RANA SUGARS LIMITED

(Incorporated in the Republic of India as a public company with limited liability)

Offering of 2.455,662 million Global Depositary Receipts representing 24.556,620 million underlying Equity
Shares of Rs.10 each. Offer Price of US$7.33 per Global Depositary Receipt

(The total amount is not to exceed U.S.$18.million)

Rana Sugars Limited (“Rana Sugars” or “the Company”) is offering 2.455,662 million of its ordinary equity
shares of Rs.10 each in the capital of the Company (the “Shares”) in the form of Global Depositary
Receipts (“GDRs”). Each GDR represents 10 equity Shares in the capital of the Company.

The GDRs will be issued pursuant to a Deposit Agreement to be dated on or about 15 May, 2006 between
the Depositary and the Company. The GDRs will be issued in global form and evidenced by a Master GDR
(the “Master GDR”), registered in the name of DIFX Guardian Limited, as nominee for the Dubai
International Financial Exchange (“DIFX”), and held for the account of GDR holders as book-entry
interests in DIFX. Except as described herein, individual global depositary receipts representing the GDRs
will not be issued in definitive form in exchange for beneficial interests in the Master GDR. Interests in the
Master GDR will be subject to certain restrictions on transfer. See “Description of the Global Depositary
Receipts” and “Restrictions on Foreign Ownership of Indian Securities – Transfer Restrictions.”

The Shares evidenced by the GDRs may be withdrawn by Holders but only after the listing of the Shares on
the Indian Stock Exchanges, where the shares of the Company are currently listed (see page 2 below).
There can be no assurances that such listings will be granted. Upon listing of the Shares on the Indian Stock
Exchanges, a GDR holder may request the Depositary to withdraw, from the GDR facility, the Shares
represented thereby and transfer such Shares directly to the Holder. The Issuer states that no Securities will
be distributed under the Offering Circular later than 12 months after the date of Offering Circular.

The courts of India shall be the courts of competent jurisdiction under which the Certificates and the
underlying Securities have been created and shall be the courts of competent jurisdiction in the event of
litigation including details of the consequences in event of default occurring in respect of the underlying
Securities.

Lead Manager
Chartered Capital and Investment Limited

The date of this Offering Circular is 2 May 2006.

1
An application will be made to the DIFX for the admission to listing of 2.455,662 million GDRs.

The Offering is not intended for, and the GDRs are not being offered, distributed, sold, transferred
or delivered, directly or indirectly, to, or for the account or benefit of, any person in the DIFC. This
Offering Circular is not intended for distribution to any person in the DIFC and any such person
that receives a copy of this Offering Circular should not act or rely on this Offering Circular and
should ignore the same.

The DIFX takes no responsibility for the contents of this document, makes no representations as to
its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever
arising from or in reliance upon any part of the contents of this document.

GDR holders are given an option to cancel GDRs with the Depositary upon listing of the Shares on the Indian
Stock Exchanges and hold such Shares directly and recover the proceeds by selling the Shares and investors are
also given the option to convert the Shares so released into GDRs for purchase, subject in both cases to applicable
Indian laws and regulations, (see “Transfer Restrictions” on page 89). In India, two-way fungibility is permitted
and therefore, GDRs are convertible to the extent of the original issue size. The reissuance of GDRs is permitted
where such GDRs have been redeemed into Shares, subject to such original issue size.

Rana Sugars’s equity shares are traded in India on The Stock Exchange, Mumbai and National Stock
Exchange of India Limited, which are referred to herein as the “Indian Stock Exchanges”. Copies of this
Offering Circular will be filed, for record purposes, with Indian regulatory authorities including the
Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh in India, the Securities and Exchange
Board of India, the Reserve Bank of India and with the Indian Stock Exchanges.

The distribution of this Offering Circular and the offering of the GDRs and the Shares may be restricted by
law in certain jurisdictions. This Offering Circular does not constitute an offer of, or an invitation by or on
behalf of the Company to subscribe for or purchase any of the GDRs in any jurisdiction where it is
unlawful for it to make such an offer or invitation. This Offering Circular may not be used for or in
connection with any offer to sell, or solicitation of an offer to subscribe for or buy, by anyone in any
jurisdiction in which it is unlawful to make such an offer or solicitation. Persons into whose possession this
document may come are required by the Company to inform themselves about and to observe such
restrictions. No action is being taken in any jurisdiction to permit an offering to the general public of GDRs
and the Shares or the distribution of this document in any jurisdiction where action would be required for
such purposes.

The GDRs are being offered by the Company as specified herein, subject to receipt and acceptance by it of,
and subject to its rights to reject, any offer to purchase in whole or in part and subject to certain other
conditions.

Rana Sugars and its Directors accept responsibility for the information contained in this Offering Circular.
To the best of the knowledge and belief of the Company and the Directors (which has taken all reasonable
care to ensure that such is the case), the information contained herein is in accordance with the facts and
does not omit anything likely to affect the import of such information. No responsibility is accepted by
Chartered Capital and Investment Limited or the Depositary or their respective affiliates for the accuracy of
the information contained in the Offering Circular.

Any investor should rely only on the information contained in this Offering Circular. The Company has not
authorised any person to provide information different from that contained in this Offering Circular. The
Company is offering to sell, and seeking offers to buy GDRs only in jurisdictions where offers and sales are
permitted. The information contained in this Offering Circular is accurate only as of the date of this
Offering Circular, regardless of the time of delivery of this Offering Circular or of any sale of the
Company’s GDRs. Information contained on the Company’s website does not form part of this Offering
Circular.

This Offering Circular relies on or refers to information and data regarding the sugar industry, drawn from
various publications available in the public domain. Although, the Company believes that this information
is reliable, it has not independently verified the same.

2
The GDRs are being offered in Middle East Countries and high networth individuals are desirous of
subscribing to the GDRs of the Company. The GDRs may not be offered or sold directly or indirectly in the
Republic of India or to, or for the account or benefit of, any resident of India. The GDRs offered hereby are
not transferable except in accordance with the restrictions described under “Transfer Restrictions”.

Certain defined terms, conventions and currency of presentation

In this Offering Circular, all references to “Indian Rupees”, “Rupees” and “Rs.” are to the legal currency of
India and all references to “U.S. Dollars”, “USD”, “Dollars” and “$” are to the legal currency of the United
States. For the convenience of the reader, this Offering Circular contains translations of some Indian Rupee
amounts into U.S. Dollars. This should not be construed as a representation that those Indian Rupee or U.S.
Dollar amounts could have been, or could be, converted into U.S. Dollars or Indian Rupees, as the case
may be, at any particular rate, the rate stated below, or at 43.74. Except as otherwise stated in this Offering
Circular, all translations from Indian Rupees to U.S. Dollars contained in this Offering Circular have been
based on the noon buying rate in the city of New York on 20 November 2005 for cable transfers in Indian
Rupees as certified for custom purposes by the Federal Reserve Bank of New York, which was Rs. 45.61
per $1.00. In this Offering Circular, any discrepancies in any table between totals and the sums of the
amounts listed are due to rounding off.

In this Offering Circular, unless otherwise specified or the context otherwise requires, “U.S.” and “United
States” means the United States of America, its territories and its possessions, “U.K.” means the United
Kingdom and “Financial Year” means the financial year ended 31 March in any particular year, unless
otherwise specified. Unless the context otherwise requires, references to the “Government” are to the
Central Government of India. A glossary of certain technical terms and abbreviations used in this Offering
Circular is provided at page 15.

3
 TABLE OF CONTENTS

Page
FORWARD LOOKING STATEMENTS 5

SUMMARY 6

SUMMARY OF THE OFFERING 11

DEFINITIONS 13

GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONS 15

RISK FACTORS 17

ENFORCEMENT OF JUDGMENTS OBTAINED IN OTHER JURISDICTIONS 23

USE OF PROCEEDS 24

INDUSTRY OVERVIEW 25

COMPANY INFORMATION 29

BUSINESS OF THE COMPANY 42

PERFORMANCE OF THE COMPANY 45

INFORMATION ON THE SHARES 48

DESCRIPTION OF THE SHARES AND COMPANY PROCEDURE 51

GOVERNMENT AND OTHER STATUTORY APPROVALS 59

TERMS AND CONDITIONS OF THE GLOBAL DEPOSITARY RECEIPTS 61

SUMMARY OF PROVISIONS RELATING TO THE GDRS WHILE IN MASTER FORM 76

INFORMATION RELATING TO THE DEPOSITARY 78

NATURE OF THE INDIAN SECURITIES TRADING MARKET 79

RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES 85

TAXATION 90

GENERAL INFORMATION 94

THREE YEAR FINANCIALS OF RANA SUGARS ALONGWITH ANNEXURES 95

INFORMATION ABOUT THE COMPANY AS REQUIRED FOR DIFX 116

4
 FORWARD LOOKING STATEMENTS

Investors should not rely on forward-looking statements

This Offering Circular contains forward-looking statements that involve risks and uncertainties. These
statements relate to future events or the Company’s future financial performance and include, but are not
limited to, statements concerning:

• its ability to attract and retain clients;

• the anticipated benefits and risks associated with its business strategy, including those relating to its
current and future service offerings;

• its future operating results and the future value of the GDRs;

• the anticipated benefits and risks of its key business relationships;

• the anticipated size or trends of the market segments in which it competes and the anticipated
competition in those markets;

• Government regulation; and

• its future capital requirements and ability to satisfy the capital needs.

In some cases, the investor can identify forward-looking statements by terminology such as “may”, “will”,
“could”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “project”,
“potential” or “continue”, the negative of such terms or other comparable terminology. These statements
are only predictions. Actual events or results may differ materially. In evaluating these statements, the
investor should specifically consider various factors, including the risks outlined in the Risk Factors section
above. These factors may cause the Company’s actual results to differ materially from those contained in
any forward-looking statement. Although, in the opinion of the Board, the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity,
performance or achievement. Except as required by law, the Company has no obligation to update publicly
any forward-looking statements for any reason after the date of this Offering Circular, and the Company
does not undertake to confirm these statements to actual results or to changes in expectations.

5
 SUMMARY

The following is only a summary which should be read together with more detailed information
regarding the Company and the GDRs being sold pursuant to this Offering Circular and the
Company’s historical financial statements and notes included elsewhere in this Offering Circular.

INFORMATION ABOUT THE COMPANY

Rana Sugars is a sugar company with a capacity to crush 5000 TCD of sugarcane and generation of 20 MW
of power per day. The Sugar Mill and Co-generation Power projects are situated at Village Buttar Seviyan,
Tehsil Baba Bakala, District Amritsar, Punjab.

The project was set up with a capacity of 2500 TCD, alongwith facilities for generation of 5 MW of power
per day. The cost of project was Rs.395.5 million and the same was funded by equity share capital of
Rs.213 million (Rs.36.5 million from Rana Gurjeet Singh & Associates, Rs.61 million from Punjab Agro
Industries Corporation Limited and Rs.115.5 million from public issue), term loans of Rs.177.5 million
(Rs.70 million from IFCI, Rs.70 million from IDBI, Rs.30 million from ICICI, Rs.5 million from SBI and
Rs.2.5 million from SBOP) and State Subsidy of Rs.5 million. It is incentive for setting up an Industry. The
project started the commercial production in December 1993.

The crushing capacity of Rana Sugars was enhanced to 5000 TCD and co-generation capacity to 20 MW
from November 1998 with a capital outlay of Rs.280 million. The expansion of project was funded by term
loans by IFCI of Rs.140 million, Sugar Development Fund of Rs.101 million and equity contribution of
Rs.39 million by Rana Gurjeet Singh & Associates. Out of total co-generation capacity of 20 MW, 10.2
MW co-generation project was funded by Soft Loan of Rs.75.57 million, Term Loan of Rs.4.9 million from
IREDA, Capital Subsidy of Rs.75.57 million from Government of India, Rs.17.00 million by US Aid and
Equity contribution of Rs.25.5 million by Punjab Energy Development Agency and Rs.71.15 million by the
Promoters of the Company, Rana Gurjeet Singh & Associates including cash accruals from the Company.

Financial and Operational Performance

Rana Sugar’s turnover has increased from Rs.835.15 million in 2000-2001 to Rs.1410.39 million in 2004-
2005 and its net profit has increased from Rs.28.3 million in 2000-2001 to Rs.178.3 million in 2004-2005.

During the year 2004-2005, the income of the Company has recorded an impressive growth of 6%. The net
profit of the Company has increased to Rs.178.312 million from Rs.70.968 million registering an increase
of 151%.

(For further information and detailed analysis please see the heading “Performance of the Company” at
page no. 45)

Adequacy of Internal Controls

The Company ensures existence of adequate internal control through documented policy and procedure to
be followed by the executives of the Company at various levels in the organisation commensurate with the
size of the Company and the nature of its business for purchase of stores, raw-materials including
components plant and machinery, equipments and other assets, and for the sale of goods.

Outlook

The Company has crushing capacity of 5000 TCD of sugarcane. The Company is making all possible
efforts to encourage and motivate the cane growers of the area (state of Punjab in India) to produce
maximum sugarcane by providing necessary guarantee for the crop loans from Banks like State Bank of
Patiala, State Bank of India and UCO Bank and also providing seeds and pesticides on the subsidised rates.

6
Future Strategy

Rana Sugar is setting up a distillery unit of 60 KL with a total project cost of Rs.350 million. The Letter of
Intent for distillery awarded in August 2002 and approval of site granted by the Department of Labour and
Employment. Rana Sugar has obtained the NOC from the Punjab Pollution Control Board after a successful
public hearing and has already obtained the environmental clearance from the Ministry of Environment and
Forests and has purchased approximately 30 acres of Land at Village Louhka, Tehsil Patti at the total cost
approximately Rs.16 million.

The expansion of power generation capacity from existing 20 MW to 30 MW per day is in process and the
same is likely to be completed during the last quarter of 2006.

Competitive strengths of the Company

1. Enough Sugar cane available

There is enough sugar cane available in the cane growing area of the Company. Further, the
Company has taken various steps for its progress and growth in the years to come. Sufficient
arrangements has been made to make available the required quantity and quality of sugarcane during
the coming seasons. As an incentive to the cane growers, the Company has arranged the crop loans
from various Banks for supply of cane seeds, insecticides and other agricultural inputs to the
growers. As a result of which the Company expects to have sufficient sugarcane for the coming
seasons in its catchment area.

2. A good managed Company

Rana Sugars Limited is a well managed Company. The Company is headed by its Board of Directors
having competent and experienced Directors. The production department is looked after by General
Manager of the Company. The cane crop area is looked after by a team of officers headed by Chief
Cane Development Officer assisted by staff members including Deputy Chief Cane Development
Officer. The financial, secretarial and legal activities are supervised by the highly qualified,
experienced and competent professionals.

3. Earning profit from very beginning

Rana Sugars started commercial production during the month of December 1993. The Company has
shown impressive results since incorporation. The Company is earning profits from the very first
year of its operation. The year wise net profit of the Company is as below:

Year Net Profit

(Rs. in million)

1993-94 2.138
1994-95 23.100
1995-96 13.934
1996-97 17.550
1997-98 27.908
1998-99 13.876
1999-00 14.894
2000-01 28.336
2001-02 16.072
2002-03 34.473
2003-04 70.968
2004-05 178.312

7
4. Good quality of product

The main product of Rana Sugars is sugar. The Company is manufacturing sugar of good quality.
The chief chemist of the Company ensures that the quality of the product is maintained. There has
never been any complaint about the quality of Company’s product.

5. Co-generation Power Project

Rana Sugars is the first Company in the state of Punjab, India, which has set up a co-generation
power project. The project was set up during the year 2000. The power is produced mainly from
bagasse, which is a by-product. The surplus power produced by the Company is sold to Punjab
State Electricity Board for which the Company has executed a Power Purchase Agreement.

6. Dividend paying Company

Rana Sugars is a dividend paying Company. After stabilization, it has starting paying dividend to
its shareholders. The Company paid dividend @ 10% to the shareholders for the financial year
2003-04 and 2004-05. Considering the progress, growth and future plans, the Company expects to
pay higher rate of dividend in the coming years.

7. Good future plans for the growth of the Company

Rana Sugars is a progressive Company, which was set up in the year 1993 with a crushing
capacity of 2500 TCD, which has been increased to 5000 TCD subsequently. The Company has
set up Co-generation power project with a capacity of 20 MW per day of power.

The Company is in the process of setting up a Distillery Unit of 60 KL per day capacity with a
Cost of Rs.350 million, which is likely to be completed by December 2005. The Company is also
expanding its power generation capacity from 20 MW to 30 MW, which is likely to be completed
during the last quarter of 2006. The Company has very good future plans of growth. The Company
is planning to set up 2 sugar mills of 5000 TCD capacity alongwith power generating facilities of
20 MW each in the State of Uttar Pradesh, India during the next year with a total project cost of
Rs.4180.00 million.

The audited and re-stated Financial Summary of Rana Sugars for the financial years ended 31
March 2003, 2004 and 2005, as per IFRS regulations have been extracted from the auditors reports
prepared by M/s. S.N.Nanda & Co., Chartered Accountants. The complete financial statements
can be found in the Offering Circular on page 95 of this document.

There has been no material adverse change in the financial position or trading prospects of Rana
Sugars since the last audited accounts or later interim statement ending on 31 March 2006.

8
 Financial Summary - For The Last Three Years

INCOME STATEMENT

Amount in Amount in Millions Amount in Millions Amount in Millions

Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

Income
Revenue (As per note 497.17 11.30 1341.79 30.67
15) 850.85 19.61 934.11 19.67
Other Incomes 1.81 0.04 10.30 0.24 31.30 0.72 11.58 0.24
Changes in Inventory (380.34) (8.65) (228.60) (5.23) 184.30 4.25 52.18 1.10
Expenses
Raw material & 6.24 0.14 583.97 13.36
consumables used 660.99 15.23 652.77 13.73
Staff Costs (As per note 17.26 0.40 43.09 0.98
16) 41.36 0.95 43.67 0.92
Depreciation 31.26 0.71 62.52 1.43 61.00 1.41 57.75 1.22
Manufacturing Expenses (As per note 21.70 0.50 83.26 1.90
17) 89.30 2.06 79.12 1.67
Other Operating (As per note 11.59 0.26 28.16 0.64
Expenses 18) 13.88 0.33 15.51 0.33
Profit from operations 30.59 0.68 322.49 7.37 199.92 4.60 149.05 3.14
Finance Costs (As per note 27.84 0.62 70.60 1.61
19) 90.38 2.09 90.44 1.90
Selling Expenses 1.26 0.02 4.23 0.10 2.89 0.06 3.45 0.08
Cane Development 0.88 0.02 4.28 0.10
Expenses 2.20 0.05 3.97 0.08
Provision for doubtful (0.61) (0.01) (0.08) (0.00)
debts 0.58 0.01 1.04 0.02
Profit before tax 1.22 0.03 243.46 5.57 103.87 2.39 50.15 1.06
Income Tax - Current 0.55 0.01 19.30 0.44
Tax 7.38 0.17 4.19 0.09
Deferred Tax 0.01 0.01 46.71 1.07 27.03 0.62 16.76 0.35
Income Tax of Previous 0.00 0.00 0.00 0.00 0.44 0.01
years 0.77 0.03
Provision Written Back 0.00 0.00 0.00 0.00 0.00 0.00 2.19 0.05
Net Profit after tax 0.66 0.01 177.46 4.06
(loss) 69.02 1.59 30.62 0.64

9
The audited Financial Summary of the Company for the financial years ended 31 March 2003, 31 March
2004, 31 March 2005 and for the half-yearly ending 30 September 2005, have been extracted from the re-
stated financial statements, as per IFRS Regulations prepared by S.N.Nanda & Co., Chartered Accountants.
The complete financial statements can be found on page 95 of this Offering Circular.

BALANCE SHEET

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

Assets
Non-Current Assets
Property, Plant & Equipment (note no 1) 1357.93 30.87 1047.46 23.94 967.97 22.31 952.48 20.05
Investments (note no 2) 0.39 0.01 0.39 0.01 0.39 0.01 0.00 0.00
Trade receivables (note no 4) 0.32 0.01 0.49 0.01 0.80 0.02 1.27 0.03
Security deposit 2.68 0.06 2.14 0.05 2.32 0.05 1.92 0.04
Current Assets
Inventories (note no 3) 374.86 8.53 736.43 16.83 962.28 22.18 771.00 16.23
Current portion of trade (note no 4) 65.03 1.48 196.74 4.50 96.37 2.22 56.27 1.18
Receivables
Cash and Cash equivalent (note no 5) 86.29 1.96 121.98 2.79 15.78 0.37 11.43 0.23
Prepayments 5.98 0.10 5.64 0.13 6.33 0.14 5.20 0.11
Interest Receivable 0.22 0.01 0.27 0.01 0.03 0.00 0.03 0.00
Other Receivables (note no 6) 66.43 1.51 117.19 2.68 11.23 0.26 30.90 0.65
Tax Deducted at Source by 0.30 0.01 5.28 0.12 2.74 0.06 0.73 0.02
Clients & Advance Tax
Other Loans & Advances 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
MODVAT 19.29 0.44 7.30 0.17 3.35 0.07 1.82 0.04
Service Tax 1.26 0.03 0.86 0.02 0.00 0.00 0.00 0.00
Total Assets 1980.98 45.02 2242.17 51.26 2069.59 47.69 1833.05 38.58
Equity and Liabilities
Shareholders Equity
Issued Capital (note no 7) 498.32 11.32 498.32 11.39 348.29 8.02 348.29 7.33
Reserves (note no 8) 459.02 10.44 457.20 10.46 210.66 4.85 184.19 3.88
Retained Earnings (note no 9) 146.24 3.32 145.57 3.33 58.15 1.35 48.42 1.02
Non -Current Liabilities
Interest bearing borrowings (note no 10) 274.36 6.24 178.85 4.09 228.35 5.27 264.62 5.57
Non Interest bearing (note no 11) 120.82 2.75 93.99 2.15 156.39 3.60 152.43 3.21
borrowings
Deferred Tax Liability 112.70 2.56 112.70 2.57 65.99 1.52 38.96 0.81
Retirement Benefit 4.64 0.11 3.40 0.08 3.60 0.08 3.65 0.08
Obligations
Current Liabilities
Trade and Other Payables (note no 12) 88.90 2.02 123.08 2.81 279.48 6.44 293.53 6.17
Short Term Borrowings (note no 13) 228.07 5.17 569.72 13.02 672.01 15.49 494.76 10.42
Provisions (note no 14) 47.91 1.09 59.34 1.36 46.67 1.07 4.19 0.09
Total Equity and Liability 1980.98 45.02 2242.17 51.26 2069.59 47.69 1833.05 38.58

10
 SUMMARY OF THE OFFERING

The following is only a summary of the Offering:

The Offering Offering of 2.455,662 million GDRs representing 24.556,620 million equity shares of
nominal value of Rs.10 each pursuant to this Offering Circular. The equity shares
represented by the GDRs will represent approximately 33.40% of the Company’s
outstanding share capital.

Offering Price The Offering Price is US$7.33 per GDR.

The GDRs GDRs will be delivered by the Depositary pursuant to the Deposit Agreement and
will be represented by Shares, which are deposited with the ICICI Bank Limited (the
“Custodian”) in India. The Shares will have substantially the same rights as the
issued shares (see “Description of Shares” and “Description of Global Depositary
Receipt”).

The GDRs will be evidenced by a Master GDR. The GDRs and the Shares are
subject to certain restrictions on transfer. (see “Transfer Restrictions” on page 89).

Shares issued by the Company There are 49,861,000 equity shares of Rs.10 each issued by the Company as on 31
August 2005.

Shares authorised and issued An AGM of the Company held on 3 November 2005 at which enabling resolutions
under this Offering Circular for the following further issue of shares have been passed:

“to issue Global Depository Receipts for an amount not exceeding 50,000,000
equity shares @ Rs.33 per share aggregating to Rs.1650 million (about US$ 36.66
million)”

Use of Proceeds The aggregate net proceeds received from this Offer, anticipated to be USD$17.60
million, which shall be used for setting up a Sugar Mill of 5000 TCD with co-
generation of power at a capacity of 20 MW, also see “Use of Proceeds” on page
24.

Sale and Withdrawal of Shares
Upon listing of the Shares on the Indian Stock Exchanges, a GDR holder may
withdraw and hold the Shares directly represented by such GDRs upon production
of such GDRs, together with a duly executed order and payment of all necessary
fees, expenses, taxes or government charges. In accordance with the Deposit
Agreement, the Company shall use its best endeavours to maintain a listing of
Shares on the Indian Exchanges, the rules of which require the Shares to be
dematerialized prior to listing.

Listing of the Shares and An application has been made to the DIFX for the 2.455,662 million GDRs under
GDRs this Offering to be admitted to their official list. An application is proposed to be
made to list the Shares to be represented by the GDRs on the Indian Stock
Exchanges.

Dividends For the financial year ending 31 March 2005, Rana Sugars has declared dividend of
10% per Equity Share of Rs.10 each. Although the Company has no current
intention to discontinue dividend payments, the Company cannot assure that any
future dividends will be declared or paid or that the amount thereof will not be
decreased. Holders of GDRs on the applicable dividend record date will be entitled
to receive dividends, if declared, payable on equity shares represented by such
GDRs. Cash dividends on equity Shares represented by GDRs will be paid to the
Depositary in Rupees and, except as otherwise described under “Description of
Global Depositary Receipts,” will be converted by the Depositary into U.S. dollars
and distributed, net of fees, taxes, duties, charges, costs and expenses, to the
Holders of such GDRs.

11
Voting Rights Holders of the GDRs will have no voting rights with respect to the Shares. The
Depositary will not exercise any voting rights in respect of the Shares unless it is
required to do so by law. If so required, the Depositary will, at the direction of the
Board of Directors of the Company (the “Board”) (subject to the advice of legal
counsel), either vote as directed by the Board or give a proxy or power of attorney
to vote the Deposited Shares in favour of a Director of the Company or other
person or vote in same manner as those shareholders designated by the Board.

Registered holders of Shares withdrawn from the deposit facility will be entitled to
vote and exercise other direct shareholders rights (subject to transfer restrictions, as
to which see “Terms and Conditions of the Global Depositary Receipts” and
“Transfer Restrictions”). However, GDR holders may not receive sufficient
advance notice of shareholder meetings to enable them to withdraw the Shares and
vote at such meetings.

Taxation Dividends payable on the offered Shares are not subject to withholding tax in India
under Section 115 AC of the Indian Income Tax Act, 1961. There is an exemption
from Indian Capital Gains Tax on the sale in Foreign Currency of GDRs outside
India from one non-resident Indian to another non-resident Indian. See “Taxation –
Indian Taxation” at page 90.

Settlement The Master GDR will be registered in the name of DIFX Guardian Limited, as
nominee for DIFX, and delivered to Deutsche Bank AG, as the Common
Depositary for DIFX. DIFX has accepted the GDRs for settlement in their system
on a book entry basis. The Common Code for the GDRs is 025137515. The ISIN
for the GDRs is US75188Q1085.

Transfer restrictions Global depositary receipts issued by Indian companies to non-residents have free
convertibility outside India. As regards to the transfer of Shares (on conversion of
GDRs into Shares) in favour of residents, the non-resident can instruct the
Depositary to request that the Custodian release the Shares in favour of the non-
resident or to transfer the Shares in the books of Rana Sugars in the name of the
non-resident to a resident. The RBI has granted general permission permitting
transfer of shares from non-residents to residents provided (a) such shares are
released by the Custodian against surrender of GDRs by the non-resident
concerned and (b) the sale is made on a stock exchange or the shares offered for
sale in terms of an offer made under the SEBI (Substantial Acquisition of Shares
and Takeover) Regulations, 1997 (As amended).

Lock in Period A lock in period does not apply to the GDRs issued under “the Issue of FCCB and
Ordinary Shares (through Depositary Receipt Mechanism) Scheme, 1993
(Notification GSR No. 700(E) dated 12 November 1993)”.

Risk Factors Investing in the offered GDRs and the Shares represented thereby involves risks,
which are described in “Risk Factors” on page 17.

12
 DEFINITIONS

“Articles of Association” The Articles of Association of the Company

“Board” The Board of Directors of the Company

“Companies Act” or “CA56” The Indian Companies Act, 1956, as amended from time
to time.

“Custodian” ICICI Bank Limited

“Depositary” Deutsche Bank Trust Company Americas

“Depositories Act” The Indian Depositories Act, 1996, as amended

“Directors” The Directors of the Company

“Dubai International Financial Exchange” Dubai Stock Exchange

“Euro” Legal currency of European Union

“Finance Act” The Indian Finance Act, 2005

“GDR holders” or “Holder” Holders of GDRs

“Government” Government of India

“IAS” Indian Administrative Service, which is the highest cadre of

the civil services in India. Under supervision of the Ministry
of Home Affairs, Government of India, IAS officers hold
key positions in the government both at the Centre and State
levels in India.

“Income Tax Act” The Indian Income Tax Act, 1961, as amended

“Indian GAAP” Generally Accepted Accounting Principles in India

Indian Stock Exchanges The Stock Exchange, Mumbai (BSE) and National Stock
Exchange of India Limited

“Issue of Foreign Currency Convertible Bonds and The Indian Issue of Foreign Currency Convertible Bonds
Ordinary Shares Scheme” and Ordinary Shares (through Depositary Receipt
Mechanism) Scheme, 1993, as amended

“Lead Manager” Chartered Capital and Investment Limited

“Offering” USD 7.33 per GDR

“Offering Circular” This document

“Rana Sugars” or “the Company” or “we” or “us” Rana Sugars Limited

“Securities Act” United States Securities Act of 1933

“Securities Contracts Act” The Indian Securities Contracts (Regulation) Act, 1956,
as amended

“Securities Contracts Rules” The Indian Securities Contracts (Regulation) Rules,

1957, as amended

13
“Common Depositary” Deutsche Bank AG, London Branch

“Shareholders” Holders of Shares of the Company

“Shares” The equity shares of par value of Rs.10 each of the

Company

“Takeover Code” SEBI (Substantial Acquisition of Shares and Takeovers)

Regulations, 1997, as amended

“UK GAAP” Generally Accepted Accounting Principles in United

Kingdom

“U.S. or U.S.A.” The United States of America

or “US dollar” or “USD” or “$”
The legal currency of the United States of America

“US GAAP” Generally Accepted Accounting Principles in US

14
 GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONS
The following definitions and terms apply throughout these Listing Particulars unless the context otherwise
requires:

“AGM” Annual General Meeting

“approx.” Approximately

“Articles” Articles of Association of the Company

“AS” Accounting Standards

“BOLT” BSE’s online trading facility

“BSE” The Stock Exchange, Mumbai

“CA56” The Companies Act, 1956

“CLB” Company Law Board

“DIFX” Dubai International Financial Exchange

“EGM” Extraordinary General Meeting

“EPF” Employees Provident Fund

“EPF Act” Employees Provident Fund and Miscellaneous

Provisions Act, 1952

“FCCB” Foreign Currency Convertible Bond

“FDI” Foreign Direct Investment

“FIIA” Foreign Investment Implementation Authority

“ft.” Feet

“FEMA” The Indian Foreign Exchange Management Act, 1999,

as amended

“FIIs” Foreign Institutional Investors

“FIPB” Foreign Investment Promotion Board

“GAAP” Generally Accepted Accounting Policies

“GDRs” Global Depositary Receipts issued by the Depositary,

each representing 10 equity shares

“ICICI” ICICI Bank Limited

“IDBI” Industrial Development Bank of India

“IFCI” The IFCI Limited

“IFRS” International Financial Reporting Standards

15
“IPRs” Intellectual Property Rights

“KL” Kilo Litre

“mn” Million

“MW” Mega Watt

“No.” Number

“NOC” No Objection Certificate

“NSE” The National Stock Exchange of India Limited

“PAT” Profit After Tax

“qtl.” Quintal (i.e. 100 kilo grams)

“RBI” Reserve Bank of India

“R&D” Research and Development

“RoC” Registrar of Companies

“Rs.” Or “INR” or “Rupees” or “Indian Rupees” Indian National Rupee, the legal currency of India

“SEBI” Securities and Exchange Board of India

“SEBI Act” Securities and Exchange Board of India Act, 1992, as

amended

“Sl. No.” Serial Number

“sq.” Square

“TCD” Tonnes Crushing per Day

“U.K.” United Kingdom

“w.e.f.” with effect from

16
 RISK FACTORS

Investors should carefully consider the risks described below and the other information in this document
before investing in the GDRs. The Company’s business could be seriously harmed by any of these risks. In
particular, any potential investor in, or purchaser of, GDRs should pay particular attention to the fact that
the Company is governed in India by a legal and regulatory environment, which, in some respects, may
differ from that which prevails in other countries. The trading price of the GDRs could decline due to any
of these risks, and investors may lose all or part of their investment.

Some of the information in this Offering Circular may contain forward-looking statements. Such statements
can be identified by the use of forward looking terminology, such as “may”, “will”, “expect”, “anticipate”,
“estimate”, “continue” or other similar words. These statements discuss future expectation, contain
projections of result of operations or of financial condition or state other “forward looking information”.
When considering such forward statements, the investor should keep in mind the risk factors and other
cautionary statements in this Offering Circular. The risk factors noted in this section and other factors noted
throughout this Offering Circular, including certain risks and uncertainties, could cause actual results to
differ materially from those projected in any forward looking statement.

RISKS RELATED TO INVESTMENTS IN INDIAN COMPANIES

Political instability could adversely affect the business and economic conditions in India generally, and
the Company’s business in particular.

The Company is incorporated in India and majority of its assets are located in India. Consequently, its
financial performance and the market price of Shares and GDRs will be affected by changes in exchange
rates and controls, interest rates, Government policies, including taxation policies, as well as political,
social and economic developments affecting India.

Any potential investor in, and purchaser of, the GDRs should pay particular attention to the fact that the
Company is governed in India by a legal and regulatory environment which in some material respects may
be different from that which prevails in the United States and the United Kingdom and other countries.
Prior to making an investment decision, prospective investors and purchasers should carefully consider all
of the information contained in the Offering Circular (including the consolidated and, where relevant, non-
consolidated financial statements included in this Offering Circular).

Since 1991, the Government has pursued policies of economic liberalisation and financial sector reforms.
Nevertheless, the role of the Indian central and state governments in the Indian economy has remained
significant. In the elections in May 2004, a new coalition Government, the United Progressive Alliance, led
by the Indian National Congress party was formed. The new Government has announced its general
intention to continue India’s current economic and financial sector liberalisation and deregulation policies.
However, there can be no assurance that these policies may continue in the future. The rate of economic
liberalisation could change, and specific laws and policies affecting foreign investment, currency exchange
rates and other matters affecting investment in securities could also change. A significant change in India’s
economic liberalisation and deregulation policies could adversely affect business and economic conditions
in India generally, and the Company’s business in particular.

There may be less company information available in the Indian securities markets than securities
markets in developed countries.

There may be differences between the level of regulation and monitoring of the Indian securities markets
and the activities of investors, brokers and other participants and that of markets in the United States and
other developed countries. SEBI is responsible for approving and improving disclosure and other
regulatory standards for the Indian securities markets. SEBI has issued regulations and guidelines on
disclosure requirements, insider trading and other matters.

17
As the Company operates all its business in India, exchange rate fluctuations may affect the market
value of Shares and GDRs independent of its operating results.

The price of the GDRs will be quoted in U.S. dollars. The Shares are quoted in Rupees on the Indian Stock
Exchanges. Dividends in respect of the Shares will be paid in Rupees and subsequently converted into U.S.
dollars for distribution to GDR holders. GDR holders, who seek to sell in India any Shares withdrawn upon
surrender of any GDR, and to convert the Rupee proceeds of such sale into foreign currency from India,
will require the approval of the RBI for each such transaction. The value of the Rupee, measured in U.S.
dollars, has been declining over the past few years. However, over the last year, the value of Rupee has
appreciated against the USD.

Fluctuations in the exchange rate between the Rupee and the US dollar will affect the US dollar conversion
by the Depositary of any cash dividends paid in Rupees on the Shares represented by the GDRs. In
addition, fluctuations in the exchange rate between the Rupee and the US dollar will affect the US dollar
equivalent of the Rupee price of the Company’s Shares on the Indian Stock Exchanges and, as a result, are
likely to affect the prices of the Company’s GDRs. Such fluctuations will also affect the US dollar value of
the proceeds, a Holder would receive upon the sale in India of any Shares withdrawn from the Depositary
under the Deposit agreement. There can be no assurance that Holders of GDRs will be able to convert
Rupee proceeds into US dollars or any other currency or the rate at which any such conversion could occur.

Surcharges under the Income Tax Act will increase the Company’s tax liability and decrease any profits
the Company might have in the future.

The statutory corporate income tax rate in India is currently 30%. This tax rate is presently subject to 10%
surcharge and 2% education cess resulting in an effective tax rate of 33.66%. Though, the surcharge was
increased from 2.5% to 10% for the assessment year 2005-06, the Company cannot assure that the 10%
surcharge will be repealed or remain at its current rate or that additional surcharges will not be
implemented by the Government of India.

Dividends declared, distributed or paid by Indian companies are subject to a dividend distribution tax of
12.5%, including the presently applicable surcharge of 10% plus education cess of 2%, of the total amount
of the dividend declared, distributed or paid. The said dividend tax is payable by the company and not the
shareholders.

Although, the Government has recently issued regulations on relevant tax matters, certain aspects of the
Indian tax treatment applicable to the Shares remain unclear.

Capital gains (whether short term or long-term) arising on the sale of the Shares in India are subject to
Income Tax Act. There is an exemption for the purpose of computing the amount of capital gains subject to
such tax, the Government’s Depositary Receipt Scheme specifies that the cost of acquisition of the Shares
shall be deemed to be the Share price prevailing on the Indian Stock Exchanges on the date, the Depositary
gives notice to the Custodian requesting release of such Shares. However, there is no corresponding
provision in the Income Tax Act, as to the cost of acquisition of the Shares being the price prevailing on the
date of notice/conversion as mentioned above. The period of holding of such Shares, for determining
whether the gain is long-term or short-term, commences on the date of the giving of such notice by the
Depositary to the Custodian.

Investors are advised to consult their own tax advisors and to consider carefully the potential tax
consequences/liabilities of an investment in the GDRs. See “Taxation”.

There is a difference between the level of regulation and monitoring of the Indian securities markets and
the activities of investors, brokers and other participants and that of markets in United Arab Emirates
(“UAE”), the United States and other developed economies. SEBI is responsible for approving disclosure
and other regulatory standards for the Indian securities markets. SEBI has issued regulations and guidelines
on disclosure requirements, insider trading and other matters. There may, however, be less publicly
available information about Indian companies than is regularly made available by public companies in
developed economies.

18
Conditions in the Indian securities market may affect the price or liquidity of the Shares and the GDRs.

The Indian securities markets are smaller and more volatile than securities markets in more developed economies.
The Indian Stock Exchanges has in the past experienced substantial fluctuations in the prices of listed securities
and the price of the Company’s stock has been especially volatile. For example, the Company’s stock price on
the BSE ranged from a high of Rs.25 (approximately USD0.58) in the last month of calendar year 2004 to a
low of Rs.24 (approximately USD0.56) in the second quarter of calendar year 2005. As on 31 August 2005,
the closing price of the Company’s shares on the BSE was Rs.32.55 (approximately USD0.76).
(Conversion rate USD1=Rs.43).

The Indian Stock Exchanges have also experienced problems that affected the market price and liquidity of
the securities of Indian companies. These problems have included temporary exchange closures, broker
defaults, settlement delays and strikes by brokers. The BSE was closed for three (3) days in March 1995
following default by a brokerage house. In addition, the governing bodies of the Indian Stock Exchanges
have from time to time imposed restrictions on trading in certain securities, limitations on price movements
and margin requirements. Further, from time to time, disputes have occurred between listed companies and
stock exchanges and other regulatory bodies, which in some cases may have had a negative effect on
market sentiment. Similar problems could happen in the future and, if they do, they could affect the market
price and liquidity of the Company’s Shares and GDRs.

THE MATERIAL RISKS ASSOCIATED WITH INVESTING IN THE COMPANY, AND WHERE
APPLICABLE, ANY RISKS ASSOCIATED WITH ASSETS TO BE ACQUIRED USING THE
PROCEEDS OF THE DISTRIBUTION

The Company operates in a highly regulated market. Changes in Government policy regarding fixation of
statutory cane price, sugar distribution (i.e. the ratio of levy and non-levy sugar) and pricing of sugar may
affect the revenues and profitability of the Company. The cane price is paid by sugar Companies as fixed
by State Government. The price is fixed by State Government after considering various factors. The present
cane price is Rs.115 per qtl. which has been increased from Rs.100 per qtl. by the State Government after
few years. The levy sugar is only 10% and the non-levy sugar which consists 90% is sold by the Company
on prevailing market rate. However, the sugar is sold in accordance with quota released by Government of
India on month basis.

Also, as the Company is going to set up new Sugar Mills from the proceeds of the GDRs the aforesaid
factors may affect the performance of the new Sugar Mills.

The Company’s business is dependent on agricultural production.

Sugar industry is an agro-based industry and its main raw material is sugarcane. In India, agriculture is
primarily dependent on climatic conditions. Therefore, in any year, if there is a shortfall of sugarcane
production on account of adverse climatic conditions, the same may affect the Company’s financial
performance adversely.

The Company may face competition from other established Companies and future entrants into the
industry.

Since, the sugar industry is growing, additional capacities are being added by existing sugar companies and
also by new entrants in this field. The additional supply of sugar in the market will impact the sugar price if
it is not supported by proportionate increase in demand. The Company’s profit margin may get reduce,
incase of fall in future sugar price and the same will have a direct impact on the Company’s financial
performance. The sugar is an essential commodity and presently, being sold without branding except few
places in North India like states of Punjab, Haryana and Uttar Pradesh in India. Thus, competition is likely
to affect the Company’s financial performance.

19
Changes in the Government of India policies could impact the liberalisation of the Indian economy and
adversely affect economic conditions in India generally and the Company’s business in particular.

A significant change in India’s economic liberalisation and deregulation policies could affect business and
economic conditions in India generally and the Company’s business in particular. A significant change in
the Indian government’s or the state government’s economic liberalisation and deregulation policies could
adversely affect the business and economic conditions in India generally and the Company’s business and
financial condition and prospects in particular.

Certain factors beyond the control of the Company could adversely affect the business of the Company.

Certain factors beyond the control of the Company like terrorist attacks, droughts, floods, earthquakes etc.,
or any other acts of violence involving India and other countries could adversely affect the Company’s
financial performance.

Litigation.

The Company is involved in three litigation cases involving civil suits, amounting to Rs.6,147,535.
Therefore, if the judgment is given against the Company in any/all of the aforementioned matters, the
Company will become liable to the same, which may have an adverse effect on the business, finance results
and operations of the Company.

Intellectual Property Rights.

The Company has not filed for registration of any intellectual property rights. Therefore, the Company’s
efforts to protect its intellectual property may not be adequate to prevent misappropriation of proprietary
information or to ensure that it will be able to detect unauthorised use and take appropriate steps to enforce
its unregistered intellectual property rights. The Company’s competitors may independently develop
similar technology or duplicate its products. Unauthorised parties may infringe upon or misappropriate its
products or proprietary information. The misappropriation or duplication of Company’s intellectual
property could disrupt its ongoing business, distract its management and employees, reduce its revenues
and increase its expenses. In the future, litigation may be necessary to enforce Company’s intellectual
property rights or to determine the validity and scope of the proprietary rights of others.

STEPS PROPOSED BY THE COMPANY TO MITIGATE OR MANAGE THE RISKS

The Company has taken various effective steps in order to make available the sufficient quantity and
quality of sugarcane in the years to come such as arranging crop loans from Banks for cane seeds,
insecticides, agricultural inputs for the growers. 90% of the sugar is non-levy, which is sold by the
Company in the open market at competitive rates. Further, the Company makes efforts to obtain maximum
quota for sale of sugar from Government of India on various grounds.

RISKS RELATED TO THE GDRs AND THE TRADING MARKET

Holders of GDRs will not have any voting rights

Holders of GDRs will have no voting rights with respect to the Deposited Shares. The Depositary will not
exercise any voting rights in respect of the Deposited Shares unless it is required to do so by law. If so
required, the Depositary will, at the direction of the Board (subject to the advice of legal counsel taken by
the Depositary and the Company at the expense of the Company), either vote as directed by the Board or
give a proxy or power of attorney to vote the Deposited Shares in favour of a Director of the Company or
other person or vote in same manner as those shareholders designated by the Board. See “Terms and
Conditions of Global Depositary Receipts – Voting Rights” on page 68.

Restrictions on foreign investment may affect the price of the GDRs

Foreign investment in Indian securities is regulated by FEMA. In certain emerging markets, including
India, GDRs may trade at a discount or premium, as the case may be, to the Shares, in part because of

20
restrictions on foreign ownership of the Shares. The RBI has granted a general exemption permitting the
transfer of Shares, after such Shares have been converted into GDRs, from non-residents to residents,
provided that the Shares are released by the Indian custodian in respect of a GDR issue against the
surrender of the GDRs by the non-resident, and further provided that the sale was made on a stock
exchange, or the Shares were offered for sale by way of an offer made under the provisions of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (as amended) (“the Regulations”). In
case of transfer of shares on conversion into shares in favour of residents, no prior approval of the RBI will
be required for the transfer of Shares from non-residents to residents.

Holders who seek to convert the Rupee proceeds from a sale in India into foreign currency and repatriate
such foreign currency from India will not be required to obtain prior RBI approval for each such
transaction. In addition, Shares, which are withdrawn from the Depositary, may not be sold on the domestic
stock exchanges until the Shares have been listed on those exchanges, a process which can take forty five
(45) days from issuance of the relevant GDRs.

Issues of GDRs may not result in the market for GDRs being more active or liquid, particularly in light of
Indian legal restrictions on equity share conversion and other restrictions.

The Company cannot predict the extent to which issues of GDRs will change the public trading market for
the GDRs. Active, liquid trading markets generally result in lower price volatility and more efficient
execution of buy and sell orders for investors. Liquidity of a securities market is often a function of the
volume of the Shares that are publicly held by unrelated parties. Although, GDR Holders are entitled to
withdraw the underlying Shares from the Depositary at any time after such Shares are listed on the Indian
Stock Exchanges, there is no public market for the Shares anywhere outside India.

Future issue of GDRs or sales of the Shares may significantly affect the trading price of the Shares or the
GDRs.

The future issuance of Shares by the Company or the disposal of Shares by any of the major shareholders
of the Company or the perception that such issuance or sales may occur may significantly affect the trading
price of the Shares and the GDRs.

Holders of the GDRs may face uncertainties in their ability to withdraw Shares from the GDR depositary
facility and any such withdrawal may be subject to delays

India’s restrictions on foreign ownership of Indian companies limits the number of shares that may be
owned by foreign investors and generally require Government approval for foreign ownership. Although,
the Company is not required to obtain Government approval for the offering, investors who withdraw
Shares from the GDR depositary facility for the purpose of selling such Shares will be subject to Indian
regulatory restrictions on foreign ownership upon withdrawal. It is possible that this withdrawal process
may be subject to delays.

The ability of Holders of the GDRs to sell to a resident of India, any equity Shares withdrawn from the
GDR depositary facility, may be subject to delays if specific Government approval is required

Due to restrictions set out in the Deposit Agreement and the Terms and Conditions of the Global
Depositary Receipts, the supply of GDRs will be limited. See “Terms and Conditions of the Global
Depositary Receipts” page no. 61.

Holder of GDRs may be restricted in their ability to exercise pre-emptive rights under Indian law and
thereby may suffer future dilution of their ownership position

Under the Companies Act, a public company incorporated in India must offer its holders of equity shares,
pre-emptive rights to subscribe and pay for a proportionate number of shares to maintain their existing
ownership percentages, prior to the issuance of any new equity shares, unless the pre-emptive rights have
been waived by a special resolution requiring the affirmative vote three times of negative vote polled on
that resolution. Overseas holders of GDRs may be unable to exercise pre-emptive rights for the Shares
unless a registration statement under the Securities Act, 1933 (“Securities Act”), as amended, is effective

21
with respect to the rights or an exemption from the registration requirements of the Securities Act is
available. The Company’s decision to file a registration statement will depend on the costs and potential
liabilities associated with any given registration statement as well as the perceived benefits of enabling the
Holders of its GDRs to exercise their pre-emptive rights and any other factors that the Company deems
appropriate to consider at the time the decision must be made. The Company may elect not to file a
registration statement, related to the Shares issuable upon exercise of the pre-emptive rights otherwise
available by law to the Company’s shareholders. In the case of such future issuance, the new securities may
be issued to its Depositary, which may sell the securities for the benefit of the holders of the GDRs. The
value, if any, the Depositary would receive upon the sale of such securities cannot be predicted. To the
extent that holders of GDRs are unable to exercise pre-emptive rights granted in respect of the Shares
represented by their GDRs, their proportional interests in the Company would be different to other
shareholders.

There is no guarantee that the Shares will be listed on the Indian Stock Exchanges

The Shares of the Company are listed on the Indian Stock Exchanges. The Company will apply to obtain
permission of Indian Stock Exchanges to list the Shares represented by the GDRs upon the GDRs offered
hereunder having been issued, but there is no guarantee that such permission for listing of Shares on the
Indian Stock Exchanges will be granted. Application for listing of the Shares underlying the GDRs will not,
in accordance with Indian law and practice, be made until those Shares and the GDRs representing them
have been allotted and issued. GDR holders will be unable to withdraw the Shares underlying their GDRs
until such time as such Shares are listed on the Indian Stock Exchanges.

22
 ENFORCEMENT OF JUDGMENTS OBTAINED IN OTHER JURISDICTIONS

The Company is a public limited liability company incorporated and operating under the laws of the
Republic of India. Consequently, it may be difficult for investors to effect service of process in respect of
proceedings issued outside India upon Directors and executive officers of the Company or the Indian
experts named in this Offering Circular. It may also be difficult to enforce judgments obtained in other
jurisdictions against the Company.

However, it has been advised by K. R. Chawla and Co., Advocates that the statutory basis for recognition
of foreign judgments is found in Section 13 of the Indian Code of Civil Procedure, 1908, which provides
that an Indian court may recognise a foreign civil judgment, subject to certain time limitations, as
conclusive evidence of any matter directly decided upon, if it finds that:

• the judgment has been pronounced by a court of competent jurisdiction;

• the judgment has been given on the merits of the case;

• the judgment does not appear on the face of the proceedings to be founded on an incorrect
interpretation of international law or a refusal to recognise the law of India in cases where such law is
applicable;

• the proceedings in which the judgment was obtained were not opposed to natural justice;

• the judgment has not been obtained by fraud; and

• the judgment does not sustain a claim founded on a breach of any law in force in India.

Section 44A of the Indian Code of Civil Procedure, 1908, provides that where a foreign judgment has been
made by a court in any country or territory outside India, which the Government of India has by
notification declared to be a reciprocating territory, such judgment may be enforced in India, as if the
judgment had been rendered by the relevant court in India. The United States and certain countries in
Europe have not been declared by the Government to be a reciprocating territory for the purposes of
Section 44A. Accordingly, a judgment of a court in the United States or certain European countries may be
enforced in India only by “suit upon the judgment”, and not by proceedings in execution. The suit must be
brought in India within three (3) years from the date of the judgment in the same manner as any other suit
filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the
same basis as a foreign court. Furthermore, it is unlikely that an Indian court would enforce foreign
judgments if it viewed the amount of damages awarded as excessive or inconsistent with Indian practice. A
party seeking to enforce a foreign judgment in India, whether by suit upon the judgment or by proceedings
in execution, is required to obtain the approval of the RBI under the FEMA, if such enforcement involves
any matter requiring approval under FEMA, including the repatriation of any amount recovered. K. R.
Chawla and Co., Advocates have advised the Company, that a party may file a suit in India against Rana
Sugars, its Directors, and its executive officers as an original action.

23
 USE OF PROCEEDS

The total proceeds of the Offer will be USD 18 million and the net proceeds after deduction of
underwriting fees, discounts, commissions and expenses associated with this Offering, anticipated to
be USD 17.60 million, received by the Company in respect of the Offering.

The Company intends to use the proceeds of the issue for setting up a Sugar Mill of 5000 TCD with
co-generation of power at a capacity of 20 MW.

24
 INDUSTRY OVERVIEW

SUGAR INDUSTRY

Indian Sugar Industry

India is the largest consumer and second largest producer of sugar in the world (Source: United States
Department of Agriculture (USDA) Foreign Agricultural Service). The Indian sugar industry is the second
largest agro-industry located in the rural India. The Indian sugar industry has a turnover of approximately
Rs.500 billion per annum and it contributes almost Rs.22.5 billion to the central and state exchequer as tax,
cess, and excise duty every year [Source: Ministry of Food, Government of India]. It is the second largest
agro-processing industry in the country after cotton textiles. With 453 sugar mills operating in different
parts of the country, Indian sugar industry has been a major contributing factor in the socio-economic
development of the rural areas. About 50 million sugarcane farmers and a large number of agricultural
labourers are involved in sugarcane cultivation and ancillary activities, constituting 7.5% of the total rural
population. This industry also provides employment to about 2 million skilled / semi- skilled workers who
are mostly from rural areas. [Source: Indian Sugar Mills Association, www.indiansugar.com]

SUGAR MARKETING & DEMAND-SUPPLY

India has been known as the original home of sugar and sugarcane. Indian mythology supports the above
fact as it contains legends showing the origin of sugarcane. India is the second largest producer of
sugarcane next to Brazil. Presently, about 4 million hectares of land is under sugarcane with an average
yield of 70 tonnes per hectare. India is the largest single producer of sugar including traditional cane sugar
sweeteners, khandsari and Gur equivalent to 26 MMTs raw value followed by Brazil in the second place at
18.5 MMTs. Even in respect of white crystal sugar, India has ranked at No.1 position in 7 out of the last 10
years.

India is the largest consumer of sugar in the world and Indian sugar industry is the 2nd largest agro-industry
located in the rural India. With 507 operating sugar mills in different parts of the country, Indian sugar
industry has been a focal point for socio-economic development in the rural areas. About 50 million
sugarcane farmers and a large number of agricultural labourers are involved in sugarcane cultivation and
ancillary activities, constituting 7.5% of the rural population. Besides the industry provides employment to
about 2 million skilled/semi skilled workers and others mostly from the rural areas.

The sugar industry not only generates power for its own requirement but surplus power for export to the
grid based on byproduct bagasse. It also produces ethanol, an eco-friendly and renewable energy for
blending with petrol. Following table gives the details of impressive contribution of the Indian sugar
industry to the national economy.

The sugar industry uses only sugarcane as input, hence, sugar companies have been established in large
sugarcane growing states like Uttar Pradesh, Maharashtra, Karnataka, Gujarat, Tamil Nadu, and Andhra
Pradesh. In the year 2003-2004, these six states contributed more than 85% of the total sugar production of
India; Uttar Pradesh, Maharashtra, and Karnataka together contributed more than 65% of the total
production.

Sugar Production by State in India (in million metric tons)

State 2002-2003 Total Percentage 2003-2004 Total Percentage
Uttar Pradesh 5.65 28.06% 4.55 33.60%
Maharashtra 6.22 30.86% 3.18 23.44%

Karnataka 1.87 9.28% 1.12 8.24%

Gujarat 1.25 6.22% 1.07 7.87%

Tamil Nadu 1.64 8.16% 0.92 6.80%

25
Andhra Pradesh 1.21 6.01% 0.89 6.54%

Haryana 0.64 3.16% 0.58 4.30%

Punjab 0.59 2.91% 0.39 2.88%

Uttaranchal 0.50 2.47% 0.39 2.86%

Bihar 0.41 2.03% 0.27 2.02%

Others 0.17 0.85% 0.20 1.46%

TOTAL 20.14 100.00% 13.55 100.00%

[Source: Indian Sugar Magazine December 2004, published by Indian Sugar Mills Association]

The Government of India de-licensed the sugar sector in August 1998, thereby removing the restrictions on
expansion of existing capacity as well as on the establishment of new units, with the only stipulation that a
minimum distance of 15 kilometers would be maintained between an existing sugar mill and a new mill.

There are 566 installed sugar mills in the country with a production capacity of 18 million metric tons of
sugar, of which only 453 are presently operational. These mills are spread over 18 different states of the
country. Around 315 of the total installed mills are in the cooperative sector, 189 in the private sector and
62 in the public sector [Source: Directorate of Sugar]

Sugarcane Availability

Sugarcane occupies about 2.7% of the total cultivated area and it is one of the most important cash crops of
the country. The area under sugarcane has gradually increased from 2.7 million hectares in 1980-1981 to
4.3 million hectares in 2002-2003, mainly because of much larger diversion of land from other crops to
sugarcane by the farmers for economic reasons. The sugarcane area, however, declined in the year 2003-
2004 from 3.9 million hectares and to 3.7 million hectares in 2004-2005, mainly due to drought and pest
attacks.

From a level of 154 million metric tons in 1980-1981, the sugarcane production increased to 241 million
metric tons in 1990-1991 and further to 296 million metric tons in 2000-2001. Since then, it has been
approximately around 300 million metric tons until 2002-2003. In the season 2003-2004, however,
sugarcane production declined to 236 million metric tons mainly due to drought and pest attacks. [Source:
Indian Sugar Mills Association, www.indiansugar.com]

Not only sugarcane production has been increasing, even the utilisation of sugarcane by the sugar industry
has also been steadily increasing over the past years. In India, sugarcane is utilised by sugar mills as well as
by producers of traditional sweeteners like gur and khandsari. However, the diversion of sugarcane to gur
and khandsari is lower in states of Maharashtra and Karnataka, as compared to Northern States like Uttar
Pradesh.

Sugarcane Utilisation
% Sugarcane utilisation for
Year White sugar Gur and khandsari Seed, feed and chewing

1980-1981 33.4 54.8 11.8

1990-1991 50.7 37.4 11.8

2000-2001 59.7 28.8 11.5

2001-2002 57.4 31.5 11.1

2002-2003 68.9 20.1 11.1

26
2003-2004 56.1 32.5 11.4
(Source: Indian Sugar Mills Association, www.indiansugar.com)

International Sugar Industry

Brazil and India are the largest sugar producing countries followed by China, USA, Thailand, Australia,
Mexico, Pakistan, France and Germany. Global sugar production increased from approximately 125.88
million metric tons in 1995-1996 to 149.4 million metric tons in 2002-2003 and then declined to 143.7
million metric tons in 2003-2004, whereas consumption increased steadily from 118.1 million metric tons
in 1995-1996 to 142.8 million metric tons in 2003-2004 as shown in the table given below [Source: FO
Licht World Sugar Balance]. The world consumption is projected to grow to 160.7 million metric tons by
2010 and 176.1 million metric tons by 2015 [Source: FO Licht, 2005].

The world’s largest consumers of sugar are India, China, Brazil, USA, Russia, Mexico, Pakistan, Indonesia,
Germany and Egypt. According to USDA Foreign Agriculture Service, the consumption of sugar in Asian
countries has increased at a faster rate, as a direct result of increasing population, increasing per capita
income and increased availability.

Production and Consumption for Major Countries

(Data shown for the year 2004-2005)
(‘000 metric tons)

World Sugar Balance

(Data shown for the years: September - August)

(‘000 metric tons)

2003-2004 2002-2003 2001-2002 2000-2001 1999-2000

Opening Stocks 69,327.3 62,040.0 62,063.3 62,223.6 57,611.7

Production 143,701.9 149,405.2 137,982.6 132,200.0 134,753.9

Imports 48,190.3 48,593.2 45,261.1 43,573.9 41,226.3

Exports 52,062.7 51,339.9 47,759.7 44,212.9 42,720.6

Consumption 142,766.9 139,371.1 135,507.3 13,1721.2 128,647.7

Ending Stocks 66,389.9 69,327.3 62,040.0 62,063.3 62,223.6

Ending stocks as % of 46.50% 49.74% 45.78% 47.12% 48.37%

27
consumption
[Source: FO Licht World Sugar Balance]

World Sugar Trade

World trade in raw sugar is typically around 22 million metric tons and white sugar around 16 million
metric tons. The table given below shows the total exports of sugar for top exporting nations. Brazil is the
largest exporter, followed by EU, Thailand, Australia and Cuba. The largest importers are Russia,
Indonesia, UK, South Korea, Japan, Malaysia, the Middle East, and North Africa.

Major Exporting Nations For 2003-2004

(All units in ‘000 metric tons)

[Source: FO Licht World Sugar Balance]

SUGARCANE AREA AND PRODUCTION

FROM 1980-81 TO 2003-04
Year Area under cane (Million Cane Production (Million
hectares) Metric Tonnes)
1980-81 2.67 154
1990-91 3.69 241
2000-01 4.32 296
2001-02 4.41 297
2002-03 4.36 282
2003-04 3.99 236

28
 COMPANY INFORMATION

Rana Sugars is a sugar company with a capacity to crush 5000 tonnes of sugarcane per day and operates a
captive power unit for co-generation of 20 MW of power. The project is situated at village Buttar Seviyan,
Tehsil Baba Bakala, District Amritsar, Punjab.

Background

The Company was set up jointly by Rana Gurjeet Singh & Associates with Punjab Agro Industries
Corporation Limited, in the year 1991. The project was set up with a capacity of 2500 TCD alongwith
facilities for generating of 5 MW of power. The cost of project was Rs.395.5 million which was funded, as
per details given below:

Sl. No. Name of the Party Amount (Rs. in Millions)

A. Equity
1. Rana Gurjeet Singh & Associates 36.5
2. Punjab Agro Industries 61
Corporation Ltd.
3. Public Issue 115.5
SUB TOTAL 213
B. Loans
1. IFCI Ltd. 70
2. IDBI 70
3. ICICI 30
4. SBI 5
5. SBOP 2.5
SUB TOTAL 177.5
C. State Subsidy 5
SUB TOTAL 5
GRAND TOTAL 395.5

The project started commercial production in December 1993. The Company came out with its first public
issue during September 1993, of Rs.115.5 million, which was subscribed by more than four times.

Thereafter, the sugarcane crushing capacity of the Company was subsequently enhanced to 5000 TCD and
its co-generation capacity to 10 MW of power from November 1998, with a capital outlay of Rs.280
million. The expansion of the project was funded by term loans of Rs.140 million by IFCI, Sugar
Development Fund of Rs.101 million and Equity contribution of Rs.39 million by Rana Gurjeet Singh &
Associates.

Rana Sugars is the first company in the State of Punjab, which has set up a co-generation power project at
the cost of Rs.330 million and which is running successfully. The co-generation power project is generating
14 MW surplus power after meeting its captive demand from its in-built system and the surplus power is
being sold to Punjab State Electricity Board, pursuant to the Power Purchase Agreement dated 4 May 2005,
executed between Rana Sugars Limited and Punjab State Electricity Board. . Out of total co-generation
capacity of 20 MW, 10.2 MW co-generation project was funded by Soft Loan of Rs.75.57 million, Term
Loan of Rs.4.9 million from IREDA, Capital Subsidy of Rs.75.57 million from Government of India,
Rs.17.00 million by US Aid and Equity contribution of Rs.25.5 million by Punjab Energy Development
Agency and Rs.71.15 million by the Promoters of the Company, Rana Gurjeet Singh & Associates
including cash accruals from the Company.

Incorporation

Rana Sugars Limited was incorporated as a public limited company on 30 July 1991, under Companies
Act, 1956 and was issued a Certificate of Incorporation bearing number 53-11537 of 1991 by the ROC,
Punjab, Himachal Pradesh and Chandigarh. Further, Rana Sugars was issued a Certificate of
Commencement of Business on 9 August 1991 by the ROC, Punjab, Himachal Pradesh and Chandigarh.

29
The Company falls under the jurisdiction of the district courts of Chandigarh and the High Court of Punjab
and Haryana, India.

Registered Office

Rana Sugars is having its registered office at SOC 49-50, Sector 8-C, Madhya Marg, Chandigarh - 160009.

Rana Group

Rana Sugars is a member of Rana Group of companies and has six (6) other group companies namely Rana
Polycot Limited, Rana Leathers Limited, Rana Informatics Limited, R.G.S. Traders Pvt. Ltd., Sri
Hargobindpur Sugars Private Limited and Rana Infrastructures Private Limited. No equity of Rana Sugars
Limited is held by any other Group Company nor any Group Company hold any shares in Rana Sugars
Limited.

Subsidiaries of the Company

The Company has no subsidiary company.

Main Objects of the Company

The main objects as set out in Article III (A) of the Memorandum of Association of the Company are:

1. To carry on all or any of the business of manufacturers, importers, exporters and dealers in all
types and grades of Sugar and it’s allied products.

2. To generate, distribute, supply and employ electricity, all kinds of power and energy out of the
steam generated in the process of manufacturing of sugar and its by-products.

3. To carry on all or any business of manufacturers, importers, exporters, distributors and otherwise
dealers in sugar and its by-products such as molasses, baggage, alcohol and other chemicals
extracted from sugar, molasses and baggage, manures, breweries, distilleries, and manufacturers of
all kinds of preserved food, sauces, jams, alcoholic and non-alcoholic drinks and pharmaceuticals
for domestic and hotel use.

4. To carry on all or any of the business of cultivators, planters, growers, processors, buyers, millers
and dealers of all types of sugar cane, sugar beet and other agriculture products of the soil as may
be required for the purpose of the Company.

5. To carry on all or any of the business of manufacturers, importers and exporters, distributors,
processors and otherwise dealers in all types of raw materials like Sulphur, Lime, Chemicals
packing material, gunny bags, plastic and synthetic bags, metallic and non-metalic bag &
containers and things required for the production of sugar, its by-products and electricity.

6. To manufacture, export, import, distribute or sell in retail and wholesale pulp, simplex, duplex and
triplex boards, hard boards, soft boards, coated paper, writing paper and printing paper, specialty
paper, all variety of boards and paper and board products, art paper, newsprint, drawing paper,
filter paper, grease paper, insulation paper, kraft paper, cheque paper, absorbent paper, decorative
laminate paper.

30
The present Board of Directors of the Company is as under:

Sl. No. Name Address Date of Appointment Educational

Qualification

1. Mr. Rana Ranjit H. No. 53, Sector – 4, 30 July 1991 Diploma in Hotel
Singh Chandigarh Management
2. Mr. S. A. S. Bajwa Village Naya Gaon, 30 November 1992 M.A., LLB
(Near Chandigarh)
Distt. Ropar (Pb.)
3. Mr. A. S. Sodhi H. No. 2282, Sector 30 November 1992 Retd. IAS
21-C, Chandigarh
4. Mr. S. S. Sekhon H. No. 659/2, Sector- 27 August 2001 B. Tech
38-A, Chandigarh
5. Dr. Y. P. Abbi H. No. A-1/85, 30 July 2001 Ph.D. in
Safdarjung Enclave, Engineering
New Delhi
6. Mr. Rana Inder H. No. 53, Sector – 4, 31 October 2002 MBA
Pratap Singh Chandigarh
7. Mr. Rana Veer H. No. 53, Sector – 4, 31 October 2002 BBA
Pratap Singh Chandigarh
8. Mr. Baljit Singh H. No. 264, Shivalik 30 July 2004 Chemical
Enclave, NAC Engineer
Manimajra,
Chandigarh
9. Mr. M. P. Singh H. No. 1740, Sector 1 December, 2005 Mechanical
34-D, Chandigarh Engineer,
MBA
10. Mr. S. K. Duggal H. No.1013, Sector 29 December, 2005 B. Tech,
43-B, Chandigarh LLB

Brief profile of the Board

1. Mr. Rana Ranjit Singh

Mr. Singh has done 3 years course in Hotel Management from Delhi Institute of Management
Studies in the year 1976 after 12th standard. He is one of the promoters of the Company. He is also
Managing Director of Rana Polycot Limited w.e.f. 27 March 2002 and Director in 4 other
Companies, namely:

Sr.No. Name of the Company Date of appointment

1 Rana Leathers Limited 12 July, 1994
2 Rana Informatics Limited 17 August, 1999
3 R.G.S. Traders Pvt. Limited 15 October, 2003
4 Sri Hargobindpur Sugars Pvt. Limited 5 April, 2000

He has about 15 years of experience in different fields of industry. He was Director of Rana
Sugars Limited w.e.f. 30 July 1991 and Director of Rana Polycot Limited w.e.f. 5 July 1993.
Besides he was involved in his family business of Certified Seeds since 1977. He was Managing
Director of the Company from 31 January 2002 to 31 January 2006. He is the Chairman of the
Company w.e.f. 31 January 2006.

2. Mr. S. A. S. Bajwa

Mr. Bajwa is holding a degree of LL.B and he has completed his LL.B from Punjab University in
1973. He is practising as an advocate in Punjab & Haryana High Court since 1993. He has worked

31
 as a Managing Director with Morinda Co-operative Sugar Mill Ltd. from 1975 to 1977 and Punjab
State Co-operative Bank from 1988 to 1992. He has also worked as an Additional Managing
director with MARKFED from 1978 to 1983 and administrator with Co-operative Sugar Mills,
Punjab. He has about 30 years of experience. He is holding a directorship in the Company since 30
November 1992.

3. Mr. A. S. Sodhi

Mr. Sodhi is a retired IAS since January, 1988. He has worked on various administrative posts in
Punjab Government and its Corporations. He has about 35 years of experience. He is holding a
directorship in the Company since 30 November 1992.

4. Mr. S. S. Sekhon

Mr. Sekhon is holding a degree of B. Tech and has completed his B. Tech from Punjab
Agriculture University, Ludhiana in 1977. He is a nominee Director of Punjab Energy
Development Agency (PEDA) since 27 August 2001. He has about 28 years of experience. He has
worked in various Punjab Government Departments including Agriculture, Soil Conversation,
Education etc. from 1977 to 1984. He worked as Senior Manager in Punjab Agro Industries
Corporation Limited from 1984 to 1991. He has also worked in PEDA as Senior Manager from
1991 to 1992, as Joint Director from 1992 to 1998. Presently he is working as Director in PEDA.
He is holding a directorship in the Company since 27 August 2001.

5. Dr. Y. P. Abbi

Mr. Abbi is holding a degree of Ph.D. in Engineering and has completed his Ph.D in Engineering
from University of Wales, Swansea, U.K in 1973. He is a nominee Director of Indian Renewable
Energy Development Agency (IREDA) since 30 July 2001. He is also working as Senior Fellow
in Energy Environment Technology Applications, Tata Energy Research Institute, New Delhi
since April 2001. He has about 30 years experience. He has worked as Executive Director in
Bharat Heavy Electricals Limited from 1975 to 2001. He is holding a directorship in the Company
since 30 July 2001.

6. Mr. Rana Inder Pratap Singh

Mr. Singh is holding a degree of MBA and has completed his MBA from University of Kent, U.
K. in the year 2003. He is one of the private promoters. He is also holding a directorship in five
other Companies, namely:

Sl. No. Name of the Company Date of appointment

1 Rana Leathers Limited 29 April, 2004
2 Rana Informatics Limited 3 September, 2003
3 R.G.S. Traders Pvt. Limited 29 April, 2004
4 Sri Hargobindpur Sugars Pvt. Limited 29 April, 2004
5 Rana Infrastructures Pvt. Limited 3 October, 2005

He has about 4 years of experience in the industry. He is the Managing Director of the Company
w.e.f. 31 January 2006.

7. Mr. Rana Veer Pratap Singh

Mr. Singh is holding a degree of BBA and has completed his BBA from Ehapn University Los
Angles, U.S.A. in the year 2004. He is a representative of private promoters. He has about 4 years
experience in the industry. He is also director of Rana Infrastructures Pvt. Limited since 3 October
2005. He is holding a directorship in the Company since 31 October 2002.

32
8. Mr. Baljit Singh

Mr. Singh is a chemical engineer and has completed his engineering from Jadavpur University,
Kolkata in the year 1979. He has worked with Steel Authority of India (SAIL) as Assistant
Manager from the 1970 to 1982 and with IFCI as Loan Officer (Tech), Dy. Manager, Assistant
General Manager, Deputy General Manager from 1982 to 2001. He has worked as Managing
Director of NITCON from March 2001 to September 2002. He has about 32 years of experience.
He is holding a directorship in the Company since 30 July 2004.

9. Mr. M. P. Singh

Mr. Singh is a Mechanical Engineer from Punjab University, Chandigarh that he has done in
February 1987. He has also done MBA from Punjab University, Chandigarh in November 1993.
He is a nominee Director of Punjab Energy Development Agency (PEDA). He has worked as
Manager from May 1998 to July 2003 and is working as Senior Manager from July 2003 to till
date with PEDA. He is Director of the Company w.e.f. 1 December 2005.

10. Mr. S. K. Duggal

Mr. Duggal had done B. Tech from Delhi Polytechnic in 1959. He has also done LLB from Punjab
University, Chandigarh in 1996. He has worked as Executive Director of Punjab State Industrial
Development Corporation Limited and Managing Director of NITCON Ltd. He has total
experience of about 45 years in the industry.

Shareholding of the Directors of the Company

Sl. No. Name(s) No. of Shares held Percentage of

Shareholding
1. Rana Ranjit Singh 2196561 4.41
2. Rana Inder Pratap Singh 3804100 7.63
3. Rana Veer Pratap Singh 3804100 7.63

Term of the Office of Directors

There are total ten directors on the Board of the Company. Out of which three are permanent directors who are not
eligible for retirement. The remaining seven directors are liable to retire by rotation out of which 1/3 directors
retire by rotation every year.
Key Management Personnel

Sl. No. Name Age Qualification Experience

1. Mr. Rana Ranjit 48 years Diploma in Hotel He is also the Managing
Singh Management Director of Rana Polycot
Limited and holding a
Directorship in four other
associates companies, namely
Rana Leathers Limited, Rana
Informatics Limited, R.G.S.
Traders Pvt. Limited and Sri
Hargobindpur Sugars Pvt.
Limited. He has experience of
about 15 years in different
fields of sugars and textiles
industry, besides he was
involved in his family
business of Certified Seeds.
2. Mr. Rana Inder 25 years M.B.A He is holding Directorship in
Pratap Singh five other associates
companies namely Rana

33
 Leathers Limited, Rana
Informatics Limited, R.G.S.
Traders Pvt. Limited, Sri
Hargobindpur Sugars Pvt.
Limited and Rana
Infrastructures Pvt. Limited.
He has experience of about 4
years in the sugar industry,
besides he was involved in his
family business of Certified
Seeds.
3. Mr. Rana Veer Pratap 22 years B.B.A He has experience of about 4
Singh years in the sugar industry
besides he was involved in his
family business of certified
seeds. He is also director of
Rana Infrastructures Pvt.
Limited.

Corporate Governance

The Company’s Philosophy on Corporate Governance relates to transparency, accountability leading to

management reliability and equity in all its spheres and dealing with stakeholders. The Company continues
to follow the procedures and practices in conformity with the code of Corporate Governance. The
Corporate Governance at the Company recognise all stakeholders and the decision-making process reflects
this concern of the Company.

Board Committees

There are various committees of Directors responsible for different aspects of the Company’s organisation.
The Company gives importance to the corporate governance and operates in a transparent manner. In order
to facilitate the functioning of the Board and to provide effective supervision, the Company has constituted
different committees: the Audit Committee, Share Transfer Committee, Shareholders / Investors Grievance
Committee and Remuneration Committee.

Audit Committee

The Audit Committee comprises of 3 non-executive directors and the Company Secretary is the Secretary
of the Audit Committee. The Committee met 4 times during the year 2004-2005 and the attendance of
members at the meetings is as follows:

Name of the Member Status No. of Meetings Attended

Mr. A. S. Sodhi Chairman 4
Mr. S. A. S. Bajwa Member 4
Mr. Rajnish Tuli* Member 4
Mr. Baljit Singh Member 2
Mr. S.K Duggal** Member -

* Ceased to be member of Audit Committee w.e.f. 3 October 2005.

** Appointed as member of Audit Committee w.e.f. 18 January 2006.

Terms of reference:

The Board has defined the scope of Audit Committee to cover all areas provided for under section 292A of
the Companies Act, 1956 and Clause 49 of the Listing Agreement of Stock Exchanges.

34
Share Transfer Committee

The Committee comprises of three Non-Executive Director, Managing Director and Company Secretary as
its members. The Committee met twenty five times during the year 2004-2005 and the attendance of
members at the meetings is as follows:

Name of the Member Status No. of Meetings Attended

Mr. Rana Ranjit Singh ** Chairman 25
Mr. Rajnish Tuli * Member 25
Mr. Manmohan K. Raina** Member 25
Mr. A. S. Sodhi *** Member -
Rana Veer Pratap Singh **** Member -
Sh. S.K. Duggal *** Member -

* Ceased to be member of Share Transfer Committee w.e.f. 3 October 2005.

** Ceased to be member of Share Transfer Committee w.e.f. 18 January 2006.
*** Appointed as member of Share Transfer Committee w.e.f. 18 January 2006.
**** Appointed as member of Share Transfer Committee w.e.f. 31 January 2006.

Term of reference:

The Committee has been formed to approve the matters relating to transfer, transmission and issue of
duplicate certificates etc.

Shareholders / Investors Grievance Committee

The present composition of the Shareholders / Investors Grievance Committee is as under:

Name of the Member Status

Mr. A. S. Sodhi Chairman
Mr. S. A. S. Bajwa Member
Mr. Rajnish Tuli* Member
Mr. S.K. Duggal** Member

* Ceased to be member of Shareholders / Investors Grievance Committee w.e.f. 3 October 2005.

** Appointed as member of Shareholders / Investors Grievance Committee w.e.f. 18 January 2006

In accordance with Clause 49 (VI) (D) of the Listing Agreement with Stock Exchanges the Board has
authorised Mr. Manmohan K. Raina, Company Secretary, as Compliance Officer of the Company.

Investors’ Complaints received and resolved during the year 2004-2005:

The Company has about 45,805 investors. The Company received 229 letters/complaints from the investors
and all the letters/complaints received were duly attended/resolved.

Term of reference:

The Committee has been formed to review and redressal of investors’ grievance regarding allotment of
securities, issue of duplicate certificates, dematerialisation of shares etc. and other allied matters.

Remuneration Committee

The present composition of the Remuneration Committee is as under:

Name of the Member Status

Mr. A. S. Sodhi Chairman
Mr. S. A. S. Bajwa Member
Mr. Rajnish Tuli * Member

35
 Mr. S.K Duggal ** Member

* Ceased to be member of Remuneration Committee w.e.f. 3 October 2005.

** Appointed as member of Remuneration Committee w.e.f. 18 January 2006

Term of reference:

The Remuneration Committee, inter alia, recommends to the Board the remuneration package of the
Managing Director.

Employees

As at 31 August 2005, the Company employed a total of 545 employees. The average number of employees
over the last 3 fiscal years are as follows:

Fiscal year ended 31 Fiscal year ended 31 Fiscal year ended 31

March 2004 March 2005 March 2006
Average
Number of 302 545 700
Employees

The list of employees of Rana Sugars is as follows:

Sl. Category No. of No. of No. of Total

No. Employees Employees Employees
(Head Office) (Sugar (Distillery
Division) Division)
1. Vice President - 1 - 1
2. Company Secretary 1 - - 1
3. General Manager - 1 1 2
4. Dy. / Asstt. General 2 - 2 4
Manager
5. Chief Chemist - 1 - 1
6. Chief Engineer - 1 - 1
7. Chief Cane Development - 1 - 1
Officer
8. Chief Accounts Officer - 1 1 2
9. Managers 1 8 2 11
10. Officers - 20 5 25
11. Staff 14 181 101 296
12. Workers - 295 60 355
TOTAL 18 510 172 700

The Company has not had any strikes or labour disputes since its incorporation. The Company’s employees
do not belong to any labour union or other employee union.

There is no provision and/or scheme of the Company to offer any stock option for involving any employee
or staff in the capital of the Company.

36
Employees’ Post-Retirement Benefits

Employees' post-retirement benefits include a Gratuity, Provident Fund, and Employees’ State Insurance,
as follows:

The Payment of Gratuity Act, 1972

The Company’s liability to pay gratuity arises on superannuation/ retirement/ resignation/

death/disablement of an employee who has rendered five year’s of continuous service. As per the
provisions of the Gratuity Act, every employee other than an apprentice, irrespective of his wages, is
entitled to receive gratuity after he has rendered continuous service for five years or more. Gratuity is
payable at the rate of fifteen day’s wages for every completed year of service, not exceeding Rs.350,000.
The gratuity can be withheld, to the extent of the damage caused, if the act for which the services of an
employee were terminated had resulted in loss to the employer.

Employees Provident Fund and Miscellaneous Provisions Act, 1952

The provisions of the EPF Act are intended for the better future of covered workers on their retirement and
also for their dependents in the event of a worker’s death in the course of employment.

As per section 6 of the EPF Act, the employer shall pay a total contribution, which shall be equal to 12.5%
of basic wages (as defined under the EPF Act) to the Employees’ Provident Fund.

The Company is regular in depositing EPF and for the month of July 2005, Rana Sugars has deposited an
amount of Rs.52,625.

The Employees State Insurance Act, 1948

The purpose of the ESI Act is to provide for certain benefits to employees in case of sickness, maternity
and employment injury.

The ESI Act is applicable to any employee earning a wage of Rs.7,500 and below. The Employer shall pay
both the employer’s contribution and the employee’s contribution. The Employer shall be entitled to
recover from the employee, the employee’s contribution by deduction from the employee’s wages at the
rate of 1.75% of the monthly wages paid to the employee. The Employer shall make his contribution of
4.75% of the monthly wages payable to the employee.

The Sugar Industry is a seasonal industry as such E.S.I. is not applicable to the Company.

Loans and Advances

The Company has obtained term loans and working capital loans from various institutions such as State
Bank of India, State Bank of Patiala, Bank of Baroda, UCO Bank and the total outstanding loans, as at 31 August
2005 is of Rs.450.622 million.

Financial Position

The Company has sufficient funds to meet its working capital requirements. The Company, vide Board
Resolution dated 29 September 1995, has authorised its Directors as per the provisions of section 293(1)(d)
of the CA56 to raise additional capital from time to time upto an amount of Rs. 1,000,000,000.

Investments
The Company has invested Rs.390,000 in the equity shares of UCO Bank. The market price of these shares
as on 31 March 2005 was Rs.973,375. The Company has also invested Rs.63,000,000 as on 30 September
2005 in Rana Infrastructures Pvt. Limited under section 372A of the Companies Act, 1956.

37
Litigation

The following litigation cases are pending, in which Rana Sugars is involved, or has been involved,
whether as a claimant, defendant or third party:

Sl. No. Name of the Nature of the Case Amount Involved Status
Case (Rs.)
1. India Glycols Civil Suit for specific 4,000,000 The Case is
Ltd. vs. Rana performance presently at
Sugars evidence stage
Limited M/s. India Glycols and the next date
Limited had agreed to of hearing has
purchase an old boiler been fixed for 4
from the Company and May 2006.
paid Rs.4 million as
advance for the same.
But the party did not lift
the boiler in specified
time resulting into delay
in start of Sugar Mill and
Company suffered huge
losses due to that. The
Company cancelled the
deed and opposite party
filed suit for specific
performance in the Court
of Mr. R. K. Singla,
Civil Judge, Junior
Division, Chandigarh.

2. Rana Sugars Civil Suit 2,147,535 The decree has

Limited vs. been granted in
Amritsar Pulp The Company had favour of Rana
& Board Pvt. supplied bagasse to M/s. Sugars Ltd. The
Ltd. Amritsar Pulp & Board request for stay
Pvt. Ltd. but the party of the opposite
did not pay the price of party has been
the bagasse to Rana dismissed by
Sugars Limited. The Punjab &
Company filed a Civil Haryana High
Suit in the Court of Civil Court, and case
Judge, Junior Division, has been
Baba Bakala and decree admitted. Next
for Rs.2,147,535 was date of hearing
granted by the Court in has not been
favour of Rana Sugars fixed yet.
Limited.
3. Batala Co- Writ Petition Batala Co- The Notice of
operative operative Sugar Mills motion has been
Sugar Mills have filed a writ petition issued. Next date
vs. State of in Punjab & Haryana of hearing has
Punjab & High Court regarding not been fixed
others transfer of villages of yet.
cane area, which belong
to Rana Sugars Ltd.
presently.

38
4. Rana Sugars The Company filed a The case was
Limited Vs. writ petition for Stay heard on 31
State of Order of imposing January 2006.
Punjab & Purchase Tax on The Hon’ble
Others. Sugarcane as well as High Court
VAT @4%. ordered that the
State Govt. shall
not resort to
coercive step for
recovery of Tax.
Next date of
hearing has not
been fixed yet.

5. Sarya Case regarding fixation Case remanded

Industries of Sugarcane price by to High Court by
Ltd. & Others State Govt. in excess of Supreme Court.
Vs. State of what has been fixed by The Case has
Punjab etc. the Central Govt. been admitted
(Rana Sugars is one of after hearing
the parties) High Court.
Next date of
hearing yet to be
fixed.

6. Punjab State Rana Sugars Limited, in The case was

Electricity the year 1999, executed heard on
Board Vs. an agreement with 25.04.2006. The
Rana Sugars Punjab State Electricity petition filed by
Ltd. Board, wherein the PSEB has been
power generated by dismissed.
Rana Sugars is supplied
at a pre-determined rate
to Punjab State
Electricity Board subject
to an escalation of 5% in
the purchase price for a
period of 10 years from
the date of execution of
the agreement. However,
due to change in
government policy,
Punjab State Electricity
Board has filed a petition
before Punjab State
Electricity Regulatory
Commission,
Chandigarh seeking a
review of the said
agreement, as it is not
desirous of escalating the
purchase price
subsequent to the year
2006, payable to Rana
Sugars. In this regard,
the petition has been
filed for review of
escalation in rate of

39
 purchase of power.
TOTAL 6,147,535

The total exposure of the Company in the aforesaid litigation cases is Rs.6,147,535.

Significant Properties

Rana Sugars has taken and given certain properties on lease and it also owns certain properties in its own
name and the details of the same are as follows:

The details of the properties owned by the Company are as follows:

Sl. Title Address Purpose

No.
1. Owned Village Buttar Seviyan, Works 1 (Sugar and Power Division)
Tehsil Baba Bakala, District Amritsar,
Punjab

2. Owned Village Louhka, Near Patti, District Works 2 (Distillery Division)

Tarn-Taran, Punjab [under implementation]

3. Owned B-103, Phase – VIII, Industrial Area, Branch Office

S.A.S. Nagar, Mohali, Punjab

The details of the properties taken on lease by the Company are given below:

Sl. Title Address Commence Tenure Area Consideration Purpose

No. ment Date (approx
.)
1. Leased SOC 49-50, 1 December 4 years 2800 sq. Rs.33,000 per Registered
Sector 8-C, 1998 ft. month for the first Office
Madhya Marg, two years and
Chandigarh – Rs.37,950 for next
160009. two years.

2. Leased Plot No. 14, 1 April 2005 11 months 29//1/2 Rs.25,000 per Guest
Defence marlas month. House/
Colony, Branch
Jalandhar, Office
Punjab.

The details of the property given on lease by the Company is given below:

Sl. Name of Area Commencement Tenure Consideration

No. the Lessee Date
1. Rana Half Portion of Building 5 May 2003 5 years Rs.25,000 per
Polycot situated at B-103, Phase month with an
Limited – VIII, Industrial Area, increase at the rate
S.A.S. Nagar, Mohali, of 7.5% every year.
Punjab.

40
Intellectual Property

Rana Sugars has not registered for any trademark in its name, its logo and its products in India and overseas
countries or any service marks. Further, Rana Sugars does not have/own/possess any Intellectual Property
Rights such as copyrights, rights in designs, rights in inventions, know - how or trade secrets.

Delisting of the Company’s shares

The Company’s shares have been delisted from the Delhi Stock Exchange Association Limited, Madras
Stock Exchange Limited and the Jaipur Stock Exchange Limited, due to non-trading of the shares at these
Stock Exchanges.

The Board of Directors, in its meeting held on 6 September 2005 has approved the de-listing of shares of
the Company from the Ludhiana Stock Exchange Association Limited, due to non-trading of the shares at
this Stock Exchange.

As the shares of the Company were not being traded at the Delhi Stock Exchange Association Limited,
Madras Stock Exchange Limited and the Jaipur Stock Exchange Limited since long, the Company got
voluntary de-listed the shares from these stock exchanges.

41
 BUSINESS OF THE COMPANY

Rana Sugars is manufacturing white crystal sugar with a capacity to 5000 TCD. Rana Sugars is the first
Company in the State of Punjab, which has set up a Co-generation Power Project, which is generating 14
MW surplus power after meeting its captive demand. The surplus power is being sold to Punjab State
Electricity Board.

The distillery unit of the Company is under implementation and is likely to be completed by December
2005.

BUSINESS OVERVIEW

The Company’s turnover has increased from Rs.835.15 million in 2000-2001 to Rs.1410.39 million in
2004-2005 and its net profit has increased from Rs.28.3 million in 2000-2001 to Rs.178.3 million in 2004-
2005.

Rana Sugars has 3 divisions:

1. Sugar Division
2. Power Division
3. Distillery Division

1. Sugar Division

The Sugar Division of the Company is located at Village Buttar Seviyan, Tehsil Baba Bakala,
District Amritsar, Punjab, India. The Sugar Division was set up in the year of 1993. It has crushing
capacity of 5000 TCD. The basic raw material for the sugar unit is sugarcane, which is produced
by the sugarcane growers in the area allocated by the Punjab Government, to the Company. The
sugar is sold through dealers in the State of Punjab and other states in India. Sugar being a
controlled commodity, its sale is made in accordance with the release orders issued by the Central
Government. The total manpower of Sugar Division is 487.

2. Power Division

The Power Division of the Company is located at Village Buttar Seviyan, Tehsil Baba Bakala,
District Amritsar, Punjab, India. The Power Division of the Company was set up during the year
2000. The Power Division has generating capacity of 20 MW power per day. After captive use of
the power used for running sugar mill, the surplus power of about 13-14 MW is sold to the Punjab
State Electricity Board for which the Company has executed a Power Purchase Agreement with
Punjab State Electricity Board. There are about 22 employees engaged in the Power Division.

3. Distillery Division

The Distillery Division of the Company is being set up at Village Lauhka, near Patti, District
Tarn-Taran, Punjab, India. This Unit will have capacity of 60 KL per day with a total cost of
project Rs.350 million. The project is at an advanced stage of completion and is likely to be
completed by the end of December 2005.

COMPETITIVE STRENGTHS OF THE COMPANY

1. Enough Sugar cane available

There is enough sugar cane available in the cane growing area of the Company. Further, the
Company has taken various steps for its progress and growth in the years to come. The Company
has made sufficient arrangements to make available the required quantity and quality of sugarcane
during the coming seasons. As an incentive to the cane growers, the Company has arranged the
crop loans from various banks for supply of cane seeds, insecticides and other agricultural inputs
to the growers. The Company expects to have sufficient sugarcane for the coming seasons in its
catchment area.

42
2. A well managed Company

Rana Sugars is a well managed Company. The Company is headed by its Board of Directors
having competent and experienced Directors. The production department is looked after by the
General Manager. The cane crop area is looked after by a team of officers headed by Chief Cane
Development Officer. The financial, secretarial and legal activities are supervised by the highly
qualified, experienced and competent professionals.

3. Earning profit from very beginning

Rana Sugars started commercial production during the month of December 1993. The Company
has shown excellent results from the very first year of its operation. The year wise net profit of the
Company is as below:

Year Net Profit

(Rs. in million)

1993-94 2.138
1994-95 23.100
1995-96 13.934
1996-97 17.550
1997-98 27.908
1998-99 13.876
1999-00 14.894
2000-01 28.336
2001-02 16.072
2002-03 34.473
2003-05 70.968
2004-06 178.312

4. Good quality product

The main product of Rana Sugars is Sugar. It is manufacturing sugar of good quality. The Chief
Chemist of the Company ensures that the quality of the product is maintained. There has never
been any complaint about quality of product of the Company.

5. Co-generation Power Project

Rana Sugars is the first Company in the state of Punjab, which has set up a co-generation power
project. The project was set up during the year 2000. The power is produced mainly from bagasse,
which is a by-product of sugarcane. The surplus power produced by the Company is sold to
Punjab State Electricity Board for which the Company has executed a Power Purchase Agreement.

6. Dividend paying Company

Rana Sugars is a dividend paying Company. After stabilization, it has starting paying dividend to
its shareholders. The Company paid dividend @ 10% to the shareholders for the financial year
2003-04 and 2004-05. Considering the progress, growth and future plans, the Company expects to
pay higher rate of dividend in the coming years.

7. Good future plans for the growth of the Company

Rana Sugars is a progressive Company, which was set up in the year 1993 with a crushing
capacity of 2500 TCD, which has been increased to 5000 TCD subsequently. The Company has
set up co-generation power project with a capacity of 20 MW per day of power. The Company is
setting up a Distillery Unit of 60 KL per day capacity with a Cost of Rs.350 million, which is
likely to be completed by December 2005. The Company is also expanding its power generation
capacity from 20MW to 30 MW, which is likely to be completed during the last quarter of 2006.

43
 The Company is setting up 2 sugar mills of 5000 TCD capacity alongwith power generating
facilities of 20 MW each in the State of Uttar Pradesh during the next year with a total cost of
Project of Rs.4180.00 million.

FUTURE STRATEGY

The Company proposes to set up a distillery unit of 60 KL with a total project cost of Rs.350 million.

The Company is in the process of expanding its power generation capacity from 20 MW to 30 MW, which
is likely to be completed in the next 6 months.

MAIN CUSTOMERS OF THE COMPANY

SUGAR:

1. M/s. Amar Nath Satpal & Co., Jammu

2. M/s. Brijmohan & Sons, Chojawa (Punjab)
3. M/s. Deep Raj & Co., Jammu
4. M/s. Deepak Traders, Baba Bakala (Punjab)
5. M/s. Gandamal Mangal Dass, Jammu
6. M/s. H. P. State Civil Supply Company, Shimla
7. M/s. Karan Sugar Store, Baba Bakala (Punjab)
8. M/s. Nandlal Rakesh Kumar, Amritsar (Punjab)
9. M/s. Nobal Karyana Store, Cheretha (Punjab)
10. M/s. Pawan Kumar & Co., Mehta Chowk (Punjab)
11. Radha Soami Satsang, Beas (Punjab)

POWER:

Punjab State Electricity Board (PSEB)

MOLASSES:

1. M/s. Chandigarh Distilleries Limited, Chandigarh

2. M/s. Patiala Distilleries & Bottlers Limited, Patiala
3. M/s. Santokh Ram Narinder Nath, Phagwara (Punjab)

MAIN SUPPLIERS OF THE COMPANY

The main raw material of the Company is sugarcane, which is supplied by the farmers of the catchment
area of the Company.

44
 PERFORMANCE OF THE COMPANY

Financial and Operational Performance

The Company’s turnover has increased from Rs.835.15 million in 2000-2001 to Rs.1410.39 million in
2004-2005 and its net profit has increased from Rs.28.3 million in 2000-2001 to Rs.178.3 million in 2004-
2005.

During the year 2004-2005, the income of the Company has recorded an impressive growth of 6%. The net
profit of the Company has increased to Rs.178.312 million from Rs.70.968 million registering an increase
of 151.256%.

Adequacy of Internal Controls

The Company ensures existence of adequate internal control through documented policy and procedure to
be followed by the executives at various levels in the Company commensurate with the size of the
Company and the nature of its business for purchase of stores, raw-materials including components plant
and machinery, equipments and other assets, and for the sale of goods.

Year to Year Profitability

Company's performance including net profits, earning per share for the last five (5) years:
(Rs. In Millions)
Year 2004-2005 2003-2004 2002-2003 2001-2002 2000-01

Turnover (Gross) 1410.39 904.35 994.12 822.11 835.15

PBIT 314.59 195.29 145.27 119.48 123.37
Depreciation 62.52 61.00 57.76 40.29 37.49
Interest 70.27 89.91 89.84 92.59 92.41
Taxation 66.01 34.41 20.96 10.82 2.62
PAT 178.31 70.97 34.47 16.07 28.34
No. of Shares 49861000 34861000 34861000 34861000 28575800
EPS (in Rs) 5.03 2.04 0.99 0.46 0.99

Financial Projections of the Company for the next 12 months

Projected Balance Sheets

LIABILITIES As on 31 March 2006 As on 31 March 2007

Share Capital 8,005.05 10,505.05
Share Premium 5,750.00 11,500.00
Reserves & Surplus 9,603.75 17,120.84
Term Loans 16,343.98 26,929.43
Working Capital Limits 7,927.85 18,977.84
Other Term Liabilities 939.86 939.86
Current Liabilities 1,175.84 1,275.84
TOTAL 49,746.33 87,248.87
ASSETS
Fixed Assets 34,553.98 53,053.61
Current Assets 13,855.64 30,023.58
Non-Current Assets 3.90 3.90
Cash & Bank Balance 1,320.37 4,167.77
Miscellaneous Expenditure (to be 12.43 -
Written Off)
Total 49746.22 87248.86

45
 Profitability Projections (Unit I at Amritsar)

Capacity Utilisation 87% 87%

Particulars 2005-06 2006-07
Raw Materials 7862.63 7862.63
Packing Material 202.275 202.275
Consumable, Stores & Chemicals 163.13 163.13
Power & Fuel Expense 150.00 150.00
Wages & Salaries 466.15 489.45
Factory Overheads 373.58 392.26
Administrative Expenses 260.00 260.00
Selling Expenses 55.46 55.46
Total cost of Production 9533.21 9375.20
Sales Realisation 13874.47 13874.47
Misc. Income 100.00 100.00
Gross Profit 4441.26 4399.27
Interest on R.T.L 165.45 163.95
Interest on Bank Borrowings 600.00 600.00
Depreciation 680.00 690.00
Misc. Expenses Written Off 25.00 12.43
Operating Profit / Loss 2970.81 2932.89
Profit before Tax 2970.81 2932.89
Taxation 250.14 246.36
Net Profit 2720.66 2686.54
Dividend & Dividend Tax 646.46 646.46
Net Profit after Dividend 2074.20 2040.08
Gross Cash Accruals 3425.66 3388.97
Net Cash Accruals 2779.20 2742.51

46
 Profitability Projections (Unit II at Amritsar)

For the year ended 2005-06 2006-07

Cost of the production 2723.66 6214.90

Administrative Expenses 20.00 40.00
Selling expenses
Advertisement and publicity 16.66 38.08
Selling and distribution 16.66 38.08
Total selling expenses 33.32 76.16
Total cost of production 2776.98 6331.06
Sales realization 3331.95 7615.88
Gross profit before interest 554.97 1284.82
16.66 16.87
Financial Expenses
Interest on term loan 100.00 200.00
Interest on working capital 30.61 69.90
Bank charges & commission 5.00 15.00
Total Financial Expenses 135.61 284.90

Depreciation 85.04 170.09

Operating profit 334.32 829.83
Operating profit Margin % 10.03 10.90

Profit before taxation 334.32 829.83

Provision for taxation 26.21 65.06
Profit after tax 308.11 764.77
Profit after tax % 9.25 10.04

Retained Profits 308.11 764.77

Total Cash accruals 393.16 934.86

47
 INFORMATION ON THE SHARES

Share Capital

As at 31 August 2005, the Company’s authorised share capital is Rs.500,000,000 divided into 50,000,000
equity shares of Rs.10 each.

As at 31 August 2005, the issued, subscribed and paid up share capital of the Company is Rs.498,610,000
divided into 49,861,000 equity shares of Rs.10 each and allotment money @ Rs.5/- per share aggregating to
Rs.294,500 is in arrears on 58,900 shares.

Capital History

The paid up capital of the Company consists of equity shares only.

Capital History of the Company is as follows:

Date of Face Total Cumulative

Issue
allotment/ No. of Valu Amount (Rs. number of
Price Consideration Remarks
Fully Shares e Million) Equity
(Rs.)
paid-up (Rs.) Shares
Cash Subscribers to
70 the
30.07.1991 7 10 10 Memorandum 7
Firm allotment
to the
9,74,99,930 Cash promoters at
the time of
10.11.1993 97,49,993 10 10 Public Issue 97,50,000
1,15,50,0 11,55,00,00 Cash Public issue
10.11.1993 00 10 10 0 2,13,00,000
To the
7,27,58,000 Cash Promoters on
Preferential
29.10.1999 72,75,800 10 10 Basis 2,85,75,800
To the
6,28,52,000 Cash Promoters on
Preferential
31.10.2001 62,85,200 10 10 Basis 3,48,61,000
To the
34,50,00,00 Cash Promoters on
1,50,00,0 0 Preferential
18.03.2005 00 10 23 Basis 4,98,61,000

Capital Structure

Capital Structure of the Company as at 31 August 2005:

Share Capital Amount

(in Rupees Million)
A Authorised Capital 1000 *
Divided into 100 million Equity Shares of Rs.10 each

B Issued, Subscribed and Paid up Capital 498.61

Divided into fully paid 49.861 million Equity Shares of Rs.10 each

48
C Present Offer
24.55 million Equity Shares of Rs.10 each 245.56

D Equity Capital after the Present Offer 744.17

74.41 million Equity Shares of Rs.10 each

* Authorised Capital increased from Rs.500 million to Rs.1000 million w.e.f. 03.11.2005

Shareholders Holding More Than 5% Voting Rights in the Company

S. Name(s) No. of Shares Percentage of

No. Held Shareholding
INDIAN PROMOTERS

1. Rana Inder Pratap Singh 3,804,100 7.63

2. Rana Veer Pratap Singh 3,804,100 7.63
3. Rana Karan Pratap Singh 3,804,100 7.63
4. Rana Preet Inder Singh 3,804,100 7.63
5. Punjab Energy Development Agency 2,550,000 5.11

Dividends

Rana Sugars has declared dividend of 10% for the Financial Year 2004-2005.

Although, the Company has no intention to discontinue dividend payments in future, however, the Company
cannot assure that any future dividends will be declared or paid or that the amount thereof will not be decreased.
Holders of GDRs on the applicable dividend record date will be entitled to receive dividends, if declared,
payable on equity shares represented by such GDRs. Cash dividends on equity shares represented by GDRs
will be paid to the depositary in Rupees and, except as otherwise described under “Description of Global
Depositary Receipts,” will be converted by the depositary into U.S. dollars and distributed, net of fees,
taxes, duties, charges, costs and expenses, if any, to the holders of such GDRs.

Price Range of Equity Shares

The Company’s equity shares are listed and traded on the Indian Stock Exchanges. The prices for equity
shares as quoted in the official list of the Indian Stock Exchanges are expressed in Indian Rupees. For the
last 3 years, the following figures are provided in respect of NSE:

• The reported high and low sales prices quoted in Rupees for the equity shares; and

• The total and average trading volume for the equity shares.

The prices and volumes quoted on other stock exchanges may be different.

Financial Year Quarter Share Price (Rs.) Volume

High Low No. of Average

Shares
2002-03 1st Quarter 5.00 1.55 394985 6583
2nd Quarter 6.55 3.25 578386 9037
3rd Quarter 4.15 2.40 238414 4041
4th Quarter 4.70 2.65 282964 4564

2003-04 1st Quarter 6.09 3.40 442760 7141

2nd Quarter 11.18 5.55 3416896 52568
3rd Quarter 14.90 6.50 9551848 146952

49
 4th Quarter 14.40 8.55 5385148 86857

2004-05 1st Quarter 17.30 7.80 10056345 159624

2nd Quarter 18.95 8.50 20176610 305706
3rd Quarter 25.50 14.55 58656604 931057
4th Quarter 32.95 20.25 93294321 1529415

2005-06 1st Quarter 32.00 24.05 32099774 493843

2nd Quarter 36.80 24.90 33046225 524543

As on 30 September 2005, the closing price of a Share on the BSE was Rs.31.70.

Shareholding Pattern

The distribution schedule of shareholding of Rana Sugars, as at 31 March 2006, is as follows:

CATEGORY NO. OF SHARES %AGE OF

HELD SHAREHOLDING
A. PROMOTERS HOLDING
1. Promoters
- Indian Promoters 23,362,103 46.854
- Foreign Promoters(NRI) Nil Nil
2. Persons acting in concert Nil Nil
**Sub Total** 23,362,103 46.854
B. NON-PROMOTERS HOLDING
3. Institutional Investors
a. Mutual Funds & UTI 36,400 0.073
b. Banks, FIs, Insurance Companies, 14,250 0.029
(Central/State Govt. Institutions, Non-Govt. Institutions)
c. Foreign Institutional Investors Nil Nil
**Sub Total** 50,650 0.102
4. Others
a. Private Corporate Bodies 6,398,725 12.833
b. Indian Public 18,601,735 37.307
c. NRIs/OCBs 1,447,787 2.904
d. Any other --- ---
**Sub Total** 26,448,247 53.044
**GRAND TOTAL** 49,861,000 100.000
** TOTAL FOREIGN HOLDING** 1,447,787 2.904

50
 DESCRIPTION OF THE SHARES AND COMPANY PROCEDURES

General

The present offer of GDRs is being made pursuant to the resolution passed at the Annual General Meeting
of the Company held on 3 November, 2005 and the Board Resolution in this regard passed on 5 October,
2005, for the purposes of this Offering Circular, “shareholder” means a shareholder who is registered as a
member in the Register of Members of the Company.

Dividend

Under the Companies Act, unless the Board recommends the payment of a dividend, the Company may not
declare a dividend. Similarly, under its Articles of Association (“Articles”), the shareholders may, at the
AGM, approve a dividend of an amount less than that recommended by the Board. The shareholders cannot
increase the amount of dividend. The dividend recommended by the Board, if any, and subject to the
limitations described above, is distributed and paid to shareholders in proportion to the paid up value of
their shares within thirty (30) days from the date of the declaration by the company after the approval by
the shareholders at the AGM. Pursuant to its Articles, the Board has discretion to declare and pay interim
dividends without shareholders’ approval. However, the final dividend is required to be approved in the
AGM of the company. The company’s shares are compulsorily traded in dematerialised form and
accordingly all shares including converted shares are entitled to a full dividend in any particular year.
Under the Companies Act, dividends can only be paid to the registered shareholder at a record date fixed on
or prior to the AGM in cash or to his order or his banker’s order.

The Companies Act provides that any dividends that remain unpaid or unclaimed after the thirty (30) days
period are to be transferred to a special bank account (the Unpaid Dividend Account) within seven (7) days
of the expiry of the thirty (30) days period. The company is required to transfer any dividends that remain
unclaimed for seven (7) years from the date of the transfer to the Unpaid Dividend Account to an Investor
Education and Protection Fund created by the Government. After the transfer to this fund, no claim shall lie
against the fund or against the company in respect of unclaimed and unpaid dividends.

Under the Companies Act, dividends may be paid out of the profits of the company in the year in which the
dividend is declared or out of the undistributed profits of the previous fiscal years. Before declaring a
dividend, the company is required under the Companies Act to transfer to its reserves a minimum
percentage of its profits for that year, depending upon the dividend percentage to be declared in such year.
The Companies Act further provides that, in the event of an inadequacy or absence of profits in any year, a
dividend may be declared for such year out of the company’s accumulated profits, subject to the following
conditions:

• The rate of dividend to be declared shall not exceed 10% of its paid up capital or the average of the rate
at which dividends were declared by the company in the previous 5 years, whichever is less;

• The total amount to be drawn from the accumulated profits earned in the previous years and transferred
to the reserves shall not exceed an amount equivalent to 10% of its paid up capital and free reserves,
and the amount so drawn is to be used first to set off the losses incurred in the fiscal year before any
dividends in respect of preference or equity are declared; and

• The balance of reserves after such withdrawals shall not fall below 15% of its paid up capital.

Any income by way of dividends distributed, declared or paid (whether interim or otherwise) by any Indian
company is subject to dividend distribution tax, as per Finance Act, 2005, at a rate of 12.5% including 10%
surcharge plus 2% education cess on the dividend.

51
Bonus Shares

In addition to permitting dividends to be paid out of current or retained earnings as described above, the
Companies Act permits the Board of the company to distribute an amount transferred from the general
reserve or capital redemption reserve to shareholders in the form of fully paid-up bonus shares, which are
similar to a stock dividend, subject to an approval from the shareholders of the company in the general
meeting. The company is not permitted to issue bonus shares out of reserves created by revaluation of
assets. The Companies Act also permits the issuance of bonus shares from a share premium account. Those
bonus shares are distributed to the shareholders in the proportion of the number of shares owned by them.
The shareholders on record on a fixed record date are entitled to receive such bonus shares.

Pre-emptive Rights and Issue of Additional Shares

The Companies Act gives shareholders the right to subscribe for new shares in proportion to their
respective existing shareholdings, unless the shareholders decide otherwise by a special resolution. A
special resolution is a resolution passed by shareholders where the number of votes cast in favor of the
resolution is not less than three (3) times number of votes cast against the resolution. If the special
resolution is not approved, the new shares must first be offered to the existing shareholders as of a fixed
record date. The offer must include: (i) the right, exercisable by the shareholders of record, to renounce the
shares offered in favor of any other person; and (ii) the number of shares offered and the period of the offer,
which may not be less than fifteen (15) days from the date of offer. If the offer is not accepted it is deemed
to have been declined. The Board of Directors is authorised under the Companies Act to distribute any new
shares not purchased by the pre-emptive rights holders in the manner that it deems most beneficial to the
company.

If the resolution is passed as an ordinary resolution, the Company may, with the approval of the Central
Government, issue such shares to persons other than the existing shareholders.

General Meetings of Shareholders

There are two types of general meetings of shareholders: annual general meetings and extraordinary
general meetings. The company is required to convene an annual general meeting within six months of the
end of each fiscal year and may convene an extraordinary general meeting of shareholders when necessary,
or at the request of a shareholder or shareholders holding on the date of the request at least 10% of the paid
up capital of the company. Not more than fifteen months is permitted to elapse between the date of one
annual general meeting and that of the next. A general meeting of the shareholders is generally convened
by the Chairman of the company in accordance with a resolution of the Board. Written notices setting out
the agenda of the meeting must be given, at least twenty one days (excluding the days of mailing and
receipt) prior to the date of the general meeting to the shareholders on record).

The annual general meeting of shareholders is either held at the registered office of the company or at some
other place within the city in which the registered office is situated.

Alteration of Share Capital

As per Article 72 of the AOA of the Company:

“The Company may in General Meeting after the conditions of its Memorandum as follows:

(a) Consolidate and divide all or any of its share capital into shares of larger amount than its existing
shares;

(b) Sub-divide its shares or any of them into shares of smaller amount than is fixed by the
Memorandum, so, however, that in the sub-division the proportion between the amount paid and
the amounts, if any, unpaid on each reduced share shall be the same as it was in the case of the
share from which the reduced shares is derived.

52
(c) Cancel shares which, at the date of such General meeting have not been taken or agreed to be
taken by any person and diminish the amount of its share capital by the amount of the shares so
cancelled.”

Modification of Rights

As per the Companies Act, where the company’s share capital is divided into different classes, all or any of
the rights and privileges attached to any class (unless otherwise provided by the terms of issue of the shares
of that class) may be varied, abrogated or dealt with the consent in writing of the holders of three-fourths of
the issued shares of that class, or with the sanction of a special resolution passed at a separate meeting of
the holders of shares of that class.

Voting Rights

At any general meeting, voting is by show of hands unless a poll is demanded by a shareholder or
shareholders present in person or by proxy, holding at least 10% of the total shares entitled to vote on the
resolution. Upon a show of hands, each shareholder has one vote and, on a poll, every shareholder entitled
to vote and present in person or by proxy has voting rights in proportion to the paid up capital held by such
shareholder.

Ordinary resolutions are adopted at general meetings of shareholders by a majority of the shareholders
having voting rights present in person or by proxy. However, certain resolutions, such as amendments to
the Memorandum or Articles of Association, commencement of a new line of business, issue of further
shares to persons other than existing shareholders and reduction of share capital, require a special
resolution i.e., the votes cast in favor of the resolution (whether on a show of hands or on a poll) are not
less than three times the number of votes cast against the resolution.

A shareholder may exercise his voting rights by proxy to be given in the form provided in the relevant
schedule to the Companies Act. The instrument appointing a proxy must be delivered to the company at
least forty eight hours prior to the meeting. A corporate shareholder is also entitled to nominate a
representative to attend and vote (both upon a show of hands and upon poll) on its behalf at general
meetings.

A holder of GDRs has no voting rights or other direct rights of a shareholder with respect to the Shares.

The Depositary will not exercise any voting rights in respect of the Shares unless it is required to do so by
law. If so required, the Depositary will, at the direction of the Board of Directors of the Company (subject
to the advice of legal counsel taken by the Depositary and the Company at the expense of the Company),
either vote as directed by the Board of Directors of the Company or give a proxy or power of attorney to
vote the Shares in favour of a Director of the Company or other person or vote in same manner as those
shareholders designated by the Board of Directors of the Company. A valid corporate decision of the
Company will bind the Depositary and the Holders notwithstanding these restrictions on voting rights.

Shares, which have been withdrawn from the depositary facility and transferred on the Company’s register
of members to a person other than the Depositary or its nominee may be voted by the holders thereof.
However, Holders or owners of GDRs may not receive sufficient advance notice of shareholder meetings to
enable them to withdraw the Shares and vote at such meetings

Recently, the government has framed rules for listed companies for voting by postal ballot in case of
resolutions like alteration of the object clause in the Memorandum of Association, buy back of shares, issue
of shares with differential voting rights, sale of whole or substantially whole of undertaking of a company,
giving loans or extending guarantees in excess of limits and compromises or arrangements with creditors
and members.

Audit and Annual Report

At least twenty-one (21) clear days before the annual general meeting of shareholders (excluding the date
of mailing and the date of the meeting), the company must dispatch to the shareholders a detailed version of
the audited balance sheet and profit and loss account and the related reports of the Board and the auditors,

53
together with notice convening the annual general meeting. Such documents are presented at the annual
general meeting for adoption.

Under the Companies Act, the Company must file the balance sheet and profit and loss account presented
to the shareholders within thirty days of the conclusion of the annual general meeting with the Registrar of
Companies in Punjab, Himachal Pradesh and Chandigarh, India. The Company must also file an annual
return, which includes a list of the shareholders, directors as on the date of annual general meeting, within
sixty days of the conclusion of the annual general meeting. In case the annual general meeting has not been
held within the time specified in the Companies Act, the annual return should be filed within sixty days
from the last date on which the annual general meeting ought to have been held as per the provisions of the
Companies Act. Copies of the annual reports are also required to be sent to the stock exchange where the
Company’s shares are listed.

Under the listing agreement, the Company must furnish to the Indian Stock Exchanges where its shares are
listed, unaudited financial results on a quarterly basis within one month from the end of the relevant quarter
duly approved by the Board of Directors. However, in respect of the half yearly results, if the Company
intimates in advance to the Indian Stock Exchanges that it will publish audited half yearly financial results
within two months of the close of the half year, then in such a case unaudited results and limited review
need not be published/given to the Indian Stock Exchanges. The Company must also publish its financial
results in at least one English language daily newspaper circulating in the whole or substantially the whole
of India and also in a regional newspaper.

Register of Members, Record Dates and Transfer of Shares

The Company maintains a Register of Members at its registered office. For the purpose of determining the
shares entitled to annual dividends, the register is closed for a specified period prior to the AGM. The date
on which this period begins is the record date.

To determine which shareholders are entitled to specify shareholder rights, the company may close the
register of shareholders. The Companies Act requires a Company to give at least seven days' prior notice to
the public by way of a newspaper advertisement before such closure. The Company may not close the
register of shareholders for more than thirty consecutive days, and in no event for more than forty-five days
in a year. Trading of the equity shares, however, may continue while the register of shareholders is closed.

Following the enactment of the Depositories Act and the repeal of section 22A of the Securities Contracts
Act, which enabled companies to refuse to register transfers of shares in some circumstances, the shares of
public companies are freely transferable, subject only to the provisions of section 111A of the Companies
Act. In accordance with the provisions of section 111A (2) of the Companies Act, the Company’s Directors
may exercise this discretion if they have sufficient cause to do so. If the Company’s Directors refuse to
register a transfer of shares, the shareholder wishing to transfer his, her or its shares may file an appeal with
the Company Law Board (“CLB”). Pursuant to Section 111A (3), if a transfer of shares contravenes any of
the provisions of the SEBI Act or the regulations issued thereunder or the Sick Industrial Companies
(Special Provisions) Act, 1985 or any other Indian laws, the CLB may, on an application made by the
Company, a Depositary incorporated in India, a participant, an investor, or the Securities and Exchange
Board of India, direct the rectification of the register of members. The CLB may, in its discretion, issue an
interim order suspending the voting rights attached to the relevant shares before making or completing its
investigation into the alleged contravention. During the pendency of the application with the CLB, the
rights of a shareholder to transfer the shares are not suspended unless there is an order of the CLB to that
effect.

Acquisition by the Company of its own Shares

Under the Companies Act, approval of the Company’s shareholders by passing special resolution voting on
the matter and confirmation of the High Court of the State in which the registered office of the Company is
situated (in the Company’s case, this is Punjab, Himachal Pradesh and Chandigarh) is required to reduce
the Company’s share capital. The Company may, under some circumstances, acquire its own equity shares
without seeking the confirmation of the High Court. However, the Company would have to extinguish the
shares it has so acquired within the prescribed time period. Generally, the Company is not permitted to
acquire its own shares for treasury operations. An acquisition by a listed Company of its own shares

54
(without having to obtain the confirmation of the High Court) must comply with prescribed rules,
regulations and conditions as laid down in the Companies Act and the SEBI (Buy-back of Securities)
Regulations, 1998.

Disclosure of Ownership Interest

Section 187C of the Companies Act requires beneficial owners of shares of Indian companies, who are not
Holders on record, to declare to the Company details of the Holder on record and requires the Holder on
record to declare details of the beneficial owner. Any lien, promissory note or other collateral agreement
created, executed or entered into with respect to any equity share by its registered owner, or any
hypothecation by the registered owner of any equity share, shall not be enforceable by the beneficial owner
or any person claiming through the beneficial owner if such declaration is not made. Failure to comply with
Section 187C of the Companies Act will not affect the Company’s obligation to register a transfer of shares
or to pay any dividends to the registered holder of any shares pursuant to which the declaration has not
been made. While it is unclear under Indian law whether Section 187C of the Companies Act applies to
holders of GDRs, in the absence of any specific exemption from the Department of Company Affairs, the
reporting requirements under Section 187C of the Companies Act could be enforced against holders of
GDRs. It is clear, however, that investors who exchange GDRs for the equity Shares will be subject to the
requirements of Section 187C. Any investor who fails to comply with these requirements may be liable for
a fine of up to Rs.1,000 for each day such failure continues. Additionally, if the Company fails to comply
with the provisions of Section 187C, then Company, and every one of its officers, may be liable for a fine
of up to Rs.100 for each day the default continues. Additionally, holders of GDRs may be required to
comply with the notification and disclosure obligations pursuant to the provisions of the Deposit
Agreement to be entered into by the Company and the Depositary.

Liquidation Rights

Subject to the rights of creditors, employees and the holders of any shares entitled by their terms to
preferential repayment over the shares, if any, in the event of Company’s winding-up, the holders of the
shares are entitled to be repaid the amounts of paid up capital or credited as paid up on those shares. All
surplus assets remaining after payments are made to holders of any preference shares belong to holders of
the shares in proportion to the amount paid up or credited as paid up on such shares, respectively, at the
commencement of the winding up.

Takeover Code

Disclosure and mandatory bid obligations under Indian law are governed by the Securities and Exchange
Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Code”),
which prescribes certain thresholds, or trigger points that give rise to these obligations. The Takeover Code
is under constant review by SEBI and was recently amended.

The most important features of the Takeover Code, as amended, are as follows:

• Any acquirer (meaning a person who, directly or indirectly, acquires or agrees to acquire shares or
voting rights in a company, either by himself or with any person acting in concert) who acquires
shares or voting rights that would entitle him to more than 5% or 10% or 14% or 74% of the
shares or voting rights in a company is required to disclose the aggregate of his shareholding or
voting rights in that company to the company (which in turn is required to disclose the same to
each of the stock exchanges on which the Company's shares are listed) and to the stock
exchange(s) on which the Company’s shares are listed within two days of (a) the receipt of
intimation of allotment of shares; or (b) the acquisitions of shares or voting rights, as the case may
be.

• A person who holds more than 15% of the shares or voting rights in any company shall, within
twenty one days from the financial year ending 31 March, as well as the record date of the
company for the purposes of declaration of dividend, disclose the number and percentage of shares
or voting rights held by him and by persons acting in concert with him, in that company to the

55
 company (which in turn is required to disclose the same to each of the stock exchanges on which
the Company's shares are listed).

• Promoters or persons having control of a company are also required to make the said disclosure of
their holdings in the same manner.

• An acquirer cannot acquire shares or voting rights which (taken together with existing shares or
voting rights, if any, held by him or by persons acting in concert with him) would entitle such
acquirer to exercise 15% or more of the voting rights in a company, unless such acquirer makes a
public announcement offering to acquire an aggregate minimum of 20% of the shares of the
Company in accordance with the Takeover Code.

• An acquirer who, together with persons acting in concert with him, holds between 15% and 75%
of the shares, cannot acquire additional shares or voting rights that would entitle him to exercise
more than 5% of the voting rights in a period of twelve months ending on 31 March unless such
acquirer makes a public announcement offering to acquire an aggregate minimum of 20% of the
shares of the Company, in accordance with the Takeover Code.

• Any further acquisition of shares or voting rights by an acquirer who holds 75% of the shares or
voting rights in a company triggers the same public announcement requirements.

• In addition, regardless of whether there has been any acquisition of shares or voting rights in a
company, an acquirer acting in concert cannot directly or indirectly acquire control over a
company (for example, by way of acquiring the right to appoint a majority of the directors or to
control the management or the policy decisions of the Company) unless such acquirer makes a
public announcement offering to acquire an aggregate minimum of 20% of the shares of the
company to acquire shares and acquires such shares in accordance with the Takeover Code.

The Takeover Code sets out the contents of the required public announcements as well as the minimum
offer price.

The Takeover Code permits conditional offers as well as the acquisition and subsequent delisting of all
shares of a company in case of non-compliance; and provides specific guidelines for the gradual acquisition
of shares or voting rights. Specific obligations of the acquirer and the board of directors of the target
company in the offer process have also been set out. Acquirers making a public offer are also required to
deposit in an escrow account a percentage of the total consideration, which amount will be forfeited in the
event the acquirer does not fulfill his obligations. In addition, the Takeover Code defines acquisition to
include indirect acquisition by virtue of acquisition of holding companies, whether listed or unlisted,
whether in India or abroad.

There are separate requirements for bail-out takeovers relating to substantial acquisition of shares of a
financially weak company but not a “sick industrial company” pursuant to a rehabilitation scheme
approved by a public financial institution or a scheduled bank. A “financially weak company” is a
company, which has at the end of the previous fiscal year accumulated losses, which have resulted in
erosion of more than 50% but less than 100% of net worth at the end of the previous fiscal year. A “sick
industrial company” is an industrial company registered for more than 5 years, which has at the end of any
fiscal year accumulated losses equal to or exceeding its entire net worth.

The Takeover Code does not apply to certain specified acquisitions including the acquisition of shares:

• by allotment in pursuance of an application made to a public / rights issue;

• allotment to the underwriters pursuant to any underwriting agreement;
• inter se transfer amongst group, relatives, promoters and foreign collaborators who are shareholders,
etc.;
• the acquirer and the person acting in concert with him where such transfer of shares takes place
amongst those persons (inter se transfer) three years after the date of closure of the public offer made
by them under the said regulations;

56
• acquisition of shares in the ordinary course of business by a registered stock-broker of a stock
exchange on behalf of clients; a registered market maker of a stock exchange in respect of shares for
which he is the market maker, during the course of market making; by Public Financial Institutions on
their own account; by banks and public financial institutions as pledges;
• acquisition of shares by a person in exchange of shares received under a public offer under the said
regulations;
• acquisition of shares by way of transmission on succession or inheritance;
• acquisition of shares by government companies within the meaning of Section 617 of the Companies
Act, 1956 (1 of 1956) and statutory corporations;
• transfer of shares from state level financial institutions, pursuant to an agreement between such
financial institution and such co-promoter(s);
• transfer of shares from venture capital funds or foreign venture capital investors registered with the
Board to promoters of a venture capital undertaking or venture capital undertaking pursuant to an
agreement between such venture capital fund or foreign venture capital investors with such promoters
or venture capital undertaking;
• pursuant to a scheme – framed under Section 18 of the Sick Industrial Companies (Special Provisions)
Act, 1985; of arrangement or reconstruction including amalgamation or merger or demerger under any
law or regulation, Indian or foreign;
• Change in control by takeover of management of the borrower target company by the secured creditors
or by restoration of the management to the said target company by the said secured creditor in terms of
the securitisation and reconstruction of financial assets and enforcement of Security Interest Act, 2002;
• acquisition of shares in companies whose shares are not listed on any stock exchange.

Disclosures under the Insider Trading Regulations

The Insider Trading Regulations have been issued by SEBI vide SEBI (Prohibition of Insider Trading)
Regulations, 1992, to prevent insider trading in India by prohibiting and penalising insider trading in India.
The Insider Trading Regulations prohibit an “insider” from dealing, either on his/her own behalf or on behalf
of any other person, in the securities of a company listed on any stock exchange when in possession of
unpublished price sensitive information. The terms, “insider”, “unpublished” and “price sensitive
information” are defined in the Insider Trading Regulations. The insider is also prohibited from
communicating, counselling or procuring, directly or indirectly, any unpublished price sensitive information
to any other person whilst in possession of such unpublished price sensitive information, shall not deal in any
securities to which that information relates. The prohibition under the Insider Trading Regulations also
extends to a company dealing in the securities of other company listed on any stock exchange whilst in the
possession of unpublished price sensitive information. It is to be noted that recently SEBI has amended the
Insider Trading Regulations to provide certain defences to the prohibition on companies in possession of
unpublished price sensitive information dealing in securities.

The Insider Trading Regulations make it compulsory for listed companies and certain other entities associated
with the securities market to establish an internal code of conduct to prevent insider trading and also to
regulate disclosure of unpublished price sensitive information within such entities so as to minimise misuse of
such information. To this end, the Insider Trading Regulations provide a model code of conduct. Further, the
Insider Trading Regulations specify a model Code of Corporate Disclosure Practices to prevent insider
trading, which must be implemented by all listed companies.

Pursuant to the Insider Trading Regulations, any person holding more than 5% of the ordinary shares or
related voting rights in any listed company must disclose to the company in the specified form, the number of
shares or voting rights held by such person on becoming such a holder, within four working days of (a) the
receipt of intimation of allotment of shares or (b) the acquisition of shares or voting rights, as the case may be.
Additionally, any change in such shareholding or voting rights in excess of 2% from the time of the last
disclosure (even if such change results in the shareholding or voting rights falling below 5%) is required to be
disclosed to the company within four working days of (a) the receipt of intimation or allotment of shares or (b)
the acquisition or sale of shares or voting rights, as the case may be. The company is also required to disclose
such information, in the specified format, received from its shareholders within five days of the receipt of such
information, to the stock exchanges on which the company’s shares are listed.

57
Any person who is a director or officer of a listed company is required to disclose to the company, in the
specified form, the number of shares or voting rights held by him within 4 days of becoming such director or
officer of the company. Further, such director or shareholder must disclose any change from the last
disclosure in his shareholding and voting rights in excess of Rs.500,000 or 25,000 shares or 1% of total
shareholding or voting rights, whichever is lower. The disclosure shall be made within four working days of
(a) the receipt of intimation or allotment of shares or (b) the acquisition or sale of shares or voting rights, as
the case may be.

58
 GOVERNMENT AND OTHER STATUTORY APPROVALS

The Company has obtained all the necessary consents/ licenses/ permissions/ approvals from the
Government and various Government agencies required for its present business and no further approvals
are required for carrying on the present as well as the proposed business, except as stated elsewhere in this
Offering Circular. The Company will take all the necessary steps in compliance with applicable laws to
obtain any other governmental licenses or permissions required to undertake for any of its proposed
activities.

The Company has obtained the following Government approvals/licenses/permissions:

Incorporation and other statutory compliances

1. Certificate of Incorporation bearing no. 53-11537 of 1991 dated 30 July 1991 in the name of Rana
Sugars Limited issued by the ROC, Punjab, Himachal Pradesh and Chandigarh.

2. Certificate of Commencement of business dated 9 August 1991 in the name of Rana Sugars
Limited issued by the ROC, Punjab, Himachal Pradesh and Chandigarh.

3. Industrial Licence bearing no. CIL No. 114 (94) dated 24 November 1994, under Rule 7 of the
Registration and Licencing of Industrial Undertaking Rules, 1952 for the manufacturing of Sugar.

4. Letter of Intent No.1/110/2002-ET2(8)/4959 dated 01.08.2002 valid for two years and the validity
of the same was extended upto 31.07.2006 vide letter No.10350 dated 05.08.2005.

Income Tax

Permanent Account Number - AABCR6744C, issued by the Director of Income Tax (Systems), Income
Tax Department.

Government Approvals not yet applied for/Pending Government Approvals:

Approval / Consent Agency Status

Letter of Intent
Convertion of land from
Agriculture use to Industrial
use
Power Purchase Agreement
Ministry of Food, Govt. of India,
New Delhi
Revenue Authorities,
Uttar Pradesh
U. P. State Electricity Board
Letter of Intent for setting up new
two Sugars Mills of 5000 TCD is
expected shortly from Govt. of
India
Permission is to be granted by
Revenue Authorities in due course
The Power Purchase Agreement is
to be executed for surplus power
generated in due course

Statutory Approval

The Company has obtained all the necessary consents, licenses, permissions and approvals form the
Government/RBI and various government agencies required for its present business and no further
approvals are required for carrying on the present as well as the proposed business of the Company except
the pending approvals as mentioned above It must, however, be distinctly understood that in granting the
above consents/licenses/permissions/approvals, the Government does not take any responsibility for the
financial soundness of the Company or for the correctness of any of the statements or any commitments
made or opinions expressed.

59
The Company can undertake all the present and proposed activities in view of the present approvals and no
further approvals from any statutory body are required by the Company to undertake the present and
proposed activities.

60
 TERMS AND CONDITIONS OF THE GLOBAL DEPOSITARY RECEIPTS

The Global Depositary Receipts (“GDRs”) represented by this certificate are each issued in respect of ten
(10) equity shares of par value Rs. 10 each (the “Shares”) in Rana Sugars Limited (the “Company”)
pursuant to and subject to an agreement dated 15 May 2006, and made between the Company and Deutsche
Bank Trust Company Americas as depositary (the “Depositary”) (such agreement, as amended from time
to time, being hereinafter referred to as the “Deposit Agreement”). Pursuant to the provisions of the
Deposit Agreement, the Depositary has appointed ICICI Bank Limited, Mumbai as Custodian (as defined
below) to receive and hold on its behalf the Share certificates in respect of certain Shares (the “Deposited
Shares”) and all rights, securities, property and cash deposited with the Custodian which are attributable to
the Deposited Shares (together with the Deposited Shares, the “Deposited Property”). The Depositary
shall hold Deposited Shares for the benefit of the Holders (as defined below) in proportion to the number of
Shares in respect of which the GDRs held by them are issued. In these terms and conditions (the
“Conditions”), references to the “Depositary” are to Deutsche Bank Trust Company Americas and/or any
other Depositary which may from time to time be appointed under the Deposit Agreement, references to the
“Custodian” are to ICICI Bank Limited, Mumbai or any other Custodian from time to time appointed
under the Deposit Agreement and references to the “Office” mean, in relation to the Custodian, its office at
ICICI Bank Limited, Securities Processing Division, North Tower 2nd Floor, ICICI Towers, Bandra Kurla
Complex, Mumbai 400 051, India (or such other office as from time to time may be designated by the
Custodian with the approval of the Depositary).
GDRs may take the form of GDRs evidenced by one or more Master GDRs (each a “Master GDR”)
registered in the name of a nominee for, and held by the Common Depositary for, DIFX Central Securities
Depository (“CSD”), and held for the account of accountholders in the CSD, exchangeable, at the option of
the Holder (as defined below) of such Master GDR and at the expense of any person shown in the records
of the CSD as the owner of a GDR (as defined below) and upon delivery to the Depositary of a certificate
substantially in the form of Schedule 3, Part A of the Deposit Agreement, for a certificate in definitive
registered form in respect of GDRs evidenced all or part of the interest of such person in such Master GDR.
If at any time when Deposited Shares are represented by the Master GDR, either (i) the Holder of the
Master GDR is unwilling or unable to continue as Common Depositary or depositary (or as nominee
thereof), as the case may be, and a successor Common Depositary or successor depositary (or successor
nominee therefor), as the case may be, is not appointed within 90 calendar days; or (ii) the CSD is closed
for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or
announces an intention permanently to cease business or does, in fact, do so and no alternative clearing
system satisfactory to the Depositary is available within 45 days; or (iii) the Depositary has determined
that, on the occasion of the next payment in respect of the GDRs, the Company, the Depositary or its Agent
would be required to make any deduction or withholding from any payment in respect of the GDRs which
would not be required were the GDRs in definitive form; or (iv) the Holder of the relevant Master GDR
gives notice to the Depositary of its desire to exchange a part or the whole of the Master GDR for
certificates evidencing GDRs in definitive registered form, the Company will, on intimation from the
Depositary of the occurrence of one or more events set forth in (i) to (iv) instruct the Depositary to make
Certificates in definitive registered form available.
Under the terms of the GDRs, each purchaser of GDRs is deemed to have represented and agreed, among
other things, that (a) the GDRs have not been and will not be registered under the Securities Act and may
be offered, sold, pledged or otherwise transferred only in a transaction exempt from the registration
requirements of the Securities Act and (b) the GDRs may not be offered, sold, pledged or otherwise
transferred to any person located in India, residents of India, or to, or for the account or benefit of, such
persons. Each GDR will contain a legend to the foregoing effect.
References in these Conditions to the “Holder” of any GDR shall mean the person registered as Holder on
the books of the Depositary maintained for such purpose. These Conditions include summaries of, and are
subject to, the detailed provisions of the Deposit Agreement, which includes the forms of the certificate in
respect of the GDRs. Copies of the Deposit Agreement, are available for inspection at the specified office
of the Depositary and each Agent (as defined in Condition 17) and at the Office of the Custodian. Holders
are deemed to have notice of and be bound by all of the provisions of the Deposit Agreement. Terms used
in these Conditions and not defined herein but which are defined in the Deposit Agreement have the
meanings ascribed to them in the Deposit Agreement.

61
1. Deposit of Shares and Other Securities

(A) After the initial deposit of Shares by the Company in respect of each GDR, unless
otherwise agreed by the Depositary and the Company and permitted by applicable law,
only the following may be deposited under the Deposit Agreement in respect of such
GDR:
(i) Shares issued as a dividend or free distribution on Deposited Shares pursuant to
Condition 5;
(ii) Shares subscribed or acquired by Holders from the Company through the
exercise of rights distributed by the Company to such persons in respect of
Deposited Shares pursuant to Condition 7;
(iii) Securities issued by the Company to the Holders in respect of Deposited Shares
as a result of any change in the par value, sub-division, consolidation or other
reclassification of Deposited Shares or otherwise pursuant to Condition 10.
References in these Conditions to “Deposited Shares” or “Shares” shall include
any such securities, where the context permits; and
(iv) (to the extent permitted by applicable law and regulation) any other Shares in
issue.
(B) The Depositary will issue GDRs in respect of Shares accepted for deposit under this
Condition. Under the Deposit Agreement, the Company must inform the Depositary if
any Shares issued by it which may be deposited under this Condition do not, by reason of
the date of issue or otherwise, rank pari passu in all respects with the other Deposited
Shares. Subject to the provisions of Conditions 5, 7 and 10, if the Depositary accepts such
Shares for deposit it will arrange for the issue of temporary GDRs in respect of such
Shares which will form a different class of GDRs from the other GDRs until such time as
the Shares which they represent become fully fungible with the other Deposited Shares.
Shares may not be deposited by persons located in India, residents of India or for, or on
the account of, such persons (except by the Company and the Custodian) and such other
persons who are authorised to do so in accordance with Indian regulations.
Subject to the terms and conditions of the Deposit Agreement and applicable law, upon
physical delivery to the Custodian of Shares, delivery to the Depositary of a certificate
substantially in the form of Schedule 3, Part C of the Deposit Agreement and available
from the Depositary or the Custodian and payment of necessary taxes, governmental
charges (including transfer taxes) and other charges as set forth in the Deposit
Agreement, the Depositary will adjust its records for the number of GDRs issued in
respect of the Shares so deposited and will notify the Common Depositary, as the case
may be, as to the increase in the number of GDRs evidenced by a Master GDR. Each
person receiving a GDR or interest therein will be deemed to make the representations,
covenants and acknowledgements set forth under “Transfer Restrictions”.

(C) The Depositary will refuse to accept Shares for deposit whenever it is notified in writing
that the Company has restricted the transfer of such Shares to comply with ownership
restrictions under applicable Indian law or that such deposit would result in any violation
of any applicable Indian laws or governmental or stock exchange regulations. The
Depositary may also refuse to accept Shares for deposit in certain other circumstances as
set out in the Deposit Agreement.

(D) Subject to the limitations set forth in the Deposit Agreement, the Depositary may (but is
not required to) issue GDRs prior to the delivery to it of Shares in respect of which such
GDRs are to be issued.

62
2. Withdrawal of Deposited Property

(A) Deposited Property may not be withdrawn until the Depositary has received a written
confirmation from the Company that the Shares are listed on The Stock Exchange,
Mumbai (“BSE”), and the National Stock Exchange of India Limited (“NSE”). The
Depositary shall notify the Holders of such listings in accordance with Condition 23 as
soon as is practically possible after receiving such written confirmation. Subject as set out
above, any Holder may request withdrawal of, and the Depositary shall thereupon
relinquish, the Deposited Property attributable to any GDR upon production of such
evidence that such person is the Holder of, and entitled to, the relative GDR as the
Depositary may reasonably require at the specified office of the Depositary or any Agent
accompanied by:

(i) duly executed order (in a form approved by the Depositary) requesting the
Depositary to cause the Deposited Property being withdrawn to be delivered at
the Office of the Custodian, or (at the request, risk and expense of the Holder) at
the specified office from time to time of the Depositary or any Agent (located in
India or such other place as permitted under applicable law from time to time)
to, or to the order in writing of, the person or persons designated in such order
and a certificate substantially in the form of Schedule 3, Part B of the Deposit
Agreement and available from the Depositary or the Custodian;

(ii) the payment of such fees, duties, charges and expenses as may be required under
these Conditions or the Deposit Agreement; and

(iii) the surrender (if appropriate) of GDR certificates in definitive registered form to
which the Deposited Property being withdrawn is attributable.

(B) Certificates for withdrawn Deposited Shares will contain such legends and withdrawals
of Deposited Shares may be subject to such transfer restrictions or certifications, as the
Company or the Depositary may from time to time determine to be necessary for
compliance with applicable laws.

The Board of Directors of the Company may in certain circumstances refuse to register
the transfer of Deposited Shares from the name of the Depositary or its nominee.
A stamp duty of 0.25 per cent of the market value of Shares is currently charged in
respect of any transfer of Shares in physical form. This duty is payable by the relevant
Holder. Currently, in accordance with Indian regulations, the delivery of underlying
Shares of GDRs shall only be in the dematerialised form and stock exchanges may not
accept delivery of underlying Shares of GDRs in physical form. In addition, it may be
necessary to obtain the approval of (i) the Reserve Bank of India for Shares, such as
withdrawn Deposited Shares, to be registered in the name of a person who is a resident of
India and (ii) the Foreign Investment Promotion Board for Shares, such as withdrawn
Deposited Shares, to be registered in the name of certain categories of persons who are
not residents of India. Holders are advised to seek independent legal advice in relation to
transfer and requirement of approval issues.
(C) Upon production of such documentation and the making of such payment as aforesaid in
accordance with paragraph (A) of this Condition, the Depositary will direct the
Custodian, within a reasonable time after receiving such direction from such Holder, to
deliver at its Office to, or to the order in writing of, the person or persons designated in
the accompanying order:
(i) a certificate for, or other appropriate instrument of title to, the relevant
Deposited Shares, registered in the name of the Depositary or its nominee and
accompanied by such instruments of transfer in blank or to the person or persons
specified in the order for withdrawal and such other documents, if any, as are
required by law for the transfer thereof; and

63
 (ii) all other property forming part of the Deposited Property attributable to such
GDR, accompanied, if required by law, by one or more duly executed
endorsements or instruments of transfer in respect thereof as aforesaid;
provided that the Depositary (at the request, risk and expense of any Holder so
surrendering a GDR):
(a) will direct the Custodian to deliver the certificates for, or other instruments of
title to, the relevant Deposited Shares and any document relative thereto and any
other documents referred to in sub-paragraph (C) (i) of this Condition (together
with any other property forming part of the Deposited Property which may be
held by the Custodian or its Agent and is attributable to such Deposited Shares);
and/or

(b) will deliver any other property forming part of the Deposited Property which
may be held by the Depositary and is attributable to such GDR (accompanied by
such instruments of transfer in blank or to the person or persons specified in
such order and such other documents, if any, as are required by law for the
transfer thereto),

in each case to the specified office from time to time of the Depositary or, if any, any
Agent (located in India or such other place as is permitted under applicable law from time
to time) as designated by the surrendering Holder in such accompanying order as
aforesaid.
(D) Delivery by the Depositary, any Agent and the Custodian of all certificates, instruments,
dividends or other property forming part of the Deposited Property as specified in this
Condition will be made subject to any laws or regulations applicable thereto.
(E) The Depositary may suspend the withdrawal of all or any category of Deposited Property
during any period when the register of shareholders or other relevant holders of other
securities of the Company is closed, generally or in one or more localities, or in order to
comply with any applicable Indian law or governmental or stock exchange regulations.
The Depositary shall restrict the withdrawal of Deposited Shares whenever it is notified
in writing that such withdrawal would result in a breach of ownership restrictions under
applicable Indian law.
3. Transfer and Ownership

GDRs are in registered form each issued in respect of ten (10) Shares. Title to the GDRs passes by
registration in the records of the Depositary. The Depositary will refuse to accept for transfer any
GDRs if it reasonably believes that such transfer would result in a violation of applicable laws.
The Holder of any GDR will (except as otherwise required by law) be treated as its absolute owner
for all purposes (whether or not any payment or other distribution in respect of such GDR is
overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, or
the theft or loss of, any certificate issued in respect of it) and no person will be liable for so
treating the Holder.

The Deposit Agreement defines the “owner of GDRs” as, in respect of any GDR represented by a
Master GDR, such person whose name appears in the records of the CSD and, in respect of any
other GDR, the Holder thereof and “beneficial owner of GDRs” as a person holding beneficial title
to such GDRs or interests therein.
4. Cash Distributions

Whenever the Depositary shall receive from the Company any cash dividend or other cash
distribution on or in respect of the Deposited Shares (including any amounts received in the
liquidation of the Company) or otherwise in connection with the Deposited Property, the
Depositary, its Agent or Custodian shall as soon as practicable convert the same into United States
dollars in accordance with Condition 8. The Depositary shall, if practicable in the opinion of the
Depositary, give notice to the Holders of its receipt of such payment in accordance with Condition

64
 23, specifying the amount per Deposited Share payable in respect of such dividend or distribution
and the date, determined by the Depositary, for such payment and shall as soon as practicable
distribute any such amounts to the Holders in proportion to the number of Deposited Shares
represented by the GDRs so held by them respectively, subject to and in accordance with the
provisions of Conditions 8, 9 and 11; provided that:
(a) in the event that any Deposited Shares shall not be entitled, by reason of the date of issue or
transfer or otherwise, to such full proportionate amount, the amount so distributed to the
relative Holders shall be adjusted accordingly; and
(b) the Depositary will distribute only such amounts of cash dividends and other distributions as
may be distributed without attributing to any GDR a fraction of the lowest integral unit of
currency in which the distribution is made by the Depositary and any balance remaining shall
be retained by the Depositary beneficially as an additional fee under Condition 16(A)(iv).
5. Distributions of Shares

Whenever the Depositary shall receive from the Company any distribution in respect of Deposited
Shares which consists of a dividend in, or free distribution or bonus issue of, Shares, the
Depositary shall cause to be distributed to the Holders entitled thereto, in proportion to the number
of Deposited Shares represented by the GDRs held by them respectively, additional GDRs
representing an aggregate number of Shares received pursuant to such dividend or distribution by
an increase in the number of GDRs evidenced by the Master GDR or an issue of certificates in
definitive registered form in respect of GDRs, according to the manner in which the Holders hold
their GDRs; provided that, if and in so far as the Depositary deems any such distribution to all or
any Holders not to be reasonably practicable (including, without limitation, owing to the fractions
which would otherwise result or to any requirement that the Company, the Custodian or the
Depositary withhold an amount on account of taxes or other governmental charges) or to be
unlawful, the Depositary shall sell such Shares so received (either by public or private sale and
otherwise at its discretion, subject to Indian laws and regulations) and distribute the net proceeds
of such sale as a cash distribution pursuant to Condition 4 to the Holders entitled thereto.
6. Distributions Other than in Cash or Shares

Whenever the Depositary shall receive from the Company any dividend or distribution in
securities (other than Shares) or in other property (other than cash) on or in respect of the
Deposited Property, the Depositary shall distribute or cause to be distributed such securities or
other property to the Holders entitled thereto, in proportion to the number of Deposited Shares
represented by the GDRs held by them respectively, in any manner that the Depositary may deem
equitable and practicable for effecting such distribution; provided that, if and in so far as the
Depositary deems any such distribution to all or any Holders not to be reasonably practicable
(including, without limitation, due to the fractions which would otherwise result or to any
requirement that the Company, the Custodian or the Depositary withhold an amount on account of
taxes or other governmental charges) or to be unlawful, the Depositary shall sell the securities or
property so received, or any part thereof, (either by public or private sale and otherwise at its
discretion, subject to Indian laws and regulations) and distribute the net proceeds of such sale as a
cash distribution pursuant to Condition 4 to the Holders entitled thereto.
7. Rights Issues

If and whenever the Company announces its intention to make any offer or invitation to the
Holders of Shares to subscribe for or to acquire Shares, securities or other assets by way of rights,
the Depositary shall as soon as practicable give notice to the Holders in accordance with Condition
23 of such offer or invitation specifying, if applicable, the earliest date established for acceptance
thereof, the last date established for acceptance thereof and the manner by which and time during
which Holders may request the Depositary to exercise such rights as provided below or, if such be
the case, give details of how the Depositary proposes to distribute the rights or the proceeds of sale.
The Depositary will deal with such rights in the manner described below:
(i) if at its discretion, the Depositary shall be satisfied that it is lawful and reasonably
practicable and, to the extent that it is so satisfied, the Depositary shall make

65
 arrangements whereby the Holders may, upon payment of the subscription price in
Rupees or other currency (where appropriate) together with such fees, taxes, duties,
charges, costs and expenses as may be required under the Deposit Agreement and
completion of such undertakings, declarations, certifications and other documents as the
Depositary may reasonably require, request the Depositary to exercise such rights on their
behalf with respect to the Deposited Shares and in the case of Shares so subscribed or
acquired to distribute them to the Holders entitled thereto by an increase in the numbers of
GDRs evidenced by the Master GDR or an issue of certificates in definitive form in
respect of GDRs, according to the manner in which the Holders hold their GDRs; or
(ii) if, at its discretion, the Depositary shall be satisfied that it is lawful and reasonably
practicable and to the extent that it is so satisfied, the Depositary shall distribute such
securities or other assets by way of rights or the rights themselves to the Holders entitled
thereto in proportion to the number of Deposited Shares represented by the GDRs held by
them respectively in such manner as the Depositary may at its discretion determine; or
(iii) if and in so far as the Depositary is not satisfied that any such arrangement and
distribution to all or any Holders is lawful and reasonably practicable (including, without
limitation, owing to the fractions which would otherwise result or to any requirement that
the Company, the Custodian or the Depositary withhold an amount on account of taxes or
other governmental charges) or is so satisfied that it is unlawful, the Depositary will,
provided that Holders have not taken up rights through the Depositary as provided in (i)
above, sell such rights (either by public or private sale and otherwise at its discretion
subject to Indian laws and regulations) and distribute the net proceeds of such sale as a
cash distribution pursuant to Condition 4 to the Holders entitled thereto except to the
extent prohibited by applicable law.
If at the time of the offering of any rights, at its discretion, the Depositary shall be satisfied that it
is not lawful or practicable (for reasons outside its control) to dispose of the rights in any manner
provided in (i), (ii) or (iii) above the Depositary shall permit the rights to lapse. In the absence of
its own wilful default, negligence or bad faith the Depositary will not be responsible for any failure
to determine that it may be lawful or practicable to make rights available to Holders in general or
to any Holder in particular.
The Company has agreed in the Deposit Agreement that it will, unless prohibited by applicable
law, give its consent to, and, if requested, use all reasonable endeavours (subject to the next
paragraph) to facilitate any such distribution, sale or subscription by the Depositary or the Holders,
as the case may be, pursuant to Condition 4, 5, 6, 7 or 10.
If the Company notifies the Depositary that registration is required in any jurisdiction under any
applicable law of the rights, securities or other property to be distributed under Condition 4, 5, 6, 7
or 10 or the securities to which such rights relate, in order for the Depositary to offer such rights or
distribute such securities or other property to the Holders or owners of GDRs and to sell the
securities represented by such rights, the Depositary will not offer such rights or distribute such
securities or other property to Holders of GDRs unless and until the Company procures at the
Company’s expense, the receipt by the Depositary of an opinion from counsel satisfactory to the
Depositary that the necessary registration has been effected or that the offer and sale of such
rights, securities or property to Holders of GDRs are exempt of registration. Neither the Company
nor the Depositary shall be liable to register such rights, securities or other property or the
securities to which such rights relate and they shall not be liable for any losses, damages or
expenses resulting from any failure to do so.
8. Conversion of Foreign Currency

Whenever the Depositary shall receive any currency other than United States dollars by way of
dividend or other distribution or as the net proceeds from the sale of securities, other property or
rights, and if at the time of the receipt thereof the currency so received can in the judgement of the
Depositary be converted on a reasonable basis into United States dollars and distributed to the
Holders entitled thereto, the Depositary shall as soon as practicable itself convert or cause to be
converted by another bank, by sale or in any other manner that it may determine, the currency so
received into United States dollars. If such conversion or distribution can be effected only with the

66
 approval or licence of any government or agency thereof, the Depositary, with the assistance of the
Company, shall make reasonable efforts to apply, or procure that an application be made, for such
approval or licence, if any, as it may consider necessary. If at any time the Depositary shall
determine that in its judgement any currency other than United States dollars is not convertible on
a reasonable basis into United States dollars and distributable to the Holders entitled thereto, or if
any approval or licence of any government or agency thereof which is required for such
conversion is denied or, in the opinion of the Depositary, is not obtainable, or if any such approval
or licence is not obtained within a reasonable period as determined by the Depositary, the
Depositary may distribute such other currency received by it (or an appropriate document
evidencing the right to receive such other currency) to the Holders entitled thereto to the extent
permitted under applicable law, or the Depositary may in its discretion hold such other currency
for the benefit of the Holders entitled thereto. If any conversion of any such currency can be
effected in whole or in part for distribution to some (but not all) Holders entitled thereto, the
Depositary may in its discretion make such conversion and distribution in United States dollars to
the extent possible to the Holders entitled thereto and may distribute the balance of such other
currency received by the Depositary to, or hold such balance on non-interest bearing accounts for
the account of, the Holders entitled thereto and notify the Holders accordingly.
9. Distribution of any Payments

(A) Any distribution of cash under Condition 4, 5, 6, 7 or 10 will be made by the Depositary
to those Holders who are Holders of record on the record date established by the
Depositary (which shall be the same date as the corresponding record date set by the
Company or, if different from the record date set by the Company, shall be set after
consultation with the Company and shall be as near as practicable to any record date set
by the Company) for that purpose and, if practicable in the opinion of the Depositary,
notice shall be given promptly to Holders in accordance with Condition 23, in each case
subject to any laws or regulations applicable thereto and (subject to the provisions of
Condition 8) distributions will be made in United States dollars by cheque drawn upon a
bank in New York City or, in the case of the Master GDR, according to usual practice
between the Depositary and the CSD, as the case may be. The Depositary or the Agent, as
the case may be, may deduct and retain from all moneys due in respect of such GDR in
accordance with the Deposit Agreement all fees, taxes, duties, charges, costs and
expenses which may become or have become payable under the Deposit Agreement or
under applicable law in respect of such GDR or the relative Deposited Property.
(B) Delivery of any securities or other property or rights other than cash shall be made as
soon as practicable to the entitled Holder, subject to any laws or regulations applicable
thereto. If any distribution made by the Company with respect to the Deposited Property
and received by the Depositary shall remain unclaimed at the end of 12 years from the
first date upon which such distribution is made available to Holders in accordance with
the Deposit Agreement, all rights of the Holders to such distribution or the proceeds of the
sale thereof shall be extinguished and the Depositary shall (except for any distribution
upon the liquidation of the Company, which remains unclaimed for such period as
aforesaid, when the Depositary shall retain the same) return the same to the Company for
its own use and benefit.

10. Capital Reorganisation

Upon any change in the par value, sub-division, consolidation or other reclassification of
Deposited Shares or any other part of the Deposited Property or upon any reduction of capital or
upon any reorganisation, merger or consolidation of the Company or to which it is a party (except
where the Company is the continuing corporation), the Depositary shall as soon as practicable give
notice of such event to the Holders in accordance with Condition 23 and, at its discretion, may treat
such event as a distribution and comply with the relevant provisions of Conditions 4, 5, 6 and 9
with respect thereto or may execute and deliver additional GDRs in respect of Shares or may
require the exchange of existing GDRs for new GDRs which reflect the effect of such change.

67
11. Taxation and Applicable Laws
(A) Payments to Holders of dividends or other distributions made to Holders on or in respect
of the Deposited Shares will be subject to deduction of Indian and other withholding taxes,
if any, at the applicable rates.
(B) If any governmental or administrative authorisation, consent, registration or permit or any
report to any governmental or administrative authority is required under any applicable
law in India in order for the Depositary to receive from the Company Shares to be
deposited under the Conditions or in order for Shares, other securities or other property to
be distributed under Condition 4, 5, 6 or 10 to be subscribed under Condition 7, the
Depositary shall request that the Company apply for such authorisation, consent,
registration or permit or file such report on behalf of the Holders within the time required
under such law. In this connection, the Company has undertaken in the Deposit
Agreement, to the extent reasonably practicable and that it does not involve unreasonable
expense on behalf of the Company, to take such action as may be required in obtaining or
filing the same. The Depositary shall not distribute GDRs, Shares, other securities or other
property with respect to which such authorisation, consent or permit or such report has not
been obtained or filed, as the case may be, and shall have no duties to obtain any such
authorisation, consent or permit or to file any such report except in circumstances where
the same may only be obtained or filed by the Depositary without, in the opinion of the
Depositary, unreasonable burden or expense.

12. Voting Rights

Holders of GDRs will have no voting rights with respect to the Deposited Shares. The Depositary
will not exercise any voting rights in respect of the Deposited Shares unless it is required to do so
by law. If so required, the Depositary will, at the direction of the Board of Directors of the
Company (subject to the advice of legal counsel taken by the Depositary and the Company at the
expense of the Company), either vote as directed by the Board of Directors of the Company or give
a proxy or power of attorney to vote the Deposited Shares in favour of a Director of the Company
or other person or vote in same manner as those shareholders designated by the Board of Directors
of the Company. A valid corporate decision of the Company will bind the Depositary and the
Holders notwithstanding these restrictions on voting rights.
Shares, which have been withdrawn from the depositary facility and transferred on the Company’s
register of members to a person other than the Depositary or its nominee, may be voted by the
holders thereof. However, Holders or owners of GDRs may not receive sufficient advance notice
of shareholder meetings to enable them to withdraw the Shares and vote at such meetings.

13. Documents to be Furnished, Recovery of Taxes, Duties and Other Charges

The Depositary shall not be liable for any taxes, duties, charges, costs or expenses which may
become payable in respect of the Deposited Shares or other Deposited Property or the GDRs,
whether under any present or future fiscal or other laws or regulations, and such part thereof as is
proportionate or referable to a GDR shall be payable by the Holder thereof to the Depositary at any
time on request or may be deducted from any amount due or becoming due on such GDR in
respect of any dividend or other distribution. In default thereof, the Depositary may, for the
account of the Holder, discharge the same out of the proceeds of sale and subject to Indian law and
regulations, of an appropriate number of Deposited Shares (being an integral multiple of the
number of Shares in respect of which a single GDR is issued) or other Deposited Property and
subsequently pay any surplus to the Holder. Any such request shall be made by giving notice
pursuant to Condition 23.

14. Liability

(A) In acting hereunder the Depositary shall have only those duties, obligations and
responsibilities expressly specified in the Deposit Agreement and these Conditions and,
other than holding the Deposited Property for the benefit of Holders as bare trustee, does
not assume any relationship of trust for or with the Holders or the owners of GDRs except

68
 that any funds received by the Depositary for the payment of any amount due, in
accordance with these Conditions, on the GDRs shall, subject to Condition 9(B) be held
by it in trust for the relevant Holder until duly paid thereto.
(B) None of the Depositary, the Custodian, the Company, nor any of their agents, officers,
directors or employees nor any Agent shall incur any liability to any other of them or to
any Holder or owner of a GDR if, by reason of any provision of any present or future law
or regulation of India or any other country or of any relevant governmental authority or by
reason of the interpretation or application of any such present or future law or regulation
or any change therein or by reason of any other circumstances beyond their control or, in
the case of the Depositary, the Custodian, any of their agents, officers, directors or
employees or any Agent, by reason of any provision, present or future, of the constitutive
documents of the Company, any of them shall be prevented, delayed or forbidden from
doing or performing any act or thing which the terms of the Deposit Agreement or these
Conditions provide shall or may be done or performed; nor (save in the case of wilful
default, negligence or bad faith) shall any of them incur any liability to any Holder, owner
of a GDR or person with an interest in any GDR by reason of any non-performance or
delay, caused as aforesaid, in performance of any act or thing which the terms of the
Deposit Agreement or these Conditions provide shall or may be done or performed, or by
reason of any exercise of, or failure to exercise, caused as aforesaid, any voting rights
attached to the Deposited Shares or any of them or any other discretion or power provided
for in the Deposit Agreement. Any such party may rely on, and shall be protected in acting
upon, any written notice, request, direction or other document believed by it to be genuine
and to have been duly signed or presented (including a translation which is made by a
translator believed by it to be competent or which appears to be authentic).
(C) Neither the Depositary, the Custodian nor any Agent shall be liable (except by reason of its
own wilful default, negligence or bad faith or that of its agent, officers, directors or
employees) to the Company or any Holder or owner of a GDR, by reason of having
accepted as valid or not having rejected any certificate for Shares or GDRs purporting to
be such and subsequently found to be forged or not authentic.
(D) Neither the Company nor the Depositary nor any of their respective agents shall be liable
to Holders of GDRs for any indirect, special, punitive or consequential damages.
(E) The Depositary and each of its Agents (and any holding, subsidiary or associated company
of the Depositary) may engage or be interested in any financial or other business
transactions with the Company or any of its subsidiaries or affiliates or in relation to the
Deposited Property (including, without prejudice to the generality of the foregoing, the
conversion of any part of the Deposited Property from one currency to another), may at
any time hold GDRs for its own account, and shall be entitled to charge and be paid all
usual fees, commission and other charges for business transacted and acts done by it as a
bank or in any other capacity, and not in the capacity of Depositary, in relation to matters
arising under the Deposit Agreement (including, without prejudice to the generality of the
foregoing, charges on the conversion of any part of the Deposited Property from one
currency to another and any sales of property) without accounting to Holders or any other
person for any profit arising therefrom.
(F) The Depositary shall endeavour to effect any such sale as is referred to or contemplated in
Condition 5, 6, 7, 10, 13 or 21 or any such conversion as is referred to in Condition 8 in
accordance with the Depositary’s normal practices and procedures, but shall have no
liability (in the absence of its own wilful default, negligence or bad faith or that of its
agents, officers, directors or employees) with respect to the terms of such sale or
conversion or if such sale or conversion shall not be possible. In the absence of its own
wilful default, negligence or bad faith the Depositary will not be responsible for any
failure to determine that it may be lawful or practicable to make rights available to Holders
in general or to any Holder in particular pursuant to Condition 7.

69
15. Issue and Delivery of Replacement GDRs and Exchange of GDRs

Subject to the payment of the relevant fees, taxes, duties, charges, costs and expenses and such
terms as to evidence and indemnity as the Depositary may require, replacement GDRs will be
issued by the Depositary and will be delivered in exchange for or in replacement of outstanding
lost, stolen, mutilated, defaced or destroyed GDRs upon surrender thereof (except in the case of
destruction, loss or theft) at the specified office of the Depositary or (at the request, risk and
expense of the holder) at the specified office of any Agent.

16. Depositary’s Fees, Costs and Expenses

(A) The Depositary shall be entitled to charge the following remuneration and receive the
following remuneration and reimbursement (such remuneration and reimbursement being
payable on demand) from the Holders in respect of its services under the Deposit
Agreement:
(i) for the issue of GDRs (other than upon the issue of GDRs on the date hereof) or
the cancellation of GDRs upon the withdrawal of Deposited Property: U.S.$0.05
or less per GDR issued or cancelled;
(ii) for issuing GDR certificates in definitive registered form in replacement for
mutilated, defaced, lost, stolen or destroyed GDR certificates: a sum per GDR
certificate which is determined by the Depositary to be a reasonable charge to
reflect the work, costs and expenses involved;
(iii) for issuing GDR certificates in definitive registered form (other than pursuant to
(ii) above): a sum per GDR certificate which is determined by the Depositary to
be a reasonable charge to reflect the work, costs (including, but not limited to,
printing costs) and expenses involved;
(iv) for receiving and paying any cash dividend or other cash distribution on or in
respect of the Deposited Shares: a fee of U.S.$0.02 or less per GDR for each such
dividend or distribution;
(v) in respect of any issue of rights or distribution of Shares (whether or not
evidenced by GDRs) or other securities or other property (other than cash) upon
exercise of any rights, any free distribution, stock dividend or other distribution
(except where converted to cash): U.S.$0.05 or less per outstanding GDR for
each such issue of rights, dividend or distribution;
(vi) for the operation and maintenance in administering the GDRs an annual fee of
U.S.$0.02 or less per GDR; and
(vii) in connection with inspections of the relevant share register maintained by the
local registrar, if applicable undertaken by the Depositary, the Custodian or their
respective agents: an annual fee of U.S.$0.01 or less per GDR (such fee to be
assessed against Holders of record as of the date or dates set by the Depositary as
it sees fit and collected at the sole discretion of the Depositary by billing such
Holders for such fee or by deducting such fee from one or more cash dividends
or other cash distributions;
together with all expenses, transfer and registration fees, taxes, duties and charges payable
by the Depositary, any Agent or the Custodian in connection with any of the above
including, but not limited to charges imposed by a central depositary and such customary
expenses as are incurred by the Depositary in the conversion of currencies other than U.S.
dollars into U.S. dollars and fees imposed by any relevant regulatory authority.
(B) The Depositary is entitled to receive from the Company such fees, taxes, duties, charges,
costs, expenses and other payments as agreed between them in any agreement concerning
such fees, taxes, duties, charges, costs, expenses and other payments.

70
17. Agents
(A) The Depositary shall be entitled to appoint one or more agents (the “Agents”) for the
purpose, inter alia, making distributions to the Holders.
(B) Notice of appointment or removal of any Agent or of any change in the specified office of
the Depositary or any Agent will be duly given by the Depositary to the Holders.

18. Listing
The Company has undertaken in the Deposit Agreement to use its best endeavours to obtain and
thereafter maintain, so long as any GDR is outstanding, a listing for GDRs on the DIFX and a
listing of the Shares on the BSE and the NSE. For that purpose the Company will pay all fees and
sign and deliver all undertakings required by the DIFX in connection therewith. In the event that
such listings are not maintained, the Company has undertaken in the Deposit Agreement to use its
best endeavours to obtain and maintain a listing of the GDRs on another international recognised
investment exchange designated as a “recognised investment exchange” for the purposes of s.841
(1) (b) of the United Kingdom Income and Corporation Taxes Act (ICTA) 1988 and a listing of the
Shares on one or more stock exchanges in India.

19 The Custodian
The Depositary has, pursuant to the Deposit Agreement, agreed with the Custodian that the
Custodian will receive and hold (or appoint agents approved by the Depositary to receive and hold)
all Deposited Property for the account and to the order of the Depositary in accordance with the
applicable terms of the Deposit Agreement, which include a requirement to segregate the
Deposited Property from the other property of, or held by, the Custodian. The Custodian shall be
responsible solely to the Depositary; provided that, if at any time the Depositary and the Custodian
are the same legal entity, references to them separately in these Conditions and the Deposit
Agreement are for convenience only and that legal entity shall be responsible for discharging both
functions directly to the Holders and the Company. Upon receiving notice of the resignation of the
Custodian, the Depositary shall promptly appoint a successor custodian, which shall, upon
acceptance of such appointment, become the Custodian under the Deposit Agreement. Whenever
the Depositary in its discretion determines that it is in the best interest of the Holders to do so, it
may terminate the appointment of the Custodian and, in the event of the termination of the
appointment of the Custodian, the Depositary shall promptly appoint a successor Custodian which
shall, upon acceptance of such appointment, become the Custodian under the Deposit Agreement
on the effective date of such termination. The Depositary shall notify Holders of such change as
soon as is practically possible following such change taking effect in accordance with Condition
23. Notwithstanding the foregoing, the Depositary may temporarily deposit the Deposited Property
in a manner or a place other than as herein specified; provided that, in the case of such temporary
deposit in another place, the Company shall have consented to such deposit and such consent of the
Company shall have been delivered to the Custodian. In case of transportation of the Deposited
Property under this Condition, the Depositary shall obtain appropriate insurance at the expense of
the Company if, and to the extent that, the obtaining of such insurance is reasonably practicable
and the premiums payable are, in the opinion of the Depositary, of a reasonable amount.

20. Resignation and Termination of Appointment of the Depositary

(A) Unless otherwise agreed to in writing between the Company and Depositary from time to
time, the Company may terminate the appointment of the Depositary under the Deposit
Agreement by giving at least 90 days’ notice in writing to the Depositary and the
Custodian, and the Depositary may resign as Depositary by giving 90 days’ notice in
writing to the Company and the Custodian. Within 30 days after the giving of such
notice, notice thereof shall be duly given by the Depositary to the Holders in accordance
with Condition 23. Such resignation by the Depositary shall be subject to the terms and
conditions of any other agreement executed between the Depositary and the Company.
The termination of the appointment or the resignation of the Depositary shall take effect
on the date specified in the relevant notice provided that no such termination of
appointment or resignation shall take effect until the appointment by the Company of a

71
 successor depositary, the grant of such approvals as may be necessary to comply with
applicable laws and with the constitutive documents of the Company for the transfer of
the Deposited Property to such successor depositary, the acceptance of such appointment
to act in accordance with the terms thereof by the successor depositary and the payment
to the Depositary of all fees, taxes, duties, charges, costs, expenses and other payments as
agreed by the Depositary and the Company in any agreement concerning such fees, taxes,
duties, charges, costs, expenses and other payments. The Company has undertaken in the
Deposit Agreement to use its best endeavours to procure the appointment of a successor
depositary with effect from the date of termination specified in such notice as soon as
reasonably possible following notice of such termination or resignation. Upon any such
appointment and acceptance, notice thereof shall be duly given by the successor
depositary to the Holders in accordance with Condition 23.
(B) Upon the termination of appointment or resignation of the Depositary, the Depositary
shall deliver to its successor depositary sufficient information and records to enable such
successor efficiently to perform its obligations under the Deposit Agreement and shall
deliver and pay to such successor depositary all Deposited Property held by it under the
Deposit Agreement. Upon the date when such termination of appointment or resignation
takes effect, the Deposit Agreement provides that the Custodian shall be deemed to be the
Custodian thereunder for such successor depositary and shall hold the Deposited Property
for such successor depositary and the Depositary shall thereafter have no obligation
thereunder.

21. Termination of Deposit Agreement

(A) Subject as set out below, either the Company or the Depositary but, in the case of the
Depositary, only if the Company has failed to appoint a replacement Depositary within 90
days of the date on which the Depositary has given notice pursuant to Condition 20 that it
wishes to resign, may terminate the Deposit Agreement by giving 90 days’ notice to the
other and to the Custodian. Within 30 days after the giving of such notice, notice of such
termination shall be duly given by the Depositary to Holders of all GDRs then
outstanding in accordance with Condition 23.
If the Company terminates the Deposit Agreement, it will (unless the termination is due to
the wilful default, negligence or fraud of the Depositary) be obligated, prior to such
termination, to reimburse to the Depositary all amounts owed to the Depositary as set out
in the Deposit Agreement and in any agreement between the Depositary and the Company.
(B) During the period beginning on the date of the giving of such notice by the Depositary to
the Holders and ending on the date on which such termination takes effect, each Holder
shall be entitled to obtain delivery of the Deposited Property relative to each GDR held
by it, subject to the provisions of paragraph (D) of Condition 2 and upon compliance with
Condition 2, and further upon payment by the Holder of any sums payable by the
Depositary to the Custodian in connection therewith for such delivery and surrender but
otherwise in accordance with the Deposit Agreement.
(C) If any GDRs remain outstanding after the date of termination, the Depositary shall as
soon as reasonably practicable sell the Deposited Property then held by it under the
Deposit Agreement and shall not register transfers, shall not pass on dividends or
distributions or take any other action except that it will deliver the net proceeds of any
such sale, together with any other cash then held by it under the Deposit Agreement, pro
rata to Holders of GDRs which have not previously been so surrendered by reference to
that proportion of the Deposited Property which is represented by the GDRs of which
they are Holders. After making such sale, the Depositary shall be discharged from all
obligations under the Deposit Agreement and these Conditions, except its obligations to
account to Holders for such net proceeds of sale and other cash comprising the Deposited
Property without interest.
(D) The Company has agreed not to appoint any other depositary for the issue of depositary
receipts so long as Deutsche Bank Trust Company Americas is acting as Depositary
under the Deposit Agreement.

72
22. Amendment of Deposit Agreement and Conditions
All and any of the provisions of the Deposit Agreement and these Conditions (other than this
Condition 22 and Clause 12 of the Deposit Agreement) may at any time and from time to time be
amended by written agreement between the Company and the Depositary and if required, the
Securities and Exchange Board of India (or its successor organisation) in any respect which they
may deem necessary or desirable. Notice of any amendment of these Conditions (except to correct
a manifest error) shall be duly given to the Holders by the Depositary and any amendment (except
as aforesaid) which shall increase or impose fees or charges payable by Holders or which shall
otherwise, in the opinion of the Depositary, be materially prejudicial to the interests of the Holders
(as a class) shall not become effective so as to impose any obligation on the Holders of the
outstanding GDRs until the expiry of three months after such notice shall have been given. During
such period of three months, each Holder shall be entitled to obtain, subject to and upon
compliance with Condition 2, delivery of the Deposited Property relative to each GDR held by it
upon surrender thereof, free of the charge specified in paragraph (A)(i) of Condition 16 for such
delivery and surrender but otherwise in accordance with the Deposit Agreement. Each Holder at
the time when any such amendment so becomes effective shall be deemed, by continuing to hold a
GDR, to approve such amendment and to be bound by the terms thereof in so far as they affect the
rights of the Holders. In no event shall any amendment impair the right of any Holder to receive,
subject to and upon compliance with Condition 2, the Deposited Property attributable to the
relevant GDR.

23. Notices
All notices to Holders shall be validly given if mailed to them at their respective addresses in the
register of Holders maintained by the Depositary or furnished to them by electronic transmission as
agreed between the Company and the Depositary and, so long as the GDRs are listed on the DIFX,
published on the trading system and website of the DIFX (www.difx.ae) or any other method of
publication as the DIFX Listing Rules may provide.
All notices required to be given by the Company to the Holders pursuant to any applicable laws,
regulations or other agreements shall be given by the Company to the Depositary and upon receipt
of any such notices, the Depositary shall forward such notices to the Holders. The Depositary shall
not be liable for any notices required to be given by the Company which the Depositary has not
received from the Company, nor shall the Depositary be liable to monitor the obligations of the
Company to provide such notices to the Holders.

24. Reports and Information on the Company

(A) The Company has undertaken in the Deposit Agreement (so long as any GDR is
outstanding) to furnish the Depositary with six copies in English by mail, facsimile or
electronic transmission as agreed between the Company and the Depositary (and to make
available to the Depositary, the Custodian and each Agent as many further copies as they
may reasonably require to satisfy requests from Holders) of:
(i) in respect of the financial year ending on 31 March 2005 and in respect of each
financial year thereafter, the non-consolidated (or, if published for holders of
Shares, consolidated) balance sheets as at the end of such financial year and the
non-consolidated (or, if published for holders of Shares, consolidated)
statements of income for such financial year in respect of the Company,
prepared in conformity with either generally accepted accounting principles in
India or, at the option of the Company, in accordance with International
Financial Reporting Standards and reported upon by independent public
accountants selected by the Company, as soon as practicable (and in any event
within nine months) after the end of such year; and
(ii) semi-annual non-consolidated (or, if published for holders of Shares,
consolidated) financial statements as soon as practicable (and in any event, not
later than four months after the date to which they relate) after the same are
published.

73
 (B) The Depositary shall, upon receipt thereof, give due notice to the Holders that such
copies are available upon request at its specified office and the specified office of any
Agent.

25. Copies of Company Notices

On or before the day when the Company first gives notice, by mail, publication or otherwise, to
holders of any Shares or other Deposited Property, whether in relation to the taking of any action
in respect thereof or in respect of any dividend or other distribution thereon or of any meeting or
adjourned meeting of such holders or otherwise, the Company has undertaken in the Deposit
Agreement to transmit to the Custodian and the Depositary such number of copies of such notice
and any other material (which in the opinion of the Company contains information having a
material bearing on the interests of the Holders) furnished to such holders by the Company in
connection therewith as the Depositary may reasonably request. If such notice is not furnished to
the Depositary in English, either by the Company or the Custodian, the Depositary shall, at the
Company’s expense, arrange for an English translation thereof (which may be in such summarised
form as the Depositary may deem adequate to provide sufficient information) to be prepared. The
Depositary shall, as soon as practicable after receiving notice of such transmission or (where
appropriate) upon completion of translation thereof, give due notice to the Holders which notice
may be given together with a notice pursuant to paragraph (A) of Condition 9, and shall make the
same available to Holders in such manner as it may determine.

26. Moneys Held by the Depositary

The Depositary shall be entitled to deal with moneys paid to it by the Company for the purposes of
the Deposit Agreement in the same manner as other moneys paid to it as a banker by its customers
and shall not be liable to account to the Company or any holder or any other person for any interest
thereon, except as otherwise agreed.

27. Disclosure of Beneficial Ownership and Other Information

The Depositary may from time to time request Holders or former Holders or any clearing system in
which the GDRs are from time to time cleared to provide information as to the capacity in which
they hold or held GDRs and regarding the identity of any other persons then or previously
interested in such GDRs and the nature of such interest and various other matters. Each such
Holder agrees to provide any such information reasonably requested by the Depositary pursuant to
the Deposit Agreement whether or not still a Holder at the time of such request.

28. Severability
If any one or more of the provisions contained in the Deposit Agreement or in these Conditions
shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained therein or herein shall in no way be affected,
prejudiced or otherwise disturbed thereby.

29. Governing Law

(A) The Deposit Agreement and the GDRs are governed by, and shall be construed in
accordance with, English law. The rights and obligations attaching to the Deposited
Property will be governed by Indian Law. The Company has submitted in respect of the
Deposit Agreement and these Conditions to the jurisdiction of the English courts.
(B) The courts of England are to have jurisdiction to settle any disputes which may arise out of
or in connection with the GDRs and accordingly any legal action or proceedings arising
out of or in connection with the GDRs (“Proceedings”) may be brought in such courts.
This submission is made for the benefit of each of the Holders and shall not limit the right
of any of them to take Proceedings in any other court of competent jurisdiction nor shall
the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings
in any other jurisdiction (whether concurrently or not).

74
 (C) The Depositary irrevocably appoints the Managing Director for the time being of
Deutsche Trustee Company Limited, currently situated at Winchester House, 1 Great
Winchester Street, London EC2N 2DB as its authorised agent for service of process in
England. If for any reason the Depositary does not have such an agent in England, it will
promptly appoint a substitute process agent and notify the Company of such appointment.
Nothing herein shall affect the right to serve process in any other manner permitted by
law.

30. Contracts (Rights of Third Parties) Act, 1999

No person shall have any right to enforce these terms and conditions under the Contracts (Rights
of Third Parties) Act, 1999 except and to the extent (if any) that these terms and conditions
expressly provide for such Act to apply.

75
 SUMMARY OF PROVISIONS RELATING TO THE GDRS WHILE IN MASTER FORM

A Master GDR in registered form represents the GDRs. The Master GDR is registered in the name of a
common nominee (the “Common Nominee”), and held by Deutsche Bank Trust Company Americas in its
capacity as common depositary (the “Common Depositary”). The Master GDR contains certain provisions
that apply to the GDRs while they are in master form. The terms and conditions described below include
summaries of, and are subject to, the detailed provisions of the Deposit Agreement, which includes the
forms of the relevant certificates. Copies of the Deposit Agreement are available for inspection at the
specified office of the Depositary and each Agent and at the Office of the Custodian. Holders are deemed to
have notice of and be bound by all of the provisions of the Deposit Agreement. Terms used in the terms and
conditions below and not defined herein but which are defined in the Deposit Agreement have the
meanings ascribed to them in the Deposit Agreement.

The Master GDR will only be exchanged for certificates in definitive registered form evidencing GDRs in
the circumstances described in (i), (ii), (iii) or (iv) below in whole but not, except in the case of (iii) or (iv)
below, in part. Subject to the terms and conditions hereof, the Depositary hereby irrevocably undertakes to
deliver certificates evidencing GDRs in definitive registered form in exchange for the Master GDR to
persons entitled to interests in the Master GDR within 60 days in the event that:

(i) the holder of the Master GDR is unwilling or unable to continue as settlement agent (or as
nominee thereof) and a successor settlement agent (or successor depositary) (or successor nominee
thereof), is not appointed within 90 calendar days; or

(ii) CSD is closed for business for a continuous period of 14 days (other than by reason of holiday,
statutory or otherwise) or announces an intention permanently to cease business or does, in fact,
do so and no alternative clearing system satisfactory to the Depositary is available within 45 days;
or

(iii) the Depositary has determined that, on the occasion of the next payment in respect of the GDRs,
the Company, the Depositary or its Agent would be required to make any deduction or
withholding from any payment in respect of the GDRs which would not be required were the
GDRs in definitive form; or

(iv) the Holder gives notice to the Depositary of its desire to exchange a part or the whole of the
Master GDR for certificates evidencing GDRs in definitive registered form.

In relation to (iii) and (iv) above any person appearing in the records maintained by the CSD as entitled to
any interest in the Master GDR shall be entitled to require the Holder to procure the exchange of an
appropriate part of the Master GDR for a definitive GDR for an interest held by such person in the Master
GDR in the above circumstances upon notice to the Holder. Any such exchange shall be at the expense
(including printing costs) of the Holder in the case of such appropriate part or at the expense of the Holders
in case of exchange of the whole of the Master GDR for the definitive GDRs.

See “Terms and Conditions of the Global Depositary Receipts" on page 61. "Depositary’s Fees, Costs and
Expenses" on page 70 for details of certain of the costs for issuing GDRs in definitive form.

Upon any exchange of a part of the Master GDR for a certificate evidencing a GDR or GDRs in definitive
form or any distribution of GDRs pursuant to Conditions 3, 5, 6, 7 or 10, or any reduction in the number of
GDRs evidenced hereby following any withdrawal of any Deposited Property pursuant to Condition 2, or
any increase in the number of GDRs following the deposit of Shares pursuant to Condition 1, the relevant
details shall be entered on the Register of the Depositary, whereupon the number of GDRs represented by
the Master GDR shall be reduced or increased. As the case may be, for all purposes by the amount so
exchanged and entered on the Register, provided always that if the number of GDRs evidenced by the
Master GDR is reduced to zero the Master GDR shall continue in existence until the obligations of the
Company under the Deposit Agreement and the obligations of the Depositary pursuant to the Deposit
Agreement and the Conditions have terminated.

76
Payments and Distributions

Payments of cash dividends and other amounts (including cash distributions) in respect of the GDRs
evidenced by the Master GDR will be made by the Depositary through the CSD on behalf of persons
entitled thereto upon receipt of funds therefore from the Company. A free distribution or rights issue of
Shares to the Depositary on behalf of Holders may result in the Master GDR being marked up to reflect the
enlarged number of GDRs it thereby evidences.

Surrender of GDRs

Any requirement in the Conditions relating to the surrender of a GDR to the Depositary shall be satisfied
by the production by the Common Depositary on behalf of a Holder of such evidence of entitlement of such
Holder as the Depositary may reasonably require, which is expected to be a certificate or other documents
issued by the CSD or, if relevant, an alternative clearing system. The delivery or production of any such
evidence shall be sufficient evidence, in favour of the Depositary, any Agent and the Custodian of the title
of such person to receive (or to issue instructions for the receipt of) all moneys or other property payable or
distributable, in respect of the Deposited Property represented by such GDRs.

Notices

For so long as the Master GDR is registered in the name of a Common Depositary on behalf of the CSD,
notices may be given by the Depositary by delivery of the relevant notice to the Common Depositary for
communication to persons entitled thereto in substitution for publication required by Condition 23.

77
 INFORMATION RELATING TO THE DEPOSITARY

The Depositary is Deutsche Bank Trust Company Americas. Deutsche Bank Trust Company Americas
was incorporated in 1903 as a bank with limited liability in the State of New York and is an indirect
wholly-owned subsidiary of Deutsche Bank AG. The Depositary is subject to regulation and supervision
by the New York State Banking Department, the Federal Reserve Board and the Federal Deposit Insurance
Corporation. The registered office of the Depositary is located at 60 Wall Street, New York, NY 10005
and the registered number is BR1026. A copy of the Depositary’s by-laws, as amended, together with
copies of the most recent financial statements and annual report of the Depositary will be available for
inspection at the principal administrative establishment of the Depositary located at 60 Wall Street, DR
Department, 27th Floor, New York, NY 10005 and at the office of the Depositary located at Winchester
House, 1 Great Winchester Street, London EC2N 2DB.

78
 NATURE OF THE INDIAN SECURITIES TRADING MARKET

The information in this section has been extracted from publicly available documents, including officially
prepared materials from the SEBI, the BSE and has not been prepared or independently verified by the
Company. Rana Sugars accepts responsibility for the information contained in these listing particulars. To
the best of the knowledge and belief of the Company and its Directors (who have taken all reasonable care
to ensure that such is the case), the information contained herein is in accordance with the facts and does
not omit anything likely to affect the import of such information.

The Indian Securities Market

India has a long history of organised securities trading. In 1875, the first stock exchange was established in
Mumbai. As of today there are twenty four Stock Exchanges in India.

Stock Exchange Regulation

India's stock exchanges are regulated primarily by the SEBI, as well as by the Government acting through
the Ministry of Finance, Stock Exchange Division, under the Securities Contracts Act and the Securities
Contracts Rules. The Securities Contract Rules regulate the recognition of stock exchanges, the
qualifications for membership and the manner in which contracts are entered into and enforced between
members.

The main objective of SEBI, which was established by the Government in February 1992, is to promote the
development of and regulate the Indian securities markets and protect the interests of investors. SEBI may
make or amend an exchange's by-laws and rules, overrule an exchange's governing body and withdraw
recognition of an exchange. In the past, SEBI's regulation of market practices was limited. The SEBI Act
granted SEBI powers to regulate the business of Indian securities markets, including stock exchanges and
other financial intermediaries, promote and monitor self-regulatory organisations, prohibit fraudulent and
unfair trade practices and insider trading, and regulate substantial acquisitions of shares and takeovers of
companies. SEBI has also issued guidelines concerning minimum disclosure requirements by public
companies, rules and regulations concerning investor protection, insider trading, substantial acquisitions of
shares and takeovers of companies, buybacks of securities, employee stock option schemes, stockbrokers,
merchant bankers, mutual funds, credit rating agencies and other capital market participants.

Recently, the Securities Contracts Act has been amended to include derivatives of securities and
instruments of collective investment in the definition of “securities”. This has been done with a view to
develop and regulate the markets for derivatives. SEBI has also set up a committee for the review of Indian
securities laws, which has proposed a draft Securities Bill. The draft Securities Bill, if accepted, will result
in a substantial revision in the laws relating to securities in India. Recently, the Companies Act was
amended to introduce significant changes such as allowing the buyback of securities, issuance of sweat
equity shares, making accounting standards issued by the Institute of Chartered Accountants of India
mandatory and relaxing restrictions on inter-corporate investment and loans.

Public Issuance of Securities

Under the Companies Act, a public offering of securities in India must generally be made by means of a
prospectus, which must contain information specified in the Companies Act and under applicable SEBI
guidelines and be filed with the Registrar of Companies having jurisdiction over the place where the
Company's registered office is situated. The Company's Directors and Promoters may be subject to civil
and criminal liability for misstatements in a prospectus. The Companies Act also sets forth procedures for
the acceptance of subscriptions and the allotment of securities among subscribers and establishes maximum
commission rates for the sale of securities.

SEBI has issued detailed guidelines concerning disclosures by public companies and investor protection.
Prior to the repeal of certain rules in mid-1992, the Controller of Capital Issues of the Government
regulated the prices at which companies could issue securities. SEBI guidelines now permit existing listed
companies to price freely their public or rights issue of securities, though the pricing of initial public
offerings is subject to certain restrictions. All new issues governed by SEBI guidelines are conditional upon

79
a minimum subscription requirement of 90% of the securities being issued. However, such minimum
subscription clause is not applicable to Development Financial Institutions. In July 1996, SEBI relaxed the
foregoing minimum subscription requirement in the case of “offer for sale” of securities (i.e., a sale by
existing shareholders), but introduced regulations which require that there be a minimum of ten
shareholders for every Rs.100,000 of the nominal value of shares offered to the public. In the case of public
issues, the requirement is for a minimum of five shareholders for every Rs.100,000 of the nominal value of
shares offered to the public. Promoters of companies are required to retain a certain minimum certified
holding of equity share capital, which is subject to a lock-in for three years. No issuance of bonus shares is
permitted within twelve months of any public issue or rights issue.

Public limited companies are required under the Companies Act to prepare, file with the Registrar of
Companies and circulate to their shareholders audited annual accounts, which comply with the Companies
Act's disclosure requirements and regulations governing their manner of presentation. In addition, a listed
company is subject to continuing disclosure requirements pursuant to the terms of its listing agreement with
the relevant stock exchange. SEBI has recently notified amendments to the listing agreement tightening the
continual disclosure standards by corporations. Accordingly, companies are now required to publish
unaudited financial statements on a quarterly basis and are required to inform stock exchanges immediately
regarding any price sensitive information.

Listing

The listing of securities on a recognised Indian stock exchange is regulated by the Securities Contracts
Rules.

Under the standard terms of stock exchange Listing Agreements, the governing body of each stock
exchange is empowered to suspend trading of or dealing in a listed security for breach of a company's
obligations under such agreement, subject to the company receiving prior notice of the intent of the
exchange. A listed company can also be delisted after a notice period of six months, if the number of public
shareholders falls below five for every Rs.100,000 nominal value of shares offered to the public or the
listed company fails to pay annual listing fees to the relevant stock exchange. SEBI has recently issued
guidelines for standardising Listing Agreements and by-laws of stock exchanges in India. SEBI proposes to
issue additional guidelines, which set out basic listing standards for all stock exchanges in India. In the
event that a suspension of a company's securities continues for a period in excess of three months, the
company may appeal to SEBI to set aside the suspension. SEBI has the power to veto stock exchange
decisions in this regard.

Indian Stock Exchanges

There are twenty four (24) stock exchanges in India. As of 31 March 2005, over nine thousand (9000)
brokers dispersed across India served these stock exchanges. Most of the stock exchanges have their
governing board for self-regulation.

The BSE and the NSE account for a majority of trading volumes of securities in India. The BSE and NSE
together hold a dominant position among the stock exchanges in terms of number of listed companies,
market capitalisation and trading activity.

SEBI had prescribed certain guidelines for the pricing and reporting of negotiated deals. A negotiated deal
refers to a transaction executed at a price not determined through stock exchange pricing and involving a
value of not less than Rs.2.5 million or a volume of not less than 10,000 shares. Earlier, a negotiated deal
had to be reported to the stock exchange within fifteen minutes from the time the trade was negotiated, or if
such transaction occurs after trading hours, on the next day when the market opens.

However, for greater transparency, SEBI has decided that negotiated deals will not be permitted in the
existing manner, and they have to be executed on the screens of the exchanges just like any other normal
trade.

There are generally no restrictions on price movements of any security on any given day. However, to
restrict abnormal price volatility, SEBI has instructed stock exchanges to apply daily circuit breakers that
do not allow transactions at prices different by more than 8% of the previous closing price for shares

80
quoted at Rs.20 or more. SEBI has recently instructed stock exchanges to relax the circuit breakers by a
further 4% after half an hour from the time prices reach the limit of 8% It has allowed stock exchanges to
fix circuit breakers for shares quoted at prices up to Rs.20. Further, margin requirements are also imposed
by stock exchanges that are required to be paid at rates fixed by the stock exchanges. The stock exchanges
can also exercise the power to suspend trading during periods of market volatility.

A settlement cycle is an account period for the securities traded on a stock exchange. At the end of the
period, obligations are settled, i.e., buyers of securities pay for and receive securities while sellers give
securities and receive payment for them. The obligations are settled on a net basis, i.e., if some security is
both purchased and sold in the same settlement cycle then only the net quantity of securities is delivered or
received and the net amount of funds paid or received. Typically, the length of the settlement period is five
business days. SEBI has specified ten shares that were to be settled by rolling settlement from 10 January
2000. Under rolling settlement, the length of the settlement period is one day.

In December 1993, SEBI announced a ban on forward trading on the Ahmedabad, Calcutta and Delhi stock
exchanges and the BSE in order to contain excessive speculation, protect the interests of investors and
regulate the stock market. All transactions thereafter were required to be for payment and delivery.

In October 1995, SEBI announced the introduction of a modified forward trading system to enable buyers
and sellers to defer the settlement of their obligations to the following settlement cycle. This system began
on BSE in January 1996 for select shares. The new system segregates trades into different categories,
namely, carry-forward, delivery and jobbing, with different identification numbers of the various trades.
SEBI has appointed a committee to recommend modalities for a carry forward mechanism under the rolling
settlement. Once the revised carry forward mechanism is approved, rolling settlement will be applicable
also for shares in the carry forward list.

In 1992, SEBI promulgated rules and regulations that prescribe conditions for registration of stockbrokers.
A stockbroker may not buy, sell or deal in securities except pursuant to a certificate granted by SEBI. The
regulations also prescribe a broker code of conduct and rules for the fair treatment of investors by brokers,
the procedures for registration, the payment of registration fees, maintenance of appropriate books and
records and the right of inspection of the books of the stockbrokers by SEBI. Broker liability in cases of
default extends to suspension or cancellation of the broker's registration. SEBI has issued registration
certificates to over 9,000 stockbrokers who are members of various stock exchanges in India. Before these
regulations, stockbrokers were required to be registered only with the stock exchanges of which they were
members. SEBI regulations introduced the concept of dual registration of stockbrokers with SEBI and the
stock exchanges, and brought the brokers under regulation for the first time.

SEBI has enforcement powers over secondary market participants for violation of any provisions of SEBI
Act, 1992, or breach of the rules and regulations of SEBI. SEBI may also take enforcement action for
violations of the Securities Contracts Act or rules made thereunder and rule regulations and by-laws of the
stock exchanges.

BSE

The BSE, the oldest stock exchange in India, was established in 1875. It has evolved over the years into its
present status as the premier stock exchange of India. The BSE switched over to online trading (“BOLT”)
from May 1995. As of 31 January 2005, the BSE had 781 members, comprising 201 individual members, 561
Indian companies and 19 foreign institutional investors. Only a member of the BSE has the right to trade in
the stocks listed on the BSE.

As of 30 June 2005, there were 4,738 listed companies trading on the BSE and the estimated market
capitalisation of stocks trading on the BSE was Rs.18,503.8 billion (U.S.S424.5 billion). The average daily
turnover on the BSE was Rs.25.4 billion (U.S.$0.6 billion) in June 2005. The BSE had over 11,000 trader
work stations spread over 400 cities as of 30 June 2005.

Derivatives trading commenced on the BSE in 2000. The BSE has also wholesale and retail debt trading
segments. Retail trading in government securities commenced in January 2003.

81
Trading Hours

Trading on the BOLT system of the BSE is conducted from Monday through Friday between 9:55 a.m. to
3:30 p.m. The BSE is closed on public holidays.

Trading Procedure

Until 1995, brokers and members of the BSE received individual orders from which any cross-orders were
matched and taken off. The balance of the orders was transmitted to the trading floor for execution in an
open outcry system. The BSE has now introduced its BOLT online trading system on the exchange. The
enhanced transparency in dealings due to implementation of BOLT has assisted considerably in
smoothening settlement cycles and improving efficiency in back office work. The BOLT was
commissioned on 14 March 1995.

Transaction tax

The Finance Act 2004 has inserted a levy of securities transaction taxes on taxable securities transactions.
According to this act, the rate of levy of the securities transaction tax is as follows:

Sl. No. Taxable Securities Transaction Rate Payable by

1. Purchase of an equity share in a company or a unit of an equity 0.1% Purchaser
oriented fund, where (a) such purchase is transacted on a
recognised stock exchange; and (b) the contract for the
purchase of such share or unit is settled by the actual delivery
or transfer of such share or unit

2. Sale of an equity share in a company or a unit of an equity 0.1% Seller

oriented fund, where (a) such sale is transacted on a recognised
stock exchange; and (b) the contract for the sale of such share
or unit is settled by the actual delivery or transfer of such share
or unit

3. Sale of an equity share in a company or a unit of an equity 0.02% Seller

oriented fund, where (a) such sale is transacted on a recognised
stock exchange; and (b) the contract for the sale of such share
or unit is settled otherwise than by the actual delivery or
transfer of such share or unit

4. Sale of a derivative where the transaction of such sale is entered 0.0133% Seller
into on a recognised stock exchange

5. Sale of a unit of equity and equity oriented fund to a mutual 0.2% Seller
fund

Derivatives (futures and options)

Trading in derivatives is governed by the Securities Contracts (Regulation) Act, 1956 and the Securities and
Exchange Board of India Act, 1992. The Securities Contracts (Regulation) Act, 1956 was amended in
February 2000 and derivative contracts were included within the term “securities”, as defined by the
Securities Contracts Act. Trading in derivatives in India takes place either on separate and independent
derivatives exchanges or on a separate segment of an existing stock exchange. Derivatives products have been
introduced in a phased manner in India, starting with futures contracts in June 2000 and index options, stock
options and stock futures in June 2000, July 2001 and November 2001, respectively.

Settlement

The trades done by the members during the weekly trading period from Monday to Friday are settled by
payment of monies and delivery of securities in the following week. All deliveries of securities are required
to be routed through the clearinghouse. The securities, as per delivery orders issued by the BSE, are to be

82
delivered in the clearing house on the day designated for securities pay-in, i.e., on Wednesday without any
time slot up to 4:00 p.m. and as per time slot between 4:00 p.m. and 6:00 p.m. and on Thursday as per
prescribed time slots up to 2:00 p.m. The members can, however, submit deliveries between 2:30 p.m. and
4:00 p.m. on Thursday on payment of late delivery charges. The BSE clearing house then delivers
securities to the brokers on Friday and makes payments to the brokers on Saturday. The clearinghouse
compulsorily auctions all shortages in delivery. The auction system is fully computerised and has been
following a closed-bid system. For payments, the bank accounts of the brokers are maintained with the
designated clearing banks, which are debited or credited on the specified days.

Commissions

The maximum commission charged by brokers for trading equities is 2.5% of the transaction value but, in
practice, commissions are normally in the range of 0.5% to 2% The 1994 budget imposed a 5% service tax
on brokerage commissions, which was subsequently increased to 8% by 2003 budget.

Stock Market Indices

The following two indices are generally used in tracking the aggregate price movements on the BSE.

The BSE Sensitive Index (Sensex) consists of listed shares of 30 large market capitalisation companies.
The companies were selected on the basis of market capitalisation, liquidity and the need for industry
representation. The BSE Sensitive Index was first compiled in 1986 with the fiscal year ended 31 March
1979 as its base year. This is the most commonly used index in India.

The BSE 100 Index (formerly the BSE National Index) contains listed shares of 100 companies including
the 30 in the BSE Sensitive Index, and fiscal year 1983-84 was chosen as the base year. The BSE 100
Index was introduced in January 1989.

Internet-Based Securities Trading and Services

SEBI allows Internet-based securities trading under the existing legal framework. The regulations seek to
allow the Internet to be used as an order routing system through stock brokers registered with SEBI on
behalf of clients for executing trades on a recognised stock exchange in India. Stock brokers interested in
providing this service are required to apply for permission to the respective stock exchange and also have to
comply with certain minimum conditions stipulated by SEBI. Given the limited life of these new
regulations to date, it is possible that these regulations will continue to evolve in the future.

Depositaries

In August 1996, the Indian Parliament enacted the Depositories Act, which provides a legal framework for
the establishment of depositaries to record ownership details and effectuate transfers in book-entry form.
SEBI enacted. SEBI (Depositories and Participants) Regulations, 1996, which provides for the formation of
such depositaries, the registration of participants as well as the rights and obligations of the depositaries,
participants and the issuers. Every depositary has to register with SEBI. Pursuant to the Depositories Act,
the National Securities Depositary Limited was established by the Unit Trust of India, the Industrial
Development Bank of India and the NSE in 1996, to provide electronic depositary facilities for trading in
equity and debt securities. The National Securities Depositary Limited, which commenced operations in
November 1996, was the first depositary in India. Another depositary, the Central Depositary Services
(India) Limited, established by the BSE has commenced operations since 15 July 1999. The depositary
system has significantly improved the operations of the Indian securities markets.

Trading of securities in book-entry form commenced in December 1996 and was available for securities of
1,473 companies as of 9 November 2000. In order to encourage “dematerialisation” of securities, SEBI has
set up a working group on dematerialisation of securities comprising FIIs, custodians, stock exchanges,
mutual funds and the National Securities Depositary Limited to review the progress of securities and
trading in dematerialised form and to recommend scripts for compulsory dematerialised trading in a phased
manner. Accordingly, commencing January 1998, SEBI has notified Scripps of various companies for
compulsory dematerialised trading by certain categories of investors such as FIIs and other institutional
investors and has also notified compulsory dematerialised trading in specified Scripps for all retail

83
investors. SEBI proposes to increase the number of Scripps in which dematerialised trading is compulsory
for all investors significantly in the near future. SEBI has also provided that the issue and allotment of
shares in public, rights or offer for sale after a specified date to be notified by SEBI shall only be in
dematerialised form and an investor shall be compulsorily required to open a depositary account with a
participant.

However, even in case of scripts notified for compulsory dematerialised trading, investors, other than
institutional investors, are permitted to trade in physical shares on transactions outside the stock exchange
where there are no requirements of reporting such transactions to the stock exchange and on transactions on
the stock exchange involving lots less than 500 securities.

84
 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

General

Prior to 1 June 2000, foreign investment in Indian securities, including the acquisition, sale and transfer of
securities of Indian companies, was regulated by the Foreign Exchange (Regulation) Act, 1973 of India (the
“FERA”) and the notifications issued by the RBI thereunder.

With effect from 1 June 2000, foreign investment in Indian securities is regulated by the Foreign Exchange
Management Act, 1999 (as amended from time to time) (“FEMA”) and the rules, regulations and
notifications by the RBI made under FEMA. A person resident outside India can acquire or transfer any
security of an Indian company or any other security to an Indian resident only under the terms and
conditions specified in FEMA and the rules and regulations made thereunder.

The RBI issued the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
Outside India) Regulations 2000 (the “Regulations”) to regulate the issue of Indian securities including
global depositary receipts to persons resident outside India and the transfer of Indian securities by or to
persons resident outside India. The RBI has also issued the Foreign Exchange Management (Transfer or
Issue of any Foreign Security) Regulations 2000 (the “ODI Regulations”).

The Regulations provide that an Indian entity may issue securities to a person resident outside India or
record in its books any transfer of security from or to such person only in the manner set forth in FEMA
and the rules and regulations made thereunder or as permitted by the RBI.

Foreign Direct Investment

The Government of India, pursuant to its liberalisation policy, set up the Foreign Investment Promotion
Board, Ministry of Finance, Government of India (the “FIPB”) to regulate all investments by way of
subscription and/or purchase of securities of an Indian company by a non-resident investor (“Foreign Direct
Investment” or “FDI”) into India. FIPB approval is required for investment in sectors such as housing,
petroleum (other than refining), defence and strategic industries and for investment in certain other
circumstances. Also, the following investments would require the prior permission of the FIPB:

• Foreign investment in industries that require an industrial licence under the provisions of the
Industries (Development and Regulation) Act, 1951;
• Foreign investment of more than 24% in the equity capital of manufacturing items reserved for
small scale industries;
• All proposals in which the foreign collaborator has a previous or existing joint venture in India in
the relevant sector;
• All proposals for investment in certain industries specified by the Government (for example,
atomic energy, defence and strategic industries; and
• All proposals for investment in certain specified industries where the proposed investment is in
excess of a maximum specified limit (for example, investment in excess of 74% in banking).

Currently, subject to certain exceptions, FDI and investment by Non-Resident Indians in Indian companies
does not require the prior approval of the FIPB or the RBI. The Government of India has indicated that in
all cases where Foreign Direct Investment is allowed on an automatic basis without FIPB approval, the RBI
would continue to be the primary agency for the purposes of monitoring and regulating foreign investment.
In cases where FDI is on an automatic basis, no prior approval of the RBI is required, although a
declaration in the prescribed form, detailing the foreign investment, must be filed with the RBI within a
specified period of the foreign investment being made in the Indian company. The foregoing description
applies only to an issuance of shares by, and not to a transfer of shares of, Indian companies.

The Government of India has set up the Foreign Investment Implementation Authority (the “FIIA”) in the
Ministry of Commerce & Industry. The FIIA has been mandated to (i) translate foreign direct investment
approvals into implementation, (ii) provide a pro-active one stop after care service to foreign investors by
helping them obtain necessary approvals, (iii) deal with operational problems, and (iv) meet with various
Government of India agencies to find solutions to foreign investment problems, and maximise
opportunities through a partnership approach.

85
Pricing

The price of shares of a listed Indian company issued to non-residents under the FDI scheme on an
automatic basis cannot be less than the price calculated in accordance with the guidelines issued by the
SEBI. Where the Indian company is not listed on any recognised stock exchange in India, the minimum
issue price of the shares would be based on a fair valuation of shares produced by a chartered accountant as
per the guidelines issued by the former Controller of Capital Issues.

Every Indian company issuing shares or convertible debentures in accordance with the Regulations is
required to submit a report to the RBI within thirty days of receipt of the consideration and another report
within thirty days from the date of issue of the shares to the non-resident purchaser.

The above description applies only to a fresh issue of shares or convertible debentures by an Indian
company.

Portfolio Investment by Foreign Institutional Investors

In September 1992, the Government of India issued guidelines which enable Foreign Institutional Investors
(“FIIs”), including institutions such as pension funds, investment trusts, asset management companies,
nominee companies and incorporated/institutional portfolio managers, to make portfolio investments in all
securities of listed and unlisted companies in India. Investments by registered FIIs or Non-Resident Indians
made through a stock exchange are known as portfolio investments (“Portfolio Investments”). Foreign
investors wishing to invest and trade in Indian securities in India under the portfolio investment route are
required to register with the SEBI under the Securities and Exchange Board of India (Foreign Institutional
Investors) Regulations 1995 (the “Foreign Institutional Investor Regulations”) and obtain a general
permission from the RBI under the Foreign Exchange Management Act, 1999. Investors can also register as
sub accounts of FIIs. However, since the SEBI provides a single window clearance, a single application
must be made to the SEBI. Foreign investors are not necessarily required to register with the SEBI as FIIs
and may invest in securities of Indian companies pursuant to the Foreign Direct Investment route discussed
above.

FIIs who are registered with the SEBI are required to comply with the provisions of the Securities and
Exchange Board of India (Foreign Institutional Investors) Regulations 1995 (the “Foreign Institutional
Investor Regulations”). A registered FII may buy, subject to the ownership restrictions discussed below, and
sell freely listed securities issued by any Indian company, realise capital gains on investments made
through the initial amount invested in India, subscribe to or renounce rights offerings for shares, appoint a
domestic custodian for custody of investments made and repatriate the capital, capital gains, dividends,
income received by way of interest and any compensation received towards sale or renunciation of rights
offerings of shares. A FII or a sub account of an FII may not hold more than 10% of the total issued capital
of a company in its own name, a corporate/individual sub-account of the FII may not hold more than 5% of
the total issued capital of a company, and a broad-based sub-account may not hold more than 10% of the
total issued capital of a company. The maximum holding of 24% for all non-residents portfolio investments
including those of the registered FIIs, will also include NRI corporate and non-corporate investments, but
will not include: (a) foreign investment under financial collaborations (direct foreign investment) which are
permitted upto 51% in all priority areas; (b) investments by FIIs through the alternative routes, such as
offshore single/regional funds, global depository receipts and euro convertibles.

In terms of the recent amendments made to the Regulations, FIIs are permitted to purchase
shares/convertible debentures, subject to the FII limits, of an Indian company either through:

• a public offer, where the price of the shares to be issued is not less than the price at which the
shares are issued to the residents, or
• by way of a private placement, where the price is not less than the price according to the terms of
the relevant guidelines or the guidelines issued by the former Controller of Capital Issues.

There is uncertainty under Indian law about the tax regime applicable to FIIs, which hold and trade GDRs.
FIIs are urged to consult with their Indian legal and tax advisers about the relationship between the FII
guidelines and the GDRs and any equity shares withdrawn upon surrender of the GDRs.

86
Registered FIIs are generally subject to tax under Section 115AD of the Income Tax Act, 1961 of India (as
amended) (the “Income Tax Act”). The Bonds and Shares (including Shares represented by GDRs) are
subject to tax under the Income Tax Act. There is uncertainty under Indian law as to the tax regime
applicable to FIIs that hold and trade in GDRs and Shares. “See Taxation — Indian Tax”.

Portfolio Investment by Non-Resident Indians

A variety of methods for investing in shares of Indian companies are available to Non-Resident Indians.
These methods allow Non-Resident Indians to make Portfolio Investments in shares and other securities of
Indian companies on a basis not generally available to other foreign investors. Under the Portfolio
Investment Scheme, a Non-Resident Indian can purchase upto 5% of the paid up value of the shares issued
by a company, subject to the condition that the aggregate paid up value of shares purchased by all Non-
Resident Indians does not exceed 10% of the paid up capital of the company. In addition to Portfolio
Investments in Indian companies, Non-Resident Indians may also make foreign direct investments in
Indian companies pursuant to the Foreign Direct Investment route discussed above.

Transfer of shares and convertible debentures of an Indian company by a person resident outside India

Subject to what is stated below, a person resident outside India may transfer the shares or debentures held
by him in Indian companies in accordance with the Regulations. A non-resident or a Non-Resident Indian
may transfer by way of sale the shares or convertible debentures held by him to any other non- resident or a
Non-Resident Indian, respectively, without the prior approval of the RBI. Approval from the FIPB may,
however, be required by the transferee. If the transferee has an existing or previous venture or tie up in
India through investment in shares or debentures, or a technical collaboration, trade mark agreement or
investment by whatever name called in the same field or allied field other than in the information
technology field to that in which the Indian company whose shares are being transferred is engaged,
approval from the FIPB would be required. Further, a non-resident may transfer any security held by him to
a person resident in India by way of gift.

Under FEMA, no approval of the RBI is required for the sale of Shares by a non-resident person (including
a non-resident Indian) to a resident of India. Intimation to the RBI is made in Form FC-TRS, in respect of
such transfer of shares, in which information as to the transferor, the transferee, the shareholding structure
of the Indian company whose shares are to be sold, the sale price per share, and other information is
provided.

In the event that the acquisition of shares as above mentioned exceeds the limits prescribed, the Takeover
Code may apply. (See “Indian Securities Market”).

Transfer of shares of an Indian company would be subject to capital gains in the hands of the transferor
(See “Taxation - Indian Tax”).

A non-resident person holding shares or convertible debentures of an Indian company is now, pursuant to
recent changes to the Regulations, permitted to sell the same on a recognised Indian stock exchange
through a registered broker. Any non-resident person seeking to sell shares received upon surrender of
GDRs or otherwise transfer such shares within India, whether or not through the BSE, or any other stock
exchange, should seek advice from their Indian legal advisers as to the applicable requirements.

Issue of GDRs

The Ministry of Finance, through the Issue of Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depository Receipt Mechanism) Scheme, 1993 (the “Depository Receipt Scheme”) allows Indian
companies to issue GDRs. This notification has been amended from time to time by the Ministry of
Finance, and certain relaxations in the guidelines have been notified by the RBI. The Regulations provide
that an Indian company may issue GDRs to a person resident outside India through a depository under the
automatic route, subject to the approval of the Ministry of Finance, which is required only in certain cases.
An Indian company issuing such GDRs is required to comply with certain reporting requirements.

87
Transfer of GDRs and Surrender of GDRs

A person resident outside India may transfer the GDRs held by him in Indian companies to another person
resident outside India without any permission. A person resident in India is not permitted to hold GDRs of
an Indian company.

A GDR holder is permitted to surrender the GDRs held by him in an Indian company and to receive the
underlying equity shares in terms of the Deposit Agreement. Under Indian regulations the re-deposit of
these equity shares with the depositary to obtain GDRs may not be permitted.

Fungibility of GDRs

The Ministry of Finance, Government of India, has granted general permission for the transfer of GDRs
outside India and has permitted non-resident holders of GDRs to surrender their GDRs in exchange for the
deposited shares.

In March 2001, the RBI amended the Regulations and established two (2) alternative methods to allow
equity shares to be converted into and sold as GDRs.

Purchase on the Stock Exchange

Pursuant to this amendment, a registered broker in India can purchase shares of an Indian company that has
issued depositary shares, on behalf of a person resident outside India, for the purpose of converting the
shares into depositary shares. However, such conversion of equity shares into depositary shares is possible
only if the following conditions are satisfied:

• the shares are purchased on a recognised stock exchange;

• the shares are purchased with the permission of the Custodian for the depositary shares offering of
the Indian company and are deposited with the Custodian;
• the shares purchased for conversion into depositary shares do not exceed the number of shares that
were released by the Custodian pursuant to conversions of depositary shares into shares under the
Deposit Agreement; and
• the non-resident investor, the broker, the Custodian and the Depositary comply with the provisions
of the Depositary Receipt Scheme and the related guidelines issued by the Government from time
to time.

Sponsored GDR facilities

By notification dated 23 November 2002, the RBI has permitted existing shareholders of Indian companies
to sell their shares through the issuance of GDRs against the block of existing shares of the Indian
company, subject to the following conditions:

• The facility to sell the shares would be available pari passu to all categories of shareholders.
• The sponsoring company whose shareholders propose to divest existing shares in the overseas
market through the issue of GDRs will give an option to all its shareholders indicating the number
of shares to be divested and the mechanism of determining the price under the GDR norms. If the
shares offered for divestment are more than the pre-specified number to be divested, shares would
be accepted from the existing shareholders in proportion to their existing shareholdings.
• The proposal for divestment of the shares would have to be approved by a special resolution of the
Indian company.
• The proceeds of the GDR issue raised abroad shall be repatriated into India within a period of one
month from the closing of the issue. However, the proceeds of the GDR issue can also be retained
abroad to meet the future foreign exchange requirements of the company and, by a recent
notification, this facility has been extended indefinitely until further notice.
• The issue-related expenses in relation to the public issue of GDRs under this scheme would be
subject to a ceiling of 4% of the issue size, in the case of public issues, and 2% of the issue size, in
the case of private placements. The issue related expenses would include underwriting
commissions, lead managers’ charges, legal expenses and reimbursable expenses. The issue

88
 expenses shall be passed on to the shareholders participating in the sponsored issue on a pro-rata
basis.

Obligations of the Custodian

The RBI has prescribed that the domestic custodians are the entities required to ensure compliance with the
RBI guidelines and to file reports with the RBI from time to time. The domestic custodians are also
required to perform certain functions, including the following:

• provide a certificate to the RBI and the SEBI stating that the sectoral ceilings for foreign
investment in the relevant company have not been breached;
• monitor the total number of GDRs that have been converted into underlying shares by non-
resident investors;
• liaise with the Company to ensure that the foreign investment restrictions, if any, are not being
breached; and
• file a monthly report with the RBI and the SEBI concerning the GDR transactions under the two-
way fungibility arrangement.

Transfer Restrictions

The GDRs may not be offered or sold directly or indirectly in India, to residents of India, or to, or for the
account or benefit of, such persons in connection with the Issue or at any time thereafter. Each person
acquiring a beneficial interest in any GDR will be deemed to have represented and agreed as follows:

(1) It is not located in India, is not a resident of India and is not purchasing for, or for the account or
benefit of, such a person.

(2) It acknowledges that the GDRs may not be offered, sold, pledged or otherwise transferred to any
person located in India, to residents of India, or to, or from the account or benefit of, such persons.

(3) It understands that the GDRs will bear a legend substantially to the following effect:

THE MASTER GDR, THE GLOBAL DEPOSITARY RECEIPTS EVIDENCED HEREBY AND
THE EQUITY SHARES REPRESENTED THEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(“SECURITIES ACT”) AND SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH REGULATION S
UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THE HOLDER HEREOF, BY PURCHASING THE GLOBAL DEPOSITARY RECEIPTS

REPRESENTED BY THIS MASTER GDR, AGREES, FOR THE BENEFIT OF RANA
SUGARS LIMITED AND THE DEPOSITARY NAMED BELOW THAT THE GLOBAL
DEPOSITARY RECEIPTS REPRESENTED BY THIS CERTIFICATE MAY NOT AT ANY
TIME BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED TO ANY
PERSON LOCATED IN INDIA, RESIDENTS OF INDIA, OR TO, OR FOR THE ACCOUNT
OR BENEFIT OF, SUCH PERSONS.

(4) Any resale or other transfer, or attempted resale or other transfer, made other than in compliance
with the above-stated restriction may not be recognised by the Company or the Depositary in
respect of the GDRs.

89
 TAXATION

The following summary is based on current Indian tax laws. The summary does not purport to deal with all
aspects of taxation that may be relevant to particular investors in light of their investment or tax
circumstances. Prospective investors should consult their own advisers concerning the tax consequences of
an investment in Bonds, GDRs and the Shares. The summary is based on the taxation law in force at the
time of these Listing Particulars and is subject to change.

Indian Taxation

The following is a summary of the Indian tax consequences of an investment in Bonds, GDRs and Shares
by investors who are not resident in India. This summary is not a complete guide on the tax consequences
under Indian law with respect to the acquisition, ownership or sale of Bonds, GDRs or of other transactions
involving Bonds, GDRs or of the conversion of the Bonds into GDRs or Shares or redemption of GDRs
into Shares or sale of the Shares by non-resident investors. Prior to making a decision to invest, potential
investors should, therefore, consult their own tax advisers on the tax consequences of such transactions
under Indian law, the law of the jurisdiction of their residence and any tax treaty between India and their
country of residence.

The Income Tax Act, 1961 (144 of 1961) (“Indian Income Tax Act”) is the law relating to taxes on income
in India. The Indian Income Tax Act provides for the taxation of persons resident in India on global income
and persons not resident in India on income received, accruing or arising in India or deemed to have been
received, accrued or arisen in India. Sections 4, 5, 6 and 9 of the Indian Income Tax Act set forth the
circumstances under which persons not resident in India are subject to income tax in India.

Residence for the Purpose of the Indian Income Tax Act

For the purpose of the Indian Income Tax Act, an individual is said to be resident in India if, in any year
ended 31 March, the individual: (i) is in India for one hundred eighty two days or more; or (ii) having been
in India for three hundred sixty five days or more, during the four years preceding that year ended 31
March and is in India for sixty days or more in that year ended 31 March. However, in the case of an Indian
citizen or a person of Indian origin who is not resident in India and visits India during the fiscal year or, an
Indian citizen who leaves India as a member of a crew of an Indian ship or for the purpose of employment
outside India during the year ended 31 March, the sixty days period in (ii) above is extended to one
hundred eighty two days.

A company is resident in India in any year ended 31 March, if it is an Indian company or if during that year
control and management of its affairs is situated wholly in India.

An Indian company means a company formed and registered under the Indian Companies Act, 1956 and
includes a company formed and registered under any law relating to companies formerly in force in India
or, a corporation established by or under a Central, State or Provincial Act of India or, an institution,
association or a body declared by the Central Board of Direct Taxes of India to be a company for the
purpose of the Indian Income tax Act; provided that the registered office or, as the case may be, the
principal office of the company, corporation, institution, association or body is in India.

A firm or other association of persons, and every other person is regarded as resident in India except where,
during the year ended 31 March, the control and the management of its affairs is situated wholly outside
India.

Taxation of Income from Bonds and GDRs

Section 115AC of the Indian Income Tax Act (read with other applicable provisions of the Indian Income
Tax Act) is a special tax regime for taxes on income from Bonds or GDRs (issued under the Issue of
Foreign Currency Convertible Bonds and Ordinary Shares (through the Depositary Receipt Mechanism)
Scheme, 1993) (the “Scheme”) purchased in foreign currency through an approved intermediary and capital
gains arising from their transfer. The concessional tax treatment provided under section 115AC of the
Indian Income Tax Act is applicable only to Bonds and GDRs falling within the purview of the said section

90
and not in relation to the Shares issued upon conversion of the Bonds or GDRs. A summary of the
concessions available under this section is set forth below.

Taxation of Interest

Section 115AC of the Indian Income Tax Act provides that payment of interest on the Bonds paid to non-
resident holders of the Bonds will be subject to tax at the rate of 10% plus surcharge of 2.5% plus education
cess of 2% on the income tax or will be subject to withholding tax at a favourable rate available under tax
treaties entered into by India with the country of residence of the relevant Depositary. The Indian Income
Tax Act requires such tax to be withheld at source. Where the tax is required to be deducted or withheld, the
Company will gross up the taxable amount to the extent set forth under “Terms and Conditions - Taxation”
and will be required to account separately to the Indian tax authorities for any withholding taxes applicable
on such amounts.

Taxation on Dividend Distributions

Under the current Indian tax laws, dividends are not taxable in the hands of the recipient and hence upon
conversion of the Bonds into GDRs and delivery to the Depositary and/or each holder or such holders
designee of the shares in respect thereof, or after withdrawal of shares from the depositary facility under the
Depositary Agreement or when the Bonds are converted directly into Shares, dividends to such non-
resident holder will not be liable to tax. However, the Company will be liable to pay a “dividend
distribution tax” currently at the rate of 12.5% including 10% surcharge on the total amount distributed as
dividend. Additionally, the Finance Act, 2005 levies an education cess at the rate of 2% of such tax.

Taxation on Transfer of Bonds and GDRs

The transfer of Bonds and GDRs falling within the purview of section 115AC of the Indian Income Tax Act
between non-resident investors outside India are to be free from any liability to income tax in India on
capital gains therefrom. It is unclear whether capital gains derived from the sale of rights by a non-resident
investor to another non-resident investor will be subject to tax liability in India. This would depend on the
view taken by Indian tax authorities on the position with respect to the status of the rights being offered
under the Bonds or GDRs.

Taxation on acquisition of Shares upon conversion of Bonds or GDRs into Shares

The conversion of the Bonds or GDRs into Shares by a non-resident investor does not give rise to a taxable
event for Indian income tax purposes.

Taxation on Sale of Shares

Capital gains arising to the non-resident investor on the transfer of the Shares (whether in India or outside
India to non-resident investor) will be liable to income tax under the provisions of the Indian Income Tax
Act.

If the Shares (including shares issuable on the conversion of the Bonds and GDRs) are held by the non-
resident investor for a period of more than twelve months from the date of advice of their redemption by
the depositary, the capital gains arising on the sale thereof is to be treated as long term capital gains and
will be subject to income tax at the rate of 10.25% (including surcharge). As per the existing Finance Act,
2005 long term capital gains tax on listed securities is nil. The Shares are held for a period of less than
twelve months from the date of redemption advice, the capital gains arising on the sale thereof is to be
treated as short term capital gains and will be subject to tax at the rate of 10% plus surcharge.

The provisions of the Agreement for Avoidance of Double Taxation entered into by the Government of
India with the country of residence of the non-resident investor will be applicable to the extent they are
more beneficial to the non-resident investor.

Neither section 115AC of the Indian Income Tax Act nor the Scheme deals with capital losses arising on a
transfer of Shares in India. However under the Indian Income Tax Act, losses arising from a transfer of a
capital asset in India can only be set off against capital gains. A long term capital loss can be set off only

91
against a long term capital gain. A short-term capital loss can be set off against capital gain. To the extent
that the losses are not absorbed in the year of transfer, they may be carried forward for a period of eight
assessment years immediately succeeding the assessment year for which the loss was first computed and
may be set off against the capital gains assessable for such subsequent assessment years. In order to set off
capital losses as above, the non-resident investor would be required to file appropriate and timely tax
returns in India and undergo the usual assessment procedures.

Taxation on Buyback of Equity Shares

If the Shares held by the non-resident investor are purchased by the issuing company from the non-resident
investor, the non-resident investor will be liable to income tax in respect of the capital gains arising on such
buyback as per the provisions of the Indian Income tax Act and capital gains tax arising therefrom shall be
withheld at source before repatriation of sale proceeds from India. The provisions of the Agreement for
Avoidance of Double Taxation entered into by the Government of India with the country of residence of the
non-resident investor will be applicable to the extent they are more beneficial to the non-resident investor.
(See “Taxation on Sale of Shares”).

Taxation of Payment on Liquidation or Reduction of Capital

If any distribution is made by the Company to its shareholders or GDR holders on its liquidation or on the
reduction of its capital, to the extent to which the distribution is attributable to the accumulated profits of
the issuing company, the same will be treated as deemed dividend income in the hands of the shareholders
or GDR holders and will be subject to income tax in India. However, tax on such deemed dividend will be
paid by the company. Any gains accruing to the shareholder or GDR holders on liquidation or reduction of
capital of the issuing company, in excess of such accumulated profits will be liable to income tax as capital
gains in the hands of the shareholder or GDR holder as per the provisions of Indian Income Tax Act. The
provisions of the Agreement for Avoidance of Double Taxation entered into by the Government of India
with the country of residence of the non-resident investor will be applicable to the extent they are more
beneficial to the non-resident investor. (See “Taxation on Sale of Shares”).

Taxation of Bonus Shares and Right Shares

The issue of right shares or bonus shares to the shareholders or GDR holders will not give rise to a taxable
event for Indian income tax purposes. The shareholders or the GDR holders will be subject to capital gains
tax liability as per the provisions of the Indian Income Tax Act on the transfer of right shares or bonus
shares. The provisions of the Agreement for Avoidance of Double Taxation entered into by the Government
of India with the country of residence of the non-resident investor will be applicable to the extent they are
more beneficial to the non-resident investor. (See “Taxation on sale of Shares”).

Withholding Tax

Capital gains arising to non-resident investors on the transfer of the Shares in India will be subject to a
withholding tax at applicable rates (see “Taxation on sale of Shares”). However, as per the provisions of
section 196D (2) of the Indian Income Tax Act, no withholding tax is required to be deducted from any
income by way of capital gains arising to Foreign Institutional Investors as defined in section 115AD of the
Indian Income Tax Act on the transfer of securities defined in section 115AD of the Indian Income Tax Act.
The provisions of the Agreement for Avoidance of Double Taxation entered into by the Government of
India with the country of residence of the non-resident investor will be applicable to the extent they are
more beneficial to the non-resident investor.

Tax Treaties

Currently, dividend income is not subject to tax in India in the hands of the holder of the shares. If any
shares are held by a non-resident investor following withdrawal thereof from the Depositary Facility under
the Depositary Agreements, any double taxation treaty if any, entered into by India with the country of
residence of such non-resident investor, will be applicable to taxation of interest, tax credit with respect to
any taxes paid by the Company and any tax on capital gain arising from transfer of such Shares or Bonds.

92
Stamp Duty

The sale of an equity share in physical form would be subject to Indian stamp duty at the rate of 0.25% of
the value of the equity shares on the trade date, and such stamp duty customarily is borne by the transferee,
that is, the purchaser. However, since the Company’s equity shares are not in physical form, there would be
no stamp duty payable in India on transfer of these equity shares. There is no stamp duty liability on sale or
transfer of GDRs.

Other Taxes

At present, there are no wealth, gift or inheritance taxes, which may apply to the GDRs and the redeemed
equity shares.

Service Tax

Brokerage or commissions paid to stockbrokers in connection with the sale or purchase of shares listed on a
recognised stock exchange in India are subject to a service tax of 12.24% (including education cess). The
stockbroker is responsible for collecting the service tax and paying it to the relevant authority.

PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH

RESPECT TO THE INDIAN AND THEIR LOCAL TAX CONSEQUENCES OF ACQUIRING,
OWNING OR DISPOSING OF EQUITY SHARES OR GDRs

Shares Eligible for Future Sale

Sales of a substantial number of equity shares into the public market following this offering, whether on the
Indian Stock Exchanges or into the United Kingdom or Europe markets by conversion of outstanding
equity shares into GDRs could adversely affect the market price of the GDRs.

Upon completion of this offering, 24.55 million equity shares will be issued.

Pricing of the Offering

The offering price will be determined by negotiations between the Company, the Investment Bankers and
the representatives of the Purchasers. Among the factors considered in determining the offering price will
be the future prospects of Rana Sugars and its industry in general, sales, earnings and certain other financial
operating information of Rana Sugars in recent periods, and the price-earnings ratios, price sales ratios,
market prices of securities in the Indian Stock Exchanges and the DIFX and certain financial and operating
information of companies engaged in activities similar to those of Rana Sugars.

Experts

The India GAAP based financial statements of Rana Sugars as of 31 March 2003, 2004 and 2005 have been
included herein in reliance upon the report of Kansal Singla & Associates, independent accountants
appearing elsewhere herein, and upon the authority of said firm as experts in auditing and accounting.
Kansal Singla & Associates have given and not withdrawn their consents to the inclusion of their respective
names and reports in the form and context in which they appear herein.

Placement of the GDRs

2.455,662 million GDRs have been offered to and placed with institutional investors by the Company with
the assistance of the Lead Manager (Chartered Capital And Investment Limited). The Company has placed
and procured payment for the Shares represented by the GDRs at the issue price of USD7.33 per GDR.

93
 GENERAL INFORMATION

1. The issue of Shares represented by the GDRs and of this Offering Circular have been authorised
and approved by The Annual General Meeting of the shareholders of the Company held on 3
November 2005.

2. The Company will issue the Shares to the Depositary pursuant to the Placing Agreement on the
Closing Date (as defined in the Placing Agreement). On the Closing Date the Company will
deliver a share certificate in the Depositary’s name to the Custodian. The Depositary will issue
GDRs in respect of the Shares.

3. Application has been made to list the GDRs on the DIFX. In connection with the listing
application, the Memorandum and Articles of Association of the Company and the by-laws of the
Depositary, as each is amended to the date hereof, the Deposit Agreement and a legal notice
relating to the issue of the GDRs will be deposited prior to listing with the DIFX, where copies
thereof may be obtained upon request. Immediately following the Closing Date, application will
be made to list the Shares on the Indian Stock Exchanges. There is no assurance that such listings
will be granted or maintained.

4. Copies of the Memorandum and Articles of Association of the Company and of the Depositary,
and the Deposit Agreement will be available for inspection at Deutsche Bank Trust Company
Americas at Winchester House, 1 Great Winchester Street, London EC2N 2DB and, for so long as the
GDRs are listed on the DIFX, copies of the audited, non-consolidated (with effect from the
Company’s financial year ending 31 March 2003) annual reports to shareholders of the Company
and copies of the unaudited non-consolidated semi-annual financial statements of the Company
and copies of the unaudited non-consolidated quarterly financial statements of the Company, in
each case, in English may be obtained in that office. The Company has a subsidiary, which is
under incorporation, therefore, the Company does not produce or publish consolidated annual
accounts/ consolidated interim accounts.

5. There has been no material adverse change in the financial position of the Company since 31
March 2005, the date to which the audited financial information in this document has been
prepared.

7. The Placing Agreement and the Deposit Agreement are governed by the laws of Dubai.

8. The Exchange Control Department of the RBI will be furnished with full particulars of the
Placing, including the percentage of foreign shareholding in the Company, within thirty days after
the issue of the GDRs. A copy of this document will be delivered to the Registrar of Companies,
Punjab, Himachal Pradesh and Chandigarh and to SEBI for the purpose of record.

9. The GDRs from time to time evidenced by one or more Master GDRs have been accepted for
clearance and settlement in DIFX. The Common Code for the GDRs is 025137515. The ISIN for
the GDRs is US75188Q1085. The CUSIP for the GDRs is 75188Q 10 8.

10. The auditors of the Company are Kansal Singla & Associates, Chartered Accountants, having its office
at SCO 1114-15, Sector 22-B Chandigarh – 160 022 who audited the accounts for the period ended
31 March 2005, 2004 and 2003. Kansal Singla & Associates, Chartered Accountants have consented
to the inclusion of their report in this document. The reconsolidation and compilation of accounts
as per IFRS guidelines has been done by S.N.Nanda & Co., C-43 Pamposh Enclave, New Delhi -
110048

94
Index to Financial Statements

Description Page
• Three year Financials of the Company for the year ended 31 March 2003, 2004 95-107
and 2005, re-stated as per IFRS including the Financials of the Company for the
half-yearly ending 30 September 2005.

• Significant Accounting Policies and Notes on Accounts forming part of accounts of 108-114
Rana Sugars for the year ended 31 March 2005

• Independent Auditors Report of Rana Sugars for the year ended 31 March 2005 115

95
 BALANCE SHEET OF RANA SUGARS LIMITED

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

Particulars 30 September 2005 31 March 2005 31 March 2004 31 March 2003
Rs. USD Rs. USD Rs. USD Rs. USD
Assets
Non-Current Assets
Property, Plant & (note no 1) 1357.93 30.87 1047.46 23.94 967.97 22.31 952.48 20.05
Equipment
Investments (note no 2) 0.39 0.01 0.39 0.01 0.39 0.01 0.00 0.00
Trade receivables (note no 4) 0.32 0.01 0.49 0.01 0.80 0.02 1.27 0.03
Security deposit 2.68 0.06 2.14 0.05 2.32 0.05 1.92 0.04
Current Assets
Inventories (note no 3) 374.86 8.53 736.43 16.83 962.28 22.18 771.00 16.23
Current portion of trade (note no 4) 65.03 1.48 196.74 4.50 96.37 2.22 56.27 1.18
Receivables
Cash and Cash equivalent (note no 5) 86.29 1.96 121.98 2.79 15.78 0.37 11.43 0.23
Prepayments 5.98 0.10 5.64 0.13 6.33 0.14 5.20 0.11
Interest Receivable 0.22 0.01 0.27 0.01 0.03 0.00 0.03 0.00
Other Receivables (note no 6) 66.43 1.51 117.19 2.68 11.23 0.26 30.90 0.65
Tax Deducted at Source by 0.30 0.01 5.28 0.12 2.74 0.06 0.73 0.02
Clients & Advance Tax
Other Loans & Advances 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
MODVAT 19.29 0.44 7.30 0.17 3.35 0.07 1.82 0.04
Service Tax 1.26 0.03 0.86 0.02 0.00 0.00 0.00 0.00
Total Assets 1980.98 45.02 2242.17 51.26 2069.59 47.69 1833.05 38.58
Equity and Liabilities
Shareholders Equity
Issued Capital (note no 7) 498.32 11.32 498.32 11.39 348.29 8.02 348.29 7.33
Reserves (note no 8) 459.02 10.44 457.20 10.46 210.66 4.85 184.19 3.88
Retained Earnings (note no 9) 146.24 3.32 145.57 3.33 58.15 1.35 48.42 1.02
Non -Current Liabilities
Interest bearing (note no 10) 274.36 6.24 178.85 4.09 228.35 5.27 264.62 5.57
borrowings
Non Interest bearing (note no 11) 120.82 2.75 93.99 2.15 156.39 3.60 152.43 3.21
borrowings
Deferred Tax Liability 112.70 2.56 112.70 2.57 65.99 1.52 38.96 0.81
Retirement Benefit 4.64 0.11 3.40 0.08 3.60 0.08 3.65 0.08
Obligations
Current Liabilities
Trade and Other Payables (note no 12) 88.90 2.02 123.08 2.81 279.48 6.44 293.53 6.17
Short Term Borrowings (note no 13) 228.07 5.17 569.72 13.02 672.01 15.49 494.76 10.42
Provisions (note no 14) 47.91 1.09 59.34 1.36 46.67 1.07 4.19 0.09
Total Equity and 1980.98 45.02 2242.17 51.26 2069.59 47.69 1833.05 38.58
Liability
The notes referred to above and other notes on financial statements form an integral part of the Balance Sheet.
As per our report of even date

For S. N. Nanda & Co., For and on behalf of the Board

Chartered Accountants Rana Ranjit Singh
Bhavna Nanda Managing Director
Partner

Date:
Place:

96
 RANA SUGARS LIMITED
Income Statement for the period ending
Amount in Amount in Millions Amount in Millions Amount in Millions
Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

Income
Revenue (As per 497.17 11.30 1341.79 30.67
note 15) 850.85 19.61 934.11 19.67
Other Incomes 1.81 0.04 10.30 0.24 31.30 0.72 11.58 0.24
Changes in Inventory (380.34) (8.65) (228.60) (5.23) 184.30 4.25 52.18 1.10
Expenses
Raw material & 6.24 0.14 583.97 13.36
consumables used 660.99 15.23 652.77 13.73
Staff Costs (As per 17.26 0.40 43.09 0.98
note 16) 41.36 0.95 43.67 0.92
Depreciation 31.26 0.71 62.52 1.43 61.00 1.41 57.75 1.22
Manufacturing (As per 21.70 0.50 83.26 1.90
Expenses note 17) 89.30 2.06 79.12 1.67
Other Operating (As per 11.59 0.26 28.16 0.64
Expenses note 18) 13.88 0.33 15.51 0.33
Profit from operations 30.59 0.68 322.49 7.37 199.92 4.60 149.05 3.14
Finance Costs (As per 27.84 0.62 70.60 1.61
note 19) 90.38 2.09 90.44 1.90
Selling Expenses 1.26 0.02 4.23 0.10 2.89 0.06 3.45 0.08
Cane Development 0.88 0.02 4.28 0.10
Expenses 2.20 0.05 3.97 0.08
Provision for doubtful (0.61) (0.01) (0.08) (0.00)
debts 0.58 0.01 1.04 0.02
Profit before tax 1.22 0.03 243.46 5.57 103.87 2.39 50.15 1.06
Income Tax - Current 0.55 0.01 19.30 0.44
Tax 7.38 0.17 4.19 0.09
Deferred Tax 0.01 0.01 46.71 1.07 27.03 0.62 16.76 0.35
Income Tax of 0.00 0.00 0.00 0.00 0.44 0.01
Previous years 0.77 0.03
Provision Written 0.00 0.00 0.00 0.00 0.00 0.00
Back 2.19 0.05
Net Profit after tax 0.66 0.01 177.46 4.06
(loss) 69.02 1.59 30.62 0.64

The notes referred to above and other notes on financial statements form an integral part of the Income Statement.

As per our report of even date.

For and on behalf of the Board

For S. N. Nanda & Co.,

Chartered Accountants Rana Ranjit Singh
Bhavna Nanda Managing Director
Partner

Rana Inder Pratap Singh

Director

97
 CASH FLOW STATEMENT

Amount in Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

USD USD USD USD
Rs. Rs. Rs. Rs.

CASH FLOW FROM OPERATING

A. ACTIVITIES
Net Profit before Tax and extra ordinary
items 122.04 2.77 243.46 5.57 103.87 2.39 52.35 1.10
Adjustment for:
Depreciation & Non Cash Expences 32.15 0.73 66.71 1.52 63.79 1.47 62.78 1.32
Profit on Sale of Fixed assets - - - - - - - -
Interest (Net) 27.66 0.63 69.33 1.58 89.11 2.06 89.05 1.87
OPERATING PROFIT BEFORE
WORKING CAPITAL CHANGES
181.86 4.13 379.52 8.67 256.77 5.92 204.18 4.29
Adjustment for:
Trade and Other Receivables 174.85 3.97 (213.09) (4.87) (25.50) (0.59) (35.17) (0.74)
Inventories 359.78 8.18 225.84 5.17 (191.27) (4.41) (60.91) (1.28)
Trade Paybles (76.43) (1.74) (143.50) (3.28) 27.82 0.64 112.32 2.36
CASH GENERATED FROM
OPERATING ACTIVITIES 640.06 14.55 248.77 5.69 67.82 1.56 220.42 4.63
Interest paid (27.66) (0.63) (70.27) (1.61) (89.91) (2.07) (89.83) (1.88)
Direct Tax paid (0.57) (0.01) (19.30) (0.44) (7.38) (0.17) (4.19) (0.09)
Cash Flow before Extraordinary
Activities 611.83 13.91 159.20 3.64 (29.47) (0.68) 126.40 2.66
NET CASH FROM OPERATING
ACTIVITIES 611.83 13.91 159.20 3.64 (29.47) (0.68) 126.40 2.66

CASH FLOW FROM INVESTING

B. ACTIVITIES
Purchase of Fixed Assets (339.52) (7.72) (144.77) (3.30) (76.65) (1.77) (54.73) (1.15)

Sale of Fixed Assets (Net) - - 2.76 0.06 0.16 0.00 2.76 0.06
Purchase of Investments - - - - (0.39) (0.01) - -
Interest received - - 0.94 0.02 0.81 0.02 0.78 0.02
Misc. Expenses (0.89) (0.02) (4.28) (0.10) (2.21) (0.05) (0.77) (0.02)
NET CASH USED IN INVESTING
ACTIVITIES (340.41) (7.74) ###### (3.32) (78.28) (1.80) (51.96) (1.09)

CASH FLOW FROM FINANCING

C. ACTIVITIES
Proceeds from Issue of Capital - - 345.03 7.89 - - - -
Subsidy 1.83 0.04 1.54 0.04 6.47 0.15 3.40 0.07
Proceeds from Long Term Borrowings 9.96 0.23 - - 13.74 0.32 27.43 0.58
Repayment of Long Term Borrowings (4.06) (0.09) (49.50) (1.13) (50.02) (1.15) (37.44) (0.79)
Adjustment of Unsecured Loans 26.83 0.61 (62.41) (1.43) 3.96 0.09 11.50 0.24

98
Working Capital Borrowing (341.67) (7.77) (102.28) (2.34) 177.24 4.08 (82.36) (1.73)
Dividend and Dividend Tax Paid - - (40.03) (0.92) (39.29) (0.91) - -
Decrease in Deferred Tax Liability - - - - - - - -
NET CASH FROM FINANCING
ACTIVITIES (307.11) (6.98) 92.35 2.11 112.10 2.58 (77.47) (1.63)
NET CHANGE IN CASH AND CASH
EQUIVALENT (A+B+C) (35.69) (0.81) 106.20 2.43 4.35 0.10 (3.03) (0.06)
CASH AND CASH EQUIVALENT AT
THE BEGINING 121.98 2.77 15.78 0.36 11.43 0.26 14.46 0.30
CASH AND CASH EQUIVALENT AT
THE END 86.28 1.96 121.98 2.79 15.78 0.36 11.43 0.24

99
Note No. 1

NOTES TO FINANCIAL STATEMENTS

I. Property, Plant, Equipments & Other Assets: Sugar Division
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 31 March 2004 31 March 2003
Particulars 2005
Rs. USD Rs. USD Rs. USD Rs. USD
Land includes site development 62.08 1.41 62.08 1.42 27.00 0.62 26.99 0.57
Building & Civil Works 96.11 2.19 97.65 2.23 91.70 2.11 89.18 1.88
Plant & Machinery 405.49 9.22 423.55 9.68 418.78 9.65 444.80 9.36
Electric Installation 3.96 0.09 4.30 0.10 4.71 0.11 5.27 0.11
Furniture & Fittings 1.67 0.04 1.79 0.04 2.95 0.07 3.07 0.06
Office Equipments 1.01 0.02 1.07 0.02 1.19 0.03 1.26 0.03
Vehicles 14.57 0.33 15.74 0.36 7.15 0.16 7.89 0.16
Computers 0.54 0.01 0.83 0.02 1.02 0.02 1.33 0.03
Miscellaneous Fixed Assets 5.18 0.12 7.55 0.17 7.43 0.17 7.74 0.16
Total 590.61 13.49 614.57 14.05 561.94 12.94 587.52 12.37
Capital Work in Progress 461.22 10.48 116.29 2.66 83.36 1.92 31.41 0.66

II. Property, Plant, Equipments & Other Assets: Power Division

Land includes Site
Development 0.80 0.02 0.80 0.02 0.80 0.02 0.80 0.02
Building & Civil
Works 9.82 0.23 9.98 0.23 10.32 0.24 10.41 0.22
Plant & Machinery 290.98 6.61 300.08 6.86 306.32 7.06 322.22 6.78
Furniture And
Fittings 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 301.60 6.86 310.87 7.11 317.44 7.32 333.43 7.02
Capital Work in
Progress 0.29 0.04 5.73 0.13 5.22 0.12 0.12 0.00
Grand Total 1357.93 30.87 1047.46 23.94 967.97 22.31 952.48 20.05

100
Note No. 2

Investments
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 31 March 31 March 2004 31 March 2003
Particulars 2005 2005
Rs. USD Rs. USD Rs. USD Rs. USD

Current Investment 0.39 0.01 0.39 0.01 0.39 0.01 0.00 0.00
(quoted investment
32500 equity
shares of Rs.10
each fully paid-up
at UCO Bank)
(Valued at lower of
cost or Market
Price)
Total 0.39 0.01 0.39 0.01 0.39 0.01 0.00 0.00

Note No. 3
Inventories
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 31 March 2005 31 March 2004 31 March 2003
Particulars 2005
Rs. USD Rs. USD Rs. USD Rs. USD

Sugar 309.61 7.04 631.40 14.43 904.17 20.84 711.95 14.99

Molasses 3.81 0.09 59.41 1.36 15.24 0.35 15.87 0.33
Stores & 59.62 1.36 43.80
Chemicals 1.00 41.03 0.95 34.10 0.72
Packing Material 1.82 0.04 1.82 0.04 1.84 0.04 1.78 0.04
Bagasse 0.00 0.00 0.00 0.00 0.00 0.00 7.29 0.15
Sugar Cane in hand 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00
Total 374.86 8.53 736.43 16.89 962.28 22.18 771.00 16.23

Note No. 4
Trade
Receivables:
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 31 March 2005 31 March 2004 31 March 2003
Particulars 2005
Rs. USD Rs. USD Rs. USD Rs. USD
Sundry Debtors
Current 65.03 1.48 196.74 4.50 96.37 2.22 56.27 1.18
Non current 1.25 0.03 2.03 0.05 2.43 0.06 2.31 0.05
Less: Provision for (0.93) (0.02) (1.54)
doubtful debts (0.04) (1.63) (0.04) (1.04) (0.02)
Total 65.35 1.49 197.23 4.51 97.17 2.24 57.54 1.21

101
Note No. 5
Cash and Cash
Equivalent:
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2005 31 March 2004 31 March 2003
Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Cash in Hand 35.73 0.81 24.11 0.55 1.20 0.03 1.11 0.02
Draft / Cheques in 0.00 0.00 39.18
hand 0.90 1.67 0.04 1.18 0.02
Balance with
Scheduled Bank
- In Current 46.21 1.05 49.70
Account 1.14 4.74 0.11 1.51 0.03
- Fixed Deposit 4.35 0.10 8.98 0.20 8.17 0.19 7.63 0.16
Total 86.29 1.96 121.98 2.79 15.78 0.37 11.43 0.23

Note No. 6
Amount in Millions Amount in Millions Amount in Millions Amount in Millions

30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Other receivables

Loan to Cane 15.32 0.35 68.96

growers 1.58 0.30 0.01 2.12 0.04
Buffer stock claim 4.88 0.11 4.88
receivable 0.11 2.49 0.06 0.00 0.00
Other advances 46.23 1.05 43.35 0.99 8.43 0.19 28.78 0.61
Total 66.43 1.51 117.19 2.68 11.22 0.26 30.90 0.65

Note No. 7
Shareholders
Equity
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2003
Particulars 31 March 2005 31 March 2004
Rs. USD Rs. USD Rs. USD Rs. USD

Authorised:
50000000 Equity 500.00 11.37 500.00 11.43
Shares of Rs 10/-
each 350.00 8.07 350.00 7.37
Issued & paid up:
Equity Shares of 498.32 11.32 498.32 11.39
Rs 10/ each 348.29 8.02 348.29 7.33
Total 498.32 11.32 498.32 11.39 348.29 8.02 348.29 7.33

102
Note No. 8
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2003
Particulars 31 March 2005 31 March 2004
Rs. USD Rs. USD Rs. USD Rs. USD

Reserves

Capital Reserve
State subsidy 7.50 0.17 7.50 0.17 7.50 0.17 7.50 0.16
MNES Subsidy 43.00 0.98 43.00 0.98 43.00 0.99 36.53 0.77
US Aid 16.96 0.39 15.14 0.36 13.60 0.31 13.60 0.29
Share Premium 195.00 4.43 195.00 4.46 0.00 0.00 0.00 0.00
General Reserve 196.56 4.47 196.56 4.49 146.56 3.38 126.56 2.66
Total 459.02 10.44 457.20 10.46 210.66 4.85 184.19 3.88

Note No. 9
Retained earning
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31March 2005 31 March 2004 31 March 2003
Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Opening balance 145.58 3.31 58.15 1.33 48.42 1.12 37.80 0.80
Net profit for the 0.66 177.46
year 0.01 4.06 69.02 1.59 30.62 0.64
Transfer to reserve 0.00 0.00 (50.00) (1.14) (20.00) (0.46) (20.00) (0.42)
Dividend 0.00 0.00 (35.41) (0.81) (34.83) (0.80) 0.00 0.00
Corporate dividend 0.00 (4.63)
tax 0.00 (0.11) (4.46) (0.10) 0.00 0.00
Total 146.24 3.32 145.57 3.33 58.15 1.35 48.42 1.02

Note No. 10
Interest Bearing
Borrowings
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2005 31 March 2004 31 March 2003
Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

From others -
secured against
hypothecation
of inventory and 267.97 6.09 170.24 3.89
equipments 213.34 4.92 244.96 5.16
From Others - 6.39 0.15 8.61 0.20
Secured against
Bank guarantee 15.01 0.35 19.66 0.41
Total 274.36 6.24 178.85 4.09 228.35 5.27 264.62 5.57

103
Note No. 11
Non-Interest
Bearing
Borrowing :
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2005 31 March 2004 31March 2003
Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Interest Free 120.82 2.75 93.99 2.15 156.39 3.60 152.43 3.21
unsecured loan
from Directors and
relatives

Total 120.82 2.75 93.99 2.15 156.39 3.60 152.43 3.21

Note No. 12
Trade and Other
Payables
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2005 31 March 2004 31March 2003
Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Sundry Creditors 42.94 0.98 55.63 1.27 59.48 1.37 55.27 1.16
Cane price payable 0.00 0.00 3.45 0.08 165.32 3.81 202.54 4.26
Security Received 7.24 0.16 4.64 0.11 4.55 0.10 4.88 0.10
Other Payable 20.86 0.47 51.17 1.17 38.22 0.88 28.24 0.59
Income tax of 0.00 0.00 0.00 0.00
Previous Years 1.21 0.03 0.77 0.02
Advance received 17.86 0.41 8.19 0.19
from clients 10.70 0.25 1.83 0.04
Total 88.90 2.02 123.08 2.82 279.48 6.44 293.53 6.17

Note No. 13

Short Term
Borrowing
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2005 31 March 2004 31 March 2003
Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Working Capital
Loan
- State Bank of 120.68 230.16
India 2.74 5.26 272.07 6.27 221.12 4.66
- State Bank of 47.26 155.88
Patiala 1.07 3.56 181.17 4.18 149.06 3.14
- Bank of Baroda 42.75 0.97 139.64 3.19 151.40 3.49 124.58 2.62
- Uco Bank 17.38 0.39 41.91 0.96 67.37 1.55 0.00 0.00
- Intt. Acc. And 0.00 2.13 0.00 0.00 0.00 0.00
due 0.00 0.05
Total 228.07 5.17 569.72 13.02 672.01 15.49 494.76 10.42

104
Note No. 14

Provisions
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31March 2005 31March 2004 31 March 2003
Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Provision for Tax 7.87 0.18 19.30 0.44 7.38 0.17 4.19 0.09
Proposed Dividend 35.41 0.80 35.41 0.81 34.83 0.80 0.00 0.00
Corporate 4.63 0.11 4.63 0.11
Dividend Tax 4.46 0.10 0.00 0.00
Total 47.91 1.09 59.34 1.36 46.67 1.07 4.19 0.09

Note No. 15
Revenue
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2005 31 March 2004 31March 2003

Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Sale of -
Sugar. 448.78 10.20 1193.93 27.29 689.88 15.90 781.28 16.45
Molasses. 66.77 1.52 75.69 1.73 57.47 1.32 73.05 1.54
Electricity. 14.10 0.32 140.77 3.22 138.78 3.20 117.73 2.48
Sale of Agro
inputs. 0.00 0.00 0.00 0.00 18.23 0.42 0.00 0.00
Bagasse. 0.00 0.00 0.00 0.00 0.00 0.00 22.06 0.46
Less Excise duty
paid (32.48) (0.74) (68.60) (1.57) (53.51) (1.23) (60.01) (1.26)
Total Revenue 497.17 11.30 1341.79 30.67 850.85 19.61 934.11 19.67

Note No. 16
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Staff Cost
Salary, Wages and 15.67 37.65
other benefits
including Bonus 0.36 0.86 37.28 0.86 38.75 0.82
Contribution to 1.16 2.37
Provident Fund 0.03 0.05 2.22 0.05 2.09 0.04
Gratuity 0.33 0.01 0.60 0.01 0.43 0.01 0.47 0.01
Staff Welfare 0.10 0.00 2.47 0.06 1.43 0.03 2.36 0.05
Total 17.26 0.40 43.09 0.98 41.36 0.95 43.67 0.92

105
Note No. 17

Manufacturing
Expenses
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
Particulars 30 Sep 2005 31 March 2005 31 March 2004 31March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

Packing Material 0.00 17.69
Consumed 0.00 0.40 22.17 0.51 20.52 0.43
Power & Fuel 3.32 0.08 15.14 0.35 5.51 0.13 6.34 0.13
Chemical 0.00 8.85
Consumed 0.00 0.20 12.34 0.28 14.09 0.30
Process Stores & 2.22 2.97
Spares 0.05 0.07 2.85 0.07 2.50 0.05
Repair &
Maintenance
Plant & Machinery 14.53 30.47
& Building 0.33 0.70 35.90 0.83 28.50 0.60
Handling Expenses 0.23 0.01 3.06 0.07 3.77 0.09 3.37 0.07
Hire Charges 0.10 0.00 1.01 0.02 1.84 0.04 0.13 0.00
Oil & Lubricants 0.00 0.00 1.44 0.03 1.79 0.04 1.86 0.04
Insurance on Plant 1.30 2.63
& Machinery 0.03 0.06 3.13 0.07 1.81 0.04
Total 21.70 0.50 83.26 1.90 89.30 2.06 79.12 1.66

Note 18
Other Operating
Expenses
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
30 Sep 2005 31 March 2005 31 March 2004 31 March 2003
Particulars
Rs. USD Rs. USD Rs. USD Rs. USD

Rent 0.80 0.01 2.50 0.06 1.89 0.04 2.29 0.05

Rates, Taxes & Fee 0.34 0.01 1.32 0.03 0.24 0.01 0.89 0.02
Traveling & 3.84 5.58
Conveyance 0.08 0.12 2.69 0.06 2.66 0.06
Postage, Telephone 0.90 3.09
& Telegraph 0.02 0.07 1.78 0.04 1.59 0.03
Business 1.61 4.78
Promotion &
Entertainment 0.04 0.11 0.68 0.02 0.76 0.02
Printing & 0.25 1.56
Stationery 0.01 0.04 1.26 0.03 0.94 0.02
Vehicle running/ 1.21 2.20
Car hire charges 0.02 0.05 1.71 0.04 1.76 0.04
Repair & 1.10 2.08
Maintenance 0.03 0.05 0.87 0.02 1.11 0.02
Consultancy and 0.40 1.27
Technical Fees 0.01 0.03 0.36 0.01 0.50 0.01
Insurance 0.70 0.02 2.76 0.06 1.66 0.04 1.49 0.03
Listing Fees 0.24 0.01 0.32 0.01 0.23 0.01 0.21 0.00
Electricity & Water 0.13 0.41
Charges 0.00 0.01 0.30 0.01 0.26 0.01
Auditors 0.00 0.10
Remuneration 0.00 0.00 0.08 0.00 0.08 0.00
Loss on sale of 0.00 0.00
Assets 0.00 0.00 0.03 0.00 0.89 0.02
Misc. Expenses 0.07 0.00 0.19 0.00 0.10 0.00 0.08 0.00
Total 11.59 0.26 28.16 0.64 13.88 0.33 15.51 0.33

106
Note No. 19
Finance Cost
Amount in Millions Amount in Millions Amount in Millions Amount in Millions
31 March 2004 31 March 2003
Particulars 30 Sep 2005 31 March 2005
Rs. USD Rs. USD Rs. USD Rs. USD
Interest on 27.33 65.76
Overdraft and Loan 0.61 1.50 86.57 2.00 85.00 1.79
Bank charges and 0.34 4.52
other finance
charges 0.01 0.10 3.35 0.08 4.85 0.10
Amortization 0.17 0.00 0.32 0.01 0.46 0.01 0.59 0.01
Total 27.84 0.62 70.60 1.61 90.38 2.09 90.44 1.90

107
 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS FORMING PART OF
ACCOUNTS AS AT 31 MARCH 2005

A. ORGANIZATION AND NATURE OF OPERATIONS

Rana Sugars Limited was incorporated as a public limited company on 30 July 1991, under the Indian
Companies Act, 1956 in India and was issued a Certificate of Incorporation bearing number 53-11537 of
1991 by the ROC, Punjab, Himachal Pradesh and Chandigarh.

Rana Sugars is a sugar company with a capacity to crush 5000 tonnes of sugarcane per day and operates a
captive power unit for co-generation of 20 MW of power. The project is situated at village Buttar Seviyan,
Tehsil Baba Bakala, District Amritsar, Punjab.

Rana Sugars is the first company in the State of Punjab, which has set up a co-generation power project at
the cost of Rs.330 million and which is running successfully. The co-generation power project is generating
14 MW surplus power after meeting its captive demand from its in-built system and the surplus power is
being sold to Punjab State Electricity Board, pursuant to the Power Purchase Agreement dated 4 May 2005,
executed between Rana Sugars Limited and Punjab State Electricity Board.

The co-generation power project has been set up with equity participation of Rs.25.50 million by Punjab
Energy Development Agency.

B. SIGNIFICANT ACCOUNTING POLICIES

1. Accounting Convention

The financial statements are prepared in accordance with the historical cost convention in
accordance with generally accepted accounting principles and the provisions of the
Companies Act, 1956. Accounting policies not specifically referred to are consistent with
generally accepted accounting policies.

Cost is based on the fair value of consideration given in exchange for assets. The carrying
amount of non-current assets has been determined by reference to expected net cash flow,
which has not been discounted, except where stated.

The financial statements of the company are presented as per International Accounting
Standards (IAS) & IFRS applicable during the period.

The income statement has been prepared on the basis of classification of expenses by
function.

The financial statements have been reported in Indian rupees, the national currency of India,
which is also the functional currency of the company. Solely, for the convenience of the
readers, the financial statements have been translated into United States dollars at the noon
buying rate in New York city on 31 March 2005 for cable transfers in Indian Rupees.

2. Revenue Recognition

Sales revenue is recognized on the basis of dispatch of goods to the customers and is
accounted for inclusive of Excise Duty. Sale of Power to Punjab State Electricity Board
(PSEB) is accounted for based on the meter reading as per metering equipments of PSEB
installed at the Power Grid.

3. Fixed Assets

The fixed assets are stated at cost net of Excise Duty. All costs directly related to the
acquisition and installation of fixed assets are capitalized and added to the respective assets.

108
 4. Depreciation

Depreciation is provided on all the fixed assets on straight-line method in accordance with
and in the manner specified in Schedule XIV to the Companies Act, 1956.

5. Inventories

Inventories except molasses and bagasse, being by-products, are valued at lower of cost and
net realizable value. The by-products are valued at net realizable value. Cost of stores, spares
& consumables is determined on Weighted Average Cost method. In respect of finished
goods, appropriate overheads are considered.

6. Investments

Current Investments are valued at lower of cost or market value.

7. Current assets, loans &advances

a) Accounts receivable are valued at their estimated realizable value, by recording an

appropriate provision for doubtful accounts.
b) In the opinion of the Board of Directors all the Current Assets, Loans and Advances,
if realised in the ordinary course of business, have a value at least equal to the
amount at which these are stated in the Balance Sheet.

8. Guarantees, Commitments and Contingent liabilities

Contingent liabilities are not recognized but a disclosure is made.

9. Current liabilities

Accounts payable are stated at their nominal value.

10. Retirement Benefits

Defined Contribution Plan

Contribution to provident fund is made on a monthly basis as per the enactment in India. The
contributions are made to a provident fund scheme (a government of India body) at the rate of
12% of the basic salary of the employee restricted to Rs. 6,500 and charged to revenue.

Defined Benefit Plan

Defined benefit plan is based on service and remuneration of employees at retirement. Payment
of present liability of future obligation is made to gratuity fund, which fully covers the same
under group gratuity scheme of Life Insurance Corporation of India. Some actuarial
assumptions adopted are discount rate is 7.5%, salary escalation is 7% and withdrawals are 5%.

Provision for Leave encashment liability is made on accrual basis.

11. Borrowing cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are
capitalised as a part of the cost of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other borrowing costs are charged
to revenue.

109
 12. Taxes on Income

Provision for current tax is made for the amount of tax payable in respect of taxable income
for the year under the Income Tax Act, 1961.

Deferred tax is recognized subject to the consideration of prudence, on timing difference,

being the differences between Book profit and tax profit that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax assets are recognized only
if there is reasonable certainty that sufficient future taxable income will be available against
which such deferred tax assets can be realized.

13. Accounting Estimates, Assumption and Judgement

The preparation of accounts is in accordance with International accounting standard which

require management to make certain estimates and assumption concerning future, that effect
the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Estimation and judgements are continuously evaluated and are based on historical experience
and other factors, including expectation of future events that are believed to be reasonable
under the circumstances.

14. Financial Instruments

The company’s financial instruments consist of trade and other receivables, interest bearing
borrowings, security deposits, trade and other payables, and accrued liabilities. Unless stated,
it is the managements opinion that the company is not subjected to significant interest,
currency and credit risk arising from its financial instruments the fair value amortised cost of
financial instruments as applicable approximates their carrying value, unless otherwise stated.

NOTES

20. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided
for Rs.1.55 million (Previous year Rs.1.88 million)

21. Contingent liabilities

Contingent Liabilities Not Provided For:

Liability in respect of Income Tax and Sales Tax has been accounted for on the basis of
respective returns filed with the relevant authorities. Additional demand, if any, arising at the
time of assessment is accounted for in the year in which the assessment is completed.
a) Income Tax assessments have been completed up to the assessment year 2002-03.
b) Sales Tax assessments have been completed upto the assessment year 2002-03 and there
is no outstanding demand in this respect.
However, there is no demand pending in respect of completed assessment.
c) The company has deposited a sum of Rs0.21million under protest with excise authorities
and has preferred an appeal with the Appellate Authorities against the order of this
amount.
d) Bank Guarantees given to Ministry of Food, Govt. of India Rs. 37.9 million (previous
year Rs. 37.9 million). Guarantees are secured by pledge of FDRs of Rs. 8.98 million
(previous year Rs. 8.17 million) and counter guarantee given by the Company.
e) The Company has given guarantees against crop loans availed by farmers of Rs. 145.51
million to banks.

110
22. The Company has not made provision for Excise Duty on stock of finished goods
lying at the year end and accordingly the amount is not included in the valuation of
inventories. However, this does not have any impact on the profit for the year.

23. Equity Shares

The Company has only one class of capital stock referred to herein as equity shares. Par value
of each share outstanding as on 31March 2005 is Rs.10.

Voting

Each holder of equity shares is entitled to one vote per share.

Dividends

Final dividends proposed by the Board of Directors are payable when formally declared by
the shareholders, who have the right to decrease but not increase the amount of dividend
recommended by the Board of Directors. The Board of Directors declares interim dividend
without the need of shareholders approval. Dividend payable to equity shareholders are based
on the net income available for distribution as reported in the company’s financial statements
prepared in accordance with US GAAP. As such, dividends are declared and paid in Indian
rupees. The net income in accordance with IFRS may, in certain years, either not be fully
available or will be additionally available for distribution to equity shareholders.

Under Indian GAAP, the accumulated retained earnings available for distribution to equity
shareholders as on 31 March, 2005 is Rs.177.46 million, dividend proposed by the company
for the year ending 31 March 2005 is Rs. 35.40 million.

Under the Indian Companies Act, dividends may be paid out of profits of a company in the
year in which the dividend is declared or out of the undistributed profits of previous fiscal
years. Before declaring a dividend greater than 10.0% of the par value of its equity shares, a
company is required to transfer to its reserves a minimum percentage of its profits for that
year, ranging from 2.5% to 10.0% or higher, depending on the dividend percentage to be
declared in such year.

24. Earning Per Share: 2004-05 2003-04

a) Weighted average number of shares at the

beginning and end of the year. 3,54,36,342 3,48,61,000

b) Net Profit after tax available for

Equity Share Holders (Rs. In million) 1,77.46 70.50

c) Basic & Diluted Earning per share (Rs.) 5.01 1.98

25. Segment Reporting

Primary Segment

Based on the guiding principle given in IAS-14 "Segment Reporting" issued by the
Institute of Chartered Accountants of India, the Company's segments are White
Crystallized Sugar and Power Generation. Revenue and expenses have been accounted
on the basis of their relationship to the operating activities of the respective segment.

111
 (Rs. In millions)
Description White Crystal Power Generation Elimination Total
Segment Revenue S Yr. Cur. Yr. Prev. Yr. Cur. Yr.
Cur. Prv. Prv. Cur. Yr. Prv.
Yr. Yr. Yr.

31.03.0 31.03.04 31.03.05 31.03.04 31.03.05 31.03. 31.03.05 31.03.

5 04 04
a) External Sales 1269.62 765.57 140.78 138.78 - - 1410.39 904.35
b) Inter Segment 101.48 103.42 129.87 138.26 231.35 (241.68 - -
Sales )
Total 1371.10 868.99 270.64 277.04 231.35 (241.68 1410.39 904.35
)
Segment Result 22775.4 79.97 88.03 114.27 - - 314.07 194.24

Interest 70.59 90.37

Profit before Tax 243.48 103.87
Provision for current 19.30 7.38
tax
Provision for Deferred 46.71 27.03
Tax

Income tax of previous - 0.43

years

Profit after tax 177.47 69.03

Segment Assets (Cross) 1839.35 1730.72 683.49 692.02 - - 2522.84 2422.74

Segment Liability 759.97 1040.90 120.79 148.67 - - 880.76 1189.57

Capital Expenditure 105.48 58.98 25.72 17.42 - - 131.20 76.40
(Net)
Depreciation 34.92 33.72 27.60 27.28 - - 62.52 61.00
Non cash expenses 2.45 1.73 - - - - 2.45 1.73

26. Related Party Disclosures:

Disclosures as required by IAS-24 “Related Party Disclosures” are given below:

A. Relationship

a) Associate Companies
1. Rana Polycot Limited
2. Sri Hargobindpur Sugars (P) Ltd.
3. Rana Informatics Ltd.
4. Rana Leathers Ltd.
5. R.G.S. Traders Pvt. Ltd.

b) Key Management Personnel:

1. Rana Ranjit Singh — Managing Director
2. Rana Inder Pratap Singh — Director
3. Rana Veer Pratap Singh — Director

112
 c) Relative of Key Management
Personnel:
1. Rana Gurjeet Singh.

B. Transactions with (Rs. In million)

related Parties
Nature of Transactions Associate Companies Key Management
Personnel
2004-2005 2003-2004

1. Purchase of raw 0.06 0.59 -

material
& t 0.30 0.28 -
2. Rent Received
0.00 0.03 -
3. Mobile expenses
C. Outstanding 01.04.2004 31.03.2005
Balances (Rs. in
Million)
20.89 20.41
- Interest Free unsecured
loans from Directors
- Interest Free Loan 50.60 2.64
from relatives of
Directors

27. Deferred Tax Liability

The Deferred Tax Liability for the current year amounting to Rs. 46.71 million (Previous year Rs.
27.03 million) has been charged to Profit & Loss account. Deferred tax assets and liabilities are
being offset as they relate to taxes on income levied by the same governing taxation laws. Major
components of Deferred Tax Assets and Deferred Tax Liabilities:-
(Rs. in million)
31 March, During the 31 March,
2005 Year 2004
Net Timing Difference Net Deferred Tax 112.70 46.71 46.71 65.99
Liability - 27.03

28. Impairment of assets

The company has carried out the assessment of impairment of assets as per IAS 36. There has been
no impairment loss during the year 2004-05.

29. Financial Instruments

The financial instruments of the company are classified as Trade and other receivables, interest
bearing borrowings and security deposits and financial liabilities as per classification specification
of IAS 32/39, the carrying amount of this do not vary significantly from their amortized cost,
except in case of the following:

a) Trade receivables - Sundry debtors include Rs. 1.85 million for the recovery of which suit
is pending in court and as per the legal opinion received by the management, these are
expected to be realized before the year 2007. These have been amortized at the
commercial rate of borrowing which is currently 10% per annum.

113
 b) Security deposits are interest free long term deposits and in the opinion of the
management, these are providing adequate economic benefits to the company, and have
not been amortized.

30. Retirement benefits

Contribution to provident fund during the year is Rs.2.37 million. Gratuity liability has been
fully funded as per the group gratuity scheme of Life Insurance Corporation of India.

(Rs in million)
Total contribution to the fund : 2.04
Interest earned : 0.12
Claims settled : 0.29

The leave encashment liability has been estimated by the management at Rs.2.72 million at
the end of the year.

Leave encashment

Balance sheet and related analysis

(Rs in million)
March 2005 March 2004
Present value of the obligation at end 2.72 2.56
Present value of plan assets -- --
Unfunded liability provision in 2.72 2.56
Balance sheet
Unrecognised actural gains/ (losses) -- --
Unrecognized transiting liability -- --

114
AUDITOR’S REPORT OF RANA SUGARS LIMITED FOR THE YEAR ENDED 31 MARCH 2005

Directors
Rana Sugars Ltd.
SCO 49-50 Sector 8 C
Madhya Marg
Chandigarh

As agreed with you, we have examined the restated the Balance Sheet as on 31 March 2005 Profit & Loss
Account and Cash Flow Statement for the year ending 31 March 2005 audited by M/s Kansal Singla &
Associates Chartered Accountants. Our engagement was undertaken in accordance with the guidance Note
on Engagements to perform Agreed upon procedures regarding Financial information issued by the
Institute of Chartered Accountants of India. The preparation and presentation of these financial statements
are the responsibility of the company management. Our responsibility is to express our opinion on these
financial statement duly audited by Kansal Singla & Associates.

We have performed such tests and procedures, which in our opinion were necessary for the examination.
The procedure include comparison of the attached restated financial statements with the Company’s audited
Financial Statements on the basis of the information and explanation, given to us and on consideration of
the audit report of M/s Kansal Singla & Associates dated 6 September, 2005. In our opinion the restated
financial statements give a true & fair view in conformity with the International Financial Reporting
Standards

a) In case of restated Balance Sheet of the company as at 31 March 2005.

b) In case of Profit & Loss accounts result of operation of the company for the year ended 31 March
2005.
c) In case of cash flow statement of the cash flows for the year ended on that date.

This report is solely for your information and for submission to Dubai International Financial Exchange in
connection with application for listing of your securities.

Place : New Delhi For S. N. Nanda & Co.

Dated : CHARTERED ACCONTANTS

BHAVNA NANDA
Partner

115
 RANA SUGARS LIMITED
SCO 49-50, SECTOR 8-C
MADHYA MARG
CHANDIGARH - 160 009
INDIA

DEPOSITARY LEAD MANAGER

DEUTSCHE BANK TRUST COMPANY CHARTERED CAPITAL AND INVESTMENT

AMERICAS LIMITED
60 WALL STREET 711, MAHAKANT, OPP. V S HOSPITAL,
NEW YORK, ELLISBRIDGE
NEW YORK 10005 AHMEDABAD, GUJARAT (INDIA) - 380 006
U.S.A.

AUDITORS CHARTRED ACCOUNTANTS

KANSAL SINGLA & ASSOCIATES S.N.NANDA & Co.

CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS
SCO 1114-15, SECTOR 22-B CHANDIGARH – C-43, PAMPOSH ENCLAVE
160 022 NEW DELHI - 110048

OVERESEAS COUNSEL TO THE LEAD LEGAL ADVISORS TO THE COMPANY

MANAGER

DAVÉ & CO. K.R. CHAWLA & CO.

SOLICITORS ADVOCATES
49 THE PADDOCKS AND LEGAL CONSULTANTS
RAYLEIGH 707, KAILASH BUILDING
ESSEX 26, KASTURBA GANDHI MARG
SS6 8NE, NEW DELHI 110 001
UNITED KINGDOM INDIA

116