SYNCOM FORMULATIONS (INDIA) LIMITED · SYNCOM FORMULATIONS (INDIA) LIMITED (The company was originally incorporated as Syncom Formulations (India) Private Limited in the state of

LETTER OF OFFER

SYNCOM FORMULATIONS (INDIA) LIMITED

(The company was originally incorporated as Syncom Formulations (India) Private Limited in the state of Maharashtra on June 21, 1988 under the Companies Act, 1956. Further the status of company was changed to public limited company and thereby name of company changed to Syncom Formulations (India) Limited and a fresh certificate of change of name obtained on July 9, 1992.)

Registered Office: 7, Niraj Industrial Estate, off Mahakali Caves Road, Andheri (East), Mumbai- 400 093, Maharashtra. Tel: +91-22-30887744; Fax: +91-22-30887755

(For changes in our Registered Office, see “History and Corporate Structure” on page no 99 of the Letter of Offer.) Works: 256-257, Sector-1, Pithampur (District Dhar), MP-454775, Tel / Fax: +91 7292 403122 Corporate Office: 2nd Floor, Tagore Centre, 13-14, R.N.T. Marg, Indore- 452 001, Madhya Pradesh.

Tel: +91-731-3046869; Fax: +91-731-3046872 Contact Person: Ms. Shikha Maheshwari, Company Secretary & Compliance officer E-mail: [email protected] Website: www.syncomformulations.com

For Private circulation to the Equity Shareholders of the Company Only

LETTER OF OFFER

ISSUE OF 31, 12, 500 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT PREMIUM OF RS 7/- PER EQUITY SHARE AGGREGATING TO Rs.529.13 LAKHS TO THE EXISTING EQUITY SHAREHOLDERS OF THE SYNCOM FORMULATIONS (INDIA) LIMITED ON RIGHTS BASIS IN THE RATIO OF [1] EQUITY SHARE EVERY [2] EQUITY SHARE HELD ON RECORD DATE i.e. 20TH MAY 2009. THE ISSUE PRICE FOR THE EQUITY SHARES WILL BE PAYABLE IN FULL ON APPLICATION. FOR EVERY ONE [1] EQUITY SHARE ALLOTED ON RIGHT BASIS THE ALLOTEES WILL RECEIVE ONE [1] DETACHABLE WARRANT. TOTAL ISSUE INCLUDING CONVERSION OF WARRANTS INTO EQUITY SHARES WOULD AGREEGATE UPTO RS.1058.26 LAKHS. THE ISSUE PRICE IS 1.7 TIMES THE FACE VALUE OF THE EQUITY SHARES. FOR DETAILS PLEASE REFER TO “OFFERING INFORMATION” ON PAGE 170 OF THIS LETTER OF OFFER

GENERAL RISKS

Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the issuer and the issue including the risks involved. The equity shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this Letter of Offer. Investors are advised to refer to “Risk Factors” on Page 6 to 15 of this Letter of Offer before making an Investment in this Issue.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard to Syncom Formulations (India) Limited and the Issue, which is material in the context of the Issue, that the information contained in this Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly led and that there are no other facts, the omission of which makes this Letter of Offer as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING ARRANGEMENTS

The existing Equity Shares of the Company are listed on Bombay Stock Exchange Limited (BSE), Mumbai (Designated Stock Exchange). The Company will make application to BSE for permission to deal in and for official quotation in respect of Equity shares arising out of the issue. The company has received in-principle approvals from B SE, letter dated 3rd December 2008.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

COMFORT SECURITIES PVT. LTD A-301, Hetal Arch, Opp. Natraj Market, S.V.Road, Malad(West), Mumbai- 400 064. Tel : +91 - 22 - 28449765 Fax: +91 - 22 - 28892527 Email: [email protected] Website: www.comfortsecurities.co.in Contact Person: Mr. Sarthak Vijlani SEBI Regn. No: INM000011328

ANKIT CONSULTANCY PVT. LTD 2nd Floor, Alankar Point, 4-A, Rajgarh Kothi, Gita Bhawan Square, A.B.Road, Indore- 452001, Madhya Pradesh Tel : +91- 731- 2491298/2495226 Fax: +91 -731-4065798 Contact Person: Mr. Sanjay Singh Email: [email protected] Website: www.ankitonline.org SEBI Regn No. INR000000767

ISSUE PROGRAMME

ISSUE OPENS ON LAST DATE FOR RECEIPT OF REQUESTS FOR SPLIT APPLICATION FORMS

ISSUE CLOSES ON

June 16, 2009 June 23, 2009 June 30, 2009

TABLE OF CONTENTS

Section Title Page No

I DEFINITIONS AND ABBREVIATIONS

Conventional / General Terms/ Definitions 2 Issue Related Terms 3 Company/ Industry Related Terms 4 Abbreviations 4 II RISK FACTORS

Forward Looking Statements Certain Conventions & Market Data 6 Risk Factors 7 Notes to Risk Factors 14 III INTRODUCTION

Summary 16 Summary of Financial Information 20 General Information 22 Capital Structure 27 Objects of the Issue 36 Basic Terms of Issue 40 Basis for issue price 41 Tax Benefits to the Company and its Members 44 IV ABOUT THE ISSUER COMPANY

Industry Overview 53 Business Overview 72 Key Industry Regulations or Policies 96 History and Corporate Structure of the Company 99 Management of the Company 103 Our Promoters 119 Related Party Transactions 120 Currency of Presentation 121 Dividend Policy 122 V FINANCIAL DETAILS

Financial Information of the Issuer Company 123 Financial Information of the Group Company 141 Changes in the Accounting Policies in the last three years 142 Management Discussion & Analysis of Financial Condition and results of the

operations 143

VI LEGAL AND OTHER INFORMATION

Outstanding Litigation and Material Developments 150 Government & Other Statutory Approvals 159 VII OTHER REGULATORY AND STATUTORY DISCLOSURES 161 VIII OFFERING INFORMATION

Terms of the Present Issue 170 Issue Procedure 179 IX MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION 197 X OTHER INFORMATION

Material Contracts and Documents for Inspection 221 Declaration 222

Syncom Formulations (India) Limited

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SECTION I: DEFINITIONS AND ABBREVIATIONS In this Letter of Offer, unless the context otherwise requires, all references to one gender also refers to another gender and the word “Lakh” or “Lac” means “ One Hundred Thousand” and the word “Million” means “Ten Lac” and the word “Crore” means “Ten Million”. In this Letter of Offer, any discrepancies in any table between total and the sum of the amounts listed are due to rounding-off.

Throughout this Letter of Offer, all figures have been expressed in Lacs unless otherwise specifically stated. All references to “India” contained in this Letter of Offer are to the Republic of India.

For additional definitions used in this Letter of Offer, see the Section “Definitions and Abbreviations” on Page 2 of this Letter of Offer. In the section titled “Main Provisions of the Articles of Association” on Page No. 197 of this Letter of Offer, defined terms have the meaning given to such terms in the Articles of Association of the Company. Industry data used throughout this Letter of Offer has been obtained from industry publications and other authenticated published data. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe industry data used in this Letter of Offer is reliable, it has not been independently verified. Similarly, internal Company reports, while believed by us to be reliable, have not been verified by any independent source.

Currency of Presentation In this Letter of Offer, all references to “Rupees” and “Rs.” are to the legal currency of India. Unless the context otherwise indicates or requires, the following terms shall have the meanings given below in this Letter of Offer.


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CONVENTIONAL / GENERAL TERMS/ DEFINITION

Act The Companies Act, 1956 and amendments thereto Articles Articles of Association of the Company

AGM Annual General Meeting BSE Bombay Stock Exchange Limited Capital or Share Capital Share Capital of the Company

CDSL Central Depository Services (India) Limited

CESTAT Customs, Excise & Service Tax Appellate Tribunal

CIT Commissioner of Income Tax

DP Depository Participant ECS Electronic Clearing Service

EGM Extra Ordinary General Meeting

Equity Share (s) or Share(s) Means the Equity share of the Company having a face value of Rs.10/-

FDI Foreign Direct Investment

FI Financial Institutions

FIPB Foreign Investment Promotion Board

FEMA Foreign Exchange Management Act, 1999 read with rules and regulations there under and amendments thereto

FY/ Fiscal Year Financial Year ending March 31 or June 30 as the case may be

FII(s) Foreign Institutional Investors registered with SEBI under applicable Laws

GDP Gross Domestic Product

GOI Government of India

HUF Hindu Undivided Family INR or Rs. Indian Rupee IPO Initial Public Offer ITAT Income Tax Appellate Tribunal

MD Managing Director

Memorandum of Association / Memorandum/ MOA

Memorandum of Association of the Company i.e. Syncom Formulations (India) Limited

MOU Memorandum of Understanding NAV / BV Net Assets Value / Book Value NR Non Resident NRI(s) Non-Resident Indian(s) NSDL National Securities Depository Limited NSE The National Stock Exchange of India Limited P/E Ratio Price/Earnings Ratio PAN Permanent Account Number PBDT Profit Before Depreciation and Tax PBIDT Profit Before Interest, Depreciation and Tax PBT Profit Before Tax ROI Return on Investment RBI Reserve Bank of India ROC Registrar of Companies SEBI Securities and Exchange Board of India Shareholder Means an Equity Shareholder of Syncom Formulations (India) Limited SICA Sick Industrial Companies (Special Provisions) Act 1985 Take over Regulations SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

and amendments thereto WTO World Trade Organization


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ISSUE RELATED TERMS

Allotment Unless the context otherwise requires, issue of equity shares pursuant to this Issue

Allottees The successful applicants to whom the Equity Shares along with the warrants are being/or have been issued

Application Supported by Blocked Amount/ ASBA

The application (whether physical or electronic) used by an Investors to make a Bid Authorizing the SCSB to block the Bid Amount in their specified bank account.

Applicant Any prospective investor who makes an application pursuant to the terms of this Letter of Offer Bankers to the Issue DENA BANK & HDFC Bank

CAF / Composite Application Form

The form used by an Investor to make an application for allotment of Shares & Warrants

Consolidated Certificate

In case of Physical certificates, the Company would issue one certificate for the Equity Shares allotted to one folio

Designated Stock Exchange

The Bombay Stock Exchange Limited

DLOO

Letter of Offer

CSPL/ Lead Manager/ LM

Lead Manager to the Issue i.e. Comfort Securities Pvt. Ltd

Face Value Face Value of equity shares of the Company being Rs.10/- each

First Applicant The applicant whose name appears first in the Application Form

Issue / Rights Issue Issue of 31,12,500 Equity Shares of face value of Rs.10/- each for cash at a premium of Rs. 7/- per Equity Share aggregating upto Rs. 529.13 lakhs to the existing Equity Shareholders of Syncom Formulations(India) Limited on right basis in the ratio of [1] Equity shares for every [2] Equity share held on the Record Date i.e.20th May 2009. The issue price will be payable in full on application. Under the Issue, for every one[1] Equity Shares allotted on right basis the allotees willreceive one [1] detachable warrant. Total issue including conversion of warrants into equity would aggregate upto Rs.1058.26 lakhs. The Issue Price is 1.7 times the face value of the Equity Shares. For details please refer to “Terms of the Issue” on page 170 of this Letter of Offer

Issue Opening Date The date on which the Issue opens for subscription i.e. June 16, 2009

Issue Closing Date The date on which the issue closes for subscription i.e. June 30, 2009

Issue Price The price at which the equity shares will be issued by the Company under this Letter of Offer i.e. Rs. 17/- per share

Investor (s) Shall mean the holder(s) of Equity Shares of the Company as on the Record Date i.e 20th May 2009

Memorandum of Association / MOA

Memorandum of Association of Syncom Formulations (India) Limited

NRI Non-Resident Indians

Offer The Issue of Equity Shares along with detachable warrants pursuant to this Letter of Offer

PAN Permanent Account Number Promoter(s) Promoters shall have the same meaning as described to it under the SEBI

Guidelines and which has been particularly detailed in the disclosure in this Letter of Offer

Record Date 20th May 2009

Registrar to the Issue or Registrar

Registrar to the Issue, in this case is Ankit Consultancy Pvt. Ltd


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Renouncees Shall mean the persons who have acquired Rights entitlements from the Equity Shareholders.

Rights Entitlement The number of Equity Shares that an Equity Shareholder is entitled to under this Letter of Offer in proportion to his/her/its existing shareholding in the Company as on the Record Date 20th May 2009

Stock Exchange(s) Shall refer to the BSE where the Shares of the Company are presently listed. Warrant Exercise Period

The period commencing after 6 (six) months form the date of allotment and up to 18(Eighteen) months from the date of allotment. The warrant will get converted on or beforethe fixed date (“Notice Date, the outermost date for conversion”) and would be made uniformly in respect of all the warrants outstanding.

Warrant Exercise Price

Lower of (a) 20% discount to the average six month weekly closing prices before the date of the public notice on the Designated Stock Exchange; or (b) 20% discount to average two weekly closing prices before the date of the public notice on Designated Stock Exchange; or (c) the cap price, being Rs 17/- per Equity Share SCSB Self Certified Syndicate Bank

COMPANY/ INDUSTRY RELATED TERMS

Auditors The statutory Auditors of the Company namely S.P.Moondra & Co., Chartered Accountants, 53/8, Kanchan Bagh, Indore- 452 001

Board / Board of Directors Board of Directors of Syncom Formulations (India) Limited Chairman The Chairman of the Board of Directors, namely, Mr. Kedarmal

Bankda, resident of India DM Demineralized ESIC Employee’s State Insurance Corporation GMP Good Manufacturing Practice Directors Directors on the Board of Syncom Formulations (India) Limited FBD Fluid Bed Drier ICAI The Institute of Chartered Accountants of India ISO International Organization for Standardization LOD Loff on Drying Memorandum/Memorandum of Association

The Memorandum of Association of the Company

MHRA Ministry of Health & Regulatory Authority MW Mega Watt Promoter The Promoter of the Company i.e.Mr. Kedarmal Bankda and Mr. Vijay

Bankda Registered Office/Registered Office of the Company

7, Niraj Industrial Estate, off Mahakali Caves Road, Andheri (East), Mumbai- 400 093, Maharashtra

ROC Registrar of Companies, Mumbai (Maharashtra) RMG Rapid Mixture Grinding Pharma Pharmaceutical

WHO World Health Organisation

ABBREVIATIONS

AY Assessment Year AHU Air Handling Unit AIDS Acquired Immune Deficiency Syndrome API Active Pharmaceutical Ingredients A/C Account AOA Articles of Association B.Com Bachelor of Commerce BSE Bombay Stock Exchange


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CIN Corporate Identity Number Co. Company CDSL Central Depository Services (India) Limited CS Company Secretary D-Mat Dematerialisation EPS Earnings Per Share Etc. Eccetra FCA Fellow Chartered Accountant HRD Human Resource Development LTD. Limited Ltrs Liters LLB Bachelor of Law IEC Importer Exporter Code Kgs kilograms M/s. Messers MAPIN Market Participation & Investor Database M.Com Masters of Commerce MAT Minimum Alternate Tax MD Managing Director Ml milliliter NA Not Applicable No. Number OTC Over The Counter PAN Permanent Account Number Pharma Pharmaceutical PVT. Private QC Quality Control RBI The Reserve Bank of India REC Rural Electrification Corporation Ltd Regn. No. Registration Number Rs. Rupees RTGS Real Time Gross Settlement S.No. Serial Number s/o Son of SHL Syncom Healthcare Limited SFL Syncom Formulations (India) Limited SAP Significant Accounting Policies SWOT Strengths, Weaknesses, Opportunities and Threats Sq ft Square Feet STT Securities Transaction Tax SLM Straight Line Method of Depreciation TAN Tax Deduction Account Number UIN Unique Identification Number VAT Value Added Tax w.e.f. With effect from W.r.t. With reference to WTD Whole Time Director


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SECTION II: RISK FACTORS

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

� General economic and business conditions in India and other countries;

� Company’s ability to successfully implement its strategy and its growth and expansion plans;

� Factors affecting the industry;

� Increasing competition in the industry;

� Increases in labour costs, raw materials prices, prices of plant & machineries and insurance premium;

� Cyclical or seasonal fluctuations in the operating results;

� Amount that the Company is able to realize from the clients;

� Changes in laws and regulations that apply to the industry;

� Changes in fiscal, economic or political conditions in India;

� Social or civil unrest or hostilities with neighboring countries or acts of international terrorism;

� Changes in the foreign exchange control regulations, interest rates and tax laws in India.

For further discussion of factors that could cause Company’s actual results to differ, please see the section entitled “Risk Factors” included in this Letter of Offer. In the light of inherent risks and uncertainties, the forward-looking statements, events and circumstances discussed in this Letter of Offer might not occur and are not guarantees of future performance. Neither the Company, it’s Directors and Officers, any member of the Issue Management Team nor any of their respective affiliates has any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, for purposes of the Issue, the Company and the Lead Manager to the Issue will ensure that investors in India are informed of material developments relating to the business until such time as the grant of listing and trading permission by the Stock Exchanges.

Market Data

Market data used throughout this Letter of Offer was obtained from industry publications and internal company reports. Industry publications generally state that the information contained in those


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publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although, the company believes market data used in this Letter of Offer is reliable, it has not been independently verified. Similarly, data provided by the Company, while believed by the Company to be reliable, has not been verified by any independent sources. Similarly, internal Company reports, while believed by us to be reliable, have not been verified by any independent source. RISK FACTORS An investment in equity shares involves a high degree of risk. You should carefully consider all the information in this Letter of Offer, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, results of operations and financial condition could suffer, the price of our Equity Shares could decline, and you may loose all or part of your investment. The financial and other implications of material impact of risks concerned, wherever quantifiable have been disclosed in the risk factors mentioned below. However there are a few risk factors where the impact is not quantifiable and hence the same has not been disclosed in such risk factors. Prior to making an investment decision, you should carefully consider all of the information contained in this Letter of Offer, including the sections titled “Business Overview”, “Management’s Discussion and Analysis of Financial Condition and Results of the Operations” and the “Financial Details” included in this Letter of Offer beginning on pages 72, 143 and 123 respectively. The occurrence of any of the following events could have a material adverse effect on our business, results of operation, financial condition and prospects and cause the market price of the Equity Shares to fall significantly. This Letter of Offer also includes statistical and other data regarding the Indian Pharmaceuticals Industry. This data was obtained from industry publications, reports and other sources that we and the Lead Manager believe to be reliable. Neither we nor the Lead Manager have independently verified such data. Materiality The Risk factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality. 1. Some events may not be material individually but may be found material collectively. 2. Some events may have material impact qualitatively instead of quantitatively. 3. Some events may not be material at present but may be having material impacts in future. Internal Risk Factors

1. There are outstanding litigations involving the Company.

The Company is defendants/plaintiff in various legal proceedings incidental to our business and operations. These legal proceedings are pending at different levels of adjudication before various courts. In the event of rulings against the company by courts in these proceedings or levy of penalties by any statutory authorities, the Company may need to make payment to others or book provisions against probable future payments, which could increase Company’s expenses and current liabilities. Summary of litigations are as below:


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Sr. No.

Particulars No. of Cases / Disputes

Amount Involved Where Quantifable (Rs. In Lakhs)

LITIGATION BY AND AGAINST OUR COMPANY A) Litigations filed against our company

i) Litigation involving Civil Laws 4 9.35 ii) Litigation involving Securities & Criminal

Laws 1 00.13

iii) Litigation involving Statutory Laws Income Tax 3 117.21 Central Sales Tax Act – 1956 1 0.46 iv) Litigation involving Labour Laws 3 8.11 B) Litigations filed by our company

i) Litigation involving civil Laws 2 7.06 ii) Litigation involving Criminal Laws 7 21.33 For further details, Please read “Outstanding Litigation and Material Developments” on Page No 150

2. Our dependence on certain agreements may adversely affect of our business in case of

termination of those agreements.

Apart from manufacturing the products and selling under its own brand, the company is also into contract manufacturing. The major quantum of this division is from IPCA Laboratories Limited for whom the company is manufacturing products for export as well domestic market. The termination of contract / agreement with IPCA Laboratories may adversely affect the business.

3. There are no supply agreements for the raw materials required for manufacturing of our products. Volatility in the prices of the raw material may have an adverse impact on our business and financial operations. No long term contract has been entered with any supplier. The price of raw materials may fluctuate depending upon supply & demand of the raw material, availability of producer or distributor in the market. In case of escalation in price, the company’s financials may be affected.

4. Our company depends on its senior management team and the loss of team members may

adversely affect its business.

Our company maintains conducive work environment and provides adequate motivation to perform. However senior management team members or key personals may chose to leave the organisation in which case operations of our company may be affected. However in such eventually we will promptly fill the vacancy through either fresh requirement or internal promotion.

5. Failure to keep abreast with the latest trends in technology may adversely affect our cost competitiveness and may affect our financial condition adversely.

Our company cannot ensure that it will successfully implement new technology effectively or adapt the processing system to emerging industry standards. If our company is unable due to technical, financial, legal and/or other reasons to adapt in timely manner to the changing


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market conditions, its business, financial performance and the market price of its equity shares could be adversely affected.

6. Our business has experienced growth in the past, which we may not be able to sustain in

the future.

Our Total turnover has shown the stable growth since FY 2002-03 except marginal decline in fiscal 2006.We have reported turnover of Rs. 4330.89 Lacs in fiscal 2004 as compared to Rs. 3361 Lacs in fiscal 2003 with a growth of 28.86%, Rs. 5499.90 Lacs in fiscal 2005 as compared to Rs.4330.89 Lacs of fiscal 2004 with a growth of 26.99%, Rs.5224.78 Lacs in fiscal 2006 as compared to Rs.5499.90 Lacs in fiscal 2005 with a decline of 5.0 % . Rs. 6031.55 Lacs in fiscal 2007 as compared to Rs.5224.78 Lacs in fiscal 2006 with a growth of 15.44%. Rs. 6833.26 Lacs in fiscal 2008 as compared to Rs. 6031.55 Lacs in fiscal 2007 with a growth of 13.29 %. We may not be able to sustain our growth or maintain a similar rate of growth in the future due to non-availability of professionals with necessary skill sets, decline in the demand for our products, increased competition, and lack of management resources or due to a general slowdown in the economy. A failure to sustain our growth may have a material adverse effect on our financial condition and results of operations.

7. The profits of company is posing a declining trend The profit after tax (PAT) of the company was Rs. 379.63 Lacs in fiscal 2008 in comparisons to Rs. 454.41 Lacs of fiscal 2007, Rs. 509.92 of fiscal 2006 and Rs. 575.35 of fiscal 2005. So it is evident that profits of the company are decreasing since fiscal 2005 in spite of registering constant increase in its turnover. The reason for such decrease is attributed to constant increase in staff costs, selling and administration overheads of the company due to launch of its “Cratus” Division in order to register a wide presence in domestic markets. The Cratus Division was in initial stages and accounted heavily on staff costs, selling and administration overheads of the company with comparative lesser growth in sales.

8. We have planned Working Capital Expenditure, which may not yield the benefits intended.

We are embarking upon steps for expansion of business in domestic market and increase the profitability by infusion of additional working capital in the system, as detailed in the section titled “Objects of the Issue” beginning on page no. 36 of this Letter of Offer. We cannot assure that we will be able to get the benefits of the generally growing demand in this sector and accordingly the benefits accruing to us from the planned expansion may be less than what is anticipated.

9. Proposed Objects are dependent on Issue proceeds and any delay in raising funds from

Right Issue could adversely impact on the achievement of objects of the Issue.

The proposed Working Capital expenditure as specified under "Objects of the Issue' will be funded through the proceeds of the issue. Any delay / failure in Rights issue process may disrupt the business operations, which could have a material adverse effect on our financial condition and results of operations.

10. Our Accounting Policy for the benefit of employees are not in line with AS -15 issued by ICAI which may lead to action against us by any statutory body and the same may adversely affect our business or harm our reputation

Retirement benefit to employees, which form part of defined contribution plan viz, provident fund, and family pension fund are accounted on accrual basis and the same is in line with Accounting Standard – 15, however benefits which form part of defined contribution plan viz gratuity is also accounted on accrual basis as against actuarial basis and we are also not able to


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quantify the variance being actuarial valuation has not been conducted for gratuity which form part of defined contribution plan.

11. Failure to comply with export obligations may subject the company to significant import duties and other penalties The company has imported goods, which is used for manufacturing and the Company has Applicable governmental regulations allow the Company to import such goods at concessional rate of import duties, provided the Company correspondingly exports a pre-determined value of products within a specified time. As of 30.04.2009 the Company has an obligation to export products of Rs. 53.48 lakhs. While the Company fully expects to comply with this obligation, there can be no assurance that the Company will be able to meet its obligations on time. Any inability to fulfill these obligations in a timely manner may require the Company to pay import duties and other penalties amounting to Rs. 18.72 lakhs, which could have a material adverse effect on the Company’s operations and financial results.

12. We have reported negative cash flows

We have reported negative cash flows to the tune of Rs. 6.44 Lakhs for the period ended 31st January 2009, Rs. 194.59 lakhs for the fiscal 2008 and Rs. 2.32 lacs for the fiscal 2005. These sustained negative cash flow can affect on our business and growth. The detailed break up of cash flows are summarized in below mentioned table:

Amount (Rs. In Lakhs)

Particulars 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04 Net Cash flow from Operative Activities

(40.52) 643.78 537.52 345.13 888.48 412.23

Net Cash Flow from investing activities

(163.30) (934.66) (561.14) (614.32) (254.44) (41.03)

Net Cash Flow from Financing Activites

197.38 96.29 167.97 329.35 (636.36) (366.12)

Net Cash Flow for the Year

(6.44) (194.59) 144.35 60.16 (2.32) 5.08

13. Any future equity offerings by us could lead to dilution of your shareholding or adversely

affect the market price of the Equity Shares.

If we do not have sufficient internal resources to fund our investment requirements or working capital needs in the future, we may need to raise funds through equity financing. As a purchaser of the Equity Shares in the Issue, you could experience dilution to your shareholding in the event that we conduct future equity offerings. Such dilution can adversely affect the market price of the Equity Shares and could impact our ability to raise capital through an offering of our equity securities. In addition, any perception by investors that such issuance or sales will occur could also affect the trading price of the Equity Shares.

14. Our ability to pay dividends in the future will depend upon future earnings, financial

condition, cash flows, working capital requirements and capital expenditures.

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


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15. We have entered into certain related party transactions and may continue to do so. These transactions in the present & future may potentially involve a conflict of interest which may adversely affect our business or harm our reputation

We have entered into transactions with related parties. Further the transactions entered with the related parties are in the nature of remuneration payable to directors, unsecured loan taken from directors & its repayment, interest & rent payment to directors/ Promoters. While we believe that all such transactions have been conducted on the arms length basis, there can be no assurance that we could not have been achieved more favourable terms had such transactions not been entered into with related parties. Furthermore, it is likely that we will enter into related party transactions in the future. There can be no assurance that such transactions, individually or in aggregate, will not have an adverse effect on our financial condition and results of operation. For detailed information on our related party transactions, please refer to section "Related Party Transactions" appearing on page no. 120 of this Letter of Offer.

16. If we are sued for defects in our products it could harm our reputation and our profits

Our business (pharmaceutical formulations) inherently exposes us to potential liability. Also, product liability claims could require a pharmaceutical company to spend money on litigation, divert management's time, damage a company's reputation and affect the marketability of a company's products.

17. Our funding requirements and the deployment of the proceeds of the Issue are based on management estimates and have not been independently appraised by any banks/ Financial Institutions, any deviation in the actual performance could adversely impact our operations and sustainability

Our working capital requirements has not been appraised by any of the external agency. Our management has prepared an internal business plan and investment proposal based on estimates derived from past experience of the promoters. There is no guarantee that our estimates will prove to be accurate in the coming years and any significant deviation in our estimates could adversely impact our operations and sustainability. However we confirm that issue proceeds shall be utilized within the objects specified under the section titled "Objects of the Issue" on page no. 36 of this Letter of Offer.

18. The Registered Office & Corporate Office is not owned by us.

The Registered office in Mumbai, Maharashtra as well as Corporate Office in Indore, Madhya Pradesh are not owned by the company and however same are owned by promoters and its relatives accordingly the company is not facing the risk of uncertainty on losing its premises.

19. The Land of our Factory is a Leasehold Property. Non-renewal of such lease after its

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

The Factory at Pithampur (District Dhar), M.P is on a leasehold land for 99 years starting from January 1993. The Company has taken such lease from Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Limited and non renewal of such lease after its expiry period may have a material adverse effect on our financial condition and results of operations. It may even lead to discontinuance of business operations in Pithampur (District Dhar), Madhya Pradesh.

20. Our Insurance coverage may not adequately protect us against certain operating risks and

this may have a material adverse impact on our business.


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We believe that the Insurance coverage maintained, would reasonably cover all normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be met fully, in part or on time. To the extent that we suffer loss or damage that is not covered by insurance or exceeds our insurance coverage, or the insurance policy covering such risk is not met, our results of operations and cash flow may be adversely affected.

21. Our Operation is based on timely supply of raw material as well as fluctuation in the prices

of major raw material and any adverse affect may impact on the profitability.

The raw materials used by the company are bulk drugs which are procured from within and outside India. Import of raw material is subject to availability, volatility and exchange risks. Any abrupt or large scale escalations in the prices of raw material can adversely affect the company. Besides the above, continued shortage of domestic/imported raw materials/components may adversely affect the Company’s prospects.

22. License pertaining to Authorization for operating a facility for collection, reception, storage and transport of Hazardous Waste have been applied for renewal by the Company are yet to be received and any delay in receipt of it may affect the operations of the Company. The Company had obtained this license authorizing it for operating a facility for collection, reception, storage and transport of Hazardous Waste on February 27, 2007 which was valid till May 28, 2008 The Company has made an application to the Madhya Pradesh Pollution Control Board vide letter dated October 21, 2008 for renewal upto May 28, 2010.

23. Competition from other manufacturers / marketers may adversely affect the competitive

position and profitability of the company.

The company may face competition from other existing players and potential entrants to the industry which may affect the competitive position and profitability of the company. Loss of market share due to competition may adversely affect the profitability. Our inability to compete successfully in our industry would materially affect our business prospects and financial condition.

24. Our business depends on our manufacturing facility and the loss of or shutdown of

operations of the manufacturing facility on any grounds could adversely affect our business or results of operations

Our manufacturing facility is subject to operating risks, such as breakdown or failure of equipment, interruption in power supply or processes, performance below expected levels of output or efficiency, natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities. Manufacturing of the pharmaceutical formulations requires expensive and delicate machines which is subject to normal wear and tear and therefore require lots of maintenance. Breakdown of any of the machines may also affect our business or results of operation.

25. Our operations may be subject to labour unrest, slowdowns and increased wage costs,

which could adversely impact our operations and financial condition.

Our employees are not currently unionised, it is not sure that they will not unionise in future. Moreover, whether or not our employee unionises, we may be subject to industrial unrest or slowdowns. In future, our employees might unionise we might experience unrest or slowdowns, and it may become difficult for us to maintain flexible labor policies and we may experience increased wage costs.


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26. Our business is subject to regulation by several authorities, which could have an adverse

effect on our business and our results of operation.

Our Company has to comply with the regulations under the Drug and Cosmetics Act, 1940; Drugs and Cosmetics Rules, 1945; The Drugs (Prices Control) Order, 1995, Drugs and Magic Remedies Act, 1954; Patent Regulation. Further, our business operations are subject to strict regulations by environmental regulations, Trade Mark Act, Factories Act, etc. We incur costs to comply with requirements of environmental laws and regulations. Any lapses or non-compliance of any laws or regulations or rules or acts or policies by us may adversely affect our business and / or financial operations. For more details on the regulations and policies, please refer to the section titled "Key Industry Regulations or Policies" beginning on page no. 96 of this Letter of Offer.

27. Any decrease in demand / price of Finished Goods (pharmaceuticals) will have impact and

an adverse affect on our business Our profits depend on the demand/ prices for the pharmaceuticals for the domestic and international market. If there is a drop in demand, there would be a corresponding drop in prices and our profit margins might decline as a result.

External Risk Factors

28. The Pharmaceutical industry in India is highly regulated by the Government of India under its Drug Price Control Order (DPCO).

Any adverse change in the Government Policy in terms of margins or prices of the products would affect our Company’s performance. In case Government regulations impose restrictions on our Company’s ability to sell products at certain price, it may result in a loss of revenue and profits.

29. Our business could be adversely impacted by economic, political and social developments

in India.

Our performance and growth are dependent on the health of the Indian economy which could be adversely affected by various factors, such as political and regulatory action including adverse changes in liberalization policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in these economies could adversely affect our advertisers and viewers, which in turn would adversely impact our business and financial performance and the price of our Equity Shares.

30. Terrorist attacks and other acts of violence involving India, the United States, the United

Kingdom or other countries could adversely affect the financial markets, result in a loss of client confidence and adversely affect our business, results of operations, financial condition and cash flows.

Certain events that are beyond our control like the terrorist attacks and other acts of violence or war, including those involving India, the United States, the United Kingdom or other countries, may adversely affect worldwide financial markets and could potentially lead to economic recession, which could adversely affect our business, results of operations, financial condition and cash flows, and more generally, any of these events could lower confidence in India..

31. A slowdown in economic growth in India could cause the business of the Company to suffer


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Company’s performance and growth is dependent on the health of the Indian economy. The economy could be adversely affected by various factors such as political or regulatory action, including adverse changes in liberalisation policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in the Indian economy may adversely impact our business and financial performance and the price of our Equity Shares.

32. Natural disasters could disrupt our operations and result in loss of revenues and

increased costs. The business of the Company is exposed to man-made and natural disasters such as, explosions, earthquakes, storms and floods as well as to terrorist attacks or other enemy actions. The occurrence of a man-made or natural disaster, terrorist attack, enemy action or other accidents could disrupt the operations of the business of the Company and result in loss of revenues and increased costs.

33. Competition from established and new players in the Industry

Our operations in the Pharmaceutical industry compete with those of other established players, some of whom have been in operation for a longer period of time than us. Some of our competitors have access to larger financial resources than our company.

NOTES TO RISK FACTORS: 1. Investors are advised to refer to “Basis for Issue Price” before investing in this Issue. 2. Investors are advised to refer to “Notes on Restated Financial Statements” before investing in this

issue. 3. Net worth before the Issue as on 31.01.2009 is Rs. 4168.14 Lacs and the size of the Rights Issue

(excluding conversion of warrant) is Rs. 529.13 Lacs and the size of the Rights Issue (including conversion of warrant) is Rs. 1058.26 Lacs

4. The Book Value of the equity shares of the Company as on 31.01.2009 is Rs. 66.96 per share. 5. Average cost of acquisition of Equity Shares of the Company by Promoters is Rs. 25.95 per share 6. All legal requirements applicable till the filing of the Letter of Offer with the stock exchanges have

been complied with. 7. Financials of Issuer Company has been disclosed as per the SEBI (DIP) Guidelines, 2000. 8. All information shall be made available by the Lead Manager and the Issuer to the public and

investors at large and no selective or additional information will be made available for a section of investors in any manner whatsoever.

9. Issue of 31,12,500 Equity Shares of face value of Rs.10/- each for cash at a premium of Rs. 7/- per

Equity Share aggregating up to Rs 529.13 Lakhs to the existing Equity Shareholders of Syncom Formulations(India) Limited on right basis in the ratio of [1] Equity shares for every [2] Equity share held on the Record Date i.e. 20th May 2009 Under the Issue, for every one[1] Equity Shares allotted on right basis the allotees will receive one [1] detachable warrant.

10. As on date 30.04.2009, our Company had 7395 shareholders.


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11. The transaction-wise aggregate values for the related party transactions have been set out in the following table.

Details of Transactions with Related party: (Rs. in lacs)

Nature of Transaction Relationship 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Debits

Repayment of Unsecured Loans Directors 592.29 433.15 376.22 574.66 474.72 233.77

Relatives of Director 0.00 0.00 131.54 698.27 632.43 27.67

Car Hire Charges Directors 4.30 5.16 4.74 3.16 3.72 2.56


Rent Directors 2.00 2.40 2.40 2.40 1.80 2.40


Interest Directors Nil 23.47 Nil Nil 2.14 0.81

Relatives of Director Nil Nil Nil Nil Nil Nil

Salary Directors 3.00 3.60 2.58 2.40 2.40 2.40


Sitting Fees Directors 0.30 0.05 Nil 0.05 0.10 0.05

Unsecured Loans received Directors 6.49 586.59 379.80 753.83 380.21 111.81


Credits

Enterprise controlled or managed by key management personnel

Unsecured Loans received 1253.48 0.00 0.00 0.00 0.00 0.00

Repayment of Unsecured Loans 420.90 0.00 0.00 0.00 0.00 0.00

Sales , Services & Other Income 0.00 Nil Nil Nil 2.72 8.80 Interest Paid 31.37 0.00 0.00 0.00 0.00 0.00

TOTAL 2269.57 1071.70 914.64 2764.9 2413.34 463.52


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SECTION III: INTRODUCTION

SUMMARY This is only a summary and does not contain all the information that you should consider before investing in our Equity Shares. You should read the entire Letter of Offer, including the information contained in the Chapters titled “Risk Factors” and “Financial Details” and related notes beginning on pages 6 and 123 of this Letter of Offer before deciding to invest in our Equity Shares. Industry Overview India's pharmaceutical industry is well positioned for sustainable growth and expansion, according to KPMG – CII Report titled, “Indian Pharma Inc. – A Continuing Success Story” released in November 2007 at the Pharma Summit 2007. The industry has grown at a CAGR of 13 percent from 2002-2007 and is expected to grow at a CAGR of 16 percent over 2007-2011. Over the last couple of years, the pharmaceuticals industry has grown at approximately 1.5-1.6 times the growth of economy. The rise in disposable income has a positive impact on healthcare spend. In 2005, 6.2 percent of disposable income was spent on healthcare as compared to 2.8 percent in 1995. This augurs well for the pharma industry, as the strong economic momentum is likely to continue with the Indian economy expected to grow by 8–9 percent in the next few years. On the international front, Indian generic drug makers are playing an important role in the global consolidation process and are augmenting their market presence across regulated as well as semi regulated markets through their organic as well as inorganic initiatives. In spite of increasing competitive intensity on account of continued pricing pressure, several significant opportunities are being leveraged by Indian generic players. Contract Research and Manufacturing Services (CRAMS), is becoming one of the most promising opportunities for the Indian pharma industry. India, with its intrinsic competitive advantages, remains as one of the most preferred outsourcing destinations and is now playing a vital role in manufacturing as well as drug development value chain of various innovator pharma companies. According to John Morris, Head, Global Pharmaceutical Practice, KPMG, “ The Indian pharmaceutical industry is at a critical juncture given its inherent strengths and its ability to be a dominant player in the global pharmaceutical industry. It has become a strategic imperative for global pharma companies to make India an integral part of their manufacturing value chain to maintain lean cost structures and combat intense competition in the global generics industry”. MNC pharma companies are increasingly focusing on realigning their manufacturing activities in order to concentrate on core activities such as R&D and brand building - thereby reinforcing the potential for cost savings through contract manufacturing. At the same time, existing global CRAMS players are facing adverse business conditions, on account of increasing regulatory compliances on environmental issues and competition from low cost countries. According to the KPMG – CII Report, Pharma Multinationals are also increasingly using India as a base for exports not only to the immediate neighboring markets, but also to other markets around the world such as Japan, South Africa, Latin America and Europe. Pharma multinationals are also exploiting India’s competencies in the field of Information Technology and its strong and low cost IT skill sets; by setting up centers for their global clinical data management functions in India.


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BUSINESS OVERVIEW

Syncom Formulations (India) Limited (SFL) was incorporated as a Private limited company in the name of Syncom Formulations (India) Private Limited on June 21, 1988 by Mr. Kedarmal Bankda, Mr. Ajay Kumar Bankda & Mr. Vijay Kumar Bankda for manufacturing, marketing, dealership, importing, exporting & job work of pharmaceuticals, medicinal and other Industrial preparation & formulations under its own brands in Ethical, OTC, Generic and Herbal market segment. The company changed its status from Private limited to Public limited in Year 1992. The company came out with its Initial Public Offering in the Year 1994 hence obtained listing at BSE, DSE, ASE and MSE. However company has voluntarily de-listed its shares from ASE on July 8, 2004, MPSE on May 29, 2008 & DSE on September 2, 2004. The registered office of the company is situated at 7, Niraj Industrial Estate, Off Mahakali Caves Road, Andheri (East), Mumbai 400 093. It has manufacturing unit at Pithampur, District Dhar, Madhya Pradesh which has a state of art manufacturing facility with WHO: GMP & ISO 9001 accreditation. SFL Quality policy is to upgrade Organisational capabilities viz. Men, Materials & Machines in order to consistently provide Quality products. The Current Promoters of the company are Mr. Kedarmal Bankda and Mr. Vijay Kumar Bankda. The company is engaged in the business of pharmaceutical formulations. It manufactures range of products in various dosage forms and markets them in various countries. In addition to pharmaceutical formulations in the form of tablets, capsules, liquids and dry powders, the company also manufactures Injectibles, inhalers and ear/eye drops. In 1994, the company undertook an expansion programme of setting up a new plant for manufacturing pharmaceutical formulations at Pithampur, Madhya Pradesh. The project which was financed through a public issue made in January 1994 was completed in 1995. During the year 1997-98, the Company has further diversified into Ethical Operations by introducing the range of prescription formulations. During the year 1998-99 there has been huge expansion of installed capacity and production base. Further the company introduced products in the generic, OTC and Ethical Divisions. During the year 2007-08 the Company has further completed modernization and expansion of Project in Pithampur unit, District Dhar, M.P with a total investment of Rs. 1516.62 Lacs. Today, SFL is operating in more than 35 countries worldwide and has more than 150 products in various dosage forms which include Tablets, Capsules, Dry Syrups, and Ointments/Creams, Dry Powder Injections and Ampoules and wide range of Herbal Products. In the process of family settlement, the domestic pharmaceuticals formulations business of SFL was hived off to Syncom Healthcare Limited (SHL) as a result one of the promoters Mr. Ajay Bankda got disassociated with SFL. The company has entered into “Deed of Assignment of Trade Marks” and “Deed of Assignment of Copyright” both dated May 10, 2004 with SHL for transferring & assigning various registered & pending trade marks & copy right for artistic works of various labels from SFL to SHL. SHL took over various domestic brands of SFL as well as the domestic marketing network of SFL. Overseas business has been assigned to SFL for which “Registered User Agreement” and “Licensed User Agreement” both dated May 12, 2004 was entered into between SFL & SHL. For details, refer to the paragraph titled “Other Agreements / Arrangements” in the section titled “History and Corporate Structure of the Company” on page 99 In order to penetrate in to the domestic market and registering ample domestic presence, the company has launched the Cratus division in the year 2006, which caters the demand of Indian markets. In the domestic division, we are getting products outsourced from outside manufacturing units on third party agreement basis. This enables us to take advantage of excise exemption, as these units are located in excise free zone declared by government. The company presently exports goods to Guinea, Ghana, Kenya, Uganda, Sudan, Russia, Maldova, Tanzania, Africa, Azberjan, Nepal and Srilanka. The company has been approved as a supplier to reputed Hospitals and regulatory agencies including Central Medical Stores Organization of Gujarat Govt, Directorate of health services of Delhi Govt. and Central Govt. and supply to and registration of defense services is in its final stages. This results us to generate substantial sales volume. Keeping in view the shifting consumer preferences for the use of herbal products, the


18

company is aggressively manufacturing and marketing its herbal products like Colo Vaporex, Colo Inhaler, Edicare, Attom Megacaps, Ecziguard and Yas antacid salt. The company manufactures various dosage forms, which include Tablets, Capsules, Dry powder Injectibles (vials/ampoules both liquid and dry), Ointment and Inhaler. The company has an established product-marketing network covering both domestic and international markets, which enable it to reach its existing and potential customers through network of distributors and dealers spread across the country. For the purpose of marketing the various products, the Company’s business has been categorized as

• Domestic Division • Exports Division and • Contract Manufacturing Division.

Competitive Strengths

• Multi-product capability • International Standards • Location Advantage • Experience Management Team

SFL besides having more than 150 products in various dosage forms which include Tablets, Capsules, Dry Syrups, Ointments/Creams, Dry Powder Injections and Ampoules and also is one of the few companies in India which also has a wide range of Quality Herbal Products.

Product / Technology type(s) covered: - Generics - FP (finished products) - OTC (over the counter drugs) - Pharmaceuticals / Therapeutics - Phyto - Nutritionals / Vitamins - Prescription drugs (Rx) - Proteins Therapeutic targets: - Arthritis / Rheumato - Cough / Cold - Dermatology - Diabetes - Gastrointestinal - Geriatrics - Infectious Diseases - Men's Health - Ophthalmology - Pain - Pediatrics - Tonics - Women's Health Markets Covered a. Head Quarter : India b. Continent(s) active : Africa, Asia, Central/South America c. Countries active : Nepal, Bhutan, Nigeria, Haiti, Philippines, Vietnam


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Offering Details Pursuant to the resolution passed by Board of Directors of the Company at its Meeting held on August 29, 2008 and Shareholders approval in the AGM held on September 26, 2008, has decided to make the following offer to the Equity Shareholders of the Company: Issue of 31,12,500 Equity Shares of face value of Rs. 10/- each for cash at a premium of Rs. 7/-/- per Equity Share on rights basis to the existing Equity Shareholders of The Syncom Formulations (India) Limited in the ratio of 1 (One) Equity Share for every 2 (Two) Equity Shares held on the Record Date i.e. 20th May 2009 Under the Issue, for every 1 (one) equity shares allotted on rights basis the allottees will receive 1 (one) detachable Warrant(s).Total Issue including conversion of Warrants into Equity Shares would aggregate to Rs 1058.26 lacs. The Issue Price is 1.7 times the face value of the Equity Shares. For details please refer to “Terms of the Issue” on page 170 of this Letter of Offer.


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SUMMARY OF FINANCIAL INFORMATION The following tables set forth the selected summary of the financial information derived from our restated financial statements for the financial year ended March 31 2008, 2007, 2006, 2005, 2004 and period ended January 31, 2009. For detailed financial information please refer the section entitled “Financial Information” on page no. 123 of this Letter of Offer

STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED

(Rs. in Lacs)

As at 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Assets

Fixed Assets-Gross block 4506.34 4396.34 3616.44 2830.30 2478.58 2226.72

Less: Depreciation 1433.86 1253.53 1075.40 928.43 787.32 712.87

Net Block 3072.48 3142.81 2541.03 1901.87 1691.27 1513.85

Less: Revaluation Reserve 0.00 0.00 0.00 0.00 0.00 0.00 Net Block after adjustment for Revaluation Reserve 3072.48 3142.81 2541.03 1901.87 1691.27 1513.85

Add : Capital Work in progress including advances for Capital goods 79.38 25.76 69.01 230.74 2.84 0.26

Net Block after adjustment of Advances (A) 3151.86 3168.56 2610.04 2132.61 1694.10 1514.11

Investments (B) 243.03 223.59 4.00 41.93 4.00 4.00

Current assets, loans and advances 0.00

Inventories 269.37 555.78 341.70 617.74 540.69 432.04

Receivables 1137.45 1779.53 1444.41 1259.45 1530.87 1329.79

Cash & bank balances 21.92 28.36 222.95 78.61 18.45 20.77

Loans and advances 1319.53 1042.40 770.69 571.66 509.71 453.49

Total Current Assets (C ) 2748.27 3406.07 2779.74 2527.46 2599.73 2236.10

Total Assets D = (A) + (B) + (C) 6143.16 6798.22 5393.78 4702.00 4297.84 3754.21

Liabilities & Provisions

Loan funds

Secured loans 48.52 136.99 271.54 56.01 102.61 997.00

Unsecured loans 832.58 585.81 432.37 560.34 363.49 303.45

TOTAL Loan Fund (E) 881.10 722.80 703.91 616.35 466.10 1300.45

Current liabilities & provisions

Sundry liabilities 538.30 1564.52 629.19 488.15 879.42 577.13

Provisions 88.22 207.22 286.35 376.40 468.75 150.41

Deferred Tax Liability 467.40 421.88 367.55 329.22 357.96 266.63

Total Liabilities & provisions (F) 1093.92 2193.62 1283.09 1193.77 1706.13 994.17

Net worth (D) – (E) -(F) 4168.14 3881.80 3406.79 2891.88 2125.61 1459.59

Represented by:

Share Capital 622.50 622.50 591.50 562.00 534.20 507.70

Reserves & surplus 3530.69 3244.35 2815.29 2329.88 1591.41 962.71

Less: Revaluation Reserve 0.00 0.00 0.00 0.00 0.00 0.00

Reserves (Net of Revaluation Reserve) 3530.69 3244.35 2815.29 2329.88 1591.41 962.71

Less: Misc. expenditure not written off 0.00 0.00 0.00 0.00 0.00 10.82

Share Application /Warrant Money Recd 14.95 14.95 0.00 0.00 0.00 0.00

Total Net Worth 4168.14 3881.80 3406.79 2891.88 2125.61 1459.59


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STATEMENT OF PROFIT AND LOSS ACCOUNT, AS RESTATED (Rs. in lacs)

For the year/period ended 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Sales :

Of products manufactured by the Company 4772.27 6001.62 5628.08 4629.24 4307.29 4025.83

Of products traded by the Company 397.12 831.64 403.47 595.54 1192.61 305.06

Less : Excise Duty (5.23) (48.88) (60.31) (0.38) (58.86) (189.39)

Other income 68.73 126.81 194.93 216.00 148.75 2.48

Increase (decrease) in inventory (77.25) 46.23 (161.53) 46.61 5.93 72.57

Total Income 5155.64 6957.42 6004.64 5487.01 5595.71 4216.56

Raw Materials & goods consumed 3244.17 4624.50 3719.48 3572.97 3640.80 3020.47

Staff costs 445.57 524.77 365.66 214.07 160.12 137.40

Other Manufacturing expenses 190.63 225.52 191.02 155.35 173.25 124.06

Administration Expenses 135.27 219.99 188.58 141.83 93.38 111.65

Selling & distribution expenses 464.76 557.21 690.73 530.93 459.68 255.50

Interest & financial Charges 80.23 43.74 9.70 8.85 67.43 94.66

Depreciation 180.33 178.13 146.97 141.41 74.45 66.96

Miscellaneous expenditure written off 0.00 0.00 0.00 0.00 10.82 10.82

LOSS on Sales of Machinery 0.00 0.00 0.00 1.45 0.00 0.00

Total Expenditure 4740.95 6373.86 5312.15 4766.87 4679.92 3821.51

Net Profit before tax and extraordinary items 414.69 583.56 692.50 720.15 915.79 395.04

Current Tax 94.10 136.34 190.71 236.79 249.11 35.92

Deferred Tax 45.52 54.33 38.33 (28.74) 91.33 58.23

Fringe Benefit Tax 10.38 13.25 9.06 2.17 0.00 0.00

Net profit after tax & before extraordinary items 264.69 379.63 454.41 509.92 575.35 300.90

Extraordinary items (net of tax) 0.00 0.00 0.00 0.00 0.00 0.00

Less : I.T. paid in Next Years 0.00 21.64 12.19 16.04 103.45 56.57

Less: Prior Period Adjustment 0.00 4.12 17.41 0.00 0.53 0.00

Net profit after extraordinary items 264.69 353.87 424.81 493.88 471.37 244.33

Profit brought forward from previous year 162.65 195.20 89.59 91.83 111.07 124.01

Balance available for appropriation 427.34 549.07 514.40 585.71 582.44 368.34

Appropriations

General Reserve 0.00 350.00 250.00 400.00 400.00 200.00

Proposed dividend 0.00 31.13 59.15 84.30 80.13 50.77

Tax on proposed dividend 0.00 5.29 10.05 11.82 10.47 6.50

Balance carried to Balance sheet 427.34 162.65 195.20 89.58 91.83 111.07


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GENERAL INFORMATION

Dear Shareholder(s),

Pursuant to the resolution passed by the Board of Directors in their meeting held on August 29, 2008 and the shareholders approval obtained at their AGM dated September 26, 2008, it has been decided to make the following offer to the equity shareholders of the Company on rights basis with a right to renounce: ISSUE OF 31, 12, 500 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT PREMIUM OF RS. 7/- PER EQUITY SHARE AGGREGATING TO Rs. 529.13 LAKHS TO THE EXISTING EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [1] EQUITY SHARE FOR EVERY [2] EQUITY SHARE HELD ON RECORD DATE i.e 20th May 2009. FOR EVERY ONE [1] EQUITY SHARE ALLOTED ON RIGHT BASIS THE ALLOTEES WILL RECEIVE ONE [1] DETACHABLE WARRANT. Details of the Issuer Company

Name of the Company SYNCOM FORMAULATIONS (INDIA) LIMITED

Registered Office 7, Niraj Industrial Estate, off Mahakali Caves Road, Andheri (East),

Mumbai- 400 093, Maharashtra

Registration No. (Corporate Identity Number)

L 24239 MH 1988 PLC 047759

Listing The existing Equity Shares of the Company are listed on Bombay Stock Exchange Limited (BSE), Mumbai ( Designated Stock Exchange), The company has received in-principle approval from BSE vide letter dated 3 r d December 2008

Contact Person Ms. Shikha Maheshwari Company Secretary & Compliance Officer

Address of Registrar of Companies

Registrar of Companies, Mumbai, Maharashtra 100, Everest, Marine Drive, Mumbai 400002

Issue Programme The subscription list will open at the commencement of banking hours and will close at the close of banking hours on the days as mentioned below:

Issue Opens On Last date for receiving requests for Split Forms

Issue Closes On

June 16, 2009 June 23, 2009 June 30, 2009

Board of Directors of the Company

Name of the Director Designation Status DIN

Mr. Kedarmal Bankda Chairman & Whole Time Director

Executive & Non Independent 00023050

Mr. Vijay Bankda Managing Director Executive & Non Independent 00023027

Mr. Sanjay Mehta Director Non Executive & Independent 00007582

Mr. Vinod Kumar Kabra Director Non Executive & Independent 01816189

Mr. Krishna Das Neema Director Non Executive & Independent 02294270


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Mr. Kedarmal Bankda, aged 56 years, s/o Mr. Shankarlal Harilal Bankda has completed his Master’s in Commerce from Vikram University, Ujjain. He has an experience of over 37 years in the pharmaceutical industry. He initially started his career as a retailer and later wholesale distribution of pharmaceuticals in Ujjain.

In 1979, he set up in Indore, M/S Kedar Chemists, a proprietory concern involved in the retail/wholesale trade of pharmaceutical formulations products. M/s Kedar Chemists at different times has been a distributor for various pharmaceutical companies like Panjon, Searle India, Nicholas Laboratories, Franco India, Yash Pharma, Duphar Interfram etc. (M/s Kedar Chemists ceased its operations in 1991 due to pre occupation of the owners).

In 1984, he started M/s Syncom Pharmaceuticals, a partnership firm to manufacture pharmaceutical formulations on a loan license basis and market them under its own brand names. In 1988, along with his younger brothers, Mr. Vijay Bankda and Mr. Ajay Bankda, promoted Syncom Formulations (India) Limited. In 1989 the business of the firm was transferred to Syncom Formulations (India) Pvt. Ltd.

As the Chairman & Whole time Director of the Company he is actively involved in the day to day affairs of the Company particularly control of all matters pertaining to the production and works at the Factory. Mr. Vijay Bankda, aged 50 years, s/o Mr. Shankarlal Harilal Bankda has completed his graduation in Commerce and L.L.B from Vikram University, Ujjain. He began his career in 1976 by joining the family concern – M/S Kedar Chemist and has a valuable experience of more than 29 years in the pharmaceutical industry. In 1984 he became a partner in Syncom Pharmaceuticals. Mr. Vijay Bankda along with his two brothers promoted M/S Syncom Formulations (India) Pvt. Ltd. in 1988.

As the Managing Director of the Company, apart from being responsible for the overall management of the affairs of the Company, he particularly controls the marketing aspects of the Company in Domestic and Overseas Market. Mr. Sanjay Mehta, aged 42 years, s/o Mr. Vimal Singh Mehta is a practicing Chartered Accountant by profession and has an experience of more than a decade in his field. He has an expertise in field of Corporate Law, Taxation and Finance. As the Independent Director of the Company, he advises the Company in making critical financial decisions. Mr. Vinod Kumar Kabra, aged 56 years, s/o Mr. Sridhar Kabra has completed L.L.B and Masters in Commerce from Vikram University, Ujjain. He has also has completed B.Ed from Vikram University, Ujjain and has a vast experience of more than 32 years in the educational field. His knowledge has helped the Company in making strategic decisions. Mr. Krishna Das Neema, aged 57 years, s/o Mr. Ram Chandra Neema has completed L.L.B and Masters in Commerce from Vikram University, Ujjain. His Knowledge in the field of Law and Business will help our Company in making judgments pertaining to the legal aspects of the Company.


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ISSUE MANAGEMENT TEAM

COMPANY SECRETARY & COMPLIANCE OFFICER

Ms. Shikha Maheshwari 2nd Floor, Tagore Centre, 13-14, R.N.T. Marg, Indore- 452 001, Madhya Pradesh. Tel: +91-731-3046869; Fax: +91-731-3046872 Email Id: [email protected]

LEAD MANAGER REGISTRARS TO THE ISSUE

COMFORT SECURITIES PVT. LTD A-301, Hetal Arch, Opp. Natraj Market, S.V.Road, Malad(West) Mumbai-400 064, Maharashtra Tel : + 91 – 22 – 28449765 Fax : + 91 – 22 – 28892527 Email: [email protected] Website: www.comfortsecurities.co.in SEBI Regn. No: INM 000011328 Contact Person: Mr. Sarthak Vijlani

ANKIT CONSULTANCY PVT. LTD 2nd Floor, Alankar Point, 4-A, Rajgarh Kothi, Gita Bhawan Square, A.B.Road, Indore- 452001, Madhya Pradeh Tel : +91-731-2491298/2495226 Fax: +91 -731-4065798 Email: [email protected] Website: www.ankitonline.org SEBI Regn No. INR000000767 Contact Person: Mr. Sabjay Singh

AUDITORS OF THE COMPANY LEGAL ADVISOR TO THE ISSUE

M/S S.P MOONDRA & CO. 53/8. Kanchan Bagh Indore 452 001 Madhya Pradesh Tel: 0731-2513817 Fax: 0731-2513817 Email: [email protected] Contact Person: Mr. S.P Moondra

PRAVEN PAL , Advocate & Consultant 152/2, Banganga, Indore (MP) Tel:0731-2421441 , Email: [email protected] Contact Person: Mr. Praveen Pal

BANKERS TO THE COMPANY BANKERS TO THE ISSUE

DENA BANK K.C Branch, Imperial Branch T.T Circle, Dadar (East) Mumbai Tel: + 91 22 24123724 Fax : + 91 22 24126651 Website: www.denabank.com

DENA BANK Mumbai City Region DENA BANK Building, 2nd Floor 17 B, Horniman Circle, Fort Mumbai 400 023 Tel: +91 22 2261 0149 Fax : +91 22 2266 6891 Website: www.denabank.com SEBI Regn No. INBI00000046 HDFC BANK LIMITED HDFC Bank House Senapati Bapat Marg Lower Parel Mumbai 400013 Tel: +91 22 28561818 Fax: +91 22 24925121 Website: www.hdfcbank.com SEBI Regn No: INBI00000063

Note: The investors are advised to contact the Registrar/Compliance Officer to the issue/ Company in case of any Pre-issue/ Post- Issue related queries such as non receipt of Letter of Offer/ Letter of Allotment/ Share Certificates/ Refund Orders, etc. Ms. Shikha Maheshwari, Company Secretary of the Company has been appointed as the Compliance Officer for the captioned Rights Issue and will be in charge of handling all investor’s grievances


25

and redressal of complaints, if any, pertaining to the securities of M/s Syncom Formulations (India) Limited being offered through the Rights Issue and thereby listed at BSE. Inter – Se Allocation of Responsibilities

No. Activities Responsibility Coordinator

1. Capital structuring with the relative components and formalities such as composition of debt and equity type of instruments.

CSPL

CSPL

2. Drafting of offer document and of advertisement/publicity material including newspaper advertisements and brochure/memorandum containing salient features of the offer document.

CSPL

CSPL

3. The designated Lead Manager shall ensure compliance with SEBI (DIP) Guidelines and other stipulated requirements and completion of prescribed formalities with the Stock Exchanges and SEBI

CSPL

CSPL

4. Selection of various agencies connected with the Issue, namely Registrars to the Issue, printers and advertisement agencies.

CSPL

CSPL

5. Follow up with Bankers to the Issue to get quick estimates of collection and advising the Issuer about closure of the Issue based on the correct figures.

CSPL

CSPL

6. The post-issue activities will involve essential follow-up steps, which must include finalization of basis of allotment / weeding out of multiple applications, listing of instruments and despatch of certificates and refunds, with the various agencies connected with the work such as registrars to the issue, bankers to the issue, and the bank handling refund business.

CSPL

CSPL

Credit Rating This being a Rights issue, no Credit Rating is required. IPO Grading This being Rights Issue of Equity Shares, IPO grading is not applicable. Debenture Trustee This being Rights Issue of Equity Shares, appointment of Debenture trustee is not required. Monitoring Agency In terms of SEBI (DIP) Guidelines, Clause 8.17, the appointment of a monitoring agency is not mandatory. The Audit Committee of the Board will monitor utilization of the proceeds and in turn report to the Board periodically. Appraising Entity Any Bank/ Financial Institution have not appraised the objects of the issue viz Working Capital Estimates. Requirements of the Working Capital are ascertained by the Management of the Company.


26

Minimum Subscription If we do not receive the minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants within fifteen days from the date of closure of the Issue. If there is a delay in the refund of subscription by more than eight days after we become liable to repay the subscription amount, i.e. fifteen (15) days after closure of the Issue, we will pay interest for the delayed period, at the rates prescribed in sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956. The Issue will become undersubscribed after considering the number of Equity Shares applied as per entitlement plus additional Shares and the Shares applied for pursuant to right of renunciation. The Promoters or the Promoter Group will subscribe to such undersubscribed portion as per the relevant provisions of the law. The undersubscribed portion shall be applied for only after the close of the Issue. If any person including the Promoters presently in control of our Company desires to subscribe to such undersubscribed portion, the Promoters and such Person shall be exempted from the provisions of Regulations 10, 11 and 12 of the SEBI Takeover Code. However, disclosure shall be made as per the SEBI Takeover Code in respect of such acquisition and allotment of the undersubscribed portion of the Issue. Allotment to Promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with Clause 40A of the Listing Agreement. For further details please refer to the sub-section titled "Basis of Allotment" beginning on page 192 of this Letter of Offer. Underwriting/ Standby Support

This issue of equity shares is not being underwritten and/or no standby support is being sought for the said issue. However, the Promoters and persons acting in Concert have confirmed that they intent to subscribe to full extent of their entitlement of the Issue. Promoters and Persons acting in Concert intent to apply for additional equity shares in the issue such that at least 90% of the Issue size is subscribed. If the Company does not receive the minimum subscription of 90% of the issue, the entire subscription shall be refunded to the applicants within fifteen (15) days from the date of closure of the Issue. If there is a delay in the refund of subscription by more than Eight (8) days after the Company becomes liable to pay the subscription amount i.e. fifteen (15) days after closure of the issue, the Company shall pay interest for the delayed period at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.


27

CAPITAL STRUCTURE

Particulars Aggregate/Nominal Value (Rs.)

Authorised Share Capital 1,40,00,000 Equity Shares of Rs. 10/- each

14,00,00,000

Issued, Subscribed and paid-up share capital before the issue 62,25,000 Equity Shares of Rs. 10/- each fully paid-up

6,22,50,000

Present Issue of Equity Shares in terms of this Letter of Offer 31,12,500 Equity Shares of Rs.10/- each for cash at a premium of Rs 7/- on Right Basis

3,11,25,000

Paid up Equity Capital after Issue 93,37,500 Equity Shares of Rs. 10/- each

9,33,75,000

Paid up Equity Capital after Conversion of Share Warrants Issued on Preferential Basis (due conversion on or before September 28, 2009) 96,62,500 Equity Shares of Rs. 10/- each

9,66,25,000

Paid up Equity Capital after Conversion of Warrants Issue 1,27,75,000 Equity Shares of Rs. 10/- each

12,77,50,000

Share Premium Account

Existing Share Premium Account 8,52,08,560

Share Premium after Conversion of Share Warrants Issued on Preferential Basis (due conversion on or before September 28, 2009)

9,69,08,560

Share Premium Account after the Issue assuming allotment of all Equity Shares offered

11,86,96,060

Share Premium Account after the conversion of warrants assuming allotment of all warrants offered have been converted at cap price i.e Rs.17/-

14,04,83,560

Note: Post Issue Shareholding is based on the assumption that all shareholders (including promoters) will subscribe in full to their entire Rights entitlement. Notes to Capital Structure: 1. The Equity Share split was approved at the Annual General Meeting of the Shareholders of our company held on

May 7, 1992, resulting each equity share of Rs.100/- being subdivided into ten Equity Shares of Rs.10/- each. 2. Fresh Issue of 31,12,500 Equity Shares & 31,12,500 warrants has been authorized by a special resolution adopted

pursuant to Section 81 (1A) of the Companies Act, 1956, at the Annual General Meeting of our shareholders held on September 26, 2008


28

3. Detail of changes in the Authorised Share Capital since inception are as follows:

4. Build up of the Equity Share Capital

Date of Issue / Allotment

No. Of Equity Shares

Cumulative Number of Shares

Face Value (Rs)

Issue Price (Rs)

Consideration (Cash, Bonus,

Consideration other than cash)

Reasons for allotment / Remarks

28/06/1988 20 20 100 100 Cash Initial subscription to Memorandum

30/03/1989 7480 7500 100 100 Cash For cash Promoter’s Contribution

07/05/1992 ------ 75,000 10 N.A. N.A Subdivision of Shares from Rs.100/- 3to

Rs.10/-

08/05/1992 75,000 1,50,000 10 N.A. Bonus Bonus in the ratio 1:1

26/05/1992 1,50,000 3,00,000 10 10 Cash Right Issue 1:1

26/07/1992 2,00,000 5,00,000 10 10 Cash Right Issue 2:3

04/02/1994 25,37,300 30,37,300 10 15 Cash IPO

25/03/1997 9,48,766 39,86,066 10 10.54 Cash Preferential Allotment of

S. No. Particulars of Increase Date of Meeting Nature of Meeting

1. Initial Authorised Capital of Rs. 0.10 Crores on Incorporation

Incorporation N.A.

2. Increase in the Authorised Share Capital of the Company from Rs. 0.10 Crore to Rs 1.00 Crore

07/05/1992 AGM

3. Increase in the Authorised Share Capital of the Company from Rs 1.00 Crore to Rs. 3.50 Crores

01/12/1992 EGM

4. Increase in the Authorised Share Capital of the Company from Rs Rs. 3.50 Crores to Rs. 5.00 Crores

20/05/1996 AGM

5. Increase in the Authorised Share Capital of the Company from Rs 5.00 Crores to Rs 6.00 Crores

27/09/1999 AGM

6. Increase in the Authorised Share Capital of the Company from Rs 6.00 Crores to Rs 10.00 Crores

10/03/2008 EGM

7 Increase in the Authorised Share Capital of the Company from Rs 10.00 Crores to Rs 14.00 Crores

26/09/2008 AGM


29

shares on conversion of warrants to Promoter & promoter Group viz,

Shankarlal Bankda Huf, Kedarmal Bankda, Vimla Bankda, Ankit Bankda, Vijay Kumar Bankda, Asha Bankda, Rahul

Bankda, Ankur Bankda, Ajay Kumar Bankda, Jyoti Bankda, Pratik Bankda and Pranav

Bankda

30/10/1999 10,90,900 50,76,766 10 11 Cash Preferential Allotment of shares on conversion of warrants to Promoter & Promoter Group viz Kedarmal Bankda,

Shankarlal Bankda Huf, Vimla Bankda, Ankit Bankda, M/s Kedarmal

Bankda Huf, Vijay Kumar Bankda, Asha Bankda, Rahul Bankda, Ankur

Bankda, M/s Vijay kumar bakda, Ajay Kumar

Bankda, Jyoti Bankda, Pratik Bankda and

Pranav Bankda, M/s Ajay Bankda Huf.

23/03/2005 2,65,034 53,42,000 10 90 Cash Preferential Basis to promoter & Promoter Group viz Ankur Bankda

and Ankit Bankda

18/11/2005 2,78,000 56,20,000 10 102 Cash Preferential Basis to Promoter & Promoter Group viz, Shankarlal Bankda Huf, Vimla

Bankda and Kedarmal Bankda Huf.

09/10/2006 2,95,000 59,15,000 10 54 Cash Preferential Basis to Promoter & Promoter group viz, Kedarmal

Bankda

29/03/2008 3,10,000 62,25,000 10 46 Cash Preferential Basis to Promoter & Promoter group viz, Kedarmal

Bankda

The company has allotted 3,25,000 share warrants to Mr Rahul Bankda on preferential basis at a price of Rs. 46/- per warrant having option to convert upon payment of remaining amount of Rs.41.40 per warrant (90%) into equity share of


30

Rs.10/- each at a premium of Rs.36/- per share on or before September 28, 2009 (i.e. within 18 months from the date of allotment). 5. Shares of Promoter which are in lock-in period:

S.

No.

Name of Shareholders

No of shares under lock in

% of the paid up capital of the Company

Lock in up to the date

Reasons for place under lock in

Promoter

1 Mr. Kedarmal Bankda 3,10,000 4.98 28.03.2011 Preferential issue kept in lock in for a period of 3 years.

2 Mr. Kedarmal Bankda 2,95,000 4.74 08.10.2009 Preferential issue kept in lock in for a period of 3 years

6. All shares issued since the date of incorporation of the Company are fully paid up. 7. The Company does not have any Employees Stock Option Scheme. 8. Promoters’ Contribution and Lock-in

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

9. Details of Shareholding before and after the offer:

Sr. No. Category of shareholder Pre Issue (As on 30.04.2009)

Post Issue

No. of Shares

% No. of Shares

% of Shareholding

No. of equity shares post exercise of warrants

% of post issue capital, post exercising warrants

(A) Shareholding of Promoter and Promoter

Group [•] [•] [•] [•]

(1) Indian [•] [•] [•] [•]

(a) Individuals/ Hindu Undivided Family 2,871,878 46.13 [•] [•] [•] [•]

(b) Central Government/ State Government(s) - - [•] [•] [•] [•]

(c) Bodies Corporate - - [•] [•] [•] [•]

(d) Financial Institutions/ Banks - - [•] [•] [•] [•]

(e) Any Other (PAC) - - [•] [•] [•] [•]

Sub-Total (A)(1) 2,871,878 46.13 [•] [•] [•] [•]

(2) Foreign [•] [•] [•] [•]

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

- - [•] [•] [•] [•]


31

(b) Bodies Corporate - - [•] [•] [•] [•]

(c) Institutions - - [•] [•] [•] [•]

(d) Any Other (specify) - - [•] [•] [•] [•]

Total Shareholding of Promoter and Promoter Group A =(A)(1)+(A)(2)

2,871,878 46.13 [•] [•] [•] [•]

(B) Public shareholding [•] [•] [•] [•]

(1) Institutions [•] [•] [•] [•]

(a) Mutual Funds/ UTI - - [•] [•] [•] [•]

(b) Financial Institutions/ Banks - - [•] [•] [•] [•]

(c) Central Government/ State Government(s) - - [•] [•] [•] [•]

(d) (e) Venture Capital Funds Insurance Companies - - [•] [•] [•] [•]

(f) Foreign Institutional Investors - - [•] [•] [•] [•]

(g) Foreign Venture Capital Investors - - [•] [•] [•] [•]

(h) Any Other (specify) - - [•] [•] [•] [•]

Sub-Total (B)(1) - - [•] [•] [•] [•]

(2) Non-institutions [•] [•] [•] [•]

(a) Bodies Corporate 4,07,006 6.54 [•] [•] [•] [•]

(b) Individuals -i. Individual shareholders holding nominal share capital up to Rs. 1 lakh

25,34,227 40.71 [•] [•] [•] [•]

Individual –ii. Shareholders holding nominal share capital in excess of Rs. 1 lakh.

3,67,450 5.90 [•] [•] [•] [•]

(c) Any Other [•] [•] [•] [•]

i) Clearing Members 900 0.01 [•] [•] [•] [•]

ii) NRI 43,539 0.70 [•] [•] [•] [•]

Sub-Total (B)(2) 33,53,122 53.87 [•] [•] [•] [•]

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

33,53,122 53.87 [•] [•] [•] [•]

TOTAL (A)+(B) 62,25,000 100 [•] [•] [•] [•]

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

- - [•] [•] [•] [•]

GRAND TOTAL (A)+(B)+(C) 62,25,000 100 [•] [•] [•] [•]


32

10. Details of shareholding pattern of the Promoters & Promoter Group as on 30.04.2009

Currently there are no equity shares held by Promoter & Promoter group are under pledge. Note: Post Issue Shareholding is based on the assumption that promoters will subscribe in full to their entire Rights entitlement. Presently our Company is complying with Clause 40A of the Listing Agreement and the minimum public shareholding required to be maintained for continuous listing is 25% of the total paid up equity capital Allotment to our Promoters and Promoter Group of any unsubscribed portion of Rights Equity Share, over and above their Rights Entitlement, if exercised, shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. 11. Promoters of the Company, their relatives and associates, promoter group have not purchased or sold directly or

indirectly, any equity shares during a period of 6 months proceeding the date on which this Letter of Offer is filed with Stock Exchanges.

12. The promoters have confirmed vide their letter dated November 8, 2008 that they intend to subscribe to the promoters

entitlement in full either through self or by renouncing the said holding in favor of other Promoter / Promoter Entities / companies entirely held and controlled by them as disclosed elsewhere in this Letter of Offer. The acquisition of

Sr. No

Name No. of shares held pre issue

% of pre Issue Capital

Post Issue

No. of Shares

% of Shareholdin

g

No. of equity shares post exercise of warrants

% of post issue capital, post exercising warrants

Promoter 1 Mr. Kedarmal Banka 1027226 16.50 1540839 16.50 2054452 16.50 2 Mr. Vijay Bankda 733771 11.79 1100657 11.79 1467542 11.79 Subtotal – (a) 1760997 28.29 2641496 28.29 3521994 28.29

Promoters Group 1 Kedarmal Bankda (HUF) 100000 1.61 150000 1.61 200000 1.61 2 Shankar Lal Bankda (HUF) 78042 1.25 117063 1.25 156084 1.25 3 Mrs. Vimla Bankda 230468 3.70 345702 3.70 460936 3.70 4 Mr. Ankit Bankda 245244 3.94 367866 3.94 490488 3.94 5 Vijay Bankda (HUF) 115108 1.85 172662 1.85 230216 1.85 6 Mrs. Asha Bankda 69663 1.12 104495 1.12 139326 1.12 7 Mr. Rahul Bankda 22891 0.37 34337 0.37 45782 0.37 8 Mr. Ankur Bankda 249465 4.01 374198 4.01 498930 4.01 Subtotal – (b) 1110881 17.86 1666323 17.85 2221762 17.85 TOTAL 2871878 46.14% 4307819 46.13% 5743756 46.13


33

additional securities or subscription to the shortfall shall be exempt in terms of proviso to Regulation 3(1) (b) (ii) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. Further this acquisition will not result in change of control of the management of the Company.

13. The Promoter, Directors and Lead Manager to the Issue have not entered into any buy-back stand by or similar

arrangements for any of the securities being issued through this Letter of Offer. 14. Top ten shareholders as on the date of filing of the Letter of Offer*

Sl. No. Name of the shareholder No. of Equity Shares held

% of Issued Capital

1. Kedarmal Bankda 1027226 16.50

2. Vijay Bankda 733771 11.79

3. Ankur Bankda 249465 4.01

4. Ankit Bankda 245244 3.94

5. Vimla Bankda 230468 3.70

6. Vijay Bankda (HUF) 115108 1.85

7. Kedarmal Bankda (HUF) 100000 1.61

8. Praveen Jindal 80362 1.29

9. Shankarlal Bankda (HUF) 78042 1.25

10. Asha Bankda 69663 1.12

TOTAL 2929349 47.06

* As per the beneficial position as on May 08, 2009 15. Top ten shareholders 10 days prior to the date of filing of the Letter of offer*


% of Issued Capital


2. Vijay Bankda 733771 11.79






8. Praveen Jindal 80362 1.29


10. Asha Bankda 69663 1.12

TOTAL 2828020 45.43

* As per the beneficial position as on May 01, 2009


34

16. Top ten shareholders as on two years prior to the date of filing of the Letter of Offer*


% of Issued Capital

1. Vijay Bankda 733771 12.41








9. Asha Bankda 69663 1.18

10. Angle Broking Limited 44605 0.75

TOTAL 2583592 43.68

* As per the beneficial position as on May 11, 2007 17. The Company undertakes that there shall be no further issue of capital whether by way of issue of bonus shares,

preferential allotment, Rights Issue or public issue or in any other manner, during the period commencing from the submission of the Letter of Offer to SEBI for Rights Issue till the securities referred in the Letter of Offer have been listed or application moneys refunded on account of failure of the Issue.

18. Our Company has not raised any bridge loans against the proceeds of the current issue. 19. The number of equity shareholders/beneficial owners of the Company as on 30/04/2009 were 7395 20. The Company presently does not intend to alter its capital structure for a period of six months from the date of the

opening of the Issue, by way of split or consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly or indirectly into Equity Shares) whether preferential or otherwise except that if the Company enters into acquisitions or joint ventures or if the business needs arise, it may, subject to necessary approvals, consider raising additional capital to fund such activity.

21. The Issue will remain open for 15 days. However, the Board will have the right to extend the Issue period as it may

determine from time to time but not exceeding 30 days from the Issue Opening Date. 22. The Company undertakes that at any given time, there shall be only one denomination for the shares of the

Company and the Company shall comply with such disclosure and accounting norms specified by SEBI from time to time.

23. The Company has not issued any Equity Shares out of revaluation reserves in the past. 24. The entire issue price is to be paid on application and hence there will be no partly paid up shares arising out of

this issue.


35

25. The Company has complied with the provisions of clause 35, 40A, 41 & 49 of the Listing Agreement during the financial year 2008-2009

26. The Company has complied with the provisions of Regulation 8(3) pertaining to disclosure of changes in

shareholding and Regulation 8A pertaining to disclosure of pledged shares. 27. The Company has complied with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992, with

respect to reporting in terms of Regulation 13.


36

OBJECTS OF THE ISSUE Our company intends to use the proceeds of the Present Right Issue of 31,12,500 Equity Shares of Rs. 17/- Each and 31,12,500 share warrants of Rs. 17/- each (assuming the warrant would be converted at cap price of Rs.17/- each) for meeting the following objects.

1. To augment the Working Capital requirements of the Company by increasing the own funds of the company through increasing the share capital base of the company.

2. To meet the expenses of the issue. The Main Object clause and the objects incidental or ancillary to the main object clause of the Memorandum of Association enables the Company to undertake the existing activity and the activities for which the funds are being raised by the Company through the present rights issue. The fund requirement is proposed to be raised mainly through proceeds of Rights Issue and the proceeds from the Rights Issue would be crystallized on finalization of the Issue Price. Any shortfall in meeting the objects of the issues on determination of issue price would be met from internal accruals and / or debt. Further, the amount that is in excess of the funds required for the object’s proposed project and Issue expenses will be utilized for general corporate purposes, which would be in accordance with the policies of our Board made from time to time. Rational of the Objects of the Issue: The company is currently meeting its working capital requirements through a mix of own funds comprising of share capital and profits of the company ploughed back in operations. The company is also availing longer credit from its suppliers against supplies to the company which in turn comes at a cost in terms of additional interest add on in the supply rates for supplies for and proportionate to the period of credit availed by the company.

The proceeds of the right issue will enable the company to augment its own funds in the operations of the company which in turn would be used to shorten the credit period availed from the suppliers leading to substantial savings due to the discounts provided for earlier payments by the suppliers. The extent of savings will be determined only on the actual realization from the proposed right issue which in turn will be fixed on determining the pricing of the issue. Description of the Objects of the Issue: Cost of Project / Requirements of Funds

(Rs. In Crores) Infusion of Additional Working Capital 17.03 Issue Expenses 0.19 Total 17.22

Means of Finance

(Rs. In Crores) Right Issue 10.58 Proceeds from Issue of Warrants allotted under Preferential Basis 1.35 From own funds already invested in the company including internal accruals 5.85 Total 17.78

Notes:

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

(b) The Company is dependent on full subscription to the Rights Issue in order to meet the financial requirements for the proposed objects.


37

(c) In case there is any shortfall in the issue proceeds to meet the objects of the issue, we will shorten the working capital cycle requirement by availing longer credit period from our suppliers thereby reducing the working capital requirement or using the internal accruals to the extent already invested in the system .

Detail Break Up of Utilization of Issue Proceeds

1. Working Capital Requirement

Syncom Formulations (India) Limited is presently engaged in the manufacture of pharmaceutical formulations and approximately 90% of total turnover is into exporting to various countries. Since 2005-06, the company has also entered into domestic market in a major way. In the fiscal 2008, the turnover of company has increased by 13.61% in comparison to turnover of fiscal 2007. To Further strengthen and for optimum utilization of the resources, the company would be required to increase the production in order to cater the demands of products in Domestic and Overseas markets. Till now company was able to meet its working capital requirements from its own funds in the form of internal accruals and also by availing a long credit period (of more than 3 months) from suppliers of raw material, through which there was an opportunity cost of 1.5% to 2% per month on the total creditor’s outstanding by not availing the benefit of cash discount. Now the proceeds of the right issue planned shall enable the company to increase its own available funds for working capital and buy raw material at lower credit period and in turn earn substantial savings in the form of cash discount on the credit period shortened and also rationalize its working capital cycle. The company is currently encountering the paucity of working capital and company has estimated the working capital requirement which is as under:

(Rs. In crores)

Amount Amount

(Fiscal 2009)

(Fiscal 2010)

Particulars Basis (months)

Estimated

Basis (Months)

Estimated

0.50 0.50

0.10 0.10

Inventories Raw Material WIP Finished Goods 0.27

5.15

0.27

6.21

3.50 3.50 Debtors Domestic Overseas 2.50

18.96

2.50

22.50

Cash & Bank 0.34 0.36

Loans & Advances 10.05 13.50

Total (A) 34.51 42.57

Less:

Creditors 4.10 20.91 1.80 10.82

Expenses Payable 1.25 1.52 1.25 1.77

Loans Repayable within one Year

Provisions for Taxes & Dividend

2.07 2.94

Total (B) 24.50 15.53

Net Working Capital (A-B) 10.01 27.04

Funding Pattern:

Proceeds from the right Issue - 10.58

Proceeds from Issue of Warrants allotted under Preferential Basis

- 1.35

Own Funds including internal 10.01 15.11


38

Amount Amount

(Fiscal 2009)

(Fiscal 2010)

Particulars Basis (months)

Estimated

Basis (Months)

Estimated

accruals already in the system

The working capital requirement of the company was Rs.9.45 Crores in the fiscal 2008 and the working capital of Fiscal 2009 has been assessed at Rs. 10.01 Crores. The company has infused additional working capital of Rs. 0.56 Crores in the fiscal 2009. The total working capital requirement of company would be Rs. 27.04 Crores in fiscal 2010 entailing a requirement of infusion of additional working capital funds of Rs. 17.03 Crores. Hence, total additional working capital infusion required by the company is estimated to be Rs. 17.03 Crores Justification of Holding Level

• Raw materials: -

The level of raw material estimated for the current Year i.e. Fiscal 2009 is at 0.50 month. This is lower as compared to last two financial years i.e. on 31/3/2008 (1.03 month) and 31/3/2007 (0.69 month). During the months of March and April the level of stocks of raw material is maintained at a higher level to meet the demand of higher production and sales in the months of March to May due to seasonal variation. Therefore the level of stocks of raw material during these months is maintained at a level higher than the average level of stock of raw material assumed for the full year. A stock level of 0.50 month is considered reasonable from the point of view of the fact that the company has about 400 drug formulation products which it markets and for which it has to use about 750-800 different basic drugs/intermediate compounds/additives etc as raw materials. Looking at the number of items and the stocking requirement for the same, the level assumed is considered satisfactory. • Stock in process: Stock in process level is at 0.10 months (3 days) which is in line with the time taken for production, quality certification and packaging of each batch of drug • Finished goods: The level of finished goods is at approx 0.27 month (8 days) despite of having a large product base. It is at lower level as compared to level of holdings of finished goods in past years i.e. in the past 2 years at 0.34 (31/3/2008) and 0.16 (31/3/2007). • Receivables: The level of export receivables estimated for the current and future years is at 2.50 month. The current sales trend is in line with the policy of the company and the trend observed in the past 2 years were 2.56 months (31.03.2008) and 2.65 months (31.03.2007). The estimated level of receivables from domestic sales is at 3.50 months. It is lower than the actual level of debtors against domestic sales in the past 2 years at 6.98 (31.03.2008) and 5.25 (31.03.2007). The level of debtors in the past was higher due to bunching up /major sales of the company having been done in the month of February and March as compared to average level of monthly sales per month calculated for the Fiscal 2007 and 2008. Also the company launched new unit for domestic sales in the year 2005-06. In order to gain foothold in the market, it was extending longer credits to the customers. Having achieved considerable recognition in the market, the company is now following a consistent policy of extending a credit of up to 3.5 months in the domestic market. • Consumable stores


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The value of consumable stores is at nominal level and hence no separate comment is required for the same. • Other current assets:

Other current assets include advances for raw material, export incentive receivable from Central government against exports. In the case of advances against purchase of raw material, the normal level is 1 month whereas the out standings against Export Incentives from the Central Government is nominally realized after a lag of a year. • Creditors:-

Actual level of Creditors as on 31.3.2008 was 3.51 months and for fiscal 2009 it has been assessed at 4.10 months. As against the same the creditor levels for subsequent financial year i.e. 31.03.2010 has been estimated at 1.80 month of purchases. This is so as the company in the previous years was availing maximum credit period from its suppliers/creditors to meet its working capital requirements which came at a cost of 1.5% to 2% per month by not availing the benefit of Cash Discount. As a consequence the working capital gap of the company for the Fiscal Year 2008 was only Rs.9.45 crores & for fiscal 2009 was Rs. 10.01 Crores after considering the credit availed from suppliers/creditors and this balance was met out of own funds of the company. As per the credit policy from the suppliers, on payment to suppliers within 7 days from the date of purchase entitles the company to a cash discount of 2% per month. Now with the availability of additional capital from right issue, the company can avail this benefit by making payment in cash and save a considerable amount of cost through cash discount.

2. Issue Expenses

The break up of issue expenses as estimated is as given below:

Sr. No.

Particulars Amount (Rs in Lakhs)

% of total expenses of the issue

% of total issue Size

1 Lead Management Fees

6.75 34.88% 0.64%

2 Registrar Fees 1.40 7.24% 0.13%

3 Postage & Stationery 2.50 12.92% 0.23%

4 Printing of LOO & CAF

4.00 20.67% 0.38%

5 Advertising 1.50 7.75% 0.14%

6 Traveling & Conveyance

0.75 3.88% 0.07%

7 Legal Advisors Fees 0.50 2.58% 0.04%

8 SEBI & Stock Exchanges Fees

0.75 3.88% 0.07%

9 Depository Charges 0.20 1.03% 0.02%

10 Auditors Fees 0.50 2.58% 0.05%

11 Contingencies & Other Expenses

0.50 2.58% 0.07%

TOTAL 19.35 100.00 1.83%

Appraisal The fund requirement is not appraised by any Bank or Financial Institution. The same is based on existing working capital requirements estimated by the company. Schedule of Implementation


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Deployment of Issue Proceeds: Activity Already Deployed Fiscal 2010 Total (Rs. In crores) Working Capital Deployment

17.03 17.03

Deployment in the Issue Expenses

0.07 0.12 0.19

Total 0.63 17.15 17.22

Sources & Deployment of Funds Funds deployed: Our Company has incurred an expenditure of Rs. 6.50 Lacs (Rupees Six Lacs and fifty thousand) on the objects of the proposed rights issue up to 4th May 2009 as per the Certificate of M/s. S.P Moondra & Co, Chartered Accountants, Indore dated 4th May 2009 .The break up of the expenditure incurred till date are given as under:

Particulars Amount (Rs. In Lakhs)

Rights Issue Expenses 6.50

TOTAL 6.50

Sources of financing of Funds already Deployed:

Particulars Amount (Rs. In Lakhs)

Internal Accruals of the company 6.50

TOTAL 6.50

Interim Use of Funds The deployment of funds raised through the rights issue would be mainly for the purposes of funding working capital requirements. The interim use of funds is not involved as funds will be available on completion of issue. Monitoring of Utilization of Funds There is no requirement for a monitoring agency in terms of clause 8.17 of the SEBI (DIP) Guidelines. The audit committee appointed by the Board of Directors will monitor utilization of Issue proceeds. The company will disclose the utilization of the proceeds of the issue under a separate head in the balance sheet clearly specifying the purpose for which such proceeds have been utilized. The company will also, in the balance sheet provide 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. However, at any point of time the proceeds of the Issue will not be used for any other purposes, except as those stated in the Memorandum of Association of our Company. BASIC TERMS OF ISSUE

Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on August 29, 2008 and the shareholders approval obtained at its AGM dated September 26, 2008 it has been decided to make the following offer to the Equity Shareholders of the Company on the Record Date i.e. 20th May, 2009

Face Value Each Equity Share has the face value of Rs.10/-. Issue Price Each Equity Share is being offered at a price of Rs. 17/-

per share No. of Equity Shares offered 31,12,500 Equity Shares of Rs.10/- each


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Rights Entitlement Ratio The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the ratio of 1 (one) Equity Shares for every 2 Equity Shares held as on the Record Date. FOR EVERY ONE [1] EQUITY SHARE ALLOTED ON RIGHT BASIS THE ALLOTEES WILL RECEIVE ONE [1] DETACHABLE WARRANT

Record Date 20th May 2009 Market Lot The market lot for Equity Shares in dematerialized mode

is 1 (one). In case of holding of Equity shares in physical form, our Company would issue to the allottees one (1) certificate for the Equity Shares allotted to one (1) folio (“Consolidated Certificate”).

Terms of Payment 100% of the issue price i.e. Rs.17/- per Equity share of Rs.10/- face value is payable on Application.

Fractional Entitlements On applying the rights ratio, the rights entitlement may contain certain fractional entitlements, in such case the fractional entitlement shall be rounded off to the next higher integer. The additional shares required to accommodate such rounding off will be adjusted out of the entitlement of the one of the promoter group shares.

Ranking of Equity Share The Equity Shares shall be subject to the Memorandum and Articles of Association of the Company and shall rank pari- passu in all respects including dividends with the existing Equity Shares of the Company.

Despatch of Refund Orders

Refund orders above the value of Rs.1,500 will be dispatched by Registered Post/ Speed Post to the sole/ first applicant’s registered address. However, refund orders for value not exceeding Rs.1,500 shall be sent to the applicants under Postal Certificate. Further, adequate funds would be made available to the Registrar to the Issue for the dispatch of Letters of allotment/ securities certificates and refund orders

Interest in Case of Delay in Dispatch of Allotment / Refund Orders

a. As far as possible allotment of securities offered to the public shall be made within 15 days of the closure of the rights issue. b. It shall pay interest @15% per annum if the allotment has not been made and the refund orders have not been dispatched to the investors within 15 days from the date of the closure of the issue.

For more details please refer to “Offering Information” on page 170 of this Letter of Offer

BASIS FOR ISSUE PRICE The Issue Price will be determined by the company in consultation with Lead Manager to the Issue considering following qualitative & quantitative factors. Investors should also refer to the section “Risk Factors” and “Financial Information” on page no. 6 and 123 respectively to get a more informed view before making the investment decision. Qualitative Factors

� Promoters of Company have experience in Pharmaceuticals industry � Management of our Company has several years of experience in their domain


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� The day to day affairs of the Company are looked after by experienced Key Personnel. � Goodwill of the Company in this field � Existing profit making company � Existing dividend paying company

Quantitative Factors Information presented in this section is derived from our audited restated financial statements prepared in accordance with Indian Accounting & Auditing Standards.

1. Earnings per share for the last three years

Particulars Earnings Per Share (Rs.) Weight

Year Ended March 31, 2006 9.37 1



Weighted Average EPS 7.40

Ten Months Ended January 31, 2009*

4.25

* The EPS is actual if annualized EPS works out to Rs. 5.10 per share • The Earning per equity share has been computed on the basis of adjusted Profits & Losses for the respective

years/periods after considering the impact of accounting changes and prior period adjustments/regroupings pertaining to the earlier years.

• EPS Calculations have been done in accordance with Accounting Standard 20-“Earning per Share” issued by the

Institute of Chartered Accountants of India • The denominator considered for the purpose of calculating earning per share is the weighted average number of

Equity Shares outstanding during the period.

2. Price Earning Ratio (P/E ratio) in relation to Issue Price of Rs. 17

Sr. No.

Particulars P/E Ratio

A Based on EPS of Fiscal 2007-2008 2.65 B Based on Weighted Average EPS 2.30 C. Based on Ten (10) months ended January

31, 2009 4.00

Industry P/E

Highest 10.3 Lowest 1.6 Composite Average 3.3

Source: Capital Market VolumeXXIV/05 May 04-17, 2009; Industry: Pharmaceuticals- Indian- Formulations


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3. Comparison of the accounting ratios of the peer group:

Particulars Face Value (Rs)

Book Value per share (Rs)

Return on Networth (%)

EPS (Rs)

P/E Ratio

Albert David 10 88.6 15 12.4 4.6

Parenteral Drugs 10 86.3 23.4 13.6 4.5

Twilight Li- Taka 5 20.9 49.1 9.2 2.9

Source: Capital Market VolumeXXIV/05 May 04-17, 2009 Industry: Pharmaceuticals- Indian- Formulations Financial ratios given in the table is as per data provided as per the source of document and does not reflect the position as on the date of this Letter of Offer.

4. Return on Net Worth (RONW) for the last three years

Financial Year % Weight

31/03/2006 17.63% 1

31/03/2007 13.34% 2

31/03/2008 9.73% 3

Weighted Average RONW 12.25%

Minimum return on total Net worth after issue needed to maintain pre-issue EPS of Rs. 4.25 is 8.45 %.

5. Net Asset Value (NAV) per share

Particulars NAV (Rs.)

As on March 31, 2008 62.36

As on January 31, 2009 66.96

Post Rights Issue (Excluding Conversion of warrants) 50.30

Post Rights Issue (Including Conversion of warrants assuming at cap price of Rs.17/-)

41.98

The Face Value of the share is Rs.10/- and the issue price is 1.7 times of the Face value. In view of the above qualitative and quantitative parameters, the Company and the Lead Manager to the Issue, are of the opinion that the Issue Price is reasonable and justified. The investors may also want to pursue the risk factors and financials of the Company including important profitability and return ratios, as set out in the Auditors Report in the Letter of Offer to have more informed view about the investment proposition


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TAX BENEFIT TO THE COMPANY AND ITS MEMBERS

Statement of Tax Benefit To, Syncom Formulations (India) Limited 7, Niraj Industrial Estate, off Mahakali Caves Road, Andheri (East), Mumbai- 400 093, Dear Sir (s) We hereby report that the enclosed annexure state the possible tax benefits available to Syncom Formulations (India) Limited (the “Company”) and its shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependant upon fulfilling such conditions, which is based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill. The benefits discussed below are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences, the changing tax laws and the fact that the Company will not distinguish between the share offered for subscription and the shares offered for sale by the Selling Shareholders, 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 shareholders will continue to obtain these benefits in future; or

(ii) the condition prescribed for availing the benefits have been / would be met with. The contents of this

annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company.

M/S S.P Moondra & Co. Chartered Accountants Sd/- S.P Moondra Proprietor M. No. 073747 Place : Indore Date : 08/11/2008


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Statement of Possible Tax Benefits Available to Syncom Formulations (India) Limited (“The Company”) and It’s Shareholders Special tax benefit available to the Syncom Formulations (India) Limited and it’s Shareholders:

NIL I. General tax benefits available to all companies or to the shareholders of any company, after fulfilling certain conditions as required in the respective act.

1. Benefits to the Company under the Income Tax Act, 1961 (“The Act”):

The Company will be entitled to deduction under the sections mentioned hereunder from its total income chargeable to Income Tax.

1.1 Dividends exempt under Section 10(34) Under Section 10(34) of the Act, the Company will be eligible for exemption of income by way of dividend from domestic company referred to in Section 115-O of the Act.

1.2 Income from units of Mutual Funds exempt under Section 10(35) The Company will be eligible for exemption of income received from units of mutual funds specified under Section 10(23D) of the Act, income received in respect of units from the Administrator of specified undertaking and income received in respect of units from the specified company in accordance with and subject to the provisions of Section 10(35) of the Act.

1.3 Computation of capital gains 1.3.1 Capital assets may be categorized into short term capital assets and long term capital assets based on the period of holding. Shares in a company, listed securities or units of UTI or unit of Mutual Fund specified under Section 10(23D) or a zero coupon bond will be considered as long term capital assets if they are held for a period exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “long term capital gains”. Capital gains arising on sale of these assets held for 12 months or less are considered as “short term capital gains”.

1.3.2 Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition/improvement and expenses incurred in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it offers a benefit by permitting substitution of cost of acquisition/improvement with the indexed cost of acquisition/improvement, which adjusts the cost of acquisition/improvement by a cost inflation index as prescribed from time to time.

1.3.3 As per the provisions of Section 112 of the Act, long term gains as computed above that are not exempt under section 10(36) or 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and education cess). However, as per the proviso to Section 112(1), if the tax on long term capital gains resulting on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation benefit exceeds the tax on long term gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and education cess).

1.3.4 As per the provisions of Section 111A of the Act, short-term capital gains on sale of equity shares or units of an equity oriented fund where the transaction of sale is chargeable to Securities Transaction tax (“STT”) shall be subject to tax at a rate of 15 per cent (plus applicable surcharge and education cess). 1.3.5 Exemption of capital gain from income tax


46

• Under Section 10(36) of the Act, long term capital gains arising on eligible equity share in a company (acquired on or after the 1st day of March 2003 and before the 1st day of March 2004) sold through a recognized stock exchange in India will be exempt from tax.

• Under Section 10(38) of the Act, long term capital gains arising out of sale of equity shares or a unit of equity oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or unit is chargeable to STT. However, such income shall be taken into account in computing the book profit tax payable under Section 115JB.

• According to the provisions of Section 54EC of the Act and subject to the conditions specified therein, long term capital gains not exempt under Section 10(38) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.

1.4 Other specified deductions Subject to fulfillment of conditions, the Company will be eligible, inter alia, for the following specified deductions in computing its business income:-

1.4.1 Section 35(1)(i) and (iv) of the Act, in respect of any revenue or capital expenditure incurred, other than expenditure on the acquisition of any land, on scientific research related to the business of the Company.

1.4.2 Section 35(1)(ii) and (iii) of the Act, in respect of any sum paid to a Scientific Research Association which has as its object, the undertaking of scientific research or to any approved university, college or other institution to be used for scientific research or for research in social sciences or Statistical Research to the extent of a sum equal to one and one fourth times the sum so paid subject to the Scientific Research Association, university, college or other institution to be approved and notified for the purposes of said clauses.

1.4.3 Subject to compliance with certain conditions laid down in Section 32 of the Act, the Company will be entitled to deduction for depreciation: • In respect of tangible assets (being buildings, machinery, plant or furniture) and intangible assets (being know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature acquired on or after 1st day of April, 1998) at the rates prescribed under the Income-tax Rules, 1962; • In respect of any new machinery or plant which has been acquired and installed after 31st March 2005 by an assessee engaged in the business of manufacture or production of any article of thing, a further sum of 20% of the actual cost of such machinery or plant;

1.4.4 As per the provision of sub- section 1(A) of section 115-O of the Act which related to dividend distribution tax that the amount of dividend received from the subsidiary by a domestic company on which tax is payable under section 115-O, will be reduced from amount of dividend declared/distributed for calculation of dividend distribution tax, if the subsidiary has paid dividend distribution tax on such dividend and such domestic company is not a subsidiary of any other company.

1.4.5 Under Section 115 JAA (1A) of the Act, tax credit shall be allowed of any tax paid (MAT) under Section 115 JB of the Act. Credit eligible for carry forward is the difference between MAT paid and the tax computed as per the normal provisions of the Act. Such MAT credit shall not be available for set-off beyond 7 years succeeding the year in which the MAT becomes allowable.

2. Benefits available to resident shareholders

2.1 Dividends exempt under Section 10(34) Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in Section 115-O of the Act is exempt from income tax in the hands of the shareholders.


47

2.2 Computation of capital gains 2.2.1 Capital assets may be categorized into short term capital assets and long term capital assets based on the period of holding. Shares in a company, listed securities or units of UTI or unit of Mutual Fund specified under Section 10(23D) of the Act or a zero coupon bond will be considered as long term capital assets if they are held for a period exceeding 12 months.Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “long term capital gains”. Capital gains arising on sale of these assets held for 12 months or less are considered as “short term capital gains”.

2.2.2 Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition / improvement and expenses incurred in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it offers a benefit by permitting substitution of cost of acquisition / improvement with the indexed cost of acquisition / improvement, which adjusts the cost of acquisition /improvement by a cost inflation index as prescribed from time to time.

2.2.3 As per the provisions of Section 112 of the Act, long term gains as computed above that are not exempt under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and education cess). However, as per the proviso to Section 112(1), if the tax on long term capital gains resulting on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation benefit exceeds the tax on long term gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and education cess).

2.2.4 As per the provisions of section 111A of the Act, short-term capital gains on sale of equity shares where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 15 per cent (plus applicable surcharge and education cess).

2.2.5 Exemption of capital gain from income tax • Under Section 10(38) of the Act, Long term Capital Gains arising out of sale of equity shares or a unit of equity oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or unit is chargeable to STT. • According to the provisions of Section 54EC of the Act and subject to the conditions specified therein, long term capital gains not exempt under section 10(38) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately. In such a case, the cost of such long term specified asset will not qualify for deduction under section 80C of the Act. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.

• According to the provisions of section 54F of the Act and subject to the conditions specified therein, in the case of an individual or a Hindu Undivided Family (‘HUF’), gains arising on transfer of a long term capital asset (not being a residential house) are not chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period in a residential house. If only a part of such net consideration is invested within the prescribed period in a residential house, the exemption shall be allowed proportionately. For this purpose, net consideration means full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.

2.3 Deduction of securities transaction tax under section 36(1)(xv) Section 36(1)(xv) provides that securities transaction tax paid during the previous year in respect of taxable securities transactions entered into in the course of his business during the previous year shall be allowed as deduction provided that such income arising from such taxable securities transactions is included in the income computed under the head “profits and gains from business or profession”


48

3. Benefits available to Non-Resident Indian shareholders (Other than FIIs and Foreign venture capital investors)

3.1 Dividends exempt under Section 10(34) Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in Section 115-O of the Act is exempt from income tax in the hands of the shareholders. 3.2 Computation of capital gains

3.2.1 Capital assets may be categorized into short term capital assets and long term capital assets based on the period of holding. Shares in a company, listed securities or units of UTI or unit of Mutual Fund specified under Section 10(23D) of the Act or a zero coupon bond will be considered as long term capital assets if they are held for a period exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “long term capital gains”. Capital gains arising on sale of these assets held for 12 months or less are considered as “short term capital gains”. 3.2.2 Section 48 of the Act contains special provisions in relation to computation of capital gains on transfer of shares of an Indian company by non-residents. Computation of capital gains arising on transfer of shares in case of non-residents has to be done in the original foreign currency, which was used to acquire the shares. The capital gain (i.e., sale proceeds less cost of acquisition/ improvement) computed in the original foreign currency is then converted into Indian Rupees at the prevailing rate of exchange. According to the provisions of Section 112 of the Act, long term gains as computed above that are not exempt under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and education cess).

3.2.3 In case investment is made in Indian rupees, the long-term capital gain is to be computed after indexing the cost. According to the provisions of Section 112 of the Act, long term gains as computed above that are not exempt under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and education cess). However, as per the proviso to Section 112(1), if the tax on long term capital gains resulting on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation benefit exceeds the tax on long-term gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and education cess).

3.2.4 As per the provisions of Section 111A of the Act, short-term capital gains on sale of equity shares where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 15 per cent (plus applicable surcharge and education cess).

3.2.5 Options available under the Act Where shares have been subscribed to in convertible foreign exchange – Option of taxation under Chapter XII-A of the Act: Non-Resident Indians [as defined in Section 115C(e) of the Act], being shareholders of an Indian Company, have the option of being governed by the provisions of Chapter XII-A of the Act, which inter alia entitles them to the following benefits in respect of income from shares of an Indian company acquired, purchased or subscribed to in convertible foreign exchange: • According to the provisions of Section 115D read with Section 115E of the Act and subject to the conditions specified therein, long term capital gains arising on transfer of shares in an Indian company not exempt under Section 10(38), will be subject to tax at the rate of 10 percent (plus applicable surcharge and education cess), without indexation benefit. • According to the provisions of Section 115F of the Act and subject to the conditions specified therein, gains arising on transfer of a long term capital asset being shares in an Indian company shall not be chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period of six months in any specified asset. If part of such net consideration is invested within the prescribed period of six months in any specified asset the exemption will be allowed on a proportionate basis. For this purpose, net consideration means


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full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. Further, if the specified asset in which the investment has been made is transferred within a period of three years from the date of investment, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified asset or savings certificates are transferred. • As per the provisions of Section 115G of the Act, Non-Resident Indians are not obliged to file a return of income under Section 139(1) of the Act, if their source of income is only investment income and / or long term capital gains defined in Section 115C of the Act, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act. • Under Section 115H of the Act, where the Non-Resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under Section 139 of the Act to the effect that the provisions of the Chapter XII-A shall continue to apply to him in relation to such investment income derived from any foreign exchange asset being asset of the nature referred to in sub clause (ii), (iii), (iv) & (v) of Section 115C(f) for that year and subsequent assessment years until such assets are converted into money. • As per the provisions of Section 115-I of the Act, a Non-Resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that assessment year under Section 139 of the Act, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Act.

3.2.6 Exemption of capital gain from income tax • Under Section 10(38) of the Act, long term capital gains arising out of sale of equity shares or a unit of equity oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or unit is chargeable to STT. • According to the provisions of Section 54EC of the Act and subject to the conditions specified therein, capital gains not exempt under Section 10(38) and arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately. In such a case, the cost of such long term specified asset will not qualify for deduction under Section 80C of the Act. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money. • According to the provisions of section 54F of the Act and subject to the conditions specified therein, in the case of an individual, gains arising on transfer of a long term capital asset (not being a residential house) are not chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period in a residential house. If only a part of such net consideration is invested within the prescribed period in a residential house, the exemption shall be allowed proportionately. For this purpose, net consideration means full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. 3.3 Deduction of securities transaction tax under section 36(1)(xv) Section 36(1)(xv) provides that securities transaction tax paid during the previous year in respect of taxable securities transactions entered into in the course of his business during the previous year shall be allowed as deduction provided that such income arising from such taxable securities transactions is included in the income computed under the head “profits and gains from business or profession”


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4. Benefits available to other Non-resident Shareholders (Other than FIIs and Foreign venture capital investors)

4.1 Dividends exempt under Section 10(34) Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in Section 115-O of the Act is exempt from income tax in the hands of the shareholders. 4.2 Computation of capital gains 4.2.1 Capital assets may be categorized into short term capital assets and long term capital assets based on the period of holding. Shares in a company, listed securities or units of UTI or unit of Mutual Fund specified under Section 10(23D) of the Act or a zero coupon bond will be considered as long term capital assets if they are held for a period exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “long term capital gains”. Capital gains arising on sale of these assets held for 12 months or less are considered as “short term capital gains”.

4.2.2 Section 48 of the Act contains special provisions in relation to computation of capital gains on transfer of shares of an Indian company by non-residents. Computation of capital gains arising on transfer of shares in case of non-residents has to be done in the original foreign currency, which was used to acquire the shares. The capital gain (i.e., sale proceeds less cost of acquisition/ improvement) computed in the original foreign currency is then converted into Indian Rupees at the prevailing rate of exchange. As per the provisions of Section 112 of the Act, long term gains as computed above that are not exempt under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and education cess).

4.2.3 In case investment is made in Indian rupees, the long-term capital gain is to be computed after indexing the cost. As per the provisions of Section 112 of the Act, long term gains as computed above that are not exempt under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and education cess). However, as per the proviso to Section 112(1), if the tax on long term capital gains resulting on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation benefit exceeds the tax on long-term gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and education cess).

4.2.4 As per the provisions of section 111A of the Act, short-term capital gains on sale of equity shares, where the transaction of sale is chargeable to STT, shall be subject to tax at a rate of 15 per cent (plus applicable surcharge and education cess).

4.2.5 Exemption of capital gain from income tax • Under Section 10(38) of the Act, long term capital gains arising out of sale of equity shares or a unit of equity oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or unit is chargeable to STT.

• According to the provisions of Section 54EC of the Act and subject to the conditions specified therein, long term capital gains not exempt under section 10(38) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately. In such a case, the cost of such long term specified asset will not qualify for deduction under Section 80C of the Act. However, if the assessee transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.

• According to the provisions of Section 54F of the Act and subject to the conditions specified therein, in the case of an individual or a HUF, gains arising on transfer of a long term capital asset (not being a residential house) are not chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period in a residential house. If only a part of such net consideration is invested within the prescribed period in a residential house, the exemption shall be allowed proportionately. For this purpose, net consideration means full


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value of the consideration received or accrued as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.


5. Benefits available to Foreign Institutional Investors (‘FIIs’)

5.1 Dividends exempt under section 10(34) Under Section 10(34) of the Act, income earned by way of dividend from domestic company referred to in Section 115-O of the Act is exempt from income tax in the hands of the shareholders. 5.2 Taxability of capital gains 5.2.1 Under Section 10(38) of the Act, long term capital gains arising out of sale of equity shares or a unit of equity oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or unit is chargeable to STT.

5.2.2 The income by way of short term capital gains or long term capital gains [in cases not covered under section 10(38) of the Act] realized by FIIs on sale of shares of the company would be taxed at the following rates as per section 115 AD of the Act.

• Short term capital gains, other than those referred to under section 111A of the Act shall be taxed @ 30% (plus applicable surcharge & education cess). In case such transaction of sale is entered on a recognized stock exchange in India and is liable to STT then short term capital gain shall be taxed @ 15% ((plus applicable surcharge & education cess).

• Short term capital gains, referred to under section 111A of the Act shall be taxed @ 15% (plus applicable surcharge and education cess)

• Long Term capital gains @ 10% (plus applicable surcharge and education cess) (without cost indexation) It may be noted here that the benefits of indexation and foreign currency fluctuation protection as provided by section 48 of the Act are not applicable.

5.2.3 According to the provisions of Section 54EC of the Act and subject to the conditions specified therein, long term capital gains not exempt under Section 10(38) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately. However, if the assessee transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.


6. Benefits available to Mutual Funds

As per the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made there under, Mutual Funds set up by public sector banks or


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public financial institutions or authorized by the Reserve Bank of India would be exempt from income tax. However, the Mutual Funds shall be liable to pay tax on distributed income to unit holders under Section 115R of the Act.

7. Venture Capital Companies / Funds

In terms of section 10(23FB) of the Act, all Venture capital companies/funds registered with Securities and Exchange of India, subject to the conditions specified, are eligible for exemption from income tax on all their income, including profit on sale of shares of the Company.

8. Tax Treaty benefits

An investor has an option to be governed by the provisions of the Act or the provisions of a Tax Treaty that India has entered into with another country of which the investor is a tax resident, whichever is more beneficial.

9. Benefits available under the Wealth-tax Act, 1957

Shares of the Company held by the shareholder will not be treated as an asset within the meaning of section 2(ea) of Wealth Tax Act, 1957, hence no Wealth Tax will be payable on the market value of shares of the Company held by the shareholder of the Company.

10. Benefits Available under the GIFT tax ACT, 1958 Gift tax is not leviable in respect of any gifts made on or after 1st October 1998. Therefore, any gift of shares will not attract gift tax. Notes:

1. All the above possible benefits are as per the current tax law as amended by the Finance Act, 2008. 2. The stated benefits will be available only to the sole / first named holder in case the shares are held by

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

advisor with respect to specific tax. For S.P Moondra & Co. Chartered Accountants Sd/- (S.P Moondra) Proprietor M.No. 073747 Place : Indore Date : 08/11/2008


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SECTION IV – ABOUT THE ISSUER COMPANY

INDUSTRY OVERVIEW

The Indian Pharmaceutical industry has matured and expanded exponentially in the last few decades. From once being an importer of even the basic pharmaceutical products, India has evolved into a thriving domestic pharmaceutical market with double digit growth rates. India today stands world's 4th largest pharmaceutical market in volume and 13th largest in value terms. India is counted among one of the most dominant players in global exports of generic formulation and active pharmaceutical ingredients. Lately, India has progressed into being a preferred outsourcing destination for research and manufacturing operations and high-end services such as clinical research and related services. However, KPMG-CII report titled- `India Pharma Inc - An Emerging Global Pharma Hub’ released at the Pharma Summit 2008, highlights that the sector needs to further tap opportunities where India can truly become a global pharma hub and help address challenges that it faces to get there. While the country has proved itself as an excellent value proposition for global pharma companies, most of which are leveraging on India’s cost competitiveness and large pool of technically skilled manpower. India has emerged as a preferred global supplier of high quality drugs and intermediates at very cost effective prices. Indian companies are working aggressively to get a stronger foothold across various segments such as generics, contract research and manufacturing, services and clinical research services.


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This market is projected to grow at a healthy compounded annual growth rate (CAGR) of 13% over the next four years to touch $73 billion by 2011. Up until 2015, we expect pharmaceutical sales to rise by 8% p.a. to just under EUR 20 bn, compared with an increase of 6% in the world as a whole and 5% in Germany. But even then, India’s share in the world pharmaceutical market would only come to slightly over 2% (Germany: 7%). In Asia, India looks set to lose market share, as other Asian countries are registering even stronger growth.

India’s pharmaceutical industry has been in transition for several years now. This is the result mainly of the changes to drug patent legislation in 2005 According to Hitesh Gajaria, Sector Head, Pharmaceuticals, KPMG in India, said, amendments to India’s patent legislation in 2005 have proved to be a turning point which resulted in growth in the partnerships between Indian and foreign companies across a varied range of areas such as discovery research, development and manufacturing.


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The R&D divisions of Indian pharmaceutical companies are making the transition from reverse engineering to discovery and development of new molecules. They have displayed potential to build their expertise and capabilities and have made inroads in this space. India is now concurrently developing its New Chemical Entity (NCE) baskets and is gearing up to launch its own patented molecules globally in the future. Indian companies are increasingly collaborating with the big pharma through licensing and joint development agreements in order to cope with the high costs and risks associated with new molecule discovery and development.

The intense pricing pressure in the global generics market can pose serious constraints on the sustainability of this source in order to further their R&D initiatives. Many Indian companies have already or are in process of hiving off their R&D activities into separate entities in order to enhance the focus on this business segment.

This demerger strategy lays the foundation for building a sustained model for carrying out successful new drug discovery R&D.

It is now well positioned for sustainable growth and expansion and companies in India are identifying diverse business models as a means to participate in the global growth potential. The domestic market also has strong underlying growth drivers such as increasing spend on healthcare, increasing penetration of health insurance and changing disease profile which should sustain the double digit growth witnessed over the last year.

Domestic Pharmaceutical Market The Domestic pharmaceutical market is going through a transformation, led by strong underlying growth drivers and has witnessed robust growth over the last couple of years. While this growth was driven mainly by an increasing spend on healthcare, on account of rising disposable income, increasing penetration of health insurance and changing disease profile, regulatory reforms also provided a significant boost. The industry has grown at a CAGR of 13 percent from 2002-2007 and is expected to grow at a CAGR of 16 percent over 2007-2011.

Growth Drivers

Strong Economic Growth The prospects of the Healthcare and Pharmaceuticals industry are strongly linked to economic growth. Over the last couple of years, the pharmaceuticals industry has grown at approximately 1.5-1.6 times the growth of economy. The rise in disposable income has a positive impact on healthcare spend. In 2005, 6.2 percent of disposable income was spent on healthcare as compared to 2.8 percent in 1995.


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This augurs well for the pharma industry, as the strong economic momentum is expected to continue and the Indian economy is expected to grow by 8–9 percent in the next few years. Improving Healthcare Infrastructure Both healthcare delivery and infrastructure segments are going through a structural change with the entry of corporates. Significant investments have been lined up in the domains of organized pharmacy chains and private hospitals. In addition to Metros even B and C category towns are witnessing sizeable investments. Many pharma companies have expanded their sales force in order to cater to these untapped markets. At present, organized players account for a meager 2 percent share of the pharma retail market. It is expected that with the advent of modern retailing in India, increasing investments in this space will multiply the availability and accessibility of pharma products. The organized pharmacy chains will not only capture an increasing percentage of the total market but will also expand the market with value added services and enhanced offerings. The culmination of all these factors is expected to further drive the growth of the domestic pharma market. Increasing penetration of health insurance At present, only 4 percent of the healthcare costs are borne by the insurers in India as against 80 percent in developed economies. With increasing health insurance penetration in India, this is set to change and going forward, a larger proportion of expenses will be paid by insurers and consumption of sophisticated drugs is likely to become more affordable.

At present, the health insurance penetration is estimated at approximately 10 percent in India and is expected to double in the next five to seven years. Changing Therapeutic Mix

The existing therapy mix is tilted towards acute diseases. However, in the medium to long run the domestic pharmaceutical market will be largely driven by the increasing prevalence of the chronic segment. Increasing urbanization, changing lifestyles and ageing population will drive the growth of this segment. In most cases, ailments in the chronic segment are recurring in nature, which ensures regular consumption of medicines for the lifetime of the patient. Going forward, therapies for treating cardiovascular diseases and diabetes are expected to have one of the highest growth rates.


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In terms of the geographical distribution of the Pharma market, 23 Metro cities account for approximately a quarter of the market. Class I towns— comprising 300 towns altogether— account for about one-third of the market. Rural markets which account for 21 percent of the total market have been increasingly becoming an important market for big pharma companies. Though rural markets are dominated by acute segments, chronic segments have slowly started making inroads.


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Government Initiatives The Government has introduced several development programmes to improve the access to and quality of the healthcare services in the country. The National Rural Health Mission (NRHM), introduced by the government to provide basic healthcare amenities in the rural areas, is expected to increase the access to drugs in the rural areas. In Budget 2007-08, the budgetary allocation to health was increased by 22 percent to INR 1, 52,910 million. Launch of Patented Drugs After the product patent regime was introduced in India in 2005, the domestic pharma industry has witnessed the launch of around 11 patented products by multinational companies. This number is expected to grow, as MNC pharma companies are already planning significant patented launches over the next few years. Various industry estimates suggest that by 2015, patented drugs will account for 10-15 percent of the domestic pharma market. Key Considerations Need for Public–Private Partnership (PPP) At present, a principal share (almost 75-80 percent) of the total healthcare expenditure by the country is incurred by the private sector, while the public sector finances the balance. On the other hand, affordability and accessibility of the latest and quality drugs continues to be one of the major issues for a large section of the population and for the country as a whole. Both the public as well as private sectors have recognized this as a serious concern and are looking at PPPs as a sustainable model to cater to the growing demand of medicines across all sections of society. Spurious / Sub-standard drugs At a time when India is moving towards becoming a preferred manufacturing base for global pharma companies, the menace of spurious and substandard drugs could give a negative image to the country. According to the Mashelkar committee report, the industry faces a loss of around INR 40 billion due to substandard drugs and a WHO report suggests that 35 percent of spurious drugs of the world are being produced in India. Spurious and counterfeit drugs are a major public health hazard.


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Price Controls Uncertainties regarding the Pharmaceutical Policy 2006, which proposes to bring 354 essential drugs under the purview of Drug Price Control Order (DPCO) continues to be an area of acute concern for the industry. The pharma industry feels that regulation should try to simulate the "effects of competition" and price control should not be imposed on drugs where the "effects of competition" already exist. The proposed policy would significantly increase DPCO’s span of control from the existing 25 percent to approximately 50-60 percent of all medicines produced. Some of the notable views from the industry as follow. High fragmentation The domestic formulations market is predominantly a branded generics market and intensely competitive, with the presence of several players, including small scale companies. The top 10 companies account for only 37 percent of the market. This shows the level of fragmentation in the industry. Given this industry structure, brands franchise, field force strength and product innovation become critical success factors to operate in this market place. A report by the Institute for Studies in Industrial Development (ISID), a national level policy research organization in the public domain, mentions that in 2000-01 there were approximately 2872 pharma units in India and out of these 91 percent were small manufacturing enterprises.


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India’s domestic pharmaceutical market is at an inflection point. The strong underlying growth drivers offer enormous opportunities for domestic as well as MNC pharma companies. However, an inclusive and growth oriented public policy regime will ensure that this growth is sustainable. Global Generics Industry Over the last few years, Indian pharma companies have been scaling up their presence in the non-traditional business segments such as drug discovery and development, contract research and manufacturing, etc., and are focusing on building their competencies in every area of the pharma value chain. However generics continue to remain the mainstay of the industry. Indian companies are increasingly advancing beyond domestic boundaries and are aggressively focusing on making their mark in the global generics space. In order to reduce their dependence on the U.S. market, Indian pharma companies are now entering new and under-served generics markets across different geographies such as Japan, South Africa, European and Commonwealth of Independent States (CIS) countries and Latin America. While the global generics industry continues to remain under severe pricing pressure, the Indian generic drug makers continue to spread their wings across different international markets. Growth Drivers Trend towards an increased use of generics Globally, the trend towards an increased use of generics is on the rise and is expected to open up tremendous opportunities for generics players as governments in many countries encourage the shift to generics on the back of rising pressure on healthcare budgets. Globally, the generics industry is expected to grow at a Compound Annual Growth Rate (CAGR) of 11 percent between 2006 and 2010 and touch USD 94 billion by 2010. At present, India has only 10 percent market share in this industry. Regulated Markets United States - The world’s largest generics market : The U.S. market is still by far the largest pharma market in the world and accounts for over 28 percent of the world’s generics market. In spite of severe pricing pressure and declining profitability, the U.S. market will continue to be attractive. Drugs worth USD 65-70 billion are expected to go off patent in the next four-five years.

Given the opportunity and challenges in this market, it is evident that the success of Indian players in the U.S. market will largely depend on their ability to offer value-added generics products and their specialization in business development through partnerships, strategic alliances and joint ventures (JV).


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European Union (EU) – regulatory reforms to drive growth Most European markets such as France, Italy, Belgium, Spain and Germany are highly regulated and have low levels of generics penetration. Rising healthcare expenditures in these countries is becoming a key concern for most European regulators. Several reforms and regulatory changes have been introduced in the last couple of years to encourage an increased use of generics. These markets are largely branded generics; hence pricing pressure is limited as compared to the U.S. market. These regulatory changes coupled with a significant number of drugs going off patent over the next few years, has opened up a big opportunity for Indian generics makers. Many Indian companies have already made their mark in these markets while others are pursuing aggressive strategies to foray into these markets, primarily through their inorganic initiatives.

Japan – Low generics penetration and Government legislation to drive growth Japan, the world’s second largest pharmaceutical market, has lured many Indian companies, in spite of its low generics penetration rate. The Japanese pharma market was valued at USD 65.2 billion in 2006. At present, generics account for approximately 17 percent of the market by volume and 5 percent by value. It is expected to grow to USD 14 billion by 2010. The government is actively introducing reforms and measures to encourage low cost-high quality generics drugs, with the objective to cut the increasing healthcare spending. Indian companies are looking at significant opportunities in the Japanese market. The growth of the generics industry in Japan is expected to be driven by a rapidly ageing population, increasing healthcare expenditure and government reforms. Since 2002, the Japanese government has introduced several legislations to promote the use of generics drugs. The generic substitution law— which was introduced in April 2006— is one of them. It is expected to be a key engine to expand Japan’s generics drug market and enable medical institutions to dispense generic drugs. Emerging Markets- gaining traction: Emerging markets such as Russia and the CIS nations, Eastern Europe; Brazil and other Latin American countries and South Africa are increasingly being viewed as highly remunerative markets.


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Russia and other CIS nations: The Russian pharmaceuticals market was valued at USD 7 billion in 2006.6 It is one of the fastest growing pharmaceuticals markets in the world. Russia’s generics market is around 30 percent of the total market.7 It is a semi-regulated market, offering high and stable returns. Other attractive CIS markets include Ukraine, Kazakhstan, Belorussia, Uzbekistan and Azerbaijan.

Brazil and other Latin American markets: The Brazilian market has caught the fancy of many Indian companies in the recent years. In fact, approximately 50 percent of the JVs and partnerships between India and Brazil are formed in the pharma sector. Generics accounted for 14.2 percent of the estimated USD 11 billion market in 2006. Although India’s pharma exports to this market stood at only 3 percent of the total pharma exports in FY07, this market is expected to generate significant opportunities in the near future, driven by the recent de-recognition of the patent for antiretroviral drugs and promotion of generics. Other markets of Latin America which have attracted many Indian companies are Argentina, Mexico and Chile. These semi-regulated markets offer stable returns and higher margins as compared to regulated markets. India’s competitive position: Indian companies have already proved their mettle in the fiercely competitive global generics space. India has a share of around 23 percent in the total Abbreviated New Drug Application (ANDA) approvals and 48 percent of the total Drug Master Files (DMF) filings.8 India’s cost advantage is highly compelling. This fact, coupled with strong chemistry and regulatory skills and the largest no. of USFDA-approved plants outside the U.S., makes India one of the most dominant players in the global generics space.


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In order to remain competitive and maintain their dominance, Indian players have realigned and restructured their operating paradigms reflected in lean cost structures, vertically integrated models, geographically diversified presence, vast product baskets and increasing presence in niche segments. Enhanced focus on niche specialties

Indian players are now focusing on capturing emerging opportunities in certain niche specialties. These segments offer higher and more sustainable margins which can compensate for the intense pricing pressure in the generics segment. Building Para IV pipelines Aggressive Para IV filings and teaming up with innovator pharma companies for launching authorized generics is also gaining momentum. Global Consolidation The consolidation drive that has accelerated over the last two years continued unabated this year as well Today, the top 10 global generics companies collectively have a market share of over 50 percent of the global generic market. This is likely to have a positive effect and reduce pricing pressure in the global generics market, to some extent. The enthusiasm for acquisition has been driven by a series of factors such as attaining scale, geographic diversification by venturing into new markets, expanding product portfolios, building new therapeutic specializations and strengthening supply chain capabilities. Acquisitions by Indian Companies The augmented risk appetite of the Indian players is reflected in their aggressive acquisition strategy and increased leveraged funding activity, over the last few years. In continuation of their strategy of growth through the inorganic route, this year also, the pharma industry was buzzing with heightened Merger and Acquisition (M&A) activities. This is driven by the growing ambitions of Indian companies to strengthen their competitive position and consolidate their presence in the generics space. Acquisitions of Indian assets by international pharma companies It has become a strategic imperative for global pharma companies to make India an integral part of their manufacturing value chain to maintain lean cost structures and combat intense competition in the global generics industry. Global generics players such as Mylan and Actavis have acquired Indian assets to create a strong back-end for their global supply chain.


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Key Considerations Pricing Pressure and Increasing Competitive Intensity The global generics industry continues to reel under pressure with intense price-led competition, and the entry of smaller players has further intensified the competitive intensity. Though the generics segment continues to grow at a rate higher than the global pharmaceutical market, the operating environment is becoming increasingly competitive. U.S., the leading generics market, is witnessing intense competitive pressure with several new players entering this space leading to price erosion to the tune of 95-98 percent in some instances Managing Growth in multiple markets One of the key issues to be dealt with while achieving geographical diversification is to manage growth in multiple markets. Not only big players but even mid and small sized Indian pharma companies have started foraying into regulated as well as non-regulated markets. Each of these markets has unique characteristics. It is a challenging task to develop a strong presence and acquire scale in each of these markets. The success of companies in these markets will depend on factors such as: – Entry strategy – Ability to comply with regulatory complexities – Building product portfolio based on disease profile of each country. Competition from China It is becoming increasingly difficult for India to ignore China. China is emerging as a strong competitor on the back of its cost competitiveness, strong government support (in the form of incentives), implementation of GMP norms, aggressive focus on exports and the soaring consolidation drive to build large Chinese pharma giants. In fact, China is thought to be the preferred contract research destination over India.

In some aspects, however, China lacks the required specialization in some areas such as finished formulations, regulatory compliances for regulated markets and Intellectual Property Rights (IPR) development. In terms of U.S. FDA approved plants, China is still far behind India. India is also leading in terms of the number of DMF filings. While India has filed 1,155 DMFs between January 2000-June 2007, China has filed only 329 in the same period. In 2007 itself, India has filed 110 DMFs, which is nearly thrice that of China’s 38 filings. These are very exciting times for Indian generics players. On one hand, the mainstay of the Indian players, the U.S. market, is experiencing intensely competitive business environment, and on the other hand, semi-regulated and emerging markets are expected to become new growth markets. While, operational restructuring and realignment of


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business models will help Indian players survive the competitive environment in the U.S. and European markets, their increasing presence in other promising markets will further enhance their market share in the global generics industry. Contract Research and Manufacturing Services (CRAMS) Pharmaceutical companies are increasingly realizing the benefits of outsourcing. Until the late 1990s, companies developed their products in-house and only shared select information with third parties. However, in recent times, increased competition, weaker product development pipelines, fewer approvals, the need to accelerate the time-to-market of new products, and pricing pressures have compelled pharmaceutical companies to re-examine their priorities and increasingly include outsourcing as part of their model structure for business operations. CRAMS, considered as one of the most promising medium to long term opportunities for the Indian pharma industry, is gaining momentum. In recent times, the CRAMS segment has witnessed heightened activities on the back of increasing deal flows, presence of global Contract Manufacturing Organizations (CMOs) and Contract Research Organizations (CROs) and emergence of new players. Global pharma companies are finding innovative ways to capture cost efficiencies across the value chain and are resorting to outsourcing of core as well as non-core processes. India, with its inherent competitive advantages, stands as one of the most preferred outsourcing destinations for a range of activities and is now becoming a critical component in manufacturing as well as the drug development value chain of various innovator pharma companies. Growth Drivers MNC pharma companies are increasingly focusing on realigning their manufacturing activities in order to concentrate on core activities such as R&D and brand building - thereby reinforcing the potential for cost savings through contract manufacturing. At the same time, existing global CRAMS players are facing adverse business conditions, on account of increasing regulatory compliances on environmental issues and competition from low cost countries.

MNCs - leveraging on their Indian subsidiaries for global support The introduction of the product patent regime has opened up dual opportunities for global pharma companies in India. While on one hand the regime has made India one of the most promising pharma markets (on account of the favorable demographics and increasing income levels), on the other, it has boosted India’s capabilities as an emerging off-shoring destination for providing end to end pharma outsourcing services.


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Some of the key operations for which India is evolving as an important outsourcing base include: Support for global R&D functions In order to improve R&D productivity and curb escalating costs, MNC pharma companies are capitalizing on their existing low cost facilities in India. Many Indian subsidiaries are already playing a vital role in the global R&D programmes of the parent company. Outsourcing of manufacturing operations to the Indian subsidiaries Pharma MNCs that have renewed their interest in the Indian markets have set up low cost manufacturing facilities in India that meet international standards. While they continue to expand their presence in the domestic markets, many of them are simultaneously using these facilities as off-shoring hubs. Using India as a export base for other countries Pharma MNCs are also increasingly using India as a base for exports not only to the immediate neighboring markets, but also to other markets around the world such as Japan, South Africa, Latin America and Europe. Clinical Data Management for global drug discovery and research functions Pharma MNCs are also exploiting India’s competencies in the field of Information Technology and its strong and low cost IT skill sets; by setting up centers for their global clinical data management functions in India. The India pharma industry is positioning itself as the provider of value added services such as support for early phase discovery, research, clinical tests, and synthesis of custom-made intermediates or even finished APIs, elaboration of generics dossiers bundled with the supply of the formulated drug product, etc. at affordable prices. Accordingly, many MNC pharma companies have already started taking advantage of this. Contract Manufacturing Contract Manufacturing represents the largest opportunity within the CRAMS space. India, with its efficient labor pool and large number of USFDA compliant manufacturing plants outside the U.S., is expected to garner a major share of this large opportunity. At present, the global manufacturing outsourcing opportunity is estimated at USD 20 billion and is expected to reach USD 31 billion by 2010. The four main components of the global outsourcing market are intermediates, APIs, custom synthesis and formulations/dosage forms. It is estimated that approximately 40 percent of outsourcing demand is for the manufacturing of APIs.


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Having a presence across various segments of the contract manufacturing space is important and helps to capitalize on opportunities provided by this space. Though Custom Chemical Synthesis (CCS) and the intermediates space offers limited scale and volume but strong chemistry skills at this stage is a significant step in getting increasingly involved with the overall drug development process and developing relationships with MNC pharma companies. For Indian contract manufacturing players, opportunities exist on two fronts - capture a larger share of the opportunities created because of the shift from in-house manufacturing to outsourcing by innovator pharma companies and - foray into western countries by acquiring existing contract manufacturing players in the western countries. Acquisitions are not new to Indian pharma companies. The success of the generics players can very well be attributed to the large acquisitions they have made to foray into western countries – especially in the European region. Indian contract manufacturing players have also opted for the inorganic route to growth and have made strategic acquisitions to gain scale and strengthen customer relationships. Contract Research Contract Research also offers significant opportunity to the Indian pharma industry which is becoming a global R&D hot-spot for innovator pharma companies. The global contract research opportunity was pegged at USD 14 billion in 2006 and is expected to reach USD 24 billion by 2010. Declining R&D productivity, coupled with an increasing number of products going off patent is expected to drive the growth of the contract research segment.

Given the conducive regulatory environment, strong chemistry innovation skills, large and diverse patient pool; and availability of players providing ancillary services such as bio-informatics, clinical data management and bio-statistics; the contract research market in India is expected to grow at a CAGR of 30-35 percent during 2006-2011. At present, contract research for new drug discovery accounts for 60 percent of the total market while the balance 40 percent is for generic drugs. Clinical Research At present, a majority of clinical trials conducted in India are for Phase II and Phase III. Further, Phase I trials are not permitted in India for new drug substances discovered in other countries unless Phase I data from other countries is made available to Indian authorities. However, the government is in the process of considering the recommendation of the Drug Technical Advisory Board (DTAB) to allow Faze I clinical trials for the drugs discovered abroad. If this happens, then it will enable the Indian CRAMS industry to provide a wide range of drug discovery services. Following the move of their global customers, international CROs have also forayed into the Indian market. Some of the prominent ones include Quintiles, SBFC International, ICON Clinical Research and i GATE Clinical Research International.


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The advent of the product patent regime in 2005 has provided the much needed impetus to the growth of the clinical research and clinical trials segment. Many MNC pharma companies have made India their R&D hub - especially for clinical trials. India is also becoming a preferred destination for clinical trials given that it offers a huge patient base afflicted by both tropical diseases as well as lifestyle diseases. Patient recruitment in India is also faster than other semi- regulated and regulated markets. Government Support On the regulatory front, the government is also trying to promote the growth of this industry by providing tax exemption on all services carried out by the contract research and clinical trials industry. This step is likely to further boost clinical trial outsourcing to India. Key Considerations Efficient execution of contracts Given that the Indian CRAMS industry is still evolving, the industry experiences a rather long gestation period due to a longer time taken for awarding contracts. Further time spent on registration and other regulatory processes can extend final delivery timelines by almost two additional years in the initial phase. The Indian CRAMS industry also needs to focus on building strong and sustainable client relationships and improving the quality of service with respect to meeting delivery timelines, upholding ethics, and the ability to offer value-added services. Building a strong technology platform and long term partnerships Considering the large opportunity and strong growth drivers, several Indian mid sized companies have forayed into this segment. Training and Infrastructure Education pertaining to contract research, including discovery services and clinical trials, needs to be given high priority. An adequate physical infrastructure coupled with specialized training and an industry wide accreditation system will help balance the demand-supply equation in this rapidly growing industry. IPR Compliances


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Issues related to data exclusivity and confidentiality are still areas of concern for most clinical trials sponsors. Stronger IPR compliances will instill greater confidence in MNC Pharma companies and will further boost the CRAMS segment. Today, what was once considered a potential opportunity is now being translated into real numbers. In recent times, the pharma industry has seen has seen an emergence of significant opportunities in the form of increase in outsourcing contracts. Indian companies are now witnessing increasing visibility in this business – from one-off contracts to becoming preferred vendors with assured revenue streams. One of the most notable trends is a formation of a proper eco-system that will support the growth of this industry on a sustained basis. Emergence of domestic players, increasing presence of global CROs, well developed IT infrastructure, encouraging regulatory environment and well established Knowledge Process Outsourcing (KPO) industry. A combination of all these factors will take this nascent industry to the next level.

Research and Development Research on New Chemical Entities (NCEs) and New Drug Delivery Systems (NDDS) is steadily becoming an integral part of the strategy of Indian pharma companies, who want to build a sustainable long term advantage. Over the last couple of years, the discovery R&D segment has gained significant momentum and discovery R&D pipelines of several players have expanded substantially. At present, as many as 10-12 companies have molecules under various stages of development. R&D investments by Indian companies have also increased significantly and now account for as much as 7-9 percent of sales for leading pharma companies. It is expected that investment in R&D is expected to rise to USD 500 million in 2010 and USD1.2 billion by 2015.10 Growth Drivers and Trends India’s competitive advantage in offering strong chemistry innovation skills at significantly lower costs has lured many multinational innovator pharma companies to make India a major component of their global drug discovery value chain. Key aspects of R&D initiatives of Indian pharma companies are the various collaborations and innovative funding models that are being adopted by each one of them. Research on NCEs is relatively a new field for Indian pharma companies, which have traditionally relied on their process engineering skills and is fraught with uncertainties and demands considerable financial resources. Collaborative research, through in-licensing and out-licensing helps in accessing the vast pool of resource capabilities of MNC Pharma companies. This also allows Indian pharma companies to build resources for expanding their research pipeline. In-licensing and out-licensing transactions are gaining strategic importance with MNC pharma companies making it an integral part of their business models. This not only helps in boosting their weak short to mid-term growth prospects by swiftly filling gaps in their pipelines but also helps in saving time for conducting early stage R&D process. MNC Pharma’s quest for in-licensing For MNC pharma companies, in-licensing is the most sought after strategy to arrest declining R&D productivity. Over the last couple of years, many MNC pharma companies have stepped up their in-licensing activities. Novartis has more than 320 ongoing collaborations across 19 countries while Astra Zeneca has in-licensing partnerships with more than 50 companies. Globally, leading pharma companies are witnessing increasing dependence on in-licensed products to augment sales. In 2005, revenues from licensed products accounted for 24.4 percent of the total sales of the top 55 pharma companies as against 20.7 percent in 2002. Datamonitor estimates that by 2010, these companies will derive as much as 29 percent of their total sales from in-licensed products. Collaborative Research Indian CROs with advanced research capabilities and value added service offerings are going beyond their pure service led models to an incentive based structure. Advinus Therapeutics, a CRO promoted by the Tata Group, is one such example. It has entered into an in-licensing cum joint development agreement with Merck for the development of two drugs in the metabolic disorder segment. In addition to the USD 75 million milestone payments, upon commercialization, Advinus will also receive royalty on drug sales. In another example, India’s biotech major, Biocon, has entered into a USD 300 million deals with BMS to develop a new research center employing 400 scientists for providing discovery and pre clinical support to BMS.


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De-mergers De-merging of R&D assets into a separate company is one of the most notable trends among Indian pharma companies. The objective being – to enhance the focus on the drug discovery business and generate resources by roping in strategic investors to take molecules to advance stages of development. Key Considerations Need for partnering New drug discovery is a costly and lengthy process. It takes anywhere between (approximately) 10-12 years, for a new drug to reach the market from the laboratory and costs approximately USD 800 million to 1.2 billion. Indian players have been funding their research pipelines through resources generated from the generics business which is facing intense price competition. This makes it particularly difficult for Indian pharma companies to drive the entire process of drug discovery all the way to the stage of marketing. Indian pharma companies are well placed to do early stage research but lack the financial strength to take a promising new molecule to advanced stages of development. Globally, the R&D business is becoming tougher with declining productivity and spiraling costs. On the regulatory front, product approval norms are becoming stricter. Both Indian pharma companies and global innovator pharma companies realize the benefits of partnering. Partnering with a MNC Pharma company helps in taking new compounds through all the phases of clinical trials right till the launch of the molecule. This strategy considerably reduces payback period and helps Indian companies develop specialization to consistently generate new innovative compounds through in-house R&D. Need for Regulatory Impetus The government and other regulatory bodies can play a significant role in determining the success of drug discovery research in India. One form of government support, would be the PPP models that can give the much needed impetus to this segment. The PPP model can help companies finance the molecules across different stages of development, provide support for conducting clinical trials and get faster regulatory approvals. The public sector will also stand to benefit by getting access to drugs of high therapeutic use meant for mass distribution, at significantly low costs. Funding Constraints Most of the Indian pharma companies that are involved in new drug discovery are also focused on the generics business as well as the domestic formulations market. Globally, the generics business is witnessing relentless pricing pressure on the back of intense competition and fewer product launches. At the same time, the competitive intensity in the domestic market is also high due to severe price-based competition and a high level of fragmentation. Considering these factors, resource generation for investment in R&D activities is becoming increasingly challenging. India is expected to play a vital role in the global R&D space and collaborative research is expected to be the future of the new drug discovery process in India. This is reinforced by the increasing collaborations between Indian and MNC pharma companies. Going forward, this trend will continue to gather momentum. However, success would largely depend on proper partner selection and well structured alliances. Growth through Collaborations The pharma industry is regarded as one of the most globalized industries. The Indian pharmaceutical industry has the ability to exploit the opportunity inherent in the global industry at various points in the value chain from raw materials, intermediates and active pharmaceutical ingredients at one end, to generic and outsourced formulations and drug discovery and development at the other end. In order to rapidly integrate with the global pharma industry, Indian pharma players have entered into various collaborations in almost every area of the pharma value chain, be it drug discovery and development; manufacturing, sales or distribution.


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Collaborations have played a very important role in the growth of the Indian pharma companies. Be it the domestic market or international, the co-existence of collaboration and competition has now become an inherent characteristic of the Indian pharma industry. Companies have identified collaborations as a faster growth tool than building their own infrastructure. Today, pharmaceutical companies operate in multiple markets spanning multiple segments and with varied business models. Collaborations will be critical to success in such a dynamic business environment Source :

Deutsche Bank Research dated April 09, 2008 CII-KPMG report – “Pharma Summit 2007 – India Pharma Inc. - A continuing Success Story, November 2007”


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BUSINESS OVERVIEW Syncom Formulations (India) Limited (SFL) was incorporated as a Private limited company in the name of Syncom Formulations (India) Private Limited on June 21, 1988 by Mr. Kedarmal Bankda, Mr. Ajay Kumar Bankda & Mr. Vijay Kumar Bankda for manufacturing, marketing, dealership, importing, exporting & job work of pharmaceuticals, medicinal and other Industrial preparation & formulations under its own brands in Ethical, OTC, Generic and Herbal market segment. The company changed its status from Private limited to Public limited in Year 1992. The company came out with its Initial Public Offering in the Year 1994 hence obtained listing at BSE, DSE, ASE and MSE. However company has voluntarily de-listed its shares from ASE on July 8, 2004, MPSE on May 29, 2008 & DSE on September 2, 2004. The registered office of the company is situated at 7, Niraj Industrial Estate, Off Mahakali Caves Road, Andheri (East), Mumbai 400 093. It has manufacturing unit at Pithampur, District Dhar, Madhya Pradesh which has a state of art manufacturing facility with WHO: GMP & ISO 9001 accreditation. SFL Quality policy is to upgrade Organisational capabilities viz. Men, Materials & Machines in order to consistently provide Quality products. The Current Promoters of the company are Mr. Kedarmal Bankda and Mr. Vijay Kumar Bankda. The company is engaged in the business of pharmaceutical formulations. It manufactures range of products in various dosage forms and markets them in various countries. In addition to pharmaceutical formulations in the form of tablets, capsules, liquids and dry powders, the company also manufactures Injectibles, inhalers and ear/eye drops. In 1994, the company undertook an expansion programme of setting up a new plant for manufacturing pharmaceutical formulations at Pithampur, Madhya Pradesh. The project which was financed through a public issue made in January 1994 was completed in 1995. During the year 1997-98, the Company has further diversified into Ethical Operations by introducing the range of prescription formulations. During the year 1998-99 there has been huge expansion of installed capacity and production base. Further the company introduced products in the generic, OTC and Ethical Divisions. During the year 2007-08 the Company has further completed modernization and expansion of Project in Pithampur unit, District Dhar, M.P with a total investment of Rs. 1516.62 Lacs. Today, SFL is operating in more than 35 countries worldwide and has more than 150 products in various dosage forms which include Tablets, Capsules, Dry Syrups, and Ointments/Creams, Dry Powder Injections and Ampoules and wide range of Herbal Products. In the process of family settlement, the domestic pharmaceuticals formulations business of SFL was hived off to Syncom Healthcare Limited (SHL) as a result one of the promoters Mr. Ajay Bankda got disassociated with SFL. The company has entered into “Deed of Assignment of Trade Marks” and “Deed of Assignment of Copyright” both dated May 10, 2004 with SHL for transferring & assigning various registered & pending trade marks & copy right for artistic works of various labels from SFL to SHL. SHL took over various domestic brands of SFL as well as the domestic marketing network of SFL. Overseas business has been assigned to SFL for which “Registered User Agreement” and “Licensed User Agreement” both dated May 12, 2004 was entered into between SFL & SHL. For details, refer to the paragraph titled “Other Agreements / Arrangements” in the section titled “History and Corporate Structure of the Company” on page 99. In order to penetrate in to the domestic market and registering ample domestic presence, the company has launched the Cratus division in the year 2006, which caters the demand of Indian markets. In the domestic division, we are getting products outsourced from outside manufacturing units on third party agreement basis. This enables us to take advantage of excise exemption, as these units are located in excise free zone declared by government. The company presently exports goods to Guinea, Ghana, Kenya, Uganda, Sudan, Russia, Maldova, Tanzania, Africa, Azberjan, Nepal and Srilanka. The company has been approved as a supplier to reputed Hospitals and regulatory agencies including Central Medical Stores Organization of Gujarat Govt, Directorate of health services of Delhi Govt. and Central Govt. and supply to and registration of defense services is in its final stages. This results us to generate substantial sales volume. Keeping in view the shifting consumer preferences for the use of herbal products, the


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company is aggressively manufacturing and marketing its herbal products like Colo Vaporex, Colo Inhaler, Edicare, Attom Megacaps, Ecziguard and Yas antacid salt. OUR BUSINESS MODEL

The company has an established product-marketing network covering both domestic and international markets, which enable it to reach its existing and potential customers through network of distributors and dealers spread across the country. For the purpose of marketing the various products, the Company’s business has been categorized as:

• Domestic Division • Exports Division and • Contract Manufacturing Division.

Domestic Division To cater to the domestic market SFL have started a new division in the name of Cratus Life Care. In the domestic division, the company is getting products outsourced from outside manufacturing units on third party basis agreement. By doing this they are able to take advantage of excise exemption, as these units are located in excise free zone declared by government. The company has a total marketing team of more than 238 people in “Cratus” division covering 15 major states in the country.

Exports Division: The export activity of SFL has been increasing and the Company has witnessed an upward trend in its sales through exports from Rs. 2446.91 Lacs in the year 2003-2004 to Rs. 5604.86 Lacs for the year ended on 2007-08. The Company has registered more than 150 products in around 35 countries including Philippines, Vietnam, Myanmar, Sri Lanka, Nepal, Kenya, South – Africa, Nigeria, Ghana, Angola, Liberia, Congo, Haiti, Panama etc. Apart from the already registered products, The Company has lot many products which are under registration in the existing and new markets. More than 95% of the material exported is being manufactured in the company’s own plant located at Pithampur. Contract Manufacturing Division: Apart from manufacturing the products and selling under its own brand, the Company is also into contract manufacturing. The major quantum of this division is from IPCA Laboratories Limited for whom the company is manufacturing products for export as well domestic market. OUR COMPETITIVE STRENGTHS Multi-product capability


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The company has approvals to manufacture 570 formulations. It routinely manufacture 250-270 types of formulations based on market demand and limited formulation lines. However, SFL have versatile manufacturing facilities, which can produce multiple products using a combination of processes. The flexible manufacturing infrastructure helps it to remain flexible in response to changes in market demand. The company has complete infrastructure of formulation development, pilot plant and validation studies and are able to develop efficient specialized processes at short notice. International Standards SFL has been continually WHO GMP certified. This certification, currently valid till May 31, 2010 has been awarded to the company by the State Drugs Controlling Authority, Directorate of Health & Family welfare, Madhya Pradesh. All products manufactured at the manufacturing plant are covered under this certification.

The company is also certified with ISO 9001:2000 certification. This certification is accredited by the Joint Accreditation System of Australia and New Zealand.


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Environment friendly operations We have already set up systems in the existing business which not only meet the present environment norms but are also geared to face the stricter environmental norms when enforced and thereby enabling us to leverage newer business opportunities. Location advantage The manufacturing unit is situated at Pithampur, District Dhar, M.P. The location is in close proximity to infrastructure facilities as under:

� Road – The facility is situated 15 km away from Agra-Bombay National Highway (NH3), which is well connected with major business cities.

� Freight Charges – The developed transportation on the route (NH3) provides competitive freight charges. � Port – Pithampur, being a Dry Port facilitating exports as well as imports. � Manpower – The skilled manpower is easily available in and around the area where the plant is situated thereby

fulfilling all human resources requirement. � Water – Water is one of the fundamental requirements of pharmaceutical companies. The facility is situated

adjacent to the Narmada River Water Supply pipeline, facilitating easy access to river water (fulfilling our requirement of 75,000 liters/day)

Experienced Management Team

The Company is managed by a team of experienced and professional managers with abundant experience of different aspects of pharmaceutical industry including production, quality control, sales, marketing and finance. The promoters and management are qualified approved chemists and have an experience of around 35 years in pharmaceutical industry which give them an edge to manage their existing manpower. Intellectual Property Rights The Company has total 32 trade mark registered in the name of Syncom Formulation (India) Limited for various pharmaceutical formulations. The Company has assigned 33 registered trade marks and 440 trade marks pending registration to Syncom Healthcare Limited vide Deed of Assignment of Trade Marks” on May 10, 2004. However the company has received the rights to use 10 registered trademarks and 139 trade marks pending registration of various pharmaceuticals products for export use. The Company has made further applications for registering 169 trade marks in its own name. Our registered Office situated in Mumbai also houses the Regulatory Affairs Department, which is well equipped with modern library, reference documents, and all other facilities to provide world-class registration dossiers. Research & Development The Strong focus on product development by constantly focusing on R&D has enabled the company to develop high quality products. It also helps the company in attaining an optimum product mix which in turn leads to a better realization. Consistently delivered high quality products For Syncom, quality is not a destination to be reached but a journey with a mission to constantly upgrade organizational capabilities viz Men, Materials and Machines. SFL considers the quality of its products an obligation and pre-requisites of its activities in the health care sector and is committed to build quality into the products being manufactured. The quality assurance department of the company keeps a consistent surveillance on the purchasing, storage, manufacturing, testing, distribution & marketing of its products to ensure compliance with company’s quality goals. The quality management systems are established with the understanding that "Product Quality as well as Performance Quality" is the essential crux for a long term survival of the organization."


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Quality audits are performed at regular intervals by a self inspection team compromising representatives from quality assurance, production, maintenance & HRD departments which ensures that the Standard Operating Procedure are being followed by all the employees. Details of Business of the Company Location The Company has a manufacturing facility at 256-257, Sector 1, Pithampur (District Dhar), M.P 454778. The manufacturing facility was set up on an area measuring 18800 square meter land which is taken on lease of 99 years from M/S M.P Audyogik Kendra Vikas Nigam (Indore) Limited.

The Corporate Office of the Company is situated at 2nd Floor, “Tagore Centre”, (Dawa Bazaar), 13-14, R.N.T Marg, Indore (M.P) 452001. This property is a rented property and belongs to Promoters and their relatives The Registered office of the company is situated at 7, Niraj Industrial Estate, Off Mahakali Caves Road, Andheri (East), Mumbai 400 093 which is also a rented property and belongs to Promoters and their relatives. PLANT, MACHINERY, TECHNOLOGY AND PROCESS Existing Plant and Machinery A) TCL & Ointment, Injectibles Department

S.No. Machinery Name Make Total

1 Sifter (Small,Big,Mechanical) Elicon Pharma/Excel Techno/Clit jemkay 10 Nos

2 RMG ( 650 Ltr,750 ) Saral/Sainath Boiler/Elicon Pharma 4 Nos.

3 FBD ( 350 /100 Kg. ) Elicon Pharma / Pharmac 7 Nos

4 (Multi /Collidal /Community) Mill Ganson/ Clit /Chamunda/Elicon/Fluid pack/ Kothari/ C.I.P. Machinary 14 Nos

5 Octablender ( 2500 ltr,2400 ) Pharma Tech/Anchor mark 4 Nos.

6 Starch Paste kettle (I) IGPE/Indo German 7 Nos

7 Tablet Compression(Giga/Mega Press)

Clit Jemkay/Clit jemkay/Accura Press/Cadmach/Royal Pharma 17 Nos

8 Coating Unit (48"& 60"& Polishing) Modi/Sams mach/Pharma tech/Elicon/Royal pharma/Ganson 16 Nos


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9 Stirrer (I) S.S. Kettle Kothari Pharma/Pharma Chem/Indo German /Vasant 7 Nos

10 Spray Tank with 2 Head (II) Kothari Pharma 2 Nos

11 Tray Drayer Bombey Engg. 3 Nos

12 Compactor Clit Pharma / Mark 2 Nos

13 Octagonal Blender (350/750/2500)Ltr. Gansons /Pharma Tech /Anju Pharma 5 Nos

14 Capsule Filling, M/c.& (Manual / Automatic) Cap Tech/Anchor Pharma/Pharmachem 8 Nos

15 Capsule Polishing m/c. Cap Tech.Engineers/Anchor Pharma 6 Nos

16 En-Runner Pharmfill/ Anchor Mark 1 Nos

17 Pulverizer S.J. Engg. 1 Nos

18 Blister Packing Machine / Belt Precision Gears/Rapid pack/Elmech pack/Pharmapack/Global/Accurate/ Rotawace 23 Nos

19 Strip Sealing Machine / Belt SAMS M/c Tools/Gansons engg. 4 Nos.

20 Bulk Tablet Counting m/c Scorpio , Magnose Ery Con. 2 Nos

21 Tablet Screen Printing m/c Scorpio , Magnose Ery Con. 3 Nos

22 Strip/Blister Defoiling Machine SAMS M/c Tools /Pharmac / PLM Enterprise 7 Nos

23 Shrink Tunnel M/C / (manual) USHER / Clear pack / USA make / Shirnk Packaging 21 Nos

24 Coding Machine (Corton/Label) Nimach 7 Nos

25 Cartinator M/C (Automatic/Manual) Ind Tech. System /Parle Mumbai 2 Nos

26 Bottle/Vial/Ampoule labeling M/C

Ambica Pharma/Akash pharma/H.Strunck/Vikram/A.H.Industries/Ambica Engg. 10 Nos

27 S.S.Tank (1500/2500) Ltrs (Jacketed). Indo German / Pharma Chem 4 Nos.

28 Tank Capacity - (300 / 500)kg./ Buffer Tank Kothari Pharma, Bombay / Anju Pharma 4 Nos.

29 Homogenizer 10 HP/3 HP.(1400 /2800RPM) Pharma Engg./Pharma Chem/Indo German 3 Nos

30 Transfer / Bump pump / Filter Press Indo German / Crystal Automation / Kothari Pharma 8 Nos

31 Bottle/ Ampoule/ Vial/ Bung Washing M/C

Pharma Lab/Petal/Bright india/Ambica engg./Excel Techno 8 Nos

32 Hament / Garment Washing Machine BPL 2 Nos

33 Ampoule /Vial Sterilizing Tunnel Klenzaids, 3 Nos

34 Dry Heat Sterilizer (DHS) M.F. Marketing, Bombay 2 Nos

35 Moist /Heat Sterilizer (Autoclave) M.F. Marketing,/ NAT steel equ. 3 Nos

36 Ampoule/Tube Filling & Sealing M/C Bright India/Cadmach/Squar Pharma 3 Nos

37 Vial Filling & Bunging Machine Laxmi Engg./Ambica Engg./Amba 3 Nos

38 Vial / Cap Sealing Machine Vikram Engg./ Hofliger-karg /Anju Pharma / Amba /Pharma lab /Ambica Engg. 6 Nos

39 Filling Machine Amba / Global Engg./Shimco/ Pharma Lab 4 Nos.

40 Vial Bunging Machine (NBL) Deshera 1 Nos

41

Vessel (Filling/Mfg/Pressure) Cap.(50/75/100/200/500/1000)Ltr

Kothari Pharma/Indo German/Pharma Engg.

25 Nos

42 Membrane Holder - 293 mm/142mm Indo - German 7 Nos

43 Garment Cubical Klenzaids /Dyna 3 Nos

44 Hot Plate Shivani Scientific, Bombay 2 Nos

45 Vial/Ampoule/Tablet Inspection M/C Saral/Petals/Bright india 16 Nos

46 Roundo Tray Packer A.H. Industries, Ahmedabad 3 Nos


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B) Miscellaneous


1 Air Compressor Ingersol Rand /Chicago Pnumatic 5 Nos

2 Boiler Industrial Boiler / Tharmax 2 Nos

3 Bry Air Dehumidifier Bry Air 1 Nos.

4 D.G Set (300KVA / 125KVA) Kirlosker /Grives 2 Nos

5 DX SYSTEM Snehel 5 Nos

6 DM Plant / DW Plant/ P.S.G Ion- Exchaing/ Pharma Lab 5 Nos

7 E.T.P / Softneer Plant Local / Ion- Exchaing 3 Nos

8 V.A.C. 400TR,125TR Thermax 2 Nos

9 AHU SYSTEM Snehel & Blue Star 125 Nos

10 Air Conditioning M/C (Window/ Split) Hitachi & Voltas/ Carrier 32 Nos

11 main Transformer 975 kva Voltamp 1 Nos

12 Control Panel Vasant /Aavag / Kothari Pharma 14 Nos

13 Vacuum Cleaner BPL 2 Nos

14 Hygrometer Zeal 70 Nos

15 Leak test Apparatus Millipore 2 Nos.

16 Lamanir Air Flow /HEPA / Reverse LAF Klenzaids /Dyna 72 Nos

17 Balance (220,600) gm-(1,30,50,150,220,300,400) kg.

Lota Vigita /Kws /Citizen/Penta/Shimadzu/Egale/Libra 26 Nos

C) QC / R & D Department


1 Autoclave (150,50) Ltr. Ketan 2 Nos

2 Atomic Absorption GBC 1 Nos

3 Brookfield Viscometer Brokefield 3 Nos

4 Bulk Density Apparatus Ketan 1 Nos

5 Brusting Strength Apparatus Linix 1 Nos

6 Centrifuge Apparatus Remi 3 Nos

7 Chromatography interface (black box) Ind-Tech inst 1 Nos

8 Conductivity meter Systronics 1 Nos

9 Colony Counter Lapiz 1 Nos

10 Cyclomixer Remi 1 Nos

11 Disintegration test Apparatus Ketan/DBK 2 Nos

12 Dissolution Apparatus Electrolab 2 Nos

13 Flame Photometer Elico Limited 1 Nos

14 Friability Test App. (2 Nos) Ketan 3 Nos

15 Furnace (Electrical Bunsen Burner) Koshiash 1 Nos

16 F.T.I.R. Shimadzu 1 Nos

17 Gas Chromatograph Netal 1 Nos

18 Hardness Tester /( Electronics ) Erweka/Kadmac 2 Nos

19 Heating Mantle Ketan 1 Nos

20 Heating block for B.E.T. Neo Lab 1 Nos


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21 Hot Air Oven Ketan 2 Nos

22 Hot Plate Ketan 2 Nos

23 Heater ( for Ash Content) Techno 4 Nos

24 HPLC Shimadzu 3 Nos

25 Humidity Control Oven Kumar/Remi 2 Nos

26 Hydraulic Press Kimaya 1 Nos

27 Incubator Ketan 2 Nos

28 IR Moisture Remove Apparatus Advance 1 Nos

29 Karl Fischer Titrater VEEGO 1 Nos

30 Laminar Air Flow Klenzaids 3 Nos

31 Leak Test Apparatus Kasablanka 1 Nos

32 Magnetic Stirrer Remi 3 Nos

33 Mechanical Shaker Navjyot 1 Nos

34 Melting Point Apparatus Remi 1 Nos

35 Microscope ( Particle counter ) Blisco 1 Nos

36 Muffle Furnace Ketan 1 Nos

37 PH Meter /Polar meter Systronics/Shimadzu/Aditya 3 Nos

38 Photo Fluorometer Systronics 1 Nos

39 Polar meter Advance 1 Nos

40 Refrigerator Kelvinator 2 Nos

41 Refract meter Advance 1 Nos

42 Telethermometer ( 12 Channel ) Electrolab 1 Nos

43 Thickness Tester Peacock 2 Nos

44 UV - Visible Spectrophometer Systronics/Shimadzu 2 Nos

45 Ultrasonic Apparatus (5.5 Ltrs ) PCi 1 Nos

46 Vacuum Oven ( Digital ) 500 KW Shivani 1 Nos

47 Zone Reader Ketan 1 Nos

Technology Our Company is equipped with state-of-the-art technology. In house R&D is set up to cater the need of process development in drug and pharmaceutical formulations. The benefits derived from R & D are:

- Productivity and quality improvement - Improved process performance and better – cost management - Enhancement of safety and better environmental protection


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Manufacturing Process � Injectibles Injectibles Manufacturing The process of manufacturing of Injectibles and ear/eye drops starts from washing of ampoules/vials and sterilization of these ampoules & vials. After washing and sterilization, these ampoules and vials are filled with solution or powder, prepared as per the composition of formula, with the help of filling machine. The filing machines are adjusted to give a desired quantity of solution or powder. The ampoules / vials are then sealed and put to visual inspection. These are then sent to packing department where these ampoules / vials are labeled and packed.

Flow Chart Process


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� Tablets Tablet Manufacturing For tablet manufacturing, the ingredients are taken as per the composition and are passed through multi mill for getting fine powder. This powder is sieved in a fine mesh. This material is then put into mass mixer for formation of granules. These granules are dried on a specific temperature. The dried granules are then fed into the hopper of rotary punching machine, where tablets are made. These tablets are then checked for disintegration time and friability test. The tablets are then coated with sweetening material. After the coating, these are dried and then sent for packing into strips.

Flow Chart Process


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� Capsules

Capsule Manufacturing

The process of capsule making starts with mixing of the raw material in a drum mixer for homogeneous mixing. Then these powders are filled in empty gelatine capsules with the help of capsules filling machines. After filling, the capsules are locked and wiped for cleanliness. These capsules are then sent for inspection. After approval by quality control department they are sent for packing.

Flow Chart Process


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� Ointment & Cream Ointment Manufacturing For manufacturing ointment the base material is melted by heating and mixed with drugs as per the composition. Some essence and flavors are also added and the mixture is stirred till all the ingredients are properly mixed. It is then cooled to room temperature and filled in pre-printed tubes with the help of tube filling machines.

Flow Chart Process


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� Liquids Liquid Manufacturing In the first step, dispension of the raw materials (Active and Excipients) for particular product on the basis of Raw material sheet. In a syrup preparation tank, collection of the Purified water & addition of the preservative and sugar one by one with continuous stirring and check the clarity and wt/ml. Next, to check clarity and wt/ml of Sugar syrup, filter it with the help of Filter press and send it into manufacturing tank and cool it. In this manufacturing tank, add active ingredient one by one with continuous stirring until it dissolves completely. With continuous stirring, colouring material is added into the manufacturing Tank. In this step first pH is adjusted within limits and finally makes up volume using purified water with continuous stirring. After getting approval from QC, start of filling. Time to time, inspection of the fill volume of bottles is carried on, Clarity, Leak test, Text matter according to Standard Parameter. Packing is started of all the Bottles in appropriate carton, inner and Shipper and it is sent for final testing.

Flow Chart Process


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� Dry Powder Dry Powder Manufacturing For preparing dry syrup the sugar is pulverized in multi mill for making course powder. This powder is passed through sieve, and then ampicillin tryhydrate, colours and essence are added to this powder. These all ingredients are mixed in a mass mixer for proper mixing. The powder is then dried at a specific temperature and filled into empty bottles. Bottles are sealed, labeled and packed.

Flow Chart Process


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Collaborations: The Company has so far not entered into any technical or financial collaboration agreement. Infrastructure facilities for raw materials and utilities

Raw Material Requirement The basic raw material required to manufacture formulation is basic drug/bulk drug comprising of both active and non-active ingredients. The active raw materials are required in bulk quantities whereas non-active (diluents / excepients) is required in small quantities. The Company is having a system of vendors’ approval for procurement of raw material items are purchased only from such approval vendors. At least three vendors of repute are approved for each and every raw material items so as to ensure timely supplies. The raw materials items are procured from time to time as per the production planning. All the raw materials items are available in India in abundance. However, The Company also sometimes use imported raw material. The ratio of imported and indigenous raw material consumed in value terms was 9.58% and 90.42% respectively for the financial year ended March 31,2008. The imported raw material is purchased both under general license schemes and advance license schemes. The major raw materials consumed by the company includes Paracetamol, Ibuprofen, Chloroquine Phosphate, etc. (constituting 38.91% of the total raw materials cost) However, no long-term contract has been entered into with any of the suppliers. The normal lead-time is as under: Local Raw Materials: 1-30 days Empty Gelatin Capsules: 30-45 days Import Raw Materials: 30-60 days In view of reputation enjoyed by the Company in the market, the raw material items are available at the most competitive rates. The suppliers are having long-term relationship with the Company. Most of the purchases are on clean credit basis from 60-120 days without any letter of credit. There is no supply bottleneck for raw material items. Utilities

1. Power The total requirement of the existing facility is 850KVA. The Company has a sanctioned load of 850 KVA with a contracted load of 850 KVA from Madhya Pradesh State Electricity Board. In addition The Company has 2 DG sets of 250 KVA & 125 KVA each as a stand by during power failure.

2. Water Our current water requirement is 75,000 liters/day for manufacturing and other utilities, which are sourced from Narmada River pipeline and from two bore wells. The Company also have an underground water storage tank of 1,00,000 liters capacity; before using the same it is purified using Sodium Hypochlorite. The potable water after treatment is converted to soft water, purified water and water for Injection. The soft water is exclusively used for the utility equipments. The purified water & water for injection is used for the production purposes.

3. Ventilation and Air conditioning systems Heat ventilation and Air conditioning systems have been supplied by and installed by Tharmex Ltd. The factory has forced air ventilation system by which air is filtered through 5µ filters and used in all operational area. The sterile areas are air conditioned with centralized AHU’s and HVAC system. Separate air handling units are provided for each area to avoid cross contamination and Pressure gradient is maintained in areas to avoid outside contamination


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4. Manpower

The details of total existing manpower employed (at works) as on September 30, 2008 is as under:

Sr.No. Category Total 1 Managerial 42 2 Production Skilled 73 3 Unskilled 139 4 Quality Control 9 5 Technical 68 6 Clerical 38 Total 369

The details of total existing manpower (other than works) as on September 30, 2008 is as under:

Finance & Account

Administration & HR

Marketing Total

Registered Office

2 18 3 23

Cratus Division 0 4 234 238 Corporate Office

6 13 0 19

Total 8 35 237 280

Nature of Products and End Users: We successfully develop and market innovative products that improve enhance and extend human life and we pride ourselves on delivering total quality products at an affordable price. We manufacture a range of products, which includes Tablets, Capsules, Dry powder Injectables (vials/ampoules both liquid and dry), Ointment and Inhaler. The products manufactured by us are used by medical professional and other healthcare industries to cure the diseases and for human well being. We have an established product-marketing network covering both domestic and international markets, which enable us to reach our existing and potential customers through network of distributors and dealers spread across the country.

Major Finished Product

Finished Products during fiscal 2008

Product Name Unit Installed Capacity

Production Quantity

Purchase Quantity

Sales Quantity

Sales Value (Rs. Crs)

Formulations (Tablets)

Thousands Numbers

5,400,000 2,599,381.00 116721.00 2,705,685.00 43.36

Formulation (Capsules)

Thousands Numbers

600,000 309,368.00 11357.00 315,792.00 10.63

Liquids Litres 1,250,000 408,370.00 132327.00 541,547.00 5.87 Injectables Thousands

Numbers 68,500 4,014.00 Nil 3,899.00 2.35

Ointments Kgs 157,500 48,637.00 73909.00 119,480.00 2.25 Dry Powders Kgs 300,000 11,037.00 10753.00 21,301.00 0.80

Inhalers Thousands Numbers

500 84.00 85.00 0.05

Chemicals & Drugs (Basic)

Nil Nil 2.00 2.00 0.04


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Product / Technology type(s) covered: - Generics - FP (finished products) - OTC (over the counter drugs) - Pharmaceuticals / Therapeutics - Phyto - Nutritionals / Vitamins - Prescription drugs (Rx) - Proteins On the basis of dosage forms the products are categorized into five product lines viz. tablets, Capsules, Liquid Injections, Dry Powder Injections and Ointment.

Dosage Forms Product Name Markets

Rofucef Tablet International Aciril tablet International Shie Kit Domestic

Tablets

Hemocrat Domestic Syncom B–Complex Caps International Cefnixal Capsules International Soyon Plus Capsules Domestic

Capsules

Eucobal Capsules Domestic Anergy Syrup International Profeed Syrup International Icrate Syrup Domestic

Liquid

Cratex Syrup Domestic Amoxytop International Fabrimol International Increapen International

Dry Powder

Ampitop International Hydrocrat International Increpean International Rophinox International

Injectables

Rofin International Fastheat International Upheat International Relivac Domestic

Ointment

Korishma Domestic Medicold International Biobreathe International

Inhaler

Gripe International Therapeutic targets: - Arthritis / Rheumato - Cough / Cold - Dermatology - Diabetes - Gastrointestinal - Geriatrics - Infectious Diseases - Men's Health - Ophthalmology


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- Pain - Pediatrics - Tonics - Women's Health Markets Covered

a. Head Quarter : India b. Continent(s) active : Africa, Asia, Central/South America c. Countries active : Nepal, Bhutan, Nigeria, Haiti, Philippines, Vietnam Competition The pharmaceutical industry is highly fragmented with large number of players in organized and unorganized sectors. We face competition from companies both in India and abroad. The leading 250 pharmaceuticals companies control 70% of the market .There are 250 large units and about 8000 small scale units, which form the core of the pharmaceuticals industry in India Any WHO GMP certified Pharmaceutical formulator having spare capacity & complying with The Drugs and Cosmetics Act, 1940 is a potential competitor and to meet the competition we are striving of various business activities so as to achieve diverse product portfolio, economies of scale and cost competitiveness. Marketing Arrangements: Marketing and distribution are the major activities for pharmaceutical companies and the overall success of a pharmaceuticals company is dependent to a great extent on the efficiency of its marketing and distribution function. The marketing operations of our company have grown both quantitatively and qualitatively over the last few years. We believe that our Company has carved out a name for itself in the overseas market and for the domestic market, we had recently launched a dedicated unit viz Cratus Life care. “Cratus” is now a developing name and enjoys a good image in the domestic market and it is expected that this division shall become growth driver of the company in coming years. The company has build up a marketing set up in the following manner in order to capture the major geographical segment in domestic as well as overseas market and achieve the multiple growths for the company:


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MARKETING SET UP

Marketing Strategy Marketing Strategy in Export Presently SFL exports to more than 35 countries round the globe. The Company has around 150 products registered and more than 100 products under registration which are expected to get registered in the near period of time. SFL arranges for the required dossier and samples to get itself and its products registered. This is a very lengthy and costly procedure and it varies substantially from country to country. Many countries also required approval of manufacturing unit by the local drug authority of their country. A team of inspectors from their Drug Authority visit’s our plant and make a detailed scrutiny of the company’s documentation procedure, manufacturing procedure & quality control standards. Based on their evaluation it gets the permission to get its products registered.

MANAGING DIRECTOR

Marketing Manager – Domestic – Ethical Division

Exports

VICE PRESIDENT

Sales Manager – 2 nos

Regional Sales Manager– 11 nos

Area Sales Manager– 35 Nos

Business Development Manager– 182 Nos

Export Manager – SE

Asia

Export Manager – Africa /

Latin America

Support Staff


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Once the product is registered, the company can start marketing its products in the country in association with the distributor, which it has carefully selected. SFL has developed a marketing team under the distributor and support distributor with promotional material and gift articles to establish its products in the market. SFL provides useful product information to the Medical Representatives (MR) and impart training to help them promote the product more effectively. The Company organizes doctors and medical professionals meet in the country during its visit and explain them about its company and its product. SFL have made its marketing strategy very flexible and it moulds according to the requirement of the country. This is necessary because the culture and market of countries vary substantially and one strategy could not be successful in all countries. Domestic Distribution: In domestic market in Ethical division which the Company markets under Cratus Life care (A division of Syncom Formulations India Limited), The Company have appointed 1 Super distributor in Indore who caters to 22 distributors spread in various states. These 22 distributors cater to more than 350 Stockist and further they supply to retailer. By appointing one super distributor, the company has been using the expertise and infrastructure in Logistic which has helped to reduce the heavy expenditure in setting up a new logistic department. In this division the Company has a team of 250 people spread in more than 15 states across India. “Cratus” in spite of being in the launching phase has created good reputation with doctors. Contract Manufacturing

Many R&D based multinational pharmaceutical companies are expected to be affected by the number of drugs going off patent. To maintain their growth momentum, the affected companies have to reduce their manufacturing costs. To achieve this cost reduction, these companies are expected to increasingly outsource part of manufacturing of bulk actives and formulations. This increases the prospects for countries that offer a low-cost manufacturing base, India being one of them. The Company intends to expand their contract manufacturing activities to include large multinational companies. EXPORT POSSIBILITY & OBLIGATION Our Company is currently exporting to various countries like Guinea, Ghana, Kenya, Uganda, Sudan, Russia, Maldova, Tanzania, Africa, Azberjan, Nepal, Srilanka, etc. We are constantly tapping new markets to have tie ups with reputed distributors in view of long term relationship. The Company’s drive is to expand its business and provide the best to many other countries of the world.

The Company has an export obligation towards advance licenses which it has acquired to import goods. Therefore as on 30.04.2009 the Company has an export obligation to the tune of Rs. 53.48 Lacs and the details are herein below:

Sr. No.

Advance License No.

Advance License. Date

Due Date of License

Export Obligation (Rs. In Lacs)

1. 1110014536 15.12.06

14.12.2008 renewed upto 14.05.09)

21.00

2. 1110015456

05.06.07

04.06.2009 0.13

3. 1110017004

25.03.08

24.03.2010

15.38

4. 1110017780

14.07.08

13.07.2010

16.97

TOTAL 53.48


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BUSINESS STRATEGY Increase in product portfolio At present the Company is manufacturing number of products in OTC, Generics, Ethical and Herbals segments. The Company will further add other products in the line by venturing in to segments for drugs used in lifestyle disorder segments like diabetes, dermatology and gynecology by launching the products and promoting them ethically. Be cost competitive by increasing our capacity to benefit from economies of scale We intend to be cost effective in our products by scaling up the manufacturing operations and through bulk purchasing of some of the raw materials and further by implementing automation processes. Entry into regulated markets We intend to set up regulated market compliant manufacturing facility which would enable us to tap into these markets. Widening Presence in Domestic Market During the year 2004 In the process of family settlement, the domestic pharmaceuticals formulations business of SFL was hived off to Syncom Healthcare Limited (SHL) and various trademarks has been assigned to SHL through Deed of Assignment of Trade Marks” and “Deed of Assignment of Copyright” and Overseas business has been assigned to SFL through “Registered User Agreement” and “Licensed User Agreement” Accordingly he major turnover of the company accounts of overseas business. The company now intends to tap the lucrative domestic market in a major way. As a pert of this comprehensive strategy company has recently launched its division namely “Cratus Life care” Cratus is now building its image in domestic market and under this division we are getting products outsourced from outside manufacturing units on third party basis agreement. This enables us take advantage of excise exemption, as these units are located in excise free zone declared by government. The company now intends to multiply its domestic segment in coming years Increase in contract manufacturing activities The Company will increase the volume of business from the existing contract manufacturing parties for whom we are presently manufacturing the products for them under their brand. We also propose to add more contract manufacturing parties for contract manufacturing of the products for them. Many R & D based multinational pharmaceutical companies are expected to be affected by the number of drugs going off patent. To maintain their growth momentum, the affected companies have to reduce their manufacturing costs. To achieve this cost reduction, these companies are expected to increasingly outsource part of manufacturing of bulk actives and formulations. This increases the prospects for countries that offer a low cost manufacturing base, India being one of them. We intend to expand our contract manufacturing activities to include large multinational companies as our Customers. Focus on Environmental Protection We are committed to provide a safe, clean and healthy environment. We focus on minimizing the generation of waste water and air emissions, thereby preventing pollution at source and that can be achieved by adopting cleaner technologies, reducing the use of natural resources and recovering and recycling wastes. SFL has obtained necessary Environmental Clearance, for detail please refer “Government & Other Statutory Approvals” on page No 159 of this letter of offer.


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Capacity & Capacity Utilisation

2007-08 2006-07 2005-06

Product Line

Unit Installed Capacity

Capacity Utilization

Installed Capacity


Installed Capacity


Tablets ‘000 Nos

54,00,000 25,99,381 25,00,000 20,93,492 20,00,000 18,43,459

Capsules ‘000 Nos

6,00,000 3,09,368 5,00,000 2,74,007 5,00,000 2,20,861

Liquid Ltrs 12,50,000 4,08,370 12,50,000 4,57,950 12,50,000 4,14,353

Dry Powder Kgs 3,00,000 11,037 3,00,000 6,242 3,00,000 13,505

Injectibles ‘000 Nos

68,500 4,014 68,500 1,087

68,500 1,479

Ointment Kgs 1,57,500 48,637 1,57,500 37,768 1,57,500 26,528

Inhalers ‘ooo Nos

500 84 500 116 500 85

Note:

• Installed capacity is based on single shift. • Number of Working days in a year is 330.

Proposed Capacity Utilisation Product Line Unit 2008-09 2009-10 2010-11

Tablets ‘000 Nos 3106757 3417433 3588304 Capsules ‘000 Nos 365322 401854 421947 Dry Powder Kgs 12658 13924 14620 Liquid Ltrs 491064 540170 567179 Injectable ‘000 Nos 4679 5147 5404 Ointment Kgs 54685 60154 63161 Inhalers ‘000 Nos 102 112 118 Property The details of the properties occupied/owned by the Company are as under: Sr. No Particulars Area Nature of Ownership

1 Registered Office situated at 7, Niraj Industrial Estate, Off Mahakali Caves Road, Andheri (East), Mumbai 400 093

Land Area measuring 3748.50 Square feet

Rented

2 Works situated at 256-257, Sector 1, Pithampur (District Dhar), M.P 454778

Land Area measuring 18800 sq. meter

Leasehold land for 99 Years from M.P. Audyogik Kendra Vikas Nigam (Indore) Ltd.

3 Corporate Office situated at 2nd Floor, “Tagore Centre”, (Dawa Bazaar), 13-14, R.N.T Marg, Indore (M.P) 452001

Land Area measuring 6537 Square feet

Rented


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Purchase of the Property There is no property which we have purchased or acquired or propose to purchase or acquire, which is to be paid for wholly or partly out of the proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of this Letter of Offer, other than property in respect of which: • The contracts for the purchase or acquisition were entered into in the ordinary course of the business, and the contracts were not entered into in contemplation of the Issue nor is the Issue contemplated in consequence of the contracts; or • The amount of the purchase money is not material. Except as stated in the section titled “Related Party Transactions” of page no.120 of the Letter of Offer, the Company has not purchased/acquired any property in which any of its promoters and/or Directors, have any direct or indirect interest in any payment made thereof. Quality SFL considers the quality of its products an obligation and prerequisite to its activities in the health care sector and is committed to build quality into the products being manufactured. The management is committed to take all appropriate measures to ensure the manufacture of products of high quality, which will be safe for human consumption and will have consistent properties. SFL promotes the consciousness of quality among its employees at all levels and departments and provides its qualified and trained workforce with constant training to upgrade their knowledge and stay conversant with state of the art technology. The quality assurance department of the company keeps a constant surveillance on the purchasing, storage, manufacturing, testing, distribution and marketing of its products to ensure compliance with the company’s quality goals. SFL was certified by World Health Organisation (WHO) for Good Manufacturing Practices (GMP). It has also received ISO 9001: 2000 certification. Insurance Policies

We maintain insurance for standard fire and special perils policy, which provides insurance cover against loss or damage by fire, explosion, riot and strikes, terrorism, burglary, theft and robbery, which we believe is in accordance with customary industry practices. However, the amount of our insurance coverage may be less than the replacement cost of all covered property and may not be sufficient to cover all financial losses that we may suffer should a risk materialize. Further, there are many events that could cause significant damages to our operations, or expose us to third-party liabilities, whether or not known to us, for which we may not be adequately insured. If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our results of operations and financial position. We have taken different insurance policies covering the following


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Policy type Standard Fire & Special Perils

Property insured Building & Plant and Machinery situated at Pithampur District, District Dhar, M.P

Coverage Earthquake with Plinth and Foundation. Terrorism Excluded, reinstatement Value policy

Policy no. OG-08-2302-4001-00001298 (Renewed)

Agency Bajaj Allianz General Insurance Company Limited

Sum insured (Rs) Rs. 15,00,00,000

Total premium Rs. 1,14,918.00

Claim, if any Nil

From May-15-2009

Valid up to May-14-2010

Policy type Standard Fire & Special Perils Policy – Stock Declaration

Property insured Raw Material, Finished Goods and Packing Material located at 251-257, Pithampur District, District Dhar, M.P

Coverage Stock Declaration

Policy no. OG-08-2302-4005-00000012 (Renewed)

Agency Bajaj Allianz General Insurance Company Limited

Sum insured (Rs) Rs. 1,00,00,000

Total premium Rs. 7,776.00

Claim, if any Nil

From May-15-2009

Valid upto May-14-2010


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KEY INDUSTRY REGULATIONS OR POLICIES The following description is a summary of relevant regulations and policies as prescribed by the Government of India that are applicable to us. The information detailed in this chapter has been obtained from publications available in the public domain. The regulations set out below are not exhaustive and this section is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional legal advice. Drugs and Cosmetics Act, 1940 Drugs and Cosmetics Act, 1940 governs and regulates the manufacture, sale, stock, import, export, distribution of drugs. This legislation requires a company inter alia engaged in any of the above activities to obtain licenses for the manufacture, sale, distribution, and import of drugs, as the case may be, from the Drugs Controller General of India and to maintain records of the same. In order to obtain a License for a particular drug, the approval of the Central Drugs Laboratory certifying the standards of quality is required for which the product is subjected to series of tests involving different stages and procedures. In case of APIs, the Drug Controller General of India issues manufacturing licenses. These manufacturing and marketing Licenses are submitted by the company seeking to produce the drug to the state level authority, the Drug Control Administration which clears the drug for manufacturing and marketing. The Drug Control Administration also provides the approval for the technical staff as per the drugs and Cosmetics Act and rules framed under the legislation abiding by WHO inspection norms. Drugs and Cosmetics Rules, 1945 These Rules have been framed under the Drugs and Cosmetics Act, 1940. These Rules, inter alia, provide that for the purpose of importing drugs import license and registration certificate is required from the Licensing Authority. The authorization by a manufacturer to his agent in India is documented by a Power of Attorney executed and authenticated in India before a 1st class Magistrate or in the country of origin before such equivalent authority. The Rules also provides for the approval of the Technical staff as per the Drugs and Cosmetics Act and rules framed under the legislation abiding by the World Health Organization inspection norms. The Drugs (Prices Control) Order, 1995 The Drugs (Prices Control) Order 1995 was promulgated under the Essential Commodities Act, 1955. Under this Order, the Government of India regulates the equitable distribution and increase in supply of a bulk drugs, and regulates the availability and fair price mechanism at which bulk drugs are sold. A manufacturer has to submit a list of all the Scheduled and Non-Scheduled drugs produced by it and also the cost of each of the bulk drugs. This Order is to be read in consonance with the Drugs and Cosmetics Act, 1940. The Government of India also fixes the ceiling price of scheduled formulations, keeping in view the cost or efficiency, or both of major manufacturers of such formulations. Such price consequently operates as the ceiling sale price for all packs including those sold under generic name. The authority appointed under the Order for regulation and fixation of drug prices is the “National Pharmaceuticals Pricing Authority” (NPPA). Upon the recommendation of the NPPA, the Ministry of Chemicals and Fertilizers fixes a ceiling price of the API and issues notifications in respect of drugs which are scheduled drugs and formulations. The Government of India has the power under the Order to recover charges charged by companies in excess to the notified prices. A Gazetted Officer of the Central Government or State Government so appointed for the purposes of this Act is empowered to enter and search any place, seize any drug to ensure compliance with this order. Contravention of any provisions of this Order is punishable in accordance with the provisions of the Essential Commodities Act. Drugs and Magic Remedies Act, 1954 The legislation prohibits the advertising of a drug in such a way that the advertisement contains any matter which directly or indirectly misrepresents the true character of the drug or makes a false claim or a claim which is false or misleading in any material particulars. The legislation also expressly prohibits the import or export of any document containing an advertisement relating to the same. The contravention of any provisions of this Act has been made subject to punishments as specified therein.


97

Narcotic Drug & Psychotropic Substances Act The Narcotic Drug & Psychotropic Substances Act controls operations relating to narcotic drugs like opium, cannabis, and psychotropic materials. Poisons Act The Provisions of the Poisons Act restrict the use of poisons. The poisonous substances covered by the Act are classified into two categories. These include aconite, arsenic, morphine, heroin, essential oil of almonds, oxalic acid, poppies, chloroform, zinc chloride, etc. Patent Regulation The protection and enforcement of patent rights in India are essentially governed by the Patents Act, 2005 (including the rules framed there under), as amended from time to time, the Patent Co-operation Treaty (PCT) and related international conventions to which India is a signatory. A patent unlike a trademark or copyright is territorial in nature meaning that an invention (be it product or process) that is patented in one country does not enjoy protection as a patented invention in any other country. The PCT is an international treaty between more than 125 Paris Convention countries, administered by the World Intellectual Property Organization (WIPO). The PCT makes it possible to seek patent protection for an invention simultaneously in each of a large number of countries by filing a single “international” patent application instead of filing several separate national or regional patent applications. The granting of patents remains under the control of the national or regional patent Offices called the “national phase”. In keeping with its commitment as a signatory of Trade Related Aspects Intellectual Property Rights (TRIPs) in 1995, India is required to recognise product patents in addition to process patents in respect of pharmaceutical products. Under the amended Patents Act 1970, patents in India can be granted for a product or a process. Under the new Indian patent regime, patent protection has been increased from seven years to twenty years. Environmental Regulations In India, regulation and enforcement of environment protection and safety is governed by three major central regulations namely Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control (Prevention and Control of Pollution) Act, 1981, and the Environment (Protection) Act, 1986. The main purpose of these legislations is to regulate prevent and control pollution, by the setting up, inter alia of national and regional Pollution Control Boards (PCBs) which monitor and enforce standards and norms in relation to air, water pollution and other kinds of wastes causing environmental damage. In addition, the Environment (Protection) Act, 1986 also prescribes rules for the management and disposal of hazardous industrial wastes as governed by Hazardous Wastes (Management and Handling) Rules, 1989 and Bio- Medical Waste (Management and Handling) Rules, 1998. Further all proposals for setting up, expansion or modernization are evaluated in terms of environment assessment impact, by the Ministry of Environment and Forests, which accords the necessary clearance for projects after evaluation of Environment Impact Assessment. Foreign Direct Investment: Foreign Direct Investment up to 100% is permitted, subject to stipulations laid down from time to time in the Industrial Policy, through the automatic route in the case of all bulk drugs cleared by Drug Controller General (India), all their intermediates and formulations, except those, referred to in paragraph above, kept under industrial licensing. Foreign Technology Agreements: Automatic approval for Foreign Technology Agreements is available in the case of all bulk drugs cleared by Drug Controller General (India), all their intermediates and formulations, except those, referred to in Para above, kept under industrial licensing for which a special procedure prescribed by the Government is to be followed. Excise Regulations:


98

The Central Excise Act,1944 seeks to impose an excise duty on specified excisable goods which are produced or manufactured in India. However the Government has the power to exempt certain specified goods from excise duty, by notification. The rate at which the said duty is sought to be imposed is contained in the Central Excise Tariff Act. Customs Regulations: All imports to the country or exports from the country are subject to duties under the Customs Act,1962 at the rates specified under the Customs Tariff Act,1975. However, the Government has the power to exempt certain specified goods from excise duty, by notification. Labour Regulations Depending upon the nature of the projects undertaken by the Company, applicable environmental and Labor Laws and regulations include the following:

• Contract Labor (Regulation and Abolition) Act, 1970; • Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; • Payment of Gratuity Act, 1972; • Payment of Bonus Act, 1965; • The Minimum Wages Act, 1948; • Employees State Insurance Act, 1948; • The Maternity Benefits Act, 1961.


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HISTORY AND CORPORATE STRUCTURE OF THE COMPANY

1. History & Background of the Company Syncom Formulations (India) Limited (SFL) was originally incorporated as a Private limited company in the name of Syncom Formulations (India) Private Limited vide certificate of Incorporation No 047759 on June 21, 1988 by with Registrar of Companies, Mumbai, Maharashtra. The company was promoted by Mr. Kedarmal Bankda, Mr. Ajay Kumar Bankda & Mr. Vijay Kumar Bankda with the object of manufacturing, marketing, dealership, importing, exporting & job work of pharmaceuticals, medicinal and other Industrial preparation & formulations under its own brands in Ethical, OTC, Generic and Herbal market segment. Our company became a public limited company and name of our company has been changed to Syncom Formulations (India) Limited with effect from July 9, 1992. The fresh certificate of incorporation consequent to the change in name was obtained on July 9, 1992 by the Registrar of Companies, Mumbai, Maharashtra, The company has came out with a Initial Public Offer in the year of 1994 with the object of setting up a new plant for manufacturing pharmaceutical formulations at Pithampur, Madhya Pradesh. Consequent to the IPO the shares of company were listed on the floor of Bombay Stock Exchange Limited (BSE), Ahmedabad Stock Exchange Limited (ASE), Madhya Pradesh Stock Exchange Limited (MPSE), Delhi Stock Exchange Association Limited (DSE). Due to thin volume of trading, the company has voluntarily delisted its shares from ASE on July 8, 2004, MPSE on May 29, 2008 & DSE on September 2, 2004. In the process of family settlement, the domestic pharmaceuticals formulations business of SFL was hived off to Syncom Healthcare Limited (SHL) as a result one of the promoters Mr. Ajay Bankda got disassociated with SFL. The company has entered into “Deed of Assignment of Trade Marks” and “Deed of Assignment of Copyright” both dated May 10, 2004 with SHL for transferring & assigning various registered & pending trade marks & copy right for artistic works of various labels from SFL to SHL. SHL took over various domestic brands of SFL as well as the domestic marketing network of SFL. Overseas business has been assigned to SFL for which “Registered User Agreement” and “Licensed User Agreement” both dated May 12, 2004 was entered into between SFL & SHL. For details, refer to the paragraph titled “Other Agreements / Arrangements” in the section titled “History and Corporate Structure of the Company” on page 99. The registered office of the company is situated at 7, Niraj Industrial Estate, Off Mahakali Caves Road, Andheri (East), Mumbai 400 093. It has manufacturing unit at Pithampur, District Dhar, Madhya Pradesh which has a state of art manufacturing facility with WHO: GMP & ISO 9001 accreditation. SFL Quality policy is to upgrade Organisational capabilities viz. Men, Materials & Machines in order to consistently provide Quality products. The Promoters of the company are Kedarmal Bankda and Vijay Kumar Bankda. The company is engaged in the business of pharmaceutical formulations. It manufactures range of products in various dosage forms and markets them in various countries. In 1994, the company undertook an expansion programme of setting up a new plant for manufacturing pharmaceutical formulations at Pithampur, Madhya Pradesh. The project which was financed through a public issue made in Jan 1994 was completed in 1995. During the year 1997-98, the Company has further diversified into Ethical Operations by introducing the range of prescription formulations. During the year 1998-99 there has been huge expansion of installed capacity and production base. Further the company introduced products in the generic, OTC and Ethical Divisions. Further the company introduced products in the generic, OTC and Ethical Divisions. During the year 2007-08 the Company has completed modernization and expansion of Project in Pithampur unit, District Dhar, M.P with a total investment of Rs. 1516.62 Lacs. In domestic market, the company markets under the banner of Cratus Life Care (“Cratus”) which is a marketing division of Syncom Formulations (India) Ltd.


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2. Key Events

3. Changes in Registered Office of our Company

Previous address New Address Date of Change

10, Nilanjana, Marve Road, Malad (W), Mumbai 400093

7, Niraj Industrial Estate, Off Mahakali Caves Road, Andheri (East), Mumbai, Maharashtra – 400093

October 26, 1998

4. Main Objects of the Company

01. To carry on the business of manufacturers, marketing dealers, job works, processors, sellers, retailers, importers and exporters of pharmaceutical, medicinal and other industrial preparation, drugs, compounds, medicines, allophethec, ayurvedic, homeopathic, unani and patents medicines, pharmaceutical products, fine chemicals, surgical goods, lotions, cosmetics, formulation, pills and ointment.

02. To carry on business activities to generate, receive, produce, buy, sell, resell, acquire, use, transmit, accumulate,

employ, distribute, develop, handle, protect, supply and to act as agent, broker, representative, consultants, collaborator, or otherwise to deal in electric power in all its branches of such place or places as may be permitted by appropriate authorities by establishments of Wind Power Plant, Thermal Power Plants, Hydraulic Power Plants, and other power plants based on any source of energy as may be developed or invented in future and run all necessary power substations, work shops, repair shops, wires, cables, transmission lines, accumulators, street lights for the purpose of conservation, distribution, and supply of electricity of participating industries, State Electricity Boards for industrial, commercial, domestic, public and other purposes and also to provide regular services for repairing and maintenance of all distribution and supply lines and to acquire concessions, facilities or licences from electricity boards, government, semi governments or local authorities for generation, distribution, production, transmission or use of electric power and to takeover alongwith all moveable and immovable properties, the existing facilities on mutually agreed terms from aforesaid authorities and to do all incidental acts and things necessary for the attainment of foregoing objects.

Year Major Events and Achievements

1988 Incorporated as Syncom Formulations (India) Private Limited

1992 Conversion in to Public Limited Company

1994 Initial Public Offering of around 25.37 Lakhs Equity shares of Rs 10/- each for cash at a premium of Rs. 5/- share.

1999 Expansion of installed capacity and production base at Pithampur unit, District Dhar, M.P

2003 Agreement with IPCA for Contract Manufacturing

2003 ISO 9001:2000 Certification

2003 WHO:GMP Certification

2006 Launching of Domestic Marketing Division “Cratus”

2008 Completion of modernization and expansion of Project in Pithampur unit, District Dhar, M.P


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03. To carry on the business of contractors, sub-contractors, quasi contractors whether for government or for semi-government bodies or corporation or company or society or body corporate or firms or individuals or schools or clubs or other bodies or private works and to undertake contracts and sub contracts relating to construction, modification, repairing, alteration, construction, removal, redecoration, redesigning, enlarging, improving and designing of civil work, building for whatever use, roads, approach roads, under the BOT projects of various State Govt., National Highway Authority of India, Housing Board, Nagar Nigam etc. and to prepare and develop streets, circles, squares, parks, gardens, statues, parking places, bridges, dams, water courses and reservoirs, tunnel, earth works, sewers, tanks, drains, sewage, light houses, towers, transmission towers, pipe lines, under ground cables, railway tracks, railway sidings, run ways yards, stock yards, culverts, channels whether on turnkey basis or on labour contracts or otherwise and to carry on the business activities as developers of land, colonies, sheds, buildings, structures, residential plots, commercial plots, industrial plots and sheds, roads, bridges, channels, culverts and to acquire, purchase, take on lease, exchange, hire or otherwise all types of land, and properties of any tenure or any interest in the same or to erect and construct houses, building, multi-stories, or work for every descriptions on any land of the company or upon other land or property and to pull down re-build, enlarge, alter, and improve, existing houses, building or work thereon and to purchasing and selling of houses and plots free hold or other house property, building, or lands or interest.

04. To buy, sell, hold, invest acquire whether by way of direct subscription, market purchase or otherwise, trade and

deal in all types of shares, debenture, debenture stock, bonds, gold bonds, unit, mutual funds, infrastructure bonds of by any public or private company, body corporate, government, state, dominion, sovereign, ruler, commissioners, public body or authority supreme, municipal, local or otherwise firm or person whether in India or elsewhere.

05. To carry on businesses activities relating to sell, purchase, import, export, consignments agent, contractor, broker,

dealer, stockist, transporter, manufacturer, and to acquire and operate mines, washery etc, for Coal, coke and lignite, lime, gypsum, iron ore, copper and other metals.

Changes in Memorandum of Association

Date of Passing of Resolution Changes

May 07, 1992 Increase in Authorised Share Capital of the company from INR 0.10 Crore to INR 1 Crore. Alteration of Clause V of MOA

July 9, 1992 Change in name of the company from Syncom Formulations (India) Pvt. Ltd to Syncom Formulations (India ) Ltd. Alteration of Name Clause of MOA

December 1, 1992 Increase in Authorised Share Capital of the company from INR 1 Crore to INR 3.5 Crore. Alteration of Clause V of MOA

May 20, 1996 Increase in Authorised Share Capital of the company from INR 3.5 Crore to INR 5 Crore. Alteration of Clause V of MOA

September 27, 1999 Increase in Authorised Share Capital of the company from INR 5 Crore to INR 6 Crore. Alteration of Clause V of MOA

September 30, 2005 New clause no. 02 to 05 have been inserted after existing Clause No. IIIA 01 (Main Objects)

March 03, 2008 Increase in Authorised Share Capital of the company from INR 6 Crore to INR 10 Crore. Alteration of Clause V of MOA

September 26, 2008 Increase in Authorised Share Capital of the company from INR 10 Crore to INR 14 Crore. Alteration of Clause V of MOA


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Raising of Equity For details in relation to the raising of equity, please refer to chapter titled “Capital Structure” on page no. 27 of this Letter of Offer. 5. Shareholders Agreements

Our Company has not entered into any shareholders agreement.

6. Other Agreements The Company entered into a “Deed of Assignment of Trade Marks” on May 10, 2004 with Syncom Healthcare Limited (SHL) through which we had transferred and assigned to SHL w.e.f. July 29, 2002 various trade marks together with all the rights, title, interest, property and benefit whatsoever in and to the said trade marks together with the goodwill of the business in the goods for which the said trade marks have been registered and/or pending for registration and/or are used in connection therewith absolutely forever. The deed was for 33 registered trade marks and 440 trade marks pending registration for various pharmaceuticals products. The consideration of the transaction paid by SHL to SFL was Rupees Ten Lacs only. The Company also entered into a “Deed of Assignment of Copyright” on May 10, 2004 with Syncom Healthcare Limited (SHL) through which we had transferred and assigned to SHL w.e.f. July 29, 2002, Artistic Works of various labels etc used for various pharmaceuticals products together with all the rights, title, interest, property and benefit and the beneficial ownership whatsoever in and to the said Artistic Works and the business in respect of or relating to the goods or articles or things to which they were used absolutely forever. The deed was for 15 Artistic Works for various pharmaceuticals products. We also gave SHL list of its distributors, dealers, agents and customers with whom it had dealings and contracts relating to its business in India and transferred to the SHL benefit of all contracts, agreements and orders entered into or received by it in connection with the business for manufacture, sale , purchase and supply of medicinal and pharmaceutical preparations bearing the said artistic works and all articles and things and the exclusive benefit of all the distributors, dealers, agents and customers of the SFL. We have agreed not to use directly or indirectly the said Artistic Works or colourable imitation thereof in India on its preparations and products. The consideration of the transaction paid by SHL to SFL was Rupees Fifteen Lacs only. Again through another “Registered User Agreement” dated May 12, 2004, the SHL granted SFL exclusive and irrevocable license and right to use the 10 registered trade marks for various pharmaceuticals products only for export out of India subject to certain conditions w.e.f August 5, 2002. No royalty or any other remuneration was payable to SHL under this agreement i.e. the transaction was without any consideration. SHL has agreed to not to use these trade marks for export. Through another “Licensed User Agreement” dated May 12, 2004, the SHL granted the SFL exclusive and irrevocable license and right to use the 139 trade marks pending registration for various pharmaceuticals products only for export out of India subject to certain conditions w.e.f August 5, 2002. No royalty or any other remuneration was payable to SHL under this agreement i.e. the transaction was without any consideration. SHL has agreed to not to use these trade marks for export. Other than the agreements mentioned above, there are no other agreements entered into by our Company other than those entered into during the course of business.

7. Strategic Partner The Company does not have any Strategic Partner as on the date of filing of this Letter of Offer.

8. Financial Partner The Company does not have any Financial Partner as on the date of filing of this Letter of Offer.


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MANAGEMENT OF THE COMPANY Board of Directors Under our Articles of Association, our Company is required to have not less than three directors and not more than twelve directors. Our Company currently has five (5) directors on our Board. Mr. Kedarmal Bankda is the Executive Chairman & Mr. Vijay Bankda is the Managing Director of our Company. They are in charge of the overall management of our Company subject to the supervision and control of the Board. They are ably supported by professional and technically qualified team of executives.

The following table sets forth the details regarding our Board of Directors as on the date of filing of this Letter of Offer with SEBI:

Name & Address, Designation, Status, Age & Occupation,

Nationality

DIN

Qualifications Date of

Appointment Other Directorships

Mr. Kedarmal Bankda Address: 351, Shiv Kuti, Saket Nagar, Indore 452018, Madhya Pradesh, India

Designation: Chairman & Whole time director Status: Executive & Non Independent Age: 56 Years

Occupation: Business

Nationality: Indian

00023050 M. Com Appointed on April 13, 1992. Reappointed as the Chairman & Whole time Director on September 25, 2006 w.e.f May 3, 2007 for a period of five years.

ARP Pharma Pvt. Ltd

Mr. Vijay Bankda Address: 351, Shiv Kuti, Saket Nagar, Indore 452018, Madhya Pradesh, India Designation: Managing Director Status: Executive & Non Independent Age: 50 Years


Nationality: Indian

00023027 B. Com, LLB Appointed on December 1, 1999. Reappointed as the Managing Director on September 29, 2004 w.e.f December 01, 2004 for a period of five years.

NIL

Mr. Sanjay Mehta

Address: 47, Manishpuri, Saket Nagar,

00007582 B.Sc, FCA Appointed on July 31, 2004 . Liable to retire by rotation.

1. MSK Projects (India) Limited


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Indore 452001, Madhya Pradesh, India

Designation: Director Status: Non Executive & Independent Age: 42 Years


Nationality: Indian

Mr. Vinod Kumar Kabra

Address: B-26/2, Ved Nagar Sanwer Road Ujjain 456010 Madhya Pradesh, India Designation: Director Status: Non Executive & Independent

Age: 56 Years

Occupation: Business Nationality: Indian

01816189 M.Com, LLB Appointed on April 30, 2007. Liable to retire by rotation.

NIL

Mr. Krishna Das Neema

Address: 17, Abdal Pura Ujjain 456001 Madhya Pradesh, India Designation: Director Status: Non Executive & Independent

Age: 57 Years

Occupation: Business Nationality: Indian

02294270 M.Com, LLB Appointed on July 31, 2008. Liable to retire by rotation.

NIL


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Brief profile of board of directors:


In 1979, he set up in Indore, M/S Kedar Chemists, a proprietory concern involved in the retail/wholesale trade of pharmaceutical formulations products. M/s Kedar Chemists at different times has been a distributor for various pharmaceutical companies like Panjon, Searle India, Nicholas Laboratories, Franco India, Yash Pharma, Duphar Interfram etc. (M/s Kedar Chemists ceased its operation in 1991 due to pre occupation of the owners).



As the Managing Director of the Company, apart from being responsible for the overall management of the affairs of the Company, he particularly controls the marketing aspects of the Company in Domestic and Overseas Market. Mr. Sanjay Mehta, aged 42 years, s/o Mr. Vimal Singh Mehta is a practicing Chartered Accountant by profession and has an experience of more than a decade in his field. He has an expertise in field of Corporate Law, Taxation and Finance. As the Independent Director of the Company, he advises the Company in making critical financial decisions. Mr. Vinod Kumar Kabra, aged 56 years, s/o Mr. Sridhar Kabra has completed L.L.B and Masters in Commerce from Vikram University, Ujjain. He has also has completed B.Ed from Vikram University, Ujjain and has a vast experience of more than 32 years in the educational field. His knowledge has helped the Company in making strategic decisions. Mr. Krishna Das Neema, aged 57 years, s/o Mr. Ram Chandra Neema has completed L.L.B and Masters in Commerce from Vikram University, Ujjain. His Knowledge in the field of Law and Business will help our Company in making judgments pertaining to the legal aspects of the Company.

Details of the Borrowing Powers

Vide a resolution passed at the Annual General Meeting of our company held on September 28, 1996 consent of the members of our company was accorded to the Board of Directors of our company pursuant to Section 293(1)(d) of the Companies Act, 1956 for borrowing from time to time any sum or sums of money on such security and on such terms and conditions as the Board may deem fit, notwithstanding that the money to be borrowed together with the money already borrowed by our company (apart from temporary loans obtained from our company’s Bankers in the ordinary course of business) may exceed in the aggregate, the paid-up capital of our company and its free reserves, provided however, the total amount so borrowed in excess of the aggregate of the paid-up capital of our company and its free reserves shall not at any time exceed 30 Crores (Rupees Thirty Crores only)


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Terms of Appointment & Compensation of Whole Time Director Remuneration and Compensation of Whole Time Director

Name Mr. Kedarmal Bankda

Designation Whole Time Director (WTD) Period With effect from May 03, 2007 for the period of 5 years Meeting Date AGM held on September 25, 2006 Remuneration Basic Salary : Rs 25,000/- per month

The Company shall pay to the WTD an amount of Rs 25,000/- per month as basic salary with the annual increment of Rs.5000/- only.

Perquisites: In addition to the salary as set in Clause above the WTD shall be entitled to the following perquisites, subject to ceiling of Rs. 4,00,000/- per annum Housing: The Managing Director shall be paid Rent Free Residential Accommodation or House Rent Allowance subject to maximum of 50% of the salary or the Company shall provide house accommodation and 10% of salary shall be recovered by way of rent.

Club Fee: Subject to maximum of two clubs. This does not include admission and life insurance

Medical Reimbursement: The Company shall reimburse to the WTD and his family medical expenses , the total cost of which shall me not exceeding one month salary in a year or three months salary in a block of three years. Leave Travel Concession: Expenses incurred for self and family in accordance with the Rules of the Company. Health Insurance Personal accident insurance premium not exceeding Rs 10,000/- per annum. Contribution to Provident Fund, Superannuating Fund, Family Benefit Fund as per rules of the company. Gratuity not exceeding half month salary for each completed year of service Earned Privilege Leave: As per rules of the company Car : The company shall provide car with driver and if no car is provided then reimbursement of conveyance as per claims Telephone : Free use of telephone at residence provided personal long distance call will be billed to WTD by the company


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Remuneration and Compensation of Managing Director

Name Mr. Vijay Bankda

Designation Managing Director (MD) Period With effect from December 01, 2004 for the period of 5 years Meeting Date AGM held on September 29, 2004 Remuneration Basic Salary : Rs 15,000/- per month

The Company shall pay to the MD an amount of Rs 15,000/- per month as basic salary with the annual increment of Rs.3000/- only.

Perquisites: In addition to the salary as set in Clause 1.1 the MD shall be entitled to the following perquisites, subject to ceiling of Rs. 4,00,000/- per annum Housing: The MD shall be paid Rent Free Residential Accommodation or House Rent Allowance subject to maximum of 50% of the salary or the Company shall provide house accommodation and 10% of salary shall be recovered by way of rent.

Club Fee: Subject to maximum of two clubs. This does not include admission and life insurance

Medical Reimbursement: The Company shall reimburse to the MD and his family medical expenses , the total cost of which shall me not exceeding one month salary in a year or three months salary in a block of three years. Leave Travel Concession: Expenses incurred for self and family in accordance with the Rules of the Company. Health Insurance Personal accident insurance premium not exceeding Rs 4,000/- per annum. Contribution to Provident Fund, Superannuating Fund, Family Benefit Fund as per rules of the company. Gratuity not exceeding half month salary for each completed year of service Earned Privilege Leave: As per rules of the company Car : The company shall provide car with driver and if no car is provided then reimbursement of conveyance as per claims Telephone : Free use of telephone at residence provided personal long distance call will be billed to MD by the company


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Shareholding of Directors as on 30th April 2009 Sr. No Name of Director Shares Percentage of

Paid up share Capital

1 Mr. Kedarmal Bankda 1027226 16.50 2 Mr. Vijay Bankda 733771 11.79 TOTAL 1760997 28.29

Interests of Directors Except as stated in "Related Party Transactions" on page 120 of this Letter of offer, and to the extent of shareholding in the Company, the directors do not have any other interest in the business. The directors are interested to the extent of shares allotted to them. Except to the extent of their compensation as mentioned on page 106 of this letter of Offer, and their shareholding or shareholding of companies they represent, the Directors, other than the Promoters who are also Directors, do not have any other interest in the Company. All Directors may be deemed to be interested in the contracts, agreements/arrangements entered into or to be entered into by the 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 stated otherwise, in this Letter of Offer, the Company has not entered into any contract, agreements or arrangements during the preceding two years from the date of the Letter of Offer in which the directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangements or are proposed to be made to them. Changes in the Directors in the Last Three Years

The following are the changes in the Board of Directors in the last 3 years:

Compliance with Corporate Governance Requirements We have complied with the requirements of the applicable regulations, including the Listing Agreement entered into with Stock Exchanges and the SEBI Guidelines, in respect of corporate governance, including constitution of the Board and Committees thereof. Our corporate governance framework is based on effective independent Board, separation of the Board’s supervisory role from the executive management and constitution of Board Committees.

Sr No

Name of the Director Date of Appointment

Date of Cessation

Reason

1. Mr. Kedarmal Bankda 03/05/2007 - Reappointment as Chairman & Whole Time Director

2. Mr. Vinod Kumar Kabra 30/04/2007 - Appointed as Additional Director to have a optimum mix of Executive and Independent Directors

3. Mr. Ramesh Mishra 30/04/2002 30/04/2007 Resignation due to preoccupation / health

4. Mr. Krishna Das Neema 31/07/2008 - Increase in number of Independent Director

5. Mr. Arpit Gupta 31/07/2001 01/10/2008 Resignation due to preoccupation.


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We have a Five-member Board with an Executive Chairman constituted in compliance with the Companies Act and listing agreement with Stock Exchanges and in accordance with best practices in corporate governance i.e. more than half of the Board’s strengths as Independent. The Board of Directors functions either as a full Board or through various committees constituted to oversee specific operational areas. Our management provides the Board of Directors detailed reports on its performance on a quarterly basis. Measures taken by the Company to implement Corporate Governance

� The Board of Director of the Company comprises of Mr. Kedarmal Bankda, Mr. Vijay Bankda, Mr. Sanjay Mehta, Mr. Vinod Kumar Kabra and Mr. Krishna Das Neema. Out of which Mr. Kedarmal Bankda and Mr. Vijay Bankda are the Promoter Director and the remaining being Independent Directors. None of the Directors have been appointed by virtue of any arrangement or understanding for the same.

� The members of the Board are provided with all the requisite information well in advance of the Board

Meetings and the same are dealt with appropriately. All the Directors who are on various Committees are within the permissible limits of the Listing Agreement.

Board Meetings The Board of Directors met 7 times during Fiscal 2008-09 on April 30, 2008, July 31, 2008,August 21, 2008, August 29, 2008, October 31, 2008, November 11, 2008 and January 31, 2009. Details of the members of the Board Name of Director Category No. of Other

Directorships* Committee Members

Committee Chairmanship

Mr. Kedarmal Bankda Promoter Director

- - -

Mr. Vijay Bankda Promoter Director

- - -

Mr. Sanjay Mehta Non-Executive Director

1 3 -

Mr. Vinod Kumar Kabra

Non-Executive Director

- 3 -

Mr. Krishna Das Neema

Non-Executive Director

- 3 3

* Excluding Directorship in private, foreign companies and companies which are granted license under Section 25 of the Companies Act, 1956. The Company has complied with SEBI Guidelines in respect of Corporate Governance with respect to composition of the Board, constituting Committees such as the Audit Committee, Remuneration Committee, Shareholders / Investors Grievance Committee etc. The Company has complied with all the mandatory requirements of corporate governance norms as enumerated in the Clause 49 of the Listing Agreements with Stock Exchanges. The Board has constituted an Audit Committee, Shareholders / Investors Grievance Committee and the Remuneration Committee in accordance with the Listing Agreements.


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The Company has constituted the following Committees of the Board of Directors: 1. Audit Committee A qualified and Independent Audit Committee was constituted in the year 2001. The members of the Audit Committee are Non-Executive Independent Directors. The members bring with them vast experience in the field of operations, law, technical and finance. The terms of reference of the Audit Committee include reviewing of the Internal Auditors' report, internal control system and procedures and ensuring compliance of statutory requirements, appointment of Statutory Auditors and fixation of their fees and all other powers as specified in the Clause 49 of the Listing Agreement. The Audit Committee reviews the financial statements with the statutory auditors and the management with reference to the accounting policies and practices, before recommending the same to the Board for its approval. Along with financial reviews the Audit Committee also reviews the Management Discussion & Analysis, Statement of related party transactions, Internal Control weakness report issued by Internal Auditor and Statutory Auditors. Composition of Audit Committee as on March 31, 2009 Name Category No. of Meeting attended for the

Fiscal Year 2009

Mr. Arpit Gupta (Chairman) Non- Executive & Independent Director

4

Mr. Sanjay Mehta Non- Executive & Independent Director

2

Mr. Vinod Kabra Non- Executive & Independent Director

5

*Mr. Krishna Das Neema (Chairman)

Non- Executive & Independent Director

3

*Mr. Krishna Das Neema was appointed as a member of Audit Committee w.e.f. July 31, 2008 and Consequent to the resignation of Mr. Arpit Gupta w.e.f. October 01, 2008, the Board at its meeting held on October 31, 2008 reconstituted the Audit Committee by appointing Mr. Krishna Das Neema as Chairman of Audit Committee. The Audit committee met six (6) times in Fiscal Year 2009 , i.e. on on April 30, 2008, July 31, 2008 , August 21, 2008, October 31, 2008, November 11, 2008 and January 31, 2009. Constitution of Audit Committee as on date of this Letter of Offer Audit Committee comprises of Three (3) directors. All Three are Independent Directors. Sr. No Name Designation Position in Committee

1 Mr. Krishna Das Neema Non- Executive & Independent Director

Chairman

2 Mr. Vinod Kumar Kabra Non- Executive & Independent Director

Member

3 Mr. Sanjay Mehta Non- Executive & Independent Director

Member

The Audit committee has met two (2) times up to date of filing the letter of offer for the fiscal 2010 i.e. on April 29, 2009 and May 4, 2009. Till the time of appointment of the Company Secretary, Mr. Devendra Maheshwari (General Manager- Finance & Accounts) was taking the charge of Secretary of the Audit Committee. However, consequent to appointment of Ms


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Shikha Maheshwari (Company Secretary),she is functioning as the Secretary of the Committee. The Statutory Auditor is the Special Invitee to the meeting of the Audit Committee. The terms of reference stipulated by the Board to the Audit Committee are as contained in Clause 49 of the listing Agreement and as per the responsibilities stated in Section 292A of the Companies Act, 1956. Role of Audit Committee The Terms of reference of the Audit Committee are given below: 1. To investigate any activity within its terms of reference. 2. To seek information from any employee. 3. To obtain outside legal or other professional advice. 4. To secure attendance of outsiders with relevant expertise, if it considers necessary. 5. Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. 6. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees. 7. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. 8. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956 b. Changes, if any, in accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of judgment by management d. Significant adjustments made in the financial statements arising out of audit findings e. Compliance with listing and other legal requirements relating to financial statements f. Disclosure of any related party transactions g. Qualifications in the audit report. 9. Reviewing, with the management, the quarterly financial statements before submission to the board for approval 10. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter. 11. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems.


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12. Reviewing the adequacy of internal audit function, if any, 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. 13. Discussion with internal auditors any significant findings and follow up there on. 14. Reviewing the findings of any internal investigations 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. 15. 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. 16. 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. 17. To review the functioning of the Whistle Blower mechanism, in case the same is existing. 18. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. 19. Mandotarily review the following information: a) Management discussion and analysis of financial condition and results of operations; b) Statement of significant related party transactions (as defined by the audit committee), submitted by management; c) Management letters / letters of internal control weaknesses issued by the statutory auditors; d) Internal audit reports relating to internal control weaknesses; and e) The appointment, removal and terms of remuneration of the internal auditor shall be subject to review by the Audit Committee 20. Review the Financial Statements of its subsidiary company. 21. Review the use/application of funds raised through an issue (public issues, right issues, preferential issues etc) on a quarterly basis as a part of the quarterly declaration of financial results. Further, review on annual basis statements prepared by the Company for funds utilized for purposes other than those stated in the offer document. And to carry out such other functions/powers as may be delegated by the Board to the Committee from time to time. 2. Shareholders’ / Investor Grievance Committee The Shareholders/Investors Grievance Committee was constituted in the year 2002. The Committee comprises of non-executive Directors and primarily looks into shareholders redressal and investors complaints.

Composition of Shareholder / Investor Grievance Committee as on date of this Letter of Offer

The Committee comprises of Three (3) directors. All Three are Independent Directors.

Sr. No Name Designation Position in Committee

1 Mr. Krishna Das Neema Non- Executive & Independent Director

Chairman

2 Mr. Vinod Kumar Kabra Non- Executive & Independent Director

Member

3 Mr. Sanjay Mehta Non- Executive & Independent Director

Member


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The Investor Grievance Committee met three (3) times in Fiscal Year 2009 , i.e. on July 31, 2008, October 31, 2008 and January 31, 2009 The Investor Grievance committee has met once (1) up to date of filing the letter of offer for the fiscal 2010 i.e. on April 29, 2009. Till the time of appointment of the Company Secretary, Mr. Devendra Maheshwari (General Manager- Finance & Accounts) was taking the charge of Secretary of the Audit Committee. However, consequent to appointment of Ms Shikha Maheshwari (Company Secretary),she is functioning as the Secretary of the Committee. Role of Investor Grievance Committee The Shareholders / Investor’s Grievance Committee of the Board looks into

• Transfer of shares, transmission and delay in confirmation in D-mat of shares; • Non receipt of Annual Report, etc. • Non Receipt of Dividend Warrant.

The company has authorized to implement transfer, transmission and Demat of shares to the share transfer Agent and to resolve the relating problems as professional agency. The committee meets generally on review of redressal system of investor complaints by share transfer Agent and on specific nature of complaints not resolved within a period of 21 days from the date of receipt. Status of investors/shareholders Complaints:

1. Number of complaints received during the year: 118 2. Number of complaints solved during the year: 118 3. Number of complaints pending at the end of the year: NIL

3. Remuneration Committee The Remuneration Committee was constituted in the year 2002. The Remuneration Committee comprises of Non Executive & Independent Directors. The terms of reference of the Remuneration Committee are to recommend to the Board, Salary (including annual increments), Perquisites and Allowances, Incentive remuneration, if any, and Commission, to be paid to the Company’s Managing Director / Whole-time Directors (MD/WTDs), to finalize the perquisites and allowances package within the overall ceiling fixed by the Board, to recommend to the Board retirement benefits to be paid to the MD and WTD's under the Retirement Benefit Guidelines adopted by the Board. Composition of Remuneration Committee as on March 31, 2009 Name Category * Mr. Krishna Das Neema Independent & Non- Executive Director Mr. Sanjay Mehta Independent & Non- Executive Director Mr. Vinod Kabra Independent & Non- Executive Director

Composition of Remuneration Committee as on date of this letter of Offer The Committee comprises of Three (3) directors. All Three are Independent Directors. Sr. No Name Designation Position in Committee 1 Mr. Krishna Das Neema Non- Executive

Independent Director Chairman

2 Mr. Vinod Kumar Kabra Non- Executive Member


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Independent Director 3 Mr. Sanjay Mehta Non- Executive

Independent Director Member

No meeting of the remuneration committee was held in fiscal 2009, as there was no reference made to the committee for its approval.

Till the time of appointment of the Company Secretary, Mr. Devendra Maheshwari (General Manager- Finance & Accounts) was taking the charge of Secretary of the Audit Committee. However, consequent to appointment of Ms Shikha Maheshwari (Company Secretary), she is functioning as the Secretary of the Committee. Functions of Remuneration Committee

• Looking after fixation of salary, perquisites and commissions etc, to the directors of the company are in line with the agreed terms of reference and as per company policy.

• The committee also ensure that the compensation policy of the company provides for the performance –oriented incentive to the management.

Listing Compliance: The Company has complied with all the listing requirements prescribed by the Stock Exchanges. Due to thin volume of trading, the company made applications and has delisted its shares from Ahmedabad Stock Exchange on July 8, 2004, Madhya Pradesh Stock Exchange Limited on May 29, 2008 & Delhi Stock Exchange Association Limited on September 2, 2004. The company is currently listed only on Bombay Stock Exchange Limited.


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Management Organization Chart

BOARD OF DIRECTORS

CHAIRMAN & WHOLE TIME DIRECTOR

MANAGING DIRECTOR

G.M.-Finance & Accounts

Company Secretary

Purchase Manager

Senior Mgr.- Commercial

P.P.C. Manager

E.D.P. Manager

V.P. (Export )

Mktg. Mgr. (Domestic)

Manager (Export)

Exec. Manager (Export)

Accouns Mgr.

Sr. Manager (Personnel

)

Dep.Gen.Mgr (Production)

Production Manager

Dep.Mgr. (Tablets)

Dep. Mgr (Capsules)

Dep. Mgr. (Injections

Dep. Mgr. (Liquid)

Dep. Mgr. (Ointment)

Manager- Technical

Dep. Mgr. (Factory)

Regulatory

Manager

Gen.Mgr (R & D)

Q.A. Manage

Q.C. Manager


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Key Managerial Personnel The Details of Key Managerial Personnel are given as below:

Sr. No

Name Age (Years)

Designation Qualification Experience

Functional Responsibility

Date of joining

Gross Salary for Fiscal Year 2007-08(in Rs)

1 Mr. Rajesh Narain

66 Vice President- Export Division

B.Sc 46 years Sales May 21, 2001 5,46,000.00

2 Mr. Shirish Chowk

53 Marketing Manager- Domestic

B.Sc, MBA 26 years Marketing Management & Distribution Network

June 1, 2006 5,37,240.00

3 Mr. Purshottam Ganpatty

61 Manager- Technical

B.Sc, Diploma in Management Studies, Diploma in Production Management

38 years Technical Aspects

December 1, 2000

2,10,480.00

4 Mr. Kishore Sharma

55 Deputy General Manager (Production)

B.Sc 33 years Management of the Production Department

November 15, 2006

4,60,040.00

5 Mr. Arun Kharia

50 Production Manager

B.Sc 28 Years Production & Packaging Activity

August 26, 2005 2,34,192.00

6 Mr. Dwarka Prasad Sharma

53 General Manager (Research & Development)

M.Sc 32 Years Research & Quality Control

February 01, 2004

4,31,976.00

7 Mr. Girish Vajpayee

44 Deputy Manager

MBA, BE (Mechanical Engineering), Diploma in Mechanical Engineering

19 years Engineering activities at the Factory

August 07, 2002 1,68,000.00

8 Mr. Pravindra Singh Kohli

48 Sr. Manager (Personnel)

M.A,B.Com, PG Diploma (HRM)

11 Years Overall management of the Factory

March 08, 2008 48,000.00*

9 Mr. Devendra Kumar Maheshwari

37 General Manger (Finance & Accounts)

M. Com 18 years Accounts & Finance

January 16, 1996

1,80,000.00

10 Ms. Shikha Maheshwari

28 Company Secretary & Compliance Officer

B.Com, L.L.B, CS

4 years Secretarial & Legal Compliances

November 1, 2008

NA

* Gross Salary is for the month of March 2008 only since appointment is effective from March 08, 2008.


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The persons whose names appear as Key Managerial Personnel are on the rolls of the Company as permanent employees. Detailed Profile of KMP Mr. Rajesh Narain, aged 66 years is the Vice President of our Company. He is a graduate in Science. He started his career in the Year 1962 and has an overall experience of over 46 years. Prior to joining us, he worked with Karimjee Ltd. as a Jt. General Manager. He joined us on May 21, 2001 and as the Vice President-Export Division of the Company he is responsible for developing long term relations with new and existing customers and enhances sales of our Company.

Mr. Shirish Chowk, aged 53 years is the Marketing Manager of our Company. He is qualified as a graduate in Science and has completed his M.B.A in Marketing from Devi Ahilaya Vishwavidhyalay. He started his career in Year 1982 and has over 26 years of vast experience in the field of Marketing. Prior to joining us, he was employed with Prestige Institute of Management and Research, Indore as a Faculty with specialization in Marketing. He joined us on June 1, 2006 and as the Marketing Manager of the Company he is responsible for managing the marketing and distribution network of the products of our Company in the domestic market.

Mr. Purshottam Ganpatty, aged 61 years is the Manager- Technical of our Company. He is qualified as a graduate in Science and has also completed a Diploma in Production Management from JBIMS and Diploma in Management Studies from NMIMS. He started his career in the Year 1970 and has over 38 years of experience in his field. Prior to joining us, he was employed with Evernova Health Products Pvt. Ltd as a General Manager. He joined us on December 1, 2000 and as the Manager- Technical of the Company he is responsible for the overall technical quotient of our Company.

Mr. Kishore Sharma, aged 55 years is the Deputy General Manager of our Production Division. He is qualified as a graduate in Science from Devi Ahilaya Vishwavidhyalay Indore. He started his career in Year 1975 and has over 33 years of vast experience in the field of Production. Prior to joining us, he worked for various companies in pharmaceutical industry. He joined us on November 15, 2006. Presently he heads the production department of the Company. Mr. Arun Kharia, aged 50 years is the Production Manager of our Pithampur Unit. He is qualified as a graduate in Science from Jiwaji University, Gwalior. He started his career in Year 1980 as an assistant chemist in Modern Lab and has over 28 years of vast experience in managing production activities of pharmaceutical Industry. Prior to joining us, he worked for Vindas Chemicals (India) Limited, Pithampur. He joined us on August 26, 2005. Presently he looks after the activities related to production and packaging activities of various products of the Company like Tablets, Capsules, Injections, Ointment and Liquid.

Mr. Dwarka Prasad Sharma, aged 53 years is the General Manager of our Research & Development Division. He is qualified as a Masters in Science from Jiwaji University, Gwalior. He started his career in Year 1976 and has over 32 years of in pharmaceutical field. Before joining us, he worked for more than 15 years for IPCA Laboratories Limited . He joined us on February 01, 2004. The area of activity looked after by him is technological upgradation of existing products and processes, continuous research to improve the quality of the product.

Mr. Girish Vajpayee, aged 44 years is the Deputy Manager of our Engineering Division. He is qualified as a Mechanical Engineer from University of A.P.S Univerity, Madhya Pradesh, has done a Diploma in Mechanical Engineering from M.P. Board of Tech. Education, Bhopal. He has also completed his M.B.A in marketing management from AIMA, New Delhi. He started his career in Year 1989 and has over 19 years of vast experience in various industries. Prior to joining us, he worked for Gabriel Industries Limited as Assistant Manager. He joined us on August 07, 2002. Presently he is overall in charge of Engineering Division of our unit in Pithampur.

Mr. Pravindra Singh Kohli, aged 48 years is the Senior Manager of our Personnel Division. He is qualified as a Masters in Arts and a commerce graduate from Devi Ahilaya Vishwavidhyalay and has completed post graduation Diploma in Human Resource Management from Indira Gandhi National Open University, New Delhi. He started his career in Year 1997 and has over 11 years of relevant experience in the field of human resource. Prior to joining us he worked with Syncom Healthcare Limited as Personnel Manager. He joined us on March 08, 2008. Presently he is in charge of the overall management of the Factory.

Mr. Devendra Kumar Maheshwari, aged 37 years is the General Manager ( Finance & Accounts). He is qualified as a Masters in Commerce from Dr. H. S. Gour University, Sagar. He started his career in Year 1990 and has over 18 years of


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vast experience in the field Accounts and Finance. Prior to joining us he worked with M/s Angel Remedies Pvt. Ltd as Assistant Accountant. He joined us on January 16, 1996. Presently he is overall in charge Accounts and Finance department of our company.

Ms. Shikha Maheshwari, aged 28 years is the Company Secretary & Compliance Officer of our Company. She is a Commerce Graduate by qualification. Further, she has completed her L.L.B from Indian Law School, Pune and C.S from the Institute of Company Secretaries of India. Prior to joining us, she worked with Kalani Industries Limited as a Management Trainee. She has joined us on November 1, 2008 as the Company Secretary of our Company she has been assigned responsible for overall Secretarial & Legal Compliances of our Company. Shareholding of Key Managerial Personnel in our Company

None of the key managerial personnel are related to the Promoter(s) of the Company nor are they holding any shares of the company. Loans to Key Managerial Personnel There are no loans outstanding against Key Managerial Personnel as on date. Bonus or Profit sharing Plan for the Key Managerial Personnel Our Company does not have any bonus or profit sharing plan for its Key Managerial Employees. Changes in the Key managerial personnel during the last three years

Sr. No. Name Date of Appointment Date of Resignation Reason

1. Mr. Mahendra Pal Kothari April 19, 1995 April 15, 2006 Appointed and Resigned 2. Mr. Shirish Chowk June 01, 2006 - Appointment 3. Mr. Kishore Sharma November 15, 2006 - Appointment 4. Mr. Pravindra Singh Kohli March 08, 2008 - Appointment 5. Ms. Shikha Maheshwari November 01, 2008 - Appointment Compensation of Directors/Key Managerial Personnel for the year ended 31/03/2008 For the year ended 31st March 2008, a compensation of Rs. 1,80,000/- each was paid to Managing Director and Whole Time Director as against mentioned in the terms of appointment & compensation of director on Page No. 106 of this Letter of offer and for the same Board of Directors has approved the waiver of their remuneration in the interest of the Company. As per the policy of the Company, each Non Executive Director is entitled to receive sitting fees of Rs 5000/- per meeting attended by them. However, for the fiscal 2008 there was a payment of sitting fees of Rs. 5000/- and balance of fees was waived in the Board Meeting held on 31st July 2008 on the request of directors concerned. Remuneration of all the key managerial persons who were held their respective positions is reflected under section of Key Managerial Personnel on Page No. 116 of this Letter of offer.

Employee Stock Option Scheme (ESOS)/ Employees Stock Purchase Scheme (ESPS) Our Company does not have any stock option Plans or Stock Purchase Schemes for its employees. Payment or Benefits to Officers of the Company Except the payment of salaries, perquisites and bonus, the Company does not make any payments to its officers. Interest of Key Managerial Personnel The Key Managerial Personnel of our Company do not have any interest in our Company, other than to the extent of remuneration of benefits to which they are entitled as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business.


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OUR PROMOTERS


In 1979, he set up in Indore, M/S Kedar Chemists, a proprietory concern involved in the retail/wholesale trade of pharmaceutical formulations products. M/s Kedar Chemists at different times has been a distributor for various pharmaceutical companies like Panjon, Searle India, Nicholas Laboratories, Franco India, Yash Pharma, Duphar Interfram etc. (M/s Kedar Chemists ceased its operation in 1991 due to pre occupation of the owners).



As the Managing Director of the Company, apart from being responsible for the overall management of the affairs of the Company, he particularly controls the marketing aspects of the Company in Domestic and Overseas Market.

Name of the Promoter : Mr. Kedarmal Bankda Mr. Vijay Bankda

Photograph

Driving License No. MP09/016323/03 MP09/013131/03* Passport No. A8211135 Z1515202 PAN No. ADHPB2852M ACYPB2376G Voter’s ID No. LHV3572856 KNF0805986 Name of Bank & Branch DENA BANK, SOUTH TUKOGANJ,

INDORE DENA BANK, JAIL ROAD, INDORE

Bank Account No. 059210004122 059210004126 * License Expired on March 16, 2008.


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Declaration The Company confirms that the Permanent Account Number, Bank Account Number and Passport No have been submitted to the BSE at the time of filing of this Letter of Offer with them. Common Pursuits There are no common pursuits among the company and its Group/ Associate Interest of Promoters & Directors The Promoters of the Company are interested to the extent of their shareholding in the Company. Further, Promoters who are also the Directors of our Company 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, reimbursement of expenses payable to them. Directors may also be deemed to be interested to the extent of Equity Shares, if any, already held by them and their relatives in the Company, or that may be subscribed for and allotted to them, out of the present Issue in terms of this Letter of Offer and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. Except as stated otherwise in this Letter of Offer, the Company has not entered into any contract, agreements or arrangements during the preceding two years from the date of this Letter of Offer in which the Promoters are directly or indirectly interested and no payments have been made to them in respect of the contracts, agreements or arrangements which are proposed to be made with them including the properties purchased by the Company other than in the normal course of business. Payment or Benefit to Promoters of the Company Except as stated in “Financial Information of the Company - Related Party Transactions” on page 139, no amount or benefit has been paid or given to any Promoter within the two preceding years from the date of filing of this Letter of Offer or is intended to be paid. Related Party Transactions Related party Disclosures are given as Annexure- 16 in Auditors Report on page 139 of this Letter of Offer.


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CURRENCY OF PRESENTATION In this Letter of Offer, all references to “Rupees” and “Rs.” are to the legal currency of India. All references to “U.S.$” or “U.S. Dollar(s)” are to United States Dollars, the official currency of the United States of America. Unless stated otherwise, throughout this Letter of Offer, all figures have been expressed in Lacs.


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DIVIDEND POLICY The declaration and payment of dividend is recommended by our Board of Directors depending upon number of factors, including but not limited to our profits, capital requirements and overall financial conditions, and shall be subject to the provisions of our Articles, Companies Act, 1956 and approval of our lenders. The Board may also from time to time pay interim dividends. All dividend payments are made in cash/cheque/demand to the shareholders of our Company. The dividends declared by our Company during the last five fiscal years have been presented below: Year ended

March 31, 2004

Year ended March 31, 2005




Face Value of Equity Share (per share) (Rs.)

10.00 10.00 10.00 10.00 10.00

Interim Dividend on Equity Shares (Rs.)

- - - - -

Final Dividend on each Equity Share (Rs.)

1.00 1.50 1.50 1.00 0.50

Dividend Rate for equity shares (%)

10 15 15 10 5

The amounts paid as dividends in the past are not necessarily indicative of our dividend policy or dividend amounts, if any, in the future.


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SECTION V: FINANCIAL DETAILS

FINANCIAL INFORMATION OF THE ISSUER COMPANY

AUDITOR’S REPORT The Board of Directors, SYNCOM FORMULATIONS(INDIA) LIMITED 7, Niraj Industrial Estate, Off Mahakali caves Road, Andheri (E), Mumbai Dear Sirs, 1. We have examined the financial information of SYNCOM FORMULATIONS(INDIA) LIMITED (“the Company”), as approved by the Board of Directors of the Company & Audit Committee of Board of Directors, prepared in terms of the requirements of :

a. Part II of Schedule II to the Companies Act, 1956 (‘the Act’);

b. The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, as

amended to date (‘the SEBI Guidelines’); and

c. The Guidance Note on Reports in Company Prospectuses and Guidance Note on audit Reports / Certificates on Financial information in Offer Documents Issued by the Institute of Chartered Accountants of India (ICAI).

d. Our terms of reference received from the Company, requesting us to carry our work, proposed to be

included in the Offer Document in connection with its proposed Rights Issue of Equity Shares. 2. This information has been extracted by the Management from the financial statements for the years ended March

31, 2004, 2005, 2006, 2007, 2008 and January 31, 2009. These statements were prepared by the Management and approved by the Directors & Audit Committee of the Board of Directors for the purpose of disclosure in the offer document of the Company mentioned in paragraph (1) above. The financial information for the above period was examined to the extent practicable, for the purpose of audit of financial information in accordance with the Auditing and Assurance Standards issued by the Institute of Chartered Accountants of India. Those standards require that we plan and perform our audit to obtain reasonable assurance, whether the financial information under examination is free of material misstatement. Based on the above, we report that in our opinion and according to the information and explanations given to us, we have found the same to be correct and the same have been accordingly used in the financial information appropriately.

3. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Companies Act, 1956, the SEBI Guidelines and terms of our engagement agreed with you, we further report that:

a) The Restated Summary Statement of Assets and Liabilities of the company as at March 31, 2004, 2005, 2006, 2007, 2008 and January 31, 2009 , examined by us, as set out in Annexure 1 to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies, Notes and Changes in Significant Accounting Policies as appearing in Annexure 3

b) The Restated Summary Statement of Profit or Loss of the Company for the years ended March 31, 2004, 2005, 2006, 2007, 2008 and January 31, 2009 , examined by us, as set out in Annexure 2 to this report are after making


124

adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies, Notes and Changes in Significant Accounting Policies as appearing in Annexure 3. c) The Restated Summary Statement of Cash flows of the Company for the years ended March 31, 2004, 2005, 2006, 2007 and 2008 and January 31, 2009 , examined by us, as set out in Annexure 4 to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies, Notes and Changes in Significant Accounting Policies as appearing in Annexure3.

d) Based on the above, we are of the opinion that the restated financial information have been made after incorporating: i) Adjustments for any material amounts in the respective financial years to which they relate; and ii) Extra-ordinary items that need to be disclosed separately in the accounts and audit qualifications requiring adjustments, if any. iii) Adjustments/Rectifications for all incorrect accounting practices or failures to make provisions, if any. iv) Recomputation of Financial Statements in accordance with the correct accounting policies v) There was no change in accounting policies which needs to be adjusted in financial statements. vi) There are no revaluation reserves which need to be disclosed separately in the “Restated Summary Statements”. d) We have also examined the following other financial information set out in Annexures, prepared by the Management and approved by the Board of Directors & Audit Committee of Board of Directors, for the years ended March 31, 2004, 2005, 2006, 2007, 2008 and January 31, 2009

i. Notes to Statements of Assets & Liabilities & Profit & Loss as appearing in Annexure 3 to this report. ii. Statement of Cash Flows as appearing in Annexure 4 to this report iii. Statement of Dividends in Annexure 5 to this report. iv. Mandatory Accounting Ratios as appearing in Annexure 6 to this report v. Capitalization Statement as at January 31, 2009 as appearing in Annexure 7 to this report. vi. Statement of Tax Shelters as appearing in Annexure 8 to this report. vii. Statement of Secured Loans as appearing in Annexure 9 to this report viii. Statement of Unsecured Loans as appearing in Annexure 10 to this report ix. Statement of Details of Investment as appearing in Annexure 11 to this report x. Statement of Sundry Debtors as appearing in Annexure 12 to this report xi. Statement of Loans & Advances as appearing in Annexure 13 to this report xii. Statement of Sundry Liabilities as appearing in Annexure 14 to this report xiii. Statement of Other Income as appearing in Annexure 15 to this report xiv. Statement of Related Party Disclosures as appearing in Annexure 16 to this report.

5. In our opinion, the financial information of the Company as stated above, read along with the Significant Accounting Policies and Notes, after making adjustments / restatements and regroupings as considered appropriate, has been prepared in accordance with Part II of Schedule II to the Act and the SEBI Guidelines. 6. This report is intended solely for your information and for inclusion in the Offer Document in connection with the specific Rights Issue of the Company and is not to be used, referred to, or distributed for any other purpose without our prior written consent. 7. This report should not be in any way be constructed as a reissuance or redating of any of the previous audit reports issued by us or by any other firm of Chartered Accountants, nor should this report be constructed as a new opinion on any of the financial statements referred to herein.


125

For and on behalf of For S.P.Moondra & Co. CHARTERED ACCOUNTANTS Sd/- (S.P.Moondra) Proprietor M. No.: 073747 Place: Indore Date: 31.10.2008 ANNEXURES TO THE AUDITORS’ REPORT Annexure 1 Summary Statement of Assets and Liabilities Annexure 2 Statement of Profit And Loss Annexure 3 Significant Accounting Policies and Notes on Restated Financial Statements Annexure 4 Statement of Cash Flow as Restated Annexure 5 Statement of Dividends Annexure 6 Accounting Ratios Annexure 7 Capitalization Statement Annexure 8 Statement of Tax Shelters Annexure 9 Statement of Secured Loans Annexure 10 Statement of Unsecured Loans Annexure 11 Details of Investments Annexure 12 Details of Sundry Debtors Annexure 13 Statement of Loans & Advances Annexure 14 Statement of Sundry Liabilities Annexure 15 Statement of Other Income Annexure 16 Statement of Related Party Transactions


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Annexure-1 STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED

(Rs. in Lacs)

As at 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Assets

Fixed Assets-Gross block 4506.34 4396.34 3616.44 2830.30 2478.58 2226.72

Less: Depreciation 1433.86 1253.53 1075.40 928.43 787.32 712.87

Net Block 3072.48 3142.81 2541.03 1901.87 1691.27 1513.85


Net Block after adjustment for Revaluation Reserve 3072.48 3142.81 2541.03 1901.87 1691.27 1513.85

Add : Capital Work in progress including advances for Capital goods 79.38 25.76 69.01 230.74 2.84 0.26

Net Block after adjustment of Advances (A) 3151.86 3168.56 2610.04 2132.61 1694.10 1514.11

Investments (B) 243.03 223.59 4.00 41.93 4.00 4.00

Current assets, loans and advances 0.00

Inventories 269.37 555.78 341.70 617.74 540.69 432.04

Receivables 1137.45 1779.53 1444.41 1259.45 1530.87 1329.79

Cash & bank balances 21.92 28.36 222.95 78.61 18.45 20.77

Loans and advances 1319.53 1042.40 770.69 571.66 509.71 453.49

Total Current Assets (C ) 2748.27 3406.07 2779.74 2527.46 2599.73 2236.10

Total Assets D = (A) + (B) + (C) 6143.16 6798.22 5393.78 4702.00 4297.84 3754.21

Liabilities & Provisions

Loan funds

Secured loans 48.52 136.99 271.54 56.01 102.61 997.00

Unsecured loans 832.58 585.81 432.37 560.34 363.49 303.45

TOTAL Loan Fund (E) 881.10 722.80 703.91 616.35 466.10 1300.45

Current liabilities & provisions

Sundry liabilities 538.30 1564.52 629.19 488.15 879.42 577.13

Provisions 88.22 207.22 286.35 376.40 468.75 150.41

Deferred Tax Liability 467.40 421.88 367.55 329.22 357.96 266.63

Total Liabilities & provisions (F) 1093.92 2193.62 1283.09 1193.77 1706.13 994.17

Net worth (D) – (E) -(F) 4168.14 3881.80 3406.79 2891.88 2125.61 1459.59

Represented by:

Share Capital 622.50 622.50 591.50 562.00 534.20 507.70

Reserves & surplus 3530.69 3244.35 2815.29 2329.88 1591.41 962.71


Reserves (Net of Revaluation Reserve) 3530.69 3244.35 2815.29 2329.88 1591.41 962.71

Less: Misc. expenditure not written off 0.00 0.00 0.00 0.00 0.00 10.82

Share Application /Warrant Money Recd 14.95 14.95 0.00 0.00 0.00 0.00

Total Net Worth 4168.14 3881.80 3406.79 2891.88 2125.61 1459.59


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Annexure- 2

STATEMENT OF PROFIT AND LOSS ACCOUNT, AS RESTATED (Rs. in lacs)

For the year/period ended 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Sales :

Of products manufactured by the Company 4772.27 6001.62 5628.08 4629.24 4307.29 4025.83

Of products traded by the Company 397.12 831.64 403.47 595.54 1192.61 305.06

Less : Excise Duty (5.23) (48.88) (60.31) (0.38) (58.86) (189.39)

Other income 68.73 126.81 194.93 216.00 148.75 2.48

Increase (decrease) in inventory (77.25) 46.23 (161.53) 46.61 5.93 72.57

Total Income 5155.64 6957.42 6004.64 5487.01 5595.71 4216.56

Raw Materials & goods consumed 3244.17 4624.50 3719.48 3572.97 3640.80 3020.47

Staff costs 445.57 524.77 365.66 214.07 160.12 137.40

Other Manufacturing expenses 190.63 225.52 191.02 155.35 173.25 124.06

Administration Expenses 135.27 219.99 188.58 141.83 93.38 111.65

Selling & distribution expenses 464.76 557.21 690.73 530.93 459.68 255.50

Interest & financial Charges 80.23 43.74 9.70 8.85 67.43 94.66

Depreciation 180.33 178.13 146.97 141.41 74.45 66.96

Miscellaneous expenditure written off 0.00 0.00 0.00 0.00 10.82 10.82

LOSS on Sales of Machinery 0.00 0.00 0.00 1.45 0.00 0.00

Total Expenditure 4740.95 6373.86 5312.15 4766.87 4679.92 3821.51

Net Profit before tax and extraordinary items 414.69 583.56 692.50 720.15 915.79 395.04

Current Tax 94.10 136.34 190.71 236.79 249.11 35.92

Deferred Tax 45.52 54.33 38.33 (28.74) 91.33 58.23

Fringe Benefit Tax 10.38 13.25 9.06 2.17 0.00 0.00

Net profit after tax & before extraordinary items 264.69 379.63 454.41 509.92 575.35 300.90

Extraordinary items (net of tax) 0.00 0.00 0.00 0.00 0.00 0.00

Less : I.T. paid in Next Years 0.00 21.64 12.19 16.04 103.45 56.57

Less: Prior Period Adjustment 4.12 17.41 0.00 0.53 0.00

Net profit after extraordinary items 264.69 353.87 424.81 493.88 471.37 244.33

Profit brought forward from previous year 162.65 195.20 89.59 91.83 111.07 124.01

Balance available for appropriation 427.34 549.07 514.40 585.71 582.44 368.34

Appropriations

General Reserve 0.00 350.00 250.00 400.00 400.00 200.00


Tax on proposed dividend 0.00 5.29 10.05 11.82 10.47 6.50

Balance carried to Balance sheet 427.34 162.65 195.20 89.58 91.83 111.07


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ANNEXURE- 3 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNT FOR PREPARATION OF RESTATED FINANCIAL STATEMENT A. Significant Accounting Policies:

1. Basis of preparation of Financial Statements The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provision of the Companies Act, 1956. 2. Use of Estimate The preparation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized. 3. 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.

(i) Sale of goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales revenue is net of sales return, discounts and rebates.

(ii) Interest

Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

(iii) Dividends

Revenue is recognized as and when received.

4. Fixed Assets & Depreciation Fixed Assets are stated at cost net of modvat / cenvat on construction and includes proportionate financial cost till commencement of production less accumulated depreciation and impairment loss, if any. The cost of an asset comprises of purchase price and any directly attributable cost of bringing the assets to its present condition for intended use Depreciation on Electrical Installation, Factory equipments and furniture & fixtures at Pithampur is being provided on written down Value method as per schedule XIV of the Companies Act, 1956. Depreciation on all Assets other than the aforesaid is being provided on straight line basis as per schedule XIV of the Companies Act, 1956. 5. Inventories

a) Stock of raw materials/packing materials are valued at cost (net of modvat credit) on FIFO basis or net realisable value which ever is Lower.

b) Stores & Spare and gift articles are valued at cost or net realisable value which ever is Lower. c) Semi finished goods are valued at approximate cost of input, depending on the stage of completion or net

realisable value which ever is Lower. d) Finished goods are valued at cost or net realizable value whichever is lower. Cost for this purpose is

determined by reducing the excise incidence and estimated gross margin from the billing price. 6. Investment:


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The Investments which are long term are stated at cost. Provision for diminution in the value of long term investment is made only if such a decline is other than temporary in the opinion of the management. The Current Investments are carried at Cost or market value whichever is lower 7. Foreign Exchange Transaction a) Transactions denominated in foreign currencies are normally recorded on exchange rate prevailing at the time

of the transaction. Current liabilities related to foreign currency transaction are being converted at the year end at the closing rates for revenue transactions and exchanges gains/ losses in fluctuations of exchange rate are being dealt in the profit & loss account.

b) Monetary items denominated in foreign currencies and covered by forward exchange contracts are translated

at the rate ruling on the date of transaction as increased or decreased by the proportionate difference between the forward rate and exchange rate on the date of transaction, such difference have been recognised over the life of the contract

8. Employee Retirement Benefits

Retirement benefit to employees viz. Provident fund, Family Pension fund, leave encashment and gratuity are accounted on accrual basis.

9. Borrowing Costs: Borrowing cost which are directly attributable to the acquisition/construction of Qualifying Assets are capitalized as part of the cost of such assets. A qualifying assets is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue. 10. Leases: Assets acquired under leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Profit & Loss account on accrual basis. 11. Earning per share Basic EPS is computed using the weighted average number of equity shares outstanding during the year. Diluted EPS is computed using the weighted average number of equity and diluted equity equivalent shares outstanding during the year except where the results would be anti-dilutive. 12. Taxes on Income Income Tax are accounted for in accordance with Accounting standard 22 on “Accounting for taxes on Income” Taxes comprises both Current and Deferred Tax. Current tax is measured at the amount expected to be paid/ recovered from the revenue authorities, using the applicable tax rates and laws. The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax assets or deferred tax liability. Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences. They are measured using the substantively enacted tax rates and tax regulations. The carrying amount of deferred tax assets at each balance sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable will be available against which the deferred tax assets can be realized. Fringe Benefit Tax. (FBT) payable under the provisions of section 115WC of the income tax act, 1961 is in accordance with the guidance note on “Accounting for Fringe Benefit Taxes” issued by the ICAI regarded as an additional income


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tax and considered in determination of profits for the year. Tax on distributed profits payable in accordance with the provisions of section 115 O of the income tax act, 1961 is in accordance with the guidance note on “Accounting for Corporate Dividend Tax” regarded as a tax on distribution of profits and is not considered in determination of profit for the year. 13. Intangible Assets Intangible assets are capitalized if specific criteria are met and are amortised over their useful life, generally not exceeding 5 years. The recoverable amount of an intangible asset that is not available for use or is being amortized over a period exceeding 5 years should be reviewed at least at each financial year end even if there is no indication that the asset is impaired. 14. Impairment of Assets The company assesses at each balance sheet date whether there is any indication that an assets may be impaired. If any such indication exists, the company estimates the recoverable amount of the assets. If such recoverable amount of the assets or the recoverable amount of the cash generating unit to which the asset belong is less than its carrying amount, the carrying amount is reduced to its recoverable amount. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. 15. Provision, Contingent Liabilities and contingent assets Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements. 16. Miscellaneous expenditure Miscellaneous expenditure is written off to the profit and loss account over a period of up to five years, depending upon the nature and expected future benefits of such expenditure. The management reviews the amortization period on a regular basis and if expected future benefits from such expenditure are significantly lower from previous estimates, the amortization period is accordingly changed.


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(B) Significant notes on restated Profit & Loss and Assets and Liabilities 1. The Disclosure as required by the Accounting Standard -18 (Related Party Disclosure) are given in the Annexure 16

of the Restated Financial Statement. 2. The calculation of Earning Per Share (EPS) has been made in accordance with Accounting Standard (AS) 20 issued by

the ICAI. A statement on calculation of Basic and Diluted EPS is given in Annexure 6 of the Restated Financial Statement.

3. Details of Deferred Tax assets and liabilities:

In view of the Accounting Standard 22 issued by Institute of Chartered Accountants of India, the significant component and classification of deferred tax liability/asset because of timing difference comprises of the following:

(Rs. in lakhs)

Particulars 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05

Deferred Tax Liabilities: 421.88 367.55 329.22 357.96 266.63

On account of Difference between book and Tax Depreciation 45.52 54.33 38.33 (28.74) 91.33

Deferred Tax Assets 0.00 0.00 0.00 0.00 0.00

Deferred Tax Liabilities (Net) 467.40 421.88 367.55 329.22 357.96

The deferred tax has been provided from the financial year started from 2001-2002 4 Pursuant to the approval of the members of the company in accordance with SEBI guidelines 3,25,000

convertible warrants of Rs. 46 each with an option to subscribe to one equity shares of Rs. 10 each fully paid at premium of Rs. 36 each, within 18 months of the date of allotment i.e.29.03.2008 on preferential basis upon upfront payment of 10% of the total subscription money to the person acting in concert with the promoters of the company.

5. Particulars regarding firm in which the company is a partner:

Name Of the firm & partner Share% M/s. Syncom International Total Capital Rs.4.00 Lacs a) M/s. Syncom Formulations (India) Ltd. 99% b) Mr. Vijay Bankda 1%

6. As per the information available with the company in response to the enquires from all existing suppliers with

whom company deals, none of the suppliers are registered with the micro, small & medium Enterprises Development Act, 2006.

7. Segment Reporting The company is operating in single segment.

Segment Revenue

Profit before Tax & Interest

Capital Employed

1 N.A. N.A. N.A. N.A.

8. In the opinion of the Board, sundry debtors, loans and advances and other current assets are approximately of the

value stated if realized in the ordinary course of business. The provisions for all known liabilities is adequate and not in excess of the amount reasonably necessary. Some of balances are subject to confirmation and reconciliations.


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9. Computation of net profit in accordance with section 349 of the Companies Act, 1956 has not been given, as

commission by way of percentage of profit is not payable for the year to any of the director of the company. 10. Changes in accounting policies:

There was change in accounting policy with respect to change of depreciation during the year(s) March 2004,2005 and 2006 as under :

Financial year ended March 31, 2004 : Hitherto, it was the practice of the company to provide depreciation on written down value method on the additions upto 1996-97 and subsequent additions on straight line method, this has now been changed, with respect to additions made in plant & machinery during the financial year 1996-97 to Straight line method. In compliance with the accounting standard issued by ICAI, depreciation has been recomputed from the date of commissioning of these machineries at the SLM rates applicable to the year. Consequent to this change the charge of depreciation is lower by Rs 52,50,203 relating to previous years. Had there been no change in the method of depreciation, the charge of the year would have been lower by Rs. 22318 excluding the charge relating to previous years. Consequently, profit for the year, reserve and surplus and net block of fixed assets would have been lower by Rs 52,27,885.

Financial year ended March 31, 2005 : Hitherto, it was the practice of the company to provide depreciation on written down value method on the additions upto 1995-96 and subsequent additions on straight line method, this has now been changed, with respect to additions made in plant & machinery during the financial year 1995-96 to Straight line method. In compliance with the accounting standard issued by ICAI, depreciation has been recomputed from the date of commissioning of these machineries at the SLM rates applicable to the year. Consequent to this change the charge of depreciation is lower by Rs 62,63,650 relating to previous years. Had there been no change in the method of depreciation, the charge of the year would have been lower by Rs. 5,97,773 excluding the charge relating to previous years. Consequently, profit for the year, reserve and surplus and net block of fixed assets would have been lower by Rs 56,65,877.


Financial year ended March 31, 2007 : ---------NIL--------- Financial year Ended March 31, 2008 : ---------NIL--------- Period ended January 31, 2009 : ---------NIL--------- 11. There was no auditor qualifications included in audited reports in last five years. 12. The restated Accounts are as per prevailing Accounting Standards except for AS-15 applicable to Business of the

Company.


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13. Previous year figures have been reworked, regrouped, rearranged and reclassified where ever necessary for the purpose of comparison. Figures as on Jan’31,2009 are for the 10 months periods and therefore, are not strictly comparable with previous year figures in restated profit & loss A/c.

14. Contingent Liabilities Following are the contingent liabilities as on January 31, 2009. (Rs in lacs)

15. Reasons for restatement 1. The Income tax related to earlier year which only consisted of the amount incurred on payment of

income Tax dues for previous years have been adjusted to the relevant accounting years to which the income tax relates to, in the restated accounts.

2. Export incentives income (D.E.P.B.) stated under Other Income upto year 2006-07 and under sales in

the year 2007-08 have been reclassified under sales to bring the uniformity.

3. Excise Duty stated under Expenditure up to year 2003-04 and under sales in the year from 2004-05 onwards have been reclassified under sales to bring the uniformity.

4. Interest Income net of Interest paid stated under Other Income & Vice verca have been reclassified

under respective heads in the restated Accounts.

5. Interest & Dividend Income have been reclassified under Investing Activities in the restated cash flow statement.

6. Fixed Deposits have been reclassified as investments in the restated Accounts.

Sr. No. Particulars Amount

1 Income Tax demand for A.Y.06-07 73.47

2 Income Tax demand for A.Y. 04-05 52.48

3 Central Sales Tax demand for F.Y.05-06 0.46

4 Bank guarantees 1.03


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ANNEXURE -4 STATEMENT OF CASH FLOW, AS RESTATED (Rs. In Lacs)

PARTICULARS 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

CASH FROM OPERATING ACTIVITIES

Net Profit After tax and before extra ordinary items 264.69 353.87 424.81 493.88 471.37 244.33

Adjustment For:

Add: Depreciation 180.33 178.13 146.97 141.40 74.45 66.96

Less: Interest/Dividend Received (19.76) (21.57) (25.10) (3.53) (0.23) (0.58)

Add: Accounts W/off (0.01) (0.02) (0.24) 0.00 0.22 4.27

Amortisation of deferred revenue expenses/preliminary expenses

0.00 0.00 0.00 0.00 10.81 10.81

Add: Interest Paid & financial charges (39.07) 43.74 9.70 8.85 67.43 94.66

Other Non-operating (incomes) /expenses 386.18 554.15 556.15 640.60 624.05 420.45

Operating profit before working capital changes

Adjustments for :

Decrease (Increase) in Trade & Other receivables 642.08 (335.12) (184.96) 271.43 (201.08) (167.70)

Decrease (Increase) in Inventories 286.41 (214.08) 276.05 (77.05) (108.65) (89.72)

Decrease (Increase) in Other Current Loan & Adv. (277.13) (271.71) (199.03) (61.95) (56.22) (237.63)

Increase (Decrease) in Current liabilites (1123.58) 856.21 50.99 (398.66) 656.57 344.62

Increase (Decrease) in Customers deposits 0.00 0.00 0.00 (0.50) (117.49) 83.99

Increase (Decrease) in deffered tax liability 45.52 54.33 38.32 (28.74) 91.30 58.22

Cash generated from operations (40.52) 643.78 537.52 345.13 888.48 412.23

Net cash flow from operating activities (40.52) 643.78 537.52 345.13 888.48 412.23

CASH FROM INVESTING ACTIVITIES

Purchase of fixed assets & Capital Work in progress (163.62) (736.64) (624.41) (579.92) (254.44) (37.34)

Sale of fixed assets 0.00 0.00 0.00 0.00 0.00 0.00

Investments sold (Purchases) (19.44) (219.59) 37.93 (37.93) 0.00 0.00

Interest/dividend received 19.76 21.57 25.34 3.53 0.23 0.58

Sundry balances written off 0.00 0.00 0.00 0.00 (0.23) (4.27)

Net cash flow for investing activities (163.30) (934.66) (561.14) (614.32) (254.44) (41.03)

CASH FROM FINANCING ACTIVITIES

Issue of Equity 0.00 31.00 29.50 27.80 26.50 0.00

Warrant Appl. Money Received 0.00 14.95 0.00 0.00 0.00 0.00

Share Premium 0.00 111.60 129.80 255.76 212.03 0.00

Borrowings(Secured Loan+Sh.App.money Recd.) (88.47) (134.54) 215.53 (46.59) (532.36) (161.31)

Term loan received 0.00 0.00 0.00 0.00 0.00 100.00

Unsecured Loan received 1259.97 586.59 379.80 1470.28 1284.69 175.52

Interest paid 39.07 (43.74) (9.70) (8.85) (67.43) (94.66)

Repayment of Term Loan 0.00 0.00 0.00 0.00 (362.04) (66.96)

Repayment of Unsecured Loan (1013.19) (433.15) (507.76) (1272.93) (1107.15) (261.44)

Dividend paid and tax thereon 0.00 (36.42) (69.20) (96.12) (90.60) (57.27)

Net Cash Flow From Financing Activities 197.38 96.29 167.97 329.35 (636.36) (366.12)

Net Cash Flow For the Year (6.44) (194.59) 144.34 60.16 (2.32) 5.08

Cash & Cash Equivalents at beginning of the year 28.36 222.95 78.61 18.45 20.77 15.69

Cash & Cash Equivalents at End of the year 21.92 28.36 222.95 78.61 18.45 20.77


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ANNEXURE -5 STATEMENT OF DIVIDENDS

(Rs. In Lacs)

Particulars 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004

Equity Share Capital (Face Value Rs. 10) 6225000 5915000 5620000 5342000 5076966

Rate of Dividend 5.00% 10.00% 15.00% 15.00% 10.00%

Amount of Dividend 31.13 59.15 84.30 80.13 50.77

Corporate Dividend Tax 5.29 10.05 11.82 10.47 6.50

ANNEXURE -6 ACCOUNTING RATIOS (Rs. In Lacs)

Particulars 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Net worth (Rs.) (A) 4168.14 3881.80 3406.79 2891.88 2125.61 1459.59

Adjusted Profit after Tax (Rs.) (B) *264.69 379.63 454.41 509.92 575.35 300.90

No. of Shares outstanding at the end in Nos.(C) 6225000 6225000 5915000 5620000 5342000 5076966

Weighted average number of shares outstanding in nos.(D) 6225000 5917541 5760630 5443299 5083501 5076966

Add: Effect of Convertible Warrants 325000 325000 0 0 0 0

Weighted average number of shares outstanding during the year in Nos. – Diluted (E) 6550000 6242541 5760630 5443299 5083501 5076966

Earnings per Share (EPS) (Rs.)

Basic ( In Rs.) * 10 months (B/D) *4.25 6.42 7.89 9.37 11.32 5.93

Diluted ( In Rs.) * 10 months ( B/E) *4.04 6.08 7.89 9.37 11.32 5.93

Return on Net worth (B/A)

* 10 months *6.35 9.78 13.34 17.63 27.07 20.62

Net Asset Value per Share (Rs.) (A/C) 66.96 62.36 57.60 51.46 39.79 28.75

Definitions of key ratios: (to be in conformity with the relevant accounting standards)

I. Earnings per share (Rs.): Net profit attributable to equity shareholders/weighted average number of equity shares

outstanding as at the end of the year/period. Earnings per share are calculated in accordance with Accounting Standard 20 “Earnings per Share”, issued by the Institute of Chartered Accountants of India.

II. Return on Net Worth (%): Net profit after tax/Net worth as at the end of the year/period. III. Net Asset Value (Rs.): Net worth at the end of the year/Number of equity Shares outstanding at the end of the

year/ period. IV. Net Profit, as appearing in the statement of restated profits and losses, has been considered for the purpose of computing the above ratios.


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ANNEXURE -7 CAPITALISATION STATEMENT AS AT 31.01.2009

(Rs. in lacs) Pre-issue as at 31.01.2009 Post Issue*

Borrowing

Short – Term debt 881.10 * Long-term debt 0.00 * Total Debt 881.10 * Shareholders' funds * Share Capital * - Equity 622.50 * -Convertible Warrant issued and alloted 14.95 * - Preference 0.00 * Share premium 852.09 * Reserves & surplus 2678.60 * Less: Miscellaneous Expenditure not written off 0.00 * Total Shareholders Funds 4168.14 * Total capitalisation 5049.24 *

Total Debt/ Shareholders fund 0.21 *

*Post issue figures can be calculated only on the finalization of the Right Issue.

ANNEXURE -8

STATEMENT OF TAX SHELTERS (Rs. In Lacs)

Particulars 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Net Profit / (Loss) before Current & deferred Taxes 414.69 583.56 692.50 720.15 915.79 395.04

Short Term Capital Gain on shares 0.00 0.00 20.97 17.06 0.00 0.00

Net profit before short term capital gain 414.69 583.56 671.53 703.09 915.79 395.04

Tax Rate 33.99 33.99 33.66 33.66 36.59 35.88

Tax Rate on Short Term Capital Gain 0.00 0.00 11.22 11.22 0.00 0.00

B/f Short Term Capital Loss 0.00 0.00 0.00 (2.74) 0.00 0.00

Tax at Notional Rate ( A) 140.95 198.35 228.39 238.27 335.11 141.74

Adjustments:

Export Profits U/s 80HHC 0.00 0.00 0.00 0.00 0.00 70.58

Deduction U/s 80IB 0.00 0.00 0.00 0.00 0.00 58.34

Difference Between Tax Depreciation and 102.19 148.42 113.86 1.30 235.00 94.63

Book Depreciation

Unabsorbed Depreciation B/f 0.00 0.00 80.09

Expenses on R & D U/s 35(2AB) 0.00 32.57 0.00 0.00 0.00 0.00

Amount Disallowed U/s 40 0.00 (35.66) (1.97) 0.00 (5.40) 0.00

Amount Disallowed U/s 40 in preceding Yr. Now Allowable 35.66 1.97 0.00 5.40 0.00 0.00

Other adjustments 0.00 (0.01) 0.11 (1.47) (0.10) (0.08)

Net adjustments (B) 137.85 147.29 112.00 5.23 229.50 303.56

Tax saving thereon ( C) 46.86 50.06 37.70 1.76 83.98 108.92

Set off of MAT Credit 0.00 0.00 0.00 0.00 0.00 0.38


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Particulars 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Interest on Taxes 0.00 8.82 9.14 15.52 16.49 2.71

Total taxation (A-C) 94.10 157.11 199.83 252.02 267.62 35.91

Taxation on extraordinary items 0.00 0.00 2.35 0.00 0.00 0.00

Tax on profits before extraordinary items 94.10 157.11 197.48 252.02 267.62 35.91

ANNEXURE -9

SECURED LOANS (Rs. In lacs)

Sr. No. Particulars of Loan 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

1. Term Loan 0.00 0.00 0.00 0.00 0.00 362.04

2. Over Draft /Cash Credit Account 48.52 136.99 271.54 56.01 102.61 634.96

Total Secured Loan (1+2) 48.52 136.99 271.54 56.01 102.61 997.00

Principal Terms of Secured Loans & Assets Charged As Security, as on 31.01.2009

(Rs. in Lacs)

Lender Type of Facility

Sanctioned Amount

Outstanding As on 31.01.2009

Rate of Interest

Repayment Terms Details of Security

Dena Bank

Over Draft Facility

200.00 lacs 48.52 Lacs

11.50 p.a. N..A.

Fixed Deposit of Rs. 200.00 lacs With Dena Bank, KC Dadar Branch Mumbai

Annexure- 10 STATEMENT OF UNSECURED LOANS (Rs. In lacs)

Particulars 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

From Bank 0.00 0.00 0.00 0.00 0.00 0.00

Unsecured Loans from directors & Share holders 0.00 585.81 432.37 560.34 362.99 185.46

Intercorporate deposit 832.58 0.00 0.00 0.00 0.00 0.00

Trade Deposit 0.00 0.00 0.00 0.00 0.50 117.99

Total 832.58 585.81 432.37 560.34 363.49 303.45

Annexure- 11

DETAILS OF INVESTMENTS (Rs. in Lacs)

Particulars 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Investment in group Companies/Firm 4.00 4.00 4.00 4.00 4.00 4.00

Investment in Mutual Fund/Shares 0.00 0.00 0.00 37.93 0.00 0.00 Fixed Deposit Plage with Bank Against OD facility 239.03 219.59 0.00 0.00 0.00 0.00

Total 243.03 223.59 4.00 41.93 4.00 4.00


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Annexure- 12 DETAILS OF SUNDRY DEBTORS (Rs. In lacs)

Age wise Break-up 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Promoters, Directors & Group companies

Promoters 0.00 0.00 0.00 0.00 0.00 0.00

Directors 0.00 0.00 0.00 0.00 0.00 0.00

Group Companies / Associates 15.14 9.51 9.51 9.77 14.46 31.44

(A) Less than six months

Considered good 1065.63 1678.71 1392.74 930.09 1177.10 1061.12

Others 0.00 0.00 0.00 0.00 0.00 0.00

(B) More than six months

Considered good 56.68 91.31 42.15 319.58 339.31 237.23

Others 0.00 0.00 0.00 0.00 0.00 0.00

Total 1137.45 1779.53 1444.41 1259.45 1530.87 1329.79

Annexure 13

Details of Loans and Advances (Rs. In lacs)

PARTICULAR 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

A) Promoters, Directors & Group companies

Deposit for Premises 610.00 150.00 150.00 150.00 150.00 150.00

Total (B) 610.00 150.00 150.00 150.00 150.00 150.00

B) Other then Related Parties

Advances recoverable in cash or in kind or for value to be received 658.02 768.72 527.79 328.09 233.14 291.62

Deposits 18.65 13.75 13.79 12.25 11.12 11.05

Prepaid expenses 6.79 3.52 0.25 0.32 0.45 0.82

Advance Income Tax 26.07 106.40 78.86 80.99 115.00 0.00

Total (B) 709.53 892.40 620.69 421.66 359.71 303.49

Total (A+B) 1319.53 1042.40 770.69 571.66 509.71 453.49

Annexure 14

Details of Current Liabilities and Provision (Rs. In lacs)

PARTICULAR 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Sundry Creditors

a) Dues of micro enterprise & small enterprise 0.00 0.00 0.00 0.00 0.00 b) Dues of creditors other than micro enterprise & small enterprise 291.22 1348.80 449.74 385.43 787.39 504.24

Advances received from customers 28.25 14.83 50.68 7.69 5.88 2.70

Other liabilities 200.93 184.90 113.16 82.96 80.47 65.45

Unclaimed Dividend 17.90 15.99 15.61 12.07 5.68 4.74

TOTAL (A) 538.30 1564.52 629.19 488.15 879.42 577.13

Provisions

Provision for Gratuity 10.38 9.57 8.45 7.71 7.63 5.57


Corporate Dividend Tax 0.00 5.29 10.05 11.82 10.47 6.50


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Provision for income tax 77.84 161.23 208.70 272.57 370.52 87.57

TOTAL (B) 88.22 207.22 286.35 376.40 468.75 150.41

Total A+B 626.52 1771.74 915.54 864.55 1348.17 727.54

Annexure 15

DETAILS OF OTHER INCOME (Rs. in Lacs)

Particulars Nature 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Profit before Tax 0.00 583.56 692.50 720.15 915.79 395.04

20 % of Profit before Tax 0.00 116.71 138.50 144.03 183.16 79.01

Other Income 68.73 126.81 194.93 216.00 148.75 2.48

Source of Other Income:

Job Work Income Recurring 46.95 100.68 145.22 161.13 88.45 0.00

Commission Received Non Recurring 0.00 0.00 0.00 30.48 57.79 0.00

Dividend Non-recurring 0.00 0.00 0.24 0.27 0.00 0.00

Interest on Fixed Deposits Recurring 19.76 21.57 12.22 3.26 0.00 0.58

Profit from Sale of Investments Non-recurring 0.00 0.00 20.97 17.17 0.00 0.00

Interest from Deposits non recrurring 0.00 0.00 12.88 0.00 0.23 0.00

Misc. Income Non Recurring 2.02 4.56 3.41 3.69 2.28 1.90

Total 68.73 126.81 194.93 216.00 148.75 2.48

Annexure 16

STATEMENT OF RELATED PARTY TRANSACTIONS

Transaction with related party as identified by the management in accordance with Accounting Standard 18 “Related party disclosures” issued by The Institute of Chartered Accountants of India, are as follows:

(I) List of Related Parties

Sr. No. Name of Related Party

Key Management personnel

Directors

1. Mr. Kedarmal Bankda

2. Mr. Vijay Bankda

Relatives of Directors

1 Smt. Vimla Bankda

2 Smt. Asha Bankda

3 Smt. Rahul Bankda

4 Shri. Vijay Bankda (Huf)

5 MRS. SULABH BANKDA

6 MR. ANKIT BANKDA

7 MR. ANKUR BANKDA

Enterprise controlled or managed by key


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management personnel

1. M/s Syncom International

2. M/s Synmax Pharma, Indore

3 M/s Strand developers Pvt. Ltd.

4 M/s Arp Pharma Pvt. Ltd.

II. Details of Transactions with Related party: (Rs. in lacs)

Nature of Transaction Relationship 31.01.09 31.03.08 31.03.07 31.03.06 31.03.05 31.03.04

Debits Repayment of Unsecured Loans Directors 592.29 433.15 376.22 574.66 474.72 233.77


Car Hire Charges Directors 4.30 5.16 4.74 3.16 3.72 2.56


Rent Directors 2.00 2.40 2.40 2.40 1.80 2.40


Interest Directors Nil 23.47 Nil Nil 2.14 0.81

Relatives of Director Nil Nil Nil Nil Nil Nil

Salary Directors 3.00 3.60 2.58 2.40 2.40 2.40


Sitting Fees Directors 0.30 0.05 Nil 0.05 0.10 0.05

Unsecured Loans received Directors 6.49 586.59 379.80 753.83 380.21 111.81


Credits

Enterprise controlled or managed by key management personnel

Unsecured Loans received 1253.48 0.00 0.00 0.00 0.00 0.00

Repayment of Unsecured Loans 420.90 0.00 0.00 0.00 0.00 0.00

Sales , Services & Other Income 0.00 Nil Nil Nil 2.72 8.80

Interest Paid 31.37 0.00 0.00 0.00 0.00 0.00

BALANCE AT YEAR END

Balance Payable Enterprise Controlled 832.58 0.00 0.00 0.00 0.00 0.00

Directors 0.00 585.81 432.37 184.11 5.94 100.45

Relatives of Directors 0.00 0.00 0.00 376.23 357.05 85.01

Balance Receivable Enterprises Controlled 15.14 9.51 9.51 9.77 14.46 31.44


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FINANCIAL INFORMATION OF GROUP COMPANY

A. Details of listed companies within the group companies. There are no listed Companies within the Group Companies. B. Details of unlisted companies within the group companies.

There are no unlisted Companies within the Group Companies. C. Details of partnership firm within the group companies.

1. M/S SYNCOM INTERNATIONAL M/s Syncom International is a registered partnership firm formed for the purpose of carrying on the business of export of various merchandise such as Pharmaceutical formulations & packing material & raw material., Food stuffs / commodities, Engineering goods, Jewellery & handicrafts, Garments & textiles, Dyes & dye stuffs / chemicals, Leather items & rubber products The firm was registered on 14th day of August 1998. However, since the year 2003 the firm has not been carrying out any business activities. The following is the share of the partners in the partnership firm.

Sr. No

Name of the Partner

Profit Sharing Ratio (%)

1. M/s Syncom Formulations (India) Limited 99 2. Mr. Vijay Bankda 1

The Summary of Financial information performance of M/s. Syncom International for the last 3 years is given below.

(Rs. in Lakhs)

Year Ended March 31 2008 2007 2006

Income from Operations Nil Nil Nil Net Profit / (loss) (0.30) 0.00 0.00 Partners Capital ( including Current A/cs of Partners)

(2.85) (2.85) (2.85)

Disassociation with Companies/Firms by the promoter of our company during the preceding three years There are no Companies/ Firms with which the promoters of our Company have disassociated themselves during the preceding three years. Sale or Purchase between the Group Company There have been no sales or purchase with our Company and with the Group Company exceeding 10% of the total sales and purchases of our Company. Related business transaction within the group and significance on financial performance There are no business transaction between our Company and the Group Company; hence, significance of these transactions on the financial performance of the Companies does not exist.


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CHANGES IN ACCOUNTING POLICIES IN THE LAST THREE YEARS There has been no change in the Accounting Policies of the Company during the last three years, which would materially affect the results of the Company except as stated below There was change in accounting policy with respect to change of depreciation during the year(s) March 2004, 2005 and 2006 as under: Financial year ended March 31, 2004 : Hitherto, it was the practice of the company to provide depreciation on written down value method on the additions upto 1996-97 and subsequent additions on straight line method, this has now been changed, with respect to additions made in plant & machinery during the financial year 1996-97 to Straight line method. In compliance with the accounting standard issued by ICAI, depreciation has been recomputed from the date of commissioning of these machineries at the SLM rates applicable to the year. Consequent to this change the charge of depreciation is lower by Rs 52,50,203 relating to previous years. Had there been no change in the method of depreciation, the charge of the year would have been lower by Rs. 22318 excluding the charge relating to previous years. Consequently, profit for the year, reserve and surplus and net block of fixed assets would have been lower by Rs 52,27,885.




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MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS REFLECTED IN THE FINANCIAL STATEMENTS.

OVERVIEW: Industry Overview: The Indian Pharmaceutical Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously. Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world. The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control. The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India. These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations. Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market. (Source:www.pharmaceutical-drug-manufacturers.com) Overview of business of Issuer Company: Syncom Formulations (India) Limited (SFL) was incorporated as a Private limited company in the name of Syncom Formulations (India) Private Limited on June 21, 1988 by Mr. Kedarmal Bankda, Mr. Ajay Kumar Bankda & Mr. Vijay Kumar Bankda for manufacturing, marketing, dealership, importing, exporting & job work of pharmaceuticals, medicinal and other Industrial preparation & formulations under its own brands in Ethical, OTC, Generic and Herbal market segment. The company changed its status from Private limited to Public limited in Year 1992. The company came out with its maiden Initial Public Offering in the Year 1994. The registered office of the company is situated at 7, Niraj Industrial Estate, Off Mahakali Caves Road, Andheri (East), Mumbai 400 093. It has manufacturing unit at Pithampur, District Dhar, Madhya Pradesh which has a state of art manufacturing facility with WHO: GMP & ISO 9001 accreditation. SFL Quality policy is to upgrade Organisational capabilities viz. Men, Materials & Machines in order to consistently provide Quality products. In the process of family settlement, the domestic pharmaceuticals formulations business of SFL was hived off to Syncom Healthcare Limited (SHL) as a result one of the promoters Mr. Ajay Bankda got disassociated with SFL.The Promoters are Kedarmal Bankda and Vijay Kumar Bankda.


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The company is engaged in the business of pharmaceutical formulations. It manufactures range of products in various dosage forms and markets them in various countries. In addition to pharmaceutical formulations in the form of tablets, capsules, liquids and dry powders, the company also manufactures Injectibles, inhalers and ear/eye drops. In 1994, the company undertook an expansion programme of setting up a new plant for manufacturing pharmaceutical formulations at Pithampur, Madhya Pradesh. The project which was financed through a public issue made in January 1994 was completed in 1995. During the year 1997-98, the Company has further diversified into Ethical Operations by introducing the range of prescription formulations. During the year 1998-99 there has been huge expansion of installed capacity and production base. Further the company introduced products in the generic, OTC and Ethical Divisions. During the year 2007-08 the Company has completed modernization and expansion of Project in Pithampur unit, District Dhar, M.P with a total investment of Rs. 1516.62 Lacs. Today, SFL operating in more than 35 countries worldwide and has more than 150 products in various dosage forms which include Tablets, Capsules, Dry Syrups, and Ointments/Creams, Dry Powder Injections and Ampoules and wide range of HERBAL Products. Significant and Key Developments subsequent to last Financial Year: There are no such significant developments that have taken place from the date of the last financial statement which materially and adversely affect or is likely to affect the trading or profitability of the issuer company, or the value of its assets, or its ability to pay its liabilities within the next twelve months. Factors that may affect the results of operations: Our financial condition and results of operations are affected by the following factors: • Foreign currency risk The major portion of turnover of the company is accounted for exports and accordingly the revenues from export are denominated in foreign currencies and most of our expenses are incurred and paid in Indian rupees. The exchange rates between the Indian rupee and the foreign currencies have changed substantially in the recent years. Such fluctuations in the exchange rate may affect the profitability of the company arising from proposed export of products of the company. • Cost of people The component of cost of salaries & wages of our employees is vital. The number of people engaged in the marketing and sales force is relatively high. In view of increasing employees’ compensation in India due to competitive pressures, if wages in India increases, we may be required to pay more wages which may result in increase in our human resource cost. • Competition We compete from Indian and non – Indian pharmaceutical producers, especially such competition affect the growth and pricing of our product and services. • Cost of Materials The principal component of our cost is the Raw Material and Packing materials used in the process of manufacturing. The recent change in active pharmaceutical ingredients (API) prices shows that most of the material cost is fluctuating. This may adversely affect our operational results. • Interest Rates With the high inflation rate in India, the Government is taking all necessary steps to curb the inflation. As a monetary control the Reserve Bank of India has increased their repo rate and CRR on time to time in the recent past that is resulting in increase in the rate of interest. This is causing increase in the cost of borrowings from the banks.


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• Demand Our revenues are dependent on the growing demand of our pharmaceutical products and also demand for production and research outsourcing in the pharmaceutical industry. These factors and a number of future developments may affect our results of operations, financial condition and cash flow in future periods. We believe that the following future developments may affect our future results of operations, financial condition and cash flow:-

� Effects of the new patent regime in India; � Consolidation in the pharmaceutical industry; � Additional capital expenditures and related financings, if any, including for capacity expansion; � Adoption of or changes in price controls in the Indian and other major drug markets; � Changes in the government legislations on tax incentives; � Competition from other custom manufacturing companies; � Changes in the strategic plans of our current and potential customers and clients towards outsourcing of � Change in the norms for certification under WHO GMP, and � Increase in expenditure on research and development.

Our Results of Operations: As a result of the various factors discussed above that affect our income and expenditure our results of operations may vary from period to period. The following table sets forth certain information with respect to our results of operations for the periods indicated read together with notes, accounting polices and report thereon which appear in Letter of Offer

For the year ended 31.03.08 31.03.07 31.03.06 31.03.05

Sales :

Of products manufactured by the Company 6001.62 5628.08 4629.24 4307.29

Of products traded by the Company 831.64 403.47 595.54 1192.61

Less : Excise Duty (48.88) (60.31) (0.38) (58.86)

Net Sales 6784.38 5971.24 5224.40 5441.04

Increase / (Decrease) (%) 13.62% 14.30% (3.98%) ----

Other income 126.81 194.93 216.00 148.75

Increase / (Decrease) (%) (34.95%) (9.75%) 45.21% ----

Increase (decrease) in inventory 46.23 (161.53) 46.61 5.93

Total Income 6957.42 6004.64 5487.01 5595.71


Expenditure:

Raw Materials & goods consumed 4624.50 3719.48 3572.97 3640.80

Other Manufacturing expenses 225.52 191.02 155.35 173.25

Direct Expenses 4850.02 3910.50 3728.32 3814.05


Staff costs 524.77 365.66 214.07 160.12

Increase / (Decrease) (%) 43.51% 70.81% 33.69% ----

Administration Expenses 219.99 188.58 141.83 93.38


Selling & distribution expenses 557.21 690.73 530.93 459.68

Increase / (Decrease) (%) (19.33%) 30.10% 15.50% ----

Interest & financial Charges 43.74 9.70 8.85 67.43

Increase / (Decrease) (%) 350.93% 9.60 (86.88%) ----


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Depreciation 178.13 146.97 141.41 74.45


Miscellaneous expenditure written off 0.00 0.00 0.00 10.82

Loss on Sales of Machinery 0.00 0.00 1.45 0.00

Total Expenditure 6373.86 5312.15 4766.87 4679.92


Net Profit before tax and extraordinary items 583.56 692.50 720.15 915.79

Increase / (Decrease) (%) (15.73%) (3.84%) (21.36%) ----

Current Tax 136.34 190.71 236.79 249.11

Deferred Tax 54.33 38.33 (28.74) 91.33

Fringe Benefit Tax 13.25 9.06 2.17 0.00

Net profit after tax & before extraordinary items 379.63 454.41 509.92 575.35


Extraordinary items (net of tax) 0.00 0.00 0.00 0.00

Less : I.T. paid in Next Years 21.64 12.19 16.04 103.45

Less: Prior Period Adjustment 4.12 17.41 0.00 0.53

Net profit after extraordinary items 353.87 424.81 493.88 471.37


Profit brought forward from previous year 195.20 89.59 91.83 111.07

Balance available for appropriation 549.07 514.40 585.71 582.44

Appropriations

General Reserve 350.00 250.00 400.00 400.00

Proposed dividend 31.13 59.15 84.30 80.13

Tax on proposed dividend 5.29 10.05 11.82 10.47

Balance carried to Balance sheet 162.65 195.20 89.58 91.83

Comparison of the financials for the year ended 31st March, 2005 & 31st March, 2006. Net Sales: The net sales of the company have recorded a slight decline of 3.98% with Rs.5224.40 Lacs for the year ended March 31, 2006 as against Rs. 5441.04 Lacs for the year ended March 31, 2005. The decrease was mainly because of decline in turnover of products traded by company with Rs. 595.54 Lacs for the year ended March 31, 2006 as against Rs. 1192.61 Lacs for the year ended March 31, 2005. Other Income: Other Income of the company has recorded an increase of 45.21% with Rs. 216.00 Lacs for the year ended March 31, 2006 as against Rs. 148.75 Lacs for the year ended March 31, 2005. The Increase was mainly attributed to increase in Job Work Income of Company which has increased to Rs. 161.13 Lacs in fiscal 2006 as against Rs.88.45 Lacs in fiscal 2005 and company has also recorded profit on sale of investment of Rs.17.00 Lacs in fiscal 2006 as against nil of fiscal 2005. Expenditure: The Direct expenses has recorded a slight decline of 2.25 % with Rs. 3728.32 Lacs for the year ended March 31, 2006 as against Rs. 3814.05 Lacs for the year ended March 31, 2005 due to lower base of sales in fiscal; 2006. The Staff Cost has registered the increase of 33.69% with Rs. 214.07 Lacs in fiscal 2006 as against Rs.160.12 Lacs in fiscal 2005. Thus jump was mainly attributed to hiring of marketing personnel in “Cratus Division” and routine annual


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hike in wages and remuneration of staffs. The administration Expenses has registered an increase of 51.88 % with Rs. 141.83 Lacs in fiscal 2006 as against Rs.93.38 Lacs in fiscal 2005 and selling and distribution expenses has increased of 15.50 % with Rs. 530.93 Lacs in fiscal 2006 as against Rs. 459.68 Lacs in fiscal 2005 due to increase in overheads through launching of “Cratus Division” Interest & financial Charges: Interest and financial charges of company has recorded a sharp decline of 86.88% with Rs. 8.85 Lacs in fiscal 2006 as against Rs. 67.43 Lacs in fiscal 2005 due to less utilization of its Overdraft limits from banks. Depreciation: Depreciation has been increased from Rs. 74.45 Lacs in fiscal 2005 to Rs. 141.41 Lacs in fiscal 2006 due to addition in line of fixed assets and effect of change in accounting policy and effect of changes in charging method of depreciation and through this depreciation charge of fiscal 2006 was lowered by 19.06 Lacs as against Rs.56.65 Lacs of fiscal 2005. Taxation: The Company has made provision of Current Income tax of Rs. 236.79 Lacs for the financial year ended March 31, 2006 in comparison of Rs. 249.11 Lacs for the financial year ended March 31, 2005. The reason for such reduction was comparative lower profit base of company in financial year 2006 and also reduction in corporate tax rate which has reduced to 33.66 % in fiscal 2006 as against 36.59% in fiscal 2005. Profits after Taxes (PAT): PAT of company has recorded a decline of 11.37 % with Rs.509.92 Lacs as against Rs.575.35 Lacs due to collective increase in Staff costs, Administration Expenses and Selling and distribution expenses. Comparison of the financials for the year ended 31st March, 2006 & 31st March, 2007. Net Sales: The net sales of the company have registered an increase of 14.30% with Rs.5971.24 Lacs for the year ended March 31, 2007 as against Rs. 5441.04 Lacs for the year ended March 31, 2006. Such Increase was mainly because of jump in turnover of products manufactured by company with Rs. 5628.08 Lacs for the year ended March 31, 2007 as against Rs. 4629.24 Lacs for the year ended March 31, 2006. Other Income: Other Income of the company has recorded a decline of 9.75 % with Rs. 194.93 Lacs for the year ended March 31, 2007 as against Rs. 216.00 Lacs for the year ended March 31, 2006. The reason for such decline was mainly attributed to no income from commission in fiscal 2007 as compared to Rs. 30.48 Lacs in fiscal 2006. Expenditure: The Direct expenses has recorded an increase of 4.89 % with Rs. 3910.50 Lacs for the year ended March 31, 2007 as against Rs. 3728.32 Lacs for the year ended March 31, 2006 due to increase in turnover base of company in fiscal 2007. The Staff Cost has registered the increase of 70.81% with Rs. 365.66 Lacs in fiscal 2007 as against Rs.214.07 Lacs in fiscal 2006. Thus jump was mainly attributed to hiring of marketing personnel in “Cratus Division” and routine annual hike in wages and remuneration of staffs. The administration Expenses has registered an increase of 32.96% with Rs. 188.58 Lacs in fiscal 2007 as against Rs.141.83 Lacs in fiscal 2006 and selling and distribution expenses has increased of 30.10 % with Rs. 690.73 Lacs in fiscal 2007 as against Rs. 530.93 Lacs in fiscal 2006. Interest & financial Charges: Interest and financial charges of company has increased in absolute terms by 9.60% with Rs. 9.70 Lacs in fiscal 2007 as against Rs. 8.85 Lacs in fiscal 2006. Depreciation: Depreciation has been increased from Rs. 141.41 Lacs in fiscal 2006 to Rs. 146.97 Lacs in fiscal 2007 due to addition in line of fixed assets. Taxation: The Company has made provision of Current Income tax of Rs. 190.71 Lacs in for the financial year ended March 31, 2007 in comparison of Rs. 236.79 Lacs for the financial year ended March 31, 2006 in line with decrease in profits of company. Profits after Taxes (PAT): PAT of company has recorded a decline of 10.89% with Rs.454.41 Lacs as against Rs.509.92 Lacs due to collective increase in Staff costs, Administration Expenses and Selling and distribution expenses.


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Comparison of the financials for the year ended 31st March, 2007 & 31st March, 2008. Net Sales: The net sales of the company have registered an increase of 13.62 % with Rs.6784.38 Lacs for the year ended March 31, 2008 as against Rs. 5971.24 Lacs for the year ended March 31, 2007. Such Increase was attributed to collective increase in turnover of goods manufactured as well as goods traded by company. Other Income: Other Income of the company has recorded a decline of 34.95 % with Rs. 126.81 Lacs for the year ended March 31, 2008 as against Rs. 194.93 Lacs for the year ended March 31, 2007. The reason for such decline was mainly attributed to decline in Job work income which has decreased to Rs. 100.68 Lacs in fiscal 2008 as against Rs. 145.22 Lacs in fiscal 2007 Expenditure: The Direct expenses has recorded an increase of 24.03% with Rs. 4850.02 Lacs for the year ended March 31, 2008 as against Rs. 3910.50 Lacs for the year ended March 31, 2007 in line with increase in net sales of company and increase in material prices and manufacturing overheads in fiscal 2008. The Staff Cost has registered the increase of 43.51% with Rs. 524.77 Lacs in fiscal 2008 as against Rs.365.66 Lacs in fiscal 2007. Thus jump was mainly attributed to increase in manpower strength of company and routine annual hike in wages and remuneration of staffs. The administration Expenses has registered an increase of 16.66% with Rs. 219.99 Lacs in fiscal 2008 as against Rs.188.58 Lacs in fiscal 2007 and selling and distribution expenses has decreased by 19.33 % with Rs. 557.21 Lacs in fiscal 2008 as against Rs. 690.73 Lacs in fiscal 2006. Interest & financial Charges: Interest and financial charges of company has increased to Rs. 43.74 Lacs in fiscal 2008 as against Rs. 9.70 Lacs in fiscal 2007 due to payment of interest on various unsecured loans and bank overdrafts. Depreciation: Depreciation has been increased from Rs. 146.97 Lacs in fiscal 2007 to Rs. 178.13 Lacs in fiscal 2008 due to addition in line of fixed assets. Taxation: The Company has made provision of Current Income tax of Rs. 136.34 Lacs in for the financial year ended March 31, 2008 in comparison of Rs. 190.71 Lacs for the financial year ended March 31, 2007 in line with decrease in profits of company. Profits after Taxes (PAT): PAT of company has recorded a decline of 11.61% with Rs. 379.63 Lacs as against Rs.454.41 Lacs due to collective increase in Material Costs, Manufacturing Overheads, Staff costs, Administration Expenses. Information required as per clause 6.10.5.5 of SEBI (DIP) Guidelines • Unusual or infrequent events or transactions There are no unusual or infrequent events or transactions that have significantly affected operations of the Company. • Significant economic changes that materially affected or are likely to affect income from continuing operations There are no significant economic changes that materially affected Company’s operations or are likely to affect income from continuing operations. • Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations. No known trends or uncertainties are envisaged or are expected to have a material adverse impact on sales, revenue or income from continuing operations to Company’s knowledge. • Future changes in relationship between costs and revenues in case of events such as future increase in Labour or material cost or prices that will cause material change are known. According to our knowledge there are no future relationship between cost and income that would be expected to have a material adverse impact on our operations and revenues.


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• The extent to which material increases in net sales / revenue is due to increase in sales volume, introduction of new products or services or increased sales prices Our Company witnessed continuous growth in revenues over a period of past five years Our Total turnover has grown from Rs.3361 lacs in FY 2002-03 to Rs.6833 lacs in the FY 2007-08 which registers a growth of more than 100% over a time horizon of 5 fiscals. This increase in revenues is by and large linked to increases in volume of manufacturing and other activities carried out by the Company. • Total turnover of each major industry segment in which the Company operated The Company operates in only one Industry Segment that is Pharmaceutical industry. • Status of any publicly announced New Products or Business Segment The Company has not announced any new products or business segment. • The extent to which the company’s business is seasonal. The Company’s business is not seasonal in nature. • Any significant dependence on a single or few suppliers or customers Our company sources its raw material requirement from various suppliers and also caters the demand of various customers spread in domestic as well as international market and is not under threat of dependence from any single supplier or customer. • Competitive conditions The company will face competition from existing as well as new players in pharmaceutical formulation industry in India. Statement by the Directors There is no material development after the date of latest Balance sheet save and except as stated elsewhere in this document that are likely to materially affect the performance and the prospects of the company. The above discussion be read in conjunction with our selected financial and other operating data and financial statements and other related notes appearing elsewhere in the Letter of Offer and the related notes to accounts and significant accounting policies that have been incorporated in the section titled Auditors Report. Our fiscal year ends on March 31 of each year hence all references to a particular fiscal year are to the 12-month-period ended March 31st of that year. In this section, any reference to “we”/”us” or “our” refers only to “Syncom Formulations (India) Limited”


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SECTION VI: LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS Except as described below, there are no outstanding litigations, suits or criminal or civil prosecutions, proceedings or tax liabilities against our Company, and there are no defaults, non payment of statutory dues, over dues to banks/financial institutions, defaults against banks/financial institutions, defaults in dues payable to holders to any debentures, bonds or fixed deposits issued by the Company (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of Part 1 of Schedule XIII of the Companies Act, 1956

OUTSTANDING LITIGATIONS INVOLVING OUR COMPANY A. FILED AGAINST OUR COMPANY 1. Litigation Involving Civil Laws

Below is list of litigation pending against our company involving Civil Laws:

Sr. No. Case No.(s)

Parties Authority Subject matter and relief sought/Brief History

Amount involved- (in Lacs)

Present status

1 App. Case No. 2048/06

North Eastern Carrying Corp. Vs Syncom Formulation (I) Ltd.

State Commission

The present appeal filed by the Transporter against our Company against the order dated 4.9.2006 passed by the District Consumer Forum, Indore by which it has allowed our complaint and awarded compensation.

2.35 To be listed for final hearing

2 Criminal revision no. 109,100, 101

M/s Gyata Medical v/s Syncom Formulation (I) Ltd.

Session Judge

The present Criminal revision filed by the applicant against order passed in favour of Our Company allowing application U/s 65 of Evidence act.

N .A. For Argument

3 Case no. 23/08

Kushavh Pharma v/s Syncom Formulation (I) Ltd.

Consumer Forum Gajipur

Applicant filled an application U/s 27 of C. P. Act for compliance of order. We have already filed appeal which has to be registered

2 Lacs For Argument

4 Execution case no. 06/09

SAS Pharma v/s Syncom Formulation (I) Ltd.

D. J. Dhar Applicant filed execution application against which we have already filed an appeal before the Honorable Delhi High court

5 Lacs For Argument


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2. Litigation Involving Criminal Laws

There is no litigation pending against our company involving criminal offences.

3. Litigation Involving Securities and Economic Laws

Below is list of litigation pending against our company involving securities or economic offences.

4. Litigation Involving Statutory Laws

Below is list of litigation pending against our company involving Statutory Laws

(a) Income Tax

Sr. No. Case No.(s) Assessment Year


Amount involved (Rs. In lacs)

Present status

1 ITA 1701 of

2007 ITA 2711 / Mumbai /2003

1999-00 C I T Range 8 ( 3 ) Vs Syncom Formulations (I) Ltd.

Special Bench, High Court ITAT

Ground - 80HHC claimed in 115JA Computation Result / Order awaited Special Bench Appeal - Matter referred back to Regular Benches for further orders. Orders Awaited

0.76

Dept appeal with ITAT Pending

2. Apeal to CIT

(A) 2004-05 D C I T

Range 8(3) Vs Syncom Formulations (I) Ltd.

C I T (A) Disallowance pertaining to 80HHC and 80IA. Affect of MAT disallowance

42.98 Appeal filed Hearing Date awaited

Sr. No.



Present status

1. Syncom Formulation (I) Ltd. vs Harish Grower

S. G. Nagar, (Raj.) Civil Judge

Issue of 500 duplicate shares in favor of Harish Grower. Due to third party complaint company required injuction order from court

00.13 Reply and Argument


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to be given. Revised liability is being paid in installment. 2 installment spending for Rs. 4.72 Lacs each. Peanlty u/s 271 Levied

3 Apeal to CIT (A)

2006-07 D C I T Range 8(3) Vs Syncom Formulations (I) Ltd.

C I T (A) Disallowance related to stock valuation, office/godown rent, reasonability of trading profit

73.47 Appeal filed Hearing Date awaited

NOTE: 1. Case No. ITA 4474/M/03 for A. Y. 1995-96 D C I T range 8(3) Vs Syncom Formulations (I) Ltd. Dept. appeal dismissed. 2. Case No. Pen NO. 18/P-164/2008-09 for A. Y. 2005-06 D C I T range 8(3) Vs Syncom Formulations (I) Ltd. Dept. appeal settled and demand paid. (b) Central Sales Tax Act

1 N.A. 2005-06 The Asst. commissioner of Commercial Tax

The appellate authority,Deputy Commissioner of commercial Tax of Apple

Levying tax at 10% on TTO treating the same as without supporting of C form,without giving proper opportunity to the appellant to produce the required C form

0.46 Appeal pending

* Appeal of 2004-05 is settled and difference of tax Rs.0.88 lac is deposited by company. 5. Litigation Involving Labour Laws

Below is list of litigation pending against our company involving Labour Laws


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(B) FILED BY THE ISSUER COMPANY 1. Litigation involving Civil Laws Below is list of litigation pending filed by our company involving civil laws

Sr. No.


Amount involved (in Lacs)

Present status

1 Syncom Formulation (I) Ltd. vs Ganpat S/o Khangu

Industrial Court Indore

Labour court Dhar had passed an order against the company towards payment of overtime. The company have appealed against this order

00.54 Appeal Pending

2 Syncom Formulation (I) Ltd. vs P.F. Commissioner

Commissioner of PF

P.F Commissioner has issued notice to the company that company depositing less P.F contribution. Contribution should be deducted equivalent to minimum wages.

7.50 Reply and Argument

3. Dhaval Gajre V/s Syncom Formulations(I) Ltd.

Civil Judge Mr.D.S. Gajre who working in our organization had died in Feb’08. His Dependant filed case for compensation

0.07 Reply from company has been filed.


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2. Litigation involving Criminal Laws Below is list of litigation pending filed by our company involving Criminal laws

Sr. No. Case No.(s)



Present status

1 Ex. Case No. 234B/06

Syncom Formulation (I) Ltd. vs Bagai Golden Transport

Consumer Forum

The present execution application filed by the Company against the said Transporter for recovery of the amount as per the order dated 24.1.2006 passed by the Consumer Forum which was confirmed by the Hon. Commission by its order dated 8.6.2007. The said case pertaining to the distributor M/s. Health Pharma

5.37 Arrest warrant and attachment warrant to be issued

2 Ex. Case No. 225B/06


Consumer Forum

The present execution application filed by the Company against the said Transporter for recovery of the amount as per the order dated 24.1.2006 passed by the Consumer Forum which was confirmed by the Hon. Commission by its order dated 8.6.2007. The said case pertaining to the distributor M/s. Health Pharma

1.69 Arrest warrant and attachment warrant to be issued


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Sr. No. Case No.(s)



Present status

1 Cr Case No. 0/2007


Judicial magistrate

The present Criminal complaint under section 420 and other provisions of the Indian Penal Code filed against the Transporter for mis-appropriation of the goods sent by the Company to our Distributor, M/s. Health Pharma

5.00 Evidence

2 Cr Case No. 0/2007

Syncom Formulation (I) Ltd. vs East India Transport Company

Judicial magistrate

The present Criminal complaint under section 420 and other provisions of the Indian Penal Code filed against the Transporter for mis-appropriation of the goods sent by the Company to our Distributor, M/s. Health Pharma

2.92 Evidence

3 Cr Case No. 159905

Syncom Formulation (I) Ltd. vs Hind Medical Stores

Judicial magistrate, Indore

The present complaint filed by our Company against Distributor /Stockist /C & A for offence under section 138 of the Negotiable Instrument Act as the Cheque issued by the said party was dishonoured/returned unpaid.The said cheque issued by the said party towards the legal liability for supplying the Pharmaceutical products to them.

1.25 Evidence

4 Cr Case No. 1426/2005

Syncom Formulation (I) Ltd. vs Gyatha Medicent


The present complaint filed by our Company against Distributor /Stockist /C & A for offence under section 138 of the Negotiable Instrument Act as the Cheque issued by the said party was dishonoured/returned unpaid.The said cheque issued by the said party towards the legal liability for supplying the Pharmaceutical products to them

2.16 Evidence


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3. Litigation involving Securities and Economic Laws There are no litigation pending which is filed by Issuer Company involving Securities and Economics.

4. Litigation involving Labour Laws There is no litigation pending which is filed by Issuer Company involving Labour Laws.

5. Litigation involving Statutory Laws There is no litigation pending which is filed by Issuer Company involving Statutory Laws

5 Cr Case No. 1655/2005




2.50 Evidence

6 Cr Case No. 1427/2005




2.50 Evidence

7 Cr Case No. /2005

Syncom Formulation (I) Ltd. vs Ravi Mehta


The present complaint filed by our Company against the accused for the offence under section 138 to 142 of the Negotiable Instrument Act with regard to the dishonor of Cheque given by him towards his liability.

5.00 Evidence


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OUTSTANDING LITIGATIONS INVOLVING OUR PROMOTERS OF THE ISSUER COMPANY A. Litigation against promoters of the Company

1. Mr. Kedarmal Bankda – Promoter

• Pertaining to Criminal Laws : NIL • Pertaining to Civil Laws : NIL • Statutory Dues : NIL • Defaults with Banks : NIL • Economic Offence : NIL

2. Mr. Vijay Bankda – Promoter


B. Cases Filed by promoters of the Company : NIL

OUTSTANDING LITIGATIONS INVOLVING DIRECTORS OF THE ISSUER COMPANY A. Litigation against Directors of the Company

1. Mr. Kedarmal Bankda – Director


2. Mr. Vijay Bankda – Director


3. Mr. Sanjay Mehta - Director


4. Mr. Vinod Kumar Kabra - Director


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5. Mr. Krishna Kumar Das - Director


B. Cases Filed by Directors of the Company : NIL Material Developments The Directors of the Company in their opinion hereby state that there is no material development after the date of the last financial statements disclosed in the Letter of Offer which is likely to materially and adversely affect or is likely to affect the trading or profitability of the Company of the value of its assets, or its ability to pay its liabilities within the next twelve months.


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GOVERNMENT & OTHER STATUTORY APPROVALS We have received the necessary consents, licenses, permissions and approvals from the government and various governmental agencies required for our present business and except as mentioned below, no further material approvals are required for carrying on our present business. Approval for the Issue

1. Letter dated 3rd December 2008 Issued by the Bombay Stock Exchange Limited giving our company the in-principle approval for the issue and the use of name of the Bombay Stock Exchange Limited in the Letter of Offer

2. Observation Letter dated 21st April 2009 Issued by the Securities &Exchange Board of India

3. The Board of Directors has pursuant to a resolution dated August 29, 2008 approved the issue.

4. The Shareholders of our company have pursuant to a resolution dated September 26, 2008 under section 81(1A)

of the Companies Act, 1956, authorized the issue. Certificate

1. Company Identification Number: L 24239 MH 1988 PLC 047759 2. Certificate of Incorporation dated June 21,1988 issued by Registrar of Companies, Maharashtra to Syncom

Formulations (India) Private Limited. 3. Fresh certificate of Incorporation dated July 09, 1992 issued by Registrar of Companies, Maharashtra for change

of name to Syncom Formulations (India) Private Limited to Syncom Formulations (India) Limited 4. Certificate of Importer Exporter Code, issued on April 01, 1994 by Government of India, Ministry of Commerce.

The certificate grants our Company IEC number 0394000013. The Company requires various approvals for it to carry on its business in India and overseas. The approvals that the Company requires include the following. Other Approvals Registration under various Acts/Rules relating to Income Tax, Sales Tax, Value Added Tax and Central Excise:

1. Permanent Account Number: AAFCS6794R 2. Service Tax registration No CEX/D-II/PITHAMPUR/ST/295/04-05 dated January 31, 2005 from Superintendent

Custom & Central Excise , Pithampur, Madhya Pradesh for carrying out Goods and Transport Agency and Business Auxiliary Services by our Unit in Pithampur, District Dhar, M.P.

3. Central Sales Tax Registration 0109/XIII/1087 w e f July 15, 1997 from Assistant Commercial Tax Officer, Indore

4. VAT Registration No 23020901424 w.e.f July 15, 1997 from Assistant Commercial Tax Officer, Indore 5. Central Excise Registration Number AAFCS6794RXM001 dated March 24, 2003 from Assistant Commissioner of

Central Excise, Indore for manufacturing of Excisable Goods at Pithampur, District Dhar, Madhya Pradesh 6. Professional Tax registration No. 78390900216 & 78070900198

Registration under various Industrial and Labor Laws:

1. Provident Fund Registration No M.P/IN/10688 dated December 12,1997 from Assistant Commissioner of Provident Fund, Indore

2. License to Work A Factory : License No 54/12613/DHR/2m(i) dated January 07, 2008 from Chief Inspector of Factories, Government of Madhya Pradesh

3. Consent Letter from MP AIR Pollution Control – Consent letter No 14304 dated August 21, 2002


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4. Consent Letter from MP Water Pollution Control – Consent letter No 14302 dated August 21, 2002 5. Registration under Employees’ State Insurance Act,1948 -38013/59/95 SSI dated 22/11/1995 6. Registration under Contract Labor (Regulation & Abolition) Act, 1970 -Reg No 02/PTR/1998 dated

02.05.1998 from Registering Officer, Contract Labour (R & A) Act, 1970, labour Sub-Division, Pithampur. 7. Certificate for use of Boiler No SKB/Boiler/701 dated April 03, 2008 from Madhya Pradesh Boiler Inspection

Department. 8. Permission for Installation of DG Set dated January 6, 2001 from Sub Engineer & Deputy Power Inspector,

Madhya Pradesh, Indore

Registration and approvals from various Governmental and Regulatory Authorities:

1. Acknowledgement for Industrial Entrepreneur Memorandum No 993/SIA/IMO/95 dated February 20, 1995 from Secretariat for Industrial Assistance, Delhi

2. Approval for Stamping of Electronic Weighing Machines from Weight & Measurement Inspector.

3. Drug License No 25D/6/97 dated June 06, 2008 valid up to December 31, 2009 from Indian System of Medicine

& Homeopathy, State of Madhya Pradesh

4. Drug License No 25/10/95 dated March 30, 1995 of 387 items ( Renewed till December 31, 2012) from Food & Drugs Administration, State of Madhya Pradesh

5. Drug License No 28/14/95 dated March 30, 1995 of 354 items ( Renewed till December 31, 2012) from Food &

Drugs Administration, State of Madhya Pradesh Quality Certifications and Registration/Membership of Trade Association/Export Council:

1. Registration Certificate No PXL/LSM/I/RO/SFIL/3531/2005-08 dated July 15, 2005 from Pharmaceutical Export Promotion Council (pharmexcil)

2. WHO GMP Certificate bearing No 04/2008 dated May 22, 2008 from The Controller Food & Drugs

Administration, Madhya Pradesh.

3. ISO 9001:2000 certificate No IIN 0061.06 dated April 14, 2007 from Moody International

Pending Approvals

1. Authorization for operating a facility for collection, reception, storage and transport of Hazardous Waste : The Company had received the approval on February 27, 2007 which was valid till May 28, 2008 . An application has been made to the Madhya Pradesh Pollution Control Board for renewal vide letter dated October 21, 2008 for renewal up to May 28, 2010.


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SECTION VII: OTHER REGULATORY AND STATUTORY DISCLOSURES Authority for the Present Issue The Rights issue has been authorized by the Board of Directors at its meeting held on August 29, 2008. Further, the Equity Shareholders have approved the present rights issue in terms of Section 81 (1A) of the Companies Act, 1956 vide special resolution passed at the Annual General Meeting of the Company held September 26, 2008 Prohibition by SEBI The Company, its Promoters, its Directors or any of the Company’s associates or group companies and companies with which the Directors of the Company are associated as Directors or Promoters, or Directors or Promoters in control of, of the promoting Company, are currently not prohibited from accessing the capital market under any order or direction passed by SEBI. The listing of any securities of the issuer has never been refused at any time by any of the Stock Exchanges in India or abroad. Further the Promoters, their relatives (as per Act), the Company, group companies, associate companies are not detained as willful defaulters by RBI / Government authorities. Compliance with Proviso to clause 6.39 of SEBI (Disclosure and Investor Protection) Guidelines, 2000 (a) The issuer company has been filing periodic statements in regard to financial results and shareholding pattern with the Designated Stock Exchange and Registrar of Companies for the last three years and such statements are available on websites of the Designated Stock Exchange/ on a common e- filing platform. (b) The issuer company has in place an investor grievance handling mechanism which includes meeting of ‘Shareholders’ / Investors’ Grievance Committee’ at frequent intervals, appropriate delegation of power by the board of directors of the issuer company with regard to share transfer and clearly laid out systems and procedures for timely and satisfactory redressal of investor grievances. Eligibility For The Issue The Company is an existing listed Company and it is eligible to offer this Rights Issue in terms of Clause 2.4.1 (iv) of the SEBI (Disclosure and Investor Protection) Guidelines 2000 as amended till date. Disclaimer Clause of SEBI “IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED/ CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPOSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME /PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER. THE LEAD MANAGER “COMFORT SECURITIES PVT. LTD” HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI GUIDELINES FOR DISCLOSURE AND INVESTOR PROTECTION IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER COMFORT SECURITIES PVT LTD HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 11th NOVEMBER,2008 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992 WHICH READ AS FOLLOWS:

WE, THE UNDER NOTED LEAD MANAGERS (S) TO THE ABOVE MENTIONED FORTHCOMING ISSUE STATE AS FOLLOWS: 1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALS MORE PARTICULARLY


162

REFERRED TO IN THE ANNEXURE HERETO IN CONNECTION WITH THE FINALISATION OF THE LETTER OF OFFER PERTAINING TO THE SAID ISSUE; 2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT: (a) THE LETTER OF OFFER FORWARDED TO THE BOARD IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

(b) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY THE BOARD, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND (c) THE DISCLOSURES MADE IN THE LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE. 3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE SUCH REGISTRATION IS VALID. 4. WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS.- NOT APPLICABLE 5. WE CERTIFY THAT WRITTEN CONSENT FROM THE PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR EQUITY SHARES AS PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE EQUITY SHARES PROPOSED TO FORM PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN WILL NOT BE DISPOSED OR SOLD OR TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE LETTER OF OFFER WITH SEBI UNTIL THE DATE OF COMMENCEMENT OF THE LOCK-IN PERIOD AS STATED IN THE LETTER OF OFFER. NOT APPLICABLE 6. WE CERTIFY THAT CLAUSE 4.6 OF THE SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000, WHICH RELATES TO SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS' CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE CLAUSE HAVE BEEN MADE IN THE LETTER OF OFFER.- NOT APPLICABLE 7. WE UNDERTAKE THAT CLAUSES 4.9.1, 4.9.2, 4.9.3 AND 4.9.4 OF THE SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION AND SUBSCRIPTION FROM ALL FIRM ALLOTTEES WOULD BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE COMPANY ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. - NOT APPLICABLE. 8. WHERE THE REQUIREMENTS OF PROMOTERS’ CONTRIBUTION IS NOT APPLICABLE TO THE ISSUER, WE CERTIFY THE REQUIREMENTS OF PROMOTERS’ CONTRIBUTION UNDER CLAUSE 4.10 {SUB-CLAUSE (A), (B) OR (C), AS MAY BE APPLICABLE} ARE NOT APPLICABLE TO THE ISSUER. 9. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.


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10. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SECTION 73(3) OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE PROSPECTUS. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION. 11. WE CERTIFY THAT NO PAYMENT IN THE NATURE OF DISCOUNT, COMMISSION, ALLOWANCE OR OTHERWISE SHALL BE MADE BY THE ISSUER OR THE PROMOTERS, DIRECTLY OR INDIRECTLY, TO ANY PERSON WHO RECEIVES SECURITIES BY WAY OF FIRM ALLOTMENT IN THE ISSUE. NOT APPLICABLE. 12. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE LETTER OF OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE EQUITY SHARES IN DEMAT OR PHYSICAL MODE. 13. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE LETTER OF OFFER: (A) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE COMPANY AND (B) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.” The filing of the letter of offer does not, however, absolve the company from any liabilities under section 63 or section 68 of the companies act, 1956 or from the requirement of obtaining such statutory and other clearances as may be required for the purpose of the proposed issue. SEBI, further reserves the right to take up, at any point of time, with the lead manager any irregularities or lapses in the letter of offer.” Disclaimer from the Company and Lead Manager The Company and the Lead Manager to the issue accepts no responsibility for statements made otherwise than in this Letter of Offer or in any advertisement or other material issued by the Company or by any other persons at the instance of the Company and anyone placing reliance on any other source of information would be doing so at his own risk. Caution The Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of the Letter of Offer with SEBI. The Lead Manager and the Company shall update the Letter of Offer and keep the public informed of any material changes till the listing and trading commences. Disclaimer With Respect To Jurisdiction This Letter of offer has been prepared under the provisions of Indian Laws and the applicable rules and regulations hereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, India only. The distribution of the Letter of offer and the offering of securities on a rights basis to persons in certain jurisdictions outside India may be restricted by the legal requirements prevailing in those jurisdictions. Persons into whose possession this letter of Offer may come are required to inform them about and observe such restrictions. Any disputes arising out of such issue will be subject to the jurisdiction of appropriate courts in Mumbai, India only. No action, has been, or will be taken, to permit offering of these securities in any jurisdiction where action would be required for that purpose, except that the Letter of Offer has been filed with SEBI and SEBI has given its observations


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and that the Letter of offer would be filed with the relevant Stock Exchanges in India. Accordingly, the Equity Shares may not be offered or sold directly or indirectly, and the Letter of Offer may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of the Letter of Offer, nor any sale hereunder, shall under any circumstances create any implication that the affairs of the Company have remained unchanged since the date hereof or that the information herein is correct as of any time subsequent to this date. Disclaimer Clause of BSE, Mumbai BSE (“the Exchange”) has given vide its letter dated 3rd December 2008 permission to the Company to use the Exchange’s name in this Letter of offer on which this Company’s Securities are proposed to be listed. The Exchange has scrutinized this Letter of offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner:

• warrant, certify or endorse the correctness or completeness of any of the contents of this Letter of Offer; or • warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or

• take any responsibility for the financial or other soundness of the Company, its Promoters, its management or

any scheme or project of this Company; And it should not for any reason be deemed or construed that this Letter of offer has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever. Impersonation As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection (1) of section 68A of the Act which is reproduced below: "Any person who makes in a fictitious name an application to a company for acquiring, or subscribing for, any Equity Shares therein, or otherwise induces a company to allot, or register any transfer of Equity 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" United States Restrictions NEITHER THE RIGHTS ENTITLEMENTS NOR THE EQUITY SHARES THAT MAY BE PURCHASED PURSUANT THERETO HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OF AMERICA OR THE TERRITORIES OR POSSESSIONS THEREOF (THE “UNITED STATES” OR THE “U.S.”) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, “US PERSONS” (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”)), EXCEPT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE RIGHTS REFERRED TO IN THIS LETTER OF OFFER ARE BEING OFFERED IN INDIA, BUT NOT IN THE UNITED STATES. THE OFFERING TO WHICH THIS LETTER OF OFFER RELATES IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN OFFERING OF ANY SHARES OR RIGHTS FOR SALE IN THE UNITED STATES OR AS A SOLICITATION THEREIN OF AN OFFER TO BUY ANY OF THE SAID SHARES OR RIGHTS. ACCORDINGLY, THIS LETTER OF OFFER SHOULD NOT BE FORWARDED TO OR TRANSMITTED IN OR INTO THE UNITED STATES AT ANY TIME, EXCEPT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. NEITHER THE COMPANY NOR ANY PERSON ACTING ON BEHALF OF THE COMPANY WILL ACCEPT SUBSCRIPTIONS FROM ANY PERSON, OR THE AGENT OF ANY PERSON, WHO APPEARS TO BE, OR WHO THE COMPANY OR ANY PERSON ACTING ON BEHALF OF THE COMPANY HAS REASON TO BELIEVE IS, A


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RESIDENT OF THE UNITED STATES AND TO WHOM AN OFFER, IF MADE, WOULD RESULT IN REQUIRING REGISTRATION OF THIS LETTER OF OFFER WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION. THE COMPANY IS INFORMED THAT THERE IS NO OBJECTION TO A UNITED STATES SHAREHOLDER SELLING ITS RIGHTS IN INDIA. RIGHTS MAY NOT BE TRANSFERRED OR SOLD TO ANY U.S. PERSON. Filing The Letter of Offer has been filed with SEBI, SEBI Bhavan, Plot No. C4-A, ‘G’ Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400051 A copy of this Letter of Offer has been filed with BSE, BSE Ltd, Phiroze Jeejebhoy Towers, Dalal Street, Mumbai- 400 023, having attached thereto the Material Contracts and Documents. All the legal requirements applicable till the date of filing the Letter of Offer with the stock exchanges and SEBI has been complied with. Listing

The existing Equity Shares of the Company are listed on Bombay Stock Exchange Limited (BSE), Mumbai (Designated Stock Exchange). The Company will make application to BSE permission to deal in and for official quotation in respect of Equity shares arising out of the issue. The company has received in-principle approvals from BSE vide letter dated 3 r d December 2008 . If the permission to deal in and for an official quotation of the securities is not granted by the Designated Stock Exchange mentioned above, within fifteen days from the Issue Closing Date, the Company shall forthwith repay, without interest, all monies received from applicants in pursuance of this Letter of Offer. If such money is not paid within eight days after the Company becomes liable to repay it, then the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under the Section 73 of the Act. Consents The written consents of Promoters, Directors, Compliance Officer, Auditors, Lead Managers to the Issue, Registrars to the Issue, Legal Advisor, Bankers to the Company and Bankers to the Issue to act in their respective capacities, have been obtained and such consents have not been withdrawn up to the time of delivery of this Letter of offer with the Stock Exchanges. M/s S.P Moondra & Co., the Auditors of the Company, have given their written consent for inclusion of their report in the form and content appearing in this Letter of offer and such consent and report have not been withdrawn up to the time of delivery of the Letter of offer to the Stock Exchange. They have also given their written consent for inclusion of income tax benefits in the form and content appearing in this Letter of Offer, accruing to the Company and its members. To the best of our knowledge, there are no other consents required for making this Rights Issue. However, should the need arise, necessary consents shall be obtained by us. Expert Opinion The Company has not obtained any expert opinion apart from whatever is already mentioned in this Letter of Offer. Expenses of The Issue The expenses of the Rights Issue payable by the Company inclusive of brokerage, fees payable to the Lead Manager to the Issue, Registrar to the Issue, Auditors, Legal Advisors, printing, publication, advertising and distribution expenses, bank charges, listing fees, processing fees and other miscellaneous expenses will not exceed 19.35Lakhs and will be met out of the proceeds of the Rights Issue.


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Details of Fees Payable The expenses for the issue include among others, lead manager’s fees, advertising costs, printing and distribution expenses, fees payable to the Stock Exchange, Registrar and depository fees and other miscellaneous expenses. The estimate of the issue expenses of Rs. 19.35 Lakhs is as follows which is 1.83% of the total issue size.

Sr. No.

Particulars Amount (Rs in Lakhs)

% of total expenses of the issue

% of total issue Size

1 Lead Management Fees

6.75 34.88% 0.64%

2 Registrar Fees 1.40 7.24% 0.13%

3 Postage & Stationery 2.50 12.92% 0.23%

4 Printing of LOO & CAF

4.00 20.67% 0.38%

5 Advertising 1.50 7.75% 0.14%

6 Traveling & Conveyance

0.75 3.88% 0.07%

7 Legal Advisors Fees 0.50 2.58% 0.04%

8 SEBI & Stock Exchanges Fees

0.75 3.88% 0.07%

9 Depository Charges 0.20 1.03% 0.02%

10 Auditors Fees 0.50 2.58% 0.05%

11 Contingencies & Other Expenses

0.50 2.58% 0.07%

TOTAL 19.35 100.00 1.83%

Underwriting Commission, Brokerage and Selling Commission The Rights Issue has not been underwritten. No fee under this head is payable. Previous Public or Rights Issues There was no public/rights issue done by the Company in the last 5 years. Commission or Brokerage on Previous Issues The Company has not made any public issue in last five years. Hence no commission or brokerage has been paid on any public issue in the last five years. Particulars in regard to the company and other listed companies under the same management within the meaning of section 370(1B) of the companies act, 1956, which made any public issue during the last three years. The Company as well as the other Companies under the same management has not made any Capital Issue in last three years. Listed Venture of Promoters There is no other listed venture promoted by the Promoters. Outstanding Bonds /Debentures


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There are no outstanding debentures or bonds or redeemable preference shares or any other instruments issued by the issuer company outstanding as on the date of Letter of Offer except the 3,25,000 converatable warrants of Rs.46/- each issued on 30/03/2008 which is convertible into equity shares of Rs.10/- each at a premium of Rs.36/- per share at the option of the warrant holders within a period of 18 months from the date of allotment, i.e. 29th Sept., 2009 Stock Market Data The Company’s shares are listed on BSE. The shares are actively traded on BSE. The high and low closing prices recorded on BSE for the preceding three years and the number of shares traded on the days the high and low prices were recorded are stated below:

Year High (Rs.) High Date Volume Low (Rs.) Low Date Volume

Total Volume for the Year

Average (Rs.)

2006 94.95 04/01/2006 43478 35.50 14/06/2006 10373 6301699 65.23

2007 79.00 05/12/2007 58017 31.10 01/11/2007 4941 5677086 55.05

2008 61.65 03/01/2008 74323 13.05 28/10/2008 1137 1646184 37.35

(Source: Bombay Stock Exchange Limited, official website: www.bseindia.com, Mumbai) The details of the share prices on the BSE during last 6 months are as follows:

Month

High (Rs.)

Date of High Volume Low (Rs.)

Date of Low Volume Total

Volume in the Month

Average

April 2009 18.50 16/04/2009 9314 13.20 23/04/2009 14405 76936 15.85

March 2009

15.95 23/03/2009 14440 11.00 12/03/2009 3656 92251 13.48

Feb 2009 17.00 16/02/2009 2220 13.35 20/02/2009 1693 42290 15.18

Jan 2009 21.25 06/01/2009 2750 16.00 28/01/2009 641 40415 18.63

Dec 2008 21.00 22/12/2008 1752 14.70 11/12/2009 4865 51112 17.85

Nov 2008 19.95 04/11/2008 2061 14.75 24/11/2008 1682 34640 17.35

(Source: Bombay Stock Exchange Limited, official website: www.bseindia.com, Mumbai) In the event the high and low price of the Equity Shares are the same on more than one day, the day on which there has been higher volume of trading has been considered for the purposes of this section. The price as on 30.08.2008, the day after resolution of the Board of Directors approving the issue was Nil (since stock was not traded on that day due to Stock Exchange Holiday). However the nearest date on which shares traded after the Boards Approval of the Rights Issue was 01.09.2008. The opening and closing price was Rs. 26.50 and Rs. 26.40 respectively, with the volume of only 4897 shares with a value of Rs. 128455/- The Closing Price was Rs. 15.10, the trading day immediately preceding the day on which the day Board met to finalize the offer price for the issue i.e. 29th April 2009 Disclosure on Investor Grievances and Redressal System The Company has adequate arrangements for Redressal of investor’s complaints. The Company has developed well arranged correspondence system for letters of routine nature. The share transfer and dematerialization for the company is being handled by Ankit Consultancy Pvt. Ltd, the registrar & share transfer agents of the Company. Letters are filed category wise after having attended to.


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A shareholders / investor grievances committee was constituted in the Year 2002. The Committee consists of Mr. Krishna Das Neema, Mr. Sanjay Mehta and Mr. Vinod Kumar Kabra. The committee meets generally on review of redressal system of investor complaints by share transfer Agent and on specific nature of complaints not resolved within a period of 21 days from the date of receipt. The role of the Committee is to review investor grievances and the status of grievances. Ms. Shikha Maheshwari is the Compliance Officer of the Company. The Company has qualified and experienced staff in its Secretarial Department which closely monitors and co-ordinates with its RTA, for attending to and resolving the complaints of its shareholders. The Company attempts or uses its best endeavors jointly with the RTA, to ensure that complaints are minimal and that all complaints are resolved satisfactorily. The Company ordinarily attempts to dispose the complaints within fifteen days of receipt of complaints. The Compliance Officer supervises the process of redressal of grievances. The Company’s name has never appeared in the press release issued by SEBI regarding maximum number of complaints received from investors. Investor grievances arising out of this Issue The Company’s investor grievances arising out of this issue will be handled by the Registrars to the Issue, Ankit Consultancy Pvt. Ltd. The registrar will have a separate dedicated team of personnel handling only our post issue correspondence. All grievances relating to the present issue may be addressed to the Registrar with a copy to compliance officer to the Company, giving full details such as name, address of the applicant, number of equity shares applied for, application / CAF serial number, amount paid on application and bank and branch where the application was deposited along with photocopy of the acknowledgement slip. In case of renunciation, the same details o the renounce should be furnished. The Company would monitor the work of registrar to ensure that the investors’ grievances are settled expeditiously and satisfactorily. The Company would also be co-coordinating with the registrar in attending to the grievances of the investors. The Company assures that the Board of Directors / Investor Grievance Committee in respect of the complaint, if any, to be received, shall adhere to the following schedule. Sr. No. Nature of Complaint Time Table

1 Non Receipt of Refund Within 7 days of receipt of complaint subject to production of satisfactory evidence.

2 Non Receipt of Share Certificate

Within 7 days of receipt of complaint subject to production of satisfactory evidence.

3 Transfer of shares Within 30 days 4 Change of Address

notification Within 7 days of receipt of information

5 Any other complaint in relating to the Rights Issue

Within 7 days of receipt of complaint with all relevant details

Redressal of investor’s grievance is given top priority by the Company. The Company has adequate arrangements for redressal of investor complaints as indicated above. To handle the grievances received, the Company has appointed Ms.Shikha Maheshwari, Company Secretary of the Company as a Compliance Officer. She will supervise redressal of complaints received from the investors at the office of the Company as well as the Registrars to the Issue and ensure timely settlement. The investors may contact the compliance officer in case of any pre-issue / post issue related problem. The compliance officer can be contacted at the following address. Ms. Shikha Maheshwari Compliance Officer Address: 2nd Floor, Tagore Centre, 13-14, R.N.T. Marg, Indore- 452 001, Madhya Pradesh. Tel: +91-731-3046869; Fax: +91-731-3046872 Email: [email protected] Website: www.syncomformulations.com


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All the complaints received subsequent to making document public have been dealt with suitably. There are no investor complaints pending with the Company as on the date of letter of offer. There are no listed companies within the meaning of Section 370 (1B) of the Companies Act, 1956 hence the disclosures n respect of Grievances redressal of investors are not applicable. Changes in the Auditors in the Last Three Years and the Reasons Thereof There are no changes in Auditors in the Last Three Years Capitalization of Reserves or Profits There is no Capitalization of reserves or profits during the last five years. Revaluation of Assets There has been no revaluation of any Assets in the last five years.


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SECTION VIII: OFFERING INFORMATION TERMS OF THE PRESENT ISSUE

The Equity Shares with warrants now being offered are subject to the provisions of the Act and the terms and conditions of this Letter of Offer, the CAF, the Memorandum and Articles of Association of the Company, the approvals from the Government of India, FIPB and RBI, if applicable, the provisions of the Act, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time, Listing Agreements entered into by the Company with Stock Exchanges, terms and conditions as stipulated in the allotment advise or letter of allotment or share certificate and rules as may be applicable and introduced from time to time.

Authority for the Issue The Rights issue has been authorized by the Board of Directors at its meeting held on August 29, 2008. Further, the Equity Shareholders have approved the present rights issue in terms of Section 81 (1A) of the Companies Act, 1956 vide special resolution passed at the Annual General Meeting of the Company held September 26, 2008. Ranking Of the Equity Shares The Equity Shares allotted in this Issue shall rank pari passu with the existing Equity Shares in all respects. Mode of payment of dividend The dividend is paid to all the eligible shareholders in terms of the provisions of the Companies Act, 1956 with regard to payment of dividend. The unclaimed dividend if any are transferred to Investor Protection Fund as prescribed under the Act. Basis of Offer The Equity shares are being offered for subscription for cash to all the existing Equity Shareholders of the Company, whose name appears as beneficial owners as per the list to be furnished by the depositories in respect of the shares held in the electronic form, and on the Register of Members of the Company in respect of shares held in physical form at the close of business hours on the Record Date i.e 20th May 2009 fixed for the purpose of the Rights entitlement, in consultation with the Designated Stock Exchange. The Equity Shares are being offered for subscription in the ratio of 1(One) Equity Share for every 2 (Two) Equity Shares held on Record Date. In addition, for every 1 (One) Equity Share being allotted on rights basis, the allottees will receive 1 (one) detachable warrant(s). Rights Entitlement As your name appears as beneficial owner in respect of the Equity Shares held in the electronic form or appears in the Register of Members as an Equity Shareholder on the Record Date, you are entitled to the number of Equity Shares shown in Block I of Part A of the enclosed Composite Application Form (“CAF”). The eligible equity shareholders are entitled to 1 (one) Equity Share for every 2 (Two) Equity Shares held on the Record Date. In addition, the eligible Equity Shareholders are entitled to receive 1 (one) detachable warrants for every 1 (one) Equity Share being allotted on rights basis.


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Principal Terms and Conditions of the Securities Equity Shares Face value Each Equity Share shall have the face value of Rs 10/- Issue price The Equity Shares of the Rs 10/- each are being offered at an Issue Price of Rs. 17/- per Equity Share for cash at a premium of Rs. 7/- per Equity Share in the present rights issue. Right Entitlement Ratio The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the ratio of 1 (one) Equity Share(s) for every 2(two) Equity Share(s) held on the Record Date i.e 20th May 2009. An eligible shareholder can either renounce his entitlement (in whole or in part) or apply for additional Equity Shares over and above his entitlement. Shareholder who has either renounced a part or whole of his entitlement cannot apply for additional shares. If there is an over subscription on account of application for additional shares, then the additional shares will be allotted to those applicants proportionately. Fractional Entitlement On applying the rights ratio, the rights entitlement may contain certain fractional entitlements, in such case the fractional entitlement shall be rounded off to the next higher integer. The additional shares required to accommodate such rounding off will be adjusted out of the entitlement of the one of the promoter group shares Terms of Payment The full amount of Rs. 17/- per Equity Shares shall be payable by the applicant on application (“Application Money”). The payment towards the Equity Shares offered will be applied as under: Rs.10/- per Equity Share towards Share Capital Rs. 7/- per Equity Share towards Securities Premium Rights of Equity Shareholders Subject to the applicable laws, the Memorandum and the Articles of Association of the Company, the terms of this Letter of Offer, the shareholders are entitled to the following rights –

1. To receive dividend, if declared; 2. To attend general meetings and exercise voting power, unless prohibited by law; 3. To vote on poll, either in person or proxy; 4. To receive offer for right shares and be allotted bonus shares if announced; 5. To receive surplus on liquidation; 6. Free transferability of share; and 7. Such other rights as may be available to a shareholder of a listed public company under the Companies Act and

our Memorandum and Articles of Association For more details regarding the rights available under the Articles of Association please refer to section titled “Main Provisions of the Articles of Association” beginning on page 197 of this Letter of Offer.


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Detachable Warrants Face value Each detachable warrant is convertible into one (1) Equity Share of face value of Rs 10/- each. Entitlement In addition to entitlement to apply for 1 (one) Equity Share(s) for every 2 (two) Equity Share(s) held on the Record Date, an eligible equity shareholder is entitled to receive 1 (one) detachable warrants for every 1 (one) Equity Shares being allotted on rights basis. The warrants so issued can be freely and separately traded. The warrant holder will be entitled to exercise his right to apply for 1 (one) Equity Share of Rs. 10/- each for every warrant held at Warrant Exercise Price for each warrant held, on the fixed date declared by the Company (Notice date, the outermost date for conversion) during the Warrant Exercise Period. Warrant holders can exercise their right to apply for the Equity Share at the Warrant Exercise Price. Warrant holder can not renounce his entitlement to apply for the Equity Share or apply for additional Shares over and above his entitlement. This share entitlement on each warrant shall be proportionately adjusted for any further bonus issue made by the Company prior to the Warrant Exercise Period so as to ensure that the benefit to the warrant holder is not prejudiced and remains the same as if the bonus would not have been declared. For example, should the Company declare a bonus issue prior to the Warrant Exercise Period in the ratio of 1:1, then the number of equity shares to be issued pursuant to exercise of warrant shall double. In the event of any sub-division or consolidation of the face value, the share entitlement on each warrant shall be proportionately increased / decreased such that the aggregate nominal value of the entitlement remains the same as the nominal value of the Equity Shares immediately prior to such subdivision or consolidation e.g. in case the Company decides to reduce the face value of Equity Shares to Rs.5 each, then upon exercise of each warrant by making payment under the Warrant Exercise Price, the warrant holder would get 2 Equity Shares of Rs.5 each instead of one Equity Share of Rs.10 each. However, in case the Company announces a rights issue during the tenure of the warrants, neither would any adjustment be made to the share entitlement on each warrant nor would there be any reservations for warrant holders. Ranking of the Equity Shares arising from conversion of warrants The equity shares arising from the conversion of warrants shall rank pari passu in all respects with existing Equity Shares of the Company including dividends. Rights of Warrant Holders

1. Subject to the above, the Detachable Warrants shall be transferable and transmittable in the same manner and to the same extent and be subject to the same restrictions and limitations and other related matters as in the case of Equity Shares of the Company.

2. The Detachable Warrants shall not confer upon the holders thereof any right to receive any notice of the meeting of the Shareholders of the Company or Annual Report of the Company and or to attend / vote at any of the General Meetings of the Shareholders of the Company held, if any.

3. Save and except the right of subscription to the Company’s Equity Shares as per the terms of the Issue of Detachable Warrants, the holders of the Detachable Warrants in their capacity as Detachable Warrant holders shall have no other rights or privileges.

4. The equity shares arising from the exercise of warrants shall be subject to the Memorandum and Articles of Association of the Company and shall rank pari passu in all respects with existing equity shares of the Company including dividends. Except that the shares arising from conversion of warrants shall be eligible for dividends only after payment of Warrant exercise price and allotment of the equity shares.

5. The Warrant holders inter-se, shall rank pari passu without any preference or priority of one over the other or others.

A separate register of warrant holders would be maintained by the Company.


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Warrant Exercise Period Warrant Exercise Period shall be the period commencing after six[6] months from the date of allotment up to eighteen 18 months from the date of allotment. The warrant will get converted on or before a fixed date (i.e. “Notice Date, the outermost date for conversion”) and would be made uniformly in respect of all the warrants outstanding. The Company will fix the Record Date as any time during the Warrant Exercise Period for the purpose of warrant conversion. The conversion of warrants into Equity Shares of the Company will be as per the Warrant Exercise Price as mentioned under the para “Warrant Exercise Price” provided below. WARRANTS SHALL LAPSE ON THE NOTICE DATE OR THE END OF WARRANT EXERCISE PERIOD, WHICH EVER IS EARLIER. THE DETACHABLE WARRANT WILL LAPSE IF NOT EXERCISED WITHIN THE WARRANT EXERCISE PERIOD. Warrant Exercise Price Warrant Exercise Price shall be lower of : (a) 20% discount to the average six weekly closing prices before the date of the public notice on Designated Stock Exchange; or (b) 20% discount to average two weekly closing prices before the date of the public notice on the Designated Stock Exchange; or (c) Rs. 17/- per Equity Share, being the Cap Price. The Warrant Exercise Period and the Warrant Exercise Price will be notified by giving public notice in the newspaper. The investors may also note that the cap price of Rs. 17/- per share for the purpose of conversion into Equity Shares for every detachable warrant should not be taken to be indicative of the market price of the Equity Shares, whether presently or after the Equity Shares issued upon the exercise of warrants are listed. No assurance can be given regarding the active / sustained trading in the Equity Shares or the price at which the Equity Shares offered under the present Issue will trade either after the listing or at the time of exercise of warrants. If there is an increase in the shareholding of the Promoters / Promoter Group beyond the limit prescribed in the Listing Agreement pursuant to the warrant conversion, the Company undertakes to ensure compliance in such manner as may be directed by the Stock Exchanges. Such increase in their shareholding, if any, will be pursuant to the exercise of their entitlement and shall be covered under 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997. Further such increase in their shareholding, if any, will not result in change of control of the management of the Company. In the event of the minimum public shareholding falling below the prescribed minimum (I.e. 25% of the total issued capital), the Company will take the necessary steps in ensuring that the minimum public shareholding is restored in compliance with SEBI regulations. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” on page 36 of this Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments to the Promoters, in this Issue, the Promoters’ shareholding in the Company exceeds their current shareholding. Allotment of warrants Subject to the provisions contained in this Letter of Offer, the Articles of Association of the Company and the approval of the Designated Stock Exchange, the Board will proceed to allot one [1] detachable warrant for every one [1] Equity shares allotted under the rights issue. If there is any shortfall or surplus in the warrants, required on account of rounding off as mentioned above, then the said shortfall or surplus would be adjusted against warrant entitlement of Promoter / Promoter Group. The Application Form will be sent by the Company to all the warrant holders on the record date The application form for exercise of warrants shall be sent by the Company to all the warrant holders, whose name appears in the register of warrant holders of the Company on the record date. The Application Form would also be available to all warrant holders on request with the Registrar during the Warrant Exercise Period and can be


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downloaded from the Company’s website www.syncomformulations.com During the Warrant Exercise Period, the Warrant holder should send their application to the Registrar and Transfer Agent of the Company by filling up the said application form. It should be accompanied by a cheque / demand draft for the requisite amount. Procedure for issue of equity shares in exchange of Warrants Warrant holders can apply for such number of shares as they desire by surrendering relevant warrants (1 equity share per warrant) together with the appropriate amounts as per procedure detailed below: In case of Warrant held in Physical Mode During the Warrant Exercise Period, the Warrant holder should send his application for issue of Equity Shares to the Registrar of the Company by filling up the requisite particulars on the Warrant Exercise Application Form and by discharging on the reverse of the Warrants certificate. For Resident Shareholders / Applicants and Non-resident Equity Shareholders / Applicants applying on a non repatriation basis, the application should be accompanied by a cheque/demand draft favoring “SFL – Warrant Issue” payable at Mumbai for the requisite amount. For Non-resident Equity Shareholders / Applicants applying on a repatriation basis, the application should be accompanied by a cheque / demand draft favouring “SFL – Warrant Issue-NR” payable at Mumbai for the requisite amount. For making the payment, Non-resident Equity Shareholders / Applicants are required to follow the similar procedures as specified in ‘Mode of payment for Non-Resident Equity Shareholders/ Applicants’ on page 184 of this Letter of Offer. In case of Warrant held in Dematerialised Mode The Registrar and Transfer Agent of the Company, M/s Ankit Consultancy Pvt. Ltd will, before the open a special depository account with NSDL “SFL - Warrant Conversion Escrow Account” with a Depository Participant (the “Special Depository Account”). The Company will open the Special Depository Account through the Registrar with NSDL at least 2 days prior to the commencement of the warrant exercise period. Shareholders of SFL having the depository account with CDSL must use inter depository delivery instruction slip for the purpose of crediting their warrants in favour of the Special Depository Account with the NSDL. Beneficial owners who wish to tender their warrants for conversion, will be required to send their application for issue of equity shares on the prescribed application form sent separately, accompanied by a cheque / demand draft along with a photocopy of the delivery instruction in “off market” mode or counterfoil of the delivery instruction in “off market” mode, duly acknowledged by the depository participant (“DP”) in favour of the special depository account, to the Registrars, M/s Ankit Consultancy Pvt. Ltd before the close of warrant exercise period. For Resident Shareholders / Applicants and Non-resident Equity Shareholders / Applicants applying on a non repatriation basis, the application should be accompanied by a cheque / demand draft favouring “SFL – Warrant Issue” payable at Mumbai for the requisite amount. For Non-resident Equity Shareholders / Applicants applying on a repatriation basis, the application should be accompanied by a cheque / demand draft favouring “SFL – Warrant Issue-NR” payable at Mumbai for the requisite amount. For making the payment, Non-resident Equity Shareholders / Applicants are required to follow the similar procedures as specified in ‘Mode of payment for Non-Resident Equity Shareholders/ Applicants’ on page 184 of this Letter of Offer. In case the warrants along with the cheques/drafts towards full payment of the Warrant Exercise Price do not reach the Registrar by the end of warrant exercise period then the same shall lapse. Warrants with payments for lesser amounts shall be rejected & returned. Any excess conversion price beyond the exercise price shall be refunded by the Company. Shares allotted on exercise of valid warrants will be dispatched / credited to the applicant’s electronic account within 15 days from the expiry of warrant exercise period, subject to requisite approvals from the statutory authorities. On allotment, Company shall apply for listing of resulting equity shares. Variance in the terms of the Warrants


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The rights, privileges and conditions attached to the warrants may be modified or varied or abrogated with the consent of the holders of the warrants by a Special Resolution passed at a meeting of the warrant holders, provided that nothing in such resolution shall be operative against the Company when such resolution modifies or varies the terms and conditions governing the warrants if the same is not acceptable to the Company. At a meeting of the warrant holders, every warrant holder, and in the case of joint holders the one whose name stands first in the Register, shall be entitled to vote, either in person or by proxy, in respect of such warrants. The warrant holder will be entitled to one vote on a show of hands and his / her voting rights on a poll shall be in proportion to the outstanding number of the warrants held by him / her. The quorum for such meetings shall be at least five warrant holders present in person. The proceedings of the meeting of the warrant holders shall be governed by the provisions contained in the Articles and such other rules in force for the time being to the extent applicable and in relation to matters not otherwise provided for in terms of the Issue. Caution: • Each warrant application form shall be accompanied by a single instrument of payment. Clubbing of folios / securities for the purpose of making a consolidated payment is not permitted • Cheques / DD should be payable at Mumbai for the full amount and payments for less amount will be rejected. • Investors are advised not to close or transfer their demat account between the period of application for exercise of warrant(s) till the time of allotment/receipt of credit in their account so as to avoid rejection of credit from the Depositories and resultant delay in receiving the intimation of allotment. Separate ISIN for warrants and their listing and trading The Detachable Warrants proposed to be issued along with equity shares on rights basis shall be listed and admitted for trading on BSE for which the Company will make suitable arrangement to apply new ISIN. The formalities for listing and trading of warrants will be completed with in 7 working days from the date of allotment. The Company has received in-principal approval from the BSE through letter no. DCS/PREF/JA/IP-RT/1635/08-09dated 3rd December 2008. The equity shares issued pursuant to the allotment made to warrant holders would also be listed on BSE within 21 days of the expiry of the warrant exercise period. Minimum Subscription If the company does not receive the minimum subscription of 90% of the issued amount on the date of closure of the issue, or if the subscription level falls below 90% after the closure of issue on account of cheques having being returned unpaid or withdrawal of applications, the company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the company shall pay interest as per Section 73 of the Companies Act, 1956. The Issue will become under-subscribed, if the number of shares applied for falls short of the number of shares offered, after considering the number of shares applied for as per the entitlement plus additional shares. The undersubscribed portion can be applied for only after the closure of the Issue. The Promoters can subscribe to such undersubscribed portion as per relevant provisions of law. Some members of the promoter group intend to subscribe to additional shares beyond their entitlement if the issue is under-subscribed. The acquisition of additional securities in such an event shall be exempt from making an open offer in terms of proviso to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997. Further this acquisition will not result in change of control of the management of the Company. For further details please refer to section titled “Basis of Allotment” beginning on page 192 of this Letter of Offer. Nomination Facility


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In terms of section 109A of the Companies Act, 1956, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. A sole equity shareholder or first equity shareholder, along with other joint equity shareholders being individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint holders, as the case may be, shall become entitled to the Equity Shares. A person, being a nominee, becoming entitled to the Equity Shares by reason of the death of the original equity shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Equity Shares. Where the nominee is a minor, the equity shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity Share by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the Equity Share 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 the registered office of the Company or such other person at such addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant portion of the CAF. Only one nomination would be applicable for one folio. Hence, in case the Shareholder(s) has already registered the nomination with the Company, no further nomination needs to be made for Equity Shares to be allotted in this Issue under the same folio. In case the allotment of Equity Shares/detachable warrants is in dematerialized form, there is no need to make a separate nomination for the Equity Shares/detachable warrants to be allotted in this Issue. Nominations registered with respective DP of the applicant would prevail. If the applicant requires change in the nomination, they are requested to inform their respective DP. Joint-Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint-tenants with benefits of survivorship subject to provisions contained in the Articles of Association of the Company. Offer to non-resident equity shareholders / applicants Applications received from NRIs and non-residents for allotment of Equity Shares and Detachable Warrants shall be inter alia, subject to the conditions imposed from time to time by the RBI under the Foreign Exchange Management Act, 1999 (FEMA) in the matter of receipt and refund of application moneys and the allotment of Equity Shares and the Detachable Warrants, issue of letter of allotment / share and warrant certificates, dividends, etc. General permission has been granted to any person resident outside India to purchase shares offered on rights basis by an Indian company in terms of FEMA and regulation 6 of notification No. FEMA 20/2000-RB dated May 3, 2000. The Board may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the allotment of the Equity Shares and Detachable Warrants, payment of dividend etc. to the non-resident shareholders. The Equity Shares and the Detachable Warrants purchased by non-residents shall be subject to the same conditions including restrictions in regard to the repatriability as are applicable to the original shares against which rights shares are issued. FIIs will not need permission of the FIPB / RBI for investment in the Issue to the extent of their Rights Entitlement. However, in case of applications from such entities in excess of their Rights Entitlement, allotment will be subject to restrictions under applicable laws, including existing ceilings on FII holdings in the Company and the sectoral caps on FDI in the Company, as applicable. Letter of Offer and CAF to non resident Equity Shareholders shall be dispatched only to their address mentioned in the Register of Members in India as provided under Section 53 of the Companies Act. For Resident Indian Shareholders Applications will not be accepted by the Lead Managers or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications as per instructions given in the Letter of Offer. Only applications for an amount of less than Rs.20,000 may be effected in cash and all the payments more than Rs.20, 000 shall be effected by cheque / bank draft / drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the bankers clearing house located at the center where the CAF is submitted and which is participating in the clearing at the time of submission of the application. Outstation cheque / money orders / postal orders will not be accepted and CAFs accompanied by such cheque / money orders / postal orders are liable to be rejected.


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Notices All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English national daily with wide circulation and one Hindi national daily with wide circulation and / or will be sent by ordinary post to the registered holders of the Equity Share from time to time. Issue of duplicate equity share certificate If any Equity Share certificate(s) is/are mutilated or defaced or the cages for recording transfers of Equity Shares are fully utilized, the Company against the surrender of such certificate(s) may replace the same, provided that the same will be replaced as aforesaid only if the certificate numbers and the distinctive numbers are legible. If any Equity Share certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the satisfaction of the Company and upon furnishing such indemnity/surety and/or such other documents as the Company may deem adequate, duplicate Equity Share certificate(s) shall be issued. Option to subscribe Equity Shares / Warrants in dematerialized form Applicants to the Equity Shares / Warrants of the Company issued through this Issue shall be allotted the securities in dematerialized form at the option of the applicant. The CAF shall contain space for indicating number of shares applied for in demat and physical form or both. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Applications, which do not accurately contain this information, will be given the securities in physical form. No separate applications for securities in physical and/or dematerialized form should be made. Responsibility for correctness of information filled in the CAF vis-à-vis such information with the applicant’s depository participant, would rest with the applicant. Applicants should ensure that the names of the applicants and the order in which they appear in CAF should be the same as registered with the applicant’s depository participant. The Equity Shares / Warrants pursuant to this Offer allotted to Investors opting for dematerialized form, would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice / refund order, if any would be sent directly to the applicant by the Registrar to the Issue. Renouncees will also have to provide the necessary details about their beneficiary account for allotment of securities in this Issue in demat form. In case these details are incomplete or incorrect, the application is liable to be rejected. Restriction on Transfer and Transmission of Shares Nothing contained in the Articles of Association of the Company shall prejudice any power of the Company to refuse to register the transfer of share. No fee shall be charged for sub-division and consolidation of share certificates (physical form), debenture certificates and detachable warrants and for sub-division of letters of allotment and split, consideration, renewal and pucca transfer receipts into denomination corresponding to the market units of trading. Arrangement of Odd Lots Equity Shares The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this Issue. The company will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity Shareholder. Market Lot The market lot for the Equity Shares and detachable warrants in dematerialised mode is one. In case of physical certificates, the Company would issue one certificate for the Equity Shares allotted to one folio and a detachable warrant with a split performance (the “Consolidated Certificate”). In respect of the Consolidated Certificate, the


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Company will, upon receipt of a request from the equity shareholder/warrant holder, split such Consolidated Certificate into smaller denomination within one week’s time from the request of the equity shareholder/warrant holder. The Company shall not charge any fee for the splitting of the Consolidated Certificate. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM. No Offer in the United States The rights and the Shares of our Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States or to, or for the account or benefit of, "U.S. Persons" (as defined in Regulation S under the Securities Act), except in a transaction exempt from the registration requirements of the Securities Act. The rights referred to in this Letter of Offer are being offered in India but not in the United States of America. The offering to which this Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any Shares or rights for sale in the United States of America, or the territories or possessions thereof, or as a solicitation therein of an offer to buy any of the said Shares or rights. Accordingly, this Letter of Offer should not be forwarded to or transmitted in or into the United States of America at any time except in a transaction exempt from the registration requirements of the Securities Act. Neither we nor any person acting on our behalf will accept subscriptions from any person, or the agent of any person, who appears to be, or who we or any person acting on our behalf has reason to believe is, a resident of the United States of America and to whom an offer, if made, would result in requiring registration of this Letter of Offer with the United States Securities and Exchange Commission. Rights may not be transferred or sold to any U.S. Person (as defined in Regulations under the Securities Act).


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ISSUE PROCEDURE Procedure for Application

The Composite Application Form (CAF) would be printed in black ink for all Equity Shareholders. In case the original CAF is not received by the applicant or is misplaced by the applicant, the applicant may request the Registrars to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. Option available to the Equity Shareholders The Composite Application Form clearly indicates the number of Equity Shares that the Equity Shareholder is entitled to. Equity Shareholder shall have the following options: • Apply for his entitlement in full; • Apply for his entitlement in full and apply for additional Equity Shares; • Apply for his entitlement in part; • Apply for his entitlement in part and renounce the other part; • Renounce his entire entitlement. Additional equity shares The equity shareholders are eligible to apply for additional equity shares provided the applicant has applied for all the equity shares offered to him without renouncing them in full or in part. The application for the additional equity shares shall be considered and allotment shall be made at the sole discretion of the Board and in consultation if necessary with the Designated Stock Exchange. This allotment of additional equity shares will be made on equitable basis with reference to number of shares held by the applicant on the record date. Renouncees for Equity Shares can apply for the Equity Shares renounced to them and also apply for additional Equity Shares. Renunciation This Issue shall be deemed to include a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favour of any other person or persons subject to the approval of the Board. Such renouncees can only be Indian Nationals (including minor through their natural / legal guardian) / limited companies incorporated under and governed by the Act, statutory corporations / institutions, trusts (registered under the Indian Trust Act), societies (registered under the Societies Registration Act, 1860 or any other applicable laws) provided that such trust/society is authorized under its constitution / bye laws to hold equity shares in a company and cannot be a partnership firm, foreign nationals or nominees of any of them (unless approved by RBI or other relevant authorities) or to any person situated or having jurisdiction where the offering in terms of this Letter of Offer could be illegal or require compliance with securities laws of such jurisdiction or any other persons not approved by the Board. Any renunciation from Resident Indian Shareholder(s) to Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to other Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to Resident Indian(s) is subject to the renouncer(s) / renouncee(s) obtaining the approval of the FIPB and / or necessary permission of the RBI under the Foreign Exchange Management Act, 1999 (FEMA) and other applicable laws and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid approval are liable to be rejected. By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003.


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Accordingly, the existing Equity Shareholders of the Company who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of renounces shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). Your attention is drawn to the fact that the Company shall not allot and / or register any Equity Shares in favor of: • More than three persons including joint holders • Partnership firm(s) or their nominee(s) • Minors • Any Trust or Society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable Trust laws and is authorized under its Constitutions to hold Equity Shares of a Company) The right of renunciation is subject to the express condition that the Board / Committee of Directors shall be entitled in its absolute discretion to reject the request for allotment to renouncee(s) without assigning any reason thereof. Procedure for renunciation To renounce the whole offer in favour of one renounce If you wish to renounce the offer indicated in Part A, in whole, please complete Part B of the CAF. In case of joint holding, all joint holders must sign Part B of the CAF. The person in whose favor renunciation has been made should complete and sign Part C of the CAF. In case of joint renouncees, all joint renounces must sign Part C of the CAF. To renounce in part/or renounce the whole to more than one person(s) If you wish to either accept this offer in part and renounce the balance or renounce the entire offer in favour of two or more renouncees, the CAF must be first split into requisite number of forms. Please indicate your requirement of split forms in the space provided for this purpose in Part D of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of receiving requests for split forms. On receipt of the required number of split forms from the Registrar, the procedure as mentioned in paragraph above shall have to be followed. Please note that the Warrant being attached to equity shares offered, cannot be renounced separately. Any renouncement of equity shares automatically renounces the right to entitlement of warrant. In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the specimen registered with the Company, the application is liable to be rejected. Renouncee(s) The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part C of the Application Form and submit the entire Application Form to the Bankers to the Issue on or before the Issue Closing Date along with the application money. Change and/ or introduction of additional holders If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is/are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed. Please note that: • Part A of the CAF must not be used by any person(s) other than those in whose favour this Issue has been made. If used, this will render the application invalid. • Request by the applicant for the Split Application Form should reach the Company on or before June 23, 2009. • Only the person to whom this Letter of Offer has been addressed to and not the renouncee(s) shall be entitled to renounce and to apply for Split Application Forms. Forms once split cannot be split again. • Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.


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How to apply Procedure for application for Equity Shares and the detachable warrants You may accept the Issue and apply for the Equity Shares , either in full or in part, by filling Part A of the respective CAFs enclosed and submit the same along with the application money payable to the Bankers to the Issue or any of the collection branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company in this regard. Applicants at centers not covered by the branches of collecting banks can send their CAF together with the cheque drawn at par on a local bank at Mumbai/demand draft payable at Mumbai to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. For further details on the mode of payment, see “– Mode of Payment for Resident Ordinary Shareholders/Applicants” and “– Mode of Payment for Non-Resident Ordinary Shareholders/Applicants” on pages 184 , respectively, of this Letter of Offer . The CAF consists of

1. Part A: Form for accepting the Equity Shares and the detachable warrants and for applying for additional Equity Shares and / or warrants

2. Part B: Form for renunciation of Equity Shares 3. Part C: Form for application for renounces of Equity Shares 4. Part D: Form for request for split application forms

Non-resident Equity Shareholders will be required to represent, inter alia, that they are not excluded U.S. Persons as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended. Application for conversion into Equity Shares will be sent separately to the warrant holders as on the Record Date

The summary of options available to the equity shareholders is presented below. You may exercise any of the following options with regard to the equity shares offered to you, using the enclosed CAF:

Sr. No. Option Available Action Required

1 Accept whole or part of your entitlement without renouncing the balance.

Fill in and sign Part A (all joint holders must sign)

2 Accept your entitlement in full and apply for additional equity shares.

Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

3 Renounce your entitlement to all the equity shares offered to you, to one person (joint renouncees are considered as one).

Fill in and sign Part B (all joint holders must sign) indicating the number of equity shares renounced and hand it over to the renouncee. The renounces must fill in and sign Part C (all joint renounces must sign)


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4 Accept a part of your entitlement to the equity shares offered to you and renounce the balance to one or more renouncee(s).

OR Renounce your entitlement to all the equity shares offered to you to more than one renouncee.

Fill in and sign Part D (all joint holders must sign) requesting for Split Application Forms. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for Split Forms. Splitting will be permitted only once. Request for split forms must be in multiples of 1 equity share. On receipt of the split form take action as indicated below. a) For the equity shares you wish to accept, if any, fill in and sign Part A. b) For the Equity shares you wish to renounce, fill in and sign Part B indicating the number of equity shares renounced and hand it over to the renouncees. Each of the renouncees should fill in and sign Part C for the equity shares accepted by them.

5 Introduce joint-holder or change the sequence of joint holder

This will be treated as a renunciation. Fill in and sign Part B and the renouncees must fill in and sign part C.

Applicants must provide information in the CAF as to their savings Bank/current account number and the name of the Bank with whom such account is held, to enable the Registrar to print the said details in the refund orders after the names of the payee(s). Failure to comply with this may lead to rejection of the application. Bank account details furnished by the depositories will be printed on the refund warrant in case of shares held in electronic form. Applicants must write CAF Number on the reverse of the cheque / demand draft Applications by non-resident equity shareholders Applications received from the non-resident equity shareholders for the allotment of Equity Shares shall, inter alia, be subject to the conditions as may be imposed from time to time by the RBI, in the matter of refund of application moneys, allotment of Equity Shares, issue of letters of allotment / certificates / payment of dividends etc. Non-resident equity shareholders will be required to represent, inter alia, that they are not excluded U.S. Persons as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended. Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate CAF on request of the applicant who should furnish the registered folio number, DP and Client ID no. and his/ her full name and address to the Registrar to the Issue. Please note that those who are making the application on duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received subsequently. If the applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications. Request for Split Forms

• Request for split form should be addressed to the Registrar to the issue so as to reach them on or before the last date for receiving of request for split forms by filling in Part D of the CAF

• Request for Split forms will be entertained only once Application on plain paper


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An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Rights Issue on plain paper, along with a Cheque/ Demand Draft payable at Mumbai which should be drawn in favour of “SFL- Rights Issue” and send the same by registered post directly to the Registrar to the Issue. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars –

(i) Name of Issuer, being Syncom Formulations (India) Limited (ii) Name and address of the Equity Shareholder including joint holders (iii) Registered Folio Number/ DP and Client ID no. (iv) Number of shares held as on Record Date i.e. 20th May 2009 (v) Certificate numbers and distinctive numbers, if held in physical form (vi) Number of rights Equity Shares entitled (vii) Number of rights Equity Shares applied for out of entitlement (viii) Number of additional Equity Shares applied for, if any (ix) Total number of Equity Shares applied for (x) Total amount paid at the rate of Rs. 17/- per Equity Share (xi) Particulars of cheque/draft (xii) Savings/Current Account Number and name and address of the Bank where the Equity (xiii) Shareholder will be depositing the refund order (xiv) In case of Non-Resident shareholders, NRE/FCNR/NRO Account No., name and address of the bank

and branch should be given. (xv) Signature of Equity Shareholders to appear in the same sequence and order as they appear in the

records of the Company (xvi) Payment in such cases, should be through a Cheque/ demand draft, net of demand draft and postal

charges, payable at Mumbai be drawn in favour of “SFL- Rights Issue” crossed “A/c Payee only”. Please note that those who are making the application on plain paper shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications. The Company shall refund such application amount to the applicant without any interest thereon. Application under power of attorney In case of applications under Power of Attorney or by Limited Companies or Bodies Corporates or Societies registered under the applicable laws, a certified copy of the Power of Attorney or the relevant authority, as the case may be, along with the certified copy of the Memorandum and Articles of Association or Bye-laws, as the case may be, must be lodged separately by registered post at the office of the Registrar to the Issue simultaneously with the submission of the CAF, indicating the serial number of the CAF and the name of the bank and the branch office where the application is submitted within 10 days of closure of the offer, failing which the application is liable to be rejected. In case the Power of Attorney is already registered with the Company, then the same need not be furnished again. However, the serial number of the Registration under which the Power of Attorney has been registered with the Company must be mentioned below the signature of the Applicant. Quoting of Permanent Account Number in the application forms In terms of circular no. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007, every applicant shall disclose the Permanent Account Number (PAN), allotted under the Income Tax Act, 1961, in the application form, irrespective of the amount for which application is made. Application forms without this information will be considered incomplete and are liable to be rejected. Note on cash payment (Section 269 SS)


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Having regard to the provisions of Section 269 (SS) of the Income Tax Act, 1961, if the amount payable is Rs. 20,000/- or more, subscriptions against applications for securities should not be effected in cash and must be effected only by ‘Account Payee’ cheques or ‘Account Payee’ bank drafts. In case payment is effected in contravention of this provision, the application is liable to be rejected. Last date of Application The last date for submission of the duly filled in CAF is June 30, 2009 . The Issue will be kept open for a minimum of 15 (fifteen) days and the Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 (thirty) days from the Issue Opening Date. If the CAF together with the amount payable is not received by the Banker to the Issue/Registrar to the Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/Committee of Directors, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board/Committee of Directors shall be at liberty to dispose off the shares hereby offered, as provided under “Basis of Allotment” below. Incomplete Application CAF’s, which are not complete or are not accompanied with the application money amount payable, are liable to be rejected. Mode of payment for Resident Shareholders / Applicant Payment(s) must be made by cheque/demand draft and drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the Bankers’ Clearing House located at the centre where the CAF is submitted. A separate cheque/draft must accompany each CAF. Only one mode of payment should be used. Money orders, postal orders and outstation cheques will not be accepted and applications accompanied by any such instruments will be rejected. Shareholders/Applicants residing at places other than those mentioned in the CAF and applicants who wish to send their applications but not having collection centres should send their application by Registered Post, only to the Registrar to the Issue enclosing a Cheque / Demand draft, net of bank charges and postal charges, drawn on a clearing Bank and payable at Mumbai only before the closure of the issue. Such cheque / drafts should be payable to “SFL - Rights Issue” / “SFL-Warrant Issue”. All cheque/ drafts must be crossed ‘A/c Payee only’. No receipt will be issued for the application money received. However, the Collection Centre receiving the application will acknowledge receipt of the application by stamping and returning the acknowledgement slip at the bottom of each CAF. The Company is not responsible for any postal delay/ loss in transit on this account. Mode of payment for Non-Resident Equity Shareholders/ Applicants As regards the application by non-resident Equity Shareholders, the payment must be made by demand draft / cheque payable at Mumbai (net of demand draft charges and postal charges) or funds remitted from abroad in any of the following ways: 1. Application with repatriation benefits (a) By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad (submitted along with Foreign Inward Remittance Certificate); or (b) By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained and drawn on Mumbai; or (c) By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable at Mumbai; or (d) FIIs registered with SEBI must remit funds from special non-resident rupee deposit account. (e) Non resident investors applying with repatriation benefits should draw cheques / drafts in favour of “SFL - Rights Issue NR” / “SFL - Warrant Issue NR” payable at Mumbai and must be crossed “account payee only” for the full application amount.


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2. Application without repatriation benefits As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the allotment of Equity Shares will be on non-repatriation basis. All cheques/drafts submitted by nonresidents should be drawn in favour of the Bankers to the Issue and marked “SFL - Rights Issue” or “SFL-Warrant Issue” payable at Mumbai and must be crossed “Account Payee only” for the amount payable. The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on the Issue Closing Date. A separate cheque or bank draft must accompany each CAF. Applicants may note that where payment is made by drafts purchased from NRE / FCNR / NRO accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE / FCNR / NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected. Note: • In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in Equity Shares/Warrant can be remitted outside India, subject to tax, as applicable according to IT Act. • In case Equity Shares/Warrant are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares/Warrant cannot be remitted outside India. • The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF. • In case of an application received from non-residents, allotment, refunds and other distribution, if any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals. Investments by FIIs In accordance with the current regulations, the following restrictions are applicable for investment by FIIs: The Issue of Equity Shares under this Issue and the issue of Equity Shares on exercise of Warrants to a single FII should not exceed 10% of the post-issue paid up capital of the Company. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts the investment on behalf of each sub-account shall not exceed 5% of the total paid up capital of the Company. At present, investments in pharmaceutical companies fall under the RBI automatic approval route for FDI / NRI investment up to 100%. APPLICATIONS WILL NOT BE ACCEPTED BY THE LEAD MANAGER OR THE COMPANY Rights Entitlement As your name appears in the Register of Members of the Company on the Book Closure Date, you are entitled to this Rights Offer on the basis mentioned above. The number of equity shares to which you are entitled as a Shareholder of the company is shown in part A of the CAF. Bank details of the applicant The applicant must fill in the relevant column in the CAF giving particulars of saving Bank/Current Account Number and the Name of the Bank with whom such account is held, to enable the registrar to the issue to print the said details in the refund orders, if any, after the name of the Payees. Please note that provision of Bank Account details has now been made mandatory and applications not containing such details are liable to be rejected. Application number on the Cheque or Demand Draft


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To avoid any misuse of instruments, the applicants are advised to write the application number and name of the first applicant on the reverse of the cheque/demand draft. General instructions for applicants All applications should be made on the printed CAF provided by the Company and should be complete in all respects. Applications, which are not complete in all respects or are made otherwise than as herein provided or not accompanied by proper application money in respect thereof will be refunded without interest. • Please read the instructions in the enclosed CAF carefully. • All communications in connection with your application for the equity shares including any change in your registered address should be addressed to the registrar to the issue. • Application Forms must be filled in ENGLISH in BLOCK LETTERS. • Signatures should be either in English or Hindi or the languages specified in the Eighth Schedule to the Constitution of India. Signatures other than in the aforementioned languages or thumb impressions must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. • In case of Joint Holders, all joint holders must sign the relevant parts of the Application Form in the same order and as per the specimen signatures recorded with the Company. • In case of joint applicants, refunds and all payments will be made to the person whose name appears first on the application form and all communications will be addressed to him/her. To prevent any fraudulent encashment of refund orders by third parties, the Sole/First Applicant must indicate Saving / Current Account number and the name of the bank and its branch with whom such account is held in the space provided in the CAF for the purpose so that Refund Orders are printed with these details after the name. Applications without this information are liable to be rejected. • The Application Form should be presented to the Bank in its entirety. If any of the Part(s) A, B, C and D of the Application Form(s) is /are detached or separated, such application will forthwith be rejected. • All shareholders must submit the CAF along with remittance only to the Bankers to the Issue mentioned elsewhere in this Letter of Offer and not to the Company, the Registrar or the Lead Manager. • Any dispute or suit action or proceedings arising out of or in relation to this Letter of Offer or in respect of any matter or thing herein contained and claimed by either party against the other shall be instituted or adjudicated upon or decided solely by the appropriate Court where Registered Office of the Company is situated. • The last date for receipt of CAF along with the amount payable is June 30, 2009.However, the Board will have the right to extend the same for such period as it may determine from time to time, but not exceeding 30 days from the date of opening of the subscription list. If the CAF together with the amount payable there under is not received by the bankers to the issue on or before the closure of the banking hours on the aforesaid date, or such date as may be extended by the Board, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board shall be at liberty to dispose the Rights hereby offered. For further instructions please read CAF carefully. Grounds for technical rejection Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following: • Amount paid does not tally with the amount payable for; • Bank account details (for refund) are not given; • Age of first applicant not given; • PAN not given irrespective of the amount of application; • In case of Application under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted; • If the signature of the existing shareholder does not match with the one given on the Application Form and for renouncees if the signature does not match with the records available with their depositories; • If the Applicant desires to have shares in electronic form, but the Application Form does not have the Applicant’s depository account details; • Application Forms are not submitted by the Applicants within the time prescribed as per the Application Form and the Letter of Offer; • Applications not duly signed by the sole/joint Applicants; • Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to invest in the Issue;


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• Applications accompanied by Stockinvest; • In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Applicants (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity; • Applications by US persons; • Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local laws) and where last available address in India has not been provided. Procedure for Application through the Applications Supported by Blocked Amount (“ASBA”) Process This section is for the information of Equity Shareholders proposing to subscribe to the Issue through the ASBA Process. The Company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Letter of Offer. Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and ensure that the number of Equity Shares applied for by such Shareholder do not exceed the applicable limits under laws or regulations. Shareholders applying under the ASBA Process are also advised to ensure that the CAF is correctly filled up, stating therein the bank account number maintained with the SCSB in which an amount equivalent to the amount payable on application as stated in the CAF will be blocked by the SCSB. The lists of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on http://www.sebi.gov.in/pmd/scsb.pdf. For details on designated branches of SCSBs collecting the CAF, please refer the above mentioned SEBI link. Equity Shareholders who are eligible to apply under the ASBA Process The option of applying for Equity Shares in the Issue through the ASBA Process is only available to Shareholders of the Company on the Record Date and who: • Is holding Equity Shares in dematerialised form and has applied for entitlements or additional Securities in the Issue in dematerialised form; • Has not renounced his entitlements in full or in part; • Has not split the CAF; • Is not making an application on plain paper; • Is not a Renouncee to the Issue; • Who applies through a bank account with one of the SCSBs. CAF

The Registrar will dispatch the CAF to all Equity Shareholders as per their entitlement on the Record Date for the Issue. Those Equity Shareholders who wish to apply through the ASBA payment mechanism will have to select for this mechanism in Part A of the CAF and provide necessary details. Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF only. Application in electronic mode will only be available with such SCSB who provides such facility. The method of applying under ASBA process will not be available for Investors applying on plain paper. The Equity Shareholder shall submit the CAF to the SCSB for authorizing such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. Acceptance of the Issue You may accept the Issue and apply for the Equity Shares offered, either in full or in part, by filling Part A of the CAF sent by the Registrar, selecting the ASBA process option in Part A of the CAF and submit the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company in this regard.


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Mode of payment The Shareholder applying under the ASBA Process agrees to block the entire amount payable on application (including for additional Equity Shares, if any) with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB. After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrar. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per Registrar’s instruction allocable to the Shareholders applying under the ASBA Process from bank account with the SCSB mentioned by the Shareholder in the CAF. This amount will be transferred in terms of the SEBI Guidelines, into the separate bank account maintained by the Company as per the provisions of section 73(3) of the Companies Act, 1956. The balance amount remaining after the finalisation of the basis of allotment shall be either unblocked by the SCSBs or refunded to the investors by the Registrar on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Managers to the respective SCSB. The Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF. The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the application by the SCSB, the Company would have a right to reject the application only on technical grounds. Options available to the Shareholder applying under the ASBA Process The summary of options available to the Shareholders is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the CAF received from Registrar: Option Available

Action Required

1 Accept whole or part of your entitlement without renouncing the balance.

Fill in and sign Part A of the CAF (All joint holders must sign)

2 Accept your entitlement in full and apply for additional Equity Shares

Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

The Shareholder applying under the ASBA Process will need to select the ASBA option process in the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the SCSB with the relevant details required under the ASBA process option and SCSB blocks the requisite amount, then that CAF would be treated as if the Shareholder has selected to apply through the ASBA process option. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares (as the case may be) that you are entitled too, provided that you have applied for all the Shares (as the case may be) offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional shares shall be considered and allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under “Basis of Allotment” on page 192 of this Letter of Offer. If you desire to apply for additional shares, please indicate your requirement in the place provided for additional Securities in Part A of the CAF.


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Renunciation under the ASBA Process Renouncees cannot participate in the ASBA Process. Application on Plain Paper Applications on plain paper cannot be made by Equity Shareholders availing of the ASBA Process. Last date of Application The last date for submission of the duly filled in CAF is June 30, 2009 . The Issue will be kept open for a minimum of 15 (fifteen) days and the Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 (thirty) days from the Issue Opening Date. If the CAF together with the amount payable is not received by the Bankers to the Issue/Registrar to the Issue or if the CAF is not received by the SCSB on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/Committee of Directors, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board/Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under “Basis of Allotment” on page 192 of this Letter of Offer. Option to receive Securities in Dematerialized Form SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY UNDER THE ASBA PROCESS CAN ONLY BE ALLOTTED IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE BEING HELD ON RECORD DATE. General instructions for Shareholders applying under the ASBA Process (a) Please read the instructions printed on the CAF carefully.

(b) Application should be made on the printed CAF only and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of this Letter of Offer are liable to be rejected. The CAF must be filled in English. (c) The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose bank account details are provided in the CAF and not to the Bankers to the Issue/Collecting Banks (assuming that such Collecting Bank is not a SCSB), to the Company or Registrar or Lead Manager to the Issue. (d) All applicants, and in the case of application in joint names, each of the joint applicants, should mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected. (e) All payments will be made by blocking the amount in the bank account maintained with the SCSB. Cash payment is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon. (f) Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to the Constitution of India. Thumb impression and Signatures other than in English or Hindi must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company/or Depositories. (g) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with the Company. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.


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(h) All communication in connection with application for the Securities, including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole applicant Shareholder, folio numbers and CAF number. (i) Only the person or persons to whom Securities have been offered and not renouncee(s) shall be eligible to participate under the ASBA process. Do’s: a. Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled in. b. Ensure that you submit your application in physical mode only. Electronic mode is only available with certain SCSBs and not all SCSBs and you should ensure that your SCSB offers such facility to you. c. Ensure that the details about your Depository Participant and beneficiary account are correct and the beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only. d. Ensure that the CAFs are submitted at the SCSBs whose details of bank account have been provided in the CAF. e. Ensure that you have mentioned the correct bank account number in the CAF. f. Ensure that there are sufficient funds (equal to {number of Equity Shares applied for} X {Issue Price per Equity Shares as the case may be}] available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB. g. Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on application mentioned in the CAF, in the bank account maintained with the respective SCSB, of which details are provided in the CAF and have signed the same. h. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form. i. Each applicant should mention their Permanent Account Number (“PAN”) allotted under the I. T. Act. j. Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF. k. Ensure that the Demographic Details are updated, true and correct, in all respects. Don’ts:

1) Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB. 2) Do not pay the amount payable on application in cash, by money order or by postal order. 3) Do not send your physical CAFs to the Lead Manager to Issue / Registrar / Collecting Banks (assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only. 4) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground. 5) Do not instruct their respective banks to release the funds blocked under the ASBA Process. Grounds for Technical Rejection for ASBA Process:


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In addition to the grounds listed under “Grounds for Technical Rejection” mentioned on page 186 of this Letter of Offer , applications under ASBA Process can be rejected on following additional grounds: a) Application on plain paper or on spilt form. b) Application for entitlements or additional shares in physical form. c) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available with the Registrar. d) Sending CAF to a Lead Manager / Registrar / Collecting Bank (assuming that such Collecting Bank is not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company. e) Renouncee applying under the ASBA Process. f) Insufficient funds are available with the SCSB for blocking the amount. g) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen pursuant to regulatory orders. h) Account holder not signing the CAF or declaration mentioned therein. Depository account and bank details for Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Shareholders applying under the ASBA Process should note that on the basis of name of these Shareholders, Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of these Shareholders such as address, bank account details for printing on refund orders / advice and occupation (“Demographic Details”). Hence, Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF. These Demographic Details would be used for all correspondence with such Shareholders including mailing of the letters intimating unblock of bank account of the respective Shareholder. The Demographic Details given by Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Letters intimating allotment and unblocking or refund (if any) would be mailed at the address of the Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. Refunds, if any, will be made directly to the bank account in the SCSB and which details are provided in the CAF and not the bank account linked to the DP ID. Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of bank account may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of bank account. Note that any such delay shall be at the sole risk of the Shareholders applying under the ASBA Process and none of the Company, the SCSBs or the Lead Manager shall be liable to compensate the Shareholder applying under the ASBA Process for any losses caused to such Shareholder due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Shareholders (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected.


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Basis of allotment The basis of allotment shall be finalized by the Board of the Company or Committee of Directors of the Company authorized in this behalf by the Board of the Company. The Board of the Company or the Committee of Directors as the case may be, will proceed to allot the equity Share in consultation with BSE in the following order of priority. a) Full allotment to those Equity Shareholders who have applied for their rights entitlement either in full or in part and also to the renouncee(s) who has/ have applied for Equity Shares renounced in their favor, in full or in part. b) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them and have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full allotment in (a) above. The allotment of such Equity Shares will be made on a fair and equitable basis in consultation with the Designated Stock Exchange. c) Allotment to the renouncees who having applied for the Equity Shares renounced in their favour have also applied for additional Equity Shares, provided there is an under-subscribed portion after making full allotment in (a) and (b) above. The allotment of such additional Equity Shares will be made on a proportionate basis at the sole discretion of the Board/ Committee of Directors but in consultation with the Designated Stock Exchange, as a part of the Issue and not as a preferential allotment. d) Allotment to any other person as the Board may in its absolute discretion deem fit provided there is surplus available after making full allotment under (a), (b) and (c) above. e) The Company shall not retain any over-subscription. After taking into account allotment to be made under (a) and (b) above, if there is any unsubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code which would be available for allocation under (c), (d) and (e) above. The Promoters has provided an undertaking to the Company to apply for additional Equity Shares and Warrants in the Issue, to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent allotment, the Promoters may acquire shares over and above their entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by the Promoters through this Issue, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” on page 36 of this Letter of Offer, there is no other intention / purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments to the Promoters, in this Issue, the Promoters’ shareholding in the Company exceeds their current shareholding. In the event of oversubscription, allotment will be made within the overall size of the issue. Allotment to the Promoter of any unsubscribed portion, over and above their entitlement shall be done in compliance with Clause 40A of the Listing Agreement and the other applicable laws prevailing at that time. Allotment Letters / Share Certificates / Demat Credit The Company will issue and dispatch letters of allotment/ share certificates/ demat credit and/ or letters of rejection along with refund order or credit the allotted securities to the respective beneficiary accounts, if any, within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated under Section 73(2)/(2A) of the Companies Act. In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialised form by using electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately.


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Letters of allotment/ share certificates/ demat credit/ refund orders above the value of Rs. 1,500 will be dispatched by registered post/ speed post to the sole/ first applicant’s registered address. However, refund orders for value not exceeding Rs. 1,500 shall be sent to the applicants by way of certificate of posting. Such cheques or pay orders will be payable at par at all the centres where the applications were originally accepted and will be marked ‘A/c payee’ and would be drawn in the name of the sole/ first applicant. Adequate funds would be made available to the Registrar to the Issue for the dispatch of such letters of allotment/ share certificates/ demat credit and refund orders. The Company shall ensure at par facility is provided for encashment of refund orders/ pay orders at the places where applications are accepted. Underwriting The present Issue is not underwritten. Mode of payment of refund Applicants should note that on the basis of name of the applicants, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Composite Application Form, the Registrar to the Issue will obtain from the Depositories, the applicant’s bank account details including nine digit MICR code. Hence, applicants are advised to immediately update their bank account details as appearing on the records of the depository participant. Please note that failure to do so could result in delays in credit of refunds to applicants at the applicant’s sole risk and neither the Lead Manager nor the Company shall have any responsibility and undertake any liability for the same. The payment of refund, if any, would be done through various modes in the following order of preference: 1. ECS - Payment of refund shall be undertaken through ECS for applicants having an account at any of the following centres: Mumbai, Kolkata, Chennai, Delhi, Pune Indore, Vadodra, Ahmedabad, Rajkot- refunds shall be credited through electronic transfer of funds by using ECS (Electronic Clearing Service), Direct Credit, RTGS (Real Time Gross Settlement) or NEFT (National Electronic Funds Transfer); This would be subject to availability of complete Bank Account Details including MICR code from the depository. 2. Direct Credit - Applicants having bank accounts with the Refund Banker(s), the refund amount would be directly credited to their refund banker Account with the refund banker. 3. RTGS – Investors desirous of taking direct credit of refund through RTGS, will have to provide the IFSC code in the CAF. 4. For all other applicants, including those who have not updated their bank particulars with the MICR code, the refund orders will be dispatched under certificate of posting for value up to Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn on the Mumbai and payable at par. Printing of Bank Particulars on Refund Orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the applicant’s bank account are mandatorrily required to be given for printing on the refund orders. Bank account particulars will be printed on the refund orders/refund warrants, which can then be deposited only in the account specified. In case the share held in demat mode, such bank account particulars will be obtained from the Depository. The Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Interest in case of delay on allotment / dispatch The Company agrees that as far as possible allotment of securities offered to the existing shareholders on Rights basis shall be made within 15 days of the closure of the issue. Share certificate, letter of allotment or letter of rejection as


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the case may be will be despatched to the registered address of the first named applicant and/or the respective beneficiary accounts will be credited within 15 days, from the date of closure of the Issue. In case of delay beyond eight days, the Company agrees that it shall pay interest at the rate of 15% per annum. Disposal of application and application money No receipt will be issued for the application moneys received. However, the Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. In the event of shares not being allotted in full, the excess amount paid on application will be refunded to the applicant within 15 days of the closure of the Issue. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the applicant within 15 days from the close of the Issue in accordance with section 73 of the Act. For further instruction, please read the Composite Application Form (CAF) carefully. Undertakings by the Company

The Company has given undertakings that:

i. The complaints received in respect of the Issue shall be attended to by the Company expeditiously and

satisfactorily. ii. All steps for completion of the necessary formalities for listing and commencement of trading at all Stock

Exchange where the securities are to be listed will be taken within seven working days of finalization of basis of allotment.

iii. The funds required for dispatch of refund orders/ allotment letters/ certificates by registered post shall be made

available to the Registrar to the Issue. iv. The certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within the

specified time. v. No further issue of securities affecting equity capital of the Company shall be made till the securities

issued/offered through the Issue are listed or till the application moneys are refunded on account of non-listing, under-subscription etc.

vi. The Company accepts full responsibility for the accuracy of information given in this Letter of Offer and confirms

that to best of its knowledge and belief, there are no other facts the omission of which makes any statement made in this Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts.

vii. All information shall be made available by the Lead Managers and the Issuer to the Investors at large and no

selective or additional information would be available for a section of the Investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc.

viii. We are having in place an Investor Grievance Handling Mechanism which includes meeting of

Shareholders’/Investors’ Grievance Committee’ at frequent intervals, appropriate delegation of power by the Board of Directors of the Issuer Company with regard to share transfer and clearly laid out systems and procedures for timely and satisfactorily redressal of Investor Grievance

ix. That we have been filing periodic statements in regard to financial results and shareholding pattern with the


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Designated Stock Exchange BSE and Registrar of Companies for the last three years and such statements are available on websites of the Designated Stock Exchange/ on a common e- filing platform

x. That we are addressing the investor grievances periodically by the authorized committee of the director

constituted as per Clause 49 of the Listing Agreement xi. That we further confirm that other than the disclosures made in the instant Letter of Offer nothing material has

changed in respect of disclosures made by us at the time of our previous public Issue made on 15th December, 1995.

Certification by Lead Manager We certify that M/s Syncom Formulation (India) Limited, is complying the norms as per Clause 6.39 of SEBI (DIP) Guidelines, 2000 a) M/s Syncom Formulation (India) Limited has been filling periodic statements in regard to financial results and

shareholding pattern with the Designated Stock Exchange and Registrar of Companies for the last three years and such statements are available on websites of the Designated Stock Exchange.

b) M/s Syncom Formulation (India) Limited has in place an investor grievance handling mechanism which includes meeting of Shareholders / Investors Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the issuer company with regard to share transfer and clearly laid out systems and procedures for timely and satisfactory redressal of investor grievances.

Utilization of Issue Proceeds The Board of Directors declares that: 1. The funds received against this Issue will be transferred to a separate bank account other than the bank account referred to sub-section (3) of Section 73 of the Act. 2. Details of all moneys utilised out of the Issue shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the purpose for which such moneys has been utilised. 3. Details of all such unutilised moneys out of the Issue, if any, shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the form in which such unutilised moneys have been invested. The funds received against this Issue will be kept in a separate bank account and the Company will not have any access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90% of the Issue has been received by the Company. Important • Please read this Letter of Offer carefully before taking any action. The instructions contained in the accompanying Composite Application Form (CAF) are an integral part of the conditions of this Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected. • All enquiries in connection with this Letter of Offer or accompanying CAF and requests for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and superscribed ‘SFL RIGHTS ISSUE’ on the envelope) to the Registrar to the Issue at the following address: ANKIT CONSULTANCY PVT. LTD 2nd Floor, Alankar Point, 4-A, Rajgarh Kothi, Gita Bhawan Square, A.B.Road, Indore- 452001, Madhya Pradeh Tel : +91-731-2491298/2495226 Fax: +91 -731-4065798 Contact Person: Mr. Sanjay Singh


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Email: [email protected] Website: www.ankitonline.org 1. It is to be specifically noted that this Issue of Equity Shares is subject to Risk Factors appearing on page 6 of this Letter of Offer. 2. The Rights Issue will be kept open for minimum 15 days unless extended, in which case it will be kept open for a maximum 30 days.


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SECTION IX: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION

Pursuant to Schedule II of the Companies Act and the SEBI Guidelines, the main provisions of the Articles of Association relating to voting rights, dividend, lien, forfeiture, restrictions on transfer and transmission of Equity Shares or debentures and/or on their consolidation/splitting are detailed below. Please note that each provision herein below is numbered as per the corresponding article number in the Articles of Association and capitalized/defined terms herein have the same meaning given to them in the Articles of Association. The Regulations contained in Table 'A' in Schedule to the Companies Act 1956 shall not apply to the Company. Unless the context otherwise requires the words, expressions contained in these Articles shall bear the same meaning as in Companies Act, 1956 and any amendments to and/or notifications under the provisions of the said Act in force at the date at which the Articles become binding on the Company.

i. Preliminary Title of Article Article Number and contents Table ‘A’ not to Apply but company to be governed by these Articles

The regulations contained in Table ‘A’ in the First Schedule to the Companies Act, 1956, shall not apply to company, but the regulations for the management of the Company and for the observance of the Members thereof and their representatives, shall, subject to any exercise of the statutory powers of the Company with reference to the repeal or alterations of, or addition to, its regulations by Special Resolution, as prescribed by the said Companies Act, 1956 be such as are contained in these Articles.

SHARE CAPITAL

Share Capital & Variation Of Rights Article 3.(a) provides that The Authorised Share Capital of the Company is Rs. 14,00,00,000/- (Rs. Fourteen Crore only) divided into

1,40,00,000 (One Crore Forty Lakhs) Equity shares of Rs.10/- (Rs. Ten only) each with powers of the company to increase or reduce the capital of the company and to divide the shares in the capital for the time being in to several classes and attach thereto respectively such preferential qualified or specified rights, privileges or conditions as may be determined by or in accordance with the Articles of the Company for the time being and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may be permitted by the Articles of the Company or legislative provisions for the time being in force in that behalf.

Powers of the Company Article 4 provides that Wherever in the said Act it has been provided that the Company shall have any rights, privilege, or authority or the

company could carry out the transaction only, it the Company is so authorised by its-Articles, then and in that case, this Regulation hereby authorised and empowers the Company to have such high, privilege, authority and to carry such transaction as has been permitted by the Act without there being any specific regulation in that behalf herein provided. An illustration of such rights, authorities and transaction are set out as follows,

Section 76: To pay commission on issue of share and debentures. Section 80: & 80 A to Issue redeemable preference shares. Section 92: to accept unpaid share capita' although not called up. Section 94; to alter the share capital of the Company. Section 100: to reduce the Share Capital of the Company.


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Section 106: to alter the rights of holders of special class of shares.

4(1) Subject to the provisions of the SEBI (Disclosure and Investors Protection) Guidelines as may be applicable from time to time and with the consent of the Members of the Company at a General Meeting by way of Special Resolution, the Board of directors of the Company or a Committee thereof duly authorised by the Board of directors may issue and allot Warrants Convertible into the Equity Shares on such rates, terms and conditions to the existing shareholders, general public, or on preferential basis to the promoters, directors, bodies corporate, banks, financial institutions, OCBs, NRIs or such other persons from time to time on receipt of at least 10% of the face value of the Warrants, as it may think fit. The Board of directors of the Company shall be authorized to make provisions as to the allotment and issue of Warrants and in particular may determine to whom the same shall be offered, whether at par or at premium, subject to the provisions of the Companies Act, 1956 and all the applicable provisions of the SEBI DIP Guidelines. 4(2) The Company may, by special resolution, authorise the Board to convert warrants into the equity shares at such rates (including premium), terms and conditions as may be determined by the Board and in accordance with the guidelines issued by the SEBI, Stock Exchange, Central Govt. or other authorities either on single trench or otherwise as per the sole discretion of the Board.

Buy Back of Shares Article 6(b) provides that

The Company may from time to time by Special Resolution, Buy Back its Equity Shares to the extent permissible under the provisions o! Section 77A of the Companies Act, 1956 or any rules framed there under.

Preference Shares Article 9 provides that

Subject to provision of the Act and these Articles, the Company shall have power to issue Preference Shares

carrying right to redeem out of the profits of which would be otherwise available for dividend or out of the proceeds of the fresh issue of shares made for the purpose of such redemption, liable to be redeemed at the option of the company, and the Board may, subject to the provision of section 80 & 80A of the Act, exercise such powers in such a manner as it may think fit.

Further Issue of Shares Article 10 provides that

Subject to provision of Section 81, any shares (whether forming part of original capital or of any increased capital of the company) may be issued either with the sanction of the Company in General Meeting or by the Board with such rights and privileges annexed there to and upon such terms and condition as by the General Meeting sanctioning the issue of such share be directed, and if no such direction be given and in all other cases as the Board shall determine and in particular such shares may be issued with a preferential or qualified right to dividends and in distribution of assets of company, without prejudice, to any rights and privileges already conferred on the holders of any shares or class of shares for the time being issued by the Company.

Shares under the Control of Directors

Article 11 provides that

Subject to the provisions of these Articles and Section 81 of the Act, the shares shall be under the control of the Board who may allot or otherwise dispose of same to such person on such terms and conditions either at par or at premium and for such consideration PROVIDED THAT where at any time after a period of two years from the formation of the Company or at any time after the expiry of one year from the allotment of shares in the company made for the first time after formation whichever is earlier, it is proposed to increase the subscribed capital of the


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company the option or right to offer the shares shall not be given to any person except with the sanction of the company in General Meeting as provided for in Section 81 {1) of the Act, and to give to any person the option to call for or be allowed shares of any class of the Company either at par or at a premium or subject as aforesaid at discount such option being exercisable at such times and for such consideration as the Directors think fit.

Provided that option or rights to call of shares shall not be given to any person (s) except with the sanction of the Company in General Meeting.

Commission and Brokerage


The Company may exercise the power of paying commission conferred by Section 76 of the Act and in such case shall comply with the requirement of the Section. Such commission may be by the payment of cash or the allotment of fully or partly paid shares or partly in one way and partly in other. The company may also on any issue of shares or debentures pay such brokerage as may be lawful.

Company not bound to recongnised any interest in share other than that of the registered holder.


Except as required by law and these Articles, no person shall be recognised by the Company as holding any share upon any trust, and the company shall not be bound by, or be compelled in any way to recognise (even when having notice thereof), any equitable contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Articles or under an order of a Court of Competent jurisdiction or by law otherwise provided) any other rights in respect of any shares except an absolute right to the entirely thereof in registered holders,

Acceptance Of Share


An application signed by on behalf of an applicant for shares in the company followed by an acceptance of shares within the meaning of these Articles and every person who thus or otherwise accepts any shares and whose name is on the Register shall for the purpose of these Articles be a member.

Register and Index of Members Article 26 A (9) provides that

The Register and Index of Beneficial Owners maintained by a Depository under the Depository Act shall be deemed to be the Register and issued Index of Members and Security holders for the purposes of these Articles.

Dematerialization of Securities Article 26.A provides that

1. Notwithstanding anything contained in these Articles, the company shall be entitled to demeterialise /

rematerialise its securities and to offer securities in a dematerlalised from pursuant to the Depositories Act. 1996.


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SHARES CERTIFICATES


Subject to the provisions of Sec.113 of the Act and the companies (issue of Share Certificate) Rules 1960 or any statutory modification or re-enactments thereof, share scripts shall be Issued as follows:

(a) The certificate of title to shares and duplicate thereof when necessary, shall be signed in the presence of (I) two Directors and a person acting on behalf of another Director under a duly registered Power of Attorney or two persons acting as attorney as aforesaid for two Directors; and (ii) the Secretary or some other person appointed by the Board for the purpose all of whom shall sign such share certificate; PROVIDED THAT if the composition of the Board permits of it atleast one of the aforesaid two Directors shall be person other than the Managing or Whole-time Director.

(b) Every member shall be entitled to free of charge to one or more certificates in marketable lots for all the shares of each class registered in his name, or if the Board so approves, to several certificates each for one or more such shares. Unless the conditions of issue otherwise provides the Company shall, either within three month after the date of allotment or its fractional coupons of requisite value (save in the case of bonus shares) or within one month of the receipt of application or registration of the transfer, sub-division, consolidation or renewal of any of its shares, as the case may be, deliver In accordance with the procedure laid down under Section 53 of the Act, the certificate of such shares in respect of any shares hold jointly by several persons, the Company shall not be bound to issue more than one certificate and delivery of the certificate to one of several joint-holders shall be sufficient delivery to all such holders.

Fees Payable on Issue of Certificates Article 28 provides that No Fee shall be charged for:

(a) registration of transfer of the Company's share debentures and debenture warrants. (b) sub-division and consolidation of share certificates, debenture certificates and detachable warrants and

for subdivision of letters of allotment and split, consolidation, renewal and pucca transfer receipts into the denomination corresponding to the market units of trading,

(c) sub-division of renounceable letters of right;

(d) issue of new certificates in replacement of those which are old decrepit or worn out or where the cages

on the revere for recording transfer have been fully ulilised; (e) registration of any power of attorney, probate, letters administration or similar other documents.

Article 29 provides that Fees as agreed upon with the stock Exchange will be charged for:

(a) issue of new certificates in replacement o! those that are worn out torn, defaced, lost or destroyed;

(b) sub-division and consolidation of shares and debenture certificates and for sub-division of letters of allotment and split, consolidation, renewal and pucca transfer receipts into denominations other than those fixed for the marketing unit of trading.


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Death One or More Joint Holders of Share Article 48 provides that

In the case of the death of any or more of the persons named in the Register of Members as the joint holders of any share, the survivors shall be the only persons recognised by the company as having any title to or interest In such shares, but nothing herein contained shall be taken to release the estate of deceased joint holder from any liability on shares held by him jointly with any other person.

Company's Lien on Shares Article 52 provides that

The Company shall have a first and paramount lien upon all the shares (other than fully paid shares) registered In the name of such member (whether solely of jointly with others) and upon the proceeds of sale thereof for the amount of calls, interest expenses of any other moneys payable to the company at s fixed time in respect of any shares held by him, whether solely of jointly with others; and such lien shall extend to all dividends and bonus from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the company's lien, if any, on such shares. The Directors may at any time declare any shares wholly or in part to be exempt from provisions of this clause.

Forfeiture, Surrender and Lien of Shares: If Calls Installment Not Paid, Notice May Be Given Article 54 provides that

If any member fails to pay the whole or any part of any call or any installment of a call on or before the day appointed for the payment of the same or any such extension thereof, the Board may, any time thereafter, during such time the call for such installment remains unpaid, give notice to the member requiring him to pay the same together with any Interest that may have occurred and all expenses that may have been incurred by the company by reason of such non-payment.

TRANSFER AND TRANSMISSION OF SHARES

No Transfer to Minor Article 72 provides that

The Board shall not register transfer of any snare in favour of a minor (except in case when they are fully paid) or insolvent or person of unsound mind.

Form and Instrument of Transfer Article 73 provides that

The Instrument of transfer of any share shall be in writing and in the prescribed form under the companies (Central Government) General Rules and Forms, 1960 and In accordance with the requirement of Section 109 or the Act, and the Company, the transfer and the transferee of shares to comply with provisions of the Act.

Board's Power to Refuse Register Of Transfer Article 82 provides that


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Subject to the provisions of Section 111 A of the Act and section 22A of the Securities Contract (Regulation) Act, 1956 or any statutory modification thereof for the time being Into force, the Directors may at any lime in their own absolute discretion decline to register or acknowledge a transfer of any share giving reasons mere for and in particular may so decline in any case in which the company has a lien upon the shares desired to be transferred or any call or Installment regarding any of them remain unpaid or unless the transferee Is not approved by the Directors and such refusal shall not be affected by the fact that the proposed transferee. PROVIDED THAT registration of a transfer shall not be refused on the ground of the transferor of being either alone or jointly with any other person (s) indebted to the Company or any account whatsoever except where the company has a lien on shares.

Title to Share of Deceased Holder Article 87 provides that

In the case of shares registered in the name of one person, the executor or administrator of deceased member or holder of a Succession Certificate (whether European, Hindu, Mohammedan, Parsi or otherwise) shall be the only person recognised by the company as having any title to his shares and the company shall not be bound to recognise such executor or administrator or holder of a Succession Certificate unless such executor or administrator or holder, shall have first obtained probate or Letters of Administrations, or their legal representation as the case may be, from a duly constitute Court in India or from any authority empowered by any law to grant such other legal representation. PROVIDED that in case, where the Board In their absolute discretion think fit, the Board may dispense with the production of Probate or letters article, register the name of any person who claims to be absolutely entitled to the share standing in the name of a deceased member as a member, upon such terms as to indemnity or otherwise as the Directors may deem fit.

Company charges no fee on transfers, etc. Article 94 provides that

No fee shall be charged for registration on transfer, probate, succession certificate and letters of administration, certificate of death or marriage, power of attorney or similar other documents.

Provision Applicable To Debentures / Warrants Article 97 provides that

The Provisions of these Articles shall mutates apply to the transfer or transmission by operation of law of debentures and/or detachable warrants of the company.

Reduction of Capital Article 98 provides that

Subject to the provisions of Section 94 of the Act, the Company may, from time to time by Ordinary Resolution increase, sub-divide or consolidate the shares of such sum, to be divided into shares of such amount as may be specified in the resolution.

Increase of Capital Article 99 provides that

The Company from time to time in General Meeting alter the conditions of its Memorandum by increase of its share capital by the creation of new shares of such amount as it thinks expedient and subject to the provisions of the Act the new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as be the General Meeting creating the same shall be directed and if no direction be given, as the Directors shall


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determine, and in the distribution of assets of the company provided always that any Preference Shares may be issued on the terms that they are or at the option of the company are to be redeemed.

Reduction of Capital Article 101 provides that Subject to the provisions of Section 78,80, 100 and 105 of the Act, the company may, from time to time by Special

Resolution, and Subject to the confirmation by the Court reduce its Capital and any Capital Redemption Resource Account or Share Premium Account if any manner for the time being authorized by law an in particular, capital may be paid off on the footing that it may be called up again or otherwise, This Article is not to derogate from any power the Company would have if it were omitted.

On What Conditions New Shares May Be Issued Article 102 provides that

Subject to any rights or privileges for the time being attached to any shares in the capital of the company then issued, the new share may be issued upon such terms and conditions and with such rights and privileges attached thereto as the General Meeting resolving upon the creation thereof shall direct and if no director be given and in the case of existing unissued shares as the Board shall determine and in particular in the case of preference shares, such shares may be Issued with preferential or qualified rights as to dividend and In the distribution of assets of the company and with of redemption.

Provisions relating to issue, Article 103 provides that

Before the issue of new shares, the company in General Meeting may make provisions as to the allotment and Issue of the share and in particular may determine to whom the same shall be offered in the first instance and whether at par or at premium or subject to provisions of Section 79 of the Act, at a discount, in default of any such provisions or so for as the same shall not extend, the new shares may be issued in conformity with the provisions of Article 11.

How Far New Shares to Rank with Existing Shares Article 104 provides that

Except in so far as otherwise provided by the conditions of Issue or by these presents, any capital raised by (he creation of shares shall be considered part of the existing capital of the company and shall be subject to the provisions herein contained with reference to the payments of dividends, call and installments, transfer and transmission, forfeiture, surrender and otherwise.

ALTERATION OF CAPITAL Sub-Division and Consolidation of Shares Article 107 provides that

The company in General Meeting by Ordinary Resolution may from time to time:

a) Consolidate and divide all any of its share capital Into Like shares of larger amount than its existing shares.


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b) Sub-divide its existing shares or any of them into shares of smaller amount them into shares of smaller amount than is fixed by the Memorandum, HOWEVER that In the Sub-division, the proportion between the amount paid and the amount, if any, unpaid, on each reduced share shall be the same as it was In the case of the shares from which the reduced shares is derived.

(c) Cancel any shares, which, at the date of the passing of the resolution have not been taken or agreed to be taken by any person and diminish the amount of Its shares so cancelled.

Surrender of Shares Article 108 provides that

Subject lo the provision of Section 100 and 105 inclusive of the Act, the Board may accept from any member the surrender on such terms and conditions as shall be agreed of all or any of his shares.

Conversion of Shares into Stock Conversion of Shares into Stock & Reconversion Article 109 provides that

The company may, be ordinary resolution of the company in General Meeting: a) Convert any paid-up shares into stock: and b) Reconvert and stock into paid-up shares of any denomination.

GENERAL MEETING

When Annual General Meeting to Be Called Article 114 provides that

In addition to other meeting, General Meetings of the Company shall be held within such intervals as are specified in Section 166(1) of the Act and subject to the provision of Section 166 (2) of the Act at such times and places as may be determined by the Board, Every such General Meeting shall be called Annual General Meeting and shall be specified as such in the convening the meeting.

When Extra Ordinary General Meeting Held Article 116 provides that

The Board may, whenever it deems fit, or on the requisition of members received in accordance with Section 169 of the Act proceed to call an Extra-Ordinary General Meeting. The requisitionist may, in default of the Board convening the same, convene the Extra-Ordinary General Meeting as provided by the Section 169 of the Act.

Appointment of Proxy Article 145 provides that

Instrument appointing a proxy shall be In writing under the hand of the appointer or his Attorney duly authorized for writing If such appointed Is a body corporate. Be under Its common seal of the hand of its officer or attorney duly authorized.


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BOARD OF DIRECTORS NUMBER OF DIRECTORS Article 156 provides that

The number if Directors (excluding Debenture, ex-office and alternate Directors) shall not be less than three and not more than twelve. However, subject to the provision of the Act and these Articles the company may be Ordinary Resolution from time lo time increase or reduce the number of Director within the limits fixed by this Article.

Vacation of Office of the Director Article 164 provides that

The office of the Director shall fall vacant if at any time he commits any of the acts set out in Section 283 of the Act, which disqualifies Mm.

Remuneration to the Directors Article 166 provides that

Subject to the provisions of the Act, a Managing and/or Whole-time Director of the Company may be said remuneration either by way of monthly payment or a percentage of net profits of the company or party by the former and partly by the later. Subject to the provisions of the Act a Director who is neither a Managing nor a Whole-time Director may be paid remuneration either (a) by way of a monthly. Quarterly or yearly payment with the approval of the Central Government, or (b) by way of Commission if the Company by special resolution authorizes such payment. The tee payable to each Director other than the Managing Director and or Whole time Director for attending the meeting of the Board or Committee thereof shall be such amount not exceeding Rs.500/- (Rupee Five Hundred). The Board may allow and pay to any Director attending a meeting of the Board or any committee thereof such sum as the Board may consider fair compensation for traveling, boarding, lodging and other expenses, in addition to his fee for attending such meeting as above specified. II any Director is, being willing, shall be called upon to perform extra services or make special exertions for any of the purposes of the company or as member of a Committee of the Board, then subject to Sections 198, 309 and 314 of the Act, the Board may remunerate the Directors so doing either by a fixed sum or by a percentage of profits or otherwise and such remuneration be In addition to or In substitution of any other remuneration to which he may be entitled.

Disclosure of a Director Interest & Appointments Article 170 provides that

Every Director who Is In any way, whether directly or Indirectly concerned or interested in a contract or arrangement, entered into or to be entered into, by or on behalf of the company, not being a contract or agreement entered into or to be entered into between the company and any other company, where any of the director of the company are two or more of them together holds or hold not more than two percent of the paid up share capital in other company, shall disclose the nature of his concern or Interest of a meeting of the Board as required by section 299 of the Act. A general Notice renewable In the last month of each financial year of the company, that a Director Is a Directors or a member of any specified Body Corporate or is a member of any specified firm and is to be regarded a concerned or interested In any subsequent contract or arrangement with the Body Corporate or firm shall be sufficient disclosure of concern or Interest In relation to any contract or arrangement so made and after such general notice, It shall not be necessary to give special notice relating to any particular contract or arrangement so made and after such general notice, it shall not be necessary to give special notice relating to any particular Contract or arrangement so made with such Body, Corporate or Fir, PROVIDED such general notice Is given at a meeting of the Board that a Director concerned takes responsible steps to secure that


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Its is brought up and read at the first meeting of the Board after It It-given. Every Director shall be bound to give and from. Time to time; renew a general notice as aforesaid in respect of all Body Corporate of which he is a Director or Member and of alt firms of which he is a partner.

Rights of Directors Article 172 provides that

Except as otherwise provided by these Articles all the Directors of the company shall have in all matters equal rights and privilege and be subject to equal obligations and duties In respect of the affairs of the company.

Rotation of Directors and Retirement of Directors Article 174 provides that

At each Annual General Meeting of the company, such or the Directors for the time being as are liable to retire by rotation or if their number Is three or multiply of three, than the number nearest to one-third shall retire from office. The Chairman and/or Managing Director shall not be liable to retire by rotation within the meaning of this Article.

PROCEEDING OFTHE BOARD Meeting Of the Board & Notice Article 185 provides that

The Board shall meat together at least once in every three months for the dispatch of business and may adjourn and otherwise regulate its meeting and proceedings as it thinks fit and at least four such meetings shall be held in each calendar year. Notice In writing of every meeting of the Board shall be given to every Director for the time being In India and at his usual address in India to every other Director.

Chairman Article 187 provides that

The Director may from time to time elect one of their members to be the Chairman of the Board of Directors and determine the period for which is to hold the office. The Directors may likewise appoint a Vice Chairman of the Board of Directors to preside at the meeting of the Directors at which the Chairman shall not present. If the Chairman & Vice Chairman both are not present for the Board Meeting within 15 minutes after the time appointed for the meeting the Directors present may elect one amongst them to be the Chairman for that meeting,

Quorum Article 188 provides that

The quorum for the meeting of the Board shall be one third of the number of the Board of Directors or two whichever Is more.

Chairman to Decide In Case Of Adjournment Article 189 provides that

If quorum is not present within fifteen minutes of the lime appointed for holding the meeting of the Board, it shall be adjourned until such date and time, as the Chairman of the Board shall decide.


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How Questions to Be Decided Article 191 provides that

Subject to the provisions of Sections 316,373 (5) and 366 of the Act, question arising at any time In a meeting hall be decide by a majority of votes and, In case of equality of votes, the Chairman shall have a second or casting vote.

POWERS OF THE BOARD

Certain Powers of the Board Article 198 provides that

The Board may exercise all such powers of the company and do all such things and acts as are not by the Act or any other Act or Memorandum or by the Articles of the Company required to be executed by the company in General Meeting but subject nevertheless to these Articles, to the provisions of the Act, or any other Act and to such regulations being not Inconsistent with the aforesaid regulations or provisions as may be prescribed by the company in General Meeting, but no regulation made by the General Meeting shall invalidate any prior act of the Board which have been valid II that regulation had not been made.

To Sell or Dispose Company Property

(a) Sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company, or where the company owns more than once undertaking, of the whole or substantially the whole of the undertaking.

To Give Time In Remittance Of Debts

(b) Remit or give time for the payment of any debt due by the Director. To Invest In Securities, Properties & Undertakings

(c) Invest otherwise than in trust securities the amount of compensation received by the company in respect of the compulsory acquisition of any such undertaking and without which it can not be carried on or can be carried only with difficulty or only after a considerable time;

To Borrow Long Term Loans and On Issue of Debentures

(d) Borrow moneys from time to time where moneys to be borrowed together with the moneys already borrowed by company (apart from temporary loans obtained from the company bankers in the ordinary course of the business) will 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 purposes Provided further that the powers specified in Section 292 of the Act, shall be exercised only at meeting of the Board, unless the same be delegated the extent therein stated; or

To Subscribe To Charitable and Other Funds

(e) Contribute to charitable and other funds not directly related to the business of the company or the welfare of the employees, any amounts the aggregate of which will, in any financial year exceed fifty thousand rupees or five percent of Its average net profit as determined In accordance with the provisions of Section349 and 350 of the Act during the three financial years immediately preceding; whichever Is greater.

To Sign Receipt for Remittance to the Company

(f) A receipt signed by the Managing or Whole-time Director or by a person authorized by a resolution of Directors to give receipt for any moneys, funds or property lent or payable or belonging to the company, shall be an effectual discharge on behalf of and against the company for the moneys, funds or properties which in such receipt shall be acknowledged to be received, and the person paying any such moneys shall no be bound to see the application thereof or be answerable for the misapplication, thereof.

To Operate Bank Accounts


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(g) to open and operate upon and overdraw Bank accounts to sign, make, issue, negotiate, discount, endorse, accept or otherwise deal in all types of negotiable instruments including cheques promissory notes, hundies bills of exchange and bearer bonds, arrange for credits in cash or kind, specifying the Bank 01 Banks with whom the cash credit account and any other account in whatever names called is to be opened and the limit of such accounts,

To Make Capital Expenditure

(h) To in cure from time to lime such expenses and lay out sum or sums of moneys as Directors may deem expedient for the purpose of working the workshop(s) or factories or for improving the business of the company from time to time, to erect and fix new machinery or plant, on or in any of the lands, building and premises for the time being In the possession or the property of the company and time to time removal of alt or any of the machinery, plant and stores of the company being In or upon, any land, buildings and premises of the company, to other lands building, or premises wherever situate of the company.

To Insure Company's Property and Interest

(i) To effect all types of insurance which In the opinion of the Directors ought to be effected for the benefit of the company and in particular to Insure the property of the company against loss or damage by fire or otherwise, and also to ensure against any standing charges and to ensure any anticipated profits of the company or of any transaction (s) entered into by the company, and to sell, assign, surrender to discontinue any policies of Insurance effected in pursuance of this power.

To Pay Trade Commission on Transactions

(j) To give any person employed by the company a Commission on the profits of any particular business or transaction and such commission shall be treated as part of the working expenses of the company. PROVIDED FURTHER THAT if powers specified In Section 298 of the Act subject to these Articles be exercised only at meetings of the Board, unless the same be delegated to the extent herein stated,

Specific Powers Of The Board Article 199 provides that

Without prejudice to the general powers conferred by the preceding Article and so s not in any way limit or restrict these powers, and without prejudice to the other powers, and without prejudice to the other powers conferred by these Articles, It is hereby declared that the Directors shall have the following powers, that is to say power;

To Pay Preliminary Expenses a) To pay the costs, charges and expenses preliminary and incidental to the promotion, formation, establishment and registration of the company.

To Pay Commission and Interest

b) To pay charge to the capital account of the company any commission or Interest lawfully payable there out under the provisions of Sections 76 and 203 of the Act.

To Make Payment on Acquisition of Property

c) At their discretion and subject to the provisions of the Act 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, mortgages or other securities may be either specifically charged upon all or any part of the property of the company and its uncalled capital or not so charged.

To purchase lands, buildings etc,

d) Subject of the provisions of the Act to purchase, or take on lease for any term of years, or otherwise acquire any factories or any land or lands, with or without buildings and outhouses thereon, suitable in any part of India at such price or rent under and subject to such terms and conditions as the Directors may think fit and in any such purchase lease or other acquisition to accept such title as the Directors may believe, or may be advised to be reasonably satisfactory.


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To Acquisition of Property

e) Subject to Sections 292, 297 and 360 of the Act to purchase or otherwise acquire for the company any property, rights and privileges at or for such price or consideration and generally on such terms and conditions as they may think fit, and it any such purchase, or acquisition to accept such title as the Directors may believe or may be advised to be reasonably satisfactory.

To Secure Contracts by Mortgage

f) To secure fulfillment of any contracts or engagements entered into by the company by mortgages or charge of all or any of property of the company and Its uncalled capital for the time being or in such manner as they may think fit.

To Accept Surrender of Shares

g) To accept from any member as far as may be permissible by law, a surrender of his shares or any part thereof, on such terms and conditions as shall be agreed upon.

To Appoint Trustee

h) To appoint any person to accept and hold in trust for the company and property belonging to the company in which it is interested or for any other purposes and to execute and do all such deeds and things as may be required in relation to any such trust and to provide for the remuneration of such trustee(s).

To Bring and Defend Legal Actions

i) To institute, conduct defend, compound or abandon any legal proceedings by or against the company or its officers or otherwise concerning the affairs of the company and also to compound and allow time for payment or satisfaction of any debts, dues and of any claim or demands by or against the company and to refer any differences to arbitration and observe an perform any awards made thereon.

To Act On Bankruptcy and Insolvency

j) To act on behalf of the company in all matters relating to bankrupts and insolvents. To Give Receipt in Claims or Demands

k) To make and give receipts, releases and other, discharges for moneys payable to the company and for the claims and demands of the company.

To Execute Mortgage

l) To make and give receipts, releases and other discharges for moneys payable to the company and for the claims and demands of the company.

To Invest Company Funds

I. Subject to the provisions of Sections 292, 293 (1) (e). 295, 269,370, 372 and 373 of the Act to Invest and deal with any moneys of the company not immediately required for the purpose thereof upon such security {not being hares of (his company) or without security and in such manner as they may think fit an from time to time vary or realise such investments, save as provided In Section 49 of the Act, al. investments shall be make in the company's own name.

To Execute Mortgage

II. To execute in the name and on behalf of the company In favour of any Director or other person who may incur or be about to incur any personal liability whether as principal or surety for the benefit Of the company, such mortgages of the company's property (present and future) as they think fit, and any such mortgage may contain a power of sale and such other powers, provisions, covenants and agreements as shall be agreed upon.

To Appoint Authorised Signatory

m) To determine from time to lime who shall be entitled lo sign on behalf of the company, the bills, notes, receipts, acceptances, endorsements, cheques, dividend warrants, releases, contacts, documents and to give necessary authority for such purposes.


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To Distribute Bonus n) To distribute by way of bonus amongst the staff of the company a share or shares In the profits of the company and to give to any officer or other person employed by the company; a commission on the profits of any particulars business or transaction and to charge such bonus or commission as part of the working expenses of the company.

To Contribute Towards Welfare

o) To provide for the welfare of the Directors or Ex-directors or employees or ex-employees of the company and their wives, widows arid families or the dependents by building or contributing to the building of house, dwelling, or chawls or by grants or moneys, pension, gratuities, allowances, bonus or other payments or by creating and from time to time subscribing or contributing to provident and other associations, institutions funds or trusts and by providing or subscribing or contributing towards places of recreation, hospitals, dispensaries, medical and other attendances and other assistance as the Board shall think fit, and subject to Section 293 (i) (e) to subscribe or contribute or otherwise assist or guarantee money to charitable, benevolent, religious, scientific national or other institutions or objects which shall have any moral or other claim to support or aid by the company either by reason of locality of operation, or of public & general utility of otherwise.

To Create Depreciation and Other Funds

p) Before recommending any dividend, to set aside out of the company, such sums as they may think proper for depreciation or to depreciation Insurance, reserve, sinking or special fund to meet any contingencies or to pay debenture or debenture-stock or for special dividends or for equaliasing dividends or for repairing Improving extending or maintaining any of the property of the company and for such other purpose (Including the purpose referred to in the preceding clauses) as the Board may in their absolute discretion, think conducive to the interest of the company, and any shares may have been issued and subject to the provisions of subject to Sections 292,295, 370 and 372 of the Act, to Invest the several sums so set aside or so much thereof as required to be invested and dispose off, apply and expand all or part thereof for the benefit of the company in such manner or for such purposes as the Board in their absolute discretion think conducive to the Interest of the company notwithstanding that the matters to or upon which the capital money of the company be rightly applied or expended an to divide the Reserve Fund Into such special funds as the Board may think tit, with power to transfer the whole or any portion of the Reserve Fund or diversion thereof to another Reserve Fund with full powers to employ the assets constituting all or, any of the above funds in the business of the company or in the purchase or repayment of Debenture of Debenture stock or without being bound to keep the same separate from the other assets and without being bound to keep the same separate from the other assets and without being to pay interest on the same with power, however, to the' Board at their discretion to pay or allow to the credit of such funds Interest at such rate(s) as the Board may thinks; proper from time to time,

To appoint & suspend employees etc,

q) To appoint and at their discretion remove or suspend subject to the relevant laws being in force, such managerial, executive, supervisory and assistants staff as they may from time to time think fit, on permanent, temporary or special services and to determine their power and duties and to fix their salaries emoluments or remuneration and perks as may be applicable and to require security In such instances and to such amounts as they may think fit and also from time to time to provide for the management transactions of the affairs of the company in any specified locality in India or elsewhere in such manner as they think fit, and the provisions contained In the next four sub clauses shall be without prejudice to the general powers conferred by this sub-clause.

To Comply Local Laws

r) To comply with the requirement of any local laws which in their opinion it shall be In the interest of the company be necessary or expedient to comply with.

To Appoint Local Boards

s) From time to time and at any time to establish any Local Board for managing any of the affairs of the company in any specified locality in India or elsewhere and to appoint any person to be members of such Local Boards and to fix their remuneration.


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To Delegate Powers t) Subject to Section 292 of the Act, from time to time and any time to delegate to any person so appointed any of the powers, authorities and discretions for the time being vested In the Board other than their power to make calls or to make loans or borrow moneys and to authorise the members for the time being of any such Local Board or any of them to fill up any vacancies therein and to act not with standing vacancies an any such appointment or delegation may be made on such terms and conditions as the Board may think fit and the Board may at any time remove any person so appointed and may as usual or vary any such delegation.

To Give Power Of Attorney

u) At any lime and from lime to time by Power or Attorney under the Seal of the company, to appoint person(s) to be the Attorney or (Attorneys) of the company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board under these presents and excluding the power to make calls and excluding also the power exceed their limits authorised by the Board regarding the power to make loans and borrow moneys) and for such periods and subject to such conditions as the Board may from time to time think fit; and any such appointment may (if the Board thinks (it) be made in favour of member(s) of any Local Board established as aforesaid or In favour of the shareholders, directors or managers of (he company or any other person{s) the’ Board may decide and any such power of attorney may contain such powers for the protection or conveniences of persons dealing with such attorneys as the board may think fit and may contain powers enabling any such delegates or attorneys as aforesaid to sub-delegates all or any of the powers, authorities and discretion for the time being vested in them.

To Enter Into Contract

v) Subject to Section 294,297 and 300 of the Act for or in relation to any of the matters aforesaid or otherwise for the purpose of the company to enter Into all such negotiations and contracts and rescind or vary all such contracts and execute and do all such acts, deeds and things in the name and on behalf of the company as they may consider expedient AND GENERALLY subject to the provisions of the Act and these Articles, to delegate the powers, authorities and discretions vested in the Directors to any person, firm company or Body of Persons as may be decide from time to time.

To Accept Powers Of Attorney

w) The Board of Directors may authorise from time to time except to act as constituted attorney for any person or person resident or non-resident in India or company whether belonging to resident or non-resident in India and exercise through any Director or Directors or any person authorised by a Resolution of the Board all powers obtained In Company by the document of Power of Attorney.

To Repeal By-Laws

x) From time to time, make, vary and repeal bye-laws for the regulation of the business of the company and its employees.

BORROWING POWERS


Subject to the provisions of Section 58 A, 292 of the Act and of the Companies (Acceptance of Deposit) Rules, 1975 and of these Articles or any statutory modification thereof for the time being in force, the Board may, from time to time at Us discretion by a Resolution passed at a meeting of the Board, accept deposits from the public, directors (including their relatives), employees and from members either in advance or calls or otherwise and generally raise or borrow or secure the payment of any sum of sums of money for the purpose of the company PROVIDED HOWEVER that where the moneys to be borrowed together with the moneys already borrowed (apart from temporary loans to be obtained from the company's Bankers in the ordinary course of business) exceed the aggregate of the paid up capital of the company and its free reserves (not being reserves set apart for any specific purpose) the Board of Directors shall not borrow such money without the sanction of the company in General Meeting.

Conditions on Which Money May Be Borrowed


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The Board may raise or secure the repayment of such sum or sums in such manner and upon terms and conditions In all respects as deems fit and in particular; by the issue of bonds, perpetual or redeemable debenture or debenture stock or any mortgage or security on the undertaking of the whole or part of the property of the company (both present and future) but shall not create charge on Its uncalled capital for the time being without the sanction of the company In Genera! Meeting. Provided that Debenture/Bonds Debentures Stock Bonds or other securities with the right to conversion into or allotment of shares shall be issued only with the consent of the company in General Meeting.

MANAGING DIRECTOR OR DIRECTORS

Appointment and Remuneration of the Managing Director Article 203 provides that

Subject to the provisions of the Act and of the these Articles, the Board shall have the power to appoint and reappoint and will appoint from time to time Managing Director of the company out of the Directors being on the Board only for the fixed time not exceeding five years upon such terms and conditions as the Board thinks tit upon such remuneration as may be determined by the Board subject to the provisions of the Act and may from time to time remove or dismiss him from office and appoint another In his place.

Powers of the Managing Director Article 204 provides that

The Board may also vest in the Managing Director either by way of a resolution or an agreement to this effect such of the powers, authorities and functions hereby vested In the Board generally as it thinks fit and such power may be exercisable for such period and upon such conditions and subject to such restrictions as may be determined or specified by the Board.

Restrictions On The Powers Of The Managing Director Article 205 provides that

The Managing Director shall not, in any event, exercise the following powers. a) Make calls on shareholders in respect of money unpaid on the shares in the company. b) Issue debentures. and except to the extent mentioned in a resolution passed at the Board Meeting

under Section 292 of Ac!, shall also not exercise power to; c) Borrow moneys, otherwise than on debentures. d) Invest the funds of the company; and e)Make loans and expect to the extent mentioned in a resolution passed at the Board Meeting under

Section 292 of the Act, shall also not exercise powers to;

Disqualification Of The Managing And Whole-Time Director Article 206 provides that

The Company shall not appoint or employ or continue employment during the tenure as the Managing or Whole time Director who:

a) Is an undischarged insolvent, or has at any time been adjudged as insolvent. b) Suspends or has at any time suspended payment of his creditors. c)Is or has at any time been convicted by a Court of an offense involving moral turpitude.


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Managing Director Not To Retire By Rotation Article 207 provides that

A Managing Director shall not, while he continues to hold that office be subject to retirement by rotation. If he ceases to hold office, he shall ipso facto ceases to be the Managing Director.

Appointment And Remuneration Of Whole Time Director Article 208 provides that

Subject lo the provisions of the Act and of these Articles the Board may from time to time with sanction of the Central Government as may be required by law appoint and/or re-appoint one of more of the Directors to be the Whole-time Director(s) of the company out of the Director for the time being on the Board either for a fixed term or permanently upon such terms and conditions as the Board thinks fit and on such remuneration as may be determined by the Board subject to the provisions of the Act.

Powers Of The Whole Time Director Article 209 provides that

The Board may also vest in the Whole-time Director(s) either by way of a resolution or an agreement to his effect such of the powers, authorities and functions hereby vested In the Board generally as It thinks fit and such powers may be made exercisable for such period and upon such conditions and subject to such restrictions as may be determined or specified by the Board. The Board has the powers to revoke, withdraw, after or vary any or all such powers and/or remove or dismiss him or them and appoint another or other in his/their place(s) again out of the Directors for the time being in the Board.

Whole Time Director Not To Retire By Rotation Article 210 provides that

Subject to the provisions of Section 255 of the Act, Whole-time Director(s) shall not, while he/they continue(s) to hold that office be liable to retirement by rotation (subject to the provisions of the any contract between him/they and the company) but he/they shall be subject to the same provisions as to resignation and removal as the other Directors and if he ceases to hold the office of Director(s), he/they shall ipso facto cease(s) to be the Whole-time Director(s).

Retirement How Determined Between The Managing And Whole Time Director Article 211 provides that

If at any time the total number of Managing Director and Whole-time Directors) is more than one third, who shall not retire shall be determined by and in accordance with their seniorities. For the purpose of this Article, the seniorities of the Managing and the Whole-time Director(s) shall be determined by their date of joining in their respective appointments.

THE SEAL Common Seal Article 212 provides that


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The Board shall provide a common seal for the Company and they shall have power from time to time to destroy the same substances a new seal in lieu thereof, and the common seal shall be kept at the Registered Office of the company and committed to the custody of the Managing Director or the Secretary if there is one

Seal How Affixed Article 213 provides that

The Seal shall not be affixed to any instrument except by authority of a resolution of the Board or of committee and unless the Board otherwise determine every deed or other Instrument or which the seal is required to be affixed shall unless the same is executed by a duly constituted attorney for the company be signed by one Director at least in whole presence the seal shall have been affixed and countersigned by the Managing Director, Secretary or such other person as may from time to time be authorised by the Managing Director or by the Board provided nevertheless that any Instrument bearing the seal of the company and Issued for valuable consideration shall be binding on the Company notwithstanding any irregularity touching the authority to Issue the Same.

Seal for Use Abroad Article 214 provides that

The Company may exercise the power conferred by Section 50 of the Act with regard to having an Official Seal for use abroad and such powers shall be vested in the Board, and the Company may cause to be kept In any state of country outside India, as may be the Act a foreign Register of Member of debenture holders resident In any such State or Country and the Board may, from time to time make such regulations not being Inconsistent with the provisions of Section 157 and 158 of the Act, and the Board may from time to time make such provisions as it may think fit relating thereto and may comply with the requirement of any local law and shall in any case comply with the provisions of Sections 157 and 158 of the Act.

POWER TO APPOINT SECRETARY Article 215 provides that

Subject to Section 383-A of the Act the Board may appoint a Secretary of the Company on such terms and conditions u It may think fit and may remove any Secretary so appointed and may fill up vacancy in the office of the Secretary. The Secretary shall exercise such powers and carry out such duties as the Board may from time to time determine. A Director may be appointed as secretary subject to provision of Section 383 A (1) of the Act.

DIVIDENDS

Company in General Meeting May Declares Dividend Article 219 provides that

The company in General Meeting may declare a dividend to be paid to the members according to their respective rights and Interest In the profits and, subject to the provisions of the Act, may fix the time for payment.

Profits Devisable On Paid-Up Amount Article 220 provides that

Subject to the provisions of Section 205 of Act and the rules made thereunder, the profits of the company subject to any special rights relating thereto creditor authorised to be created by these Articles and subject to the provisions of these Articles shall be division the Shares held by them respectively and subject to the provisions of the Act may fix the time for payment. When a dividend has been so declared, the warrant in


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respect thereof shall be posted within forty-two days form the date of the declaration to the Shareholders entitled to the payment of the same.

Unpaid Dividend to Be Transferred To Special Dividend Account Article 221 provides that

No unclaimed or unpaid dividend shall be forfeited by the board subject to the provisions of Section 205 A of the Act, when a dividend Is declared but not paid or claimed as the case may be, within 42 days from the date of declaration, the total amount of unpaid or unclaimed dividend shall be transferred to a special account within seven days from the date of period 42 days.

Dividend Payable after Providing For Depreciation Article 222 provides that

No dividend shall be declared or paid otherwise by the company for any financial year out of the profits for the year arrived at after providing for depreciation In accordance with the provisions of Section 205 of the Act, except after the transfer to the Reserve of the Company of such percentage of Its profits for that year as may be prescribed or out of the profits of the company for any previous financial year (s) arrived at after providing for depreciation In accordance with these provisions and remaining undistributed or out of both provided that: (a) If the company has incurred any loss in previous financial year (s), it shall before declaring or paying a dividend for any financial year, provide for such depreciation out of the profits of the previous financial year or other previous financial year or years. (b) If the company has incurred any loss in any previous financial year or years the amount of loss or an amount which is equal to the amount provided for depreciation for that year or these years whichever Is less, shall be set off against the profits of the company for any previous financial year or years arrived at in both cases after providing for depreciation in accordance with provisions of Section 205 (2} of the Act or against both. PROVIDED FURTHER THAT no dividend shall be declared or paid for any financial year out of the profits, of the company for that year arrived at after providing for depreciation as above except after the transfers to themselves of the company of such percentage of its profits for that year a may prescribed in accordance with Section 205 of the Act or such higher percentage of its profits as may be allowed in accordance with the Section.

Board to Pay Interim Dividend Article 223 provides that

The board may, from time to lime, pay to the members such interim dividend as in their judgment the position of the company justifies.

What to Be Deemed Profits Article 224 provides that

The declaration of the Board as to the amount of the net profit of the company shall be conclusive, Ascertainment of Amount Available For Dividend Article 225 provides that

Where any assets, business or property Is bought by the company as from a past date upon the terms that the company shall as from that date take the profits and bear the losses thereof such profits and losses as the case may be shall at the discretion of Directors, be so credited or debited whole or in part to the Profit and Loss Amount and in that case the amounts so credited or debited shall for the purpose of ascertaining the funds available for dividends be treated as a profit or loss arising from the business of the company and available for


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dividend accordingly, if any share or securities are purchased with dividend or interest such dividend or Interest when paid may at the discretion of the Directors be treated as revenues and It shall not be obligatory to capitalize the same or any part thereof.

Payment of Interest on Capital Article 240 provides that

The company may pay Interest on capital from the construction of works buildings when and so far as It shall be authorised to do so by and subject to Section 208 of the Act.

Bonus Shares Article 241 provides that

Dividend may be paid by capitalisation of profits or reserves by Issue of fully paid up bonus shares or paying up any amount for the time being unpaid on any shares held by the members.

Power of Directors to Limit Dividends Article 242 provides that

No larger dividend shall be declared than Is recommended by the Directors, but the company in general meeting may declare smaller dividend. No dividend shall be payable except out of the profits of the year or any other undistributed profits or otherwise then in accordance with the provisions of Section 205, 206 and 207 of the Act and 'no dividend shall carry Interest as against the company. The declaration of the Directors, as to the amount of the net profit of company shall be conclusive.

No Member To Receive Dividends While Indebted To The Company And Company's Rights Of Reimbursement Thereof Article 243 provides that

Subject to the provisions of the Act, no member shall be entitled to receive payment of any interest or dividend in respect of his share or shares while any money may be due or owing from him to the company in respect of such share or shares or otherwise howsoever either alone or Jointly with any other person or persons, and the Directors may deduct from the Interest or dividend payable to any member all sums of money so due from him to the company.

CAPITALISATION OF RESERVES

Reserves for Capitalization Article 247 provides that

The company In General Meeting may resolve that any moneys, Investments or the assets forming part of the undivided profits of the company standing to the credit to the reserves or any Capital Redemption Reserve Account or surplus 1 hi the hands of the company and available for dividends or representing premiums received on the Issue of shares and standing to the credit of the share premium account be capitalised and distributed amongst such of the shareholders a s would be entitled to received the same If distributed by ways of dividend and In the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalised fund be applied on behalf of such shares holders In paying up In full any unissued shares of the company which shall be distributed accordingly or towards payment of the uncalled liability on any Issued shares and that such distribution or payment shall be accepted by such shareholders In full satisfaction of their Interest In the capital sum PROVIDED THAT any such standing to the credit of a Share Premium Account or a Capital


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Redemption Reserve Account may for the purpose of the Article, only be applied In paying up unissued shares to be Issued to the shareholders of the company as fully paid bonus shares.

Surplus Money Article 248 provides that

A General Meeting may resolve that any surplus money arising from the realisation of any capital assets of the company or any Investments representing the same or other undistribution profits of the company not subject to charge of Income lax, be distributed among the members on the footing that they receive the same as capital.

Fractional Certificates Article 249 provides that

For the purpose of giving effect to any Resolution under the last two preceding Articles, the Board may settle any difficulty which arise In regard to the distribution as it, thinks expedient and In particular may issue fractional certificates and may determine that cash payments shall be made to any members upon the footing of the value so fixed In order to adjust the rights of all profits of all parties and may vest such case of specific assets in trustees upon such trust the person entitled to the dividend or capitalised fund as may deem expedient by the Board. When required, a proper contract shall be filled In accordance with Section 75 of the Act, and the Board may appoint any person to sign such contract on behalf of the person entitled to the dividend or capitalised fund and such appointment shall be effective.

Capitalisation Where Some Share Fully Paid And Others Partly Paid Article 250 provides that

Subject to the previsions of the \c\ and these Articles In case where some of the shares of the company are fully paid and others are partly paid, the capitalisation referred to In Article 169 may be effected by the distribution of further shares in respect of the fully paid shares and by crediting the partly paid shares with the whole or part of the unpaid liability thereon but so that as between the holders of the fully paid shares and the partly paid share the sum so applied in the payment of such furthers shares and In the extinguishments or diminution of the liability on the partly paid share shall be in proportion to the amount then already paid or credited as paid on the existing fully paid any partly paid shares respectively.

INTEREST OUT OF CAPITAL


Where any shares are issued for the purpose raising money to defray the expenses of the construction of any works or buildings or the provisions of any plant, which cannot be make profitable for a lengthy period the company may pay interest on so much of that share capital as Is for the time being paid up for the period at the rate and subject to the conditions and restrictions provided by the Act, and may charge to same to capital as part of the cost of construction of the work or building or the provision of plant.

REGISTERS, BOOKS AND DOCUMENTS

Books of Accounts to Be Kept Article 252 provides that

The Board shall maintain proper registers, books of accounts and documents as required to be kept In accordance with Section 209 of the Act and these Articles.


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Register Of Foreign Members Article 253 provides that

The company may keep a register of foreign members In accordance with provisions of the Act, Subject to the provisions of the Act, the Directors may from time to time make such provision as they may think fit In respect of the keeping of such Branch Registers of members and or Debenture holders.

Where To Be Kept Article 254 provides that

The books of accounts shall be kept at the registered office or at such other place in India as the Board may decided and when the Board so decided the company shall, within seven days of the decision file with the Registrar's notice In writing giving the full address of that other place.

Inspection By Directors Article 255 provides that

The books of Accounts shall be open to inspection by any Director during business hours.

ACCOUNTS

Statement of Accounts Article 257 provides that

In accordance with Section 210, 212, 215,216, 217 and 221 of the Act at every Annual General Meeting the Board shall lay before the company a Balance Sheet and Profit and Loss Account made up In accordance with the provisions of Sections 210 of the Act and such Balance Sheet and Profit and Loss Account shall comply with the requirement of Section 210,211,212,215 and 216 and of Schedule IV of the Act so far as they are applicable to the company but save as aforesaid, the Board shall not be bound to disclose greater details of the results of extent of the trading and transactions of the company than it may deem expedient.

Books of Accounts to Be Kept For Article 258 (1) provides that

The company shall kept at Its registered office proper books of accounts with respect to: (a) all sums for money received and expended by the company and the matters in respect of which the receipt and expenditure takes place. (b) all sales and purchases of goods by the company and (c) The assets and liabilities of the company provided that all or any of the books of account as aforesaid may be kept at such other place In India as the Board of Directors may decide and when the Board of Director so decides, the company shall, within seven days of the decision, file with the Register a notice In writing giving the full address of that other place.

Books of account to give fair and true view. Article 260 provides that


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All the aforesaid books shall give fair and true View of the affairs of the company or of its branch office as the ease may be, with respect to the matters aforesaid land explain its transactions. '

AUDIT AND AUDITORS Accounts To Be Audited Annually Article 264 provides that

Once at least in every financial year the books of accounts of the company, Balance Sheet and Profit and Loss account made there from shall be audited by one or more Auditors appointed or re-appointed by the company in the Annual General Meeting

Service Of Notice and Other Documents How Notice To Be Served On Members Article 270 provides that

A notice or other documents may be given by the company to Its members thereof, in accordance with Section 53 and 172 of the Act, either personality or by sending it by post to him to his register address, supplied by him to the company for serving documents or notices on him.

REGISTERS AND INSPECTION

Registers To Be Maintained By the Company Article 280 provides that

The company shall duly keep and maintain at the Registered Office, Registers in accordance with Section 49 (7), 58A, 143, 150, 151, 152(2), 301, 303, 307, 356, 357, 358, 358. 359, 360, 370 and 372 of the Act and Rule 7 (2) of the Companies (issue of share Certificates (Rules, 1960).

Closure of Register of Members and Debenture-Holder Article 283 provides that

The company, after giving less than seven days prior notice by advertisement in some news papers circulating in the district, in which the Registered Office of the company Is situated, may close the Register of Members and of the Debenture holders as the case may be for any period not exceeding in aggregate forty five days at any one time.

WINDING UP

Distribution of Assets Article 286 provides that

If the company shall be would up and the assets available for distribution among the members as such are in sufficient to repay the hold of the paid-up capital such assets shall be distributed so that as nearly as may be the losses shall be borne by the members in proportion to the capital paid-up or which ought to have been paid up at the commencement of the winding up on the shares held by them respectively, If in winding up, the assets available for distribution amongst the members shall be more than sufficient to repay the whole of the capital paid-up or which ought to have been paid-up on the shares held by them repetitively but his articles Is to be with


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out prejudice to the rights of the holders of shares issued upon special terms and conditions and the preference share holders shall have prior rights to repayment of capital and divided due.

Secrecy Declaration of Secrecy Article 288 provides that

Every Director, Manager, Secretary, Trustee for the company, its members or debenture holders, members of committee officer, staff, agent or any person employed or about to the employed In or about the business of the company shall, If so required by the Board before entering upon his duties sign a declaration pledging himself to observe a strict secrecy in respect of all respect of all transactions of the company with Its customers and the state of account with Individuals and In manners relating thereto shall by such declaration pledge himself not to reveal of the matters which may come to his knowledge in discharge of the duties except when required to do so by the Board or by any General Meeting or by a Court of Law and except so far as may be necessary In order to comply with any of the provisions of these Articles contained.

INDEMNITY AND RESPONSIBILITY Indemnity Article 290 provides that

Subject to the provisions of Section 201 of the Act every Director, Manager, officer or servant of the company or any person (whether an officer of the company or not), employed by the company as auditor shall be Indemnified out of the company against all claims and it shall be the duly of the Directors out of the funds of the company to pay all costs, charges, tosses, and damages which any such person may in cure or become liable to by reason of any contact entered Into or act or thing done, about the execution or discharge of his duties or

INDIVIDUAL RESPONSIBILITY


Subject to the provisions of the Act, no Director, Auditor or other Officer of the company shall be liable fort he act, receipts, neglects or defaults of any other Director or Officer or for joining in any receipt or other act for conformity or for any ton or expenses happening or to the company through the Insufficiency or deficiency of title to any property acquired by order of the Director for or on behalf of the company or for the insufficiency or deficiency or any security in or upon which any of the moneys of the company shall be invested or any loss or damages arising from the bankruptcy, insolvency or. Tortious act of any person, firm or company to or with whom any moneys securities or effects shall be entrusted or deposited or for any loss occasioned by any error of judgment, omission, default or oversight on his part or for any other loss, damage or misfortune whatever which shall happen In relation default or to the execution of he duties of his office or his relation thereto unless the same shall happen through this own dishonesty.


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SECTION X: OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following contracts mentioned below (not being contracts entered into in the ordinary course of business carried on by the Company) are or may be deemed to be material contracts. Copies of these contracts along with documents referred below may be inspected at the Registered Office of the Company at between 10.00 a.m. and 1.00 p.m. on any working day until the closing of the subscription list.

Material Contracts

1. Memorandum of Understanding entered into between the Company and the Lead Merchant Banker, Comfort Securities Pvt Ltd dated September 30, 2008

2. Memorandum of Understanding entered into between the Company and the Registrar to the issue, Ankit Consultancy Private Limited dated October 23, 2008.

3. Deed of Assignment of Trade Marks between SFL & SHL dated May 10, 2004. 4. Deed of Assignment of Copyright between SFL & SHL dated May 10, 2004. 5. Registered User Agreement between SFL & SHL dated May 10, 2004. 6. Licensed User Agreement between SFL & SHL dated May 10, 2004. 7. Tri- partite agreement between the Company and NSDL dated November 12, 2002 for dematerialization of shares. 8. Tri- partite agreement between the Company and CDSL dated October 7, 2002 for dematerialization of shares.

Documents for Inspection

1. Memorandum and Articles of Association of the Company as amended till date. 2. Certificate of Incorporation of the Company dated June 21, 1988 issued by the Registrar of Companies, Mumbai.

Fresh Certificate of Incorporation dated July 09, 1992 pursuant to change of name of the company. 3. Copy of Board Resolution dated August 29, 2008 authorizing the issue. 4. Copy of the Special Resolution passed in the Annual General Meeting Resolution u/s 81 (1A) of the Companies Act,

1956 passed by the members of the company in their meeting held on September 26, 2008 5. Copy of Resolution passed in the Annual General Meeting dated September 29, 2004 regarding appointment of

Managing Director and fixing his remuneration for the same. 6. Copy of Resolution passed in the Board Meeting dated October 31, 2008 for appointment of Ms. Shikha Maheshwari,

Company Secretary of the company as the Compliance Officer 7. Shareholders Resolution passed at the Annual General Meeting held on September 26, 2008 re-appointing M/S S.P

Moondra & Co, Chartered Accountant as statutory auditors. 8. Letter dated 8th November 2008 from M/s. S.P Moondra & Co, the Statutory Auditors of the Company, regarding the

tax benefits available to the Company and its members. 9. The Report of the Auditors M/s. S.P Moondra & Co, dated 4th May 2009 in relation to the restated financial of the

Company for the financial year ended March 31, 2008, 2007, 2006, 2005, 2004 and ten months ended January 31, 2009 prepared as per Indian GAAP, SEBI (DIP) Guidelines 2000 and SEBI Act, 1992.

10. Annual reports & Financial Statements of the Company for the year ended March 31, 2008, 2007, 2006, 2005, and 2004.

11. Consents from the Directors, Company Secretary, Auditors, Lead Merchant Bankers, Legal Advisors to the Issue, Registrar, Bankers to the Issue & Bankers to the Company to include their name in the Letter of Offer and to act in their respective capacities.

12. Undertaking given by the promoters to subscribe more than their entitlement, in case required to ensure minimum subscription in the Right Issue.

13. Legal Certificates dated November 5, 2008 Issued by Mr. Praveen Pal (Advocate & Consultant), Legal Advisors of the Company.

14. Due Diligence Certificate dated November 11, 2008 to SEBI from the Lead Merchant Banker i.e. by M/S. Comfort Securities Pvt. Ltd.

15. Copy of Board Resolution dated November 11, 2008 approving Letter of Offer. 16. SEBI Observation Letter dated April 21, 2009 17. In principle approval dated , December 03, 2008 from BSE for listing of the securities offered in this issue.

Any of the contracts or documents mentioned in this Letter of Offer may be amended or modified at any time, if so required, in the interest of the company or if required by other parties, without reference to the shareholders, subject to compliance of the applicable laws.


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DECLARATION We, the Directors, General manager (finance & accounts) and the Compliance Officer of the Company, certify that all relevant provisions of the Companies Act, 1956, and the guidelines issued by the GOI or the guidelines issued by Securities and Exchange Board of India, applicable, as the case may be, have been complied with and no statement made in this Letter of Offer 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, and that all approvals and permissions required to carry on the business of our Company have been obtained, are currently valid and have been complied with. We further certify that all the statements in this Letter of Offer are true and correct. Undertaking We, the Directors of Syncom Formulations (India) Limited, declare and confirm that no information/material likely to have a bearing on the decision of the investor in respect of the equity shares offered in terms of this Letter of Offer have been suppressed/ withheld and/or incorporated in a manner that would amount to misstatement /misrepresentation and in the event of it transpiring at any point of time till allotment/refund, as the case may be, that any information / material has been suppressed/ withheld and /or amounts to misstatement/ misrepresentation, we undertake to refund the entire application moneys to all the subscribers within seven days thereafter, without prejudice to the provisions of section 63 of the Act. Since the date of last financial statement disclosed in this Letter of Offer, there have been no circumstances that materially and adversely affect or are likely to affect the profitability of the company or the value of its assets or its ability to pay off its liabilities within a period of next twelve months. All the Directors of the Company including Ms. Shikha Maheshwari in her capacity as Company Secretary & Compliance Officer of the Company certify that all disclosures made in the Letter of Offer are true and correct. Yours Truly For Syncom Formulations (India) Limited SIGNED BY ALL THE DIRECTORS OF SYNCOM FORMULATIONS (INDIA) LIMITED Mr. Vijay Bankda Mr. Kedarmal Bankda* Mr. Sanjay Mehta* Mr. Vinod Kumar Kabra* Mr. Krishna Das Neema* SIGNED BY COMPANY SECRETARY & COMPLIANCE OFFICER Ms. Shikha Maheshwari* SIGNED BY GENERAL MANAGER (FINANCE & ACCOUNTS)

Devendra Kumar Maheshwari

* indicates signed by their respective Power of Attorney

Place: Mumbai Date: 26.05.2009