A07216

NSE

Year Date of High High (`̀̀̀) Volume on

date of High

(No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low

(No of

shares)

Average for

the year (`̀̀̀)

2011^ September 2, 2011

574 2393 December 19, 2011

461 6719 517.50

2012* July 16, 2012 759 26406 January 4, 2012

477.10 4531 618.05

^ Commencend trading from September 2, 2011

*Till July 31, 2012

(Source: www.nseindia.com)

SCRIP CODE: N 4

ISIN: INE722A07232

NSE

Year Date of High High (`̀̀̀) Volume on date of High

(No

of shares)

Date of low Low (`̀̀̀) Volume on Date of low

(No of

shares)

Average for the year (`̀̀̀)

2011^ September 2, 2011

574 2393 December 19, 2011

461 6719 517.50

2012* July 16, 2012 759 26406 January 4, 2012

477.10 4531 618.05

^ Commencend trading from September 2, 2011

*Till July 31, 2012

(Source: www.nseindia.com)

SCRIP CODE: N 5

ISIN: INE722A07257

NSE

Year Date of High High (`̀̀̀) Volume on

date of High

(No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low

(No of

shares)

Average for

the year (`̀̀̀)

2011^ September 2, 2011

574 2393 December 19, 2011

461 6719 517.50

2012* July 16, 2012 759 26406 January 4, 2012

477.10 4531 618.05

^ Commencend trading from September 2, 2011

*Till July 31, 2012

(Source: www.nseindia.com)

217

SCRIP CODE: N 6

ISIN: INE722A07240

NSE

Year Date of High High (`̀̀̀) Volume on

date of High

(No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low

(No of

shares)

Average for

the year (`̀̀̀)

2011^ September 2, 2011

574 2393 December 19, 2011

461 6719 517.50

2012* July 16, 2012 759 26406 January 4, 2012

477.10 4531 618.05

^ Commencend trading from September 2, 2011

*Till July 31, 2012

(Source: www.nseindia.com)

BSE

SCRIP CODE: 934821

ISIN: INE722A07216

BSE

Year Date of High High (`̀̀̀) Volume on

date of High

(No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low

(No of

shares)

Average for

the year (`̀̀̀)

2011^ December 22, 2011

1000 2512 December 22, 2011

1000 2512 1000

2012* NIL NIL NIL NIL NIL NIL NIL

^ Commencend trading from September 2, 2011

*Till July 31, 2012

(Source: www.bseindia.com)

SCRIP CODE: 934822

ISIN: INE722A07224

BSE

Year Date of High High (`̀̀̀) Volume on

date of High (No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low (No of

shares)

Average for

the year (`̀̀̀)

2011^ September 27, 2011

1011 1518 September 02,2011

959 784314 985

2012* February 3, 2012

1055 1752 January 2, 2012

1021 271 1038

^ Commencend trading from September 2, 2011

218

*Till July 31, 2012

(Source: www.bseindia.com)

SCRIP CODE: 934823

ISIN: INE722A07232

BSE

Year Date of High High (`̀̀̀) Volume on

date of High (No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low (No of

shares)

Average for

the year (`̀̀̀)

2011^ NIL NIL NIL NIL NIL NIL NIL

2012* NIL NIL NIL NIL NIL NIL NIL

^ Commencend trading from September 2, 2011

*Till July 31, 2012

(Source: www.bseindia.com)

SCRIP CODE: 934824

ISIN: INE722A07240

BSE

Year Date of High High (`̀̀̀) Volume on

date of High

(No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low

(No of

shares)

Average for

the year (`̀̀̀)

2011^ September 28, 2012

1008 64 September 27, 2012

950.10 155 979.05

2012* March 13, 2012

1038.60 55 March 29, 2012

961 3 999.80

^ Commencend trading from September 2, 2011

*Till July 31, 2012

(Source: www.bseindia.com)

SCRIP CODE: 934825

ISIN: INE722A07257

BSE

Year Date of High High (`̀̀̀) Volume on

date of High (No

of shares)

Date of low Low (`̀̀̀) Volume on

Date of low (No of

shares)

Average for

the year (`̀̀̀)

2011^ NIL NIL NIL NIL NIL NIL NIL

2012* May 30, 2012 1035 40 April 30, 2012

965 422 1000

^ Commencend trading from September 2, 2011

219

*Till July 31, 2012

(Source: www.bseindia.com) Monthly high and low prices and trading volumes for the debentures publically issued by our Company in the last 6 months preceding the date of this Draft Prospectus: NSE

SCRIP CODE: N1

ISIN: INE722A07208

Month Date of High High (`̀̀̀) Volume on

date of High (No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low (No. of

Debentures)

Average

(`̀̀̀)

July 2012 July 16, 2012 759.00 3,842 July 06, 2012

620.00 2701 689.50

June 2012 June 05, 2012 639.90 432 June 01, 2012

573.30 674 606.60

May 2012 May 08, 2012 655.00 2411 May 02, 2012

537.55 9529 596.28

April 2012 April 19, 2012

658.95 461 April 26, 2012

611.00 878 634.98

March 2012 March 20, 2012

725.00 3266 March 03, 2012

536.45 569 630.73

February

2012

February 21, 2012

609 3,842 February 21, 2012

515.60 3842 562.30

SCRIP CODE: N 2

ISIN: INE722A07224

Month Date of High High (`̀̀̀) Volume on

date of High

(No. of Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low

(No. of Debentures)

Average

(`̀̀̀)

July 2012 July 16, 2012 759.00 3,842 July 06, 2012

620.00 2701 689.50

June 2012 June 05, 2012 639.90 432 June 01, 2012

573.30 674 606.60

May 2012 May 08, 2012 655.00 2411 May 02, 2012

537.55 9529 596.28

April 2012 April 19, 2012

658.95 461 April 26, 2012

611.00 878 634.98

March 2012 March 20, 2012

725.00 3266 March 03, 2012

536.45 569 630.73

February

2012

February 21, 2012

609 3,842 February 21, 2012

515.60 3842 562.30

SCRIP CODE: N 3

ISIN: INE722A07216

220

Month Date of High High (`̀̀̀) Volume on

date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low

(No. of

Debentures)

Average

(`̀̀̀)

July 2012 July 16, 2012 759.00 3,842 July 06, 2012

620.00 2701 689.50

June 2012 June 05, 2012 639.90 432 June 01, 2012

573.30 674 606.60

May 2012 May 08, 2012 655.00 2411 May 02, 2012

537.55 9529 596.28

April 2012 April 19, 2012

658.95 461 April 26, 2012

611.00 878 634.98

March 2012 March 20, 2012

725.00 3266 March 03, 2012

536.45 569 630.73

February

2012

February 21, 2012

609 3,842 February 21, 2012

515.60 3842 562.30

SCRIP CODE: N 4

ISIN: INE722A07232

Month Date of High High (`̀̀̀) Volume on

date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low

(No. of

Debentures)

Average

(`̀̀̀)

July 2012 July 16, 2012 759.00 3,842 July 06, 2012

620.00 2701 689.50

June 2012 June 05, 2012 639.90 432 June 01, 2012

573.30 674 606.60

May 2012 May 08, 2012 655.00 2411 May 02, 2012

537.55 9529 596.28

April 2012 April 19, 2012

658.95 461 April 26, 2012

611.00 878 634.98

March 2012 March 20, 2012

725.00 3266 March 03, 2012

536.45 569 630.73

February

2012

February 21, 2012

609 3,842 February 21, 2012

515.60 3842 562.30

SCRIP CODE: N 5

ISIN: INE722A07257

Month Date of High High (`̀̀̀) Volume on date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on date of Low

(No. of

Debentures)

Average (`̀̀̀)

July 2012 July 16, 2012 759.00 3,842 July 06, 2012

620.00 2701 689.50

June 2012 June 05, 2012 639.90 432 June 01, 2012

573.30 674 606.60

May 2012 May 08, 2012 655.00 2411 May 02, 2012

537.55 9529 596.28

April 2012 April 19, 2012

658.95 461 April 26, 2012

611.00 878 634.98

March 2012 March 20, 725.00 3266 March 03, 536.45 569 630.73

221

Month Date of High High (`̀̀̀) Volume on

date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low

(No. of

Debentures)

Average

(`̀̀̀)

2012 2012

February

2012

February 21, 2012

609 3,842 February 21, 2012

515.60 3842 562.30

SCRIP CODE: N 6

ISIN: INE722A07240

Month Date of High High (`̀̀̀) Volume on date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on date of Low

(No. of

Debentures)

Average (`̀̀̀)

July 2012 July 16, 2012 759.00 3,842 July 06, 2012

620.00 2701 689.50

June 2012 June 05, 2012 639.90 432 June 01, 2012

573.30 674 606.60

May 2012 May 08, 2012 655.00 2411 May 02, 2012

537.55 9529 596.28

April 2012 April 19, 2012

658.95 461 April 26, 2012

611.00 878 634.98

March 2012 March 20, 2012

725.00 3266 March 03, 2012

536.45 569 630.73

February

2012

February 21, 2012

609 3,842 February 21, 2012

515.60 3842 562.30

(Source: www.nseindia.com)

BSE

SCRIP CODE: 934820

ISIN: INE722A07208

Month Date of High High (`̀̀̀) Volume on

date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low

(No. of

Debentures)

Average

(`̀̀̀)

July 2012 NIL NIL NIL NIL NIL NIL NIL

June 2012 NIL NIL NIL NIL NIL NIL NIL

May 2012 NIL NIL NIL NIL NIL NIL NIL

April 2012 NIL NIL NIL NIL NIL NIL NIL

March 2012 NIL NIL NIL NIL NIL NIL NIL

February 2012

NIL NIL NIL NIL NIL NIL NIL

SCRIP CODE: 934821

ISIN: INE722A07216

222

Month Date of High High (`̀̀̀) Volume on

date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low

(No. of

Debentures)

Average

(`̀̀̀)

July 2012 July 19, 2012 1050 1061 July 04, 2012

1036.54 107 1043.27

June 2012 June 26, 2012 1047 9 June 25, 2012

1017.20 1114 1032.10

May 2012 NIL NIL NIL NIL NIL NIL NIL

April 2012 NIL NIL NIL NIL NIL NIL NIL

March 2012 NIL NIL NIL NIL NIL NIL NIL

February

2012

NIL NIL NIL NIL NIL NIL NIL

SCRIP CODE: 934822

ISIN: INE722A07224

Month Date of High High (`̀̀̀) Volume on date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on date of Low

(No. of

Debentures)

Average (`̀̀̀)

July 2012 July 13 and July 16, 2012

1029 100 July 2,4,and 5, 2012

1000 268,1270and 240

1014.50

June 2012 June 22, 2012 1019 655 June 18, 2012

1000 175 1009.5

May 2012 May 30, 2012 1018 49 My 15, 2012 990 14 1004

April 2012 NIL NIL NIL NIL NIL NIL NIL

March 2012 NIL NIL NIL NIL NIL NIL NIL

February

2012

NIL NIL NIL NIL NIL NIL NIL

SCRIP CODE: 934823

ISIN: INE722A07232

Month Date of High High (`̀̀̀) Volume on

date of High (No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low (No. of

Debentures)

Average

(`̀̀̀)

July 2012 NIL NIL NIL NIL NIL NIL NIL

June 2012 NIL NIL NIL NIL NIL NIL NIL

May 2012 NIL NIL NIL NIL NIL NIL NIL

April 2012 NIL NIL NIL NIL NIL NIL NIL

March 2012 NIL NIL NIL NIL NIL NIL NIL

February

2012

NIL NIL NIL NIL NIL NIL NIL

SCRIP CODE: 934824

ISIN: INE722A07240

223

Month Date of High High (`̀̀̀) Volume on

date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low

(No. of

Debentures)

Average

(`̀̀̀)

July 2012 July 31, 2012 1042 13 July 2 1000 11 1021

June 2012 June 26, 2012 1029 10 June 15, 2012

988.01 9 1008.51

May 2012 May 22, 2012 1010 25 May 04, 2012

982 4 996

April 2012 April 23, 2012

1017.50 5 April 04, 2012

967 86 992.25

March 2012 NIL NIL NIL NIL NIL NIL NIL

February 2012

NIL NIL NIL NIL NIL NIL NIL

SCRIP CODE: 934825

ISIN: INE722A07257

Month Date of High High (`̀̀̀) Volume on

date of High

(No. of

Debentures)

Date of Low Low (`̀̀̀) Volume on

date of Low

(No. of

Debentures)

Average

(`̀̀̀)

July 2012 July 13, 2012 1021 10 July 24, 2012

1011 15 1016

June 2012 June 12, 2012 1032 53 June 14 and 18, 2012

994 22 and 40 1013

May 2012 May 30, 2012 1035.00 40 May 08, 2012

985 20 1010

April 2012 April 03, 2012

1004.90 10 April 30, 2012

965 422 984.95

March 2012 NIL NIL NIL NIL NIL NIL NIL

February

2012

NIL NIL NIL NIL NIL NIL NIL

(Source: www.bseindia.com) Save as disclosed hereinabove, other debentures issued by our Company which are listed on the capital market segment of NSE and BSE have not been traded in the last three years.

Debentures or bonds and redeemable preference shares and other instruments issued by our Company and

outstanding As on March 31, 2012 our Company has privately placed listed rated/ unrated, secured/ unsecured, non-convertible redeemable debentures and listed subordinated debt aggregating to an outstanding amount of ` 96,495.00 lacs. Redeemable non-convertible debentures for an aggregate of ` 75,000.00 lacs publically issued and allotted by our Company in August 2011 are listed on NSE and BSE. Apart from the above, there are no outstanding debenture bonds, redeemable preference shares or other instruments issued by our Company that are outstanding.

Dividend

Our Company has no stated dividend policy. The declaration and payment of dividends on our shares will be recommended by our Board of Directors and approved by our shareholders, at their discretion, and will depend on a number of factors, including but not limited to our profits, capital requirements and overall financial condition.

224

Statement of dividend in respect of equity shares

`̀̀̀ in lacs

Particulars For the year ended March 31,

2012 2011 2010 2009 2008

Interim Dividend

Rate of Dividend 25% 25% 20% 10% 10%

Number of Equity Shares on which interim dividend paid

49,760,859 49,392,739 49,113,850 45,850,000 39,100,000

Amount of Interim Dividend 1,244.02 1,234.82 982.28 458.50 391.00

Dividend Distribution tax 201.81 205.09 166.94 77.91 66.45

Dividend Distribution tax Rate 16.2225% 16.609% 16.995% 16.995% 16.995%

Final Dividend for the previous year

Rate of Dividend 35% 30% 30% 30% 20%

Number of Equity Shares on which interim dividend paid

208,002 47,756 - 14,45,000 -

Amount of Interim Dividend 7.28 1.43 - 43.35 -

Dividend Distribution tax 1.18 0.24 - 7.37 -

Dividend Distribution tax Rate 16.2225% 16.609% 16.995% 16.995% 16.995%

Proposed Final Dividend for the current year

Rate of Dividend 40% 35% 30% 30% 30%

Number of Equity Shares on which final dividend paid

52,367,209 49,536,877 49,154,700 45,856,800 41,155,000

Preferential allotment/ESOP - - - 7,050 32,50,000

Amount of Final Dividend 2,094.69 1,733.79 1,474.64 1,375.92 1,332.15

Dividend Distribution tax 339.81 281.26 244.92 233.84 226.40

Dividend Distribution tax Rate 16.2225% 16.2225% 16.609% 16.995% 16.995%

Dividend details respect of Preference Shares

Particulars

Year ended As at 31st March `̀̀̀ In lacs

2012 2011 2010 2009 2008

5% - - - - 4,210

6% - - - 2,328,980* 2,018,590

8% - - - - 83,260

9% - - - - -

10% - - - - 16,270

12% - - - - 2,950

13.50% - - - - 200,000

14% - - - - 1,900

15% - - - - 1,800

225

Particulars

Year ended As at 31st March `̀̀̀ In lacs

2012 2011 2010 2009 2008

Total shares - - - 2,328,980 2,328,980

Amount of dividend - - - 63.17 141.67

Dividend distribution Tax - - - 10.74 24.07

* During the financial year 2008-09 all Preference Shares are redeemed

Revaluation of assets

Our Company has not revalued its assets in the last five years.

Mechanism for redressal of investor grievances

The MoU between the Registrar to the Issue and our Company will provide for retention of records with the Registrar to the Issue for a period of at least three years from the last date of despatch of the Allotment Advice, demat credit and refund orders to enable the investors to approach the Registrar to the Issue for redressal of their grievances.

All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such as name, address of the applicant, number of NCDs applied for, amount paid on application and the bank branch or collection centre where the application was submitted. The contact details of Registrar to the Issue are as follows:

Integrated Enterprises (India) Limited 2nd Floor, Kences Towers, No. 1, Ramakrishna Street, North Usman Road, T. Nagar, Chennai - 600 017 Tel: + 91 44 2814 0801, +91 44 2814 0802, +91 44 2814 0803

Fax:+91 44 2814 2479 Email:scuf@integratedindia.in Investor Grievance Email: sureshbabu@integratedindia.in Website: www.integratedindia.in Contact Person: Mr. K Balasubranium and Mr. Sriram S SEBI Registration No: INR000000544

We estimate that the average time required by us or the Registrar to the Issue for the redressal of routine investor grievances will be 7 (seven) business days from the date of receipt of the complaint. In case of non-routine complaints and complaints where external agencies are involved, we will seek to redress these complaints as expeditiously as possible.

Mr. C.R. Dash has been appointed as the Compliance Officer of our Company for this issue.

The contact details of Compliance officer of our Company are as follows:

Mr. C.R. Dash,

144, Santhome High Road, Mylapore,

Chennai 600 004, Tamil Nadu,

Tel. No.: + 91 44 4392 5300

Fax: +91 44 4392 5430

Email: sect@shriramcity.in

The investor complaints are processed in centralized web based complaints redressal system controlled by SEBI and is known as SEBI Complaint redress system (SCORES). The Company has designated an email id sect@shriramcity.in, exclusively for investor servicing.

Change in Auditors of our Company during the last three years

There has been no change(s) in the statutory auditor of our company in the last 3 (three) financial years preceding the date of this Draft Prospectus.

226

REGULATIONS AND POLICIES

The regulations summarised below are not exhaustive and are only intended to provide general information to

Investors and is neither designed nor intended to be a substitute for any professional legal advice. Taxation statutes

such as the IT Act, Central Sales Tax Act, 1956 and applicable local sales tax statutes, labour regulations such as

the Employees State Insurance Act, 1948 and the Employees Provident Fund and Miscellaneous Act, 1952, and

other miscellaneous regulations such as the Trade and Merchandise Marks Act, 1958 and applicable Shops and

Establishments statutes apply to us as they do to any other Indian company and therefore have not been detailed

below. The following information is based on the current provisions of applicable Indian law, which are subject to

change or modification by subsequent legislative, regulatory, administrative or judicial decisions.

As per the RBI Act, a financial institution has been defined as a company which includes a non-banking institution carrying on as its business or part of its business the financing activities, whether by way of making loans or advances or otherwise, of any activity, other than its own and it is engaged in the activities of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by the Government of India or other local authorities or other marketable securities of like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of carrying out any agricultural or industrial activities or the sale/purchase/construction of immovable property. Any company which carries on the business of a non-banking financial institution as its principal business is to be treated as an NBFC. Since the term 'principal business' has not been defined in law, the RBI has clarified through a press release (Ref. No. 1998-99/ 1269) in 1999, that in order to identify a particular company as an NBFC, it will consider both the assets and the income pattern as evidenced from the last audited balance sheet of the company to decide its principal business. The company will be treated as an NBFC if its financial assets are more than 50 per cent of its total assets (netted off by intangible assets) and income from financial assets should be more than 50 per cent of the gross income. Both these tests are required to be satisfied as the determinant factor for principal business of a company. With effect from 1997, NBFCs were not permitted to commence or carry on the business of a non banking financial institution without obtaining a Certificate of Registration (CoR). Further, with a view to imparting greater financial soundness and achieving the economies of scale in terms of efficiency of operations and higher managerial skills, the RBI has raised the requirement of minimum net owned fund from ` 25 Lacs to ` 200 Lacs for the NBFC which commences business on or after April 21, 1999. Further, every NBFC is required to submit to the RBI a certificate, from its statutory auditor within one month from the date of finalization of the balance sheet and in any case not later than December 30th of that year, stating that it is engaged in the business of non-banking financial institution requiring it to hold a CoR.

1. Regulation of NBFCs registered with the RBI

NBFCs are primarily governed by the RBI Act, 1934 (“RBI Act”), the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, (“Prudential

Norms”), the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998, (“Public Deposit Directions”), the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 (“Non- Deposit Accepting NBFC Directions”), and the provisions of the Non- Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998. In addition to these regulations, NBFCs are also governed by various circulars, notifications, guidelines and directions issued by the RBI from time to time.

2. Types of Activities that NBFCs are permitted to carry out

Although by definition, NBFCs are permitted to operate in similar sphere of activities as banks, there are a few important, key differences. The most important distinctions are:

(i) an NBFC cannot accept deposits repayable on demand – in other words, NBFCs can only accept

fixed term deposits. Thus, NBFCs are not permitted to issue negotiable instruments, such as cheques which are payable on demand; and

227

(ii) NBFCs are not allowed to deal in foreign exchange, even if they specifically apply to the RBI for approval in this regard.

3. Types of NBFCs:

Section 45-IA of the RBI Act makes it mandatory for every NBFC to get itself registered with the Reserve Bank in order to be able to commence any of the aforementioned activities. Further, an NBFC may be registered as a deposit accepting NBFC (“NBFC-D”) or as a non-deposit accepting NBFC (“NBFC-ND”). NBFCs registered with RBI are further classified as: (i) asset finance companies; (ii) investment companies;

(iii) loan companies;

(iv) infrastructure finance companies; (v) core investment companies; (vi) infrastructure debt fund - NBFCs; (vii) NBFC - micro finance institutions; and/or (viii) NBFC - Factor.

Our Company has been classified as an NBFC-D and is further classified as an “asset finance company”. However, as on March 31, 2012, in terms of our total assets and total income on an unconsolidated basis, our Company is now classified as a “loan company” under the provisions of Section 45 IA of the RBI Act, 1934 and applicable notifications on classification of NBFCs issued by the RBI. As on date of this Draft Prospectus, we have not been granted a revised certificate of registration as a “loan company” by the RBI.

4. Regulatory Requirements of an NBFC under the RBI Act Net Owned Fund

Section 45-IA of the RBI Act provides that to carry on the business of a NBFC, an entity would have to

register as an NBFC with the RBI and would be required to have a minimum net owned fund of ` 2,00,00,000 (Rupees two crore only). For this purpose, the RBI Act has defined “net owned fund” to mean:

(a) the aggregate of the paid-up equity capital and free reserves as disclosed in the latest balance sheet of the

company, after deducting (i) accumulated balance of losses, (ii) deferred revenue expenditure, (iii) deferred tax asset (net); and (iv) other intangible assets; and

(b) further reduced by the amounts representing, (1) investment by such companies in shares of (i) its subsidiaries, (ii) companies in the same group,

(iii) other NBFCs, and (2) the book value of debentures, bonds, outstanding loans and advances (including hire purchase and

lease finance) made to, and deposits with (i) subsidiaries of such companies; and (ii) companies in the same group,

228

to the extent such amount exceeds 10% of (a) above.

Reserve Fund

In addition to the above, Section 45-IC of the RBI Act requires NBFCs to create a reserve fund and transfer therein a sum of not less than 20% of its net profits earned annually before declaration of dividend. Such sum cannot be appropriated by the NBFC except for the purpose as may be specified by the RBI from time to time and every such appropriation is required to be reported to the RBI within 21 days from the date of such withdrawal.

Maintenance of liquid assets

The RBI through notification dated January 31, 1998, as amended has prescribed that every NBFC shall invest and continue to invest in unencumbered approved securities valued at a price not exceeding the current market price of such securities an amount which shall, at the close of business on any day be not less than 10% in approved securities and the remaining in unencumbered term deposits in any scheduled commercial bank; the aggregate of which shall not be less than 15% of the public deposit outstanding at the last working day of the second preceding quarter.

5. Obligations of NBFC-D under the Public Deposit Directions The RBI’s Public Deposit Directions governs the manner in which NBFCs may accept and/or hold public deposits. The Public Deposit Directions places the following restrictions on NBFCs in connection with accepting public deposits:

1. Prohibition from accepting any demand deposits: NBFCs are prohibited from accepting any public deposit which is repayable on demand.

2. Ceiling on quantum of deposits: A NBFC which is classified as an asset finance company, (a) having net

owned funds of ` 25,00,000/- (Rupees twenty five lac only) or more, and, (b) having complied with all prudential norms relating to the capital adequacy ratio of not less than fifteen percent as per last audited balance-sheet, may, accept or renew public deposits not exceeding one and one-half times of its net owned funds or public deposit up to ` 10,00,00,000/- (Rupees ten crore), whichever is less. Further, an asset finance company, (a) having net owned funds ` 25,00,000/- (Rupees twenty five lac only) or more, (b) having complied with all the prudential norms, and (c) having obtained minimum investment grade credit rating from a notified credit rating agency, may, accept or renew public deposits not exceeding four times of its net owned funds.

3. Downgrading of credit-rating: In the event that the credit rating issued by a credit rating agency recognised

by RBI, for an asset finance company is downgraded below the minimum specified investment grade, with respect to the relevant credit rating agency, the NBFC must (a) forthwith stop accepting public deposit, (b) report the position of the credit rating within fifteen working days to the RBI, and, (c) reduce, within three years from the date of such downgrading of credit rating, the amount of excess public deposit to nil or the appropriate extent as permitted under the Public Deposit Directions, by repayment as and when such deposit falls due or otherwise.

4. Ceiling on rate of interest: An NBFC cannot invite or accept or renew public deposit at a rate of interest

exceeding twelve and half per cent per annum. Such interest may be paid or compounded at rests which shall not be shorter than monthly rests.

5. Minimum lock-in period: An NBFC is prohibited from granting any loan against a public deposit or make

premature repayment of a public deposit within a period of three months from the date of acceptance of such public deposit.

6. Obligations of NBFC-D under the Prudential Norms

229

NBFC-Ds are required to comply with prescribed capital adequacy ratios, single and group exposure norms, and other specified prudential requirements prescribed under the Prudential Norms. Some of the important obligations are as follows:

i) Income Recognition: NBFC-Ds are required to follow recognised accounting principles in connection with recognition of income. Income including interest/discount or any other charges on NPA is recognised only when it is actually realised. Any such income recognised before the asset became non-performing and remaining unrealised must be reversed. With respect to hire purchase assets, where instalments are overdue for more than 12 months, income shall be recognised only when hire charges are actually received. Any such income taken to the credit of profit and loss account before the asset became non-performing and remaining unrealised, must be reversed.

ii) Asset Classification and provisioning of assets: Every NBFC-D is required to, after taking into

account the degree of well defined credit weaknesses and extent of dependence on collateral security for realisation, classify its lease/hire purchase assets, loans and advances and any other forms of credit into the following classes, namely:

• Standard assets;

• Sub-standard assets;

• Doubtful assets; and

• Loss assets.

Further, an NBFC-D must, after taking into account the time lag between an account becoming non-performing, its recognition as such, the realisation of the security and the erosion over time in the value of security charged, make provision against sub-standard assets, doubtful assets and loss assets in the manner prescribed by RBI.

iii) Provisioning of Standard Assets: In terms of the requirement of the circular dated January 17,

2011 issued by the RBI, NBFCs are required to make a general provision at 0.25 per cent of the outstanding standard assets. The provisions on standard assets are not reckoned for arriving at net NPAs. The provisions towards standard assets are not needed to be netted from gross advances but shown separately as 'Contingent Provisions against Standard Assets' in the balance sheet. NBFCs are allowed to include the ‘General Provisions on Standard Assets’ in Tier II capital which together with other ‘general provisions/ loss reserves’ will be admitted as Tier II capital only up to a maximum of 1.25 per cent of the total risk-weighted assets.

iv) Loans against NBFC’s own shares prohibited: No NBFC-D can lend against its own shares. Any

outstanding loan granted by a NBFC-D against its own shares on the date of commencement of these Directions shall be recovered by the NBFC as per the repayment schedule.

v) NBFC failing to repay public deposit prohibited from making loans and investments: A NBFC-D

which has failed to repay any public deposit or part thereof in accordance with the terms and conditions of such deposit, cannot grant any loan or other credit facility by whatever name called or make any investment or create any other asset as long as such default exists.

vi) Exposure to capital-markets: Every NBFC-D with total assets of ` 100 crore and above according

to the previous audited balance sheet, must submit a monthly return within a period of 7 days of the expiry of the month to which it pertains in the prescribed form to the Regional Office of the Department of Non-Banking Supervision of the RBI.

vii) Capital Adequacy: Every NBFC-D shall maintain a minimum CAR consisting of Tier I and Tier II

capital which must not be less than fifteen per cent of its aggregate risk weighted assets on balance sheet and of risk adjusted value of off-balance sheet items. The total of Tier II capital of any NBFC-D, at any point of time, must not exceed one hundred per cent of Tier I capital. As per RBI notification dated February 17, 2011, all deposit taking NBFCs have to maintain a minimum capital ratio, consisting of Tier I and Tier II capital, which shall not be less than 15% of its

230

aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items w.e.f. March 31, 2012.

viii) Disclosure Requirements: Every NBFC-D is required to separately disclose in its balance sheet the

provisions made in accordance with the applicable prudential norms prescribed by the RBI without netting them from the income or against the value of assets. Further, the provisions must be distinctly indicated under separate heads of account as under:

• provisions for bad and doubtful debts; and

• provisions for depreciation in investments.

Such provisions shall not be appropriated from the general provisions and loss reserves held, if any, by the NBFC-D and for each year shall be debited to the profit and loss account. The excess of provisions, if any, held under the heads general provisions and loss reserves may be written back without making adjustment against them.

ix) Fair Practices Code: The RBI has framed the fair practice guidelines, to promote good and fair

practices by setting minimum standards to be adhered to by NBFCs in dealing with customers. These guidelines require NBFCs to ensure that they meet the commitments and standards specified therein for the products and services they offer and in the procedures and practices their staff follows, their products and services meet relevant laws and regulations in letter and spirit, and their dealings with customers rest on ethical principles of integrity and transparency. Further, the said guidelines prescribe the requirements in connection with information to be provided and disclosures to be made by NBFCs to their customers. Accordingly, the guidelines require NBFCs to provide information on interest rates, common fees and charges, provide clear information explaining the key features of their services and products that customers are interested in, provide information on any type of product and service offered, that may suit the customer’s needs, tell the customers about the various means through which products and services are offered, and provide more information on the key features of the products, including applicable interest rates / fees and charges.

x) KYC Guidelines: NBFCs have been advised to follow certain customer identification procedure

for opening of accounts and monitoring transactions of suspicious nature for the purpose of reporting it to appropriate authority, (“KYC Norms”). Accordingly, NBFCs have been advised to ensure that a proper policy framework on ‘know your customer’ and anti-money laundering measures is formulated and put in place with the approval of the RBI. The KYC Norms also require that while preparing operational guidelines NBFCs may keep in mind to treat the information collected from the customer for the purpose of opening of account as confidential and not divulge any details thereof for cross selling or any other purposes. NBFCs may, therefore, ensure that information sought from the customer is relevant to the perceived risk, is not intrusive, and is in conformity with the guidelines issued in this regard. Any other information from the customer should be sought separately with his /her consent and after opening the account.

Rating of Financial Product

As per RBI Circular dated February 4, 2009 all NBFCs with assets size of ` 10,000 lacs and above is required to furnish at the regional office of the RBI under whose jurisdiction the registered office of the NBFC is functioning, information relating to the downgrading and upgrading of assigned rating of any financial products issued by them within 15 days of such change. Norms for excessive interest rates

RBI through its circular dated May 24, 2007 directed all NBFCs to put in place appropriate internal principles and procedures in determining interest rates and processing and other charges. In addition to the aforesaid instruction RBI has issued a circular dated January 2, 2009 and a master circular on Fair Practices Code dated July 1, 2009 for regulating the excessive rates of interest charged by the NBFCs. The aforementioned circular and the master circular

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stipulate that the board of each NBFC shall adopt an interest rate model taking into account the various relevant factors such as cost of funds, margin and risk premium etc. The rate of interest and the approach for gradation of risk and the rationale for charging different rates of interest for different categories of borrowers shall be required to be disclosed to the borrowers in the application form and communicated explicitly in the sanction letter. Further, the same is also required to be made available on the company’s website or be published in the relevant newspapers and is required to be updated in the event of any change therein. Further, the rate of interest would have to be annualized rates so that that the borrower is aware of the exact rates that would be charged to the account.

7. Corporate Governance

Pursuant to RBI circular (DNBS.PD/CC 94/03.10.042/2006-07) dated May 8, 2007, the RBI has proposed certain corporate governance guidelines for the consideration of all NBFC–D with an deposit size of ` 20 crore or more. The guidelines recommend that such NBFCs constitute an Audit Committee, a Nomination Committee (to ensure that fit and proper persons are nominated as directors on their respective boards) and a Risk Management Committee to institute risk management systems. The guidelines have also issued instructions relating to credit facilities to directors, loans and advances to relatives of the directors of the said NBFCs or to the directors of other companies and their relatives and other entities, timeframe for recovery of such loans, etc. Such NBFCs are also required to frame internal corporate governance guidelines based on the guidelines issued by the RBI on May 8, 2007.

8. Accounting Standards & Accounting policies Subject to the changes in Indian Accounting Standards and regulatory environment applicable to a NBFC we may change our accounting policies in the future and it might not always be possible to determine the effect on the Profit and Loss account of these changes in each of the accounting years preceding the change. In such cases our profit/ loss for the preceding years might not be strictly comparable with the profit/ loss for the period for which such accounting policy changes are being made.

9. Reporting by Statutory Auditor

The statutory auditor of the NBFC-D is required to submit to the Board of Directors of the company a report inter-alia certifying that such company has complied with the prudential norms relating to income recognition, accounting standards, asset classification and provisioning for bad and doubtful debts and standard assets as applicable to it. In the event of non-compliance, the statutory auditors are required to directly report the same to the RBI.

10. Other Regulations

Applicable Foreign Investment Regime

FEMA Regulations Foreign investment in India is governed primarily by the provisions of the FEMA which relates to regulation primarily by the RBI and the rules, regulations and notifications thereunder, and the policy prescribed by the Department of Industrial Policy and Promotion (DIPP), GoI which is regulated by the FIPB. The RBI, in exercise of its power under the FEMA, has notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (“FEMA Regulations”) to prohibit, restrict or regulate, transfer by or issue of security to a person resident outside India. As laid down by the FEMA Regulations, no prior consent and approval is required from the RBI, for FDI under the “automatic route” within the specified sectoral caps. In respect of all industries not specified as FDI under the automatic route, and in respect of investment in excess of the specified sectoral limits under the automatic route, approval may be required from the FIPB and/or the RBI.

Foreign Direct Investment

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FDI in an Indian company is governed by the provisions of the FEMA read with the FEMA Regulations and the Foreign Direct Investment Policy (“FDI Policy”) by the DIPP. FDI is permitted (except in the prohibited sectors) in Indian companies either through the automatic route or the approval route, depending upon the sector in which FDI is sought to be made. Under the automatic route, no prior Government approval is required for the issue of securities by Indian companies/ acquisition of securities of Indian companies, subject to the sectoral caps and other prescribed conditions. Investors are required to file the required documentation with the RBI within 30 days of such issue/ acquisition of securities. Under the approval route, prior approval from the FIPB or RBI is required. FDI for the items/ activities that cannot be brought in under the automatic route (other than in prohibited sectors) may be brought in through the approval route. Further: (a) As per the sector specific guidelines of the Government of India, 100% FDI/ NRI investments are allowed

under the automatic route in certain NBFC activities subject to compliance with guidelines of the RBI in this regard.

(b) Minimum Capitalisation Norms for fund based NBFCs:

(i) For FDI up to 51% - US$ 5 Lacs to be brought upfront (ii) For FDI above 51% and up to 75% - US $ 50 Lacs to be brought upfront (iii) For FDI above 75% and up to 100% - US $ 500 Lacs out of which US $ 75 Lacs to be brought

upfront and the balance in 24 months (c) Minimum capitalization norm of US $5 Lacs is applicable in respect of all permitted non fund based

NBFCs with foreign investment (d) Foreign investors can set up 100% operating subsidiaries without the condition to disinvest a minimum of

25% of its equity to Indian entities, subject to bringing in US$ 500 Lacs as at (b) (iii) above(without any restriction on number of operating subsidiaries without bringing in additional capital)

(e) Joint ventures operating NBFC’s that have 75% or less than 75% foreign investment will also be allowed to

set up subsidiaries for undertaking other NBFC activities, subject to the subsidiaries also complying with the applicable minimum capital inflow i.e. (b) (i) and (b)(ii) above.

Where FDI is allowed on an automatic basis without FIPB approval, the RBI would continue to be the primary agency for the purposes of monitoring and regulating foreign investment. In cases where FIPB approval is obtained, no approval of the RBI is required except with respect to fixing the issuance price, although a declaration in the prescribed form, detailing the foreign investment, must be filed with the RBI once the foreign investment is made in the Indian company. The foregoing description applies only to an issuance of shares by, and not to a transfer of shares of, Indian companies. Every Indian company issuing shares or convertible debentures in accordance with the RBI regulations is required to submit a report to the RBI within 30 days of receipt of the consideration and another report within 30 days from the date of issue of the shares to the non resident purchaser. Laws relating to Employment

Shops and Establishments legislations in various states

The provisions of various Shops and Establishments legislations, as applicable, regulate the conditions of work and employment in shops and commercial establishments and generally prescribe obligations in respect of inter alia registration, opening and closing hours, daily and weekly working hours, holidays, leave, health and safety measures and wages for overtime work.

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Labour Laws

The Company is required to comply with various labour laws, including the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, the Payment of Wages Act, 1936, the Payment of Gratuity Act, 1972 and the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

Laws relating to Intellectual Property

The Trade Marks Act, 1999 and the Indian Copyright Act, 1957 inter alia govern the law in relation to intellectual property, including brand names, trade names and service marks and research works. In addition to the above, our Company is required to comply with the provisions of the Companies Act, 1956, the Foreign Exchange Management Act, 1999, various tax related legislations and other applicable statutes.

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SUMMARY OF KEY PROVISIONS OF ARTICLES OF ASSOCIATION Pursuant to Schedule II of the Act the main provisions of the AOA relating to the issue and allotment of debentures and matters incidental thereto. Please note that the each provision herein below is numbered as per the corresponding article number in the AOA. All defined terms used in this section have the meaning given to them in the AOA. Any reference to the term “Article” hereunder means the corresponding article contained in the AOA. Article 11 provides that Debenture/Debenture Stock, Loan/Loan Stock, Bonds or other securities conferring the right to allotment or conversion into shares or the option or right to call for allotment of shares shall not be issued except with the sanction of the Company in the General meeting. Article 14 provides that in case Share/Debenture certificates are issued for either more or less than marketable lots, sub-division or consolidation into marketable lots will be done by the Company at no charge. Clause (ii) of Article 15 A provides that the Company shall within three months after the allotment or within one month after the application for registration of the transfer of any Share or Debenture is completed and have ready for delivery the certificates of all the Shares and Debentures so allotted or transferred unless the conditions of issue of the said Shares otherwise provide. Article 16 provides that if a certificate be worn out, defaced or if there is no further space on the back thereof for endorsement of transfer, it shall, if required, be replaced by a new certificate free of charge provided/however that such new certificate shall not be issued except upon delivery of the said worn out or defaced or used up certificate for the purpose of cancellation. Article 17 provides that if a certificate is lost or destroyed the Company may, upon such evidence and proof of such loss or destruction and such Indemnity as the Board may require and on payment of such a fee not exceeding Rupee one issue a renewed certificate. Any renewed certificate shall be marked as such. Clause A of Article 17 provides that notwithstanding what is stated in Article 16 and 17 above the Directors shall comply with such Rules or Regulations or requirements of any Stock Exchange or the Rules made under the Securities Contract (Regulation) Act, 1956 or any other Act, or rules applicable in this behalf. The provisions of this Article shall mutatis mutandis apply to the Debentures of the Company. Clause A of Article 20 provides that the Board of Directors may, if they think fit, receive from any member willing to advance the same, all or any part of the money uncalled and unpaid upon any Share/Debenture held by him and upon all or any part of the money so advanced may (until the same would but for such advance become presently payable) pay interest at such rate not exceeding 14%, p.a. or such other percentage as may be fixed in this regard as the maximum percentage without the sanction of the Company in the General meeting as may be agreed upon between the member paying the sum in advance and the Board of Directors, provided that the amount of advance calls so received shall not be entitled to rank for dividend or participate in the profits of the Company. Clause (f) of Article 21 provides that the Company should effect transfer, transmission, sub-division or consolidation of Shares/ Debentures within one month from the date of lodgement thereof. Clause (g) of Article 21 provides that notwithstanding anything contained in these Articles, the Board of Directors of the Company may in their absolute discretion refuse splitting of any Share certificate or Debenture certificate into denominations less than Marketable lots i.e. the minimum number of Shares or Debentures as required for the purpose of trading on the stock exchange in which the Company’s Shares and/or Debentures are/will be listed, except where subdivision is required to be made to comply with a statutory provision or order of a competent Authority of law. Article 24 provides that no fee shall be charged for registration of transfer of Shares/Debentures or for effecting transmission or for registering any letter of probate, letters of administration and similar other documents. Article 42 provides that in furtherance of and without prejudice to the general powers conferred on the Board of Directors by or implied in Articles 41 and the other powers conferred by these articles and subject to the provision

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of Sec.292 of the Act, it is hereby expressly declared that it shall be lawful, for the Directors to carry out all or any of the objects set forth in the Memorandum of Association and to do the following things: … Clause (3) of Article 42 at their discretion to pay for any property rights, or privileges acquired by, or services rendered to the Company, either wholly or partially in cash or in Shares, bonds, Debentures or other securities of the company and any such Shares may be issued either as fully paid-up or with such amount credited as paid up thereon as may be agreed upon and any such bonds, Debentures, or other securities may be either specifically charged upon all or any of the property of the company and its uncalled Shares, or not so charged. Clause (4) of Article 42 to secure the fulfilment of any contracts or agreement entered into by the Company by mortgage or charge of all or any of the properties of the Company and its uncalled capital for the time being or in such other manner as they think fit.

Clause (16) of Article 42 To borrow on mortgage of the whole or any part of the property of the Company or on the Bonds, Debentures either unsecured or secured by a charge or mortgage or other securities of the Company, or otherwise as they may deem expedient, such sums as they may think necessary for the purpose of the Company, subject to provisions contained in Sec.292 and Sec.293 of the Act.

Article 44 provides that he Board of Directors may from time to time but with such consent of the Company in general meetings as may be required under Sec.293 of the Act, raise any money or any moneys or sum of money for the purpose of the Company, provided that the moneys to be borrowed together with moneys already borrowed by the company apart from temporary loans obtained from the Company’s bankers in the ordinary course of business shall not without the sanction of the Company at a General Meeting exceed the aggregate of the paid-up capital of the company and its free reserves that is to say reserves not set apart for any specific purpose and in particular but subject to the provision of Section 292 of the Act, the Board may from time to time at their discretion may raise or borrow or secure the payment of any such sum or sums of money for the purpose of the Company, by the issue of Debentures to members, raised or received, to mortgage, pledge or change, the whole or any part of the property, assets, or revenue of the Company, present or future, including its uncalled capital by special assignment or otherwise or to transfer or convey the same absolutely or in trust and to give the lenders powers of sale and others as may be expedient and to purchase, redeem or pay off any such securities.

Provided that the Directors may, by a resolution at a meeting of the Board delegate the power to borrow money otherwise than on Debentures to a committee of Directors subject to limits specified in the said resolution in respect of the total which can be so borrowed.

“Debenture Stocks/Loan/Loan stocks, Bonds or other securitiesconferring the right to allotment or conversion into shares or options or right to call for allotment of shares not be issued except with the sanction of the Company in General Meeting”.

Article 54 provides that Clause (1) of Article 54 Every shareholder or debenture holder or depositor of the Company, may at any time, nominate a person to whom his shares or debentures or deposits shall vest in the event of his death in such manner as may be prescribed under the Act. Clause (2) of Article 54 Where the shares or debentures or deposits of the Company are held by more than one person jointly, joint holders may together nominate a person to whom all the rights in the shares or debentures or deposits, as the case may be shall vest in the event of death of all the joint holders in such manner as may be prescribed under the Act. Clause (3) of Article 54 Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, where a nomination made in the manner aforesaid purports to confer on any person the right to vest the shares of debentures or deposits, the nominee shall, on the death of the shareholder or debenture holder or depositor or, as the case may be on the death of the joint holders become entitled to all the rights in such shares or debentures or deposits or, as the case may be, all the joint holders, in relation to

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such shares or debentures or deposits, to the exclusion of all other person, unless the nomination is varied or cancelled in the manner as may be prescribed under the Act. Clause (4) of Article 54 Where the nominee is a minor, it shall be lawful for the holder of the shares or Debenture or deposits, to make the nomination to appoint any person to become entitled to shares in or debentures of or deposits of the Company in any manner prescribed under the Act, in the event of his death, during minority. Article 55 provides that Clause (1) of Article 55 provides that a nominee, upon production of such evidence as may be required by the Board and subject as hereinafter provided elect, either- Clause (1) (a) register himself as holder of the share or debenture or deposit, as the case may be; or Clause (1) (b) to make such transfer of the share or debenture or deposit, as the deceased shareholder or debenture holder or deposit holder, as the case may be, could have made. Clause (2) of Articles 55 provides that if the nominee elects to be registered as nominee of the Share or Debenture or deposit himself as the case may be, he shall deliver or send to the Company, a notice in writing signed by him stating that he so elects and such notice shall be accompanied with the death certificate of the deceased shareholder or debenture holder or deposit holder, as the case may be. Clause (4) of Article 55 provides that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the shares or debenture or deposit, and if the notice is not complied with within ninety (90) days, the Board may hereafter withhold payment of all dividends, interest, bonuses or other moneys payable in respect of the share or debenture or deposit, until the requirements of the notice have been complied with.

Article 56 provides that the Company shall be entitled to dematerialise its existing shares, debentures and other securities, rematerialise its shares, debentures and other securities held in the Depositories and/or offer its fresh shares and debentures and other securities in a dematerialised form pursuant to the Depositories Act, and the Rules framed thereunder, if any. Every person subscribing to or holding securities offered by the Company shall have the option to receive security certificates or to hold the securities with a Depository. Such a person who is the beneficial owner of the securities can at any time opt out of a depository, if permitted by law, in respect of any security in the manner provided by the Depositories Act, and the Company shall, in the manner and within the time prescribed, issue to the beneficial owner the required Certificates of Securities. If a person opts to hold his security with a Depository, the Company shall intimate such Depository the details of allotment of the security, and on receipt of the information, the Depository shall enter in its record the name of the allottee as the beneficial owner of the security. The Company shall cause to be kept a Register and Index of Members and a Register and Index of Debenture holders in accordance with all applicable provisions of the Companies Act, 1956 and the Depositories Act, with details of shares and Debentures held in material and dematerialised forms in any media as may be permitted by law, including in any form of electronic media. The Register and Index of Beneficial Owners maintained by Depository under the Depositories Act shall be deemed to be Register and Index of Members and Security holders for the purposes of these Articles. The Company shall be entitled to keep in any State or Country outside India a Branch Register of Members Resident in that State or Country.

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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following contracts which are or may be deemed material have been entered or are to be entered into by the Company. These contracts and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of the Company situated at 123, Angappa Naicken Street, Chennai, Tamil Nadu, India 600001 from 10.00 AM to 5 P.M on any business days from the date of this Draft Prospectus until the date of closure of the Issue. A. Material Contracts

1. Engagement Letter dated August 22, 2012 received from the Company appointing the Lead

Managers. 2. Memorandum of Understanding dated August 22, 2012 between the Company and the Lead

Managers. 3. Memorandum of Understanding dated August 20, 2012 with the Registrar to the Issue. 4. Debenture Trust Agreement dated August 17, 2012 executed between the Company and the

Debenture Trustee. 5. The agreed form of the Debenture Trust Deed to be executed between the Company and the

Debenture Trustee. 6. Escrow agreement dated [●] executed by the Company, the Registrar, the Escrow Collection

Bank(s) and the Lead Managers. 7. Memorandum of Understanding dated [●] between the Company, the Lead Brokers and the Lead

Managers.

B. Material Documents

1. Certificate of Incorporation of the Company dated March 27, 1986, issued by Registrar of Companies, Tamil Nadu, Chennai

2. Memorandum and Articles of Association of the Company. 3. The certificate of registration No. 07-00458 dated April 17, 2007 issued by Reserve Bank of India

u/s 45 IA of the Reserve Bank of India, 1934. 4. Credit rating letter dated CARE from August 10, 2012 and credit rating letter dated CRISIL from

August 14, 2012, granting credit ratings to the NCDs. 5. Copy of the Board Resolution dated July 27, 2012, approving the Issue. 6. Resolution passed by the shareholders of the Company at the Annual General Meeting held on

July 27, 2012 approving the overall borrowing limit of Company. 7. Consents of the Directors, Lead Managers to the Issue, Compliance Officer of our Company,

Debenture Trustee, Credit Rating agencies for the Issue, Legal Advisor to the Issue, Bankers to the Company and the Registrar to the Issue, to include their names in this Draft Prospectus.

8. The consent of the Statutory Auditors of our Company, namely M/s. Pijush Gupta & Co. for (a) inclusion of their names as the Statutory Auditors, (b) inclusion of examination reports on Reformatted Consolidated Summary Financial Statements and the Reformatted Unconsolidated Summary Financial Statements in the form and context in which they appear in this Draft Prospectus.

9. The examination report of the Statutory Auditors dated August 1, 2012 in relation to the Reformatted Consolidated Summary Financial Statements included herein.

10. The examination report of the Statutory Auditors dated August 1, 2012 in relation to the Reformatted Unconsolidated Summary Financial Statements included herein.

11. Annual Reports of the Company for the last five Financial Years 2007-08 to 2011-12. 12. Limited Review Report by the Statutory Auditors for the Unaudited Interim Financial Information

for the quarter ended June 30, 2012. 13. Due Diligence certificates dated [●] filed by the Lead Managers. 14. Due Diligence Certificate of the Debenture Trustee to be filed with SEBI (prior to the Issue

Opening Date). 15. Tripartite agreement between the Company, Registrar to the Issue and CDSL and the Company,

Registrar to the issue and NSDL dated March 30, 2000 and April 20, 1999, respectively. 16. Copy of the Board Resolution passed by circulation, appointing the Managing Director of the

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Company dated June 1, 2012. 17. Copy of the shareholders’ resolution appointing the Managing Director of the Company dated July

27, 2012. 18. License Agreement dated April 1, 2010 with Shriram Ownership Trust. 19. Investor agreement dated May 13, 2008 between Western India Trustee and Executor Company

Limited, in its capacity as the trustee of India Advantage Fund – VI and our Company.

20. Investor agreement dated May 12, 2008 between Bessemer Ventures Partners and our Company.

21. Investment agreement dated May 9, 2008 between Asiabridge Fund I LLC and our Company.

22. Investment agreement dated December 26, 2006 between Van Gogh Limited and our Company

and the Subscription and Amendment Agreement dated May 12, 2008 between Van Gogh Limited

and our Company.

23. Share subscription agreement dated September 12, 2008 between (i) Mr. R. Thyagarajan, Mr. T

Jayaraman, Shriram Capital Limited and Shriram Ownership Trust acting through its trustees Mr.

R. Thyagarajan, Mr. Arun Duggal, Mr. D.A Prasanna, Mr. R. Kannan and Mr. D.V Ravi, TPG

India Investments I, Inc., Shriram Retail Holdings Private Limited, Shriram Enterprises Holdings

Private Limited and our Company.

24. SCUFL Employee Stock Option Scheme of 2006 and SCUFL Employee Stock Option Scheme of

2008.

25. In-principle approval, dated [●] for the Issue issued by NSE.

26. In-principle approval, dated [●] for the Issue issued by BSE.

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DECLARATION

We, the Directors of the Shriram City Union Finance Limited, certify that all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government of India or the guidelines issued by the Securities and Exchange Board of India established under Section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Draft Prospectus is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or the rules made or guidelines issued thereunder, as the case may be.

Yours faithfully On behalf of the Board of Directors of Shriram City Union Finance Limited _________________________ MR. ARUN DUGGAL _______________________ MR. R. DURUVASAN _________________________ MR. S. KRISHNAMURTHY _______________________ MR. VIPEN KAPUR ________________________ MR. RANVIR DEWAN ______________________ MR. V. MURALI _________________________________ MRS. LAKSHMI PRANESH _________________________________ MR. PUNEET BHATIA _________________________________ MR. G. S. SUNDARARAJAN _________________________________ MR. SUNIL VARMA Place: Chennai Date: [●]

?~ q~.!l

Rating Rationale _ _____ _ ______ \__;~~~!~~},_/_· August 17,2012

Mumhai

Shriram City Union Finance Limited

'CRISIL AA-/Stable' assigned to NCO issue

Rs,S.O Billion Non-Convertible Debenture Issue CRISIL AA-/Stable (Assigned)

Rs.1.5 Billion Subordinated Debt Issue CRISIL AA-/Stable (Reaffirmed)

Rs.7,7 Billion Non-Converti bl e Debenture Issue CRISIL AA-/Stable (Reaffirnied)

Fixed Deposit Programme FAA/Stable (Reaffirmed)

Rs.8.5 Billion Short-Term Debt Programme CRISIL A1+(Reaffirrned)

CRI SIL has ass igned its ' CRISIL AA-/Stable ' rating to the Rs.S.O-billion non-convertible debenture issue of Shriram City Union Finance Ltd (Shri ram City), and has reaffi rmed its ratings on Shriram City's other above-menti oned debt programmes at 'CRISIL AA-/FAA/Stable/CRISIL Al+ '.

The ratings continue to fac tor in the operati onal benefit s that Shriram City deri ves from its assoc iat ion with, and expectation of need-based support from, the Shriram group. The ratings also refl ect Shri ram City's hea lthy capitali sation and adequate earnings pro fil e. These rating strengths are parti ally offset by Shriram City's expos ure to inherent asset-quality- related risks ari sing from lending to low-income group segments, and geograph ic concentrati on.

Shriram City is the retail fi nance vehicl e of the Shriram group and benefi ts from access to the group ' s establi shed branch infrastructure, cli entele, management, systems and processes, and investor base. The Shriram group has been in the financing business fo r over three decades, with a strong market pos iti on in commercial vehi cle fin ance (through Shriram Transport Finance Company Ltd ; rated 'C RI SIL AA/FAA+/Stable/CRI SIL AI+'), retail fi nance, and chi t fund bus inesses . Shriram City operates from 907 business outl ets, of whi ch it owns 608, and the rest are Shriram group 's branches. A substanti al porti on of Shri ram City's cli entele in its small business loan segment comprises the group 's ex isting customers- thi s fac ilitates acqui siti on of customers with establi shed track records, while red ucing the cost of originati on. Shriram City's management is largely drawn from the Shriram group's other businesses and is experienced in the small -ticket retail-finance segment in se mi-urban and rural areas. The group's brand image in the retail in vestor segment enabl es Shriram City to source adequate retail funds to meet its growth requi rements. CRI SIL believes that Shriram City is strategically important to the Shriram group, and will continue to get need-based operati onal and fin anci al support from the group.

CRISIL Complexity Levels are assigned to 1•arious types of jinanc10l instruments. The CRISIL Complex lly Levels are available on www.cnsil.com/complexity-levels. Investors are adwsed to refer to the CRISIL Complexity Levels fo r mstrwnents that they desire to invest in. Investors may also call the CRISIL Helpline at +91 22 3342 3047 I + 91 22 33-12 3064 w11h queries on specific mstruments.

Aug ust 17 201 2 WvVl.!V CIISJi corn

Shriram City has healthy capitalisation, marked by a net worth of Rs. I 7.2 billion, overall capital adequacy ratio (CAR), of 17.4 per cent, and a gearing of about 5.7 times, as on March 31,2012. Its net worth and overall CAR were around Rs. I 8.3 billion and I 5.9 per cent respectively as on June 30, 2012. The company received equity capital of Rs.2.15 billion from the Shriram group in March 20 I 2 through preferential allotment of equity shares and allotment of warrants. The company ' s healthy net worth provides adequate cushion against the inherent asset quality challenges. While the CAR has reduced in the past two years, CRISIL believes that Shriram City will maintain its healthy capitalisation, supported by its ability to access the equity markets and continued support from the Shriram group. Furthermore, Shriram City has adequate earnings profile, given its focus on the high-yield products and customer segments, and a stable operating efficiency ratio. The company's profitability has steadily improved over the past few years; its return on assets ratio (RoA) was 3.0 per cent for 2011- I 2 (refers to financial year, April I to March 3 I). For the qua11er ended June 30, 2012, its RoA (annualised) was 3. I per cent.

However, Shriram City ' s retail financing business remains susceptible to inherent asset-quality­related risks arising from lending to the low-income groups and relatively underbanked segments. Furthermore, the company remains exposed to asset-quality-related challenges arising from its focus on relatively riskier segments such as small business loans and personal loans. While Shriram City has maintained gross non-performing assets (NPAs) at manageable levels, supported by good origination and monitoring practices, and various asset protection measures, its asset quality will continue to be monitored. Moreover, Shriram City's portfolio is geographically concentrated; Andhra Pradesh, Tamil Nadu and Karnataka accounted for around 90 per cent of its portfolio as on March 31 , 2012. While the company has plans to expand into new geographies, CRISIL believes that Shriram City's operations will remain concentrated in southern India over the medium term.

Outlook: Stable CRISIL believes that Shriram City will continue to derive operational benefits and need-based support from the Shriram group, which will help the company to scale up its business. Shriram City is also likely to maintain its healthy capitalisation and adequate earnings profile over the medium term. The outlook may be revised to 'Positive ' if there is significant improvement in Shriram City 's market position, while the company maintains its asset quality and earnings profile. Conversely, the outlook may be revised to 'Negative ' if Shriram City's asset quality and earnings deteriorate from the current levels.

About the Company Shriram City , incorporated in 1986, is pa1t of the Shriram group of companies. The company is registered with the Reserve Bank of India as a deposit-taking, non-banking financial company. Shriram City predominantly operates in the retail finance space, with a focus on small business loans, gold loans, auto loans, two-wheeler financing, and consumer durable loans. The company has a pan-India presence, with 907 business outlets as on March 3 I, 20 I 2.

For 2011-12, Shriram City repo1ted a total income and a profit after tax (PAT) of Rs.20.5 billion and Rs.3 .4 bi II ion respectively, against Rs. 13.2 bi II ion and Rs.2.4 bi II ion respectively for the previous year. For the quarter ended June 30, 2012, Shriram City reported a total income and a PAT of Rs .6.7 billion and Rs.I.O billion respectively, against Rs.4.2 billion and Rs.0.8 billion respectively fo r the corresponding period of the previous year.

Auqust 17 2012 www cnsil com

Media Contacts Analytical Contacts CRISIL Ratin2 Desk Mitu Samar Pawan Agrawa l Tel +91-22-3342 3047/3342 3064 Director, Communicati ons and Seni or Direc tor - CRI SIL Ratings Em a i I• cri si !rat ingdesk@cri si !.com Brand Management Tel +9 1-22-3342 330 I CRI SIL Limi ted Email pawan.agrawa l@crisil. com Tel +91-22- 3342 1838 E-mail • mitu .samar@cri sil.com Suman Chowdhury

Director - CRI SIL Ratings Tanuja Ab hinandan Tel +91-22-3342 3293 Communicati ons and Brand E-mai I• sum an.chowdhu ry@cri si !.com Management CRI SIL Limited Te l +91-22- 3342 181 8 Email : tanuj a.abhinandan@crisil .com

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